LTC - Annual Report 2016 | FinancialReports.eu

TSE : 2301 www.liteon.com

20 16

ANNUAL REPORT

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Spokesperson:

Acting Spokesperson:

Global Headquarters:

Major Factory:

Stock Affairs Department:

Auditors:

GDR and related information:

Lite-On Technology Corporation website:

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23 27

39 40

43 167

Contact Information

Members of Top Management

1. Letter to Shareholders

2. Corporate Overview

2.1 Company Profile
2.2 Lite-On Corporate Values
2.3 Organization Chart

3. Corporate Governance

3.1 Introduction
3.1.1 Major Resolutions of the General Meeting
3.1.2 Board of Directors
3.1.3 Audit Committee
3.1.4 Compensation Committee
3.1.5 The Growth Strategic Committee
3.2 Anti-Corruption
3.3 Corporate Risk Management
3.4 Information Regarding Board Members and Management Team
3.5 Internal Control System Execution Status
3.6 Reprimands on the Company and its Staff

4. Capital and Shares

4.1 The Top-10 Shareholders and Information of Related Parties 4.2 The Structure of Shareholders
4.3 Change in the Proportion of Shareholding among the Directors, Managers, and Major Shareholders

5. Financial Information

5.1 Consolidated Financial Statements of 2016
5.2 Parent Company Only Financial Statements of 2016

MEMBERS OF TOP MANAGEMENT

Vision Mission A World-Class Excellent Company Long-Term Mission ： Best Partner in Opto-Electronic, Eco-Friendly and Intelligent Technologies Industry Corporate Citizenship: Globalization / Mid-Term Mission ：

Belief Spirit Customer Satisfaction Passion Excellence in Execution Excellence Innovation Innovation Integrity Growth

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Raymond Soong Chairman of Lite-On Group
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Warren Chen Vice Chairman and Group CEO of Lite-On Group

Lite-On Technology Corporation 2016 Annual Report

LETTER TO SHAREHOLDERS

Dear Shareholders,

Despite many challenges and changes in global economic environment and technology industries in 2016, Lite-On marched ahead like a ship sailing against the wind. With the dedication of all colleagues and optimized steadying operations after the Group's nine in one integration, we not only overcame the challenges, but also showed a positive growth and gained wide recognition from international investors. In 2016, Lite-On focused on Internet of Things (IoT) applications in cloud computing, LED lighting, automotive electronics, biomedical technology, and industrial automation as our five key areas of transforming. The global consolidated revenue amounted to NT$229.57 billion, which represented a yearly growth of 6%. Our net profit after taxes was NT$9.416 billion for the year, which was a record high after the four-in-one integration in 2002. Our annual earnings per share (EPS) reached NT$4.05; a yearly growth of 30%, which was also a record high in the last six years.

Business Performance

Since the integration of group resources and organizations in 2014, Lite-On continued to focus on profitability, sound governance, and improving shareholders' returns as our main operation strategies, and actively worked towards business transformation so that a new light can shine on our 2016 business performance. In the Opto-electronics business, market share of invisible LED application and LED component continued to increase, LED vehicle lighting and street light also experience market expansion, coupled with growth of high-end camera module. In the Information Technology business, cloud-computing products showed outstanding growth in revenue, supported by shipments increase of high-end servers and networking power management systems. Meanwhile, the growth was also driven by ongoing market share gains in keyboards, mousse and peripherals and delivery growth in laser models of Multi-Function Peripherals. In the storage business, also benefited greatly from increasing demand from cloud computing and storage related applications.

Lite-On focuses on IoT applications in cloud computing, LED lighting, automotive electronics, biomedical technology, and industrial automation as our five key areas of transformation. Among which, cloud computing, high-end camera modules, and LED/outdoor lighting have entered a mature phase; their combined share of Lite-On's annual total revenue was over 30%. In 2016, Lite-On's LED optoelectronic semiconductor applications were successfully adopted in IoT-relevant solutions, such as vehicle lighting, smart production, wearable devices, smart homes, and smart healthcare. Leotek Lighting Department successfully won the tender for LED street lights in Jordan, which opened market opportunities for energy-saving LED street lights in the Middle East. Skyla[®] HB1, the fully-automated clinical chemistry analyzer developed by the Medical and Biotech Department received CFDA certification in China. The Department also launched a new product, the skyla[®] Hi, a POC immunoassay analyzer, which only requires a minimal amount of blood from a fingertip for rapid testing of HbA1c in diabetes patients. In addition, the Department also established the first overseas biotech R&D center in Singapore as a means to develop highly competitive point-of-care products. In order to support client operations, Lite-On and the Export Processing Zone Administration, MOEA jointly launched the first land turnover renewal project in the Nantze Export Processing Zone, in preparation for the expansion of the Automotive Electronics Department and new business development.

Responsibility Award eight times. Internationally, Lite-On has been listed as a constituent stock on the Dow Jones Sustainability Index (DJSI) for six years in a row and a place on the Morgan Stanley (MSCI) Sustainability Report for two years in a row. After being featured on the A List in the Climate Disclosure Leadership Index (CDLI) from 2014 to 2015, Lite-On has been benchmarked as “Leadership Level” in the Information Technology sector and the Technology Hardware & Equipment industry by Carbon Disclosure Project (CDP) in 2016. Lite-On also received first place in Taiwan and third place in Asia in the Channel NewsAsia Sustainability Rankings. Through transparent information disclosure, Lite-On was listed in the top 5% of the Corporate Governance Evaluation System of Taiwan Stock Exchange in 2016.

Future Outlook

Lite-On aims to become a centenarian corporation, and the key for long-lasting operation is profitability and values generated by the Corporation. The IT industry is in a transformational new era. The traditional contract manufacturing mode with mass producing a few models is diminishing. The industry and product life cycles have been drastically reduced. Nowadays, IT and traditional industries alike are starting to transform by following the IoT trend; these factors are forcing the electronics industry towards transformation and upgrade.

LIte-On is no exception. The aim for Lite-On's transformation is to increase profitability; this signifies not only changes in the business model or product portfolio, but also an ability to continually generate optimized profitability to ensure Lite-On's sustainability. The adjustments made in the Company's corporate governance were not easy; however, Lite-On's outstanding business results in 2016 have shown us that transformation was the right choice and it is also a reachable goal. Lite-On will stay with this strategy and development direction and continue to integrate the Group's resources to develop a prospective new business and to set the foundation for becoming a centenarian corporation.

In Lite-On's history, we have faced many challenges and difficulties. However, from the process of overcoming these obstacles, we grew stronger and achieved outstanding results. Looking ahead, the global political and economic environment is still filled with uncertainty. Through the "One Lite-On" program, Lite-On has successfully simplified its organization and structure, improved its finances and reduced operational costs, as well as increased its resource utilization, so that the Company may continue to expand its automated production capabilities, optimize its production capacity and efficiency, and streamline processes for better productivity and performance. Now, we are prepared to face new challenges with improved corporate governance and a cautious but optimistic attitude. In different fields all over the world, innovation of all forms are breaking out like wild fire in order to create a whole new type of smart living for the future. Lite-On is blessed to be a part of this industry revolution. We are currently working on establishing the differentiation between our core businesses and new businesses on a global level through innovative thinking and solid implementation. The aim is to become the top choice as a business partner in providing innovative designs, hardware manufacturing, and all types of application to our clients from all over the world in areas such as lighting, electricity, energy conservation, and smart technologies. We sincerely hope that each and every colleague, client, supplier, and business partner of Lite-On will continue to give us their full support and recognition to work toward a wonderful start in 2017 as well as a successful transformation, and to become part of the team that established Lite-On as a "centenarian corporation".

Corporate Social Responsibility

Nationally, Lite-On has received CommonWealth Magazine's CSR Award for ten consecutive years, the Taiwan Corporate Sustainability Award six times, and Global Views Monthly's Excellence in Corporate Social

Raymond Soong

Chairman of Lite-On Group

Warren Chen

Vice Chairman and Group CEO of Lite-On Group

Lite-On Technology Corporation 2016 Annual Report

Corporate Overview

2.1 COMPANY PROFILE

Founded in 1975, Lite-On embraces being the “Best Partner in Opto-Electronic, Eco-Friendly and Intelligent Technologies” as its vision to focus on the development of optoelectronics and key electronic components, and strives to build up competitive edge through resource integration and optimized management. Lite-On produces products that are used in a broad range of applications, such as computers, communications, consumer electronics, automotive electronics, LED lighting, cloud computing as well as biotech and healthcare. Lite-On is a worldwide leading provider of optoelectronics, information technology, storage devices, and mobile mechanics.

For more than 40 years, Lite-On has concentrated on establishing a competitive advantage in mass production. Through resource integration and management, we maximize the returns from a diverse product portfolio to realize excellent revenue growth and profits. In 2014, Lite-On successfully completed its “One Lite-On” program by integrating nine of its main subsidiaries under one management, while the main business strategy remains focusing on better resource utilization, automation, production optimization, and streamlined processes for better productivity and efficiency. In the long-term, the focus is on profitability, sound governance and increasing shareholder returns to lay down the foundation for a sustainable century enterprise.

In recent years, Lite-On has been shifting its production focus from IT and communication towards IoT (Internet of Things) applications such as cloud computing, LED lighting, automotive, biotech, and industrial automation. Its current business focuses are aligned with the world’s most prominent trends in energy saving products such as new LED lighting (indoor, outdoor, and automobile), cloud computing power supply systems, solid-state drives, and automotive electronics. Meanwhile, power storage products such as electric car charging, wireless charging, and fast charging modules are also presenting immense potential.

The global technology industry is now set to welcome a new wave of changes, Lite-On hopes to leverage its existing advantage as a world-class enterprise in this age of changes and challenges to become the partner of choice for global customers developing innovations and applications for opto-electronic, eco-friendly and intelligent technologies.

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.

Customer Satisfaction

As the best partners for our customers, we attentively listen to their needs, mastering market trends and using our strong expertise to fulfill their goals.

Excellence in Execution

With outstanding execution, we dedicate ourselves to fulfilling our commitments to customers, while creating innovative competitive advantages.

Innovation

With open minds and innovative technology, we are at the forefront of the mass production of next-gen technology.

Integrity

We emphasize integrity, transparency, and doing the right thing to earn the respect of our employees and trust of our customers and stakeholders to ensure solid and sustainable business operations.

Lite-On Technology Corporation 2016 Annual Report

9 Lite-On Technology Corporation 2016 Annual Report

Corporate Governance

3.1 Introduction

2.3 Organization Chart

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Audit Committee Shareholder’s Meeting
Compensation Board of Directors Corporate
Committee Group Chairman Internal Audit
Growth Strategic
Committee Vice Chairman & Group CEO
CSER Office IR/PR
Business Function
Regions
Units Units
Power Strategy
US MEC Legal & IP
Conversion Investment
Mobile Smart Life &
EU FIN MOE
Mechanics Applications
Operational Manufacturing
SGP Storage OPS
Controlling Technology
SHH Operation
PID HR OSHM
Center
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Lite-On emphasizes transparent and effective corporate governance and has drafted a corporate governance framework and implemented practices in accordance with the Company Act, Securities and Exchange Act, and other relevant laws and regulations. The company continues to improve its management performance, while safeguarding the rights and interests of investors and other stakeholders.

Lite-On’s corporate governance milestones:

In 2007, the company introduced the role of independent director to replace supervisors, and established its first Audit Committee. In 2008 and 2010, a Compensation Committee and a Growth Strategy Committee were established respectively under the board of directors.
Lite-On places high emphasis on the complete, timely, fair and transparent disclosure of information. In addition to publishing financial data, statements, annual reports and material information onto the Market Observation Post System (MOPS), Lite-On also makes this information accessible from its website for the convenience of local and foreign investors. (www.liteon.com)
The company will continue to pursue sound corporate governance and the transparency, timeliness, and fairness of financial information disclosure. In 2015, Lite-On was rated A++ by the Securities and Futures Institute during its Information Disclosure Evaluation. Meanwhile, Lite-On was rated top 5% in 2nd Corporate Governance Evaluation and 6%~20% in 3rd Corporate Governance Evaluation arranged by Taiwan Stock Exchange (TWSE).
In 2016, Lite-On’s EA site at Guangzhou and AE site at Guangzhou both obtained Product Liability Insurance AAA Certification from ACE Group, the world’s most creditworthy certifier. So far, fourteen of the company’s plant sites have obtained Product Liability Insurance AAA Certification, and Lite-On has set a goal for all plant sites to obtain AAA certification.

Lite-On’s Board of Directors, Audit Committee, Compensation Committee and Growth Strategy Committee perform their duties in accordance with the “Board of Directors Meeting Rules,” “Audit Committee Organizational Rules,” “Compensation Committee Organizational Rules,” and “Growth Strategy Committee Organizational Rules.

3.1.1 Major Resolutions of the General Meeting

The Company held a regular session of the General Meeting of 2015 on June 24th 2016 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:

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Item Major resolutions status of execution
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Item	Major resolutions	status of execution

1	Amendment to “Articles of Incorporation”	The resolution had exceeded legal requirement of the voting numbers and been approved in the AGM. Company Change Registration had been approved by Ministry of Economic Affairs, R.O.C. on July 27, 2016. The latest “Articles of Incorporation” was announced through company website.
2	Adoption of 2015 Financial Statements	The resolution had exceeded legal requirement of the voting numbers and been approved in the AGM.

Lite-On Technology Corporation 2016 Annual Report

11 Lite-On Technology Corporation 2016 Annual Report

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Item Major resolutions status of execution
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Item	Major resolutions	status of execution

3	Adoption of the Proposal for Appropriation of 2015 Earnings	The resolution had exceeded legal requirement of the voting numbers and been approved in the AGM. Ex-rights (ex-dividend) record date: Aug. 30, 2016 Dividend distribution date: Sep. 27, 2016 (Cash dividends NT$2.19 per share )
4	Proposal for dividends and employee bonuses payable in newly-issued shares of common stock for 2015	The resolution had exceeded legal requirement of the voting numbers and been approved in the AGM. Ex-rights (ex-dividend) record date: Aug. 30, 2016 Dividend distribution date: Sep. 27, 2016 (Stock dividends NT$0.05 per share )
5	Amendment to “Regulations Governing Election of Directors”	The resolution had exceeded legal requirement of the voting numbers and been approved in the AGM. Company followed the “Regulations Governing Election of Directors” and announced through company website as well.
6	Election of the Board of Directors of the 10th Term.	The Company's re-election of directors at 2016 Annual General Shareholders' meeting had exceeded legal requirement of the voting numbers and been approved in the AGM. Name of the Director: (1) Raymond Soong (2) Lite-On Capital Inc. Representative: Warren Chen (3) Dorcas Investment Co., Ltd. Representative: Joseph Lin (4) Ta-Sung Investment Co., Ltd. Representative: Keh-Shew Lu (5) Ta-Sung Investment Co., Ltd. Representative: Y.T. PAN (6) Yuan-Pao Development & Investment Co., Ltd. Representative: C.H.Chen (7) Yuan-Pao Development & Investment Co., Ltd. Representative: David Lee Name of the Independent Director: (1) Kuo-Feng Wu (2) Harvey Chang (3) Edward Yang (4) Albert Hsueh Company Change Registration had been approved by Ministry of Economic Affairs, R.O.C. on July 27, 2016. The Election procedures of the 10th Term Board of Directors was announced through company website.
7	Proposal of release of directors from non- competition restrictions.	The Company's Annual General Shareholders' Meeting approved the removal of non-competition restrictions on Directors. Company announced the Material Information through Market Observation Post System after the AGM on Jun.24, 2016.

The board consists of 11 members; all of whom are elected by shareholders. Board members currently include one Chairman; six institutional investor representatives from Lite-On Capital, Dorcas Investment Co. Ltd., Ta-Sung Inv Co. Ltd. and Yuan Pao Development & Inv. Co., Ltd.; and four independent directors. These members come from a broad variety of backgrounds and experience, and are capable of fulfilling their duties. They have been given the duty to exercise proper governance of the board of directors, to supervise/appoint/instruct the management, and to oversee the company’s financial, social, and environmental performance in ways that maximize stakeholders’ interests.

Board members’ backgrounds, education, concurrent roles at other companies etc and functioning of the board of directors as well as various functional committees have already been disclosed in the company’s annual report. The annual report is accessible on the Market Observation Post System and from the company’s website (www.liteon.com).

According to Lite-On’s “Board of Directors Meeting Rules,” board meetings are held at least once every quarter. A total of twelve board meetings were held in 2016 (from January 1st, 2016 to April 30th, 2017) .

1. Major Resolutions of the Board Meetings

Following are the important resolutions from the board during 2016/01/01-2017/04/30.

BOD resolutions on 2016/03/25
The schedule and agenda of year 2016 shareholders’ meeting.
Remuneration of employees and directors of 2015
Issuance of new share for capital increase.
Dividend distribution.
Donation to Lite-On Culture Foundation.
The results of it’s operations for Y2015.
BOD resolutions on 2016/04/27
The candidates’ qualification for Directors and Independent directors of year 2016 shareholders’ meeting.
1. BOD resolutions on 2016/05/12
The results of it’s operations for Fiscal Year 2016 Q1.
BOD resolutions on 2016/06/24
Raymond Soong and Warren Chen are elected as chairman and vice chairman unanimously by the Board of Directors
Change of members of Audit Committee
Change of members of Compensation Committee
BOD resolutions on 2016/06/28
Subsidiary disposing 100% shares of Beijing Lite-On Mobile Electronic and Telecommunications Componenets Co., Ltd.
BOD resolutions on 2016/07/27
The 2016 ex-rights and dividend record date of the Company
BOD resolutions on 2016/08/11
The results of it’s operations for Fiscal Year 2016 H1
BOD resolutions on 2016/11/11
The results of it’s operations for the first three quarters of Fiscal Year 2016
Capital injection to Lite-On Mobile Pte. Ltd., a 100% owned subsidiary by the Company
Issuance of new share for capital increase on behalf of KBW-LITEON Jordan Private Shareholding Limited (with 49% shares)
The budget of the factory construction in Kaohsiung
BOD resolutions on 2017/2/24

3.1.2 Board of Directors

The results of it’s operations for Fiscal Year 2016
Dividend distribution

The company’s directors are elected according to its “Director Election Policy,” where candidates are nominated based on the system stipulated in Article 192-1 of the Company Act. The company is required by law to announce before the book closure date of its annual general meeting the period of directors’ (including independent directors) nomination (no less than 10 days) and the number of directors (including independent directors) to be elected. The list of director candidates (including independent directors) needs to be reviewed by the board to make sure that all candidates are qualified (including independent directors) before the election commences during the annual general meeting.

The schedule and agenda of year 2017 shareholders’ meeting
Donation to Lite-On Culture Foundation
BOD resolutions on 2017/4/28
The results of it’s operations for Fiscal Year 2017 Q1
Amending 2016/11/11 resolution for capital injection to KBW-LITEON Jordan Private Shareholding Limited
The schedule and agenda of year 2017 shareholders’ meeting (Agenda new added)

Lite-On Technology Corporation 2016 Annual Report

13 Lite-On Technology Corporation 2016 Annual Report

2. The Board and the Functional Committees

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Chairman Raymond Soong
Vice Chairman Lite-On Capital Inc. Representative: Warren Chen
Dorcas Investment Co., Ltd. Representative: Joseph Lin
The Ta-Sung Investment Co., Ltd. Representative: Keh-Shew Lu
Board Ta-Sung Investment Co., Ltd. Representative: Vacancy
Yuan Pao Development & Investment Co., Ltd. Representative: CH Chen
Yuan Pao Development & Investment Co., Ltd. Representative: David Lee
Independent Directors Kuo-Feng Wu, Harvey Chang, Edward Yang, Albert Hsueh
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Audit Committee	Compensation Committee	Growth Strategic Committee
Since: 2007/06/21	Since: 2008/08/27	Since: 2010/09/01
Chair Person:Kuo-Feng Wu	Chair Person:Harvey Chang	Chair Person:Edward Yang
Members:Harvey Chang, Edward	Members:Kuo-Feng Wu, Edward	Members:Raymond Soong, Warren
Yang, Albert Hsueh	Yang, Albert Hsueh	Chen, Keh-Shew Lu, Harvey Chang

3. Board Meetings Attendance

The Board held 12 meetings (A) in the recent period of time (from January 1st, 2016 to April 30th, 2017) with the attendance of the directors specified as below:

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Attend Attendance
Attend by
Title Name (sit in) in rate (%) Note
proxy
person (B) 【B/A】
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Title	Name	Attend (sit in) in person (B)	Attend by proxy	Attendance rate (%) 【B/A】	Note

Chairman	Raymond Soong	11	1	92%	Reelected consecutively
Vice Chairman	Lite-On Capital Inc. Representative:Warren Chen	12	0	100%	Reelected consecutively
Director	Dorcas Investment Co., Ltd. Representative:Joseph Lin	11	1	92%	Reelected consecutively
Director	Ta-Sung Investment Co., Ltd. Representative:Keh-Shew Lu	3	9	25%	Reelected consecutively
Director	Ta-Sung Investment Co., Ltd. Representative:YT Pan	4	0	100%	Resign on Oct.28, 2016
	Ta-Sung Investment Co., Ltd. Representative: Rick Wu	2	1	67%	Expiration of 9th session of the Board on Jun. 24, 2016
Director	Yuan Pao Development & Investment Co., Ltd. Representative: CH Chen	12	0	100	Reelected consecutively
Director	Yuan Pao Development & Investment Co., Ltd. Representative: David Lee	12	0	100%	Reelected consecutively
Independent Director	Kuo-Feng Wu	12	0	100%	Reelected consecutively
Independent Director	Harvey Chang	11	1	92%	Reelected consecutively

Independent Director	Edward Yang	12	0	100%	Reelected consecutively
Independent Director	Albert Hsueh	9	0	100%	New elected of 10th director’s term on Jun. 24, 2016
Ex-Director	David Lin	3	0	100%	Expiration of 9th session of the Board on Jun. 24, 2016

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: Three occasions, A. In the 9th session of the 30th Board Meeting, Director Mr. Raymond Soong, Mr. Warren Chen, Mr. David Lin and Mr. CH Chen avoided the discussion and did not vote the motion of donation to Lite-On Cultural Foundation.
B. In the 9th session of the 31th Board Meeting, Director Mr. Raymond Soong, Mr. Warren Chen, Mr. Keh-Shew Lu, Mr. CH Chen, Mr. David Lee, Mr. Joseph Lin, Mr. Kuo-Feng Wu, Mr. Harvey Chang and Mr. Edward Yang avoided his own qualification discussion and did not vote the motion of the candidates’ qualification for Directors and Independent directors of year 2016 shareholders’ meeting.
C. In the 10th session of the 8th Board Meeting, Director Mr. Raymond Soong, Mr. Warren Chen, Mr. CH Chen avoided the discussion and did not vote the motion of donation to Lite-On Cultural Foundation.
(1) 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. 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.
(2) The company will continue to pursue sound corporate governance and the transparency, timeliness, and fairness of financial information disclosure. In 2015, Lite-On was rated A++ by the Securities and Futures Institute during its Information Disclosure Evaluation. Meanwhile, Lite-On was rated top 5% of listing company in 2nd session of Corporate Governance Evaluation and 6%~20% in 3rd session of Corporate Governance Evaluation arranged by Taiwan Stock Exchange (TWSE).

3.1.3 Audit Committee

Chairperson: Independent Director Kuo-Feng Wu

Members: Independent Director Harvey Chang, Independent Director Edward Yang and Independent Director Albert Hsueh

The Audit Committee consists entirely of independent directors. The duties of its three members are to assist the board of directors in reviewing the company’s financial statements, internal control systems, audit practices, accounting policies, major asset transactions, and appointment/dismissal of external auditors, finance officers, accounting officers, and internal auditors so as to ensure compliance with government regulations.

Effective internal control systems and audit operations are the foundation of sound corporate governance. In order to maintain an effective internal control system, particularly in the area of risk management, financial and operational control, the Audit Committee regularly reviews reports submitted by internal auditors and assesses the independence of the company’s financial statement auditors, thereby ensuring the utmost integrity in financial reporting.

According to Lite-On’s “Audit Committee Organizational Rules,” the Audit Committee meets at least once every quarter. A total of eleven Audit Committee meetings were held (from January 1st, 2016 to April 30th, 2017).

Lite-On Technology Corporation 2016 Annual Report

15 Lite-On Technology Corporation 2016 Annual Report

(1) The operation of the Audit Committee

The Audit Committee held 11 meetings (A) in the recent period of time (from January 1st 2016 to April 30th 2017) with the attendance of the independence directors specified below:

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Attend (sit in) Attend Attendance rate (%)
Title Name Note
in person (B) by proxy 【B/A】(note)
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Title	Name	Attend (sit in) in person (B)	Attendance rate (%) 【B/A】(note)	Note
Independent Director	Kuo-Feng Wu	11	100%	Reelected consecutively
Independent Director	Harvey Chang	11	100%	Reelected consecutively
Independent Director	Edward Yang	11	100%	Reelected consecutively
Independent Director	Albert Hsueh	8	100%	New elected of 10th direc- tor’s term on Jun. 24, 2016

Important Notice:

Issues stated in Article 14-5 of the Securities and Exchange Act of the ROC passed by the Audit Committee:

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Company
Article
reaction
14-5 of the Minutes
base on
Board Meeting Content of motion Securities and of Audit
the opinion
Exchange Act Committee
of Audit
of the ROC
Committee
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Board Meeting	Content of motion	Article 14-5 of the Securities and Exchange Act of the ROC	Minutes of Audit Committee	Company reaction base on the opinion of Audit Committee

In the 9th session of the 30th Board Meeting Mar. 25, 2016	1. The results of it’s operations for Y2015	v	All attendees of Independent Directors have no objection	All attendees of Directors have no objection
	2. Issuance of new share for Y2015 employees’ remuneration.	v
	3. Issuance of new share for Y2015 capital increase.	v
	4. Approving 2015 Statement of Internal Control System.	v
	5. Arranging 5 years Syndication loan in amount of NT$12 billion.	v
	6. Amending the “Regulations of the Internal Control System for Administration of Shareholder Services”	v
In the 10th session of the 2nd Board Meeting Jun. 28, 2016	1. Subsidiary disposing 100% shares of Beijing Lite-On Mobile Electronic and Telecommunications Components Co., Ltd.	v
In the 10th session of the 3rd Board Meeting Jul. 27, 2016	1. Subsidiary disposing 100% shares of Guangzhou Lite-on Mobile Engineering Plastics Co. Ltd. apply Internal Loan to Zhuhai Lite- On Mobile Technology Co., Ltd. in amount of CNY150 million.	v
In the 10th session of the 4th Board Meeting Aug. 11, 2016	1. The results of it’s operations for Fiscal Year 2016 H1	v
In the 10th session of the 5th Board Meeting Nov. 11, 2016	1. Capital injection to Lite-On Mobile Pte. Ltd., a 100% owned subsidiary by the Company	v
	2. Issuance of new share for capital increase on behalf of KBW- LITEON Jordan Private Shareholding Limited (with 49% shares)	v
	3. The budget of the factory construction in Kaohsiung	v
	4. Planing to sign an one year LTA agreement with Major vendor Toshiba Electronics Taiwan Corporation and make payment in advance under TWD5 billion for insuring production capacity	v
	5. Subsidiary disposing 100% shares of Guangzhou Lite-on Mobile Engineering Plastics Co. Ltd. and Guangzhou Lite-on Mobile Electronic Components Co. Ltd. apply Internal Loan to Zhuhai Lite-On Mobile Technology Co., Ltd. with total amount of CNY300 million.	v

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Board Meeting	Content of motion	Article 14-5 of the Securities and Exchange Act of the ROC	Minutes of Audit Committee	Company reaction base on the opinion of Audit Committee
In the 10th session of the 6th Board Meeting Nov. 29, 2016	1. Amendment to “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees”	v	All attendees of Independent Directors have no objection	All attendees of Directors have no objection
In the 10th session of the 8th Board Meeting Feb. 24, 2017	1. The results of it’s operations for Fiscal Year 2016.	v
	2. Approving 2016 Statement of Internal Control System.	v
In the 10th session of the 9th Board Meeting Apr. 28, 2017	1. Amending the “Procedures for Acquisition and Disposal of Assets”	v
	2. Amending the “Regulations of the Internal Control System for Administration of Shareholder Services”	v
	3. Amending 2016/11/11 resolution for capital injection to KBW- LITEON Jordan Private Shareholding Limited	v

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.
The communications between independent directors and the Chief Audit Officer and the certified public
accountants:
(1) Communications are established through Audit Committee or individually with independent directors via
- meetings or e-mails.
- The Chief Audit Officer reported to the Audit Committee on the establishment and amendment to the
  - internal control system.
- The Chief Audit Officer reported to the Audit Committee on the annual self- assessment of the implementation and results on the internal control systems.
- The Chief Audit Officer reported to the Audit Committee on the annual audit plan and the
  - implementation of the plan.
- The Chief Audit Officer reported to the Audit Committee on the findings of each audit and the tracking
  - of corrective actions and preventive actions.
- The Chief Audit Officer provided information on the addition or amendment of laws governing securities
  - and exchange to the Audit Committee.
- The Chief Audit Officer presented to the Audit Committee the report on the conduct of special audits
  - prescribed by the committee and the findings.
- The certified public accountants reported to the Audit Committee the findings of their quarterly/annually review or audits on the Company’s financial results, and also the communication of the relevant law and regulation or any other modify issues.
(2) The communication channel between the independent directors and the Chief Audit Officer functioned well.
- The communication between independent directors and the Chief Audit Officer are listed in the table below.

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Meeting Dates Communications between the Independent Directors and the Chief Audit Officer
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Meeting Dates	Communications between the Independent Directors and the Chief Audit Offcer

March 25, 2016	1. Reviewing the internal auditor’s report for the fourth quarter of 2015 and the year 2015 (include reviewing regulatory developments) 2. Reviewing report on self- assessment results for the year 2015
May 12, 2016	Reviewing the internal auditor’s report for the frst quarter of 2016 (include reviewing regula- tory developments)
August 11, 2016	Reviewing the internal auditor’s report for the second quarter of 2016 (include reviewing regulatory developments)

Lite-On Technology Corporation 2016 Annual Report

November 11, 2016	1. Reviewing the internal auditor’s report for the third quarter of 2016 (include reviewing regulatory developments) 2. Reviewing and approving the 2017 internal audit plan 3. Reviewing and approving the regulations governing the reporting of fraud
January 1 ~December 31, 2016	During 2016, the internal auditors have sent the audit reports and follow-up reports to the Audit Committee 74 times. The Chairman of the Audit Committee has commented on each audit report. The internal auditors have followed the instructions and reported to the Audit Committee.
February 24, 2017	1. Reviewing the internal auditor’s report for the fourth quarter of 2016 (include r reviewing regulatory developments) 2. Reviewing report on self- assessment results for the year 2016
April 28, 2017	Reviewing the internal auditor’s report for the frst quarter of 2017 (include reviewing regu- latory developments)
January 1 ~Apr. 30, 2017	During Jan ~Apr 2017, the internal auditors have sent the audit reports and follow-up reports to the Audit Committee 26 times. The Chairman of the Audit Committee has com- mented on each audit report. The internal auditors have followed the instructions and reported to the Audit Committee.

(3) The communication channel between the independent directors and the certified public accountants functioned well. The communication between independent directors and the certified public accountants are listed in the table below.

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Meeting Dates Communication matters
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The certified public accountants reported to the Audit Committee on the results and major issues of consolidated and standalone financial reports of 2015. Mar. 25, 2016 2. The certified public accountants reported to the Audit Committee the annual service contents and compensation of 2016. 1. The certified public accountants reported to the Audit Committee on the results and major issues of 2016 Q1 consolidated financial report. May. 12, 2016 2. The certified public accountants introduced the newly issued auditing standard ”New Audit Report”. The certified public accountants reported to the Audit Committee on the results and major Aug. 11, 2016 issues of 2016 Q2 consolidated financial report. 1. The certified public accountants reported to the Audit Committee on the results and major issues of 2016 Q3 consolidated financial report. 2. The certified public accountants made the explanation of the New Audit Report and key audit matters of 2016. Nov. 11, 2016 3. The company made the evaluation of independent and competency to appoint the Deloitte & Touche. 4. The certified public accountants reported to the Audit Committee on the auditing planning and scope of each period of 2017. 1. The certified public accountants reported to the Audit Committee on the results, key audit matters and the major issues of consolidated and standalone financial reports of 2016. Feb. 24, 2017 2. The certified public accountants reported to the Audit Committee the annual service contents and compensation of 2017. The certified public accountants reported to the Audit Committee on the results and major Apr. 28, 2017 issues of 2017 Q1 consolidated financial report.

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.

3.1.4 Compensation Committee

Chairperson: Independent Director Harvey Chang

Members: Independent Director Kuo-Feng Wu, Independent Director Edward Yang, Independent Director Albert Hsueh

The Compensation Committee was established in 2009 to strengthen corporate governance and align the company with international practices. The Compensation Committee has been authorized by the board of directors to supervise, review and decide the company’s compensation policies.

Duties of the Compensation Committee extend beyond employees’ incentives and bonuses, to cover performance appraisals and remuneration of directors and executive managers as well. Lite-On’s Compensation Committee consists of three members; all of whom are chosen from independent directors to ensure objectivity, professionalism and fairness of the committee, while avoiding any conflicts of interest those members may have with the company.

The Compensation Committee reviews the company’s remuneration policies and plans on a regular basis to ensure that they sufficient to attract, motivate and retain talent. The committee reviews the performance and remuneration of directors, the CEO and executives, and evaluates employee bonuses on a yearly basis.

3.1.5 The Growth Strategic Committee

Chairperson: Independent Director Edward Yang

Members: Director Raymond Soong, Director Warren Chen, Director Keh-Shew Lu and Independent Director Harvey Chang

The Growth Strategy Committee was established in 2010 in an attempt to strengthen and accelerate the growth of the Lite-On Group. The committee is authorized by the board of directors to review growth strategies for the Company and the Group as a whole. It is also responsible for the preliminary assessment of all major investments of the Company and the Group. It reports its resolutions regularly to the board of directors.

The scope of responsibility of Lite-On’s Growth Strategy Committee covers Lite-On Technology Corporation as well as its subsidiaries and certain business departments.

Committee members comprise five directors, all of whom are appointed by the board of directors.

A total of four Growth Strategy Committee meetings were held in 2016.

Lite-On Technology Corporation 2016 Annual Report

19 Lite-On Technology Corporation 2016 Annual Report

3.2 Anti-corruption

Lite-On upholds its reputation by obeying the laws and ethical standards of the countries in which it carries out its business activities. Lite-On tolerates no violation of laws or ethics during pursuit of sales, profits and performance targets. The company also has measures in place to govern activities that are prone to the risk of bribery, and hence prevent incidents from occurring.

“Integrity” is one of our four core values. The company has implemented an Employee Code of Conduct to help employees understand and handle the situations and issues encountered in daily work. This Code of Conduct has been included as part of orientation programs to give new hires an understanding of the company’s standards with regard to reputation, laws and ethics. The Ethical Code of Conduct for Employees contains the following ethical guidelines:

1. Gifts and hospitality:

1.1 Company employees may not give or accept any gifts intended to improperly influence normal business or decisions. Company employees must immediately notify their supervisor or return any substantial gifts that they have received. If, however, a gift constitutes a small gift such as often exchanged in business contact, it shall not be subject to this restriction.
1.2 Customers and company employees may engage in reasonable social activities within the course of the business contact in so far as such activities are clearly for business purposes and are respectable in tone. However, any excessively generous treatment shall require the prior consent of the employee’s supervisor and a subsequent report to the supervisor. While dining is a necessary accompaniment of meetings between company employees and suppliers or customers, the principle of reciprocity should be emphasized.
1.3 Company employees should avoid any improper actions, and absolutely may not give or accept any kickbacks in any form under any circumstances. While engaged in private shopping, company employees and their family members may not accept discounts from suppliers due to their relationship with this company, unless such discounts are given to all employees of this company.
2.7 Forgery of records: payments cannot be approved, executed, or accepted if part of the payment is intended or known to be used for purposes other than those stated on the records. When there is no disbursement explanation in the company’s account books, all “kickback funds” or similar funds or account transfers are strictly prohibited.

In addition to establishing uniform standards that apply consistently to all employees, Lite-On has also emphasized on explaining the values of these ethical standards so that employees can understand how they are relevant to their daily activities and avoid conducts that may constitute violations against laws or the company’s anti-corruption policy. Through uses of proprietary materials and structured courses, the company has been able to convey its governance guidelines and operating procedures to the comprehension of all employees. Course contents are presented in ways that are relevant to employees’ work activities and real-life scenarios, with quizzes at the end of each module to help them learn. Furthermore, the company also has consultative services in place to clarify employees’ queries regarding work ethics, anti-corruption guidelines, insider information, anti-trust, and EICC policies and practices, thereby securing the company’s interests while protect employees from any illegal involvement.

In addition to organizing EICC workshops at locations where the company operates, the company has also created an online learning platform that trains employees on EICC values including: business integrity, avoidance of illegitimate gains, open information, respect for intellectual property, responsible advertising, fair trading, confidentiality, responsible minerals procurement, respect for privacy, and prohibition against retaliation.

In 2016, to handle the grievances across the top executives, Board of Directors approved to set up an ad hoc investigation team for grievance reported in the office of Chairman of Boards. The team assigned dedicated persons to handle the hotlines, e-mail, mailbox provided for stakeholders including employees, customers, suppliers, etc. to speak out freely, and reports the investigated results to the Audit Committee while providing their objective suggestions to the relevant top management of business units.

2. Principles governing business-related payments:

Any employee who discovers an irregularity affecting company assets or monies that may disrupt payments must immediately notify their supervisor. If the irregularity involves a supplier, the employee must notify the head of purchasing. No bribes of any kind may be given to any person; there are no exceptions to this rule. So-called bribes refer to payments given to certain persons to induce them to violate the rules of their employers or the laws of their country.

2.1 Payments to suppliers: payments can only be made for goods or services provided by suppliers that an authorized procuring unit has verified to have complied with the company’s standards.
2.2 Payments to government officials: the company cannot provide government officials of any country with payments that are prohibited in that country. Legitimate payments given to government officials must comply with all procedures specifically required by the company.
2.3 Payments to consultants, wholesalers or distributors: payments to consultants, wholesalers and distributors must be equivalent to the value of the services they provide.

Grievance channels:

Externally, the grievance and reporting channels are published on the company web page of http://www.liteon.com/ page.aspx?id=8fb9c570-db98-4597-b3be-12a8147f1823 containing: Tel No. : +886 2 8793 6833

Email: [email protected]

Mailbox: Mailbox: Grievance mail box, office of Chairman of Board, PO Box 156-21, Neihu Jiangnan, Taipei 11499, Taiwan R.O.C.
Internally, direct line 1234 or e-mail [email protected] are set up and published as grievance channel for employees.
2.4 Payments to customers: payments may not be directly or indirectly given to employees of any existing or potential customer with the intent of inducing them to take improper actions.
2.5 Payments to others: payments may be made to persons who are not civil servants or customers in accordance with the procedures prescribed by the company, provided that such payments are not for ordinary commercial purposes as defined by the laws of the country where the payments take place.
2.6 Payments outside the payee’s place of domicile: paying expenses or salaries to an account in a country where the payee does not reside or do business (this may sometimes be termed “distributed expenses”) is acceptable as long as this does not violate laws, and provided that the entire transaction does not compromise the company’s ethical standards.

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21 Lite-On Technology Corporation 2016 Annual Report

3.3 Corporate Risk Management

Lite-On has devoted itself to ensuring the economic, environmental and social sustainability for stakeholders including customers, shareholders, employees and the community etc. While taking steps to realize this goal, Lite-On adopts a robust risk management framework that identifies and controls the various risks of concern, so that said risk can then be transferred, mitigated, minimized or even eliminated entirely. This risk management framework is also one of the main reasons behind Lite-On’s sustainable growth and outstanding performance.

The Risk Management Framework

Lite-On’s risk management framework and internal control system allow it to take the initiative and respond to the risks associated with its operations in the most cost-effective manner. The Group CEO serves as the highest ranking officer in the company’s risk management framework.

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Board of Directors (Audit Committee)
Corporate Internal
Audit
Group CEO
Function Units / Operations
Manufacturing
Strategy Operational Manufacturing
Legal / IP Finance Operation
Investment Controlling Technology
Excellence
Operations
Innocell US
Human
OSHIM Creativity IP / PR CSER Office EU
Resources
Center SGP
SHH
Business Groups
New Mechanical
Power Conversion Mobile Mechanics Smart Life & Applications
Competence
Optoelectronic Product
Storage Portable Image Devices
Solution
----- End of picture text -----

Risk Management Life Cycle

Based on experience accumulated throughout its long history, the company has been able to develop a comprehensive risk management framework with job functions and areas of responsibility clearly segregated for risk identification purposes. Risks identified within the organization are classified into “External Risks,” “Operational Risks,” and “Information Disclosure Risks.” Each risk is further assessed and assigned a severity level of high, medium, or low,

and mapped onto a risk map for ease of identification. This enables the organization to take further steps to transfer, accept, mitigate, and avoid the identified risks. By executing the PDCA cycle (plan, do, check, and act) the company is able to improve its control over various risk factors and reduce the chances of risks occurring and the impact they might have.

“External Risks” refer to external factors such as slow sales, competition, loss of market demand, change in consumer preferences, changes in technologies, new competing products, international incidents, economic recession, mergers and acquisitions, change in foreign currency control, election outcomes, extortion, noise, pollution, natural disasters, etc. “Operational Risks” refer to problems that are associated with the company itself, such as inability to deliver goods on time, defective goods, unresolved technical issues, high procurement costs, excess inventory, poor production design, plant malfunction, employee discipline, safety incidents, fire hazard, employment of child labor, forced labor, loss of data, information errors, financial reporting mistakes, etc.. “Information Disclosure Risks” refer to risks associated with the disclosure of public information as part of the company’s operations, such as pricing failure, leakage of commercial confidentialities, unreliable financial forecasts, frequent adjustment of financial forecasts, failure to prepare quarterly/annual financial statements on time, failure to disclose required information, correction of errors etc. By setting key performance indicators (KPI) within the organization, Lite-On is able to assess whether key risks have emerged, and take necessary actions to transfer, accept, mitigate or avoid such risks. In order to minimize the possibility and degree of loss, the company adopts a risk management system that is even more proactive than insurance. Meanwhile, Lite-On is progressively implementing an “AAA Product Liability Control Project” as enhanced management over manufacturing and sales risk.

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Occurrence Risk Map
• Operations (neglect of safety • Environment (chemicals) • Market risk (customers' needs
rules/loss of personal property) • Human resources (orders/child and satisfaction)
• Health and safety (lighting) labor/work hour)
• Finance (Electricity bills)
High
• Business strategy (shareholder
relations)
• Operations (use of water/ • Safety and health (furnace • Politics (political development)
mistakes) temperature) • Health and safety (chemical
• Human resources (hazardous • Human resources (work hours/ corrosion)
jobs) grievance channels) • Business (business
• Environment (noise) • Business (budget spending) performance)
Medium
• Finance (carbon tax) • Operations (products and • Finance (liquidity)
services) • Compliance (legal and
reputation risks)
• Strategies (business model/
organization)
• Compliance (local • Business (pension) • Safety and health (safety of
environmental protection • Human resources (bribery) gas tanks)
laws) • Safety and health (substance • Environmental safety
• Human resources (protection exposure/fatigue/burns) (poisonous gas and fire)
Low
of whistle-blowers) • Human resources (limitation
of freedom)
• Finance (derivatives)
Impact Low Medium High
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Lite-On Technology Corporation 2016 Annual Report

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Board of Directors
(Audit Committee)
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Internal Audit

‧ Performs independent audits on risk management activities.
‧ Ensures implementation of appropriate risk management framework and culture.
‧ Reports to Audit Committee on audit progress.

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audit progress. framework and culture.
‧ Risk management decisioning and
resource allocation
Continuous
improvements
Functional units and business Executive management
groups (Group CEO)
‧ Perform self assessment, control ‧ Executes the board's risk
and management of risks. management decisions.
‧ Improve management practices. ‧Manages function units and
business groups.
Asse
r
s
o
s
Monit Identif
y
e
t
a
icn E
u av
m ul
m a
oC et
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The risk rating and audit system also helps reflect the risk status of various production sites. It reminds workers of the potential dangers present in the workplace, and allows quantifiable targets to be set and improved upon. In the short term, the system helps eliminate risks as soon as they are discovered; in the long run, it enables management to better plan its risk controls and implementation.

Lite-On will be introducing new business continuity management to make sure that the company can resume operations rapidly and remain competitive when facing any disaster. At the current stage, the company is focused on developing a Business Continuity Plan (BCP) that achieves the following benefits:

Ensure business recoverability and sustainability; reduce overall operational risks and maintain competitiveness.
Provide assurances to customers and secure or even expand market share.
Protect the company’s reputation and shareholders’ interests.
Reduce costs of supply chain management and create industry service value.

The PDCA Cycle

‧ Risk Management Projects

In order to address external and operational risks of higher occurrence or impact, Lite-On has implemented a risk management plan throughout all plant sites that focuses on “Raising Safety Awareness,” “Protecting Critical Assets,” and “Establishing Safety Systems and Rules.” Apart from raising risk awareness within Lite-On, the company has also executed a number of risk management projects that not only help identify dangers within various production centers, but also provides suggestions for future improvements. Through one project at a time, Lite-On is able to accomplish the overall goal of its risk management, and build a foundation for sustainable operations.

‧ Raising Safety Awareness

The Risk Management Department arranges regular training and seminars featuring the use of case studies to help employees learn from past mistakes, and hence raise their awareness towards safety and risk management.

‧ Protecting Critical Assets

Each year, the company conducts infrared tests on electrical appliances used in plant sites, and performs random checks on their risk management practices to identify areas of weakness and ways of minimizing foreseeable risks. Meanwhile, logistics operations are also inspected regularly to reduce logistics risks. All products that Lite-On offers to its customers undergo stringent internal quality control and are certified by third-parties who scrutinize everything the company does from product design, manufacturing to after-sale liabilities.

‧ Establishing Safety Systems and Rules

Lite-On has been establishing a risk control and checking system since 2009 that aims to grade each property by level of associated risk, and thereby facilitate future assessments and management. Through regular inspections and improvements, Lite-On is able to optimize the risk profiles of its production sites, reducing the possibility of accidents and hence minimizing loss of workers, plant, equipment, raw materials, and operations.

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25 Lite-On Technology Corporation 2016 Annual Report

3.4 Information Regarding Board Members and Management

3.4.1 . The profiles of the directors and the independent directors

2017/04/24

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Proportion of Proportion of Proportion of Proportion of
Other positions
Date of Tenure Date of initial shareholding at the shareholding at shareholding by spouse shareholding under the of the company
Title Nationality Name Sex appointment (year) appointment time of appointment present and underage children title of a third party Important experience (education) or other
(office)
Quantity % Quantity % Quantity % Quantity % companies
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Title	Nationality	Name	Sex	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	Important experience (education)	Other positions of the company or other companies
							Quantity	%	Quantity	%	Quantity	%	Quantity	%

Chairman	R.O.C	Raymond Soong	Male	105.6.24	three	81.05.20	78,908,736	3.38%	79,302,560	3.37%	14,966,064	0.64%	0	0%	Honorary PhD in Management, National Chiao Tung University 2016 ITRI Laureates Chairman & Founder of Lite-On Group/Lite-On Cultural Foundation Member of Board of Councilors, the Doctorate College of Technology, South California (USC) Chief Engineer, Texas Instruments Taiwan Ltd.	Note 1
Vice Chairman	R.O.C	Lite-On Capital Inc. Representative: Warren Chen	Male	105.6.24	three	90.04.19 87.05.19	15,040,803 0	0.64% 0%	15,115,869 8,408,116	0.64% 0.36%	0 3,690,218	0% 0.16%	0 0	0% 0%	Chemical Engineering, Chinese Culture University GCEO of Lite-On Group and CEO of Lite-On Technology Corp. President, Lite-On Electronic Co. Manufacturing Super-Intendant, Texas Instrument	Note 2
Director	R.O.C	Ta-Sung Investment Co., Ltd. Representative: Keh- Shew Lu	Male	105.6.24	three	87.05.19 91.09.01	46,854,554 0	2.01% 0%	47,088,399 0	2.00% 0%	0 0	0% 0%	0 0	0% 0%	Bachelor, EE, National Cheng Kung University Master, EE, Texas Institute of Technology PhD, EE, Texas Institute of Technology Asian Regional President, Senior VP, Texas Instruments Director, VArmour Corp. Ltd.	Note 3
Director	R.O.C	Ta-Sung Investment Co., Ltd. Representative : Vacancy		102.6.19	three	87.05.19	46,854,554	2.01%	47,088,399	2.00%	0	0%	0	0%
Director	R.O.C	Dorcas Investment Co., Ltd. Representative: Joseph Lin	Male	105.6.24	three	90.04.19 96.06.21	6,019,584 0	0.26% 0%	6,049,627 296,640	0.26% 0.01%	0 0	0% 0%	0 0	0% 0%	MBA, University of South California Bachelor, Dept of Mechanical Engineering, UCLA CEO, Dorcas Investment Co., Ltd.	Note 4
Director	R.O.C	Yuan Pao Development & Investment Co. Ltd. Representative : CH Chen	Male	105.6.24	three	93.06.15 93.06.15	39,277,570 0	1.68% 0%	39,473,599 0	1.68% 0%	0 0	0% 0%	0 0	0% 0%	Bachelor, Dept of Mechanical Engineering, National Taiwan University Vice CEO, Texas Instruments Taiwan Ltd. Chairman, Co-tech Copper Foil Corporation Chairman, On-Bright Electronics Incorporated Co., Ltd.	Note 5
Director	R.O.C	Yuan Pao Development & Investment Co. Ltd. Representative : David Lee	Male	105.6.24	three	93.06.15 92.06.17	39,277,570 0	1.68% 0%	39,473,599 1,491	1.68% 0	0 0	0% 0%	0 0	0% 0%	Graduate Institute of Accounting, National Cheng Chi University; Director, representative of Dynacard Co.,Ltd. Director, representative of ADDtek Corporation CFO, Lite-On Semiconductor Corp.	Note 6
Independent Director	R.O.C	Kuo-Feng Wu	Male	105.6.24	three	96.6.21	0	0%	0	0%	0	0%	0	0%	Bachelor, Dept of Economics, National Chung Hsing University, Chairman, KPMG; Senior CPA, KPMG Director, Taipei CPA Association Executive Director, ROC CPA Independent Supervisor, Wistron Corporation, Supervisor, Darfon Corporation Vice Chairman, Financial Accounting Standards Committee, Accounting Research and Development Foundation, Convener, Accounting Practice Committee, Taiwan Accounting Association. Supervisor, Tynsolar Corporation. Chairman, International affairs committee of ROCCPA	Note 7
Independent Director	R.O.C	Harvey Chang	Male	105.6.24	three	96.6.21	0	0%	0	0%	0	0%	0	0%	MBA, The Wharton School, Pennsylvania State University; Bachelor, Dept of Geology, National Taiwan University; President and CEO, Taiwan Mobile; Senior VP and CFO, TSMC; Chairman, China Securities Investment Trust Corp. President, China Development Trust Co. Ltd. ; President, Grand Cathay Securities; Manager, Trust Dept, International Dept, Chiao Tung Bank; Manger, Banking Dept, Morgan Bank Taipei Branch; Associate Manger, Multinational Corporation Dept, Citibank Taipei.	Note 8

Lite-On Technology Corporation 2016 Annual Report

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Title	Nationality	Name	Sex	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	Important experience (education)	Other positions of the company or other companies
							Quantity	%	Quantity	%	Quantity	%	Quantity	%

Independent Director	USA	Edward Yang	Male	105.6.24	three	96.6.21	0	0%	0	0%	0	0%	0	0%	Stanford Executive Program (SEP), Stanford University, USA; Master of EE, Oregon State University, USA; Bachelor of EE, National Cheng Kung University; Independent Director, Focal Tech. Independent Director, Silicon Storage Technology Independent Director, Pericom Semiconductor Commissioner, Advanced Research Advisory Committee, ITRI Commissioner, Research & Development Advisory committee, Institute for Information Industry Commissioner, Advisory Committee of Engineer Department, San Jose State University. VP and CTO, Personal System Product Division, HP Corporation; VP and CTO, Corporate System Product Division, HP Corporation; President, Singapore Network and Telecommunications Business Unit, HP Corporation; Managing Director, Monte Jade Science and Technology Association Managing Director, China Institute of Engineering; Managing Director, Information Service Association of R.O.C. Director, U-System Inc.	Note 9
Independent Director	R.O.C	Albert Hsueh	Male	105.6.24	three	105.6.24	0	0%	0	0%	0	0%	0	0%	Chairman of PricewaterhouseCoopers Taiwan Professor, National Taiwan University of Science and Technology, School of Management	Note 10

Note 1: Chairman, Lite-On Technology Corp., Lite-On Semiconductor Corp., DIODES,INC. and G-Pro Electronics (SH) Co., Ltd.

Chairman, representative of Silitech Technology Corp. and Co-tech Copper Foil Corporation. Director, Lite-On Mobile Pte. Ltd., DYNA International Holding Co.,Ltd., DYNA International Co., Ltd. and LiteOn Semiconductor(HK)LTD.

Director, representative of Lite-On China Holding Co. Ltd.(BVI), Silitech (BVI) Holding Ltd., Silitech (Bermuda) Holding Ltd., Silitech Technology Corp. Ltd., Silitech Technology Corp. Sdn. Bhd., Silitech (Hong Kong) Holding Ltd., Silitech Technologuy(Su Zhou) Ltd. and Xurong Electroinc (Shenzhen) Co., Ltd.

Note 6: Chairman, representative of Taiwan On-Bright Electronics., Ltd. , SyncMOS Technologies International, Inc. and On-Bright Electronics Incorporated

Chairman, On-Bright Electronics (SH) and On-Bright Electronics (Guangzhou)

Director, DYNA International Holding Co., Ltd., DYNA International Co. Ltd., Lite-On Semiconductor (HK) Ltd., On-Bright Electronics (Hong Kong), On-Brilliant Electronics (Hong Kong) Co., Ltd., Lite-On semi (Wuxi) Ltd., G-Pro Electronics (SH) Corp., Ltd. and Lite-On Semi Electronics (Wuxi) Co., Ltd. Director, representative of Lite-On Technology Corp. and Actron Technology Corporation. CEO, Lite-On Semiconductor Corp.

Member of Compensation Committee, Kwong Lung Enterprise Co, Ltd.

Note 2: Vice Chairman, representative of Lite-On Technology Corp.

Director, Lite-On Mobile Pte. Ltd.

Director, representative of Lite-On Semiconductor Corp., Lite-On China Holding Co., Ltd. (BVI), Silitech Technology Corp., Silitech (BVI) Holding Ltd., Silitech (Bermuda) Holding Ltd., Silitech Technology Corp. Ltd., Silitech Technology Corp. Sdn. Bhd., Silitech (Hong Kong) Holding Ltd., Silitech Technologuy(Su Zhou) Ltd. and Xurong Electroinc (Shenzhen) Co., Ltd.

GCEO, Lite-on Technology Corp.

Note 3: Director, representative of Lite-On Technology Corp. and Nuvoton Technology Corp. President and CEO of Diodes Incorporated Co., Ltd.

Note 7: Independent Director, Lite-On Technology Corp. and Wistron Corp. Supervisor, Advantech Corp.

Note 8: Independent Director, Lite-On Technology Corp.

Note 9: Independent director, Lite-On Technology Corp. Chairman, GVT fund Director, Applied BioCode Partner, iD Ventures America, LLC

Note 4: Director, representative of Lite-On Technology Corp.

Note 10: Independent director, Lite-On Technology Corp., Yuanta Financial Holding Co., Ltd., Walsin Lihwa Corp. and TTY Biopharmaceutial Manufacturers Association

Note 5: Vice Chairman, DIODES, INC. and Lite-On Semiconductor Corp.

Director, G-Pro Electronics (SH) Corp., Ltd., DYNA International Holding Co., Ltd., DYNA International Co., Ltd., Lite-On semiconductor (HK) Ltd, and CO-TECH DEVELOPMENT CORP.

Director, representative of Lite-On Technology Corp. and Kwong Lung Enterprise Co, Ltd.

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29 Lite-On Technology Corporation 2016 Annual Report

2017/4/24

3.4.2. 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			Yes	v	-	-	-	-	-	V	V	V	V	0
Representative of Lite-On Capital Inc.: Warren Chen			Yes	-	-	-	-	-	-	V	V	V	-	0
Representative of Dorcas Investment Co., Ltd.: Joseph Lin			Yes	V	-	V	V	V	V	V	V	V	-	0
Representative of Ta-Sung Investment Co., Ltd.: Keh-Shew Lu			Yes	V	-	V	V	V	-	V	V	V	-	0
Representative of Yuan Pao Development & Investment Co., Ltd.: CH Chen			Yes	v	-	V	V	V	-	V	V	V	-	0
Representative of Yuan Pao Development & Investment Co., Ltd.: David Lee			Yes	-	-	V	V	V	-	V	V	V	-	0
Kuo-Feng Wu		Yes	Yes	V	V	V	V	V	V	V	V	V	V	1
Harvey Chang			Yes	V	V	V	V	V	V	V	V	V	V	0
Edward Yang			Yes	V	V	V	V	V	V	V	V	V	V	0
Albert Hsueh	Yes	Yes	Yes	V	V	V	V	V	V	V	V	V	V	3

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 “V”.

(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.

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31 Lite-On Technology Corporation 2016 Annual Report

3.4.3 Profile of the Management Team

Date: 2016/04/24

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Title Nationality Name Date of Proportion of Proportion of Proportion of Major Background Information (note 2) Other positions of other companies
(Note 1) appointment shareholding shareholding by spouse shareholding under the
(office) and underage children title of a third party
shares % shares % shares %
----- End of picture text -----

Title (Note 1)	Nationality	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
				shares	%	shares	%	shares	%

Vice Chairman/GCEO	Republic of China	Warren Chen	2002.11.04	8,408,116	0.36%	3,690,218	0.16%	0	0%	Department of Chemical Engineering/University of Chinese Culture, CEO, Lite-On Technology Corporation.	Refer to the profles of directors for detail
New Business CEO	Republic of China	Danny Liao	2013.06.19	2,751,129	0.12%	0	0%	0	0%	MBA, Lake Superior State University; CEO, Lite-On IT Corporation	Director, Silitech Technology Corp.
Business Group President	Republic of China	Shilung Chiang	2002.11.04	483,647	0.02%	404,006	0%	0	0%	MBA, University of Pittsburgh; President, Computer Business Division, Digital Corporation.	None
Operation Controlling General Manager	Republic of China	DI Wang	2002.11.04	1,542,657	0.07%	17,136	0%	0	0%	Ph.D, Northeastern University/Mathematics; VP in Sales Engineering, Potrans Electrical Corp.	None
HR General Manager	Republic of China	Albert Chang	2002.11.04	884,416	0.04%	293,981	0.01%	0	0%	Master of Industrial Management, National Cheng Kung University; ABIT U.S. Branch President	Director, Lite-On China Holding Co. Ltd. Director, Lite-On Semiconductor Corp.
Business Group President	Republic of China	Rex Chuang	2002.11.04	1,237,894	0.05%	578,128	0.02%	0	0%	Electronic Engineering, Hsin Pu Industrial Vocational School VP of production, Lite-On Electronics Corp.,	None
VP	Republic of China	Henry Chen	2003.11.01	54,901	0%	0	0%	0	0%	Graduate Institute of Electrical Engineering, Tatung University; Project Manager, Mustek Systems.	None
VP	US	Wing Eng	2002.11.04	2,508,949	0.11%	0	0%	0	0%	Master of Electrical Engineering, Stanford University; Director of Design Dept, AT&T Bell Lab.	None
VP	Republic of China	HY Lee	2002.11.04	546,973	0.02%	26,014	0%	0	0%	Master of Industrial Engineering, National Ching Hua University; Asst VP, Universal Microelectronics	None
VP	Republic of China	Victor Hsu	2012.11.27	82,985	0%	0	0%	0	0%	University of Illinois at Urbana-Champaign/MBA; Group CFO of Samson Holding Ltd.	Director, Logah Technology Corp.
VP	Republic of China	Joseph SK Chen	2013.01.02	83,310	0%	23,955	0%	0	0%	Department of Electronics, Taipei Tech College. VP of CPBU, Sysgration Corporation Ltd.	None
VP	Republic of China	Johnson Wang	2013.06.03	103,087	0%	0	0%	0	0%	Master of Chemistry, National Ching Hua University; SCM VP, EATON PHOENIXTEC MMPL CO., LTD.	None
Senior VP	Republic of China	Anson Chiu	2013.08.19	275,020	0%	0	0%	0	0%	Department of Industrial Management, Lunghwa University of Science and Technology. Procure ment Specialist, Crownpo Technology Inc.	Director, Dragonjet Corp.
VP	Republic of China	BC Liao	2013.08.19	358,660	0.02%	10,124	0%	0	0%	Industrial Management, Chung Yuan Christian University; Procurement Manager, Philips;	None
VP	Republic of China	Jerry Hsu	2013.08.19	591,258	0.03%	303,057	0%	0	0%	Department of Electronics, Lunghwa University of Science and Technology. Engineer of power support design, ALITECH CO., LTD	None

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33 Lite-On Technology Corporation 2016 Annual Report

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Title (Note 1)	Nationality	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
				shares	%	shares	%	shares	%

VP	Republic of China	CY Chung	2013.10.02	172,908	0%	55	0%	0	0%	Industrial Management, National Cheng Kung University; Acting SBG Head, Hon Hai Precision Industrial Corp.	None
VP	Republic of China	Joe Wu	2014.03.20	742	0%	0	0%	0	0%	Biomedical Engineering , Chung Yuan Christian University. AVP, First International Computer, Inc.	None
VP	Republic of China	Michael Wang	2014.06.13	138,280	0%	0	0%	0	0%	Master of Information Engineering, Tamkang University.General Manager,Lite-On Automotive Corp.	None
VP	Republic of China	TsungCheng Wang	2014.06.13	50,025	0%	0	0%	0	0%	Ph.D, Mechanical Eng,Wayne State University.General Manager,Lite-On Automotive Corp.	None
Business Group CEO	Republic of China	Charlie Tseng	2014.08.12	30,733	0%	0	0%	0	0%	EMBA,National Chiao Tung University.CEO, Lite-On IT Corporation	Director, Silitech Technology Corp. Director, Dragonjet Corp.
VP	Republic of China	David Yeh	2014.08.12	68,339	0%	0	0%	0	0%	Master of Administration,Tulane University.General Manager,Leotek Electronics Corp.	None
VP	Republic of China	Chino Chen	2014.09.01	0	0%	0	0%	0	0%	Master of Mechanical Engineering , National Taiwan University.MTD Director, Lite-On IT Corporation	None
Chief Audit Offcer	Republic of China	Lando Lin	2014.10.01	583,820	0.02%	724	0%	0	0%	Department of Accounting,Feng Chia University.Special Assistant,Lite- On Tech. Co.	None
VP	Republic of China	Hai Huang	2015.01.01	118,453	0.01%	0	0%	0	0%	Department of Electronic Engineering,National Taiwan Ocean University. Business Unit Director,Lite-On Tech. Co.	None
VP	Republic of China	Jean Hong	2015.09.07	0	0%	0	0%	0	0%	MBA,Preston University.AVP, Finance Dept,Lite-On Technology Corporation.	None
VP	Republic of China	Allen Hsu	2015.11.02	1,639,140	0.07%	0	0%	0	0%	Master of Institute of Computer Science and Engineering,National Chiao Tung University.Special Assistant,Senao Networks,Inc.	None
Business Group CEO	Republic of China	Tom Soong	2016.06.16	5,420,287	0.23%	15708	0%	0	0%	University of Southern California/Electrical Engineering WI Happer Business Development VP	None
Chief Finance and Accounting Offcer Finance General Manager	Republic of China	Brownson Chu	2004.10.22	829,378	0.04%	588	0%	0	0%	Department of Accounting, Feng Chia University; CFO, Finance Dept, Lite-On IT Corporation	Director, Logah Technology Corp. Director, Dragonjet Corp.

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.

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35 Lite-On Technology Corporation 2016 Annual Report

3.5 Internal Control System Execution Status

3.5.1 Statement of Internal Control System

3.5.2 If CPA was Engaged to Conduct a Special Audit of Internal Control System,

Provide Its Audit Report: None.

Lite-On Technology Corporation

Statement of Internal Control System

Date: February 24, 2017

Based on the findings of a self-assessment, Lite-On Technology Corporation (LOT) states the following with regard to its internal control system during the year 2016:

3.6 Reprimands on the Company and its Staff

Reprimand on the Company and its Staff in Violation of Laws, or Reprimand on its Employees in Violation of Internal Control System and Other Internal Regulations, Major Shortcomings and Status of Correction in the most recent year and up to the publication of the annual report: None.

LOT is fully aware that establishing, operating, and maintaining an internal control system are the responsibilities of its Board of Directors and management. LOT has established such a system to provide reasonable assurance in achieving objectives related to the effectiveness and efficiency of operations (including profits, performance, and safeguarding of assets), reliability, timeliness, transparency, and regulatory compliance of reporting and compliance with applicable laws, regulations, and bylaws.
An internal control system has inherent limitations. An effective internal control system, no matter how perfectly designed, can provide only a reasonable assurance in the accomplishment of the three objectives mentioned above. Furthermore, the effectiveness of an internal control system may change along with changes in environment or circumstances. The internal control system of LOT contains self-monitoring mechanisms, and LOT takes corrective actions as soon as a deficiency is identified.
LOT evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the “Regulations Governing the Establishment of Internal Control Systems by Public Companies ” (herein referred to as “Regulations”). The internal control system evaluation criteria stated in the Regulations classify internal control into five key elements based on the process of management control: 1. control environment, 2. risk assessment, 3. control activities, 4. information and communications, and 5.monitoring. Each component further contains several items. Please refer to the Regulations for details.
LOT has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.
Based on the findings of the evaluation mentioned in the preceding paragraph, LOT believes that as at December 31, 2016, its internal control system (including its supervision and management of subsidiaries), which encompasses internal controls for the knowledge of the degree of achieving operational effectiveness and efficiency objectives, reliability, timeliness, transparency, and regulatory compliance of reporting and compliance with applicable laws, regulations, and bylaws, was effectively designed and operated and reasonably assured the achievement of the above-stated objectives.
This Statement will form an integral part of LOT’s Annual Report and Prospectus and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171 and 174 of the Securities and Exchange Act.
This Statement has been passed by the LOT Board of Directors’ Meeting on February 24, 2017, where all of the ten attending directors did not express any dissenting opinion and affirmed the content of this Statement.

Lite-On Technology Corporation

Raymond Soong Chairman

Warren Chen CEO

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Capital and Shares

4.1 The Top-10 Shareholders and Information of Related Parties

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2017/4/24
Specify the names and relations of the
top-10 shareholders who are related-
Shareholding by spouse and Shareholding under the title of
Shareholding by self parties as stated in SFAS No. 6, or spouse
Name underage children a third party or kindred within the 2nd tier under the
Civil Code
Quantity of Proportion of Quantity of Proportion of Quantity of Proportion of Title Relation
shares shareholding shares shareholding shares shareholding (or name)
----- End of picture text -----

Name	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	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
	Quantity of shares	Proportion of shareholding	Quantity of shares	Proportion of shareholding	Quantity of shares	Proportion of shareholding	Title (or name)	Relation

Ta-Rong Investment Co., Ltd.	85,402,698	3.63%	0	0%	0	0%	Raymond Soong	Director
Ta-Rong Investment Co., Ltd. Representative: Shu- Yan Tsai	44,287	0%	0	0%	0	0%	Ming-Hsing /Ta-Sung/ Yuan Pao Development ( Investment Co., Ltd. )	Representative/ Director
Raymond Soong	79,302,560	3.37%	14,966,064	0.64%	0	0%	Ming-Hsing /Ta- RongTa-Sung /Yuan Pao Development ( Investment Co., Ltd. )	Director
CAPITAL SECURITIES NOMINEE LIMITED	68,186,505	2.90%	0	0%	0	0%	None	None
Ta-Sung Investment Co., Ltd.	47,088,399	2.00%	0	0%	0	0%	Raymond Soong、 Shu- Yan Tsai	Director/ Representative
Ta-Sung Investment Co., Ltd. Representative: Keh- Shew Lu	0	0%	0	0%	0	0%	None	None
Ming-Hsing Investment Co., Ltd.	45,405,330	1.93%	0	0%	0	0%	Raymond Soong	Director
Ming-Hsing Investment Co., Ltd. Representative: Shu- Yan Tsai	44,287	0%	0	0%	0	0%	Ta-Rong /Ta-Sung/Yuan Pao/Development ( Investment Co., Ltd. )	Representative/ Director
Yuan Pao Development & Investment Co. Ltd.	39,473,599	1.68%	0	0%	0	0%	Raymond Soong, 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	1,491	0%	0	0%	0	0%	None	None
VANGUARD EMERGING MARKETS STOCK INDEX FUND, A SERIES OF VANGUARD INTERNATIONAL EQUITY INDEX FUNDS	37,992,646	1.62%	0	0%	0	0%	None	None
ROBECO CAPITAL GROWTH FUNDS	37,168,964	1.58%	0	0%	0	0%	None	None
Government of Singapore	33,936,807	1.44%	0	0%	0	0%	None	None
GMO Emerging Markets Fund	31,599,141	1.34%	0	0%	0	0%	None	None

4.2 The Structure of Shareholders

4.2 The Structure of Shareholders	4.2 The Structure of Shareholders	4.2 The Structure of Shareholders	4.2 The Structure of Shareholders	4.2 The Structure of Shareholders	4.2 The Structure of Shareholders	4.2 The Structure of Shareholders	4.2 The Structure of Shareholders
2017/7/24
	Governmental Organizations	Financial Institutions	Other Institutional Investors	Individuals	Foreign Institutional Shareholders and Individuals	The People's Republic of China Individuals	Total
Numbers of Shareholders	6	18	286	133,607	1,058	0	134,975
Holding Shares	133	40,758,952	427,252,133	436,885,640	1,445,970,174	0	2,350,867,032
Holding Stake	0%	1.73%	18.18%	18.58%	61.51%	0%	100%

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

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Title (note 1) Name 2016 Current period to April 24
Change in Change in number Change in Change in number
number of of shares pledged number of of shares pledged
shareholdings under lien shareholdings under lien
----- End of picture text -----

Title (note 1)	Name	2016	2016	Current period to April 24	Current period to April 24
		Change in number of shareholdings	Change in number of shares pledged under lien	Change in number of shareholdings	Change in number of shares pledged under lien
Chairman	Raymond Soong	393,824	0	0	0
Vice Chairman	Lite-ON Capital Inc.	75,066	0	0	0
	Representative: Warren Chen	(219,245)	0	0	0
Director	Dorcas Investment Co., Ltd	30,043	0	0	0
	Representative:Joseph Lin	1,473	0	0	0
Director	Ta Sung Investment Co., Ltd.	233,845	0	0	0
	Representative: Keh Shew Lu	0	0	0	0
Director	Ta Sung Investment Co., Ltd.	233,845	0	0	0
Director	Yuan Pao Development & Investment Co., Ltd.	2,396,029	0	0	0
	Representative: CH Chen	0	0	0	0
Director	Yuan Pao Development & Investment Co., Ltd.	2,396,029	0	0	0
	Representative: David Lee	(4,993)	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
Independent Director	Albert Hsueh	0	0	0	0
Vice Chairman/ GCEO	Warren Chen	(219,245)	0	0	0
New Business CEO	Danny Liao	8,662	0	0	0
Business Group President	Shilung Chiang	88,449	0	(211,000)	0
Operation Controlling General Manager	DI Wang	19,660	0	0	0
HR General Manager	Albert Chang	125,534	0	(18,000)	0

Title (note 1)	Name	2016	2016	Current period to April 24	Current period to April 24
		Change in number of shareholdings	Change in number of shares pledged under lien	Change in number of shareholdings	Change in number of shares pledged under lien
Business Group President	Rex Chuang	(94,853)	0	0	0
VP	Henry Chen	(47,470)	0	(31,000)	0
VP	Wing Eng	82,459	0	0	0
VP	HY Lee	51,431	0	(144,000)	0
VP	Victor Hsu	9,635	0	(45,000)	0
VP	Joseph SK Chen	597	0	(19,000)	0
VP	Johnson Wang	2,511	0	0	0
Senior VP	Anson Chiu	85,365	0	0	0
VP	BC Liao	46,781	0	0	0
VP	Jerry Hsu	(294,064)	0	0	0
VP	CY Chung	87,858	0	0	0
VP	Joe Wu	(19,694)	0	(25,000)	0
VP	Michael Wang	67,686	0	0	0
VP	TsungCheng Wang	(1,752)	0	0	0
Business Group CEO	Charlie Tseng	64,733	0	(81,000)	0
VP	David Yeh	28,339	0	0	0
VP	Chino Chen	(48,566)	0	(51,434)	0
Chief Audit Offcer	Lando Lin	60,899	0	0	0
VP	Hai Huang	(136,310)	0	(40,000)	0
VP	Jean Hong	73,364	0	(73,364)	0
VP	Allen Hsu	8,140	0	0	0
Business Group CEO	Tom Soong	210,917	0	0	0
Chief Finance and Accounting Offcer Finance General Manager	Brownson Chu	6,360	0	(150,000)	0

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41 Lite-On Technology Corporation 2016 Annual Report

Financial Information

5.1 Consolidated Financial Statements of 2016

Lite-On Technology Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2016 and 2015 and Independent Auditors’ Report

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For the year ended December 31, 2016, the key audit matters to the Group’s consolidated financial statements were as follows:

Allowance for impairment loss for trade receivables

The recoverable amount from the allowance for impairment loss is determined by management’s evaluation of the credit risk of overdue receivables, and it is affected by management’s assumption of a client’s credit quality. In our audit, we focused on clients with significant trade receivables and overdue balances, and we evaluated the reasonableness of management’s estimation of the allowance for impairment loss.

For a summary of the significant accounting policies on impairment loss for trade receivables, refer to Note 4 to the consolidated financial statements. Refer to Note 10 to the consolidated financial statements for the carrying amount of trade receivables. Our audit procedures for the aforementioned key audit matter are described as follows:

We assessed both the trade receivables aging report classified by client credit rating and the reasonableness of the percent of impairment loss allowance; this assessment included the implementation of the computer audit sampling procedures to test the correctness of the trade receivable aging report. We compared the aging reports of current and prior accounting periods and examined both periods’ bad debt write-offs. We confirmed the recoverability of outstanding trade receivables by testing the after period end collection of receivables.
We reviewed the approval of client credit terms and examined reversals in the trade receivables subledger in order to assess the effectiveness of internal controls relevant to trade receivables.

Allowance for inventory valuation loss

The value of the inventory is affected by the volatility of the market demand and the ever-changing technology which could make inventory outdated and obsolete. The allocation of inventory cost elements and estimations of the net realizable value of inventory require management’s subjective judgment. In our audit, we focused on if the value of inventory was evaluated according to IAS 2, which is based on the lower of cost or net realizable value method. We also assessed the reasonableness of management’s estimation of the allowance for inventory valuation loss.

For a summary of the significant accounting policies on inventory valuation, refer to Note 4 to the consolidated financial statements. Refer to Note 11 to the consolidated financial statements for the carrying amount of inventory. Our audit procedures for the aforementioned key audit matter are described as follows:

We assessed both the inventory aging report classified by product types and the reasonableness of the percent of allowance for inventory valuation loss; this assessment included the implementation of the computer audit sampling procedures to test the correctness of the inventory aging report. We compared the amount of allowances in prior years to the actual amount of write-downs in order to evaluate the appropriateness of the policy implemented relevant to the allowance for inventory valuation loss.
We obtained information of the year-end allowance for inventory valuation loss and inventory aging reports, and we compared the current and prior years’ allowances and analyzed any differences. We drew samples from the year-end inventory and compared the most recent price of goods sold to the carrying amount to ensure that the inventory had been valued by the lower of cost or net realizable value method.

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45 Lite-On Technology Corporation 2016 Annual Report

We obtained year-end inventory quantities from the inventory accounts book and compared it with data from the physical inventory count to test the existence and completeness of management’s assumption. Through the physical inventory count, we evaluated the conditions of the inventory and, in turn, the appropriateness of the allowance estimated by management.

Impairment loss for property, plant and equipment and intangible assets (including goodwill)

Management should assess, on the financial statements date, any indication of impairment to property, plant and equipment, and to intangible assets. If there is any indication of impairment, management should estimate the recoverable amount of these assets. If it is impossible to do so, management should estimate the recoverable amount of the cash generating units to which these assets belong. Due to the complexity of this impairment estimation, in our audit, we focused on if the estimation was made in accordance with IAS 36 to ensure all assets’ carrying amounts did not exceed their recoverable amounts.

For a summary of the significant accounting policies on property, plant and equipment and intangible assets impairment, refer to Note 4 to the consolidated financial statements. Refer to Notes 14 and 16 to the consolidated financial statements for disclosures of property, plant and equipment, and intangible assets. Our audit procedures for the aforementioned key audit matter are described as follows:

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRS, IAS, IFRIC and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Through internal control testing, we understood the methods of asset impairment valuation made by management and the associated control policy’s design and implementation.
We obtained the asset impairment valuation table of each cash generating unit from management. We consulted our firm experts on the reasonableness of management’s impairment assessments and assumptions, including their cash generating unit classification, cash flow prediction, discount rate, etc.

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

Litigation provisions and contingent liabilities

In Note 32 to the consolidated financial statements, management has disclosed the progress of major ongoing litigations, investigations, and other government related matters. The timing of the recognition and quantification of the associated liabilities require the application of management’s significant judgment on existing facts and circumstances, which can be subject to change. Therefore, we focused on if provisions and contingent liabilities were recognized according to IAS 37 and ensured that sufficient disclosures and explanations of these contingencies were in the Group’s notes to consolidated financial statements. Our audit procedures for the aforementioned key audit matter are described as follows:

We understood and assessed the effectiveness of the controls designed and executed by management to recognize and assess risks.
We evaluated the assumptions made by management in assessing the appropriate level of provisions for litigations. We compared these assumptions with that of available industry-specific and historical information, including reviewing the Group’s internal documents relevant to provisions.
We corresponded by mail with the Group’s external lawyers to obtain the latest information on ongoing litigations and other legal matters, and we tested the reasonableness of management’s assumptions.

Other Matter

We have also audited the parent company only financial statements of Lite-On Technology Corporation as of and for the years ended December 31, 2016 and 2015 on which we have issued an unmodified opinion.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

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CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2016 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Jr-Shian Ke and Ching-Fu Chang.

Deloitte & Touche Taipei, Taiwan Republic of China

February 24, 2017

Notice to Readers

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

For the convenience of readers, the independent 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 independent auditors’ report and consolidated financial statements shall prevail.

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss (Note 7) Debt instruments with no active market (Note 9) Notes receivable Trade receivables, net (Note 10) Trade receivables from related parties (Note 30) Other receivables Other receivables from related parties (Note 30) Inventories, net (Note 11) Other current assets (Note 17) Total current assets NONCURRENT ASSETS Available-for-sale financial assets (Note 8) Debt instruments with no active market (Note 9) Investments accounted for using equity method (Note 13) Property, plant and equipment, net (Note 14) Investment properties, net (Note 15) Intangible assets, net (Note 16) Deferred tax assets (Note 24) Refundable deposits Prepaid investment Other noncurrent assets (Note 17) Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 18) Financial liabilities at fair value through profit or loss (Note 7) Notes payable Trade payables Trade payables to related parties (Note 30) Other payables Other payables to related parties (Note 30) Current tax liabilities Provisions (Note 20) Advance receipts Current portion of long-term borrowings (Note 18) Finance lease payables (Note 19) Total current liabilities NONCURRENT LIABILITIES Long-term borrowings, net of current portion (Note 18) Deferred tax liabilities (Note 24) Finance lease payables, net of current portion (Note 19) Net defined benefit liabilities (Note 21) Guarantee deposits Credit balance of investments accounted for using equity method (Note 13) Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY Share capital Ordinary shares Capital surplus Additional paid-in capital from share issuance in excess of par value Bond conversion Treasury stock transactions Difference between consideration and carrying amounts adjusted arising from changes in percentage of ownership in subsidiaries Change in capital surplus from investments in associates and joint ventures accounted for using equity method Merger Total capital surplus Retain earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translating foreign operations Unrealized loss on available-for-sale financial assets Total other equity Treasury shares Total equity attributable to owners of the Parent Company NON-CONTROLLING INTERESTS Total equity TOTAL		2016		2015
		Amount % $ 65,208,491 31 173,068 - 802,348 - 374,182 - 60,829,435 29 60,178 - 1,093,853 1 5,840 - 26,756,909 13 2,619,735 1 157,924,039 75 658,655 - 684,614 - 3,810,433 2 27,826,214 13 429,790 - 15,209,734 7 3,041,666 2 510,142 - 4,457 - 757,044 1 52,932,749 25 $ 210,856,788 100 $ 14,386,282 7 128,685 - 18,473 - 64,139,696 30 1,004,079 - 22,541,026 11 9,428 - 3,186,867 2 1,032,113 - 1,981,913 1 7,890,899 4 1,657 - 116,321,118 55 12,039,170 6 2,932,121 1 3,646 - 189,104 - 88,629 - 2,564 - 15,255,234 7 131,576,352 62 23,508,670 11 9,372,488 4 7,462,138 4 328,800 - 45,612 - 273,487 - 10,015,194 5 27,497,719 13 10,845,332 5 398,602 - 16,252,206 8 27,496,140 13 (1,195,684 ) (1 ) (126,588) - (1,322,272) (1) (1,248,722) - 75,931,535 36 3,348,901 2 79,280,436 38 $ 210,856,788 100		Amount % $ 65,501,807 31 53,211 - 439,811 - 300,825 - 50,079,869 24 66,338 - 1,289,849 1 10,481 - 28,826,436 14 3,744,824 2 150,313,451 72 670,328 - 255,458 - 4,095,167 2 33,389,439 16 499,950 - 15,938,232 8 3,164,798 2 579,758 - - - 747,282 - 59,340,412 28 $ 209,653,863 100 $ 17,670,878 8 55,945 - 178,594 - 58,224,636 28 856,945 - 21,118,958 10 12,941 - 2,475,535 1 1,068,810 1 3,275,828 2 4,796,118 2 95,501 - 109,830,689 52 16,355,753 8 3,531,564 2 5,398 - 155,854 - 91,012 - - - 20,139,581 10 129,970,270 62 23,349,283 11 9,251,603 4 7,462,138 4 275,516 - 43,236 - 278,747 - 10,015,194 5 27,326,434 13 10,123,042 5 232,213 - 13,011,073 6 23,366,328 11 3,347,902 2 (152,714) - 3,195,188 2 (1,248,722) (1) 75,988,511 36 3,695,082 2 79,683,593 38 $ 209,653,863 100

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

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE Sales (Notes 23 and 30) Less: Sales allowance Sales returns Total operating revenue COST OF GOODS SOLD (Notes 11, 26 and 30) GROSS PROFIT OPERATING EXPENSES (Notes 26 and 30) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATING INCOME NONOPERATING INCOME AND EXPENSES Share of profit of associates Interest income Dividend income Other income (Notes 27 and 30) Net gain (loss) on disposal of investments Net gain on foreign currency exchange Net gain on financial assets at fair value through profit or loss Finance costs Other expenses Net loss on disposal of property, plant and equipment Impairment loss (Notes 8, 14 and 16) Total nonoperating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 24) NET PROFIT FOR THE YEAR		2016 Amount % $ 235,674,455 103 5,033,596 2 1,069,101 1 229,571,758 100 198,313,490 86 31,258,268 14 6,431,916 3 6,013,521 3 6,103,571 3 18,549,008 9 12,709,260 5 82,626 - 1,182,862 1 19,031 - 1,119,464 - 5,957 - 173,194 - 325,208 - (556,837) - (1,879,140) (1) (31,530) - (507,068) - (66,233) - 12,643,027 5 (3,270,463) (1) 9,372,564 4		2015
				Amount % $ 222,826,970 103 4,258,037 2 1,640,199 1 216,928,734 100 188,787,517 87 28,141,217 13 7,450,517 3 6,051,269 3 5,986,608 3 19,488,394 9 8,652,823 4 124,439 - 1,170,008 - 66,500 - 1,573,429 1 (71,351) - 123,658 - 360,034 - (578,715) - (1,087,531) (1) (15,465) - (311,188) - 1,353,818 - 10,006,641 4 (2,693,809) (1) 7,312,832 3 (Continued)

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

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

OTHER COMPREHENSIVE INCOME (Notes 21, 22 and 24) Items that will not be reclassified subsequently to profit or loss Remeasurement of defined benefit plans Share of the other comprehensive loss of associates accounted for using equity method Income tax relating to items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations Unrealized gain (loss) on available-for-sale financial assets Unrealized gain on hedging instruments determined to be the effective portion of cash flow hedging Share of the other comprehensive loss of associates accounted for using equity method Income tax relating to items that may be reclassified subsequently to profit or loss Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET PROFIT ATTRIBUTABLE TO: Owners of the Parent Company Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Parent Company Non-controlling interests		2016 Amount % $ (41,921) - (15,770) - 1,633 - (56,058) - (5,336,188) (2) 49,389 - - - (288,338) - 845,209 - (4,729,928) (2) (4,785,986) (2) $ 4,586,578 2 $ 9,416,351 4 (43,787) - $ 9,372,564 4 $ 4,845,911 2 (259,333) - $ 4,586,578 2		2015
				Amount % $ (75,240) - (25,529) - 15,604 - (85,165) - (932,034) - (292,354) - 11,989 - (27,849) - 130,178 - (1,110,070) - (1,195,235) - $ 6,117,597 3 $ 7,222,899 3 89,933 - $ 7,312,832 3 $ 6,080,431 3 37,166 - $ 6,117,597 3

(Continued)

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

EARNINGS PER SHARE (NEW TAIWAN DOLLARS; Note 25) Basic Diluted	2016 Amount % $4.05 $4.00	2015
		Amount % $3.10 $3.05

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

10 -

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

							Equity Att	ributable to Own	ers of the ParentCompany	ers of the ParentCompany
Issue of Share (Notes 22 a	Capital nd 26) Amount $ 23,416,737 - - - 117,084 - - - 43,332 - - - - (227,870) 23,349,283 - - - 116,746 - - - - 42,641 - - - - $ 23,508,670			CapitalSurplus (Note 22)				Total $ 27,594,927 - - - - - 12,276 47,301 102,960 47,779 - - - (478,809) 27,326,434 - - - - - - 2,376 (5,260 ) 120,885 53,284 - - - $ 27,497,719		Retained Earnings (Note 22)	Total $ 20,959,086 - - (4,613,097 ) (117,084 ) - - - - - 7,222,899 (85,476) 7,137,423 - 23,366,328 - - (5,113,493 ) (116,746 ) - - - - - - 9,416,351 (56,300) 9,360,051 $ 27,496,140		Other Equity (Note 22)		Total $ 4,252,180 - - - - - - - - - - (1,056,992) (1,056,992) - 3,195,188 - - - - (3,320 ) - - - - - - (4,514,140) (4,514,140) $ (1,322,272)
		P	Additional aid-in Capital from Share Issuance in Excess of Par Value $ 9,238,931 - - - - - - - 102,960 - - - - (90,288) 9,251,603 - - - - - - - - 120,885 - - - - $ 9,372,488	Bond Treasury Stock Conversion Transactions $ 7,534,962 $ 445,694 - - - - - - - - - - - - - - - - - 47,779 - - - - - - (72,824) (217,957) 7,462,138 275,516 - - - - - - - - - - - - - - - - - - - 53,284 - - - - - - $ 7,462,138 $ 328,800	Difference Between Consideration and Carry Amounts Adjusted Arising from Changes in Percentage of Ownership in Subsidiaries $ 30,960 - - - - - 12,276 - - - - - - - 43,236 - - - - - - 2,376 - - - - - - $ 45,612	Arising from Share of Changes in Capital Surplus of Associates $ 231,446 - - - - - - 47,301 - - - - - - 278,747 - - - - - - - (5,260 ) - - - - - $ 273,487	Merger $ 10,112,934 - - - - - - - - - - - - (97,740) 10,015,194 - - - - - - - - - - - - - $ 10,015,194
												Exchange Differences on Translating Foreign Operations $ 4,125,097 - - - - - - - - - - (777,195) (777,195) - 3,347,902 - - - - (3,320 ) - - - - - - (4,540,266) (4,540,266) $ (1,195,684)	Unrealized Gain (Loss) on Available-for- sale Financial Assets $ 139,072 - - - - - - - - - - (291,786) (291,786) - (152,714 ) - - - - - - - - - - - 26,126 26,126 $ (126,588)	Cash Flow Hedges $ (11,989 ) - - - - - - - - - - 11,989 11,989 - - - - - - - - - - - - - - - $ -
Shares (In Thousands) 2,341,674 - - - 11,708 - - - 4,333 - - - - (22,787) 2,334,928 - - - 11,675 - - - - 4,264 - - - - 2,350,867									Legal Reserve $ 9,476,876 646,166 - - - - - - - - - - - - 10,123,042 722,290 - - - - - - - - - - - - $ 10,845,332	Special Unappropriated Reserve Earnings $ 49,669 $ 11,432,541 - (646,166 ) 182,544 (182,544 ) - (4,613,097 ) - (117,084 ) - - - - - - - - - - - 7,222,899 - (85,476) - 7,137,423 - - 232,213 13,011,073 - (722,290 ) 166,389 (166,389 ) - (5,113,493 ) - (116,746 ) - - - - - - - - - - - - - 9,416,351 - (56,300) - 9,360,051 $ 398,602 $ 16,252,206

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

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LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Impairment loss recognized (reversal of impairment loss) on trade receivables Net gain on fair value change of financial assets designated as at fair value through profit or loss Finance costs Interest income Dividend income Share of profit of associates accounted for using equity method Net loss on disposal of property, plant and equipment Gain on deconsolidation of subsidiaries (Note 27) Net loss (gain) on disposal of available-for-sale financial assets Gain on disposal of associates Impairment loss recognized on financial assets Impairment loss recognized (reversal of impairment loss) on non-financial assets Unrealized net loss (gain) on foreign currency exchange Recognition of provisions Changes in operating assets and liabilities Financial instruments held for trading Notes receivable Trade receivables Trade receivables from related parties Other receivables Other receivables from related parties Inventories Other current assets Notes payable Trade payables Trade payables from related parties Other payables Other payables from related parties Provisions Advance receipts Net defined benefit liabilities Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities	2016 $ 12,643,027 6,340,412 466,983 8,263 (325,208) 556,837 (1,182,862) (19,031) (82,626) 31,530 (7,362) (5,957) - 75,986 32,052 (447,117) 265,905 272,402 (89,627) (11,785,807) 6,160 162,907 4,641 1,396,807 (105,504) (157,351) 7,455,968 147,134 2,711,424 (3,513) (295,397) (1,201,903) (7,514) 16,861,659 1,164,781 19,031 (545,202) (2,987,755) 14,512,514	2015 $ 10,006,641 6,746,130 534,128 (51,276) (360,034) 578,715 (1,170,008) (66,500) (124,439) 15,465 - 79,052 (7,701) 124,667 (52,450) 117,060 286,549 337,471 10,841 890,123 6,731 134,955 (7,428) 821,149 803,571 55,647 (3,654,138) (96,721) 1,159,926 6,200 (301,940) 452,621 (15,407) 17,259,600 1,162,036 66,500 (569,673) (2,366,201) 15,552,262 (Continued)

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

2016
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of available-for-sale financial assets
$ (70,838)
Proceeds on sales of available-for-sale financial assets
55,833
Purchase of debt investments with no active market
(806,369)
Net cash inflow on disposal of associates
-
Net cash inflow on deconsolidation of subsidiaries (Note 27)
307,920
Proceeds from disposal of non-current assets held for sale
-
Payments for property, plant and equipment
(3,764,874)
Proceeds from disposal of property, plant and equipment
287,632
Decrease (increase) in refundable deposits
40,924
Payments for intangible assets
(164,802)
Proceeds from disposal of intangible assets
6,521
Decrease (increase) in other noncurrent assets
(68,332)
Dividend received from associates

89,702

Net cash used in investing activities

(4,086,683)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of short-term borrowings
(3,006,580)
Repayments of long-term borrowings
(1,082,901)
Refund of guarantee deposits received
2,238
Decrease in finance lease payables
(92,029)
Cash dividends
(5,154,394)
Payments for buy-back of ordinary shares
-
Changes on noncontrolling interests

34,321

Net cash used in financing activities

(9,299,345)

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES

(1,419,802)

NET DECREASE IN CASH AND CASH EQUIVALENTS
(293,316)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR

65,501,807

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
$ 65,208,491

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

2015
$ (5,375)

202,200

(619,768)

15,432

-

129,505

(5,150,538)

946,448

(87,503)

(247,234)

24,750

138,859

76,884

(4,576,340)

(5,195,615)

(717,096)

10,141

(86,054)

(4,850,995)

(706,679)

(254,837)
(11,801,135)

(156,336)

(981,549)

66,483,356
$ 65,501,807
(Concluded)

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LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

Lite-On Technology Corporation (the “Parent Company”) was established in March 1989. The Parent Company’s shares have been listed on the Taiwan Stock Exchange. The Parent Company manufactures and markets (1) computer software, hardware, peripherals and components, (2) monitors, multifunction and all-in-one printers, cameras and Internet systems and image-processing equipment; (3) information storage and process equipment, electronic components and office equipment; (4) electronic coils, transformers, power suppliers and electronic hardware parts; (5) light-emitting diode (LED) products; (6) electronic car products; and (7) optical lens modules and optoelectronic components.

The Parent Company merged with Lite-On Electronics, Inc., Silitek Corp. and GVC Corp., with the Parent Company as the surviving 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., with the Parent Company as the surviving entity. The merger took effect on April 1, 2004, and the Parent Company thus assumed all rights and obligations of its former subsidiary on that date.

The Parent Company separately merged with Li Shin International Enterprise Corp., Lite-On Clean Energy Technology Corp., Lite-On Automotive Corp., Leotek Electronics Corp., Lite-On IT Corporation and LarView Technologies Corp., with the Parent Company as the surviving entity. The merger separately took effect on March 22, 2014, April 15, 2014, June 1, 2014, June 29, 2014, June 30, 2014 and September 1, 2014, and the Parent Company thus assumed all rights and obligations of the six merged companies on those date.

The consolidated financial statements are presented in the Parent Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Parent Company’s board of directors on February 24, 2017.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) endorsed by the FSC for application starting from 2017

Rule No. 1050050021 and Rule No. 1050026834 issued by the FSC stipulated that starting January 1, 2017, the Group should apply the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC and SIC (collectively, the “IFRSs”) issued by the IASB and endorsed by the FSC for application starting from 2017.

New, Amended or Revised Standards and Interpretations (the“New IFRSs”) Annual Improvements to IFRSs 2010-2012 Cycle Annual Improvements to IFRSs 2011-2013 Cycle Annual Improvements to IFRSs 2012-2014 Cycle Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities: Applying the Consolidation Exception” Amendment to IFRS 11 “Accounting for Acquisitions of Interests in Joint Operations” IFRS 14 “Regulatory Deferral Accounts” Amendment to IAS 1 “Disclosure Initiative” Amendments to IAS 16 and IAS 38 “Clarification of Acceptable Methods of Depreciation and Amortization” Amendments toIAS 16 and IAS 41 “Agriculture: Bearer Plants” Amendment to IAS 19 “Defined Benefit Plans: Employee Contributions” Amendment to IAS 27 “Equity Method in Separate Financial Statements” Amendment to IAS 36 “Impairment of Assets: Recoverable Amount Disclosures for Non-financial Assets” Amendment to IAS 39 “Novation of Derivatives and Continuation of Hedge Accounting” IFRIC 21 “Levies”	Effective Date Announced by IASB (Note 1)
	July 1, 2014 (Note 2) July 1, 2014 January 1, 2016 (Note 3) January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2016 July 1, 2014 January 1, 2016 January 1, 2014 January 1, 2014 January 1, 2014

New, Amended or Revised Standards and Interpretations
(the“New IFRSs”)
Annual Improvements to IFRSs 2010-2012 Cycle

Annual Improvements to IFRSs 2011-2013 Cycle

Annual Improvements to IFRSs 2012-2014 Cycle

Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities:
Applying the Consolidation Exception”

Amendment to IFRS 11 “Accounting for Acquisitions of Interests in
Joint Operations”

IFRS 14 “Regulatory Deferral Accounts”

Amendment to IAS 1 “Disclosure Initiative”

Amendments to IAS 16 and IAS 38 “Clarification of Acceptable
Methods of Depreciation and Amortization”

Amendments toIAS 16 and IAS 41 “Agriculture: Bearer Plants”

Amendment to IAS 19 “Defined Benefit Plans: Employee
Contributions”

Amendment to IAS 27 “Equity Method in Separate Financial
Statements”

Amendment to IAS 36 “Impairment of Assets: Recoverable Amount
Disclosures for Non-financial Assets”

Amendment to IAS 39 “Novation of Derivatives and Continuation of
Hedge Accounting”

IFRIC 21 “Levies”

Effective Date
Announced by IASB (Note 1)

July 1, 2014 (Note 2)
July 1, 2014
January 1, 2016 (Note 3)
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2016
January 1, 2014
January 1, 2014
January 1, 2014

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

Note 2: The amendment to IFRS 2 applies to share-based payment transactions with grant date on or after July 1, 2014; the amendment to IFRS 3 applies to business combinations with acquisition date on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the remaining amendments are effective for annual periods beginning on or after July 1, 2014.
Note 3: The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that occur in annual periods beginning on or after January 1, 2016; the remaining amendments are effective for annual periods beginning on or after January 1, 2016.

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The initial application in 2017 of the above IFRSs and related amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers would not have any material impact on the Group’s accounting policies, except for the following:

Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers

The amendments include additions of several accounting items and requirements for disclosures of impairment of non-financial assets as a consequence of the IFRSs endorsed by the FSC for application starting from 2017. In addition, as a result of the post implementation review of IFRSs in Taiwan, the amendments also include emphasis on certain recognition and measurement considerations and add requirements for disclosures of related party transactions and goodwill.

The amendments stipulate that other companies or institutions of which the chairman of the board of directors or president serves as the chairman of the board of directors or the president, or is the spouse or second immediate family of the chairman of the board of directors or president of the Group are deemed to have a substantive related party relationship, unless it can be demonstrated that no control, joint control, or significant influence exists. Furthermore, the amendments require the disclosure of the names of the related parties and the relationship with whom the Group has significant transaction. If the transaction or balance with a specific related party is 10% or more of the Group’s respective total transaction or balance, such transaction should be separately disclosed by the name of each related party.

The amendments also require additional disclosure if there is a significant difference between the actual operation after business combination and the expected benefit on acquisition date.

The disclosures of related party transactions and impairment of goodwill will be enhanced when the above amendments are retrospectively applied in 2017.

Except for the above impacts, as of the date the consolidated financial statements were authorized for issue, the Group continues assessing other possible impacts that application of the aforementioned amendments and the related amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers will have on the Group’s financial position and financial performance, and will disclose these other impacts when the assessment is completed.

New IFRSs IFRS 15 “Revenue from Contracts with Customers” Amendments to IFRS 15 “Clarifications to IFRS 15 Revenue from Contracts with Customers” IFRS 16 “Leases” Amendment to IAS 7 “Disclosure Initiative” Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Losses” Amendments to IAS40 “Transfers of Investment Property” IFRIC 22 “Foreign Currency Transactions and Advance Consideration”	Effective Date Announced by IASB (Note 1)
	January 1, 2018 January 1, 2018 January 1, 2019 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2018 (Concluded)

New IFRSs
IFRS 15 “Revenue from Contracts with Customers”

Amendments to IFRS 15 “Clarifications to IFRS 15 Revenue from
Contracts with Customers”

IFRS 16 “Leases”

Amendment to IAS 7 “Disclosure Initiative”

Amendments to IAS 12 “Recognition of Deferred Tax Assets for
Unrealized Losses”

Amendments to IAS40 “Transfers of Investment Property”

IFRIC 22 “Foreign Currency Transactions and Advance
Consideration”

Effective Date
Announced by IASB (Note 1)

January 1, 2018
January 1, 2018
January 1, 2019
January 1, 2017
January 1, 2017
January 1, 2018
January 1, 2018
(Concluded)

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The amendment to IFRS 12 is retrospectively applied for annual periods beginning on or after January 1, 2017; the amendment to IAS 28 is retrospectively applied for annual periods beginning on or after January 1, 2018.

The initial application of the above New IFRSs, whenever applied, would not have any material impact on the Group’s accounting policies, except for the following:

1) IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets

With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are subsequently measured at amortized cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated below.

b. New IFRSs in issue but not yet endorsed by the FSC

The Group has not applied the following IFRSs issued by the IASB but not yet endorsed by the FSC.

The FSC announced that IFRS 9 and IFRS 15 will take effect starting January 1, 2018. As of the date the consolidated financial statements were authorized for issue, the FSC has not announced the effective dates of other new IFRSs.

Effective Date New IFRSs Announced by IASB (Note 1) Annual Improvements to IFRSs 2014-2016 Cycle Note 2 Amendment to IFRS 2 “Classification and Measurement of January 1, 2018 Share-based Payment Transactions” IFRS 9 “Financial Instruments” January 1, 2018 Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of January 1, 2018 IFRS 9 and Transition Disclosures” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” (Continued)

For the Group’s debt instruments that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, their classification and measurement are as follows:

a) For debt instruments, if they are held within a business model whose objective is to collect the contractual cash flows, the financial assets are measured at amortized cost and are assessed for impairment continuously with impairment loss recognized in profit or loss, if any. Interest revenue is recognized in profit or loss by using the effective interest method;
b) For debt instruments, if they are held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of financial assets, the financial assets are measured at fair value through other comprehensive income (FVTOCI) and are assessed for impairment. Interest revenue is recognized in profit or loss by using the effective interest method, and other gain or loss shall be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When the debt instruments are derecognized or reclassified, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

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Except for above, all other financial assets are measured at fair value through profit or loss. However, the Group may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative gain or loss previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss.

Impairment of financial assets

IFRS 9 requires that impairment loss on financial assets is recognized by using the “Expected Credit Losses Model”. The credit loss allowance is required for financial assets measured at amortized cost, financial assets mandatorily measured at FVTOCI, lease receivables, contract assets arising from IFRS 15 “Revenue from Contracts with Customers”, certain written loan commitments and financial guarantee contracts. A loss allowance for the 12-month expected credit losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has increased significantly since initial recognition and is not low. However, a loss allowance for full lifetime expected credit losses is required for trade receivables that do not constitute a financing transaction.

3) IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of related interpretations.

Under IFRS 16, if the Group is a lessee, it shall recognize right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for low-value and short-term leases. The Group may elect to apply the accounting method similar to the accounting for operating lease under IAS 17 to the low-value and short-term leases. On the consolidated statements of comprehensive income, the Group should present the depreciation expense charged on the right-of-use asset separately from interest expense accrued on the lease liability; interest is computed by using effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of the lease liability are classified within financing activities; cash payments for interest portion are classified within operating activities.

When IFRS 16 becomes effective, the Group may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the initial application of this Standard recognized at the date of initial application.

4) IFRIC 22 “Foreign Currency Transactions and Advance Consideration”

For purchased or originated credit-impaired financial assets, the Group takes into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance with a corresponding gain or loss recognized in profit or loss.

Transition

Financial instruments that have been derecognized prior to the effective date of IFRS 9 cannot be reversed to apply IFRS 9 when it becomes effective. Under IFRS 9, the requirements for classification, measurement and impairment of financial assets are applied retrospectively with the difference between the previous carrying amount and the carrying amount at the date of initial application recognized in the current period and restatement of prior periods is not required. The requirements for general hedge accounting shall be applied prospectively and the accounting for hedging options shall be applied retrospectively.

2) IFRS 15 “Revenue from Contracts with Customers”

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and will supersedes IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations.

When applying IFRS 15, an entity shall recognize revenue by applying the following steps:

Identify the contract with the customer;

IAS 21 stipulated that a foreign currency transaction shall be recorded on initial recognition in the functional currency by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. IFRIC 22 further explains that the date of the transaction is the date on which an entity recognizes a non-monetary asset or non-monetary liability from payment or receipt of advance consideration. If there are multiple payments or receipts in advance, the entity shall determine the date of the transaction for each payment or receipt of advance consideration.

The Group shall apply IFRIC 22 either retrospectively or prospectively to all assets, expenses and income in the scope of the Interpretation initially recognized on or after (a) the beginning of the reporting period in which the entity first applies IFRIC 22, or (b) the beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies IFRIC 22.

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance, and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance
Identify the performance obligations in the contract;
Determine the transaction price;
Allocate the transaction price to the performance obligations in the contracts; and
Recognize revenue when the entity satisfies a performance obligation.

When IFRS 15 is effective, an entity may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this Standard recognized at the date of initial application.

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed by the FSC.

b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value.

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The fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3) Level 3 inputs are unobservable inputs for the asset or liability.
c. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Parent Company and the entities controlled by the Parent Company. Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective date of acquisition up to the effective date of disposal, as appropriate. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Parent Company. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Parent Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Parent Company.

When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and any investment retained in the former subsidiary at its fair value at the date when control is lost and (ii) the assets (including any goodwill) and liabilities and any non-controlling interests of the former subsidiary at their carrying amounts at the date when control is lost. The Group accounts for all amounts recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition.

See Note 12 and Table 7 for the detailed information of subsidiaries (including the percentage of ownership and main business).

d. Classification of current and non-current assets and liabilities

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within twelve months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the consolidated financial statements are authorized for issue; and
3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Assets and liabilities that are not classified as current are classified as non-current.

e. Business combinations

Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognized in profit or loss as incurred.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets.

f. Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period. Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income. Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within twelve months after the reporting period; and

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are recognized in other comprehensive income.

3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

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On the disposal of the Parent Company’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset, all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Parent Company are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Parent Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to non-controlling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognized in other comprehensive income.

g. Inventories

Inventories consist of raw materials, work-in-process, finished goods, merchandise, and inventory in transit. 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 weighted-average cost on the balance sheet date.

h. Investment accounted for using equity method

Investment in associates is accounted for using equity method.

An associate is an entity over which the Group has significant influence and that is not a subsidiary. Significant influence is the power to participate in financial and operating policy decisions of an investee, but is not control or joint control over the policies.

Under the equity method, investments in an associate are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate. The Group also recognizes the changes in the Group’s share of equity of associates attributable to the Group.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets and liabilities of an associate at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Group subscribes for additional new shares of the associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’s proportionate interest in the associate. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in the Group’s share of equity of associates. If the Group’s ownership interest is reduced due to the additional subscription of the new shares of associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for by the equity method is insufficient, the shortage is debited to retained earnings.

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is deducted from investment and the carrying amount is net of impairment loss. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date on which its investment ceases to be an associate and a joint venture. Any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate and the joint venture attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate and the joint venture. The Group accounts for all amounts previously recognized in other comprehensive income in relation to that associate and joint venture on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Group continues to apply the equity method and does not remeasure the retained interest.

When the Group’s share of losses of an associate and a joint venture equals or exceeds its interest in that associate and joint venture (which includes any carrying amount of the investment accounted for by the equity method and long-term interests that, in substance, form part of the Group’s net investment in the associate and joint venture), the Group discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Group has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate and joint venture.

When a group entity transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Group’s consolidated financial statements only to the extent of interests in the associate that are not related to the Group.

i. Property, plant and equipment

Property, plant and equipment are stated at cost, less recognized accumulated depreciation and accumulated impairment loss.

Property, plant and equipment in the course of construction are carried at cost, less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.

Depreciation on property, plant and equipment (including assets held under finance leases) is recognized using the straight-line method. Each significant part is depreciated separately. If the lease term is shorter than the useful lives, assets are depreciated over the lease term. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

j. Investment properties

Investment properties are properties held to earn rentals or for capital appreciation. Investment properties also include land held for a currently undetermined future use.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

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On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

k. Goodwill

Goodwill arising from the acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units or groups of cash-generating units (referred to as cash-generating units) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

For an investment accounted for using equity method, the cash-generating unit of the whole entity is tested for impairment. If impairment is identified but the recoverable amount of the asset later increases, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

l. Intangible assets

1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss.

2) Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, they are measured on the same basis as intangible assets that are acquired separately.

3) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset are recognized in profit or loss.

m. Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

n. Financial instruments

Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a) Measurement category

Financial assets are classified into the following categories: Financial assets at fair value through profit or loss, available-for-sale financial assets, and loans and receivables.

i. Financial assets at fair value through profit or loss

Financial assets are classified as at fair value through profit or loss when the financial asset doesn’t meet the criteria of hedge accounting. Financial assets at fair value through profit or loss are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss.

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ii. Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.

Available-for-sale financial assets are measured at fair value. Changes in the carrying amount of available-for-sale monetary financial assets relating to changes in foreign currency exchange rates, interest income calculated using the effective interest method and dividends on available-for-sale equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income and will be reclassified to profit or loss when the investment is disposed of or is determined to be impaired.

Dividends on available-for-sale equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established.

iii. Loans and receivables

Loans and receivables including cash and cash equivalent, note receivable, debt investments with no active market, trade receivables, and other receivables are measured at amortized cost using the effective interest method, less any impairment, except for short-term receivables when the effect of discounting is immaterial.

Cash equivalent includes time deposits and investments that meet short-term cash commitments, within highly liquid, readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value.

b) Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are 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 financial asset, the estimated future cash flows of the investment have been affected.

For financial assets carried at amortized cost, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. The Group assesses the collectability of receivables by performing the account aging analysis and examining current trends in the credit quality of its customers.

For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

For available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period. In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss except for uncollectible trade receivables that are written off against the allowance account.

c) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss.

2) Financial liabilities and equity instruments

Debt and equity instruments issued by an entity of the Group are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

a) Financial liabilities subsequent measurement

Financial liabilities are measured at amortized cost using the effective interest method.

b) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid is recognized in profit or loss.

c) Equity instruments

Equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by an entity of the Group are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Parent Company’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Parent Company’s own equity instruments.

3) Derivative financial instruments

The Group enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risks, including forward exchange contracts and cross-currency swap contracts.

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71 Lite-On Technology Corporation 2016 Annual Report

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. When the fair value of derivative financial instruments is positive, the derivative is recognized as a financial asset; when the fair value of derivative financial instruments is negative, the derivative is recognized as a financial liability.

d) It is probable that the economic benefits associated with the transaction will flow to the Group; and
e) The costs incurred or to be incurred in respect of the transaction can be measured reliably.

The Group does not recognize sales revenue on materials delivered to subcontractors because this delivery does not involve a transfer of risks and rewards of materials ownership.

2) Rental revenue

o. Hedge accounting

The Group designates derivative hedging instruments to conduct cash flow hedges. The effective portion of changes in the fair value of derivatives is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss. The associated gains or losses that were recognized in other comprehensive income are reclassified from equity to profit or loss as a reclassification adjustment in the line item relating to the hedged item in the same period when the hedged item affects profit or loss.

Hedge accounting is discontinued prospectively when the Group revokes the designated hedging relationship, or when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer meets the criteria for hedge accounting. The cumulative gain or loss on the hedging instrument that has been previously recognized in other comprehensive income from the period when the hedge was effective remains separately in equity until the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.

p. Provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

Provisions for the expected cost of warranty obligations are recognized at the date of sale of the relevant products, at the best estimate of the expenditure required to settle the Group’s obligation by the management of the Group.

The operation of leasing business was in accordance with IAS 17- Leases, that is, the possible situation related to leasing (ex. the condition of leasing, and the burden of future cost) would treat as operating lease.

3) Electricity generation revenue

Revenue is recognized when the power is transmitted to the substation of a power company. Electricity generation revenue is based on the fair value of subsidiary’s settled value with the power company. However, when receivables are expected to be realized within one year, the difference between fair value and maturity value of receivables is insignificant and the trading of power is very frequent, the fair value of settled value will not have to be discounted to the present value.

4) Dividend and interest income

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established provided that it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably.

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

r. Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

q. Revenue recognition

1) The Group as lessor

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. Allowance for sales returns and liability for returns are recognized at the time of sale based on the seller’s reliable estimate of future returns and based on past experience and other relevant factors.

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

2) The Group as lessee

1) Sale of goods

Operating lease payments are recognized as an expense on a straight-line basis over the lease term.

Revenue from the sale of goods is recognized when all the following conditions are satisfied:

s. Employee benefits
a) The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
b) The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

c) The amount of revenue can be measured reliably;

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73 Lite-On Technology Corporation 2016 Annual Report

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred tax for the year

Net defined benefit liability (asset) represents the actual deficit (surplus) in the Group’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

3) Termination benefits

A liability for a termination benefit is recognized at the earlier of when the Group can no longer withdraw the offer of the termination benefit and when the Group recognizes any related restructuring costs.

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION

UNCERTAINTY

t. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings.

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

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, research and development expenditures, and personnel training expenditures to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

In the application of the Group's accounting policies (Note 4), management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

a. Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than expected, a material impairment loss may arise.

b. Estimated impairment of trade receivables

When there is objective evidence of impairment loss, the Group takes into consideration the estimation of future cash flows. The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. Where the actual future cash flows are less than expected, a material impairment loss may arise.

c. Impairment of property, plant and equipment

The impairment of equipment in relation to the production of handsets was based on the recoverable amount of those assets, which is the higher of fair value less costs to sell or value-in-use of those assets. Any changes in the market price or future cash flows will affect the recoverable amount of those assets and may lead to recognition of additional or reversal of impairment losses.

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75 Lite-On Technology Corporation 2016 Annual Report

d. Write-down of inventory

Net realizable value of inventory is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The estimation of net realizable value was based on current market conditions and the historical experience of selling products of a similar nature. Changes in market conditions may have a material impact on the estimation of net realizable value.

e. Litigation provision and contingent liability

Refer to Note 32 for the disclosure on antitrust group lawsuits filed against the Parent Company, its subsidiaries, and other companies with related businesses in the United States of America. Litigation provision estimations and contingent liabilities disclosures are subject to change as some of the lawsuits are still in progress.

6. CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS
Cash on hand Checking accounts Demand deposits Time deposits		December 31
		2016 $ 17,623 1,377,065 30,644,835 33,168,968 $ 65,208,491	2015 $ 22,503 1,214,794 36,787,305 27,477,205 $ 65,501,807

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets held for trading Derivative financial assets (not under hedge accounting) Currency swap contracts Foreign exchange forward contracts Current Non-current Financial liabilities held for trading Derivative financial liabilities (not under hedge accounting) Foreign exchange forward contracts Current Non-current		December 31	December 31
		2016 $ 113,953 59,115 $ 173,068 $ 173,068 - $ 173,068 $ 128,685 $ 128,685 - $ 128,685	2015 $ 45,845 7,366 $ 53,211 $ 53,211 - $ 53,211 $ 55,945 $ 55,945 - $ 55,945

At the end of the reporting period, outstanding forward exchange contracts and cross-currency swap contracts not under hedge accounting were as follows:

contracts not under hedge accounting were	as follows:
		Maturity	Notional Amount
	Currency	Date	(In Thousands)
December 31, 2016
The Parent Company
Currency swap contracts	USD/NTD	2017.10.06-	USD170,000/NTD5,304,775
		2017.12.08
Lite-On Overseas Trading Co., Ltd.
Forward exchange contracts	CNY/USD	2017.03.08-	CNY202,869/USD30,000
		2017.03.14
Lite-On Singapore Pte. Ltd.
Forward exchange contracts	USD/EUR	2017.01.06	USD13,887/EUR13,000
Forward exchange contracts	USD/BRL	2017.02.06	USD2,500/BRL8,291
Forward exchange contracts	NTD/USD	2017.01.12-	NTD6,072,165/USD189,000
		2017.04.07
Forward exchange contracts	USD/NTD	2017.01.12-	USD62,000/NTD1,949,226
		2017.03.27
Forward exchange contracts	CNY/USD	2017.03.23-	CNY205,470/USD29,800
		2017.05.04
Forward exchange contracts	USD/JPY	2017.01.06	USD1,234/JPY140,000
Lite-On Electronics (Thailand) Co., Ltd.
Forward exchange contracts	THB/USD	2017.01.10-	THB235,915/USD6,700
		2017.01.17
Philip & Lite-On Digital Solutions Corp.
Forward exchange contracts	USD/EUR	2017.01.06	USD5,346/EUR5,000
Lite-On Mobile Pte. Ltd.
Forward exchange contracts	CNY/USD	2017.01.20-	CNY618,415/USD90,000
		2017.02.28
Silitech Technology Corp.
Forward exchange contracts	USD/MYR	2017.01.10-	USD1,421/MYR6,331
		2017.03.08
Forward exchange contracts	EUR/MYR	2017.01.25-	EUR150/MYR707
		2017.02.24
December 31, 2015
The Parent Company
Currency swap contracts	USD/NTD	2016.11.09	USD100,000/NTD3,212,900
Lite-On Overseas Trading Co., Ltd.
Forward exchange contracts	CNY/USD	2016.02.23	CNY194,159/USD30,000
Lite-On Singapore Pte. Ltd.
Forward exchange contracts	USD/EUR	2016.01.06	USD10,606/EUR10,000
Forward exchange contracts	USD/BRL	2016.01.25	USD2,000/BRL8,052
Forward exchange contracts	NTD/USD	2016.01.25-	NTD1,649,375/USD50,000
		2016.02.04
Lite-On Electronics (Thailand) Co., Ltd.
Forward exchange contracts	THB/USD	2016.01.04-	THB309,134/USD8,600
		2016.04.08
			(Continued)

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77 Lite-On Technology Corporation 2016 Annual Report

9. DEBT INVESTMENTS WITH NO ACTIVE MARKET

		Maturity	Notional Amount
	Currency	Date	(In Thousands)
Philip & Lite-On Digital Solutions Corp.
Forward exchange contracts	USD/EUR	2016.01.08	USD6,571/EUR6,000
Lite-On Mobile Pte. Ltd.
Forward exchange contracts	CNY/USD	2016.01.13-	CNY721,092/USD112,000
		2016.02.23
Forward exchange contracts	EUR/USD	2016.01.21	EUR5,500/USD5,981
Silitech Technology Corp.
Forward exchange contracts	USD/MYR	2016.01.08-	USD1,180/MYR5,099
		2016.03.08
Forward exchange contracts	EUR/MYR	2016.02.25	EUR50/MYR240
			(Concluded)

The Group entered into derivative contracts in 2016 and 2015 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.

DEBT INVESTMENTS WITH NO ACTIVE MARKET
Financial product Pledged time deposits and restricted bank deposits Current Non-current		December 31
		2016 $ 779,462 707,500 $ 1,486,962 $ 802,348 684,614 $ 1,486,962	2015 $ 424,399 270,870 $ 695,269 $ 439,811 255,458 $ 695,269

Financial product mainly refers to subsidiary’s guarantee income-bearing bank deposit products, which is measured at amortized cost; the products shall not be paid or redeemed within the contract period.

Refer to Note 31 for information on asset pledged as collateral or for security.

10. TRADE RECEIVABLES, NET

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

AVAILABLE-FOR-SALE FINANCIAL ASSETS
Non-current Domestic investments Listed shares Emerging market shares Unlisted shares Foreign investments Mutual funds Unlisted shares Listed shares		December 31
		2016 $ 313,185 178,716 15,785 507,686 57,973 89,370 3,626 150,969 $ 658,655	2015 $ 316,426 178,716 83,923 579,065 53,178 26,539 11,546 91,263 $ 670,328

Refer to Note 29 for information relating to the fair values of on available-for-sale financial assets determined.

There was objective evidence that the fair values of some financial assets were below their carrying costs and will permanently decline. As a result, the Group recognized impairment losses of $75,986 thousand and $124,667 thousand in the consolidated statements of comprehensive income for the years ended December 31, 2016 and 2015, respectively.

TRADE RECEIVABLES, NET
Trade receivables Allowance for impairment loss Unrealized interests revenue		December 31
		2016 $ 61,117,721 (219,021) (69,265) $ 60,829,435	2015 $ 50,390,680 (239,849) (70,962) $ 50,079,869

The average credit period on sales of goods was 90 days. In determining the recoverability of a trade receivable, the Group considered any change in the credit quality of the trade receivable since the date credit was initially granted to the end of the reporting period. The Group recognized an allowance for impairment loss of 100% against all receivables over 240 days because historical experience had been that receivables that are past due beyond 240 days were not recoverable. Allowance for impairment loss were recognized against trade receivables between 1 days and 240 days based on estimated irrecoverable amounts determined by reference to past default experience of the counterparties and an analysis of their current financial position.

The aging of trade receivables was as follows:

	December 31	December 31
	2016	2015
Not overdue	$ 60,359,423	$ 49,137,082
Overdue
1-60 days	532,570	999,794
61-210 days	54,002	114,839
211-240 days	3,430	4,119
Over 241 days	168,296	134,846
	758,298	1,253,598
	$ 61,117,721	$ 50,390,680

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79 Lite-On Technology Corporation 2016 Annual Report

The above aging schedule was based on the past due date.

At the end of the reporting period, trade receivables from sales on installments by the Group were as follows:

follows:
Trade receivables Unrealized interests revenue		December 31
		2016 $ 1,114,886 (69,265) $ 1,045,621	2015 $ 1,168,467 (70,962) $ 1,097,505

The amount of the above trade receivables is expected to be recovered at $201,684 thousand, $204,571 thousand, $198,703 thousand, $196,043 thousand, $194,981 thousand, $34,212 thousand, $38,139 thousand, $18,430 thousand, $17,053 thousand and $11,070 thousand per year from 2017 to 2026, respectively.

Movements in the allowance for impairment loss recognized on notes receivable and trade receivables were as follows:

Balance at January 1 Allowance for impairment loss (reversal of impairment loss) Uncollectible amounts written off during the period as uncollectible Foreign exchange translation Reclassification Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2016 $ 239,849 8,263 (20,277) (8,814) - $ 219,021	2015 $ 298,871 (51,276) (4,742) (1,647) (1,357) $ 239,849

11. INVENTORIES, NET

INVENTORIES, NET
Finished goods Raw materials Work in progress Inventory in transit Merchandise		December 31
		2016 $ 17,128,762 6,744,483 2,456,458 217,771 209,435 $ 26,756,909	2015 $ 18,725,787 7,069,710 2,546,266 218,599 266,074 $ 28,826,436

The costs of inventories recognized as cost of goods sold for the years ended December 31, 2016 and 2015 were $198,313,490 thousand and $188,787,517 thousand, respectively.

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2016 and 2015 included reductions of cost of goods sold amounting to $399,030 thousand and $238,971 thousand, respectively, due to an increase in inventory’s net realizable value. The increase was due to the Group writing off part of its inventories that had been impaired.

12. SUBSIDIARIES

a. Subsidiaries included in consolidated financial statements

Investor
Investee
Main Business

The Parent Company
Silitech Technology Corp.
Manufacture and sale of modules and plastic
products
Lite-On Integrated Service Inc.
Information outsourcing and system integrate
Lite-On Capital Corp.
Investment activities
Lite-On Electronics H.K. Ltd.
Sale of LED optical products
Lite-On Electronics (Thailand) Co., Ltd.
Manufacture and sale of LED optical
products
Lite-On Japan Ltd.
Sale of LED optical products and power
supplies
Lite-On International Holding Co., Ltd.
Investment activities
LTC Group Ltd.
Investment activities
Lite-On Technology USA, Inc.
Investment activities
Lite-On Electronics (Europe) Ltd.
Manufacture and sale of power supplies
The Parent Company
Lite-On Technology (Europe) B.V.
Market research and after-sales service
Lite-On Overseas Trading Co., Ltd.
Merchandising business
Lite-On Singapore Pte. Ltd.
Manufacture and supply computer peripheral
products
Lite-On Vietnam Co., Ltd.
Electronic contract manufacturing
Li Shin International Enterprise Corp.
Manufacture and sale of computer and
appliance components
Eagle Rock Investment Ltd.
Import and export business and investment
activities
Lite-On Mobile Pte. Ltd.
Manufacture and sale of mobile phone
modules and design for assembly line
High Yield Group Co., Ltd.
Holding company
Lite-On Information Technology B.V.
Market research and customer service
Philip & Lite-On Digital Solutions Corp.
Sale of optical disc drives
LET (HK) Ltd.
Sale of optical disc drives
Leotek Electronics Holding Limited
Holding company
Lite-On Automotive Electronics (Europe) B.V. Sale of automotive parts and other electronic
products
Lite-On Automotive Service USA Inc.
Sale of automotive parts and other electronic
products
Lite-On Automotive International (Cayman)
Co., Ltd.
Investment activities
Lite-On Automotive Electronics Mexico, S.A.
DE C.V.
Production, manufacture, sale, import and
export of photovoltaic device, key
electronic components,
telecommunications equipment,
information technology equipment,
semiconductor applications, general
lighting, automotive electronics, renewable
energy products and systems and
maintenance of automotive industry
Lite-On Capital Corp.
Silitech Technology Corp.
Manufacture and sale of modules and plastic
products
Lite-On Green Technologies Inc.
Manufacture and wholesale of electronic
components and energy technology
services
Lite-On Green Energy (HK) Limited
Investment activities
Lite-On Technology (Europe) B.V.
Market research and after-sales services
Lite-On Green Energy (Singapore) Pte. Ltd.
Investment activities
Five Dimension Co., Ltd.
Development, manufacture and sale of cell
phone and camera lens modules
Lite-On Green Technologies Inc.
Lite-On Green Technologies B.V.
Solar energy engineering
Lite-On Green Technologies (HK) Limited
Solar energy engineering
Lite-On Green Energy
Lite-On Green Energy B.V.
Investment activities
(Singapore) Pte. Ltd.

Lite-On Green Technologies (HK)
Limited
Lite-on Green Technologies (Nanjing)
Corporation
Solar energy engineering
Lite-On Green Energy B.V.
Romeo Tetti PV1 S.R.L
Solar energy engineering
Lite-On Green Energy S.R.L
Solar energy engineering
Lite-On Electronics H.K. Ltd.
Lite-On Electronics (Tianjinn) Co., Ltd.
ODM services
Lite-On Network Communication (Dongguan)
Limited
Manufacture and sale of IT products
Lite-On Power Technology (Chang Zhou) Co.,
Ltd.
Manufacture and sale of new-type electronic
components and peripheral materials
China Bridge (China) Co., Ltd.
Investment, sales agent
Lite-On Electronics (Dongguan) Co., Ltd.
Manufacture of electronic components
Silitek Elec. (Dongguan) Co., Ltd.
Manufacture and sale of keyboards
Lite-On Computer Tech (Dongguan) Co., Ltd. Manufacture and sale of display device
Dong Guan G-Tech Computers Co., Ltd.
Manufacture and sale of computer case
DongGuan G-Pro Computer Co., Ltd.
Manufacture and sale of system products
Lite-On Digital Electronics (Dongguan) Co.,
Ltd.
Manufacture and sale of computer peripheral
products
Lite-On Network Communication
(Dongguan) Limited
DongGuan G-Pro Computer Co., Ltd.
Manufacture and sale of system products
China Bridge (China) Co., Ltd.
Lite-On Opto Technology (Changzhou) Co.,
Ltd.
Development, manufacture of new-type
electronic components and provide
technology consulting services,
maintenance equipment and after-sales
services
China Bridge Express (Wuxi) Co., Ltd.
Express and sale of power supplies, printers,
display devices and scanners

% of Ownership
December 31
2016
2015
Remark
33.87
33.87
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
49.49
49.49
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
54.00
54.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
49.00
49.00
-
100.00
100.00
-
-
100.00
1)
100.00
100.00
-
-
100.00
2)
100.00
100.00
-
99.00
99.00
-
0.64
0.64
-
100.00
100.00
-
100.00
100.00
-
46.00
46.00
-
100.00
100.00
-
39.10
69.94
3)
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
-
100.00
4)
-
100.00
5)
100.00
100.00
-
100.00
100.00
-
-
100.00
6)
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
79.29
79.29
-
100.00
100.00
-
20.71
20.71
-
12.59
12.59
-
100.00
100.00
-
(Continued)

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81 Lite-On Technology Corporation 2016 Annual Report

Investor
Investee
Main Business

Lite-On Electronics Co., Ltd.
Lite-On Communications (Guangzhou) Co.,
Ltd.
Manufacture and sale of mobile terminal
equipment
Lite-On Electronics (Guangzhou) Co., Ltd.
Manufacture and sale of printers and scanners
Lite-On (Guangzhou) Infortech Co., Ltd.
Information outsourcing
Lite-On Elec and Wire (Guangzhou) Co., Ltd. Manufacture and sale of mobile terminal
equipment
Lite-On (Guangzhou) Precision Tooling Co.,
Ltd.
Manufacture and sale of modules
Lite-On Tech (Guangzhou) Co., Ltd.
Manufacture and sale of computer cases
Lite-On Electronics (Jiangsu) Co., Ltd.
Development, manufacture, sale and
installation of power supplies and
transformers and provision of technology
consulting services, maintenance
equipment and precision instruments
Lite-On Technology (Guangzhou) Investment
Co., Ltd.
Investment activities
Lite-On Power Technology (Dongguan) Co.,
Ltd.
Development, manufacture and sale of
electronic components, power supplies and
provision technology consulting services
Lite-On Technology (Guangzhou)
Investment Co., Ltd.
Lite-On (Guangzhou) Precision Tooling Co.,
Ltd.
Manufacture and sale of modules
Zhuhai Lite-On Mobile Technology Co., Ltd.
Mobile phone mold, assembly line design,
manufacture and sale activities.
Lite-On Technology (Changzhou) Co., Ltd.
Development, manufacture, sale and
installation of power supplies and
transformers and provision technology
consulting services, maintenance
equipment and after-sales services
Lite-On Electronics (Jiangsu) Co.,
Ltd.
Lite-On Opto Technology (Changzhou) Co.,
Ltd.
Development, manufacture and sale of
new-type electronic components and LED
and provision technology consulting
services, maintenance equipment and
after-sales services
Lite-On Medical Device (Changzhou) Ltd.
Manufacture and sale of medical equipment
Changzhou Leotek New Energy Trade Limited Wholesale, import and export and installation
of street lights, signal lights, scenery lights
and new-type electronic components

Lite-On Computer (Changzhou) Co., Ltd.
Design, development, manufacture of
computer laptop modules and components
and provision technology consulting
services and after-sales services.
Yet Foundate Ltd.
Dongguan Lite-On Computer Co., Ltd.
Manufacture and sale of computer hosts and
components
Fordgood Electronic Ltd.
Lite-On Li Shin Technology (Ganzhou) Co.,
Ltd.
Manufacture and sale of electronic
components
Lite-On Technology USA, Inc.
Lite-On, Inc.
Sales data processing business of
optoelectronic products and power supplies
Lite-On Trading USA, Inc.
Sale of optical products
Lite-On Service USA, Inc.
After-sales service of optical products
Leotek Electronics USA LLC.
Sale of LED products
Power Innovations International, Inc.
Development, design and manufacture of
power control and energy management
Lite-On Sales & Distribution Inc.
Sale of optical disc drives
Lite-On Technology Service, Inc.
After-sales service of optical products
Lite-On International Holding Co.,
Ltd.
Lite-On China Holding Co., Ltd.
Manufacture and sale of computer cases
Lite-On Singapore Pte. Ltd.
Lite-On Technology (Ying Tan) Co., Ltd.
Manufacture and sale of electronic
components
Lite-On Technology (Xianging) Co., Ltd.
Manufacture and sale of electronic
components
Lite-On Technology (Shanghai) Ltd.
Manufacture and sale of energy saving
equipment
Lite-On Automotive Electronics Mexico, S.A.
DE C.V.
Production, manufacture, sale, import and
export of photovoltaic device, key
electronic components,
telecommunications equipment,
information technology equipment,
semiconductor applications, general
lighting, automotive electronics, renewable
energy products and systems and
maintenance of automotive industry
Lite-On Technology (Shanghai) Ltd.
Lite-On Intelligent Technology (Yencheng)
Corporation
Wholesale, import and export and installation
of street lights, signal lights, scenery lights
and new-type electronic components
LTC Group Ltd.
Titanic Capital Services Ltd.
Investment activities
LTC International Ltd.
Manufacture and sale of system products
Lite-On Technology (Europe) B.V.
Lite-On (Finland) Oy
Manufacture and sale of mobile phone
modules and design for assembly line
Lite-On (Finland) Oy
Lite-On Mobile Oyj (formerly: Perlos Oyj) Manufacture and sale of mobile phone
modules and design for assembly line
Lite-On China Holding Co., Ltd.
Lite-On Electronics Co., Ltd.
Investment activities
Yet Foundate Ltd.
Manufacture of plastic and computer
peripheral products
I-Solutions Limited
Original equipment manufacturer of
electronic products
Fordgood Electronic Ltd.
Import and export and real estate business
G&W Technology (BVI) Ltd.
Real estate management
G&W Technology (BVI) Ltd.
G&W Technology Limited
Leasing business

% of Ownership
December 31
2016
2015
Remark
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
67.03
67.03
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
32.97
32.97
-
100.00
100.00
-
100.00
100.00
-
87.41
87.41
-
100.00
100.00
-
100.00
100.00
-
100.00
-
7)
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
-
100.00
8)
100.00
100.00
-
95.25
95.25
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
1.00
1.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
50.00
50.00
-
100.00
100.00
-
(Continued)

Investor
Investee
Main Business

Eagle Rock Investment Ltd.
Huizhou Li Shin Electronic Co., Ltd.
Manufacture of computer peripheral products
Huizhou Fu Tai Electronic Co., Ltd.
Manufacture of computer peripheral products
Li Shin Technology (Huizhou) Ltd.
Manufacture and sale of new-type electronic
components and peripheral materials
High Yield Group Co., Ltd.
Lite-On IT International (HK) Ltd.
Sale of optical disc drives
Lite-On IT International (HK) Ltd.
Lite-On Opto Technology (Guangzhou) Co.,
Ltd.
Manufacture and sale of optical disc drives
Lite-On Auto Electric Technology
(Guangzhou) Ltd.
Manufacture and sale of optical disc drives
Lite-On IT Opto Tech (BH) Co., Ltd.
Manufacture and sale of optical disc drives
Lite-On Information Technology B.V. Lite-On Information Technology GmbH
Sale of optical disc drives
Philip & Lite-On Digital Solutions
Corp.
Philips & Lite-On Digital Solutions Germany
GmbH
Development and sale of modules of
automotive recorders
Philips & Lite-On Digital Solutions USA Inc.
Sale of optical disc drives
Philips & Lite-On Digital Solutions Korea Ltd. Sale of optical disc drives
Philips & Lite-On Digital Solutions
Netherlands B.V.
Sale and design of optical disc drives
Philip & Lite-On Digital Solutions (Shanghai)
Co., Ltd.
Sale of optical disc drives
Silitech Technology Corp.
Silitech (BVI) Holding Ltd.
Investment activities
Lite-On Japan Ltd.
Sale of LED optical products and power
supplies
Silitech (BVI) Holding Ltd.
Silitech (Bermuda) Holding Ltd.
Investment activities
Silitech (Bermuda) Holding Ltd.
Silitech Technology Corp. Ltd.
Manufacture of plastic and computer
peripheral products
Silitech Technology Corp. Sdn. Bhd.
Manufacture of computer peripheral products
Silitech (Hong Kong) Holding Ltd.
Investment activities
Silitech International (India) Private Limited
Development, manufacture and sale of
automotive parts
Silitech (Hong Kong) Holding Ltd.
Silitech Technology (SuZhou) Co., Ltd.
Manufacture and sale of automotive parts
Silitech Technology Corp. Ltd.
Xurong Electronic (Shenzhen) Co., Ltd.
Manufacture of automotive parts, touch
panels and plastic and rubber assembly
SuZhou Xulong Mold Producing Co., Ltd.
Development, manufacture and sale of
precision modules and new-type electronic
components (chip components, testing
elements, hybrid integrated circuits)
Lite-On Automotive International
(Cayman) Co., Ltd.
Lite-On Automotive Holdings
(Hong Kong) Co., Ltd.
Investment activities
Lite-On Automotive Holdings (Hong
Kong) Co., Ltd.
Lite-On Automotive (Wuxi) Co., Ltd.
Manufacture, sale and processing of
electronic products
Lite-On Automotive Electronics (Guangzhou)
Co., Ltd.
Manufacture, sale and processing of
electronic products
Lite-On Japan Ltd.
Lite-On Japan (S) Pte. Ltd.
Import and export of electronic components
L&K Industries Philippines, Inc.
Import and export of electronic components
Lite-On Japan (H.K.) Limited
Import and export of electronic components
Lite-On Japan (Korea) Co., Ltd.
Import and export of electronic components
Lite-On Japan (Thailand) Co., Ltd.
Import and export of electronic components
Lite-On Japan (H.K.) Limited
NL (Shanghai) Co., Ltd.
Import and export of electronic components
Lite-On Mobile Oyj (formerly:
Perlos Oyj)
Lite-On Mobile Sweden AB
Manufacture and sale of mobile phone
modules and design for assembly line
Lite-On Mobile Indústria e Comércio de
Plásticos Ltda.
Manufacture and sale of mobile phone
modules and design for assembly line
Lite-On Mobile India Private Limited
Manufacture and sale of mobile phone
modules and design for assembly line
Lite-On Mobile Pte. Ltd.
Guangzhou Lite-On Mobile Electronic
Components Co., Ltd.
Manufacture and sale of mobile phone
modules and design for assembly line
Guangzhou Lite-On Mobile Engineering
Plastics Co., Ltd.
Manufacture and sale of mobile phone
modules and design for assembly line
Beijing Lite-On Mobile Electronic and
Telecommunication Components Co., Ltd.
Manufacture and sale of mobile phone
modules and design for assembly line
Shenzhen Lite-On Mobile Precision Molds
Co., Ltd.
Manufacture and sale of mobile phone
modules and design for assembly line
Lite-On Mobile Indústria e Comércio de
Plásticos Ltda.
Manufacture and sale of mobile phone
modules and design for assembly line
Perlos Precision Plastics Moulding Limited
Liability Company
Manufacture and sale of mobile phone
modules and design for assembly line
Lite-On Mobile India Private Limited.
Manufacture and sale of mobile phone
modules and design for assembly line
Lite-On Young Fast Pte. Ltd.
Investment activities
Guangzhou Lite-On Mobile Electronic
Components Co., Ltd.
Yantai Lite-On Mobile Electronic Components
Co., Ltd.
Manufacture and sale of mobile phone
modules and design for assembly line
Lite-On Young Fast Pte. Ltd.
Lite-On Young Fast (Huizhou) Co., Ltd.
Modules of touch panels

% of Ownership
December 31
2016
2015
Remark
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
7.87
7.87
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
60.00
60.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
-
100.00
9)
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
3.08
3.14
-
11.59
-
10)
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
96.92
96.86
-
100.00
100.00
-
88.41
100.00
10)
100.00
100.00
-
100.00
100.00
-
100.00
100.00
-
(Concluded)

Remark:

1) Leotek Electronics Holding Limited was dissolved after liquidation in December 2016.
2) Lite-On Automotive Service USA Inc. was dissolved after liquidation in April 2016.
3) The Group subscribed for additional new shares of Five Dimension Co., Ltd. at a percentage different from its existing ownership percentage and disposed part of its holdings. As a result, the Group has lost control of Five Dimension Co., Ltd. starting from May 2016. Five Dimension Co., Ltd. is no longer consolidated and is accounted for using the equity method for subsequent measurement.

Lite-On Technology Corporation 2016 Annual Report 84

83 Lite-On Technology Corporation 2016 Annual Report

4) Romeo Tetti PV1 S.R.L. was disposed in January 2016.
5) Lite-On Green Energy S.R.L. was dissolved after liquidation in December 2016.
6) Lite-On Power Technology (Changzhou) Co., Ltd. was dissolved after liquidation in February 2016.
7) Lite-On Computer (Changzhou) Co., Ltd. was established in June 2016.
8) Lite-On Service USA Inc. was dissolved after liquidation in December 2016.
9) Lite-On Japan (S) Pte. Ltd. was dissolved after liquidation in June 2016.
10) In March 2016, a loan to Lite-On Mobile India Private Limited from Lite-On Mobile Oyj and Lite-On Mobile Pte. Ltd. was reclassified to additional capital investment in Lite-On Mobile India Private Limited.
b. Subsidiaries excluded from consolidated financial statements: None.
c. Details of subsidiaries that have material non-controlling interests

Name of Subsidiary Silitech Technology Corp.	Proportion of Ownership and Voting Rights Held by Non-controlling Interests
	December 31
	2016 2015 65.49% 65.49%

See Table 7 and Table 8 for the information on place of incorporation and principal place of business.

Profit (Loss) Allocated to Non-controlling Interests For the Year Ended December 31 2016 2015 $ (79,187) $ 52,347 35,400 37,586 $ (43,787) $ 89,933	Accumulated Non-controlling Interests	Accumulated Non-controlling Interests

	December 31
2016 $ (79,187) 35,400 $ (43,787)	2016 $ 2,581,986 766,915 $ 3,348,901	2015 $ 2,885,289 809,793 $ 3,695,082

The summarized financial information below represents amounts before intragroup eliminations.

Silitech Technology Corp. and Silitech Technology Corp.’s subsidiaries:

Current assets Non-current assets Current liabilities Non-current liabilities Equity		December 31	December 31
		2016 $ 4,725,000 1,615,292 (1,340,826) (1,057,556) $ 3,941,910	2015 $ 5,467,860 1,941,195 (1,399,290) (1,608,984) $ 4,400,781 (Continued)

Equity attributable to: Parent Company Non-controlling interests of Silitech Technology Corp. Non-controlling interests of Silitech Technology Corp.’s subsidiaries Revenue Profit (loss) for the year Other comprehensive loss for the year Total comprehensive income (loss) for the year Profit (loss) attributable to: Parent Company Non-controlling interests of Silitech Technology Corp. Non-controlling interests of Silitech Technology Corp.’s subsidiaries Total comprehensive income (loss) attributable to: Parent Company Non-controlling interests of Silitech Technology Corp. Non-controlling interests of Silitech Technology Corp.’s subsidiaries Net cash flow from: Operating activities Investing activities Financing activities Foreign exchange translation Net cash outflow Dividends paid to non-controlling interest Silitech Technology Corp.		December 31	December 31
	2016 2015 $ 1,359,924 $ 1,515,492 2,580,743 2,875,966 1,243 9,323 $ 3,941,910 $ 4,400,781 (Concluded) For the Year Ended December 31
		2016 $ 2,387,732 $ (116,873) (236,162) $ (353,035) $ (37,686) (71,516) (7,671) $ (116,873) $ (119,044) (225,911) (8,080) $ (353,035) $ 15,467 (380,734) (106,012) (155,579) $ (626,858) $ 69,312	2015 $ 3,530,193 $ 101,383 (42,252) $ 59,131 $ 49,036 96,941 (44,594) $ 101,383 $ 34,982 69,155 (45,006) $ 59,131 $ 424,898 (412,759) (461,902) (6,274) $ (456,037) $ 148,827

Lite-On Technology Corporation 2016 Annual Report

85 Lite-On Technology Corporation 2016 Annual Report

13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in Associates

Investments in Associates
Associates that are not individually material Add: Credit balance of investments accounted for using equity method		December 31
		2016 $ 3,807,869 2,564 $ 3,810,433	2015 $ 4,095,167 - $ 4,095,167

Aggregate Information of Associates That are Not Individually Material

The Group’s share of: Profit for the year Other comprehensive loss Total comprehensive income (loss) for the year	For the Year Ended	For the Year Ended	December 31
		2016 $ 82,626 (304,108) $ (221,482)	2015 $ 124,439 (53,378) $ 71,061

14. PROPERTY, PLANT AND EQUIPMENT, NET

Cost January 1, 2016 Additions Disposals Effect of business combination Reclassification Effect of foreign currency exchange differences December 31, 2016 Accumulated depreciation January 1, 2016 Additions Disposals Effect of business combination Reclassification Effect of foreign currency exchange differences December 31, 2016 Accumulated impairment January 1, 2016 Additions Disposals Effect of business combination Effect of foreign currency exchange differences December 31, 2016 December 31, 2016, net Cost January 1, 2015 Additions Disposals Reclassification Effect of foreign currency exchange differences December 31, 2015 Accumulated depreciation January 1, 2015 Additions Disposals Reclassification Effect of foreign currency exchange differences December 31, 2015	Freehold Land $ 2,339,337 - (13,926 ) - - (650) $ 2,324,761 $ - - - - - - $ - $ - - - - - $ - $ 2,324,761 $ 2,335,867 - (53 ) 10,275 (6,752) $ 2,339,337 $ - - - - - $ -	Buildings $ 20,743,583 34,502 (362,775 ) (423,671 ) 18,614 (1,095,171) $ 18,915,082 $ 8,685,181 757,366 (124,829 ) (89,320 ) - (509,617) $ 8,718,781 $ 380,217 50,000 (134,323 ) (33,999 ) (7,723) $ 254,172 $ 9,942,129 $ 20,591,355 149,911 (90,266 ) 296,816 (204,233) $ 20,743,583 $ 7,821,429 814,098 (57,152 ) 186,352 (79,546) $ 8,685,181	Machinery Equipment $ 43,413,229 2,034,337 (3,017,478 ) - 353,806 (2,986,688) $ 39,797,206 $ 27,604,565 4,579,043 (2,740,412 ) - 23,756 (1,969,270) $ 27,497,682 $ 846,869 28,558 (87,518 ) - (53,672) $ 734,237 $ 11,565,287 $ 42,733,143 4,364,717 (3,675,925 ) 589,501 (598,207) $ 43,413,229 $ 25,607,321 4,831,830 (2,278,086 ) (194,641 ) (361,859) $ 27,604,565	Tooling Equipment $ 3,547,594 98,448 (816,315 ) - 55,854 (178,325) $ 2,707,256 $ 3,298,595 174,903 (802,633 ) - 15,876 (172,204) $ 2,514,537 $ 21,000 5,596 (12,907 ) - (65) $ 13,624 $ 179,095 $ 3,884,972 159,092 (688,688 ) 234,079 (41,861) $ 3,547,594 $ 3,704,341 194,072 (667,103 ) 107,787 (40,502) $ 3,298,595	Transportation Equipment $ 72,550 213 (6,116 ) - - (3,138) $ 63,509 $ 55,867 6,812 (4,986 ) - (2 ) (2,781) $ 54,910 $ 747 - (245 ) - (49) $ 453 $ 8,146 $ 83,156 5,050 (5,171 ) (9,336 ) (1,149) $ 72,550 $ 60,551 8,307 (4,978 ) (7,076 ) (937) $ 55,867	Office Equipment $ 2,463,313 125,528 (317,459 ) - (10,439 ) (97,367) $ 2,163,576 $ 2,028,918 203,654 (313,272 ) - (1,374 ) (87,632) $ 1,830,294 $ 8,839 21 (1,219 ) - (586) $ 7,055 $ 326,227 $ 2,730,452 221,682 (231,804 ) (245,268 ) (11,749) $ 2,463,313 $ 2,254,755 239,883 (211,497 ) (243,435 ) (10,788) $ 2,028,918	Equipment Held under Finance Lease $ 1,470,559 36,647 (603,281 ) - - (117,399) $ 786,526 $ 1,170,552 91,923 (591,301 ) - - (90,414) $ 580,760 $ 42,156 - - - (3,369) $ 38,787 $ 166,979 $ 1,411,445 97,851 (679 ) (11,741 ) (26,317) $ 1,470,559 $ 1,101,485 108,323 (281 ) (18,002 ) (20,973) $ 1,170,552	Other Equipment Total $ 7,724,699 $ 81,774,864 1,060,628 3,390,303 (275,733 ) (5,413,083 ) (888 ) (424,559 ) (436,095 ) (18,260 ) (559,035) (5,037,773) $ 7,513,576 $ 74,271,492 $ 4,083,357 $ 46,927,035 495,127 6,308,828 (256,468 ) (4,833,901 ) (460 ) (89,780 ) (9,664 ) 28,592 (265,415) (3,097,333) $ 4,046,477 $ 45,243,441 $ 158,562 $ 1,458,390 10,685 94,860 (23,808 ) (260,020 ) - (33,999 ) 8,070 (57,394) $ 153,509 $ 1,201,837 $ 3,313,590 $ 27,826,214 $ 9,077,902 $ 82,848,292 802,393 5,800,696 (435,101 ) (5,127,687 ) (1,647,974 ) (783,648 ) (72,521) (962,789) $ 7,724,699 $ 81,774,864 $ 4,534,639 $ 45,084,521 516,782 6,713,295 (423,837 ) (3,642,934 ) (505,686 ) (674,701 ) (38,541) (553,146) $ 4,083,357 $ 46,927,035 (Continued)

Accumulated impairment January 1, 2015 Additions Disposals Reclassification Effect of foreign currency exchange differences December 31, 2015 December 31, 2015, net	Freehold Land $ - - - - - $ - $ 2,339,337	Buildings $ 345,834 16 - 2,287 32,080 $ 380,217 $ 11,678,185	Machinery Equipment $ 1,113,732 130,276 (494,361 ) 84,402 12,820 $ 846,869 $ 14,961,795	Tooling Equipment $ 40,520 - (24,163 ) 908 3,735 $ 21,000 $ 227,999	Transportation Equipment $ 924 - (170 ) - (7) $ 747 $ 15,936	Office Equipment $ 9,882 - (968 ) - (75) $ 8,839 $ 425,556	Equipment Held under Finance Lease $ 42,492 - - - (336) $ 42,156 $ 257,851	Other Equipment Total $ 103,171 $ 1,656,555 56,229 186,521 (3,178 ) (522,840 ) 5,529 93,126 (3,189) 45,028 $ 158,562 $ 1,458,390 $ 3,482,780 $ 33,389,439 (Concluded)

For the years ended December 31, 2016 and 2015, as the result of the declining sale of some of the products in the market, the estimated future cash flows expected to arise from the related equipment was decreased and recognized impairment loss $94,860 thousand and $186,521 thousand, respectively. The Group carried out a review of the recoverable amount of that related equipment and determined that the carrying amount exceeded the recoverable amount. The impairment loss had been recognized in the consolidated statements of comprehensive income.

The above items of property, plant and equipment are depreciated on a straight-line basis at the following rates per annum:

Buildings 5-60 years Machinery equipment 2-10 years Tooling equipment 2-10 years Transportation equipment 3-10 years Office equipment 2-10 years Equipment held under finance lease 3-40 years Other equipment 2-10 years

15. INVESTMENT PROPERTIES, NET

INVESTMENT PROPERTIES, NET
	Completed
	Investment
	Property
Cost
Balance at January 1, 2015	$ 733,478
Net exchange differences	(5,814)
Balance at December 31, 2015	$ 727,664
Accumulated depreciation
Balance at January 1, 2015	$ 196,448
Depreciation expense	32,835
Net exchange differences	(1,569)
Balance at December 31, 2015	$ 227,714
Balance at December 31, 2015, net	$ 499,950
	(Continued)

Lite-On Technology Corporation 2016 Annual Report

87 Lite-On Technology Corporation 2016 Annual Report

	Completed
	Investment
	Property
Cost
Balance at January 1, 2016	$ 727,664
Net exchange differences	(58,162)
Balance at December 31, 2016	$ 669,502
Accumulated depreciation
Balance at January 1, 2016	$ 227,714
Depreciation expense	31,584
Net exchange differences	(19,586)
Balance at December 31, 2016	$ 239,712
Balance at December 31, 2016, net	$ 429,790
	(Concluded)

The investment properties held by the Group are depreciated using the straight-line method over their estimated useful lives of 20 years.

For the investment properties valued by Wuxi Zhongzheng Assets Appraisal Co., an independent appraiser, the Group’s management determined their fair value by reference to the appraiser’s market evidence of the transaction price of real estate. As of December 31, 2016, the fair value of investment property estimated using unobservable inputs (Level3) was $569,278 thousand.

The Group has freehold interest in all of its investment property.

16. OTHER INTANGIBLE ASSETS, NET

Cost January 1, 2016 Additions Disposals Effect of business combination Reclassification Effect of foreign currency exchange differences December 31, 2016 Accumulated amortization January 1, 2016 Additions Disposals Effect of business combination Reclassification Effect of foreign currency exchange differences December 31, 2016	Goodwill $ 15,524,903 - - (75,671 ) - (32,929) $ 15,416,303 $ 77,234 - - - - - $ 77,234	Patents $ 37,773 800 - - - (3) $ 38,570 $ 30,853 3,308 - - - - $ 34,161	Patents Use Rights $ 2,695,878 - - - - - $ 2,695,878 $ 2,134,238 224,657 - - - - $ 2,358,895	Client Relationships $ 163,819 - - - - - $ 163,819 $ 163,819 - - - - - $ 163,819	Software $ 669,053 159,667 (23,647 ) (573 ) 35,594 (6,499) $ 833,595 $ 415,910 196,693 (21,742 ) (285 ) 502 (4,000) $ 587,078	Other Intangible Assets Total $ 1,991,449 $ 21,082,875 4,336 164,803 (54,185 ) (77,832 ) - (76,244 ) (13,231 ) 22,363 (39,946) (79,377) $ 1,888,423 $ 21,036,588 $ 1,869,056 $ 4,691,110 42,325 466,983 (49,064 ) (70,806 ) - (285 ) (13,231 ) (12,729 ) (32,655) (36,655) $ 1,816,431 $ 5,037,618 (Continued)

Accumulated impairment January 1, 2016 Additions Disposals Effect of foreign currency exchange differences December 31, 2016 December 31, 2016, net Cost January 1, 2015 Additions Disposals Reclassification Effect of foreign currency exchange differences December 31, 2015 Accumulated amortization January 1, 2015 Additions Disposals Reclassification Effect of foreign currency exchange differences December 31, 2015 Accumulated impairment January 1, 2015 December 31, 2015 December 31, 2015, net	Goodwill $ 453,533 336,210 - - $ 789,743 $ 14,549,326 $ 15,483,954 92,264 - - (51,315) $ 15,524,903 $ 77,234 - - - - $ 77,234 $ 453,533 $ 453,533 $ 14,994,136	Patents $ - - - - $ - $ 4,409 $ 39,481 - - (1,566 ) (142) $ 37,773 $ 27,293 4,850 - (1,178 ) (112) $ 30,853 $ - $ - $ 6,920	Patents Use Rights $ - - - - $ - $ 336,983 $ 2,695,878 - - - - $ 2,695,878 $ 1,909,581 224,657 - - - $ 2,134,238 $ - $ - $ 561,640	Client Relationships $ - - - - $ - $ - $ 163,819 - - - - $ 163,819 $ 163,819 - - - - $ 163,819 $ - $ - $ -	Software $ - 12 (505 ) (14) $ (507) $ 247,024 $ 563,576 139,208 (37,243 ) 3,981 (469) $ 669,053 $ 277,272 159,610 (26,243 ) 5,191 80 $ 415,910 $ - $ - $ 253,143	Other Intangible Assets Total $ - $ 453,533 - 336,222 - (505 ) - (14) $ - $ 789,236 $ 71,992 $ 15,209,734 $ 3,859,575 $ 22,806,283 15,762 247,234 (1,009,378 ) (1,046,621 ) (854,677 ) (852,262 ) (19,833) (71,759) $ 1,991,449 $ 21,082,875 $ 3,598,588 $ 6,053,787 145,011 534,128 (995,602 ) (1,021,845 ) (865,406 ) (861,393 ) (13,535) (13,567) $ 1,869,056 $ 4,691,110 $ - $ 453,533 $ - $ 453,533 $ 122,393 $ 15,938,232 (Concluded)

The above items of other intangible assets were amortized on a straight-line basis over the estimated useful life of the asset:

Patents 6 years Patents use rights 12 years Client relationships 4 years Software 1-14 years Other intangible assets 1-10 years

The carrying amount of goodwill allocated to the Group’s cash-generating units as follows:

Lite-On Mobile Pte. Ltd. The Parent company Power Innovations International Inc. Others Five Dimension Co., Ltd.		December 31	December 31
		2016 $ 8,533,126 5,617,208 360,108 38,884 - $ 14,549,326	2015 $ 8,562,258 5,953,418 366,539 58,818 53,103 $ 14,994,136

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a. The Parent Company acquired an asset group from SEEnergy Corp. in September 2015. IFRS 3 “Business Combinations” and IAS 38 “Intangible Assets” define recognized goodwill as the sum of the acquisition cost plus other direct transaction costs minus the fair value of the identifiable net assets acquired. Thus, goodwill was calculated as follows:

Acquisition price Fair value of acquired identifiable net assets: Inventories Property, plant and equipment Software Goodwill	$ 2,420 340 71	$ 30,093 2,831 $ 27,262

b. Goodwill is allocated to the Group’s recoverable amount of cash-generating units. The recoverable amount of all cash-generating units has been determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering the future five-year period. In 2016, the Group examined the current conditions and future prospects of the global optical disc drives market; the amount of $336,210 thousand was recognized as goodwill impairment after the assessment, and the discount rate used was 9.71%.

Management determined the gross margin based on past performance and future profits. The growth rate used is consistent with the forecasts included in industry reports. The discount rates used are pre-tax and reflect specific risks related to the relevant cash-generating units.

17. OTHER ASSETS

Prepayments Prepayments for lease Offset against business tax payable Prepayment for equipment Others Current Non-current		December 31	December 31
		2016 $ 1,929,273 615,138 594,015 29,912 208,441 $ 3,376,779 $ 2,619,735 757,044 $ 3,376,779	2015 $ 2,408,898 689,368 1,220,409 63,956 109,475 $ 4,492,106 $ 3,744,824 747,282 $ 4,492,106

Prepayments for lease with carrying amounts of $582,914 thousand and $653,274 thousand as of December 31, 2016 and 2015, respectively, referred to land use rights located in mainland China.

18. BORROWINGS

a. Short-term borrowings

December 31 2016 2015

b.	Market interest rates for short-term borrowings were as follows: Short-term borrowings Long-term borrowings Unsecured borrowings The Parent Company Lite-On Mobile Pte. Ltd. Silitech Technology Corp. Guangzhou Lite-On Mobile Electronic Components Co., Ltd. Lite-On Japan Ltd. Five Dimension Co., Ltd. Current portion Secured borrowings Power Innovations International Inc. Current portion		0.78%-8.55% 0.7%-4% December 31	0.78%-8.55% 0.7%-4% December 31
			2016 $ 12,000,000 6,440,000 1,440,000 - 47,663 - 19,927,663 (7,889,817) 12,037,846 2,406 (1,082) 1,324 $ 12,039,170	2015 $ 12,500,000 6,555,000 1,440,000 524,396 102,082 26,890 21,148,368 (4,795,064) 16,353,304 3,503 (1,054) 2,449 $ 16,355,753

1) As of December 31, 2016 and 2015, the Parent Company had 2 long-term bank loans, respectively, with contract terms between September 23, 2013 and September 23, 2021. The floating interest rates are (1.5789% to 1.7895% and 1.5789% to 1.59067% as of December 31, 2016 and 2015, respectively) payable monthly or quarterly. These loans should be repaid in 5 installments or at lump sum on loan maturity.

On September 23, 2008, the Parent Company signed a 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 $15 billion, consisting of (a) $12 billion and (b) $3 billion of the credit line of the above syndicated loan. The Parent Company had repaid the syndicated loan in September 2015.

On September 12, 2013, the Parent Company signed another contract for a five-year syndicated loan with Citibank and 17 other financial institutions. The credit line was $15 billion, which was for Company to repay the former syndicated loan with Citibank signed on September 23, 2008, consisting of (a) $12 billion and (b) $3 billion of the credit line of the above syndicated loan. It should be used as a medium-term loan but may not be used on a revolving basis. The principal of this syndication loan should be repaid three years after September 23, 2013 in five semiannual installments with the first payment paid on September 23, 2016, and the interest rate is the 90-day Taipei Interbank Offered Rate plus 61 points. Under the syndicated loan agreement, the Parent Company should maintain the agreed financial ratios based on the most recent semiannual or annual financial statements. As of December 31, 2016 and 2015, the Parent Company used $9.6 billion and $12 billion, respectively, of the credit line of the above syndicated loan.

Unsecured borrowings Line of credit borrowings $ 14,386,282 $ 17,670,878

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On June 27, 2016, the Parent Company signed another contract for a five-year syndicated loan with Citibank and 15 other financial institutions. The credit line was $12 billion, which was for Company to repay the former syndicated loan with Citibank signed on September 12, 2013. It should be used as a medium-term loan but may not be used on a revolving basis. The principal of this syndication loan should be repaid three years after June 27, 2016 in five semiannual installments with the first payment paid on June 27, 2019, and the interest rate is the 90-day Taipei Interbank Offered Rate plus 60 points. Under the syndicated loan agreement, the Parent Company should maintain the agreed financial ratios based on the most recent semiannual or annual financial statements. As of December 31, 2016, the Parent Company used $2.4 billion of the credit line of the above syndicated loan.

2) Lite-On Mobile Pte. Ltd., a subsidiary of the Parent Company, had a long-term, syndicated-bank loan. As of December 31, 2016 and 2015, the floating interest rates were 1.98733% and 0.92075% to 1.4239%, respectively. The principal is repayable from April 29, 2014 in five semiannual installments.

On April 29, 2011, Lite-On Mobile Pte. Ltd. signed a loan contract with Citibank and 13 other financial institutions (the endorsements and guarantees were provided by the Parent Company). This contract is on a five-year syndicated loan of US$200 million. As of December 31, 2015, Lite-On Mobile Pte. Ltd. had used US$40 million of the syndicated loan. It had repaid the syndicated loan in April 2016.

On March 31, 2014, Lite-On Mobile Pte. Ltd. signed with Citibank and 12 other financial institutions (the endorsements and guarantees were provided by the Parent Company). This contract is on a five-year syndicated loan of US$200 million. This syndicated loan was for Lite-On Mobile Pte. Ltd. to prepay the syndicated loan with Citibank under a contract signed on April 29, 2011. As of December 31, 2016 and 2015, Lite-On Mobile Pte. Ltd. had used US$200 million and US$160 million of the syndicated loan.

3) Silitech Technology Co., Ltd., a subsidiary of the Parent Company, entered into a $2.4 billion syndicated loan contract, with the Land Bank of Taiwan as lead bank and a contract term from February 18, 2013 to February 18, 2018. This loan was obtained for the purposes of supporting working capital and capital expenditure. As of December 31, 2016 and 2015, Silitech had both used $1.44 billion of the syndicated loan, with floating interest rates of 1.5856% and 1.5958% to 1.5962%, respectively. The first repayment of $480 million should be made on August 18, 2017. The remaining principal of $960 million is repayable by February 18, 2018.
4) On December 28, 2011, Guangzhou Lite-On Mobile Electronic Components Co., Ltd., a subsidiary of the Parent Company, signed a contract for a five-year syndicated loan with Citibank and 10 other financial institutions. The credit line was US$50 million (the endorsements and guarantees were provided by the Parent Company). The syndicated loan was repaid in December 2016.
5) As of December 31, 2016, Lite-On Japan Ltd., a subsidiary of the Parent Company, had 4 long-term bank loans, with contract terms from March 2012 to October 2018, with interest rates of 1.3% to 1.5370% and principal repayable in trimestral installments.

As of December 31, 2015, Lite-On Japan Ltd., a subsidiary of the Parent Company, had 6 long-term bank loans, with contract terms from March 2011 to October 2018, with interest rates of 0.975% to 1.35% and principal repayable in trimestral installments.

7) As of December 31, 2016 and 2015, Power Innovations International Inc., a subsidiary of the Parent Company, had a long-term secured borrowing as a collateral loan for machinery and equipment, with contract terms from March 28, 2013 to February 28, 2019, and an interest rate of 4.4%.

19. FINANCE LEASE PAYABLES

FINANCE LEASE PAYABLES
Minimum lease payments Not later than one year Later than one year and not later than five years Future finance charges Present value of minimum lease payments Present value of minimum lease payments Not later than one year Later than one year and not later than five years Current Non-current Power Innovations International Inc. Guangzhou Lite-On Mobile Electronic Components Co., Ltd. Lite-On Mobile Sweden AB Current portion of long-term capital lease liabilities		December 31
		2016 $ 1,866 3,822 5,688 (385) $ 5,303 $ 1,657 3,646 $ 5,303 $ 1,657 3,646 $ 5,303 $ 5,303 - - 5,303 (1,657) $ 3,646	2015 $ 98,508 5,790 104,298 (3,399) $ 100,899 $ 95,501 5,398 $ 100,899 $ 95,501 5,398 $ 100,899 $ 7,010 93,390 499 100,899 (95,501) $ 5,398

a. Power Innovations International Inc. leased machinery and equipment under finance leases valid from March 28, 2013 to March 31, 2020. The terms of these leases were between five and seven years, with 3.49% to 4.75% interest rate. The machinery and equipment can be bought at bargain purchase prices at the end of the lease terms.
b. Guangzhou Lite-On Mobile Electronic Components Co., Ltd. leased buildings, machinery and equipment under finance leases valid from January 1, 2007 to December 31, 2016. The terms of these leases were 10 years, with 7.11% interest rate.
c. Lite-On Mobile Sweden AB leased machinery and equipment under finance leases valid from January 9, 2013 to January 31, 2016. The terms of these leases were three years, with 2.36% interest rate.
6) Since April 2016, Five Dimension Co., Ltd., a subsidiary of the Parent Company, is no longer included in the consolidated financial statements. As of December 31, 2015, Five Dimension Co., Ltd. had 3 long-term bank loans, with contract terms from March 28, 2012 to March 20, 2027, with interest rates of 0.4% to 2.375%, and principal repayable in monthly installments or at lump sum on loan maturity.

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20. PROVISIONS

PROVISIONS
Current Warranties Balance at January 1 Recognition of provisions Usage Effect of foreign currency exchange differences Balance at December 31		December 31
	2016 2015 $ 1,032,113 $ 1,068,810 For the Year Ended December 31
		2016 $ 1,068,810 265,905 (295,397) (7,205) $ 1,032,113	2015 $ 1,080,628 286,549 (301,940) 3,573 $ 1,068,810

Based on the local legislation for the sale of goods, provision for warranty claims is the present value of management’s best estimate of the future outflow of economic benefits that will be required under the Group’s obligations for warranties. The estimate had been made on the basis of historical warranty trends and may vary as a result of the entry of new materials, altered manufacturing processes or other events affecting product quality.

21. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Parent Company and subsidiaries - Philips & Lite-On Digital Solutions Corp., Silitech Technology Corp., Lite-On Integrated Services Inc. and Lite-On Green Technologies Inc. of the Group adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

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.

b. Defined benefit plans

The Parent Company and subsidiaries - Philips & Lite-On Digital Solutions Corp. and Silitech Technology Corp. of the Group adopted the defined benefit plan under the Labor Standards Law, under which pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Parent Company and its subsidiaries - Philips & Lite-On Digital Solutions Corp. and Silitech Technology Corp. of the Group contribute amounts equal to 2% to 6% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Parent Company and its subsidiaries assess the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Parent Company and its subsidiaries are required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of

Labor (“the Bureau”); the Parent Company and its subsidiaries have no right to influence the investment policy and strategy.

The amounts included in the balance sheets in respect of the Group’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability	December 31
	2016 2015 $ 1,267,158 $ 1,257,757 (1,078,054) (1,101,903) $ 189,104 $ 155,854

Movements in net defined benefit liability were as follows:

Present Value
of the Defined
Benefit
Obligation
Fair Value of
the Plan Assets
Balance at January 1, 2015
$ 1,178,095
$ (1,082,074)

Current service cost
12,544
-
Net interest expense (income)

20,308

(18,317)

Recognized in profit or loss

32,852

(18,317)

Remeasurement
Return on plan assets
-
(10,604)
Actuarial loss - changes in demographic
assumptions
4,795
-
Actuarial loss - changes in financial
assumptions
71,548
-
Actuarial loss - experience adjustments

9,501

-

Recognized in other comprehensive loss

85,844

(10,604)

Contributions from the employer
-
(21,910)
Benefits paid
(36,202)
31,002
Exchange differences on foreign plans

(2,832)

-

Balance at December 31, 2015
$ 1,257,757
$ (1,101,903)

Balance at January 1, 2016
$ 1,257,757
$ (1,101,903)

Current service cost
11,005
-
Net interest expense (income)

14,627

(12,087)

Recognized in profit or loss

25,632

(12,087)

Remeasurement
Return on plan assets
-
4,406
Actuarial loss - changes in demographic
assumptions
956
-
Actuarial gain - changes in financial
assumptions
(16,404)
-
Actuarial loss - experience adjustments

52,963

-

Recognized in other comprehensive loss

37,515

4,406

Contributions from the employer
-
(21,059)
Benefits paid
(52,589)
52,589
Exchange differences on foreign plans

(1,157)

-

Balance at December 31, 2016
$ 1,267,158
$ (1,078,054)

Net Defined
Benefit
Liability
$ 96,021
12,544
1,991
14,535

(10,604)
4,795
71,548
9,501
75,240

(21,910)
(5,200)
(2,832)
$ 155,854
$ 155,854
11,005
2,540
13,545
4,406
956
(16,404)
52,963
41,921

(21,059)
-
(1,157)
$ 189,104

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22. EQUITY

Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate(s) Expected rate(s) of salary increase Expected return on plan assets	December 31
	2016 2015 1.25%-4.75% 1.10%-4.375% 3.00%-4.75% 3.00%-4.75% 1.25%-4.75% 1.10%-4.375%

If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 0.25% increase 0.25% decrease		December	31
		2016 $ (30,926) $ 32,059 $ 30,843 $ (29,930)	2015 $ (32,514) $ 33,759 $ 32,481 $ (31,469)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December 31
	2016 2015 $ 21,444 $ 21,613 9.83-16.75 years 10.32-18.53 years

a. Share capital
1) Common shares

Common shares
Number of shares authorized (in thousands) Amount of shares authorized Number of shares issued and fully paid (in thousands) Amount of shares issued		December 31
		2016 3,500,000 $ 35,000,000 2,350,867 $ 23,508,670	2015 3,500,000 $ 35,000,000 2,334,928 $ 23,349,283

Fully paid common shares, which have a par value of $10, carry one vote per share and carry a right to dividends.

Of the Parent Company’s authorized shares, 100,000 thousand shares had been reserved for the issuance of employee share options.

2) Issued global depositary receipts

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.

On April 3, 1995, GVC Corp. issued 5,000 thousand units of GDRs on the London Stock Exchange. These GDRs represented 25,000 thousand common shares of GVC Corp., which later issued more shares. 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, 2016 and 2015, the outstanding marketable equity securities were 5,221 thousand units and 5,217 thousand units, representing 52,209 thousand common shares and 52,168 thousand common shares of the Parent Company, respectively. The rights and obligation of security holders are the same as those of common shareholders, except for voting rights. As of December 31, 2016 and 2015, the unredeemed GDRs amounted to 890 thousand units and 816 thousand units.

b. Capital surplus

The premium from shares issued in excess of par (including share premium from issuance of common shares, conversion of bonds, and merger) may be used to offset a deficit; in addition, when the Parent Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to capital limited to a certain percentage of the Parent Company’s capital surplus and once a year.

The capital surplus arising from share of changes in equities of subsidiaries, changes in equities of associates and joint ventures accounted for by the equity method and treasury share transactions from dividends according to the Parent Company’s shares holding by subsidiaries may only be used to offset a deficit.

c. Retained 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 no less than 10% of total dividends distributed.

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In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. The shareholders held their regular meeting on June 24, 2016 and, in that meeting, had resolved amendments to the Company’s Articles of Incorporation (the “Articles”), particularly the amendment to the policy on dividend distribution and the addition of the policy on distribution of employees’ compensation.

Under the dividend policy as set forth in the amended Articles, if there is net profit after tax upon the final settlement of account of each fiscal year, the Parent Company shall first offset any previous accumulated losses (including unappropriated earnings adjustment if any) and set aside a legal reserve at 10% of the net profits, unless the accumulated legal reserve is equal to the total capital of the Parent Company; then set aside special reserve in accordance with relevant laws or regulations or as requested by the authorities in charge. The remaining net profit, plus the beginning unappropriated earnings (including adjustment of unappropriated earnings if any), shall be distributed into dividends to shareholders according to the distribution plan proposed by the Board of Directors and submitted to the shareholders’ meeting for approval. For the policies on distribution of employees’ compensation and remuneration to directors before and after amendment, please refer to (b) Employee benefits expense in Note 26.

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

Under Rule No. 1010012865, Rule No. 1010047490 and Rule No. 1030006415 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, the Parent Company should appropriate or reverse a special reserve. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses and thereafter distributed.

Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax credit equal to their proportionate share of the income tax paid by the Parent Company.

The appropriations of earnings for 2015 and 2014 had been approved in the shareholders’ meetings on June 24, 2016 and 2015. The appropriations and dividends per share were as follows:

Legal reserve Special reserve Share dividends Cash dividends	Appropriation of Earnings 2015 2014 $ 722,290 $ 646,166 166,389 182,544 116,746 117,084 5,113,493 4,613,097	Dividends Per Share (NT$)
		2015 2014 $ 0.05 $ 0.05 2.19 1.97

The appropriations of earnings for 2016 had been proposed by the Parent Company’s board of directors on February 24, 2017. The appropriations and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Legal reserve	$	941,635
Special reserve		940,276
Cash dividends		6,864,532	$2.92

The appropriations of earnings for 2016 are subject to the resolution of the shareholders’ meeting to be held on June 22, 2017.

d. Other equity items

Movements in other equity items were as follows:

For the Year Ended December 31, 2016 Foreign Currency Translation Reserve Unrealized Gain (Loss) from Available-for- sale Financial Assets Total Balance at January 1 $ 3,347,902 $ (152,714) $ 3,195,188 Exchange differences arising on translating the financial statements of foreign operations (5,117,763) - (5,117,763) Gain arising on changes in the fair value of available-for-sale financial assets - 55,055 55,055 Reclassification to gain from disposal of available-for-sale financial assets - (5,957) (5,957) Share of other comprehensive loss of associates (265,366) (22,972) (288,338) Effect of deconsolidation of subsidiaries (Note 27) (3,320) - (3,320) Income tax benefit 842,863 - 842,863 Balance at December 31 $ (1,195,684) $ (126,588) $ (1,322,272) For the Year Ended December 31, 2015 Foreign Currency Translation Reserve Unrealized Gain (Loss) from Available-for- sale Financial Assets Cash Flow Hedges Reserve Total Balance at January 1 $ 4,125,097 $ 139,072 $ (11,989) $ 4,252,180 Exchange differences arising on translating the financial statements of foreign operations (881,221) - - (881,221) Loss arising on changes in the fair value of available-for- sale financial assets - (371,318) - (371,318) Reclassification to loss from disposal of available-for-sale financial assets - 79,052 - 79,052 Gain arising on changes in the fair value of hedging instruments - - 11,989 11,989 Share of other comprehensive income (loss) of associates (28,329) 480 - (27,849) Income tax benefit 132,355 - - 132,355 Balance at December 31 $ 3,347,902 $ (152,714) $ - $ 3,195,188	For the Year Ended December 31, 2016 Foreign Currency Translation Reserve Unrealized Gain (Loss) from Available-for- sale Financial Assets Total Balance at January 1 $ 3,347,902 $ (152,714) $ 3,195,188 Exchange differences arising on translating the financial statements of foreign operations (5,117,763) - (5,117,763) Gain arising on changes in the fair value of available-for-sale financial assets - 55,055 55,055 Reclassification to gain from disposal of available-for-sale financial assets - (5,957) (5,957) Share of other comprehensive loss of associates (265,366) (22,972) (288,338) Effect of deconsolidation of subsidiaries (Note 27) (3,320) - (3,320) Income tax benefit 842,863 - 842,863 Balance at December 31 $ (1,195,684) $ (126,588) $ (1,322,272) For the Year Ended December 31, 2015 Foreign Currency Translation Reserve Unrealized Gain (Loss) from Available-for- sale Financial Assets Cash Flow Hedges Reserve Total Balance at January 1 $ 4,125,097 $ 139,072 $ (11,989) $ 4,252,180 Exchange differences arising on translating the financial statements of foreign operations (881,221) - - (881,221) Loss arising on changes in the fair value of available-for- sale financial assets - (371,318) - (371,318) Reclassification to loss from disposal of available-for-sale financial assets - 79,052 - 79,052 Gain arising on changes in the fair value of hedging instruments - - 11,989 11,989 Share of other comprehensive income (loss) of associates (28,329) 480 - (27,849) Income tax benefit 132,355 - - 132,355 Balance at December 31 $ 3,347,902 $ (152,714) $ - $ 3,195,188	For the Year Ended December 31, 2016 Foreign Currency Translation Reserve Unrealized Gain (Loss) from Available-for- sale Financial Assets Total Balance at January 1 $ 3,347,902 $ (152,714) $ 3,195,188 Exchange differences arising on translating the financial statements of foreign operations (5,117,763) - (5,117,763) Gain arising on changes in the fair value of available-for-sale financial assets - 55,055 55,055 Reclassification to gain from disposal of available-for-sale financial assets - (5,957) (5,957) Share of other comprehensive loss of associates (265,366) (22,972) (288,338) Effect of deconsolidation of subsidiaries (Note 27) (3,320) - (3,320) Income tax benefit 842,863 - 842,863 Balance at December 31 $ (1,195,684) $ (126,588) $ (1,322,272) For the Year Ended December 31, 2015 Foreign Currency Translation Reserve Unrealized Gain (Loss) from Available-for- sale Financial Assets Cash Flow Hedges Reserve Total Balance at January 1 $ 4,125,097 $ 139,072 $ (11,989) $ 4,252,180 Exchange differences arising on translating the financial statements of foreign operations (881,221) - - (881,221) Loss arising on changes in the fair value of available-for- sale financial assets - (371,318) - (371,318) Reclassification to loss from disposal of available-for-sale financial assets - 79,052 - 79,052 Gain arising on changes in the fair value of hedging instruments - - 11,989 11,989 Share of other comprehensive income (loss) of associates (28,329) 480 - (27,849) Income tax benefit 132,355 - - 132,355 Balance at December 31 $ 3,347,902 $ (152,714) $ - $ 3,195,188		For the Year Ended December 31, 2016	For the Year Ended December 31, 2016	For the Year Ended December 31, 2016
			Foreign Currency Translation Reserve Unrealized Gain (Loss) from Available-for- sale Financial Assets Total $ 3,347,902 $ (152,714) $ 3,195,188 (5,117,763) - (5,117,763) - 55,055 55,055 - (5,957) (5,957) (265,366) (22,972) (288,338) (3,320) - (3,320) 842,863 - 842,863 $ (1,195,684) $ (126,588) $ (1,322,272) For the Year Ended December 31, 2015
		Foreign Currency Translation Reserve Unrealized Gain (Loss) from Available-for- sale Financial Assets $ 4,125,097 $ 139,072 (881,221) - - (371,318) - 79,052 - - (28,329) 480 132,355 - $ 3,347,902 $ (152,714)			Cash Flow Hedges Reserve $ (11,989) - - - 11,989 - - $ -	Total $ 4,252,180 (881,221) (371,318) 79,052 11,989 (27,849) 132,355 $ 3,195,188

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The exchange differences arising on translation of foreign operation’s net assets from its functional currency to the Parent Company’s presentation currency are recognized directly in other comprehensive income and also accumulated in the foreign currency translation reserve.

Unrealized gain/loss on available-for-sale financial assets represents the cumulative gains or losses arising from the fair value measurement on available-for-sale financial assets that are recognized in other comprehensive income. When those available-for-sale financial assets have been disposed of or are determined to be impaired subsequently, the related cumulative gains or losses in other comprehensive income are reclassified to profit or loss.

The cash flow hedges reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of the hedging instruments entered into as cash flow hedges. The cumulative gain or loss arising on changes in fair value of the hedging instruments that are recognized and accumulated in cash flow hedges reserve will be reclassified to profit or loss only when the hedge transaction affects profit or loss.

e. Non-controlling interests

Non-controlling interests
Balance at January 1 Attributable to non-controlling interests: Share of profit (loss) for the year Exchange difference arising on translation of foreign entities Unrealized net gain (loss) on available-for-sale financial assets Remeasurement on define benefit plans Related income tax benefit (expense) Effect of deconsolidation of subsidiaries (Note 27) Decrease in non-controlling interests Balance at December 31	For the Year Ended December 31
		2016 $ 3,695,082 (43,787) (218,425) 291 243 2,346 (26,985) (59,864) $ 3,348,901	2015 $ 4,198,430 89,933 (50,813) (88) 311 (2,177) - (540,514) $ 3,695,082

The Group recognized a decrease in non-controlling interests for the years ended December 31, 2016 and 2015 because of the attribution of cash dividends to non-controlling interests amounting to 94,185 thousand and 285,677 thousand, respectively.

The Parent Company’s shares held by its subsidiaries at the end of the reporting periods were as follows:

Name of Subsidiary Number of Shares Held (In Thousands) December 31, 2016 Lite-On Capital Corp. 15,116 LTC International Ltd. 7,004 Yet Foundate Ltd. 2,271 Lite-On Electronics Co., Ltd. 2,450 December 31, 2015 Lite-On Capital Corp. 15,041 LTC International Ltd. 6,969 Yet Foundate Ltd. 2,260 Lite-On Electronics Co., Ltd. 2,438	Carrying Amount Market Price $ 718,857 $ 734,631 297,469 340,269 126,881 110,276 105,515 118,984 $ 1,248,722 $ 1,304,160 $ 718,857 $ 479,049 297,469 221,759 126,881 71,820 105,515 77,491 $ 1,248,722 $ 850,119

On July 20, 2015, the Parent Company’s Board of Directors approved the repurchase of up to 100,000 thousand shares listed on the Taiwan Stock Exchange between July 21, 2015 and September 20, 2015, with the buyback price ranging from $25.34 to $53.97. By the end of the repurchase period, the Parent Company had bought back 22,787 thousand shares for $706,679 thousand. The Parent Company has already registered with the Ministry of Economic Affairs to cancel those buy-back shares.

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

f. Treasury shares

Treasury shares
			Unit: In Thousands of Shares
	Number of	Increase	Decrease	Number of
	Shares at	During the	During the	Shares at
Purpose of Buyback	January 1	Period	Period	December 31
For the year ended
December 31, 2016
Shares held by subsidiaries	26,708	133	-	26,841
For the year ended
December 31, 2015
Shares held by subsidiaries	26,575	133	-	26,708
Shares buyback for cancellation	-	22,787	22,787	-
	26,575	22,920	22,787	26,708

23. REVENUE

REVENUE
Revenue from the sale of goods Rental income from property Solar power	For the Year Ended December 31
		2016 $ 229,450,758 112,961 8,039 $ 229,571,758	2015 $ 216,736,589 125,260 66,885 $ 216,928,734

For segment revenue information, refer to Note 35.

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24. INCOME TAX

a. Major components of tax expense recognized in profit or loss

Current income tax expense Current tax expense recognized in the current year Adjustment for prior years’ tax Deferred tax The origination and reversal of temporary differences Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2016 $ 3,162,261 (218,374) 2,943,887 326,576 $ 3,270,463	2015 $ 2,456,956 (149,166) 2,307,790 386,019 $ 2,693,809

A reconciliation of income before income tax and income tax expense recognized in profit or loss was as follows:

as follows:
Income before Income tax Income tax expense calculated at the statutory rate Deductible items in determining taxable income Additional income tax on unappropriated earnings The origination and reversal of temporary differences Adjustment for prior years’ tax Income tax expense recognized in profit or loss	For the Year Ended December 31
		2016 $ 12,643,027 $ 3,272,015 (213,941) 104,187 326,576 (218,374) $ 3,270,463	2015 $ 10,006,641 $ 2,678,778 (312,831) 91,009 386,019 (149,166) $ 2,693,809

The applicable tax rate used above is the corporate tax rate of 17% payable by the Group entities based in the ROC. Tax rates used by other group entities operating in other jurisdictions are based on the tax laws in those jurisdictions.

As the status of 2017 appropriations of earnings is uncertain, the potential income tax consequences of 2016 unappropriated earnings are not reliably determinable.

b. Income tax benefit recognized in other comprehensive income

Deferred tax Income tax recognized in other comprehensive income Translation of foreign operations Remeasurement on defined benefit plans Share of other comprehensive income (loss) of associates	For the Year Ended	For the Year Ended	December 31
		2016 $ 845,227 1,633 (18) $ 846,842	2015 $ 128,956 15,604 1,222 $ 145,782

c. Deferred income tax

The movements of deferred tax assets were as follows:

2016 Temporary differences Investment accounted for using equity method Unrealized loss and expense Impairment loss on assets Accrued warranty expense Unrealized loss on inventories Operating loss carryforward Net defined benefit liability Unrealized sales profit Others 2015 Temporary differences Investment accounted for using equity method Unrealized loss and expense Impairment loss on assets Accrued warranty expense Unrealized loss on inventories Operating loss carryforward Net defined benefit liability Unrealized sales profit Accumulated compensated absences Others	Opening Balance Recognized in Profit (Loss) Recognized in Other Comprehensive Income (Loss) $ 1,263,354 $ (4,560 ) $ - 628,295 (64,327 ) - 351,520 - - 234,193 22,241 - 235,390 (33,662 ) - 110,354 22,920 - 70,007 700 1,633 39,113 3,072 - 232,572 (26,758) - $ 3,164,798 $ (80,374) $ 1,633 $ 1,305,046 $ (53,741 ) $ - 565,528 80,908 - 325,877 33,054 - 236,222 (2,616 ) - 225,978 12,132 - 112,478 (2,738 ) - 59,309 (5,575 ) 15,604 40,835 (2,220 ) - 29,681 (20,319 ) - 204,512 15,386 - $ 3,105,466 $ 54,271 $ 15,604	Exchange Differences $ (2,518 ) (35,528 ) - 12,284 (18,592 ) 12,659 387 1,697 (14,780) $ (44,391) $ 12,049 (18,141 ) (7,411 ) 587 (2,720 ) 614 669 498 4,556 (1,244) $ (10,543)	Closing Balance $ 1,256,276 528,440 351,520 268,718 183,136 145,933 72,727 43,882 191,034
			$ 3,041,666
			$ 1,263,354 628,295 351,520 234,193 235,390 110,354 70,007 39,113 13,918 218,654
			$ 3,164,798

The movements of deferred tax liabilities were as follows:

2016 Temporary differences Investment accounted for using equity method Unrealized amortization of goodwill Land value increment tax Unrealized exchange gains, net Others 2015 Temporary differences Investment accounted for using equity method Unrealized amortization of goodwill Land value increment tax Others	Opening Balance Recognized in Profit (Loss) Recognized in Other Comprehensive Income (Loss) $ 2,905,065 $ 160,893 $ (845,209 ) 353,808 - - 239,693 - - - 84,946 - 32,998 363 - $ 3,531,564 $ 246,202 $ (845,209) $ 2,614,664 $ 428,842 $ (130,178 ) 353,808 - - 239,693 - - 21,627 11,448 - $ 3,229,792 $ 440,290 $ (130,178)	Exchange Differences $ (285 ) - - (150 ) (1) $ (436) $ (8,263 ) - - (77) $ (8,340)	Closing Balance $ 2,220,464 353,808 239,693 84,796 33,360
			$ 2,932,121
			$ 2,905,065 353,808 239,693 32,998
			$ 3,531,564

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d. As of December 31, 2016 and 2015, the aggregate deductible temporary differences for which no deferred income tax assets have been recognized amounted to $1,384,716 thousand and $1,103,742 thousand, respectively.
e. Integrated income tax

Unappropriated earnings Unappropriated earnings generated before January 1, 1998 Unappropriated earnings generated on and after January 1, 1998 Imputation credits accounts		December 31	December 31
		2016 $ 2,215 16,249,991 $ 16,252,206 $ 1,034,031	2015 $ 2,215 13,008,858 $ 13,011,073 $ 888,124

The estimated and actual creditable ratio for distribution of earnings of 2016 and 2015 were 8.72% and 8.13%, respectively.

f. Income tax assessments

The tax returns of Parent Company through all years by 2014 have been assessed by the tax authorities.

25. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	For	Unit: NT$ Per Share the Year Ended December 31	Unit: NT$ Per Share the Year Ended December 31
		2016 $ 4.05 $ 4.00	2015 $ 3.10 $ 3.05

The weighted average number of shares outstanding used for the earnings per share computation was adjusted retroactively for the issuance of bonus shares on August 30, 2016. The basic and diluted earnings per share adjusted retrospectively for the year ended December 31, 2015 were as follows:

		Unit:	NT$ Per Share
		Before	After
	Retrospective		Retrospective
	Adjustment		Adjustment
Basic earnings per share	$	3.11	$ 3.10
Diluted earnings per share	$	3.07	$ 3.05

The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share from continuing operations were as follows:

Net Profit for the Year

Net Profit for the Year
Earnings used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employees’ compensation Earnings used in the computation of diluted earnings per share	For the Year Ended December 31
		2016 $ 9,416,351 - $ 9,416,351	2015 $ 7,222,899 - $ 7,222,899

Weighted Average Number of Ordinary Shares Outstanding (in thousand shares)

Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employees’ compensation or bonus issue to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2016 2,323,048 28,393 2,351,441	2015 2,331,882 34,549 2,366,431

If the Parent Company offered to settle compensation paid to employees in cash or shares, the Parent Company assumed the entire amount of the compensation will be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

26. ADDITIONAL INFORMATION ON EXPENSES

ADDITIONAL INFORMATION ON EXPENSES
a. Depreciation and amortization Property, plant and equipment Investment property Intangible assets An analysis of deprecation by function Recognized in operating costs Recognized in operating expenses An analysis of amortization by function Recognized in operating costs Recognized in operating expenses	For the Year Ended December 31
		2016 $ 6,308,828 31,584 466,983 $ 6,807,395 $ 5,468,377 872,035 $ 6,340,412 $ 46,396 420,587 $ 466,983	2015 $ 6,713,295 32,835 534,128 $ 7,280,258 $ 5,873,561 872,569 $ 6,746,130 $ 52,404 481,724 $ 534,128

(Continued)

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For the Year Ended December 31 2016 2015

b. Employee benefit expenses

Post-employment benefits Defined contribution plans Defined benefit plans (Note 21) Termination benefits Other employee benefits An analysis of employee benefit expenses by function Recognized in operating costs Recognized in operating expenses	$ 801,127 13,545 814,672 141,827 25,846,942 $ 26,803,441 $ 16,830,099 9,973,342 $ 26,803,441	$ 722,054 14,535 736,589 212,304 26,785,595 $ 27,734,488 $ 17,942,193 9,792,295 $ 27,734,488 (Concluded)

In compliance with the Company Act as amended in May 2015 and the amended Articles as resolved in the shareholders’ meeting on June 24, 2016, the Parent Company distributed employees’ compensation and remuneration of directors at the rates no less than 1% and no higher than 1.5%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. The appropriations of employee compensation and remuneration of directors for 2016 and 2015, which have been approved by the Parent Company’s board of directors on February 24, 2017 and March 25, 2016. The details were as follows:

Employees’compensation Remuneration of directors	For the Year Ended December 31
	2016 2015
	Cash Dividends Share Dividends Cash Dividends Share Dividends $1,332,414 $ - $ 858,514 $ 163,526 80,039 - 61,395 -

The 4,264 thousand shares for 2015 were determined by dividing the amount of share compensation resolved in 2016 by $38.35, the closing price of the shares on the day immediately preceding the Parent Company’s board of directors’ meeting.

Material differences between these estimates and the amounts proposed by the board of directors on or before the financial statements are authorized for issue are adjusted in the year the bonus and remuneration are recognized. If there is a change in the proposed amounts after the financial statements are authorized for issue, the differences are recorded as a change in accounting estimate.

There was no difference between the amounts of employee compensation and remuneration of directors and the amounts recognized in the consolidated financial statements for the year ended December 31, 2015.

The appropriations of bonuses to employees and remuneration of directors for 2014, which had been approved in the shareholders’ meetings on June 24, 2015, were as follows:

Bonus to employees Remuneration of directors	For the Year Ended December 31, 2014
	Cash Share $ 768,033 $ 146,292 54,924 -

The 4,333 thousand shares for 2014 was determined by dividing the amount of share bonus approved in 2015 by the closing price of $33.76 (after considering the effect of cash and stock dividends) on the day immediately preceding the shareholders’ meeting.

There was no difference between the amounts of the bonus to employees and the remuneration of directors approved in the shareholders’ meeting on June 24, 2015 and the amounts recognized in the consolidated financial statements for the years ended December 31, 2014.

Information on 2017 and 2016 employees’ compensation and remuneration of directors resolved by the Parent Company’s board of directors, refer to the Market Observation Post System website of the Taiwan Stock Exchange.

27. DECONSOLIDATION OF SUBSIDIARY

On April 28, 2016, subsidiary Lite-On Capital Corp. subscribed for additional new shares of Five Dimension Co., Ltd. at a percentage different from its existing ownership percentage and disposed part of its holdings. Lite-On Capital Corp. lost its power to govern the financial and operating policies of Five Dimension Co., Ltd.; thus, the relevant assets and liabilities had been derecognized.

On January 27, 2016, subsidiary Lite-On Green Energy B.V. disposed of its 100% ownership in Romeo Tetti PV1 S.R.L. Lite-On Green Energy B.V. lost its power to govern the financial and operating policies of Romeo Tetti PV1 S.R.L.; thus, the relevant assets and liabilities had been derecognized.

a. Consideration received from the disposal

Consideration received from the disposal
			January 27,
	April	28, 2016		2016
Sales proceeds receivable	$	15,092	$	297,778
Analysis of asset and liabilities on the date control was lost
			January 27,
	April	28, 2016		2016
Current assets
Cash and cash equivalents	$	993	$	3,957
Receivables, net		-		11,733
Other receivables		35,022		-
Inventories, net		417		-
Others		313		15,878
				(Continued)

b. Analysis of asset and liabilities on the date control was lost

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28. CAPITAL MANAGEMENT

			January	27,
	April 28, 2016		2016
Non-current assets
Property, plant and equipment, net	$	459	$ 300,321
Intangible assets, net		288		-
Refundable deposits		1,640		-
Current liabilities
Short-term borrowings		(572)		-
Payables		-	(38,557)
Others		(2,086)	(15,715)
Current portion of long-term borrowings		(3,135)		-
Non-current liabilities
Long-term borrowings, net of current portion		(24,043)		-
Net assets disposed of	$	9,296	$ 277,617
			(Concluded)

c. Gain on deconsolidation of subsidiary

Fair value of interest retained Consideration received Add: Accumulated exchange differences reclassified to profit or loss after deconsolidation of subsidiary Less: Carrying amount of interest retained Net assets deconsolidated Non-controlling interests Less: Goodwill of deconsolidated subsidiary Gain on disposal (recorded as nonoperating income and expense: Other income)	For the Year Ended December 31, 2016
	Five Dimension Co., Ltd. Romeo Tetti PV1 S.R.L. $ 26,771 $ - 15,092 297,778 3,320 - 9,296 277,617 (26,985) - (17,689) 277,617 55,736 19,935 $ 7,136 $ 226

d. Net cash inflow on deconsolidation of subsidiary

	For the Year
	Ended
	December 31,
	2016
Consideration received in cash and cash equivalents	$ 312,870
Less: Cash and cash equivalent balances disposed of	(4,950)
	$ 307,920

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance.

The Group’s capital management system aims to ensure that the necessary financial resources and operating plan are enough to meet the next 12 months’ requirements for working capital, capital expenditures, research and development expenses, debt repayment, dividend expenses and other need.

29. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments that are not measured at fair value

For certain financial instruments-including notes receivable, trade receivables, trade receivables - related parties, other receivables, other receivables - related parties, debt investments with no active market, short-term borrowings, notes payable, trade payables, trade payables - related parties, other payables, other payables - related parties, and finance lease payables-the Group’s management considers the carrying amounts of these financial instruments recognized in the financial statements as approximating their fair values. For long-term loans (including their current portion) with floating rates, the carrying amounts of long-term loans are used as basis to estimate their fair value.

b. Fair value of financial instruments that are measured at fair value on a recurring basis

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

Level 1 fair value measurements are those derived from quoted prices in active markets for identical assets or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
1) Fair value hierarchy

December 31, 2016

Financial assets at FVTPL Derivative financial assets Financial liabilities at FVTPL Derivative financial liabilities Available-for-sale financial assets Securities listed in ROC - equity securities Securities listed in other countries - equity securities	Level 1 $ - $ - $ 313,185 3,626	Level 2 $ 173,068 $ 128,685 $ - -	Level 3 $ - $ - $ - -	Total $ 173,068 $ 128,685 $ 313,185 3,626 (Continued)

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Unlisted securities - ROC - equity securities Unlisted securities - other countries - equity securities Mutual funds Emerging market stocks December 31, 2015 Financial assets at FVTPL Derivative financial assets Financial liabilities at FVTPL Derivative financial liabilities Available-for-sale financial assets Securities listed in ROC - equity securities Securities listed in other countries - equity securities Unlisted securities - ROC - equity securities Unlisted securities - other countries - equity securities Mutual funds Emerging market stocks	Level 1 - - $ - - $ 316,811 Level 1 $ - $ - $ 316,426 11,546 - - - - $ 327,972	Level 2 - - $ 57,973 178,716 $ 236,689 Level 2 $ 53,211 $ 55,945 $ - - - - 53,178 178,716 $ 231,894	Level 3 15,785 89,370 $ - - $ 105,155 Level 3 $ - $ - $ - - 83,923 26,539 - - $ 110,462	Total 15,785 89,370 $ 57,973 178,716 $ 658,655 (Concluded) Total $ 53,211 $ 55,945 $ 316,426 11,546 83,923 26,539 53,178 178,716 $ 670,328

There were no transfers between Levels 1 and 2 in the current and prior periods.

2) Reconciliation of Level 3 fair value measurements of financial assets

December 31, 2016 Balance at January 1, 2016 Total gains or losses In profit or loss In other comprehensive income Additions Disposals Balance at December 31, 2016	Investments on Equity Instruments
	Unlisted Quotes $ 110,462 (68,138) (149) 64,451 (1,471) $ 105,155 (Continued)

December 31, 2015 Balance at January 1, 2015 Total gains or losses In profit or loss In other comprehensive income Additions Disposals Balance at December 31, 2015	Investments on Equity Instruments
	Unlisted Quotes $ 366,428 (124,667) 1,598 33,627 (166,524) $ 110,462 (Concluded)

3) Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value measurement

Financial Instruments
Financial assets at FVTPL -
forward exchange contracts
Financial assets at FVTPL -
Cross-currency swap
contracts
Mutual funds
Emerging market shares

Valuation Techniques and Inputs

Estimation of future cash flows using observable forward
exchange rates at the end of the reporting period and contract
forward rates, discounted at a rate that reflects the credit risk
of various counterparties.
Estimation of fair value of a currency swap contract is based on
its principal and interest rate on mutual agreement and the
suitable discount rate that reflects the credit risk of various
counterparties at the end of the reporting period.
Using the observable similar market average price or the price of
the same kind of tools provided by the mutual fund
management company.
Using the recent emerging market share price of similar
emerging market shares of investee companies and
considering the adjustment of all the information on the
performance and operation of the emerging company
available from trading date to measuring date.

4) Valuation techniques and inputs applied for the purpose of measuring Level 3 fair value measurement

The fair values of unlisted equity securities - ROC and other countries were determined using the income approach. In this approach, the discounted cash flow method was used to capture the present value of the expected economic benefits from these investments. According to the discounted cash flow analysis and observable financial market average prices or with the same kind of tool to be estimated, the use of the discount rate and the parameters can refer to Reuters news agency or Bloomberg agency or other financial institutions with essentially the same conditions and characteristics of the interest rate swap offer financial products whose features including the remaining contract terms of fixed interest rates, the payment of principal, payment of currency, and etc. All the information can be obtained by the Group.

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c. Categories of financial instruments

Categories of financial instruments
Financial assets Fair value through profit or loss (FVTPL) Derivative instruments Loans and receivables (1) Available-for-sale financial assets Financial liabilities Fair value through profit or loss (FVTPL) Derivative instruments Amortized cost Short-term borrowings Long-term loans (including current portion of long-term debts) Payables (2)	December 31
	2016 2015 $ 173,068 $ 53,211 129,058,941 117,944,438 658,655 670,328 128,685 55,945 14,386,282 17,670,878 19,930,069 21,151,871 87,712,702 80,392,074

1) The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, debt investments with no active market, notes receivable, trade receivables, trade receivables - inter, other receivables and other receivables - inter.
2) The balances included financial liabilities measured at amortized cost, which comprise notes payable, trade payables, trade payables - inter, other payables and other payables - inter.
d. Financial risk management objectives and policies

The Group’s major financial instruments include equity investments, trade receivable, trade payables, and borrowings. The Group’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Group sought to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives was governed by the Group’s policies approved by the board of directors, which provided written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits was reviewed by the internal auditors on a continuous basis. The Group did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

There had been no change to the Group’s exposure to market risks or the manner in which these risks were managed and measured.

a) Foreign currency risk

The Group’s had foreign currency sales and purchases, which exposed the Group to foreign currency risk. Exchange rate exposures were managed within approved policy parameters utilizing forward foreign exchange contracts.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period (Refer to Note 33).

The Group required all its group entities to use foreign exchange forward contracts to eliminate currency exposure. It is the Group’s policy to negotiate the terms of the hedge derivatives to match the terms of the hedged item to maximize hedge effectiveness.

Sensitivity analysis

The Group was mainly exposed to the U.S. dollar.

The following table details the Group’s sensitivity to a 5% increase and decrease in New Taiwan dollars (the functional currency) against the relevant foreign currencies. The sensitivity analysis included only outstanding foreign currency denominated monetary items. A positive number below indicates an increase in pre-tax profit and other equity associated with New Taiwan dollars strengthen 5% against the relevant currency. For a 5% weakening of New Taiwan dollars against the relevant currency, there would be an equal and opposite impact on pre-tax profit and other equity and the balances below would be negative.

Profit or loss	Currency USD Impact	Currency USD Impact	Currency USD Impact
	For the Year Ended December 31
		2016 $ 201,172	2015 $ 9,064

b) Interest rate risk

The Group was exposed to interest rate risk because entities in the Group borrowed funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix of fixed and floating rate borrowings, and using interest rate swap contracts and forward interest rate contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost - effective hedging strategies are applied.

The carrying amount of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below). The Group entered into a variety of derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk, including:

a) Forward foreign exchange contracts to hedge the exchange rate risk arising on the export;
b) Interest rate swaps to mitigate the risk of rising interest rates.

Fair value interest rate risk Financial assets (i) Financial liabilities (ii) Cash flow interest rate risk Financial assets (iii) Financial liabilities (iv)	December 31 2016 2015 $ 34,655,930 $ 28,172,474 11,715,606 15,645,260 30,644,835 36,787,305 22,606,048 23,278,388

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i. The balances included time deposit and debt investments with no active market.
ii. The balances included financial liabilities exposed to fair value risk from interest rate fluctuation.
iii. The balances included demand deposits.
iv. The balances included financial liabilities exposed to cash flow risk from interest rate fluctuation.

Sensitivity analysis

The sensitivity analyses below were determined based on the Group’s exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year.

If interest rates had been 25 basis points higher and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2016 and 2015 would increase by $20,097 thousand and $33,772 thousand.

c) Other price risk

The Group was exposed to equity price risk through its investments in listed equity securities. Equity investments are held for strategic rather than trading purposes. The Group does not actively trade these investments.

b) Financial related credit risk

Bank deposits and other financial instruments are credit risk sources required by the Group’s Department of Finance Department to be measured and monitored. However, since the Group’s counter-parties are all reputable financial institutions and government agencies, there is no significant financial credit risk.

3) Liquidity risk

The objective of liquidity risk management, the department is required to maintain operating cash and cash equivalents, in order to ensure that the Group has sufficient financial flexibility.

The table below summarizes the maturity profile of the Group’s non-derivative financial liabilities based on contractual undiscounted payments.

December 31, 2016

Weighted Average Effective Interest Rate (%) Non-derivative financial liabilities Non-interest bearing - Finance lease liabilities 3.49-4.75 Variable interest rate liabilities 1.11-1.9873 Fixed interest rate liabilities 1.3-8.55	On Demand or Less than 1 Year $ 87,712,702 1,657 10,582,048 11,695,133 $ 109,991,540	1-3 Years Over 3 Years to 5 Years $ 87,815 $ - 3,646 - 12,024,000 - 15,170 - $ 12,130,631 $ -	5+ Years $ 814 - - - $ 814

Sensitivity analysis

December 31, 2015

The sensitivity analyses below were determined based on the exposure to equity price risks at the end of the reporting period.

If equity prices had been 10% higher, the pre-tax other comprehensive income for the years ended December 31, 2016 and 2015 would increase by $31,681 thousand and $32,797 thousand as a result of the changes in fair value of available-for-sale financial assets.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group.

The Group is exposed to credit risk from trade receivables, deposits, and other financial instruments. Credit risk on business-related exposures is managed separately from that on financial-related exposures.

a) Business related credit risk

To maintain the quality of receivables, the Group has established operating procedures to manage credit risk.

For individual customers, risk factors considered include the customer’s financial position, credit rating agency rating, the Group’s internal credit rating, and transaction history as well as current economic conditions that may affect the customer’s ability to pay. The Group also has the right to use some credit protection enhancement tools, such as requiring advance payments, to reduce the credit risks involving certain customers.

Weighted Average Effective Interest Rate (%) Non-derivative financial liabilities Non-interest bearing - Finance lease liabilities 2.36-7.11 Variable interest rate liabilities 0.4-2.375 Fixed interest rate liabilities 0.8565-4.4	On Demand or Less than 1 Year $ 80,392,074 95,501 6,975,190 15,491,806 $ 102,954,571	1-3 Years Over 3 Years to 5 Years $ 90,022 $ - 5,398 - 16,289,583 - 48,077 4,478 $ 16,433,080 $ 4,478	5+ Years $ 990 - 13,615 - $ 14,605

The table below summarizes the maturity profile of the Group’s derivative financial instruments based on contractual undiscounted payments.

December 31, 2016

On Demand or Less than 1 Year Forward exchange contracts Inflows $ 13,782,409 Outflows (13,803,962) (21,553)	1-3 Years Over 3 Years to 5 Years $ - $ - - - - -	5+ Years $ - - - (Continued)

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On Demand or Less than 1 Over 3 Years Year 1-3 Years to 5 Years 5+ Years Currency swap contracts Inflows $ 5,370,000 $ - $ - $ - Outflows (5,304,775) - - 65,225 - - - $ 43,672 $ - $ - $ - (Concluded) December 31, 2015 On Demand or Less than 1 Over 3 Years Year 1-3 Years to 5 Years 5+ Years Forward exchange contracts Inflows $ 7,387,884 $ - $ - $ - Outflows (7,410,193) - - - (22,309) - - - Currency swap contracts Inflows 3,235,000 - - - Outflows (3,212,900) - - 22,100 - - - $ (209) $ - $ - $ -

30. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Parent Company and its subsidiaries, which were related parties of the Parent Company, had been eliminated on consolidation and are not disclosed in this note. Besides as disclosed elsewhere in the other notes, details of transactions between the Group and other related parties are disclosed below.

a. Sales of goods

Related parties categories Associates Other related parties	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2016 $ 183,174 1,010 $ 184,184	2015 $ 177,556 1,197 $ 178,753

For the years ended December 31, 2016 and 2015, the Group’s selling prices for Lite-On Semiconductor Corp. were at cost plus a negotiated profit. Except for this sales arrangement with Lite-On Semiconductor Corp., the sales terms between the Group and its related parties were normal.

Operating lease contracts with related parties were based on market prices and made under mutual agreements and normal terms; the market prices and contract terms between the Group and its related parties were normal.

b. Purchases of goods

Purchases of goods
Related parties categories Associates Other related parties	For the Year Ended December 31
		2016 $ 4,987,276 625,326 $ 5,612,602	2015 $ 4,796,010 707,559 $ 5,503,569

The cost of the Group’s purchases from Lite-On Semiconductor Corp. for the years ended December 31, 2016 and 2015 was based on cost plus specific profit. Except for these purchases, the purchase terms between the Group and its related parties were normal.

c. Receivables from related parties

Related parties categories Trade receivables Associates Other related parties Other receivables Associates Other related parties		December 31	December 31
		2016 $ 58,858 1,320 $ 60,178 $ 5,712 128 $ 5,840	2015 $ 66,243 95 $ 66,338 $ 10,462 19 $ 10,481

The outstanding trade receivables from related parties are unsecured. For the years ended December 31, 2016 and 2015, no impairment loss was recognized for trade receivables from related parties.

d. Payables to related parties

Related parties categories Trade payables Associates Other related parties Other payables Associates Other related parties		December 31	December 31
		2016 $ 774,882 229,197 $ 1,004,079 $ 133 9,295 $ 9,428	2015 $ 575,365 281,580 $ 856,945 $ 4 12,937 $ 12,941

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The outstanding trade payables from related parties are unsecured.

e. Operating expense

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

Related parties categories Associates Other related parties Other revenue Related parties categories Associates Other related parties	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2016 2015 $ 2 $ - 66,724 69,011 $ 66,726 $ 69,011 For the Year Ended December 31
		2016 $ 7,362 10,114 $ 17,476	2015 $ 5,664 1,867 $ 7,531

f. Other revenue
g. Compensation of key management personnel

Short-term employee benefits Post-employment benefits Termination benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2016 $ 669,016 23,483 231 $ 692,730	2015 $ 641,939 24,453 - $ 666,392

The remuneration of directors and key executives was determined by the remuneration committee having regard to the performance of individuals and market trends.

31. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

Pledged time deposits and restricted bank deposits		December 31	December 31
		2016 $ 707,500	2015 $ 270,870

Above assets included the guarantee deposits that had been provided for (a) a government projects (b) the customs agency for shipment clearance in advance of duty payments (c) the tax refund guarantee.

a. From the fourth quarter of 2009, CMP Consulting Service, Inc., KI, Inc., Aaron Wagner, The Stereo Shop, David Carney, Jr., Aaron Deshaw, Don Cheung and other indirect U.S. consumers filed several antitrust group lawsuits against the Company 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 the United States. In January 2017, the Parent Company reached a settlement with the plaintiff, and the contents of the settlement do not have a significant impact on the Group’s operation.
b. In the second quarter of 2013, the Attorney General of the State of Florida filed antitrust lawsuits against the Parent Company and its subsidiaries - Philips & Lite-On Digital Solutions Corporation and Philips & Lite-On Digital Solutions USA, Inc. - as well as other companies with related businesses with the U.S. District Court for the Northern District of California (USDC-NDC). The Parent Company assigned lawyers as its representative in these lawsuits. In the second quarter of 2014, the USDC-NDC allowed the plaintiff to proceed with the lawsuits but dismissed certain parts of these lawsuits. In January 2017, the Parent Company reached a settlement with the plaintiff, and the contents of the settlement do not have a significant impact on the Group’s operation.
c. In the second quarter of 2013, Dell Inc. and Dell Products L.P. filed a complaint with the United States District Court for Western District of Texas. In the fourth quarter of 2013, Acer Inc., Acer America Corporation, Gateway Inc. and Gateway U.S. Retail, Inc. filed a complaint with the United States District Court for the Northern District of California. In the fourth quarter of 2013, Ingram Micro Inc., and Synnex Corporation filed a complaint with the United States District Court for the Central District of California. In the third quarter of 2015, Alfred H. Siegel, the bankruptcy trustee of Circuit City Stores, Inc. filed a complaint with the United States District Court for the Northern District of California. In the fourth quarter of 2015, Peter Kravitz, the bankruptcy trustee of RadioShack Corporation, filed a complaint with the United States District Court for the Northern District of California. All these complaints constituted an antitrust group lawsuit against the Parent Company and other companies with related businesses. The Parent Company assigned lawyers as its representative in these lawsuits. Although the outcome of the proceedings had not been determined, the Parent Company already accrued a reasonable amount in case of a loss on this lawsuit and will continue to recognize losses quarterly at this reasonably estimated amount until the settlement of this lawsuit.
d. From the second quarter of 2010 to the second quarter of 2014, petitioner Carlos Fogelman filed a motion for authorization to institute class action antitrust proceedings with the Superior Court of Quebec in the district of Montreal. The Fanshawe College of Applied Arts and Technology filed a statement of claim in Ontario court. Neil Godfrey filed a statement of claim with the Superior Court of British Columbia. Donald Woligroski filed a statement of claim in Manitoba court. Cindy Retallick filed a statement of claim in Saskatchewan court. All plaintiffs filed the antitrust group lawsuit against the Parent Company and its subsidiaries - Philips & Lite-On Digital Solutions Corporation, Philips & Lite-On Digital Solutions USA, Inc. and other companies with related businesses. The Parent Company assigned lawyers as its representative in these lawsuits. Although the outcome of the proceedings had not been determined, the Parent Company accrued a reasonable amount in case of a loss on this lawsuit and will continue to recognize the losses quarterly on the basis of a reasonable estimation of the lawsuit until the settlement of this lawsuit.
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33. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies of the group entities and the exchange rates between foreign currencies and respective functional currencies were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

December 31, 2016

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 1,581,812 32.2000 (USD:NTD) USD 1,364,261 6.9429 (USD:CNY) USD 56,644 7.7551 (USD:HKD) USD 26,143 35.8000 (USD:THB) USD 13,769 0.9517 (USD:EUR) EUR 11,342 1.0508 (EUR:USD) Non-monetary items Investments accounted for using equity method USD 1,883 32.2000 (USD:NTD)	Carrying Amount $ 50,934,338 43,929,207 1,823,929 841,791 443,376 397,189 $ 98,369,830 $ 60,643

Foreign Currencies Exchange Rate Non-monetary items Investments accounted for using equity method USD $ 1,396 32.7750 (USD:NTD) Financial liabilities Monetary items USD 1,078,634 32.7750 (USD:NTD) USD 1,013,643 6.4766 (USD:CNY) EUR 1,790 7.0751 (EUR:CNY) JPY 69,550 0.2723 (JPY:NTD) EUR 485 35.8034 (EUR:NTD) JPY 45,731 120.3600 (JPY:USD)	Carrying Amount $ 45,749 $ 35,352,229 33,222,149 64,088 18,938 17,365 12,453 $ 68,687,222 (Concluded)

For the years ended December 31, 2016 and 2015 net foreign exchange gains was $173,194 thousand and $123,658 thousand. It is impractical to disclose net foreign exchange gains or losses by each significant foreign currency due to the variety of the foreign currency transactions of the group entities.

34. SEPARATELY DISCLOSED ITEMS

Financial liabilities

a. Information on significant transactions and information on investees:

Monetary items USD 1,456,860 32.2000 (USD:NTD) USD 1,284,163 6.9429 (USD:CNY) USD 20,558 7.7551 (USD:HKD) USD 27,898 35.8000 (USD:THB) USD 19,244 0.9517 (USD:EUR)	$ 46,910,893 41,350,062 661,968 898,326 619,643 $ 90,440,892

December 31, 2015

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 1,084,165 32.7750 (USD:NTD) USD 557,386 6.4766 (USD:CNY) EUR 10,569 0.9154 (EUR:USD) HKD 43,873 7.7503 (HKD:USD) JPY 221,634 120.3600 (JPY:USD) HKD 7,184 4.2289 (HKD:NTD)	Carrying Amount $ 35,533,506 18,268,326 378,415 185,535 60,351 30,382 $ 54,456,515 (Continued)

1) Financing provided: See Table 1 below.
2) Endorsement/guarantee provided: See Table 2 below.
3) Marketable securities held (excluding investment in subsidiaries, associates and jointly controlled entities): See Table 3 below.
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: See Table 4 below.
5) Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: None.
6) Disposal of individual real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: None.
7) Total purchases from or sales to related parties of at amounting to at least NT$100 million or 20% of the paid-in capital: See Table 5 below.
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: See Table 6 below.
9) Trading in derivative instruments: See Notes 7 and 29 to the financial statements.
10) Information on investees: See Table 7 below.

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b. Information on investments in mainland China:

d. Geographic information

1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area: See Table 8 below.
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: See Table 9 below.
c. Intercompany relationships and significant intercompany transactions: See Table 9 below.

35. SEGMENT INFORMATION

Geographic information
Asia America Europe Others	Revenue from External Customers For the Year Ended December 31 2016 2015 $ 158,095,174 $ 151,570,732 49,529,759 41,682,293 21,668,018 23,241,976 278,807 433,733 $ 229,571,758 $ 216,928,734		Non-current Assets
			December 31
		2016 $ 158,095,174 49,529,759 21,668,018 278,807 $ 229,571,758	2016 $ 43,340,489 867,989 14,304 - $ 44,222,782	2015 $ 49,155,939 889,770 529,194 - $ 50,574,903

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

a. General information
e. Information about major customers

The Group identified the reportable segments based on the managerial reporting information, and the segments by the types of products which included Optoelectronics, Information Technologies, Storage, and Mobile Mechanics and Others. The types of products are described as follows:

1) Optoelectronics: LED Components and Lighting Products, Camera Modules and Automotive Electronics.
2) Information technologies: Products used in Server, Networking Devices, NB, Tablets, DT and Multifunction Peripheral.
3) Storage: Optical Disk Drives and Solid State Drives.
4) The Group also had Mobile Mechanics and Others operating segments that did not exceed the quantitative threshold. These segments mainly engage in manufacturing and selling of Mechanical Products for Mobile Devices and others.
b. Measurement of segment information

The Group uses the income before income tax from operations as the measurement for segment profit and the basis of performance assessment. There was no material differences between the accounting policies of the operating segment and the accounting policies described in Note 4.

c. Segment information

The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

as follows:
							Mobile
						Mechanics and
	Optoelectronics		IT		Storage		Others		Elimination	Total
2016
Sales from external customers	$	54,640,867	$ 111,818,722	$	44,386,554	$	18,725,615	$	-	$ 229,571,758
Sales among segments		1,357,365	1,371,829		7,543		496,602		(3,233,339 )	-
Operating profit (loss)		2,790,309	7,626,326		4,254,516		(1,160,763 )		-	13,510,388
2015
Sales from external customers		53,160,628	105,899,693		34,201,009		23,667,404		-	216,928,734
Sales among segments		1,514,501	1,724,299		14,068		609,444		(3,862,312 )	-
Operating profit (loss)		1,915,800	6,886,653		2,219,191		(1,300,981 )		-	9,720,663

There is no customer representing at least 10% of the Group’s net sales for the years ended December 31, 2016 and 2015.

f. Reconciliation information for segment profit (loss)
1) The revenue from external parties reported to the chief operating decision-maker is used the same accounting policies in consistent with in the statement of comprehensive income.
2) A reconciliation of reportable segments profit (loss) and income before income tax is provided as follows:

follows:
Reportable segments’profit Unclassified loss Non-operating income and expenses Profit before income tax	For the Year Ended December 31
		2016 $ 13,510,388 (801,128) (66,233) $ 12,643,027	2015 $ 9,720,663 (1,067,840) 1,353,818 $ 10,006,641

3) Segment profit represented the profit before tax earned by each segment without unclassified of headquarter administration costs, share of profits of associates, gain or loss on disposal of investments, dividend income, interest income, gain or loss on disposal of property, plant and equipment, exchange gain or loss, valuation gain or loss on financial instruments, finance costs, impairment loss, other expense and income tax expense. This was the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

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TABLE 1

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2016

(Amounts in Thousands of New Taiwan Dollars)

No.	Financing Company	Counter-party	Financial Statement Account	Related Party	Maximum Balance for the Period	Ending Balance	Amount Actually Drawn	Interest Rate	Nature for Financing (Note 1)	Transaction Amount	Reasons for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Note 2)	Financing Company’s Total Financing Amount Limits (Note 2)
													Item	Value
1	Lite-On Opto Technology (Changzhou) Co., Ltd.	Changzhou Leotek New Energy Trade Limited	Receivables from related parties	Yes	$ 178,098	$ -	$ -	3.045%	b	$ -	Operating capital	$ -	None	$ -	$ 2,674,321	$ 2,674,321
2	Lite-On Technology (Changzhou) Co., Ltd.	Zhuhai Lite-On Mobile Technology Co., Ltd. Changzhou Leotek New Energy Trade Limited	Receivables from related parties Receivables from related parties	Yes Yes	1,272,125 185,512	- 185,512	- 185,512	3.570% 3.045%	b b	-	Operating capital Operating capital	- -	None None	-	4,107,051 4,107,051	4,107,051 4,107,051
3	Lite-On Electronics (Tianjinn) Co., Ltd.	Lite-On Medical Device (Changzhou) Ltd. Lite-On Opto Technology (Guangzhou) Co., Ltd.	Receivables from related parties Receivables from related parties	Yes Yes	22,898 254,425	- -	- -	3.220% 3.570%	b b	- -	Operating capital Operating capital	- -	None None	- -	2,937,359 2,937,359	2,937,359 2,937,359
4	Dongguan Lite-On Computer Co., Ltd.	Yantai Lite-On Mobile Electronic Components Co., Ltd.	Receivables from related parties	Yes	50,885	-	-	3.395%	b	-	Operating capital	-	None	-	100,107	100,107
5	DongGuan G-Pro Computer Co., Ltd.	Lite-On Electronics (Dongguan) Co., Ltd.	Receivables from related parties	Yes	254,425	-	-	3.045%	b	-	Operating capital	-	None	-	1,148,281	1,148,281
6	Guangzhou Lite-On Mobile Engineering Plastics Co., Ltd.	Zhuhai Lite-On Mobile Technology Co., Ltd.	Receivables from related parties	Yes	1,715,986	1,715,986	1,715,986	3.045%-4.2%	b	-	Operating capital	-	None	-	4,526,169	4,526,169
7	Lite-On Auto Electric Technology (Guangzhou) Ltd.	Yantai Lite-On Mobile Electronic Components Co., Ltd.	Receivables from related parties	Yes	50,885	46,378	46,378	3.045%-3.395%	b	-	Operating capital	-	None	-	135,953	135,953
8	Lite-On Mobile Oyj (formerly: Perlos Oyj)	Lite-On Mobile India Private Limited	Receivables from related parties	Yes	163,219	-	-	2.833%	b	-	Operating capital	-	None	-	978,803	978,803
9	Lite-On Mobile Pte. Ltd.	Lite-On Mobile India Private Limited	Receivables from related parties	Yes	957,030	-	-	2.583%	b	-	Operating capital	-	None	-	-	-
10	Lite-On Green Energy B.V.	Romeo Tetti PV1 S.R.L.	Receivables from related parties	Yes	-	-	-	2.235%	b	-	Operating capital	-	None	-	15,267	15,267
11	Lite-On Technology (Europe) B.V.	Lite-On Green Energy B.V.	Receivables from related parties	Yes	14,516	-	-	1.000%	b	-	Operating capital	-	None	-	2,700,018	2,700,018
12	Lite-On Singapore Pte. Ltd.	Lite-On Mobile Pte. Ltd.	Receivables from related parties	Yes	1,332,400	1,288,000	1,288,000	0.860%	b	-	Operating capital	-	None	-	18,497,916	18,497,916
13	Lite-On Electronics (Guangzhou) Co., Ltd.	Zhuhai Lite-On Mobile Technology Co., Ltd.	Receivables from related parties	Yes	1,526,550	-	-	3.220%	b	-	Operating capital	-	None	-	13,017,650	13,017,650
14	LTC International Ltd.	Lite-On Automotive Electronics Mexico, S.A. DE C.V.	Receivables from related parties	Yes	99,930	-	-	4.080%	b	-	Operating capital	-	None	-	483,666	483,666
15	Lite-On Automotive (Wuxi) Co., Ltd.	Lite-On Green Technologies (Nanjing) Corporation	Receivables from related parties	Yes	103,446	51,016	51,016	3.045%-3.395%	b	-	Operating capital	-	None	-	600,912	600,912
16	Li Shin Technology (Huizhou) Ltd.	Lite-On Technology (Xianging) Co., Ltd.	Receivables from related parties	Yes	76,328	-	-	3.045%	b	-	Operating capital	-	None	-	388,552	388,552
																(Continued)

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No.	Financing Company	Counter-party	Financial Statement Account	Related Party	Maximum Balance for the Period	Ending Balance	Amount Actually Drawn	Interest Rate	Nature for Financing (Note 1)	Transaction Amount	Reasons for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Note 2)	Financing Company’s Total Financing Amount Limits (Note 2)
													Item	Value
17	Lite-On Electronics H.K. Ltd.	Lite-On Green Technologies (HK) Limited Lite-On Green Energy (HK) Limited LET (HK) Ltd.	Receivables from related parties Receivables from related parties Receivables from related parties	Yes Yes Yes	$ 415 830 260,520	$ 415 830 257,600	$ 415 830 257,600	1.200% 1.200% 1.160%	b b b	$ - - -	Operating capital Operating capital Operating capital	$ - - -	None None None	$ - - -	$ 8,087,626 8,087,626 8,087,626	$ 8,087,626 8,087,626 8,087,626
18	LTC Group Ltd.	Lite-On Automotive Electronics Mexico, S.A. DE C.V.	Receivables from related parties	Yes	96,675	96,600	96,600	2.130%	b	-	Operating capital	-	None	-	628,871	628,871
19	Lite-On Power Technology (Dongguan) Co., Ltd.	Lite-On Electronics (Dongguan) Co., Ltd.	Receivables from related parties	Yes	145,806	139,134	139,134	3.045%	b	-	Operating capital	-	None	-	774,756	774,756
20	Guangzhou Lite-On Mobile Electronic Components Co., Ltd.	Zhuhai Lite-On Mobile Technology Co., Ltd.	Receivables from related parties	Yes	371,024	371,024	371,024	3.045%	b	-	Operating capital	-	None	-	11,233,330	11,233,330
21	Huizhou Fu Tai Electronic Co., Ltd.	Lite-On Technology (Xianging) Co., Ltd.	Receivables from related parties	Yes	37,102	37,102	37,102	3.045%	b	-	Operating capital	-	None	-	61,645	61,645

Note 1: Reasons for financing are as follows:
a. Business relationship.
b. The need for short-term financing.
Note 2: Financing limit for each borrower and aggregate financing limits are calculated based on the financing company’s policy.
Note 3: The net worth value is based on the most current audited financial statements.
Note 4: All intercompany financing loans have been eliminated from consolidation.

(Concluded)

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TABLE 2

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

ENDORSEMENT/GUARANTEE PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2016

(Amounts in Thousands of New Taiwan Dollars)

No.	Endorsement/ Guarantee Provider	Guaranteed Party		Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party (Note 2)	Maximum Balance for the Period	Ending Balance	Amount Actually Drawn	Amount of Endorsement/ Guarantee Collateralized by Properties	Ratio of Accumulated Endorsement/ Guarantee to Net Equity Per Latest Financial Statements (%)	Maximum Endorsement/ Guarantee Amount Allowable (Note 2)	Guarantee Provided by Parent Company	Guarantee Provided by A Subsidiary	Guarantee Provided to Subsidiaries In Mainland China
		Name	Nature of Relationship (Note 1)
0	Lite-On Technology Corporation (the “Parent Company”)	Lite-On Technology (Europe) B.V. Lite-On Mobile Pte. Ltd. Silitek Elec. (Dongguan) Co., Ltd. Guangzhou Lite-On Mobile Electronic Components Co., Ltd.	b b c c	$ 7,593,154 7,593,154 7,593,154 7,593,154	$ 69,651 7,994,400 1,332,400 866,060	$ 64,288 6,440,000 1,288,000 -	$ 64,288 6,440,000 1,288,000 -	$ - - - -	0.08 8.48 1.70 -	$ 30,372,614 30,372,614 30,372,614 30,372,614	Yes Yes Yes Yes	No No No No	No No Yes Yes
1	Lite-On Mobile Oyj (formerly: Perlos Oyj)	Guangzhou Lite-On Mobile Electronic Components Co., Ltd.	c	156,608	809,146	-	-	-	-	391,521	No	No	Yes
2	Lite-On Capital Corp.	Lite-On Green Technologies B.V. Lite-On Green Energy B.V.	c c	2,248,152 2,248,152	859,933 344,565	793,720 318,034	793,720 318,034	- -	1.05 0.42	2,248,152 2,248,152	No No	No No	No No

Note 1: Relationship between endorser/guarantor and endorsee/guarantee are as follows:
a. Business relationship.
b. A subsidiary in which the guarantee provider holds directly over 50% of equity interest.
c. An investee in which the guarantee provider and its subsidiaries hold over 50% of equity interest.
Note 2: a. The aggregate amount of guarantees/endorsements by Lite-On Technology Corporation should not exceed 40% of its net worth, and the amount of guarantees/endorsements for any single entity should not exceed 10% of its net worth.
b. The endorsement/guarantee limit for each entity and the total endorsement/guarantee limit are calculated on the basis of Lite-On Mobile Oyj’s and Lite-On Capital Corporation’s endorsement/guarantee procedures.

c. Limits on endorsement/guarantee amount provided to each guaranteed party and maximum endorsement/guarantee amount allowable were calculated on the basis of the net worth of the endorsement/guarantee provider, as shown in its most recent audited financial statements.

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TABLE 3

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2016

(In Thousands of New Taiwan Dollars or Thousands of Foreign Currencies)

Held Company Name	Marketable Securities Type and Name	Relationship with the Parent Company	Financial Statement Account		December 31, 2016	December 31, 2016		Note
				Shares/Units (In Thousands)	Carrying Value (Foreign Currencies in Thousands)	Percentage of Ownership (%)	Fair Value (Foreign Currencies in Thousands)
Lite-On Technology Corporation Lite-On Capital Corporation Lite-On Green Energy (HK) Limited	Common stock EPISTAR Corporation Wistron Corporation Com2B Corp. Avamax Corp. Aetas Technology, Inc. AuriaSolar Co., Ltd. Z-Com, Inc. Fong Han Electronics Co., Ltd. Xepex Electronics Co., Ltd. North America Micro-Electronic & Software, Incorporated Action Media Technologies, Inc. Oplink Communications, Inc. Taiwan Changxing Technology Co., Ltd. Preferred stock Arkologic Holdings Limited PI-CORAL Convertible bond Xepex Electronics Co., Ltd. Common stock Lite-On Technology Corporation Lead Data, Inc. Compound Solar Technology Co., Ltd. Z-Com, Inc. Auden Techno Corp. Common stock Changzhou Binhu Thin Film Solar Greenhouse Co., Ltd.	- - - - Member of the board of directors - - - - - - - - - - - The Parent Company - - - Member of the board of directors -	Available-for-sale financial assets - non-current ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ Debt investments with no active market - non-current Available-for-sale financial assets - non-current ″ ″ ″ ″ Available-for-sale financial assets - non-current	5,908 5,130 5,000 559 4,026 41,400 2,974 1,167 - 5 38 1 462 11,111 1,139 150 15,116 865 2,000 2,412 8,124 -	$ 136,769 127,995 19,009 - - - 23,794 - - 1,154 - 910 4,620 - - - 734,631 5,334 - 19,293 178,716 US$ 140	0.55 0.20 11.11 6.99 8.07 19.71 4.10 6.67 - 2.67 - 0.01 15.40 7.66 10.65 - 0.64 0.59 2.86 3.33 19.90 19.90	$ 136,769 127,995 19,009 - - - 23,794 - - 1,154 - 910 4,620 - - - 734,631 5,334 - 19,293 178,716 US$ 140	Note Note Note Note Note Note Note Note Note Note

(Continued)

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Held Company Name	Marketable Securities Type and Name	Relationship with the Parent Company	Financial Statement Account		December 31, 2016	December 31, 2016		Note
				Shares/Units (In Thousands)	Carrying Value (Foreign Currencies in Thousands)	Percentage of Ownership (%)	Fair Value (Foreign Currencies in Thousands)
Lite-On Electronics Co., Ltd. Yet Foundate Ltd. LET (HK) Ltd. Lite-On Technology USA, Inc. LTC Group Ltd. (BVI) LTC International Ltd. Lite-On China Holding Co., Ltd. Silitech Technology Corp. Silitech (Bermuda) Holding Ltd. Lite-On Japan Ltd. Lite-On Mobile Oyj (formerly: Perlos Oyj)	Share certificates Lite-On Technology Corporation GDR Share certificates Lite-On Technology Corporation GDR Common stock Northern Lights Semiconductor Fund Innovation Works Development Fund, L.P. Preferred stock Mojo NetWorks, Inc. Common stock VIZIO, Inc. Common stock Lite-On Technology Corporation Share certificates Lite-On Technology Corporation GDR Common stock COMMIT Incorporated Common stock Chi Mei Mold Co., Ltd. RTR-TECH Technology Co., Ltd. Fund Innovation Works Development Fund, L.P. Common stock Tamura Corporation The Dai-ichi Life Insurance Company, Limited Common stock Kontiolahti Golf Oy	The Parent Company ″ - - - - The Parent Company ″ - Member of the board of directors ″ - - - -	″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″ ″	245 227 3,000 - 7,486 437 3,793 321 4,962 1,300 6,820 - 19,250 7 1	$ 118,984 110,276 - HK$ 6,841 US$ 2,000 $ - 184,345 155,924 - 11,165 - US$ 916 JPY 8,509 JPY 1,362 EUR 9	0.10 0.10 5.91 - 2.93 2.90 0.16 0.14 1.87 10.00 9.46 - 0.03 - -	$ 118,984 110,276 - HK$ 6,841 US$ 2,000 $ - 184,345 155,924 - 11,165 - US$ 916 JPY 8,509 JPY 1,362 EUR 9	Note Note Note Note

Note: The carrying values of financial instruments were all assessed for impairment.

(Concluded)

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TABLE 4

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2016

(Amounts in Thousands of New Taiwan Dollars or in Thousands of Foreign Currencies)

Company Name	Marketable Securities Type and Name	Financial Statement Account	Counterparty	Nature of Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending	Balance
					Shares/Units (In Thousands)	Amount	Shares/Units (In Thousands)	Amount	Shares/Units (In Thousands)	Amount	Carrying Amount	Gain (Loss) on Disposal	Shares/Units (In Thousands)	Amount
Lite-On Mobile Pte. Ltd. Lite-on Green Energy B.V. Silitech Technology Corp. Silitech Technology (SuZhou) Co., Ltd.	Lite-On Mobile India Private Limited Romeo Tetti PV1 S.R.L. Allianz Global Investors Taiwan Money Market Fund Yuanta De-Li Money Market Fund Taishin 1699 Money Market Fund Upamc James Bond Money Market Fund Paradigm Pion Money Market Fund Prudential Financial Money Market Fund Fixed Income Instruments	Investment accounted for using equity method ″ Financial assets at fair value through profit or loss - current ″ ″ ″ ″ ″ Debt investments with no active market - current	- IKAV EE Sarl - - - - - - -	- - - - - - - - -	59,095 - - - - - - - -	US$ (9,652 ) EUR 8,317 $ - - - - - - 424,399 (CNY 83,810 )	196,635 - 48,447 31,015 33,649 18,741 34,103 25,587 -	US$ 31,206 (Note 1) EUR (6) (Note 2) $ 600,000 500,000 450,000 310,000 390,000 400,000 3,166,301 (CNY 679,600 )	- - 48,447 31,015 33,649 18,741 34,103 25,587 -	$ - EUR 8,317 $ 600,445 500,312 450,266 310,057 390,072 400,296 2,832,338 (CNY 600,639 )	US$ 1,559 (Note 1) EUR 8,311 $ 600,000 500,000 450,000 310,000 390,000 400,000 2,811,238 (CNY 596,110 )	$ - EUR 6 $ 445 312 266 57 72 296 21,100 (CNY 4,529 )	255,730 - - - - - - - -	US$ 19,995 EUR - $ - - - - - - 779,462 (CNY 167,300 )

Note 1: The acquisition amount of US$28,730 thousand is from the capital injection funded by debt, and the US$2,476 thousand is from changes in equities for using equity method; the US$733 thousand in the disposal is from the loss accounted for using equity method, and US$826 thousand is from the other comprehensive loss for using equity method.

Note 2: The acquisition amount is from the loss accounted for using equity method.

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TABLE 5

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2016

(Amounts in Thousands of New Taiwan Dollars or in Thousands of Foreign Currencies)

Company Name	Related Party	Nature of Relationship		Transaction Details	Transaction Details		Abnormal Transaction	Abnormal Transaction	Notes/Accounts (Payable) or Receivable	Notes/Accounts (Payable) or Receivable	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
Lite-On Technology Corporation Philip & Lite-On Digital Solutions Corp. Lite-On Electronics (Tianjinn) Co., Ltd. Lite-On Network Communication (Dongguan) Limited Lite-On Opto Technology (Changzhou) Co., Ltd. Lite-On Li Shin Technology (Ganzhou) Co., Ltd. Lite-On Technology (Changzhou) Co., Ltd. Lite-On Technology (Ying Tan) Co., Ltd. Lite-On Technology (Xianging) Co., Ltd. Lite-On Technology (Shanghai) Ltd. China Bridge Express (Wuxi) Co., Ltd. Lite-On Electronics (Dongguan) Co., Ltd. Silitek Elec. (Dongguan) Co., Ltd. Lite-On Power Technology (Dongguan) Co., Ltd. Lite-On Electronics H.K. Ltd. Lite-On Electronics Co., Ltd. Dong Guan G-Tech Computers Co., Ltd. Huizhou Li Shin Electronic Co., Ltd.	Philip & Lite-On Digital Solutions Corp. Lite-On Technology (Changzhou) Co., Ltd. China Bridge Express (Wuxi) Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Japan Ltd. Lite-On Trading USA, Inc. Lite-On Sales & Distribution Inc. Lite-On China Holding Co., Ltd. Lite-On Technology (Changzhou) Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On, Inc. Li Shin International Enterprise Corp. Lite-On Overseas Trading Co., Ltd. Lite-On Automotive Electronics (Guangzhou) Co., Ltd. Philips & Lite-On Digital Solutions USA Inc. Philips & Lite-On Digital Solutions Germany GmbH Lite-On Overseas Trading Co., Ltd. China Bridge Express (Wuxi) Co., Ltd. Lite-On Overseas Trading Co., Ltd. Lite-On Singapore Pte. Ltd. Li Shin International Enterprise Corp. Lite-On Singapore Pte. Ltd. Lite-On Overseas Trading Co., Ltd. Li Shin International Enterprise Corp. Li Shin International Enterprise Corp. Philip & Lite-On Digital Solutions (Shanghai) Co., Ltd. Lite-On Technology (Changzhou) Co., Ltd. Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd. Lite-On Electronic Co., Ltd. Lite-On Overseas Trading Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Overseas Trading Co., Ltd. Li Shin International Enterprise Corp.	Note 1 Note 2 Note 2 Note 1 Note 1 Note 2 Note 2 Note 2 Note 2 Note 1 Note 2 Note 1 Note 1 Note 2 Note 4 Note 4 Note 3 Note 4 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 4 Note 4 Note 3 Note 3 Note 4 Note 3 Note 3 Note 3 Note 3	Sale Sale Sale Sale Sale Sale Sale Sale Purchase Purchase Purchase Purchase Purchase Purchase Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale	$ (23,627,190) (1,075,660) (1,143,329) (3,497,556) (608,388) (4,399,638) (1,943,838) (152,686) 1,176,235 21,907,646 163,708 3,264,919 85,211,776 481,162 (9,760,384) (1,429,026) (1,562,343) (200,774) (12,714,862) (3,286,850) (691,034) (12,329,615) (9,771,381) (619,287) (731,921) (841,238) (231,777) (12,901,886) (8,288,288) (1,200,457) (286,767) (1,200,462) (3,670,350) (1,204,998)	(16) (1) (1) (2) - (3) (1) - 1 17 - 3 66 - (40) (6) (100) (2) (98) (100) (100) (53) (42) (100) (100) (16) (8) (100) (95) (100) (14) (100) 98 (63)	About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days	Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing	No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference	$ 5,996,229 414,917 544,026 1,159,868 160,262 1,462,746 632,684 154,510 (508,539) (7,918,051) - (352,208) (23,414,894) (148,180) 1,728,693 389,525 260,289 53,191 1,089,382 606,864 106,078 1,763,168 1,519,871 189,119 121,206 75,306 42,577 1,118,384 1,645,684 - 113,122 - 408,406 25,463	14 1 1 3 - 3 1 - (1) (20) - (1) (58) - 30 7 100 5 94 100 100 46 40 100 100 4 4 100 92 - 21 - 94 16

(Continued)

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Company Name	Related Party	Nature of Relationship		Transaction Details	Transaction Details		Abnormal Transaction	Abnormal Transaction	Notes/Accounts (Payable) or Receivable	Notes/Accounts (Payable) or Receivable	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
DongGuan G-Pro Computer Co., Ltd. Lite-On Electronics (Guangzhou) Co., Ltd. Lite-On Opto Technology (Guangzhou) Co., Ltd. Lite-On Auto Electric Technology (Guangzhou) Ltd. Lite-On IT Opto Tech (BH) Co., Ltd. Lite-On Electronics (Thailand) Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Overseas Trading Co., Ltd. Lite-On Automotive (Wuxi) Co., Ltd. Lite-On Automotive Electronics (Guangzhou) Ltd. Shenzhen Lite-On Mobile Precision Molds Co., Ltd. Guangzhou Lite-On Mobile Electronic Components Co., Ltd. Zhuhai Lite-On Mobile Technology Co., Ltd. Lite-On Japan Ltd.	Lite-On Overseas Trading Co., Ltd. Lite-On Technology (Shanghai) Ltd. Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd. Lite-On Technology (Shanghai) Ltd. Lite-On Overseas Trading Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Japan Ltd. Lite-On Technology (Changzhou) Co., Ltd. Lite-On Technology (Shanghai) Ltd. China Bridge Express (Wuxi) Co., Ltd. Lite-On Electronics H.K. Ltd. Lite-On Japan Ltd. Lite-On, Inc. Lite-On Trading USA, Inc. Leotek Electronics USA LLC Lite-On Sales & Distribution Inc. Lite-On Overseas Trading Co., Ltd. Lite-On Mobile Indústria e Comércio de Plásticos Ltda. Lite-On Network Communication (Dongguan) Limited Lite-On Li Shin Technology (Ganzhou) Co., Ltd. Lite-On Technology (Changzhou) Co., Ltd. Lite-On Technology (Ying Tan) Co., Ltd. Lite-On Technology (Xianning) Co Ltd. Lite-On Electronics (Dongguan) Co., Ltd. Silitek Elec. (Dongguan) Co., Ltd. Dong Guan G-Tech Computers Co., Ltd. I-Solutions Limited Huizhou Li Shin Electronic Co., Ltd. DongGuan G-Pro Computer Co., Ltd. Lite-On Electronics (Guangzhou) Ltd. Lite-On Opto Technology (Guangzhou) Co., Ltd. Lite-On Auto Electric Technology (Guangzhou) Ltd. Lite-On IT Opto Tech (BH) Co., Ltd. Lite-On Singapore Pte. Ltd. Diodes Incorporated Lite-On Semiconductor Corp. Lite-On Technology (Shanghai) Ltd. Lite-On Technology (Shanghai) Ltd. Lite-On Singapore Pte. Ltd. Zhuhai Lite-On Mobile Telecommunication Co., Ltd. Lite-On Mobile Oyj (formerly: Perlos Oyj) Lite-On Mobile Pte. Ltd. Lite-On Mobile Pte. Ltd. Lite-On Semiconductor Corp. Lite-On Semiconductor Corp.	Note 4 Note 4 Note 4 Note 4 Note 4 Note 3 Note 3 Note 3 Note 4 Note 4 Note 4 Note 3 Note 3 Note 4 Note 4 Note 4 Note 4 Note 3 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 3 Note 6 Note 5 Note 4 Note 4 Note 3 Note 4 Note 4 Note 3 Note 3 Note 5 Note 5	Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Sale Purchase Purchase Sale Sale Sale Sale Sale Sale Sale Sale Purchase	$ (8,853,694) (216,184) (32,972,454) (2,389,937) (742,970) (17,190,388) (3,317,936) (104,475) (141,925) (2,475,382) (998,835) (2,063,351) (1,412,404) (786,513) (5,281,012) (1,266,916) (273,574) (250,073) (162,194) (11,405,108) (261,079) (13,853,750) (224,212) (249,250) (10,741,568) (5,996,218) (1,891,585) (317,074) (847,077) (7,233,999) (39,302,589) (1,379,803) (251,560) (15,412,908) (23,205,038) 337,661 557,040 (425,596) (1,104,314) (1,506,175) (436,926) (396,032) (2,184,744) (1,686,339) JPY (604,713) JPY 1,450,137	(100) - (60) (99) (99) (100) (97) (3) - (4) (2) (3) (2) (1) (8) (2) - - - (5) - (6) - - (5) (3) (1) - - (3) (18) (1) - (7) (11) - - (57) (28) (38) (90) (9) (48) (58) (4) 12	About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days	Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing	No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference	$ - 89,974 7,050,220 526,227 69,763 3,797,218 827,541 39,608 57,059 1,165,899 485,211 504,040 455,587 187,562 1,974,636 415,959 81,893 114,029 73,690 2,392,483 44,131 5,444,235 40,836 57,955 1,781,147 557,088 745,351 90,013 157,468 1,172,403 10,166,510 493,579 98,908 5,345,685 2,318,450 (136,527) (206,967) 201,913 471,191 427,013 75,802 166,483 1,004,758 783,315 JPY 194,293 JPY (332,274)	- 1 42 100 100 100 95 5 - 6 2 2 2 1 9 2 - 1 - 4 - 10 - - 3 1 1 - - 2 19 1 - 10 4 - - 64 28 26 88 10 61 73 7 (11)

(Continued)

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(Concluded)

Company Name	Related Party	Nature of Relationship		Transaction Details	Transaction Details		Abnormal Transaction	Abnormal Transaction	Notes/Accounts (Payable) or Receivable	Notes/Accounts (Payable) or Receivable	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
Silitech Technology Corp. Ltd. Xurong Electronic (Shenzhen) Co., Ltd.	Silitech Technology Corp. Silitech Technology Corp. Ltd.	Note 3 Note 4	Sale Sale	US$ (14,428) JPY (11,639) US$ (17,272) JPY (11,639)	(83) (46)	90 days 90 days	No significant difference No significant difference	90-120 days 90-120 days	US$ 4,366 JPY 4,769 US$ 5,229 JPY 4,769	93 69

Note 1: Equity-method investee.

Note 2: Investee of the equity-method investee.

Note 3: The Parent Company’s equity-method investee.

Note 4: Investee of the Parent Company’s equity-method investee.

Note 5: Associate.

Note 6: Other related parties.

Note 7: All intercompany sales and purchases have been eliminated from consolidation.

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141 Lite-On Technology Corporation 2016 Annual Report

TABLE 6

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2016

(Amounts in Thousands of New Taiwan Dollars or in Thousands of Foreign Currencies)

Company Name	Related Party	Nature of Relationship	Ending Balance of Notes Receivable-inter	Ending Balance of Trade Receivables-inter	Ending Balance of Other Receivables-inter	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Bad Debts
							Amount	Action Taken
Lite-On Technology Corporation Philip & Lite-On Digital Solutions Corp. Lite-On Electronics (Tianjinn) Co., Ltd. Lite-On Network Communication (Dongguan) Limited Lite-On Opto Technology (Changzhou) Co., Ltd. Lite-On Li Shin Technology (Ganzhou) Co., Ltd. Lite-On Technology (Changzhou) Co., Ltd. Lite-On Technology (Ying Tan) Co., Ltd. Lite-On Technology (Xianging) Co., Ltd. Lite-On Electronics (Dongguan) Co., Ltd. Silitek Elec. (Dongguan) Co., Ltd. Lite-On Power Technology (Dongguan) Ltd. Lite-On Electronics H.K. Ltd. Dong Guan G-Tech Computers Co., Ltd. Lite-On Electronics (Guangzhou) Co., Ltd. Lite-On Opto Technology (Guangzhou) Co., Ltd.	Philip & Lite-On Digital Solutions Corp. Lite-On Technology (Changzhou) Co., Ltd. China Bridge Express (Wuxi) Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Japan Ltd. Lite-On Trading USA, Inc. Lite-On Sales & Distribution Inc. Lite-On Overseas Trading Co., Ltd. Lite-On China Holding Co., Ltd. Philips & Lite-On Digital Solutions USA Inc. Philips & Lite-On Digital Solutions Germany GmbH Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd. Lite-On Singapore Pte. Ltd. Li-Shin International Enterprise Corp. Changzhou Leotek New Energy Trade Limited Lite-On Singapore Pte. Ltd. Lite-On Overseas Trading Co., Ltd. Li-Shin International Enterprise Corp. Li-Shin International Enterprise Corp. Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd. Lite-On Electronics (Dongguan) Co., Ltd. LET (HK) Limited Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd.	Note 1 Note 2 Note 2 Note 1 Note 1 Note 2 Note 2 Note 1 Note 2 Note 4 Note 4 Note 3 Note 3 Note 3 Note 3 Note 4 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 4 Note 3 Note 3 Note 3 Note 3 Note 3	$ - - - - - - - - - - - - - - - - - - - - - - - - - - - -	$ 5,996,229 414,917 544,026 1,159,868 160,262 1,462,746 632,684 4,098,762 154,510 1,728,693 389,525 260,289 1,089,382 606,864 106,078 - 1,763,168 1,519,871 189,119 121,206 1,118,384 1,645,684 - - 113,122 408,406 7,050,220 526,227	$ 210 3,341 - 223,803 24,180 - 2 30,786 - 3,881 - - - 7,706 - 185,781 - - - - - 4,791 143,054 257,600 - - 919 -	4.72 2.40 2.69 3.40 3.74 3.46 5.10 - 1.03 6.96 4.17 5.57 12.11 8.42 4.18 - 8.55 8.96 2.94 6.50 11.59 5.83 - - 3.27 10.20 4.82 9.08	$ - 2,330 - - 15 - - - - - - - - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - - - - - - - - - - - - - - -	$ 1,817,358 - 126,502 1,116,170 16,394 450,209 228,366 2,173,903 - 664,845 103,575 133,858 1,089,382 34,958 68,662 - 19,633 139,269 38,272 59,414 - 835,486 363 - 32,139 377,733 3,105,929 222,856	$ - - - - - - - - - - - - - - - - - - - - - - - - - - - -

(Continued)

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Company Name	Related Party	Nature of Relationship	Ending Balance of Notes Receivable-inter	Ending Balance of Trade Receivables-inter	Ending Balance of Other Receivables-inter	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Bad Debts
							Amount	Action Taken
Lite-On IT Opto Tech (BH) Co., Ltd. Lite-On Electronics (Thailand) Co., Ltd. Lite-On Singapore Pte. Ltd. G&W Technology (BVI) Limited Lite-On Overseas Trading Co., Ltd. Lite-On Automotive (Wuxi) Co., Ltd. . Lite-On Automotive Electronics (Guangzhou) Co., Ltd Guangzhou Lite-On Mobile Engineering Plastics Co., Ltd. Guangzhou Lite-On Mobile Electronic Components Co., Ltd. Zhuhai Lite-On Mobile Technology Co., Ltd. Silitech Technology Corp. Silitech (BVI) Holding Ltd. Silitech Technology Corp. Ltd. Xurong Electronic (Shenzhen) Co., Ltd.	Lite-On Overseas Trading Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Technology (Shanghai) Ltd. China Bridge Express (Wuxi) Co., Ltd. Lite-On Electronics H.K. Ltd. Lite-On Japan Ltd. Lite-On, Inc. Lite-On Trading USA, Inc. Leotek Electronics USA LLC Lite-On Overseas Trading Co., Ltd. Lite-On Mobile Pte. Ltd. G&W Technology Limited Lite-On Network Communication (Dongguan) Limited Lite-On Technology (Changzhou) Co., Ltd. Lite-On Electronics (Dongguan) Co., Ltd. Silitek Elec. (Dongguan) Co., Ltd. Dong Guan G-Tech Computers Co., Ltd. Huizhou Li Shin Electronic Co., Ltd. DongGuan G-Pro Computer Co., Ltd. Lite-On Electronics (Guangzhou) Co., Ltd. Lite-On Opto Technology (Guangzhou) Co., Ltd. Lite-On IT Opto Tech (BH) Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Technology (Shanghai) Ltd. Lite-On Technology (Shanghai) Ltd. Lite-On Singapore Pte. Ltd. Zhuhai Lite-On Mobile Technology Co., Ltd. Lite-On Mobile Oyj (formerly: Perlos Oyj) Zhuhai Lite-On Mobile Technology Co., Ltd. Lite-On Mobile Pte. Ltd. Lite-On Mobile Pte. Ltd. Silitech (BVI) Holding Ltd. Silitech (Bermuda) Holding Ltd. Silitech Technology Corp. Silitech Technology Corp. Ltd.	Note 3 Note 3 Note 4 Note 4 Note 3 Note 3 Note 4 Note 4 Note 4 Note 3 Note 3 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 3 Note 4 Note 4 Note 3 Note 4 Note 3 Note 4 Note 3 Note 3 Note 4 Note 4 Note 3 Note 4	$ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	$ 3,797,218 827,541 1,165,899 485,211 504,040 455,587 187,562 1,974,636 415,959 114,029 - - 2,392,483 5,444,235 1,781,147 557,088 745,351 157,468 1,172,403 10,166,510 493,579 5,345,685 2,318,450 201,913 471,191 427,013 - 166,483 8,745 1,004,758 783,315 - - US$ 4,366 JPY 4,769 US$ 5,229 JPY 4,769	$ - 13,182 - - - 1,178 364 - 3,552 - 1,288,492 156,651 - - - 480 - - 945 - 1,726 10,485 - 7,116 7,841 64 1,724,240 - 371,751 - - 260,379 US$ 5,370 - -	9.05 4.24 4.24 2.03 4.61 2.85 4.86 2.95 2.67 0.66 - - 5.48 2.57 7.18 9.88 2.72 5.00 5.86 4.04 5.59 5.77 4.25 2.29 3.41 3.83 - 4.07 0.20 3.47 2.24 - - 3.15 3.15	$ - - - - - - - 1,194 4,981 - - - - - - - 47,674 - - - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	$ 1,235,394 316,508 409,450 89,855 172,822 111,103 85,912 838,681 119,184 41,926 - - 1,047,153 7,347 1,149,086 557,569 174,002 - 613,925 3,786,093 132,893 1,471,975 2,318,450 39,103 100,417 50,319 - 48,621 - 311,890 103,718 - - US$ 1,019 JPY 1,386 US$ 1,375 JPY 1,385	$ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

(Continued)

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(Concluded)

Note 1: Equity-method investee.

Note 2: Investee of the equity-method investee.

Note 3: The Parent Company’s equity-method investee.

Note 4: Investee of the Parent Company’s equity-method investee.

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TABLE 7

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE FOR THE YEAR ENDED DECEMBER 31, 2016

(Amounts in Thousands of New Taiwan Dollars or Thousands of Foreign Currencies)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance as	of December 31, 2016	of December 31, 2016	Net Income (Losses) of the Investee	Share of Profits/Losses of Investee	Note
				December 31, 2016	December 31, 2015	Shares (In Thousands)	Percentage of Ownership (%)	Carrying Value
Lite-On Technology Corporation	Silitech Technology Corp. Lite-On Integrated Service Inc. Dragonjet Corporation Logah Technology Corp. Lite-On Capital Corp. Lite-On Electronics H.K. Ltd. Lite-On Electronics (Thailand) Co., Ltd. Lite-On Japan Ltd. Lite-On International Holding Co., Ltd. LTC Group Ltd. Lite-On Technology USA, Inc. Lite-On Electronics (Europe) Ltd. Lite-On Technology (Europe) B.V. Lite-On Overseas Trading Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Semiconductor Corp. Lite-On Vietnam Co., Ltd. Li Shin International Enterprise Corp. Eagle Rock Investment Ltd. Canfield Ltd. Lite-On Mobile Pte. Ltd. Leotek Electronics Holding Limited LET (HK) Ltd. High Yield Group Co., Ltd. Lite-On Information Technology B.V. Philip & Lite-On Digital Solutions Corp. Lite-Space Technology Company Limited Lite-On Automotive Electronics Mexico, S.A. DE C.V. Lite-On Automotive Service USA Inc. Lite-On Automotive Electronics (Europe) B.V. Lite-On Automotive International (Cayman) Co., Ltd.	New Taipei City, Taiwan Taipei City, Taiwan New Taipei City, Taiwan Kaohsiung City, Taiwan Taipei City, Taiwan Hong Kong Thailand Japan British Virgin Islands British Virgin Islands USA United Kingdom Netherlands British Virgin Islands Singapore New Taipei City, Taiwan Vietnam British Virgin Islands British Virgin Islands Apia, Samoa Singapore Hong Kong Hong Kong British Virgin Islands Netherlands Taiwan Hong Kong Mexico USA Netherlands Cayman	Manufacture and sale of modules and plastic products Information outsourcing and system integrate Manufacture and sale of computer peripherals, printers, digital cameras, modules and plastic products Development, manufacture and sale of LCD TV inverters Investment activities Sale of LED optical products Manufacture and sale of LED optical products Sale of LED optical products and power supplies Investment activities Investment activities Investment activities Manufacture and sale of power supplies Market research and after-sales service Merchandising business Manufacture and supply computer peripheral products Manufacture of image sensor and rectifier Electronic contract manufacturing Manufacture and sale of computer and appliance components Import and export business and investment activities Import and export business and investment activities Manufacture and sale of mobile phone modules and design for assembly line Holding company Sale of optical disc drives Holding company Market research and customer service Sale of optical disc drives Sale of computer components Production, manufacture, sale, import and export of photovoltaic device, key electronic components, telecommunications equipment, information technology equipment, semiconductor applications, general lighting, automotive electronics, renewable energy products and systems and maintenance of automotive industry Sale of automotive parts and other electronic products Sale of automotive parts and other electronic products Investment activities	$ 324,685 25,886 1,069,080 402,787 4,096,367 7,339,481 529,106 248,305 US$ 335,825 $ 1,098,752 US$ 55,172 $ 44,559 2,543,184 168,947 US$ 63,788 $ 773,618 US$ 12,000 $ 56,929 341 7,142 EUR 250,329 US$ - $ 251,322 2,271,806 1,163,591 267,113 149,968 US$ 4,950 US$ - EUR 1,090 US$ 100,626	$ 324,685 25,886 1,069,080 402,787 4,096,367 7,339,481 529,106 248,305 US$ 335,825 $ 1,380,308 US$ 55,172 $ 44,559 2,543,184 168,947 US$ 63,788 $ 773,618 US$ 3,000 $ 56,929 341 7,142 EUR 250,329 US$ 1,010 $ 42 2,271,806 1,163,591 267,113 149,968 US$ 4,950 US$ 60 EUR 1,090 US$ 100,626	60,757 3,400 26,727 31,683 209,545 17,865 5,030 6,162 335,825 32,916 470 300 331 5,143 51,777 57,204 - 1,748 10 200 162,886 - 62,060 68,138 11,018 17,150 5,100 146 - 24 11,967	33.87 100.00 29.62 28.10 100.00 100.00 100.00 49.49 100.00 100.00 100.00 100.00 54.00 100.00 100.00 18.46 100.00 100.00 100.00 33.33 100.00 - 100.00 100.00 100.00 49.00 39.23 99.00 - 100.00 100.00	$ 1,334,704 47,155 1,025,933 199,468 1,442,800 12,293,534 1,411,616 353,908 21,476,229 288,603 2,312,102 49,011 273,799 329,214 18,442,116 1,406,307 362,838 (66,015) 1,228,407 5,092 8,005,173 - 27,754 5,431,907 16,579 291,107 55,551 62,596 - 38,501 1,948,415	$ (109,202) 6,406 88,044 (122,188) 43,569 HK$ 488,442 THB 136,745 JPY 75,201 US$ (46,493) US$ (109) US$ 3,385 GBP 149 EUR 719 US$ 2,833 US$ 111,194 $ 439,969 US$ 120 US$ 20 US$ (2,494) US$ (27) US$ (8,887) HK$ 2 HK$ 12,191 US$ 10,269 EUR (14) $ 41,824 US$ 1,127 MXN (11,074) US$ 1 EUR (63) US$ 8,382	$ (36,987) 6,406 26,082 (34,338) 10,690 1,985,446 124,999 11,138 (1,555,633) (15,370) 85,576 6,603 12,384 92,516 3,585,196 76,613 3,675 623 (87,204) 475 (294,441) 9 50,119 670,065 (502) 20,494 14,314 (19,138) 40 (2,143) 218,167	Subsidiary Subsidiary Associate Associate (Note 6) Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate (Note 6) Subsidiary Subsidiary (Note 5) Subsidiary Associate Subsidiary Subsidiary (Note 3) Subsidiary Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary (Note 3) Subsidiary Subsidiary

(Continued)

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Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance as	of December 31, 2016	of December 31, 2016	Net Income (Losses) of the Investee	Share of Profits/Losses of Investee	Note
				December 31, 2016	December 31, 2015	Shares (In Thousands)	Percentage of Ownership (%)	Carrying Value
Lite-On Capital Corp. Lite-On Green Technologies Inc. Lite-On Green Energy (Singapore) Pte. Ltd. Lite-On Green Technologies B.V. Lite-On Green Energy B.V. China Bridge (China) Co., Ltd. Lite-On Electronics (Jiangsu) Co., Ltd. Lite-On Automotive International (Cayman) Co., Ltd. High Yield Group Co., Ltd. Lite-On Information Technology B.V.	Silitech Technology Corp. Lite-On Green Technologies Inc. Lite-On Green Energy (HK) Limited Lite-On Technology (Europe) B.V. Lite-On Semiconductor Corp. Lite-On Green Energy (Singapore) Pte. Ltd. Logah Technology Corp. Five Dimension Co., Ltd. Lite-On Green Technologies B.V. Lite-On Green Technologies (HK) Limited Lite-On Green Energy B.V. Kompaktsolar GmbH Lite-On Green Energy S.R.L Romeo Tetti PV1 S.R.L China Bridge Express (Wuxi) Co., Ltd. Lite-On Opto Technology (Changzhou) Co., Ltd. Lite-On Technology (Changzhou) Co., Ltd. Lite-On Opto Technology (Changzhou) Co., Ltd. Lite-On Medical Device (Changzhou) Ltd. Lite-On Computer (Changzhou) Co., Ltd. Lite-On Automotive Holdings (Hong Kong) Co., Ltd. Lite-On IT International (HK) Ltd. Lite-On Information Technology GmbH	New Taipei City, Taiwan Taipei City, Taiwan Hong Kong Netherlands New Taipei City, Taiwan Singapore Kaohsiung City, Taiwan Japan Netherlands Hong Kong Netherlands Berlin, Germany Italy Italy Wuxi, China Changzhou, China Changzhou, China Changzhou, China Changzhou, China Changzhou, China Hong Kong Hong Kong Germany	Manufacture and sale of modules and plastic products Manufacture and wholesale of electronic components and energy technology services Investment activities Market research and after-sales service Manufacture of image sensor and rectifier Investment activities Development, manufacture and sale of LCD TV inverters Development, manufacture and sale of cell phone and camera lens modules Solar energy engineering Solar energy engineering Investment activities Solar energy engineering Solar energy engineering Solar energy engineering Express and sale of power supplies, printers, display devices and scanners Development, manufacture of new-type electronic components and provide technology consulting services, maintenance equipment and after-sales services Development, manufacture, sale and installation of power supplies and transformers and provision technology consulting services, maintenance equipment and after-sales services Development, manufacture and sale of new-type electronic components and LED and provision technology consulting services, maintenance equipment and after-sales services Manufacture and sale of medical equipment Design, development, manufacture and sale of computer laptop keyboards and components and provision technology consulting services and after-sales services Investment activities Sale of optical disc drives Sale of optical disc drives	$ 115,572 1,040,000 US$ 3,000 $ 2,126,479 - 440,974 74,538 JPY 172,180 EUR 16,020 US$ 760 EUR 2,500 EUR 401 EUR - EUR - CNY 36,244 CNY 85,015 CNY 332,038 CNY 503,977 CNY 30,640 CNY 55,924 HK$ 41,384 US$ 102,400 EUR 25	$ 115,572 1,040,000 US$ 3,000 $ 2,126,479 - 440,974 74,538 JPY 223,340 EUR 16,020 US$ 760 EUR 11,000 EUR 401 EUR 60 EUR 9,847 CNY 36,244 CNY 85,015 CNY 332,038 CNY 503,977 CNY 30,640 CNY - HK$ 41,384 US$ 102,400 EUR 25	1,153 84,000 3,000 282 6,486 11,150 4,141 9 30 4,000 9,140 51 - - - - - - - - 100,626 102,400 -	0.64 100.00 100.00 46.00 2.09 100.00 3.67 39.10 100.00 100.00 100.00 51.00 - - 100.00 12.59 100.00 87.41 100.00 100.00 100.00 100.00 100.00	$ 106,783 237,491 3,671 231,386 187,987 299,961 26,070 20,782 201,954 (6,316) EUR 451 EUR - EUR - EUR - CNY 95,425 CNY 72,598 CNY 885,560 CNY 504,037 CNY 27,665 CNY 53,728 US$ 61,075 US$ 190,544 EUR 39	$ (109,202) (8,980) US$ (3) EUR 719 $ 439,969 EUR (19) $ (122,188) JPY (66,745) EUR (43) US$ 1,593 EUR 13 EUR - EUR 2 EUR (6) CNY (2,159) CNY 2,721 CNY 59,281 CNY 2,721 CNY (779) CNY (2,196) HK$ 64,234 US$ 10,274 EUR -	$ - - - - - - - - - - - - - - - - - - - - - - -	Subsidiary Subsidiary Subsidiary Subsidiary Associate (Note 6) Subsidiary Associate (Note 6) Associate Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary (Note 1) Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary (Note 2) Subsidiary Subsidiary Subsidiary

(Continued)

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Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance as	of December 31, 2016	of December 31, 2016	Net Income (Losses) of the Investee	Share of Profits/Losses of Investee	Note
				December 31, 2016	December 31, 2015	Shares (In Thousands)	Percentage of Ownership (%)	Carrying Value
Philip & Lite-On Digital Solutions Corp. Lite-On Technology USA, Inc. Lite-On International Holding Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Technology (Shanghai) Ltd. LTC Group Ltd. Lite-On Technology (Europe) B.V. Lite-On (Finland) Oy Lite-On China Holding Co., Ltd. G&W Technology (BVI) Limited Silitech Technology Corp . Silitech (BVI) Holding Ltd.	Philips & Lite-On Digital Solutions USA Inc. Philips & Lite-On Digital Solutions Netherlands B.V. Philips & Lite-On Digital Solutions Germany GmbH Philips & Lite-On Digital Solutions Korea Ltd. Lite-On, Inc. Lite-On Trading USA, Inc. Leotek Electronics USA LLC. Power Innovations International, Inc. Lite-On Sales & Distribution Inc. Lite-On Technology Service, Inc. Lite-On China Holding Co., Ltd. LiteStar JV Holding (BVI) Co., Ltd. Lite-On Automotive Electronics Mexico, S.A. DE C.V. Lite-On Intelligent Technology (Yencheng) Corp. Titanic Capital Services Ltd. LTC International Ltd. Lite-On (Finland) Oy Lite-On Mobile Oyj (formerly: Perlos Oyj) Lite-On Electronics Co., Ltd. Yet Foundate Ltd. I-Solutions Limited Fordgood Electronic Ltd. G&W Technology (BVI) Limited G&W Technology Limited Lite-On Japan Ltd. Silitech (BVI) Holding Ltd. Silitech (Bermuda) Holding Ltd.	USA Netherlands Germany South Korea USA California, USA USA USA USA USA British Virgin Islands British Virgin Islands Mexico Yancheng, China British Virgin Islands British Virgin Islands Finland Finland Hong Kong Hong Kong British Virgin Islands Hong Kong British Virgin Islands Hong Kong Japan British Virgin Islands Bermuda	Sale of optical disc drives Sale and design of optical disc drives Development and sale of modules of automotive recorders Sale of optical disc drives Sales data processing business of optoelectronic products and power supplies Sale of optical products Sale of LED products Development, design and manufacture of power control and energy management Sale of optical disc drives After-sales service of optical products Manufacture and sale of computer cases Investment activities Production, manufacture, sale, import and export of photovoltaic device, key electronic components, telecommunications equipment, information technology equipment, semiconductor applications, general lighting, automotive electronics, renewable energy products and systems and maintenance of automotive industry Wholesale, import and export and installation of street lights, signal lights, scenery lights and new-type electronic components Investment activities Manufacture and sale of system products Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line Investment activities Manufacture of plastic and computer peripheral products Original equipment manufacturer of electronic products Import and export and real estate business Real estate management Leasing business Sale of LED optical products and power supplies Investment activities Investment activities	$ 33 381,221 1,326,996 15,376 US$ 3,000 US$ 31,500 US$ 5,792 US$ 15,756 US$ 4,765 US$ 1,500 US$ 399,442 US$ 27,000 US$ 50 CNY 19,427 $ 529,106 485,514 EUR 76,674 EUR 196,618 US$ 360,760 CNY 73,220 US$ 1,500 US$ 13,336 US$ 3,900 US$ 65 JPY 197,040 US$ 95,182 US$ 95,132	$ 33 381,221 1,326,996 15,376 US$ 3,000 US$ 31,500 US$ 5,792 US$ 15,756 US$ 4,765 US$ 1,500 US$ 399,442 US$ 27,000 US$ 50 CNY 19,427 $ 810,662 485,514 EUR 76,674 EUR 196,618 US$ 360,760 CNY 73,220 US$ 1,500 US$ 13,336 US$ 3,900 US$ 65 JPY 197,040 US$ 95,182 US$ 95,132	1 15 - 18 3,000 315 - 12,916 1 1 399,442 2 1 - 8,655 15,120 3 52,937 2,966,233 68,430 1,500 105,450 3,900 500 980 95,182 95,132	100.00 100.00 100.00 100.00 100.00 100.00 100.00 95.25 100.00 100.00 100.00 19.35 1.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 50.00 100.00 7.87 100.00 100.00	$ 239,218 45,659 862,497 32,507 US$ 5,227 US$ 33,392 US$ 9,621 US$ 17,136 US$ 6,303 US$ 1,622 US$ 688,676 US$ 22,875 US$ 20 CNY 30,003 US$ 721 US$ 15,021 EUR 11,876 EUR 11,586 US$ 705,480 US$ 17,605 US$ 1,500 US$ 15,117 US$ 4,175 US$ 1,263 $ 70,859 3,351,002 US$ 103,793	US$ 425 EUR 26 EUR 1,186 KRW 41,556 US$ 506 US$ 938 US$ 1,352 US$ (625) US$ 1,218 US$ 86 US$ (46,490) $ 3,647 MXN (11,074) CNY 7,909 US$ (520) US$ 385 EUR 716 EUR 667 HK$ 92,464 CNY 5,080 US$ - HK$ 21,432 US$ 383 US$ 475 JPY 75,201 US$ 2,366 US$ 2,352	$ - - - - - - - - - - - - - - - - - - - - - - - - - - -	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

(Continued)

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Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance as	of December 31, 2016	of December 31, 2016	Net Income (Losses) of the Investee	Share of Profits/Losses of Investee	Note
				December 31, 2016	December 31, 2015	Shares (In Thousands)	Percentage of Ownership (%)	Carrying Value
Silitech (Bermuda) Holding Ltd. Lite-On Japan Ltd. Lite-On Japan (H.K.) Limited Lite-On Mobile Oyj (formerly: Perlos Oyj) Lite-On Mobile Pte. Ltd. Guangzhou Lite-On Mobile Electronic Components Co., Ltd.	Silitech (Hong Kong) Holding Ltd. Silitech Technology Corp. Sdn. Bhd. Silitech Technology Corp. Ltd. Silitech International (India) Private Limited L&K Industries Philippines, Inc. Lite-On Japan (H.K.) Limited Lite-On Japan (Korea) Co., Ltd. Lite-On Japan (Thailand) Co., Ltd. NL (Shanghai) Co., Ltd. Lite-On Mobile Sweden AB Lite-On Mobile Indústria e Comércio de Plásticos Ltda. Lite-On Mobile India Private Limited Perlos Precision Plastics Moulding Limited Liability Company Lite-On Mobile Indústria e Comércio de Plásticos Ltda. Lite-On Young Fast Pte. Ltd. Yamada-Lom Fabricacao De Artefatos De Material Plastico Ltda. Lite-On Mobile India Private Limited Yantai Lite-On Mobile Electronic Components Co., Ltd.	Hong Kong Malaysia Hong Kong India Philippines Hong Kong South Korea Thailand China Sweden Brazil India Hungary Brazil Singapore Brazil India Yantai, China	Investment activities Manufacture of computer peripheral products Manufacture of plastic and computer peripheral products Development, manufacture and sale of automotive parts Import and export business of electronic components Import and export business of electronic components Import and export business of electronic components Import and export business of electronic components Import and export business of electronic components Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line Investment activities Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line	US$ 77,200 US$ 5,632 US$ 8,000 US$ 3,002 JPY 261,944 JPY 70,000 JPY 22,593 JPY 65,939 JPY 35,655 EUR 20,551 EUR 2,509 EUR 4,436 US$ 733 US$ 105,802 US$ 7,864 US$ 540 US$ 47,239 CNY 20,000	US$ 77,200 US$ 5,632 US$ 8,000 US$ 3,002 JPY 261,944 JPY 70,000 JPY 22,593 JPY 65,939 JPY 35,655 EUR 20,551 EUR 2,509 EUR - US$ 733 US$ 104,702 US$ 7,864 US$ 540 US$ 18,508 CNY 20,000	77,200 21,400 62,400 4,173 1,000 50 20 30 200 20 6,507 33,536 - 204,802 10 - 255,730 -	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 3.08 11.59 100.00 96.92 100.00 25.00 88.41 100.00	US$ 54,967 US$ 12,141 US$ 30,120 US$ 1,415 JPY 261,944 JPY 70,000 JPY 22,593 JPY 65,939 JPY 35,655 EUR 359 EUR 335 EUR 2,502 US$ 903 US$ 11,150 US$ 3,506 US$ (75) US$ 19,995 CNY 40,587	CNY (2,226) MYR 14,426 CNY (17,153) INR 3,272 JPY (9,889) JPY 5,025 JPY - JPY 84,037 JPY 26,153 SEK 728 BRL (204) INR (128,139) EUR (522) BRL (204) US$ (17) BRL 233 INR (128,139) CNY 13,542	$ - - - - - - - - - - - - - - - - - -	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary (Note 4) Subsidiary (Note 4) Subsidiary (Note 4) Subsidiary (Note 4) Subsidiary (Note 4) Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary

Note 1: Romeo Tetti PV1 S.R.L. was disposed in January 2016.

Note 2: Lite-On Computer (Changzhou) Co., Ltd. was established in June 2016.

Note 3: Dissolved after liquidation in December 2016.
Note 4: The Parent Company’s grandchild company; investment income/losses and adjustment for changes in equities for using equity method recognized by the Parent Company.
Note 5: Credit balance of Long-Term Equity Investments under the equity method has been transferred to the credit balance of Other Liabilities - Investments Using Equity Method.
Note 6: Information on Net Income (Loss) of Investee has not been approved by its board of directors, so it is shown as an estimated amount. For final amount of Net Income (Loss), refer to financial statements published on the Market Observation Post System.
Note 7: Please refer to Table 8 for information on investment in Mainland China.

(Concluded)

Lite-On Technology Corporation 2016 Annual Report

155 Lite-On Technology Corporation 2016 Annual Report

156

TABLE 8

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2016

(Amounts in Thousands of New Taiwan Dollars or Thousands of Foreign Currencies)

Investor Company	Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2016	Investment of Flows	Investment of Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2016	Net Income (Losses) of the Investee Company (Note 2)	Percentage of Ownership	Share of Profits/Losses (Note 2)	Carrying Amount as of December 31, 2016 (Note 2)	Accumulated Inward Remittance of Earnings as of December 31, 2016	Note
						Outflow	Inflow
Lite-On Technology Corporation	Lite-On Computer Tech (Dongguan) Co., Ltd. DongGuan G-Pro Computer Co., Ltd. Lite-On Electronics (Tianjinn) Co., Ltd. Lite-On Electronics (Dongguan) Co., Ltd. Silitek Elec. (Dongguan) Co., Ltd. Lite-On Electronics (Guangzhou) Co., Ltd. China Bridge (China) Co., Ltd. Lite-On Network Communication (Dongguan) Limited Lite-On Communications (Guangzhou) Co., Ltd. Dong Guan G-Tech Computers Co., Ltd. Lite-On Tech (Guangzhou) Co., Ltd. COMMIT Incorporated Lite-On Elec and Wire (Guangzhou) Co., Ltd. Lite-On (Guangzhou) Infortech Co., Ltd. Lite-On (Guangzhou) Precision Tooling Co., Ltd. Lite-On Digital Electronics (Dongguan) Co., Ltd. Lite-On Li Shin Technology (Ganzhou) Co., Ltd. Lite-On Technology (Xianging) Co., Ltd. Lite-On Electronics (Jiangsu) Co., Ltd. Lite-On Technology (Guangzhou) Investment Co., Ltd. Lite-On Technology (Ying Tan) Co., Ltd. Lite-On Power Technology (Dongguan) Co., Ltd. Changzhou Leotek New Energy Trade Limited Lite-On Opto Technology (Guangzhou) Co., Ltd.	Manufacture and sale of display device Manufacture and sale of system products ODM services Manufacture of electronic components Manufacture and sale of keyboards Manufacture and sale of printers and scanners Investment, sales agent Manufacture and sale of IT products Manufacture and sale of mobile terminal equipment Manufacture and sale of computer case Manufacture and sale of computer case Manufacture and sale of application software and multimedia product design Manufacture and sale of mobile terminal equipment Information outsourcing Manufacture and sale of modules Manufacture and sale of computer peripheral products Manufacture and sale of electronic components Manufacture and sale of electronic components Development, manufacture, sale and installation of power supplies and transformers and provision of technology consulting services, maintenance equipment and precision instruments Investment activities Manufacture and sale of electronic components Development, manufacture and sale of electronic components, power supplies and provision technology consulting services Wholesale, import and export and installation of street lights, signal lights, scenery lights and new-type electronic components Manufacture and sale of optical disc drives	$ 528,080 (US$ 16,400 ) 701,572 (HK$ 168,968 ) 2,141,300 (US$ 66,500 ) 1,139,880 (US$ 35,400 ) 154,560 (US$ 4,800 ) 1,178,520 (US$ 36,600 ) 966,000 (US$ 30,000 ) 456,274 (US$ 14,170 ) 790,832 (US$ 24,560 ) 417,278 (HK$ 100,498 ) 1,069,040 (US$ 33,200 ) 1,033,169 (US$ 32,086 ) 509,082 (US$ 15,810 ) 40,894 (US$ 1,270 ) 586,040 (US$ 18,200 ) 96,600 (US$ 3,000 ) 386,400 (US$ 12,000 ) 209,300 (US$ 6,500 ) 4,862,200 (US$ 151,000 ) 2,576,000 (US$ 80,000 ) 354,200 (US$ 11,000 ) 514,298 (US$ 15,972 ) 32,200 (US$ 1,000 ) 1,384,600 (US$ 43,000 )	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1	$ 916,702 (US$ 28,469 ) 734,192 (US$ 22,801 ) 2,141,236 (US$ 66,498 ) 1,139,880 (US$ 35,400 ) 154,560 (US$ 4,800 ) 1,178,520 (US$ 36,600 ) 957,789 (US$ 29,745 ) 456,274 (US$ 14,170 ) 790,832 (US$ 24,560 ) 370,300 (US$ 11,500 ) 1,069,040 (US$ 33,200 ) 19,320 (US$ 600) 509,082 (US$ 15,810 ) 75,477 (US$ 2,344 ) 392,840 (US$ 12,200 ) 96,600 (US$ 3,000 ) 429,419 (US$ 13,336 ) 209,300 (US$ 6,500 ) 4,862,200 (US$ 151,000 ) 2,576,000 (US$ 80,000 ) 354,200 (US$ 11,000 ) 514,298 (US$ 15,972 ) 32,200 (US$ 1,000 ) 1,384,600 (US$ 43,000 )	$ - - - - - - - - - - - - - - - - - - - - - - - -	$ - - - - - - - - - - - - - - - - - - - - - - - -	$ 916,702 (US$ 28,469 ) 734,192 (US$ 22,801 ) 2,141,236 (US$ 66,498 ) 1,139,880 (US$ 35,400 ) 154,560 (US$ 4,800 ) 1,178,520 (US$ 36,600 ) 957,789 (US$ 29,745 ) 456,274 (US$ 14,170 ) 790,832 (US$ 24,560 ) 370,300 (US$ 11,500 ) 1,069,040 (US$ 33,200 ) 19,320 (US$ 600 ) 509,082 (US$ 15,810 ) 75,477 (US$ 2,344 ) 392,840 (US$ 12,200 ) 96,600 (US$ 3,000 ) 429,419 (US$ 13,336 ) 209,300 (US$ 6,500 ) 4,862,200 (US$ 151,000 ) 2,576,000 (US$ 80,000 ) 354,200 (US$ 11,000 ) 514,298 (US$ 15,972 ) 32,200 (US$ 1,000 ) 1,384,600 (US$ 43,000 )	$ 449 (CNY 92 ) 379,507 (CNY 77,787 ) 273,540 (CNY 56,067 ) 419,035 (CNY 85,889 ) 693,419 (CNY 142,129 ) 442,000 (CNY 90,596 ) 19,862 (CNY 4,071 ) 303,705 (CNY 62,250 ) - 7,186 (CNY 1,473 ) - - - 8,026 (CNY 1,645 ) - 6,318 (CNY 1,295 ) 101,108 (CNY 20,724 ) 108,290 (CNY 22,196 ) 299,919 (CNY 61,474 ) (420,065 ) (CNY -86,100 ) 54,472 (CNY 11,165 ) 96,922 (CNY 19,866 ) 1,830 (CNY 375 ) (76,261 ) (CNY -15,631 )	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 1.87 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	$ 449 (CNY 92 ) 379,507 (CNY 77,787 ) 273,540 (CNY 56,067 ) 419,035 (CNY 85,889 ) 693,419 (CNY 142,129 ) 442,000 (CNY 90,596 ) 19,862 (CNY 4,071 ) 303,705 (CNY 62,250 ) - 7,186 (CNY 1,473 ) - - - 8,026 (CNY 1,645 ) - 6,318 (CNY 1,295 ) 101,108 (CNY 20,724 ) 108,290 (CNY 22,196 ) 299,919 (CNY 61,474 ) (420,065 ) (CNY -86,100 ) 54,472 (CNY 11,165 ) 96,922 (CNY 19,866 ) 1,830 (CNY 375 ) (76,261 ) (CNY -15,631 )	$ 426,877 (HK$ 102,810 ) 1,185,371 (HK$ 285,487 ) 2,937,387 (HK$ 707,446 ) 1,473,489 (HK$ 354,878 ) 1,919,171 (HK$ 462,217 ) 13,017,668 (HK$ 3,135,201 ) 1,243,720 (HK$ 299,540 ) 1,399,083 (HK$ 336,958 ) - 656,559 (HK$ 158,127 ) - - - 164,905 (HK$ 39,716 ) - 91,811 (HK$ 22,112 ) 408,587 (HK$ 98,405 ) 224,595 (US$ 6,975 ) 7,210,969 (HK$ 1,736,704 ) 1,795,625 (HK$ 432,462 ) 435,956 (US$ 13,539 ) 774,757 (HK$ 186,594 ) 14,989 (CNY 3,232 ) 2,190,115 (US$ 68,016 )	$ - - - - - - - - - - - - - - - - - - - - - - - -	Note 3 Note 3 Note 3 Note 3 Note 3

(Continued)

Lite-On Technology Corporation 2016 Annual Report

158

157 Lite-On Technology Corporation 2016 Annual Report

Investor Company	Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2016	Investment of Flows	Investment of Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2016	Net Income (Losses) of the Investee Company (Note 2)	Percentage of Ownership	Share of Profits/Losses (Note 2)	Carrying Amount as of December 31, 2016 (Note 2)	Accumulated Inward Remittance of Earnings as of December 31, 2016
						Outflow	Inflow
Lite-On Technology Corporation Philip & Lite-On Digital Solutions Corp. Silitech Technology Corp.	Lite-On Auto Electric Technology (Guangzhou) Ltd. Lite-On IT Opto Tech (BH) Co., Ltd. Lite-On Automotive Electronics (Guangzhou) Co., Ltd. Lite-On Automotive (Wuxi) Co., Ltd. Huizhou Li Shin Electronic Co., Ltd. Huizhou Fu Tai Electronic Co., Ltd. Lite-On Technology (Shanghai) Ltd. Li Shin Technology (Huizhou) Ltd. Beijing Lite-On Mobile Electronic and Telecommunication Components Co., Ltd. Guangzhou Lite-On Mobile Engineering Plastics Co., Ltd. Guangzhou Lite-On Mobile Electronic Components Co., Ltd. Shenzhen Lite-On Mobile Precision Molds Co., Ltd. Zhuhai Lite-On Mobile Technology Company Ltd. Lite-On Young Fast (Huizhou) Co., Ltd. Lite-on Green Technologies (Nanjing) Corporation Changzhou Binhu Thin Film Solar Greenhouse Co., Ltd. Epricrystal (Changzhou) Co., Ltd. Dongguan Lite-On Computer Co., Ltd. Philip & Lite-On Digital Solutions (Shanghai) Co., Ltd. Xurong Electronic (Shenzhen) Co., Ltd. Silitech Technology (SuZhou) Co., Ltd. SuZhou Xulong Mold Producing Co., Ltd.	Manufacture and sale of optical disc drives Manufacture and sale of optical disc drives Manufacture, sale and processing of electronic products Manufacture, sale and processing of electronic products Manufacture of computer peripheral products Manufacture of computer peripheral products Manufacture and sale of energy saving equipment Manufacture and sale of new-type electronic components and peripheral materials Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line Modules of touch panels Solar energy engineering Manufacture and sale of solar energy engineering Manufacture, design and sale of light-emitting diode products Manufacture and sale of computer hosts and components Sale of optical disc drives Manufacture of automotive parts, touch panels and plastic & rubber assembly Manufacture and sale of automotive parts Development, manufacture and sale of precision modules and new-type electronic components (chip components, testing elements, hybrid integrated circuits)	$ 64,400 (US$ 2,000 ) 1,771,000 (US$ 55,000 ) 199,640 (US$ 6,200 ) 161,000 (US$ 5,000 ) 203,102 (US$ 6,308 ) 31,191 (US$ 969 ) 2,286,200 (US$ 71,000 ) 193,200 (US$ 6,000 ) 515,200 (US$ 16,000 ) 630,154 (US$ 19,570 ) 1,291,220 (US$ 40,100 ) 265,734 (HK$ 64,000 ) 2,688,043 (CNY 579,595 ) 322,000 (US$ 10,000 ) 24,150 (US$ 750 ) 278,036 (CNY 59,950 ) 4,669,000 (US$ 145,000 ) 64,400 (US$ 2,000 ) 32,200 (US$ 1,000 ) 90,342 (US$ 2,800 ) 2,516,670 (US$ 78,000 ) 145,193 (US$ 4,500 )	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1	$ 64,400 (US$ 2,000 ) 1,771,000 (US$ 55,000 ) 189,018 (US$ 5,870 ) 161,000 (US$ 5,000 ) 131,035 (US$ 4,069 ) 2,093 (US$ 65 ) 2,093,000 (US$ 65,000 ) - 1,686,121 (US$ 52,364 ) 2,918,189 (US$ 90,627 ) 3,714,332 (US$ 115,352 ) 420,256 (US$ 13,051 ) 500,034 (US$ 15,529 ) 209,300 (US$ 6,500 ) 24,150 (US$ 750 ) 96,494 (US$ 2,997 ) 869,400 (US$ 27,000 ) 64,400 (US$ 2,000 ) 32,200 (US$ 1,000 ) 203,354 2,516,670 (US$ 78,000 ) -	$ - - - - - - 193,200 (US$ 6,000 ) - - - - - - - - - - - - - - -	$ - - - - - - - - - - - - - - - - - - - - - -	$ 64,400 (US$ 2,000 ) 1,771,000 (US$ 55,000 ) 189,018 (US$ 5,870 ) 161,000 (US$ 5,000 ) 131,035 (US$ 4,069 ) 2,093 (US$ 65 ) 2,286,200 (US$ 71,000 ) - 1,686,121 (US$ 52,364 ) 2,918,189 (US$ 90,627 ) 3,714,332 (US$ 115,352 ) 420,256 (US$ 13,051 ) 500,034 (US$ 15,529 ) 209,300 (US$ 6,500 ) 24,150 (US$ 750 ) 96,494 (US$ 2,997 ) 869,400 (US$ 27,000 ) 64,400 (US$ 2,000 ) 32,200 (US$ 1,000 ) 203,354 2,516,670 (US$ 78,000 ) -	$ 17,939 (CNY 3,677 ) 388,201 (CNY 79,569 ) 201,372 (CNY 41,275 ) 66,718 (CNY 13,675 ) 132,035 (CNY 27,063 ) 4,454 (CNY 913 ) 201,465 (CNY 41,294 ) 7,874 (CNY 1,614 ) (289,152 ) (CNY -59,267 ) 58,565 (CNY 12,004 ) 496,906 (CNY 101,850 ) (104,221 ) (CNY -21,362 ) (441,312 ) (CNY -90,455 ) 781 (CNY 160 ) 50,700 (CNY 10,392 ) - 4,284 (CNY 878 ) (707 ) (CNY -145 ) 19,559 (CNY 4,009 ) (74,397 ) (CNY -15,268 ) (13,970 ) (CNY -2,867 ) (19,179 ) (CNY -3,936 )	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 19.90 21.55 100.00 100.00 100.00 100.00 60.00	$ 17,939 (CNY 3,677 ) 388,201 (CNY 79,569 ) 201,372 (CNY 41,275 ) 66,718 (CNY 13,675 ) 132,035 (CNY 27,063 ) 4,454 (CNY 913 ) 201,465 (CNY 41,294 ) 7,874 (CNY 1,614 ) (289,152 ) (CNY -59,267 ) 58,565 (CNY 12,004 ) 496,906 (CNY 101,850 ) (104,221 ) (CNY -21,362 ) (441,312 ) (CNY -90,455 ) 781 (CNY 160 ) 50,700 (CNY 10,392 ) - 483 (CNY 99 ) (707 ) (CNY -145 ) 19,559 (CNY 4,009 ) (74,397 ) (CNY -15,268 ) (13,970 ) (CNY -2,867 ) (11,505 ) (CNY -2,361 )	$ 135,948 (US$ 4,222 ) 3,755,100 (US$ 116,618 ) 1,365,738 (HK$ 328,927 ) 600,913 (HK$ 144,725 ) 660,647 (US$ 20,517 ) 61,631 (US$ 1,914 ) 2,371,981 (US$ 73,664 ) 388,557 (US$ 12,067 ) 859,193 (US$ 26,683 ) 1,810,477 (US$ 56,226 ) 4,485,557 (US$ 139,303 ) 347,116 (US$ 10,780 ) 1,159,710 (CNY 250,056 ) (16,615 ) (US$ -516 ) (5,796 ) (US$ -180 ) 4,508 (US$ 140 ) 881,238 (CNY 190,012 ) 98,901 (CNY 21,325 ) 489,117 913,452 (CNY 196,059 ) 1,675,181 (CNY 359,553 ) 1,864 (CNY 400 )	$ - - - - - - - - - - - - - - - - - - - 131,622 (CNY 27,012 ) 190,605 ( CNY 39,117 ) -

Accumulated Investment in Mainland China as of December 31, 2016		Investment Amounts Authorized by Investment Commission, MOEA		Upper	Limit on Investment
$36,472,283 (US$1,132,679)		$38,316,390 (US$1,189,950)			Note 4

Note 1: Indirect investment in Mainland China through holding companies.

Note 2: Amount was recognized based on the audited financial statements.

Note 3: Lite-On Electronics (Guangzhou) Co., Ltd. merged with Lite-On Tech (Guangzhou) Co., Ltd., Lite-On (Guangzhou) Precision Tooling Co., Ltd., Lite-On Communications (Guangzhou) Co., Ltd. and Lite-On Elec and Wire (Guangzhou) Co., Ltd., with the Lite-On Electronics (Guangzhou) Co., Ltd. as the survivor entity. Because the merging process was still under way as of December 31, 2016, the change in the amount of investment in Mainland China has not yet been registered with the Ministry of Economic Affairs.

Note 4: Under Order No. 09704604680 and Order No. 10420404350 issued by the Ministry of Economic Affairs, R.O.C. on August 29, 2008 and February 16, 2015, respectively, the Parent Company acquired a certification-approved by the Industrial Development Bureau and valid from February 9, 2015 to February 8, 2018 - of its status as operation headquarters in the ROC. Thus, the Parent Company has no limitation on the amount of investing in Mainland China.

(Concluded)

Lite-On Technology Corporation 2016 Annual Report

159 Lite-On Technology Corporation 2016 Annual Report

160

TABLE 9

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2016

(Amounts in Thousands of New Taiwan Dollars)

No. (Note 1)	Company Name	Counter Party	Nature of Relationship (Note 2)		Intercompany Transaction	Intercompany Transaction
				Financial Statements Item	Amount	Terms	% of Consolidated Net Revenue or Total Assets (Note 3)
0	Lite-On Technology Corporation	Philip & Lite-On Digital Solutions Corp. Philip & Lite-On Digital Solutions Corp. Lite-On Technology (Changzhou) Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Singapore Pte. Ltd. Lite-On Singapore Pte. Ltd. Lite-On Singapore Pte. Ltd. Lite-On Trading USA, Inc. Lite-On Trading USA, Inc. Lite-On Sales & Distribution Inc. Li Shin International Enterprise Corp. Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd.	a. a. a. a. a. a. a. a. a. a. a. a. a. a.	Sales Trade receivables Purchases Sales Trade receivables Purchases Trade payables Sales Trade receivables Sales Purchases Trade receivables Purchases Trade payables	$ 23,627,190 5,996,229 1,176,235 3,497,556 1,159,868 21,907,646 7,918,051 4,399,638 1,462,746 1,943,838 3,264,919 4,098,762 85,211,776 23,414,894	Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing	10 3 1 2 1 10 4 2 1 1 1 2 37 11
1	Philip & Lite-On Digital Solutions Corp.	Philip & Lite-On Digital Solutions USA Inc. Philip & Lite-On Digital Solutions USA Inc. Philip & Lite-On Digital Solutions Germany GmbH	c. c. c.	Sales Trade receivables Sales	9,760,384 1,728,693 1,429,026	Cost-plus pricing Cost-plus pricing Cost-plus pricing	4 1 1
2	Lite-On Electronics (Tianjinn) Co., Ltd.	Lite-On Overseas Trading Co., Ltd.	c.	Sales	1,562,343	Cost-plus pricing	1
3	Lite-On Network Communication (Dongguan) Limited	Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd.	c. c.	Sales Trade receivables	12,714,862 1,089,382	Cost-plus pricing Cost-plus pricing	6 1
4	Lite-On Opto Technology (Changzhou) Co., Ltd.	Lite-On Singapore Pte. Ltd.	c.	Sales	3,286,850	Cost-plus pricing	1
5	Lite-On Technology (Changzhou) Co., Ltd.	Lite-On Singapore Pte. Ltd. Lite-On Singapore Pte. Ltd. Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd.	c. c. c. c.	Sales Trade receivables Sales Trade receivables	12,329,615 1,763,168 9,771,381 1,519,871	Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing	5 1 4 1
6	Lite-On Electronics (Dongguan) Co., Ltd.	Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd.	c. c.	Sales Trade receivables	12,901,886 1,118,384	Cost-plus pricing Cost-plus pricing	6 1
7	Silitek Elec. (Dongguan) Co., Ltd.	Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd.	c. c.	Sales Trade receivables	8,288,288 1,645,684	Cost-plus pricing Cost-plus pricing	4 1

(Continued)

Lite-On Technology Corporation 2016 Annual Report

162

161 Lite-On Technology Corporation 2016 Annual Report

No. (Note 1)	Company Name	Counter Party	Nature of Relationship (Note 2)		Intercompany Transaction	Intercompany Transaction
				Financial Statements Item	Amount	Terms	% of Consolidated Net Revenue or Total Assets (Note 3)
8	Lite-On Power Technology (Dongguan) Co., Ltd.	Lite-On Electronics Co., Ltd.	c.	Sales	$ 1,200,457	Cost-plus pricing	1
9	Lite-On Electronics Co., Ltd.	Lite-On Singapore Pte. Ltd.	c.	Sales	1,200,462	Cost-plus pricing	1
10	Dong Guan G-Tech Computers Co., Ltd.	Lite-On Overseas Trading Co., Ltd.	c.	Sales	3,670,350	Cost-plus pricing	2
11	Huizhou Li Shin Electronic Co., Ltd.	Li Shin International Enterprise Corp.	c.	Sales	1,204,998	Cost-plus pricing	1
12	DongGuan G-Pro Computer Co., Ltd.	Lite-On Overseas Trading Co., Ltd.	c.	Sales	8,853,694	Cost-plus pricing	4
13	Lite-On Electronics (Guangzhou) Co., Ltd.	Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd.	c. c.	Sales Trade receivables	32,972,454 7,050,220	Cost-plus pricing Cost-plus pricing	14 3
14	Lite-On Opto Technology (Guangzhou) Co., Ltd.	Lite-On Overseas Trading Co., Ltd.	c.	Sales	2,389,937	Cost-plus pricing	1
15	Lite-On IT Opto Tech (BH) Co., Ltd.	Lite-On Overseas Trading Co., Ltd. Lite-On Overseas Trading Co., Ltd.	c. c.	Sales Trade receivables	17,190,388 3,797,218	Cost-plus pricing Cost-plus pricing	7 2
16	Lite-On Electronics (Thailand) Co., Ltd.	Lite-On Singapore Pte. Ltd.	c.	Sales	3,317,936	Cost-plus pricing	1
17	Lite-On Singapore Pte. Ltd.	Lite-On Technology (Shanghai) Ltd. Lite-On Technology (Shanghai) Ltd. Lite-On Electronics H.K. Ltd. Lite-On Trading USA, Inc. Lite-On Trading USA, Inc. Leotek Electronics USA LLC. Lite-On Mobile Pte. Ltd.	c. c. c. c. c. c. c.	Sales Trade receivables Sales Sales Trade receivables Sales Other receivables	2,475,382 1,165,899 2,063,351 5,281,012 1,974,636 1,266,916 1,288,492	Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing No significant difference	1 1 1 2 1 1 1
18	Lite-On Overseas Trading Co., Ltd.	Lite-On Network Communication (Dongguan) Limited Lite-On Network Communication (Dongguan) Limited Lite-On Technology (Changzhou) Co., Ltd. Lite-On Technology (Changzhou) Co., Ltd. Lite-On Electronics (Dongguan) Co., Ltd. Lite-On Electronics (Dongguan) Co., Ltd. Silitek Elec. (Dongguan) Co., Ltd. Dong Guan G-Tech Computers Co., Ltd. DongGuan G-Pro Computer Co., Ltd. DongGuan G-Pro Computer Co., Ltd. Lite-On Electronics (Guangzhou) Ltd. Lite-On Electronics (Guangzhou) Ltd. Lite-On Opto Technology (Guangzhou) Co., Ltd. Lite-On IT Opto Tech (BH) Co., Ltd. Lite-On IT Opto Tech (BH) Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Singapore Pte. Ltd.	c. c. c. c. c. c. c. c. c. c. c. c. c. c. c. c. c.	Sales Trade receivables Sales Trade receivables Sales Trade receivables Sales Sales Sales Trade receivables Sales Trade receivables Sales Sales Trade receivables Sales Trade receivables	11,405,108 2,392,483 13,853,750 5,444,235 10,741,568 1,781,147 5,996,218 1,891,585 7,233,999 1,172,403 39,302,589 10,166,510 1,379,803 15,412,908 5,345,685 23,205,038 2,318,450	Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing	5 1 6 3 5 1 3 1 3 1 17 5 1 7 3 10 1

(Continued)

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No. (Note 1)	Company Name	Counter Party	Nature of Relationship (Note 2)		Intercompany Transaction	Intercompany Transaction
				Financial Statements Item	Amount	Terms	% of Consolidated Net Revenue or Total Assets (Note 3)
19	Lite-On Automotive Electronics (Guangzhou) Co., Ltd.	Lite-On Singapore Pte. Ltd.	c.	Sales	$ 1,506,175	Cost-plus pricing	1
20	Guangzhou Lite-On Mobile Engineering Plastics Co., Ltd.	Zhuhai Lite-On Mobile Telecommunication Co., Ltd.	c.	Other receivables	1,724,240	No significant difference	1
21	Guangzhou Lite-On Mobile Electronic Components Co., Ltd.	Lite-On Mobile Pte. Ltd.	c.	Sales	2,184,744	Cost-plus pricing	1
22	Zhuhai Lite-On Mobile Telecommunication Co., Ltd.	Lite-On Mobile Pte. Ltd.	c.	Sales	1,686,339	Cost-plus pricing	1

Note 1: The Parent Company and its subsidiaries are coded as follows:

a. The Parent Company is coded “0”.

b. The subsidiaries are coded consecutively beginning from “1” in the order presented in the table above.

Note 2: Nature of relationship is as follows:

a. From the Parent Company to its subsidiary.
b. From a subsidiary to its Parent Company.
c. Between subsidiaries.
Note 3: The percentage calculation is based on the consolidated total operating revenues or total assets. For balance sheet items, each item's period-end balance is shown as a percentage to consolidated total assets as of December 31, 2016. For profit or loss items, cumulative amounts are shown as a percentage to consolidated total operating revenues for the year ended December 31, 2016.
Note 4: The intercompany transactions have been eliminated from consolidation.

Note 5: The above table only discloses the related-party transactions each amounting to at least 1% of total revenue or total asset, relative transactions below 1% of total revenue or total asset are not disclosed additionally.

(Concluded)

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5.2 Parent Company Only Financial Statements of 2016

Lite-On Technology Corporation

Financial Statements for the Years Ended December 31, 2016 and 2015 and Independent Auditors’ Report

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For a summary of significant accounting policies on impairment loss for trade receivables, refer to Note 4 to the Company’s financial statements. Refer to Note 9 to the Company’s financial statements for the carrying amount of trade receivables. Our audit procedures for the aforementioned key audit matter are described as follows:

We assessed both the trade receivables aging report classified by client credit rating and the reasonableness of the percent of impairment loss allowance; this assessment included the implementation of the computer audit sampling procedures to test the correctness of the trade receivable aging report. We compared the aging reports of current and prior accounting periods and examined both periods’ bad debt write-offs. We confirmed the recoverability of outstanding trade receivables by testing the after period end collection of receivables.
We reviewed approval of client credit terms and examined reversals in the trade receivables subledger in order to assess the effectiveness of internal controls relevant to trade receivables.

Allowance for Inventory Valuation Loss

For summary of the significant accounting policies on inventory valuation, refer to Note 4 to the Company’s financial statements. Refer to Note 10 to the Company’s financial statements for the carrying amount of inventory. Our audit procedures for the aforementioned key audit matter are described as follows:

We assessed both the inventory aging report classified by product types and the reasonableness of the percent of allowance for inventory valuation loss; this assessment included the implementation of the computer audit sampling procedures to test the correctness of the inventory aging report. We compared the amount of allowances in prior years to actual amount of write-downs in order to evaluate the appropriateness of the policy implemented relevant to the allowance for inventory valuation loss.
We obtained information of the year-end allowance for inventory valuation loss and inventory aging reports, and we compared the current and prior years’ allowances and analyzed any differences. We drew samples from the year-end inventory and compared the most recent price of goods sold to the carrying amount to ensure the inventory had been valued by the lower of cost or net realizable value method.
We obtained year-end inventory quantities from the inventory accounts book and compared it with data from the physical inventory count to test the existence and completeness of management’s assumption. Through the physical inventory count, we evaluated the conditions of the inventory and, in turn, the appropriateness of the allowance estimated by management.

Impairment Loss for Property, Plant and Equipment and Intangible Assets (Including Goodwill), and Investments Accounted For Using Equity Method

For a summary of the significant accounting policies on impairment loss, refer to Note 4 to the Company’s financial statements. Refer to Notes 12, 13 and 14 to the Company’s financial statements for disclosures of property, plant and equipment, intangible assets, and investments accounted for using the equity method. Our audit procedures for the aforementioned key audit matter are described as follows:

Through internal control testing, we understood the methods of asset impairment valuation made by management and the associated control policy’s design and implementation.
We obtained the asset impairment valuation table of each cash generating unit from management. We consulted with our firm experts on the reasonableness of management’s impairment assessments and assumptions, including their cash generating unit classification, cash flow prediction, discount rate, etc.

Litigation Provisions and Contingent Liabilities

In Note 27 to the Company’s financial statements, management has disclosed the progress of major ongoing litigations, investigations, and other government related matters. The timing of the recognition and quantification of the associated liabilities require the application of management’s significant judgment on existing facts and circumstances, which can be subject to change. Therefore, we focused on if provisions and contingent liabilities were recognized according to IAS 37 and ensured sufficient disclosures and explanations of these contingencies on the Company’s Notes to the financial statements. Our audit procedures for the aforementioned key audit matter are described as the follows:

We understood and assessed the effectiveness of the controls designed and executed by management to recognize and assess risks.
We evaluated assumptions made by management in assessing the appropriate level of provisions for litigations. We compared these assumptions with that of available industry-specific and historical information, including reviewing the Company’s internal documents relevant to provisions.
We corresponded by mail with the Company’s external lawyers to obtain the latest information on ongoing litigations and other legal matters, and tested the reasonableness of management assumptions.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including its audit committee, are responsible for overseeing the Company’s financial reporting process.

Management should assess, on the financial statements date, any indication of impairment to property, plant and equipment, to intangible assets, and to investments accounted for using the equity method. If there is any indication of impairment, management should estimate the recoverable amount of these assets. If it is impossible to do so, management should estimate the recoverable amount of the cash generating units to which these assets belong. Due to the complexity of this impairment estimation, in our audit, we focused on if the estimation was made in accordance to IAS 36 to ensure all assets’ carrying amounts did not exceed their recoverable amount.

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Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2016 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Jr-Shian Ke and ChingFu Chang.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Deloitte & Touche Taipei, Taiwan Republic of China

February 24, 2017

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Notice to Readers

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

For the convenience of readers, the independent 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 independent auditors’ report and financial statements shall prevail.

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LITE-ON TECHNOLOGY CORPORATION

BALANCE SHEETS DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss (Note 7) Debt instruments with no active market - current (Note 8) Notes receivable, net (Note 9) Trade receivables, net (Note 9) Trade receivables from related parties (Note 25) Other receivables Other receivables from related parties (Note 25) Inventories, net (Note 10) Prepayments Total current assets NON-CURRENT ASSETS Available-for-sale financial assets (Note 11) Debt instruments with no active market - non-current (Note 8) Investments accounted for using equity method (Note 12) Property, plant and equipment, net (Note 13) Intangible assets, net (Note 14) Deferred tax assets (Note 21) Refundable deposits Prepayments for investments Other non-current assets Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 15) Notes payable Trade payables Trade payables to related parties (Note 25) Other payables Other payables to related parties (Note 25) Current tax liabilities (Note 21) Provisions - current (Note 16) Advance receipts Current portion of long-term borrowings (Note 15) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings, net of current portion (Note 15) Deferred tax liabilities (Note 21) Net defined benefit liabilities - non-current (Note 17) Guarantee deposits Credit balance of investments accounted for using equity method (Note 12) Total noncurrent liabilities Total liabilities EQUITY Share capital Ordinary shares Capital surplus Additional paid-in capital from share issuance in excess of par value Bond conversion Treasury stock transactions Difference between consideration and carry amounts adjusted arising from changes in percentage of ownership in subsidiaries Change in capital surplus from investments in associates and joint ventures accounted for using equity method Merger Total capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translating foreign operations Unrealized loss on available-for-sale financial assets Total other equity Treasury shares Total equity TOTAL		2016		2015
		Amount % $ 7,809,197 5 113,953 - 6,534 - 1,244 - 27,660,329 18 14,671,974 10 315,080 - 389,847 - 8,997,686 6 543,135 - 60,508,979 39 314,251 - 303,823 - 80,160,419 52 6,425,996 4 6,177,890 4 1,982,632 1 117,843 - 4,457 - 6,399 - 95,493,710 61 $ 156,002,689 100 $ 10,126,680 6 2 - 8,007,701 5 32,387,980 21 10,465,709 7 199,880 - 1,785,826 1 857,176 1 1,295,315 1 4,800,000 3 69,926,269 45 7,200,000 4 2,757,688 2 101,521 - 19,661 - 66,015 - 10,144,885 6 80,071,154 51 23,508,670 15 9,372,488 6 7,462,138 5 328,800 - 45,612 - 273,487 - 10,015,194 7 27,497,719 18 10,845,332 7 398,602 - 16,252,206 11 27,496,140 18 (1,195,684 ) (1 ) (126,588) - (1,322,272) (1) (1,248,722) (1) 75,931,535 49 $ 156,002,689 100		Amount % $ 4,190,926 3 45,845 - 5,781 - 180 - 21,641,543 15 11,028,957 7 790,721 1 541,785 - 10,458,264 7 807,852 1 49,511,854 34 321,274 - 4,527 - 80,806,177 55 6,879,323 5 6,742,250 5 2,106,142 1 160,322 - 155,677 - 6,444 - 97,182,136 66 $ 146,693,990 100 $ 12,874,375 9 2,597 - 8,103,755 5 18,858,168 13 9,892,335 7 755,682 - 1,270,893 1 853,031 1 1,814,666 1 2,900,000 2 57,325,502 39 9,600,000 7 3,282,201 2 63,935 - 21,210 - 412,631 - 13,379,977 9 70,705,479 48 23,349,283 16 9,251,603 7 7,462,138 5 275,516 - 43,236 - 278,747 - 10,015,194 7 27,326,434 19 10,123,042 7 232,213 - 13,011,073 9 23,366,328 16 3,347,902 2 (152,714) - 3,195,188 2 (1,248,722) (1) 75,988,511 52 $ 146,693,990 100

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

LITE-ON TECHNOLOGY CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE Sales (Notes 19 and 25) Less: Sales returns Sales allowance Total operating revenue OPERATING COSTS Cost of goods sold (Notes 10, 20 and 25) GROSS PROFIT UNREALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES REALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES GROSS PROFIT, NET OPERATING EXPENSES (Notes 20 and 25) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses OPERATING INCOME NONOPERATING INCOME AND EXPENSES Share of profit of subsidiaries and associates Interest income Dividend income Other income (Note 25) Gain on disposal of property, plant and equipment (Note 25) Gain on disposal of investments Net loss on foreign currency exchange Gain on financial assets with fair value through profit or loss Finance costs Other expenses		2016 Amount % $ 153,349,016 103 913,932 1 3,708,892 2 148,726,192 100 133,223,045 90 15,503,147 10 48,478 - - - 15,454,669 10 2,580,664 2 4,416,912 3 3,472,085 2 10,469,661 7 4,985,008 3 4,955,874 3 35,319 - 5,960 - 1,839,685 1 31,003 - 4,318 - (28,322) - 90,209 - (308,094) - (231,216) -		2015
				Amount % $ 127,877,547 103 827,475 1 2,420,824 2 124,629,248 100 110,580,446 88 14,048,802 12 - - 28,510 - 14,077,312 12 3,030,307 2 4,823,651 4 3,293,023 3 11,146,981 9 2,930,331 3 5,047,718 4 32,065 - 10,844 - 1,185,172 1 39,220 - 20,190 - (27,501) - 45,845 - (341,075) - (555,040) (1) (Continued)

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STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Loss on disposal of property, plant and equipment Impairment loss (Notes 11, 13 and 14) Total nonoperating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 21) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (Notes 17, 18 and 21) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Share of other comprehensive loss of subsidiaries and associates accounted for using the equity method Income tax relating to items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Unrealized gain (loss) on available-for-sale financial assets Unrealized Gain on hedging instruments determined to be the effective portion of cash flow hedging Share of other comprehensive loss of subsidiaries and associates accounted for using the equity method Income tax relating to items that may be reclassified subsequently to profit or loss Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR		2016 Amount % $ (53,976) - (341,670) - 5,999,090 4 10,984,098 7 (1,567,747) (1) 9,416,351 6 (50,094) - (14,722) - 8,516 - (56,300) - (5,056,073) (3) 50,209 - - - (354,459) - 842,863 - (4,517,460) (3) (4,573,760) (3) $ 4,842,591 3		2015
				Amount % $ (517) - (54,801) - 5,402,120 4 8,332,451 7 (1,109,552) (1) 7,222,899 6 (76,626) - (21,876) - 13,026 - (85,476) - (818,537) (1) (300,819) - 11,989 - (81,980) - 132,355 - (1,056,992) (1) (1,142,468) (1) $ 6,080,431 5 (Continued)

LITE-ON TECHNOLOGY CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

2016 Amount % EARNINGS PER SHARE (NEW TAIWAN DOLLARS; Note 22) Basic $4.05 Diluted $4.00 The accompanying notes are an integral part of the financial statements.	2015
	Amount % $3.10 $3.05 (Concluded)

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STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

Issue of Share (Notes 18 an			CapitalSurplus (Note 18)	CapitalSurplus (Note 18)		Retained Earnings (Notes 18 and 21)		Other Equity (Note 18)	Other Equity (Note 18)
	P	Additional aid-in Capital from Share Excess of Par Value $ 9,238,931 - - - - - - 102,960 - - - - (90,288) 9,251,603 - - - - - - 120,885 - - - - $ 9,372,488	Bond Conversion Treasury Stock Transactions $ 7,534,962 $ 445,694 - - - - - - - - - - - - - - - 47,779 - - - - - - (72,824) (217,957) 7,462,138 275,516 - - - - - - - - - - - - - - - 53,284 - - - - - - $ 7,462,138 $ 328,800	Difference Between Consideration and Carry Amounts Adjusted Arising from Share of Arising from Change in Changes in Capital Surplus Percentage of of Associates Ownership in Subsidiaries and Joint Ventures $ 30,960 $ 231,446 - - - - - - - - 12,276 - - 47,301 - - - - - - - - - - - - 43,236 278,747 - - - - - - - - 2,376 - - (5,260 ) - - - - - - - - - - $ 45,612 $ 273,487	Merger $ 10,112,934 - - - - - - - - - - - (97,740) 10,015,194 - - - - - - - - - - - $ 10,015,194
							Exchange Differences on Translating Foreign Operations $ 4,125,097 - - - - - - - - - (777,195) (777,195) - 3,347,902 - - - - - - - - - (4,543,586) (4,543,586) $ (1,195,684)	Unrealized Gain (Loss) on Available-for- sale Financial Assets $ 139,072 - - - - - - - - - (291,786) (291,786) - (152,714 ) - - - - - - - - - 26,126 26,126 $ (126,588)	Cash Flow Hedges $ (11,989 ) - - - - - - - - - 11,989 11,989 - - - - - - - - - - - - - $ -
Shares (In Thousands) 2,341,674 - - - 11,708 - - 4,333 - - - - (22,787) 2,334,928 - - - 11,675 - - 4,264 - - - - 2,350,867						Legal Reserve Special Reserve Unappropriated Earnings $ 9,476,876 $ 49,669 $ 11,432,541 646,166 - (646,166 ) - 182,544 (182,544 ) - - (4,613,097 ) - - (117,084 ) - - - - - - - - - - - - - - 7,222,899 - - (85,476) - - 7,137,423 - - - 10,123,042 232,213 13,011,073 722,290 - (722,290 ) - 166,389 (166,389 ) - - (5,113,493 ) - - (116,746 ) - - - - - - - - - - - - - - 9,416,351 - - (56,300) - - 9,360,051 $ 10,845,332 $ 398,602 $ 16,252,206

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

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STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Recognition of impairment loss of trade receivables Net gain on fair value change of financial assets designated as at fair value through profit or loss Finance costs Interest income Dividend income Share of profit of subsidiaries and associates Loss (gain) on disposal of property, plant and equipment Gain on disposal of available-for-sale financial assets Gain on disposal of investments accounted for using equity method Impairment loss recognized on financial assets Impairment loss recognized on non-financial assets Unrealized gain on the transactions with subsidiaries and associates Realized gain on the transactions with subsidiaries and associates Unrealized loss (gain) on foreign currency exchange Recognition of provisions Changes in operating assets and liabilities Financial assets held for trading Notes receivable Trade receivables Trade receivables from related parties Other receivables Other receivables from related parties Inventories Prepayments Notes payable Trade payables Trade payables to related parties Other payables Other payables to related parties Provisions Advance receipts Net defined benefit liabilities Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities	2016 $ 10,984,098 751,792 418,255 4,798 (90,209) 308,094 (35,319) (5,960) (4,955,874) 22,973 (3,310) (1,008) 4,709 34,235 48,478 - (276,479) 293,421 22,100 (1,064) (6,023,583) (3,643,017) 487,519 153,972 1,763,304 264,717 (2,595) 180,538 13,529,812 747,165 (555,802) (289,276) (519,351) (12,508) 13,604,625 23,441 5,960 (304,433) (602,438) 12,727,155	2015 $ 8,332,451 701,807 462,614 13,818 (45,845) 341,075 (32,065) (10,844) (5,047,718) (38,703) (19,926) (264) 54,801 162,974 - (28,510) 270,959 263,383 - 40,433 1,422,153 (196,112) (132,535) 30,664 (2,195,953) 111,781 (4,118) 1,827,447 (2,052,623) 2,146,279 155,582 (238,639) (144,127) (12,674) 6,137,565 32,362 10,844 (343,334) (190,471) 5,646,966 (Continued)

LITE-ON TECHNOLOGY CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of available-for-sale financial assets Purchase of debt instruments with no active market Acquisition of investments accounted for using equity method Proceeds from disposal of long-term investments for using equity method Increase in prepayments for long-term investments Proceeds from capital reduction of investments accounted for using equity method Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in refundable deposits Payments for intangible assets Decrease in other noncurrent assets Dividend received from subsidiaries and associates Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayments of short-term borrowings Repayments of long-term borrowings Proceeds from (Refund of) guarantee deposits received Cash dividends Payments for buy-back of ordinary shares Net cash used in financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR The accompanying notes are an integral part of the financial statements.	2016 $ 55,833 (300,049) (537,840) 19,829 (4,457) 281,556 (504,810) 104,150 42,479 (156,383) 45 253,500 (746,147) (2,747,695) (500,000) (1,549) (5,113,493) - (8,362,737) 3,618,271 4,190,926 $ 7,809,197	2015 $ 22,949 (8,519) (1,555,000) - (155,677) 4,806 (520,263) 383,631 14,482 (133,023) 834 283,994 (1,661,786) (592,746) (425,000) 1,414 (4,613,097) (706,679) (6,336,108) (2,350,928) 6,541,854 $ 4,190,926 (Concluded)

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LITE-ON TECHNOLOGY CORPORATION

NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

Lite-On Technology Corporation (the “Company”) was established in March 1989. The Company’s shares have been listed on the Taiwan Stock Exchange. The Company manufactures and markets (1) computer software, hardware, peripherals and components; (2) monitors, multifunction and all-in-one printers, cameras and Internet systems and image-processing equipment; (3) information storage and process equipment, electronic components and office equipment; (4) electronic coils, transformers, power suppliers and electronic hardware parts; (5) light-emitting diode (LED) products; (6) electronic car products; and (7) optical lens modules and optoelectronic components.

The Company merged with Lite-On Electronics, Inc., Silitek Corp. and GVC Corp., with the Company as the surviving entity. The merger took effect on November 4, 2002, and the Company thus assumed all rights and obligations of the three merged companies on that date. The Company merged with its subsidiary, Lite-On Enclosure Inc., with the Company as the surviving entity.

The merger took effect on April 1, 2004, and the Company thus assumed all rights and obligations of its former subsidiary on that date.

The Company separately merged with Li Shin International Enterprise Corp., Lite-On Clean Energy Technology Corp., Lite-On Automotive Corp., Leotek Electronics Corp., Lite-On IT Corporation and LarView Technologies Corp., with the Company as the surviving entity. The merger separately took effect on March 22, 2014, April 15, 2014, June 1, 2014, June 29, 2014, June 30, 2014 and September 1, 2014, and the Company thus assumed all rights and obligations of the six merged companies on those date.

The financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors and authorized for issue on February 24, 2017.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) endorsed by the FSC for application starting from 2017

Rule No. 1050050021 and Rule No. 1050026834 issued by the FSC stipulated that starting January 1, 2017, the Company should apply the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC and SIC (collectively, the “IFRSs”) issued by the IASB and endorsed by the FSC for application starting from 2017.

New, Amended or Revised Standards and Interpretations
(the“New IFRSs”)
Annual Improvements to IFRSs 2010-2012 Cycle

Annual Improvements to IFRSs 2011-2013 Cycle

Annual Improvements to IFRSs 2012-2014 Cycle

Amendments to IFRS 10, IFRS 12 and IAS 28 “Investment Entities:
Applying the Consolidation Exception”

Amendment to IFRS 11 “Accounting for Acquisitions of Interests in
Joint Operations”

IFRS 14 “Regulatory Deferral Accounts”

Amendment to IAS 1 “Disclosure Initiative”

Amendments to IAS 16 and IAS 38 “Clarification of Acceptable
Methods of Depreciation and Amortization”

Amendments to IAS 16 and IAS 41 “Agriculture: Bearer Plants”

Amendment to IAS 19 “Defined Benefit Plans: Employee
Contributions”

Amendment to IAS 27 “Equity Method in Separate Financial
Statements”

Amendment to IAS 36 “Impairment of Assets: Recoverable Amount
Disclosures for Non-financial Assets”

Amendment to IAS 39 “Novation of Derivatives and Continuation of
Hedge Accounting”

IFRIC 21 “Levies”

Effective Date
Announced by IASB (Note 1)

Note 1: Unless stated otherwise, the above New or amended IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The amendment to IFRS 2 applies to share-based payment transactions with grant date on or after July 1, 2014; the amendment to IFRS 3 applies to business combinations with acquisition date on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the remaining amendments are effective for annual periods beginning on or after July 1, 2014.
Note 3: The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that occur in annual periods beginning on or after January 1, 2016; the remaining amendments are effective for annual periods beginning on or after January 1, 2016.

The initial application in 2017 of the above IFRSs and related amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers would not have any material impact on the Company’s accounting policies, except for the following:

Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers

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transaction or balance with a specific related party is 10% or more of the Group’s respective total transaction or balance, such transaction should be separately disclosed by the name of each related party.

The amendments also require additional disclosure if there is a significant difference between the actual operation after business combination and the expected benefit on acquisition date.

The disclosures of related party transactions and impairment of goodwill will be enhanced when the above amendments are retrospectively applied in 2017.

Except for the above impacts, as of the date the consolidated financial statements were authorized for issue, the Company continues assessing other possible impacts that application of the aforementioned amendments and the related amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers will have on the Company’s financial position and financial performance, and will disclose these other impacts when the assessment is completed.

b. New IFRSs in issue but not yet endorsed by FSC

The Group has not applied the following IFRSs issued by the IASB but not yet endorsed by the FSC. The FSC announced that IFRS 9 and IFRS 15 will take effect starting January 1, 2018. As of the date the consolidated financial statements were authorized for issue, the FSC has not announced the effective dates of other new IFRSs.

New IFRSs
Annual Improvements to IFRSs 2014-2016 Cycle

Amendment to IFRS 2“Classification and Measurement of
Share-based Payment Transactions”

IFRS 9 “Financial Instruments”

Amendments to IFRS 9 and IFRS 7 “Mandatory Effective Date of
IFRS 9 and Transition Disclosures”

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”

IFRS 15 “Revenue from Contracts with Customers”

Amendments to IFRS 15 “Clarifications to IFRS15Revenue from
Contracts with Customers”

IFRS 16 “Leases”

Amendment to IAS 7 “Disclosure Initiative”

Amendments to IAS 12 “Recognition of Deferred Tax Assets for
Unrealized Losses”

Amendments to IAS 40 “Transfers of Investment Property”

IFRIC 22 “Foreign Currency Transactions and Advance
Consideration”

Effective Date
Announced by IASB (Note 1)

Note 2
January 1, 2018
January 1, 2018
January 1, 2018
To be determined by IASB
January 1, 2018
January 1, 2018
January 1, 2019
January 1, 2017
January 1, 2017
January 1, 2018
January 1, 2018

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The amendment to IFRS 12 is retrospectively applied for annual periods beginning on or after January 1, 2017; the amendment to IAS 28 is retrospectively applied for annual periods beginning on or after January 1, 2018.

1) IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets

For the Company’s debt instruments that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, their classification and measurement are as follows:

a) For debt instruments, if they are held within a business model whose objective is to collect the contractual cash flows, the financial assets are measured at amortized cost and are assessed for impairment continuously with impairment loss recognized in profit or loss, if any. Interest revenue is recognized in profit or loss by using the effective interest method;
b) For debt instruments, if they are held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of financial assets, the financial assets are measured at fair value through other comprehensive income (FVTOCI) and are assessed for impairment. Interest revenue is recognized in profit or loss by using the effective interest method, and other gain or loss shall be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When the debt instrument is derecognized or reclassified the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

Except for above, all other financial assets are measured at fair value through profit or loss. However, the Company may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative gain or loss previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss.

The impairment of financial assets

For purchased or originated credit-impaired financial assets, the Company takes into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance with a corresponding gain or loss recognized in profit or loss.

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Transition

multiple payments or receipts in advance, the entity shall determine the date of the transaction for each payment or receipt of advance consideration.

2) IFRS 15 “Revenue from Contracts with Customers”

The Company shall apply IFRIC 22 either retrospectively or prospectively to all assets, expenses and income in the scope of the Interpretation initially recognized on or after (a) the beginning of the reporting period in which the entity first applies IFRIC 22, or (b) the beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies IFRIC 22 .

Except for the above impact, as of the date the financial statements were authorized for issue, the Company is continuingly assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance, and will disclose the relevant impact when the assessment is complete.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

When applying IFRS 15, an entity shall recognize revenue by applying the following steps:

a. Statement of compliance
Identify the contract with the customer;
Identify the performance obligations in the contract;
Determine the transaction price;

The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and IFRS as endorsed by the FSC.

Allocate the transaction price to the performance obligations in the contracts; and
Recognize revenue when the entity satisfies a performance obligation.

3) IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of related interpretations.

Under IFRS 16, if the Company is a lessee, it shall recognize right-of-use assets and lease liabilities for all leases on the balance sheets except for low-value and short-term leases. The Company may elect to apply the accounting method similar to the accounting for operating lease under IAS 17 to the low-value and short-term leases. On the statements of comprehensive income, the Company should present the depreciation expense charged on the right-of-use asset separately from interest expense accrued on the lease liability; interest is computed by using effective interest method. On the of cash flows, cash payments for the principal portion of the lease liability and interest portion are both classified within operating activities.

The application of IFRS 16 is not expected to have a material impact on the accounting of the Company as lessor.

When IFRS 16 becomes effective, the Company may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the initial application of this Standard recognized at the date of initial application.

b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair values.

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3) Level 3 inputs are unobservable inputs for the asset or liability.

When preparing the Company’s financial statements, the Company used equity method to account for its investment in subsidiaries, associates and joint ventures. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the Company’s financial statements to be the same with the amounts attributable to the owner of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatment between company only basis and consolidated basis were made to investments accounted for by equity method, share of profit or loss of subsidiaries, associates and joint ventures, share of other comprehensive income of subsidiaries, associates and related equity items, as appropriate, in the parent company only financial statements.

c. Classification of current and non-current assets and liabilities

4) IFRIC 22 “Foreign Currency Transactions and Advance Consideration”

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and

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3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

On the disposal of a foreign operation (i.e. a disposal of the Company’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation are reclassified to profit or loss.

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period, and
3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Assets and liabilities that are not classified as current are classified as non-current.

In relation to a partial disposal of a subsidiary that does not result in the Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is included in the calculation of equity transactions but is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

d. Business combinations
f. Inventories

Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognized in profit or loss as incurred.

g. Investments accounted for using equity method

Investments in subsidiaries and associates are accounted for using equity method.

1) Investments in subsidiaries

e. Foreign currencies

Subsidiaries are the entities controlled by the Company.

In preparing the Company’s financial statements, transactions in currencies other than the Company’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income. Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purposes of presenting financial statements, the assets and liabilities of the Company’s foreign operations (including of the subsidiaries and associates, in other countries or currencies used different with the Company) are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are recognized in other comprehensive income.

Under the equity method, the investment is initially recognized at cost and the carrying amount is increased or decreased to recognize the Company's share of the profit or loss and other comprehensive income of the subsidiary after the date of acquisition. Besides, the Company also recognizes the Company’s share of the change in other equity of the subsidiary.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company’s loss of control over the subsidiaries are accounted for as equity transactions. Any difference between the carrying amounts of the investment and the fair value of the consideration paid or received is recognized directly in equity.

When the Company’s share of losses of a subsidiary equals or exceeds its interest in that subsidiary, the Company continues recognizing its share of further losses.

The acquisition cost in excess of the acquisition-date fair value of the identifiable net assets acquired is recognized as goodwill. Goodwill is not amortized. The acquisition-date fair value of the net identifiable assets acquired in excess of the acquisition cost is recognized immediately in profit or loss.

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The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the entire financial statements of the invested company. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities.

Profits and losses from downstream transactions are eliminated in full. Profits and losses from upstream and sidestream transactions are recognized in the Company’s financial statements only to the extent of interests in the subsidiary that are not related to the Company.

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is deducted from investment and the carrying amount of investment is net of impairment loss. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Company discontinues the use of the equity method from the date on which its investment ceases to be an associate and a joint venture. Any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate and the joint venture attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate and the joint venture. The Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate and joint venture on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Company continues to apply the equity method and does not remeasure the retained interest.

When the Company transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Company’s financial statements only to the extent of interests in the associate that are not related to the Company.

2) Investments in associates

h. Property, plant and equipment

An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

Under the equity method, an investment in an associate is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate. Besides, the Company also recognizes the Company’s share of the change in equity of the associate.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of an associate recognized at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Company subscribes for additional new shares of the associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in the Company’s share of equity of associates. If the Company’s ownership interest is reduced due to the additional subscription of the new shares of associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for by the equity method is insufficient, the shortage is debited to retained earnings.

Property, plant and equipment are stated at cost, less recognized accumulated depreciation and accumulated impairment loss.

Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such properties are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

i. Goodwill

Goodwill arising from the acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Company’s cash-generating units or groups of cash-generating units (referred to as cash-generating units) that is expected to benefit from the synergies of the combination.

When the Company’s share of losses of an associate equals or exceeds its interest in that associate, the Company discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Company has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

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A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within that unit, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal.

j. Intangible assets

l. Financial instruments

Financial assets and financial liabilities are recognized in Balance Sheets when a company becomes a party to the contractual provisions of the instruments.

1) Intangible assets acquired separately

1) Financial assets

2) Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date. Subsequent to initial recognition, they are measured on the same basis as intangible assets that are acquired separately.

3) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset are recognized in profit or loss.

k. Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized in profit or loss.

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a) Measurement category

Financial assets are classified into the following categories: Financial assets at fair value through profit or loss, available-for-sale financial assets, and loans and receivables.

i. Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are derivatives that do not meet the criteria for hedge accounting and are measured at fair value with any gains or losses arising from remeasurement recognized in profit or loss. Please see Note 24 on financial instruments for remeasurement at fair value.

ii. Available-for-sale financial assets

Dividends on available-for-sale equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established.

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iii. Loans and receivables

Except for financial assets at fair value through profit or loss, loans and receivables (primarily including cash and cash equivalent, note receivables, debt instruments with no active market, trade receivables, and other receivables) are measured at amortized cost using the effective interest method, less any impairment, except for short-term receivables when the effect of discounting is immaterial.

b) Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are 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 financial asset, the estimated future cash flows of the investment have been affected.

c) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

2) Financial liabilities and equity instruments

Debt and equity instruments issued by a company entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

a) Financial liabilities subsequent measurement

Financial liabilities are measured at amortized cost using the effective interest method.

For financial assets carried at amortized cost, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. The Company assesses the collectability of receivables by performing the account aging analysis and examining current trends in the credit quality of its customers.

For available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss except for uncollectible trade receivables that are written off against the allowance account.

b) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

c) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

3) Derivative financial instruments

The Company enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risks, including cross-currency swap contracts.

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m. Hedge accounting

The Company designates derivative hedging instruments to conduct cash flow hedges. The effective portion of changes in the fair value of derivatives is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss. The associated gains or losses that were recognized in other comprehensive income are reclassified from equity to profit or loss as a reclassification adjustment in the line item relating to the hedged item in the same period when the hedged item affects profit or loss.

Hedge accounting is discontinued prospectively when the Company revokes the designated hedging relationship, or when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer meets the criteria for hedge accounting. The cumulative gain or loss on the hedging instrument that has been previously recognized in other comprehensive income from the period when the hedge was effective remains separately in equity until the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.

2) Rendering of services

Service income is recognized when services are provided.

3) Royalties

Royalty revenue is recognized on an accrual basis in accordance with the substance of the relevant agreement provided that it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably. Royalties determined on a time basis are recognized on a straight-line basis over the period of the agreement. Royalty arrangements that are based on production, sales and other measures are recognized by reference to the underlying arrangement.

4) Rental revenue

n. Provisions

5) Dividend and interest income

Provisions for the expected cost of warranty obligations are recognized at the date of sale of the relevant products, at the best estimate of the expenditure required to settle the Company’s obligation by the management of the Company

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

o. Revenue recognition

p. Leasing

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. Sales returns are recognized at the time of sale provided the seller can reliably estimate future returns and recognizes a liability for returns based on previous experience and other relevant factors.

1) The Company as lessor

1) Sale of goods

Revenue from the sale of goods is recognized when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

2) The Company as lessee
a) The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
b) The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

Operating lease payments are recognized as an expense on a straight-line basis over the lease term.

q. Employee benefits
- 1) Short-term employee benefits
c) The amount of revenue can be measured reliably;
d) It is probable that the economic benefits associated with the transaction will flow to the Company; and

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

2) Retirement benefits
e) The costs incurred or to be incurred in respect of the transaction can be measured reliably.

The Company does not recognize sales revenue on materials delivered to subcontractors because this delivery does not involve a transfer of risks and rewards of materials ownership.

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

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Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liability (asset) represents the actual deficit (surplus) in the Company’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

3) Termination benefits

A liability for a termination benefit is recognized at the earlier of when the Company can no longer withdraw the offer of the termination benefit and when the Company recognizes any related restructuring costs.

r. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred tax for the year

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION

UNCERTAINTY

In the application of the Company's accounting policies (Note 4), management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

1) Current tax

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings.

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

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, research and development expenditures, and personnel training expenditures to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

a. Impairment of goodwill

b. Estimated impairment of trade receivables

When there is objective evidence of impairment loss, the Company takes into consideration the estimation of future cash flows. The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. Where the actual future cash flows are less than expected, a material impairment loss may arise.

c. Impairment of property, plant and equipment

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d. Write-down of inventory

e. Litigation provision and contingent liability

Refer to Note 27 for the disclosure on antitrust group lawsuits filed against the Company, its subsidiaries, and other companies with related businesses in the United States of America. Litigation provision estimations and contingent liabilities disclosures are subject to change as some of the lawsuits are still in progress.

6. CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS
Cash on hand Checking accounts Demand deposits Time deposits		December 31
		2016 $ 1,109 1,034 2,126,374 5,680,680 $ 7,809,197	2015 $ 1,352 2,025 4,187,549 - $ 4,190,926

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS


Financial assets held for trading Derivative financial assets (not under hedge accounting) Cross-currency swap contracts Current Non-current		December 31
		2016 $ 113,953 $ 113,953 - $ 113,953	2015 $ 45,845 $ 45,845 - $ 45,845

At the end of the reporting period, cross-currency swap contracts not under hedge accounting were as follows:

follows:
			Notional Amount
	Currency	Maturity Date	(In Thousands)
December 31, 2016
Cross-currency swap contracts	USD/NTD	2017.10.06-	USD170,000/NTD5,304,775
		2017.12.08
December 31, 2015
Cross-currency swap contracts	USD/NTD	2016.11.09	USD100,000/NTD3,212,900

The Company entered into cross-currency swap contracts during the years ended December 31, 2016 and 2015 to manage exposures due to fluctuations of foreign exchange rates. The derivative contracts entered into by the Company 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 Company were to minimize risks due to changes in fair value or cash flows.

8. DEBT INSTRUMENTS WITH NO ACTIVE MARKET

DEBT INSTRUMENTS WITH NO ACTIVE MARKET
Pledged deposits Current Non-current		December 31
		2016 $ 310,357 $ 6,534 303,823 $ 310,357	2015 $ 10,308 $ 5,781 4,527 $ 10,308

Refer to Note 26 for information on debt instruments with no active market pledged as security.

9. TRADE RECEIVABLES, NET

TRADE RECEIVABLES, NET
Notes receivable Notes receivable - operating Allowance for impairment loss Trade receivables Trade receivables Allowance for impairment loss Unrealized interests revenue		December 31
		2016 $ 1,244 - $ 1,244 $ 27,760,469 (72,682) (27,458) $ 27,660,329	2015 $ 180 - $ 180 $ 21,751,209 (68,241) (41,425) $ 21,641,543

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The aging of receivables was as follows:

Not overdue Overdue 1-60 days 61-210 days 211-240 days Over 241 days		December 31	December 31
		2016 $ 27,501,475 169,470 33,191 1,023 55,310 258,994 $ 27,760,469	2015 $ 21,312,911 304,692 73,030 1,026 59,550 438,298 $ 21,751,209

The above aging schedule was based on the past due date.

Movements in the allowance for impairment loss recognized on trade receivables were as follows:

Balance at January 1 Allowance for impairment loss Amounts written off during the year as uncollectible Balance at December 31	For the Year Ended December 31	For the Year Ended December 31
		2016 2015 $ 68,241 $ 54,423 4,798 13,818 (357) - $ 72,682 $ 68,241

At the end of the reporting period, trade receivables from sales on installments by the Company were as follows:

Gross amounts trade receivables Unrealized interests revenue		December 31	December 31
		2016 $ 805,273 (27,458) $ 777,815	2015 $ 966,328 (41,425) $ 924,903

The amount of the above trade receivables is expected to be recovered $161,055 thousand per year from 2017 to 2021.

10. INVENTORIES, NET

INVENTORIES, NET
Merchandise Raw materials Finished good Work in progress		December 31
		2016 $ 5,734,033 1,915,165 739,803 608,685 $ 8,997,686	2015 $ 6,265,512 2,388,627 985,689 818,436 $ 10,458,264

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2016 and 2015 was $133,223,045 thousand and $110,580,446 thousand, respectively.

The cost of inventories recognized as the cost of goods sold in 2016 included a reversal amounting to $302,726 thousand of inventory write-downs. The reversal was due to increases in inventory net realizable values after the Company had written off the inventory. The cost of inventories recognized as the cost of goods sold in 2015 included an inventory write-down of $162,974 thousand, which resulted from a write-down of inventory to net realizable value.

11. AVAILABLE-FOR-SALE FINANCIAL ASSETS

AVAILABLE-FOR-SALE FINANCIAL ASSETS
Non-current Domestic investments Listed shares Unlisted shares Foreign investments Unlisted shares Listed shares		December 31
		2016 $ 288,558 4,620 293,178 20,163 910 21,073 $ 314,251	2015 $ 287,229 4,620 291,849 20,163 9,262 29,425 $ 321,274

Refer to Note 24 for information related to the determination of the fair values of on available-for-sale financial assets.

There was objective evidence that the fair values of some financial assets were below their carrying costs and will permanently decline. As a result, the Company recognized impairment losses of $4,709 thousand and $54,801 thousand respectively in the statements of comprehensive income for the years ended December 31, 2016 and 2015.

12. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in subsidiaries Investments in associates		December 31	December 31
		2016 $ 77,468,068 2,692,351 $ 80,160,419	2015 $ 77,923,043 2,883,134 $ 80,806,177

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a. Investments in subsidiaries

Lite-On International Holding Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Electronics H.K. Ltd. Lite-On Mobile Pte. Ltd. High Yield Group Co., Ltd. Lite-On Technology USA, Inc. Lite-On Automotive International (Cayman) Co., Ltd. Lite-On Capital Corp. Lite-On Electronics (Thailand) Co., Ltd. Silitech Technology Corp. Eagle Rock Investment Ltd. Lite-On Vietnam Co., Ltd. Lite-On Japan Ltd. Lite-On Overseas Trading Co., Ltd. Philip & Lite-On Digital Solutions Corp. LTC Group Ltd. (BVI) Lite-On Technology (Europe) B.V. Lite-On Automotive Electronics Mexico, S.A. DE C.V. Lite-On Electronics (Europe) Ltd. Lite-On Integrated Service Inc. Lite-On Automotive Electronics (Europe) B.V. LET (HK) Ltd. Lite-On Information Technology B.V. Lite-On Automotive Service USA Inc. Leotek Electronics Holding Limited Li Shin International Enterprise Corp. Add: Credit balance on the carrying value of investments accounted for using equity method	December 31	December 31	December 31
	2016 % Book Value 100.00 $ 21,476,229 100.00 18,442,116 100.00 12,293,534 100.00 8,005,173 100.00 5,431,907 100.00 2,312,102 100.00 1,948,415 100.00 1,442,800 100.00 1,411,616 33.87 1,334,704 100.00 1,228,407 100.00 362,838 49.49 353,908 100.00 329,214 49.00 291,107 100.00 288,603 54.00 273,799 99.00 62,596 100.00 49,011 100.00 47,155 100.00 38,501 100.00 27,754 100.00 16,579 - - - - 100.00 (66,015) 77,402,053 66,015 $ 77468068	2015
	% 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 33.87 100.00 100.00 49.49 100.00 49.00 100.00 54.00 99.00 100.00 100.00 100.00 100.00 100.00 - - 100.00	% 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 33.87 100.00 100.00 49.49 100.00 49.00 100.00 54.00 99.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	Book Value $ 25,106,404 15,338,196 11,231,033 8,790,237 5,305,483 2,359,141 1,897,276 1,598,494 1,304,188 1,487,387 1,410,738 70,420 358,234 242,239 337,073 592,312 311,079 (59,097) 53,011 46,323 43,143 (285,689) 18,056 12,908 9,668 (67,845) 77,510,412 412,631 $ 77923043

b. Investments in associates

Investments in associates
Associates that are not individually material		December 31
		2016 $ 2,692,351	2015 $ 2,883,134

Aggregate information of associates that are not individually material:

The Company’s share of: Net profit for the year Other comprehensive loss Total comprehensive income (loss) for the year	For the Year Ended	For the Year Ended	December 31
		2016 $ 83,146 (186,742) $ (103,596)	2015 $ 81,906 (50,418) $ 31,488

13. PROPERTY, PLANT AND EQUIPMENT, NET

Cost January 1, 2016 Additions Disposals Reclassification December 31, 2016 Accumulated depreciation January 1, 2016 Additions Disposals Reclassification December 31, 2016 Accumulated impairment January 1, 2016 Additions December 31, 2016 December 31, 2016, net Cost January 1, 2015 Additions Disposals Reclassification December 31, 2015 Accumulated depreciation January 1, 2015 Additions Disposals Reclassification December 31, 2015 Accumulated impairment January 1, 2015 December 31, 2015 December 31, 2015, net					For the Yea	r Ended December 31	, 2016
		Freehold Land $ 2,226,499 - - - $ 2,226,499 $ - - - - $ - $ - - $ - $ 2,226,499	Buildings $ 4,887,078 5,390 (2,795 ) 251 $ 4,889,924 $ 1,762,901 144,649 (1,939 ) 67 $ 1,905,678 $ 5,210 - $ 5,210 $ 2,979,036	Machinery Equipment $ 3,826,539 267,895 (381,138 ) (769) $ 3,712,527 $ 2,746,032 346,066 (246,045 ) - $ 2,846,053 $ - - $ - $ 866,474	Tooling Equipment $ 657,146 89,479 (97,232 ) 3,064 $ 652,457 $ 550,187 94,690 (97,232 ) 4,177 $ 551,822 $ - 751 $ 751 $ 99,884 For the Yea	Transportation Equipment $ 3,896 - - - $ 3,896 $ 3,543 90 - - $ 3,633 $ - - $ - $ 263 r Ended December 31	Office Equipment $ 802,677 71,096 (205,349 ) 2,643 $ 671,067 $ 625,268 108,172 (204,467 ) 421 $ 529,394 $ - - $ - $ 141,673 , 2015	Equipment Held under Finance Lease $ 71,322 - (64,942 ) - $ 6,380 $ 51,069 11,555 (53,553 ) (2,691) $ 6,380 $ - - $ - $ -	Other Equipment $ 519,526 53,237 (122,960 ) (30,661) $ 419,142 $ 371,150 46,570 (113,233 ) 2,488 $ 306,975 $ - - $ - $ 112,167	Total $ 12,994,683 487,097 (874,416 ) (25,472) $ 12,581,892 $ 6,110,150 751,792 (716,469 ) 4,462 $ 6,149,935 $ 5,210 751 $ 5,961 $ 6,425,996
		Freehold Land $ 2,226,499 - - - $ 2,226,499 $ - - - - $ - $ - $ - $ 2,226,499	Buildings $ 4,491,518 300,983 (22,421 ) 116,998 $ 4,887,078 $ 1,550,320 136,617 (22,375 ) 98,339 $ 1,762,901 $ 5,210 $ 5,210 $ 3,118,967	Machinery Equipment $ 3,903,005 247,928 (583,721 ) 259,327 $ 3,826,539 $ 2,489,038 329,991 (218,574 ) 145,577 $ 2,746,032 $ - $ - $ 1,080,507	Tooling Equipment $ 575,356 96,690 (14,898 ) (2) $ 657,146 $ 495,117 51,026 (14,091 ) 18,135 $ 550,187 $ - $ - $ 106,959	Transportation Equipment $ 4,605 - - (709) $ 3,896 $ 4,086 166 - (709) $ 3,543 $ - $ - $ 353	Office Equipment $ 800,410 103,957 (68,921 ) (32,769) $ 802,677 $ 632,410 97,654 (68,635 ) (36,161) $ 625,268 $ - $ - $ 177,409	Equipment Held under Finance Lease $ 87,081 - (16,624 ) 865 $ 71,322 $ 39,676 23,108 (4,818 ) (6,897) $ 51,069 $ - $ - $ 20,253	Other Equipment $ 1,073,239 76,863 (22,765 ) (607,811) $ 519,526 $ 567,790 63,245 (22,633 ) (237,252) $ 371,150 $ - $ - $ 148,376	Total $ 13,161,713 826,421 (729,350 ) (264,101) $ 12,994,683 $ 5,778,437 701,807 (351,126 ) (18,968) $ 6,110,150 $ 5,210 $ 5,210 $ 6,879,323

The above items of property, plant and equipment were depreciated on a straight-line basis over the estimated useful life of the asset:

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14. INTANGIBLE ASSETS, NET

January 1, 2016 Additions Disposals Reclassification December 31, 2016 Accumulated amortization January 1, 2016 Additions Disposals Reclassification December 31, 2016 Accumulated impairment January 1, 2016 Additions December 31, 2016 December 31, 2016, net January 1, 2015 Additions Disposals Reclassification December 31, 2015 Accumulated amortization January 1, 2015 Additions Disposals Reclassification December 31, 2015 December 31, 2015, net			For the Year	Ended December 31, 2016	Ended December 31, 2016
		Goodwill $ 6,030,652 - - - $ 6,030,652 $ 77,234 - - - $ 77,234 $ - 336,210 $ 336,210 $ 5,617,208	Patents $ 3,408,077 800 - - $ 3,408,877 $ 2,839,657 227,965 - - $ 3,067,622 $ - - $ - $ 341,255 For the Year	Software Client Relationships $ 1,120,521 $ 163,819 155,583 - (53,029) - 34,914 - $ 1,257,989 $ 163,819 $ 900,109 $ 163,819 190,290 - (53,029) - 1,192 - $ 1,038,562 $ 163,819 $ - $ - - - $ - $ - $ 219,427 $ - Ended December 31, 2015		Total $ 10,723,069 156,383 (53,029) 34,914 $ 10,861,337 $ 3,980,819 418,255 (53,029) 1,192 $ 4,347,237 $ - 336,210 $ 336,210 $ 6,177,890
		Goodwill $ 6,003,390 27,262 - - $ 6,030,652 $ 77,234 - - - $ 77,234 $ 5,953,418	Patents $ 4,332,221 - (946,176) 22,032 $ 3,408,077 $ 3,471,624 292,219 (946,176) 21,990 $ 2,839,657 $ 568,420	Software $ 1,045,410 103,001 (36,121) 8,231 $ 1,120,521 $ 757,601 170,395 (36,121) 8,234 $ 900,109 $ 220,412	Client Relationships $ 163,819 - - - $ 163,819 $ 163,819 - - - $ 163,819 $ -	Total $ 11,544,840 130,263 (982,297) 30,263 $ 10,723,069 $ 4,470,278 462,614 (982,297) 30,224 $ 3,980,819 $ 6,742,250

The above items of other intangible assets were amortized on a straight-line basis over the estimated useful life of the asset:

Patents 6 years Software 1-14 years Client relationships 4 years

a. The Company acquired an asset group from SEEnergy Corp. in September 2015. IFRS 3 “Business Combinations” and IAS 38 “Intangible Assets” define recognized goodwill as the sum of the acquisition cost plus other direct transaction costs minus the fair value of the identifiable net assets acquired. Thus, goodwill was calculated as follows:

acquired. Thus, goodwill was calculated as follows:
Acquisition price Fair value of acquired identifiable net assets: Inventories Property, plant and equipment Software Goodwill	$ 2,420 340 71	$ 30,093 2,831
		$ 27,262

b. Goodwill is allocated to the Company’s recoverable amount of cash-generating units. The recoverable amount of all cash-generating units has been determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering the future five-year period. In 2016, the Company examined the current conditions and future prospects of the global optical disc drives market; an amount of $336,210 thousand was recognized as goodwill impairment after the assessment, and the discount rate used was 9.71%.

15. BORROWINGS

a. Short-term borrowings

Unsecured borrowings Line of credit borrowings		December 31	December 31
		2016 $ 10,126,680	2015 $ 12,874,375

The range of interest rate on bank loans was 0.78%-6.00% and 0.70%-1.17% per annum as of December 31, 2016 and 2015, respectively.

b. Long-term borrowings

Long-term borrowings
Unsecured borrowings Syndicated loan with Citi Bank Chang Hwa Bank Current portion Long-term borrowings: Non-current	December 31
	2016 2015 $ 12,000,000 $ 12,000,000 - 500,000 12,000,000 12,500,000 (4,800,000) (2,900,000) $ 7,200,000 $ 9,600,000

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As of December 31, 2016 and 2015, the Company had 2 long-term bank loans, respectively, with contract terms between September 23, 2013 and September 23, 2021. The floating interest rates are (1.5789% to 1.7895% and 1.5789% to 1.59067% as of December 31, 2016 and 2015, respectively) payable monthly or quarterly. These loans should be repaid in 5 installments or at lump sum on loan maturity.

On September 23, 2008, the Company signed a 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 $15 billion, consisting of (a) $12 billion and (b) $3 billion of the credit line of the above syndicated loan. The Company had repaid the syndicated loan in September 2015.

On September 12, 2013, the Company signed another contract for a five-year syndicated loan with Citibank and 16 other financial institutions. The credit line was $15 billion, which was for Company to repay the former syndicated loan with Citibank signed on September 23, 2008, consisting of (a) $12 billion and (b) $3 billion of the credit line of the above syndicated loan. It should be used as a medium-term loan but may not be used on a revolving basis. The principal of this syndication loan should be repaid three years after September 23, 2013 in five semiannual installments with the first payment paid on September 23, 2016, and the interest rate is the 90-day Taipei Interbank Offered Rate plus 61 points. Under the syndicated loan agreement, the Company should maintain the agreed financial ratios based on the most recent semiannual or annual financial statements. As of December 31, 2016 and 2015, the Company used $9.6 billion and $12 billion, respectively, of the credit line of the above syndicated loan.

On June 27, 2016, the Company signed another contract for a five-year syndicated loan with Citibank and 15 other financial institutions. The credit line was $12 billion, which was for Company to repay the former syndicated loan with Citibank signed on September 12, 2013. It should be used as a medium-term loan but may not be used on a revolving basis. The principal of this syndication loan should be repaid three years after June 27, 2016 in five semiannual installments with the first payment paid on June 27, 2019, and the interest rate is the 90-day Taipei Interbank Offered Rate plus 60 points. Under the syndicated loan agreement, the Company should maintain the agreed financial ratios based on the most recent semiannual or annual financial statements. As of December 31, 2016, the Company used $2.4 billion of the credit line of the above syndicated loan.

As of December 31, 2016 and 2015, the Company did not violate the financial ratio agreement stated above.

16. PROVISIONS

PROVISIONS
Current Warranties		December 31
		2016 $ 857,176	2015 $ 853,031

Movements in the provisions were as follows:

Balance at January 1 Recognition of provisions Usage Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2016 $ 853,031 293,421 (289,276) $ 857,176	2015 $ 828,287 263,383 (238,639) $ 853,031

The provision for warranty claims represents the present value of management’s best estimate of the future outflow of economic benefits that will be required under the Company’s obligations for warranties under local sale of goods legislation. The estimate had been made on the basis of historical warranty trends and may vary as a result of the entry of new materials, altered manufacturing processes or other events affecting product quality.

17. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Company has no right to influence the investment policy and strategy.

The amounts included in the balance sheets in respect of the Company’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability		December 31	December 31
		2016 $ 1,166,870 (1,065,349) $ 101,521	2015 $ 1,154,819 (1,090,884) $ 63,935

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Movements in net defined benefit liability (asset) were as follows:

	Present Value
	of the Defined		Net Defined
	Benefit	Fair Value of		Benefit
	Obligation	the Plan Assets	Liability (Asset)
Balance at January 1, 2015	$ 1,072,976	$ (1,072,993)	$	(17)
Current service cost	7,717	-		7,717
Net interest expense (income)	17,964	(18,137)		(173)
Recognized in profit or loss	25,681	(18,137)		7,544
Remeasurement
Return on plan assets	-	(10,538)		(10,538)
Actuarial loss - changes in financial
assumptions	68,088	-		68,088
Actuarial loss - experience adjustments	19,076	-		19,076
Recognized in other comprehensive income
(loss)	87,164	(10,538)		76,626
Contributions from the employer	-	(20,218)		(20,218)
Benefits paid	(31,002)	31,002		-
Balance at December 31, 2015	$ 1,154,819	$ (1,090,884)	$	63,935
Balance at January 1, 2016	$ 1,154,819	$ (1,090,884)	$	63,935
Current service cost	6,356	-		6,356
Net interest expense (income)	12,502	(11,909)		593
Recognized in profit or loss	18,858	(11,909)		6,949
Remeasurement
Return on plan assets	-	4,312		4,312
Actuarial gain - changes in financial
assumptions	(17,296)	-		(17,296)
Actuarial loss - experience adjustments	63,078	-		63,078
Recognized in other comprehensive loss	45,782	4,312		50,094
Contributions from the employer	-	(19,457)		(19,457)
Benefits paid	(52,589)	52,589		-
Balance at December 31, 2016	$ 1,166,870	$ (1,065,349)	$	101,521

Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

Discount rate Expected rate of salary increase	December 31
	2016 2015 1.25% 1.10% 3.00% 3.00%

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 0.25% increase 0.25% decrease		December	31
		2016 $ (28,018) $ 29,034 $ 27,896 $ (27,081)	2015 $ (29,099) $ 30,194 $ 28,997 $ (28,114)

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December	31
		2016 2015 $ 19,800 $ 19,920 9.83 years 10.32 years

18. EQUITY

a. Share capital

1) Ordinary shares
1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

Ordinary shares
Numbers of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31
		2016 3,500,000 $ 35,000,000 2,350,867 $ 23,508,670	2015 3,500,000 $ 35,000,000 2,334,928 $ 23,349,283

Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends.

Of the Company’s authorized shares, 100,000 thousand shares had been reserved for the issuance of employee share options.

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2) Issued global depositary receipts

On September 25, 1996, the 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 Company.

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 later issued more shares. 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 Company’s 1,478 thousand marketable equity securities, which represented the Company’s 14,781 thousand common shares.

As of December 31, 2016 and 2015, the outstanding marketable equity securities were 5,221 thousand units and 5,217 thousand units, representing 52,209 thousand common shares and 52,168 thousand common shares of the Company, respectively. The rights and obligation of security holders are the same as those of common shareholders, except for voting rights. As of December 31, 2016 and 2015, the unredeemed GDRs amounted to 890 thousand units and 816 thousand units.

b. Capital surplus

The premium from shares issued in excess of par (including share premium from issuance of common shares, conversion of bonds, and merger) and donations may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to capital limited to a certain percentage of the Company’s capital surplus and once a year.

The capital surplus arising from share of changes in equities of subsidiaries, changes in equities of associates and joint ventures accounted for by the equity method and treasury share transactions from dividends according to the Company’s shares holding by subsidiaries may only be used to offset a deficit.

c. Retained earnings and dividend policy

To ensure the availability of cash for the Company’s present and future expansion plans and to meet shareholders’ cash flow requirements, the Company prefers to distribute more stock dividends. In principle, cash dividends are no less than 10% of total dividends distributed.

Under the dividend policy as set forth in the amended Articles, if there is net profit after tax upon the final settlement of account of each fiscal year, the Company shall first to offset any previous accumulated losses (including unappropriated earnings adjustment if any) and set aside a legal reserve at 10% of the net profits, unless the accumulated legal reserve is equal to the total capital of the Company; then set aside special reserve in accordance with relevant laws or regulations or as requested by the authorities in charge. The remaining net profit, plus the beginning unappropriated earnings (including adjustment of unappropriated earnings if any), shall be distributed into dividends to shareholders according to the distribution plan proposed by the Board of Directors and submitted to the shareholders’ meeting for approval. For the policies on distribution of employees’ compensation and remuneration of directors before and after amendment, please refer to (b) Employee benefits expense in Note 20.

Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax credit equal to their proportionate share of the income tax paid by the Parent Company.

The appropriations of earnings for 2015 and 2014 had been approved in the shareholders’ meetings on June 24, 2016 and 2015. The appropriations and dividends per share were as follows:

Legal reserve Special reserve Share dividends Cash dividends	Appropriation of Earnings 2015 2014 $ 722,290 $ 646,166 166,389 182,544 116,746 117,084 5,113,493 4,613,097	Dividends Per Share (NT$)
		2015 2014 $ 0.05 $ 0.05 2.19 1.97

The appropriations of earnings for 2016 had been proposed by the Company’s board of directors on February 24, 2016. The appropriations and dividends per share were as follows:

Legal reserve Special reserve Cash dividends	Appropriation of Earnings $ 941,635 940,276 6,864,532	Dividends Per Share (NT$)
		2.92

The appropriations of earnings for 2016 are subject to the resolution of the shareholders’ meeting to be held on June 22, 2017.

d. Others equity items

Movements in others equity items were as follows:

Balance at January 1	2016
	Foreign Currency Translation Reserve Unrealized Gain (Loss) from Available-for- sale Financial Assets Total $ 3,347,902 ($ 152,714) $ 3,195,188 (Continued)

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2016

The exchange differences arising on translation of foreign operation’s net assets from its functional currency to the Company’s presentation currency are recognized directly in other comprehensive income and also accumulated in the foreign currency translation reserve.

Exchange differences arising on translating the financial statements of foreign operations Gain arising on changes in the fair value of available-for- sale financial assets Reclassification to income from disposal of available-for-sale financial assets Share of other comprehensive income of subsidiaries and associates Income tax benefit Balance at December 31	Foreign Currency Translation Reserve Unrealized Gain (Loss) from Available-for- sale Financial Assets $ (5,056,073) $ - - 53,519 - (3,310) (330,376) ( 24,083) 842,863 - $ (1,195,684) ($ 126,588)	Total $ (5,056,073) 53,519 (3,310) ( 354,459) 842,863 ($ 1,322,272) (Concluded)

Balance at January 1 Exchange differences arising on translating the financial statements of foreign operations Loss arising on changes in the fair value of available-for- sale financial assets Reclassification to income from disposal of available-for-sale financial assets Gain arising on changes in the fair value of hedging instruments Share of other comprehensive income of subsidiaries and associates Income tax benefit Balance at December 31		2015	2015
		Foreign Currency Translation Reserve Unrealized Gain (Loss) from Available-for- sale Financial Assets $ 4,125,097 $ 139,072 (818,537) - - (280,893) - (19,926) - - (91,013) 9,033 132,355 - $ 3,347,902 $ (152,714)	Cash Flow Hedges Reserve $ (11,989) - - - 11,989 - - $ -	Total $ 4,252,180 (818,537) (280,893) (19,926) 11,989 (81,980) 132,355 $ 3,195,188

e. Treasury shares

Unit: In Thousands of Shares

	Number of	Increase	Increase	Decrease		Number of
	Shares at	During the		During the		Shares at
Purpose of Buyback	January 1	Period		Period	December 31
For the year ended December 31, 2016
Shares held by its subsidiaries	26,708		133	-		26,841
For the year ended December 31, 2015
Shares held by its subsidiaries	26,575		133	-		26,708
Shares buyback for cancellation	-		22,787	22,787		-
	26,575		22,920	22,787		26,708
The Company’s shares held by its subsidiaries at the end of the reporting periods were as follows:
	Number of
	Shares Held			Carrying
Name of Subsidiary	(In Thousands)			Amount	Market Price
December 31, 2016
Lite-On Capital Corp.		15,116	$	718,857	$	734,631
LTC International Ltd.		7,004		297,469		340,269
Yet Foundate Ltd.		2,271		126,881		110,276
Lite-On Electronics Co., Ltd.		2,450		105,515		118,984
			$	1,248,722	$	1,304,160
						(Continued)

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Name of Subsidiary Number of Shares Held (In Thousands) December 31, 2015 Lite-On Capital Corp. 15,041 LTC International Ltd. 6,969 Yet Foundate Ltd. 2,260 Lite-On Electronics Co., Ltd. 2,438	Carrying Amount Market Price $ 718,857 $ 479,049 297,469 221,759 126,881 71,820 105,515 77,491 $ 1,248,722 $ 850,119 (Concluded)

On July 20, 2015, the Company’s Board of Directors approved the repurchase of up to 100,000 thousand shares listed on the Taiwan Stock Exchange between July 21, 2015 and September 20, 2015, with the buyback price ranging from $25.34 to $53.97. By the end of the repurchase period, the Company had bought back 22,787 thousand shares for $706,679 thousand. The Company has already registered with the Ministry of Economic Affairs to cancel those buy-back shares.

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

19. REVENUE

REVENUE
Revenue from the sale of goods Royalty income Revenue from management services Rental income from property	For the Year Ended December 31
		2016 $ 147,046,370 752,589 842,448 84,785 $ 148,726,192	2015 $ 122,362,953 1,332,439 830,524 103,332 $ 124,629,248

20. ADDITIONAL INFORMATION ON EXPENSES

Net income included the following items:

a. Depreciation and amortization Property, plant and equipment Intangible assets	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2016 $ 751,792 418,255 $ 1,170,047	2015 $ 701,807 462,614 $ 1,164,421 (Continued)

Depreciation expenses summarized by function Recognized in operating costs Recognized in operating expenses Amortization expenses summarized by function Recognized in operating costs Recognized in operating expenses b. Employee benefit expenses Post-employment benefits (Note 17) Defined contribution plans Defined benefit plans Termination benefits Other employee benefits Employee benefit expenses summarized by function Recognized in operating costs Recognized in operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2016 $ 200,155 551,637 $ 751,792 $ 10,853 407,402 $ 418,255 $ 221,793 6,949 228,742 36,350 6,422,902 $ 6,687,994 $ 825,606 5,862,388 $ 6,687,994	2015 $ 212,606 489,201 $ 701,807 $ 3,084 459,530 $ 462,614 $ 213,948 7,544 221,492 32,500 6,001,944 $ 6,255,936 $ 807,678 5,448,258 $ 6,255,936 (Concluded)

In compliance with the Company Act as amended in May 2015 and the amended Articles as resolved in the shareholders’ meeting on June 24, 2016, the Company distributed employees’ compensation and remuneration of directors at the rates no less than 1% and no higher than 1.5%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. The employees’ compensation and remuneration of directors for the years ended December 31, 2016 and 2015 have been approved by the Company’s board of directors on February 24, 2017 and March 25, 2016, respectively. The details were as follows:

The details were as follows:
Employees’ compensation Remuneration of directors	For the Year Ended December 31
	2016 Cash Share $ 1,332,414 $ - 80,039 -	2015
		Cash Share $ 858,514 $ 163,526 61,395 -

If there is a change in the proposed amounts after the financial statements were authorized for issue, the differences are recorded as a change in accounting estimate and adjusted in the following year.

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There was no difference between the amount of the actual employees’ compensation and the remuneration of directors and the amount recognized in the Company’s financial statement for the year ended December 31, 2015.

The appropriations of bonuses to employees and remuneration of directors for 2014, which have been approved in the shareholders’ meetings on June 24, 2015 were as follows:

Bonus to employees Remuneration of directors	For the Year Ended December 31, 2014
	Cash Dividends Share Dividends $ 768,033 $ 146,292 54,924 -

There was no difference between the amounts of the bonus to employees and the remuneration of directors approved in the shareholders’ meeting on June 24, 2015 and the amounts recognized in the Company’s financial statements for the year ended December 31, 2014.

A reconciliation of income before income tax and income tax expense recognized in profit or loss was as follows:

Income before tax Income tax expense at the statutory rate Tax effect of adjusting items: Deductible items in determining taxable income Additional income tax on unappropriated earnings The origination and reversal of temporary differences Adjustment for prior years’ tax Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2016 $ 10,984,098 $ 1,867,297 (640,587) 101,851 450,376 (211,190) $ 1,567,747	2015 $ 8,332,451 $ 1,416,517 (738,895) 91,099 494,853 (154,022) $ 1,109,552

The applicable tax rate used above is the corporate tax rate of 17% payable by the Company.

As the status of 2017 appropriations of earnings is uncertain, the potential income tax consequences of 2016 unappropriated earnings are not reliably determinable.

b. Income tax benefit recognized in other comprehensive income

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2016 and bonus to employees and directors resolved by the shareholders' meeting in 2016 and 2015 are available on the Market Observation Post System website of the Taiwan Stock Exchange.

21. INCOME TAX

a. Income tax recognized in profit or loss

The major components of tax expense were as follows:

Current income tax expense Current tax expense recognized in the current year Adjustment for prior years’ tax Deferred tax The origination and reversal of temporary differences Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2016 $ 1,328,561 (211,190) 1,117,371 450,376 $ 1,567,747	2015 $ 768,721 (154,022) 614,699 494,853 $ 1,109,552

Deferred income tax benefit Translation of foreign operations Related to actuarial loss from defined benefit plans	For the Year Ended	For the Year Ended	December 31
		2016 $ 842,863 8,516 $ 851,379	2015 $ 132,355 13,026 $ 145,381

c. Deferred income tax balance

The analysis of deferred income tax assets was as follows:

2016
Temporary differences
Investment accounted for using equity method
Impairment loss on assets
Unrealized loss on inventories
Unrealized loss and expense
Accrued warranty expense
Net defined benefit liability
Unrealized sales profit
Unrealized exchange loss net
Others

Opening
Balance
Recognized in
Profit (Loss)
Recognized in
Other
Comprehensive
Income (Loss) Closing Balance
$ 1,109,952
$ -
$ -
$ 1,109,952
328,940
-
-
328,940
224,777
(51,464)
-
173,313
190,948
(64,327)
-
126,621
145,015
705
-
145,720
47,346
-
8,516
55,862
38,615
3,072
-
41,687
12,699
(12,699)
-
-

7,850

(7,313)

-

537
$ 2,106,142
$ (132,026)
$ 8,516
$ 1,982,632
(Continued)

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e. Integrated income tax

2015
Temporary differences
Investment accounted for using equity method
Impairment loss on assets
Unrealized loss on inventories
Unrealized loss and expense
Accrued warranty expense
Net defined benefit liability
Unrealized sales profit
Unrealized exchange loss net
Others

Opening
Balance
Recognized in
Profit (Loss)
Recognized in
Other
Comprehensive
Income (Loss) Closing Balance
$ 1,266,944
$ (156,992) $ -
$ 1,109,952
325,877
3,063
-
328,940
197,071
27,706
-
224,777
117,257
73,691
-
190,948
113,095
31,920
-
145,015
36,465
(2,145)
13,026
47,346
40,835
(2,220)
-
38,615
-
12,699
-
12,699

27,390

(19,540)

-

7,850
$ 2,124,934
$ (31,818)
$ 13,026
$ 2,106,142
(Concluded)

The analysis of deferred income tax liabilities was as follows:

2016
Temporary differences
Investment accounted for using equity method
Unrealized amortization of goodwill
Land value increment tax
Unrealized exchange gains net

2015
Temporary differences
Investment accounted for using equity method
Unrealized amortization of goodwill
Land value increment tax
Unrealized exchange gains net

Opening
Balance
Recognized in
(Profit) Loss
Recognized in
Other
Comprehensive
(Income) Loss Closing Balance
$ 2,698,177
$ 224,776
$ (842,863) $ 2,080,090
353,808
-
-
353,808
230,216
-
-
230,216

-

93,574

-

93,574
$ 3,282,201
$ 318,350
$ (842,863)
$ 2,757,688
$ 2,355,715
$ 474,817
$ (132,355) $ 2,698,177
353,808
-
-
353,808
230,216
-
-
230,216

11,782

(11,782)

-

-
$ 2,951,521
$ 463,035
$ (132,355)
$ 3,282,201

d. The aggregate amount of temporary difference associated with investments for which deferred tax liabilities have not been recognized

As of December 31, 2016 and 2015, the aggregate deductible temporary differences for which no deferred income tax assets have been recognized amounted to $663,496 thousand for both years.

Unappropriated earnings Unappropriated earnings generated before January 1, 1998 Unappropriated earnings generated on and after January 1, 1998 Imputation credits accounts		December 31	December 31
		2016 $ 2,215 16,249,991 $ 16,252,206 $ 1,034,031	2015 $ 2,215 13,008,858 $ 13,011,073 $ 888,124

The estimated and actual creditable ratio for distribution of earnings of 2016 and 2015 were 8.72% and 8.13%, respectively.

f. Income tax assessments

The tax returns through all years by 2014 have been assessed by the tax authorities.

22. EARNINGS PER SHARE

Unit: NT$ Per Share

		Unit: NT$ Per Share	Unit: NT$ Per Share
Basic earnings per share Diluted earnings per share	For	the Year Ended December 31
		2016 $ 4.05 $ 4.00	2015 $ 3.10 $ 3.05

		Unit:	NT$ Per Share
		Before	After
	Retrospective		Retrospective
	Adjustment		Adjustment
Basic earnings per share	$	3.11	$ 3.10
Diluted earnings per share	$	3.07	$ 3.05

The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share from continuing operations were as follows:

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Net Profit for the Year

Net Profit for the Year
Earnings used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employees’compensation or bonus issue to employees Earnings used in the computation of diluted earnings per share	For the Year Ended December 31
		2016 $ 9,416,351 - $ 9,416,351	2015 $ 7,222,899 - $ 7,222,899

Weighted average number of ordinary shares outstanding (in thousand shares):

Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employees’ compensation or bonus issue to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2016 2,323,048 28,393 2,351,441	2015 2,331,882 34,549 2,366,431

If the Group offered to settle compensation or bonuses paid to employees in cash or shares, the Group assumed the entire amount of the compensation or bonus will be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

23. CAPITAL MANAGEMENT

The Company manages its capital to ensure that entities in the Company will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance.

The Company’s capital management system aims to ensure that the necessary financial resources and operating plan are enough to meet the next 12 months’ requirements for working capital, capital expenditures, research and development expenses, debt repayment, dividend expenses and other need.

24. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments that are not measured at fair value

For certain financial instruments-including notes receivable, trade receivables including related parties, other receivables including related parties, debt investments with no active market, short-term borrowings, notes payable, trade payables including related parties, and other payables including related parties - the Company’s management considers the carrying amounts of these financial instruments recognized in the financial statements as approximating their fair values. For long-term loans (including their current portion) with floating rates, the carrying amounts of long-term loans are used as basis to estimate their fair value.

b. Fair value of financial instruments that are measured at fair value on a recurring basis

Level 1 fair value measurements are those derived from quoted prices in active markets for identical assets or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
1) Fair value hierarchy

December 31, 2016

Financial assets at FVTPL Cross-currency swap contracts Available-for-sale financial assets Securities listed in ROC - equity securities Securities listed in other countries - equity securities Unlisted securities - ROC - equity securities Unlisted securities - other countries - equity securities December 31, 2015 Financial assets at FVTPL Cross-currency swap contracts Available-for-sale financial assets Securities listed in ROC - equity securities Securities listed in other countries - equity securities Unlisted securities - ROC - equity securities Unlisted securities - other countries - equity securities	Level 1 $ - $ 288,558 910 - - $ 289,468 Level 1 $ - $ 287,229 9,262 - - $ 296,491	Level 2 $ 113,953 $ - - - - $ - Level 2 $ 45,845 $ - - - - $ -	Level 3 $ - $ - - 4,620 20,163 $ 24,783 Level 3 $ - $ - - 4,620 20,163 $ 24,783	Total $ 113,953 $ 288,558 910 4,620 20,163 $ 314,251 Total $ 45,845 $ 287,229 9,262 4,620 20,163 $ 321,274

There were no transfers between Levels 1 and 2 in the current and prior periods.

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2) Reconciliation of Level 3 fair value measurements of financial instruments

December 31, 2016: No change.

December 31, 2015 Financial assets Balance at January 1, 2015 Total gains or losses In profit or loss Additions Balance at December 31, 2015	Investments on Equity Instruments
	Unlisted Quotes $ 45,957 (54,801) 33,627 $ 24,783

Financial liabilities Measured at amortized cost Short-term borrowings Long-term loans (included current portion of long-term debts) Payables (2)	December 31
	2016 2015 $ 10,126,680 $ 12,874,375 12,000,000 12,500,000 51,061,272 37,612,537 (Concluded)

  - 1) The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, debt instruments with no active market, notes receivable, trade receivables, trade receivables - inter, other receivables and other receivables - inter.

  - 2) The balances included financial liabilities measured at amortized cost, which comprise notes payable, trade payables, trade payables - inter, other payables and other payables - inter.

d. Financial risk management objectives and policies
3) Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value measurement

Financial Instruments Financial assets at FVTPL - Cross-currency swap contracts	Valuation Techniques and Inputs
	Estimation of fair value of a currency swap contract is based on its principal and interest rate on mutual agreement and the suitable discount rate that reflects the credit risk of various counterparties at the end of the reporting period.

4) Valuation techniques and inputs applied for the purpose of measuring Level 3 fair value measurement

c. Categories of financial instruments

Financial assets Designated as at FVTPL Loans and receivables (1) Available-for-sale financial assets	December 31
	2016 2015 $ 113,953 $ 45,845 51,158,028 38,204,420 314,251 321,274 (Continued)

The Company’s major financial instruments included equity investments, trade receivable, trade payables and borrowings. The Company’s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Company sought to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives was governed by the Company’s policies approved by the board of directors, which provided written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits was reviewed by the internal auditors on a continuous basis. The Company did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

1) Market risk

The Company’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below). There had been no change to the Company’s exposure to market risks or the manner in which these risks were managed and measured.

a) Foreign currency risk

The Company had foreign currency sales and purchases, which exposed the Company to foreign currency risk. The Company is an international electronics manufacturing entity with stable foreign currency income that covers foreign currency expense; exchange rate exposures were managed through foreign currency loans.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities and of the derivatives exposing to foreign currency risk at the end of the reporting period are set out in Note 28.

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Sensitivity analysis

The Company was mainly exposed to the currency USD.

The following table details the Company’s sensitivity to a 5% increase and decrease in New Taiwan dollars (the functional currency) against the U.S. dollars. The sensitivity analysis included only outstanding foreign currency denominated monetary items. A positive number below indicates an increase in pre-tax profit and other equity associated with New Taiwan dollars strengthen 5% against the U.S. dollars. For a 5% weakening of New Taiwan dollars against the U.S. dollars, there would be an equal and opposite impact on pre-tax profit and other equity and the balances below would be negative.

Profit or loss	Currency USD Impact	Currency USD Impact	Currency USD Impact
	For the Year Ended December 31
		2016 $ (81,849)	2015 $ (33,750)

If interest rates had been 25 basis points higher and all other variables were held constant, the Company’s pre-tax profit years ended December 31, 2016 and 2015 would decrease by $24,684 thousand and $25,281 thousand.

c) Other price risk

The Company was exposed to equity price risk through its investments in listed equity securities. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments.

Sensitivity analysis

The sensitivity analyses below were determined based on the exposure to equity price risks at the end of the reporting period.

If equity prices had been 10% higher, the pre-tax other comprehensive income years ended December 31, 2016 and 2015 would increase by $28,947 thousand and $29,649 thousand as a result of the changes in fair value of available-for-sale shares.

b) Interest rate risk

2) Credit risk

The Company was exposed to interest rate risk because entities in the Company borrowed funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix of fixed and floating rate borrowings, and using interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied.

The carrying amount of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company.

The Company is exposed to credit risk from trade receivables, deposits and other financial instruments. Credit risks on business-related exposures are managed separately from that on financial-related exposures.

a) Business related credit risk

Fair value interest rate risk Financial assets (i) Financial liabilities (ii) Cash flow interest rate risk Financial assets (iii) Financial liabilities (iv)	December 31
	2016 2015 $ 5,991,037 $ 10,308 10,126,680 11,074,375 2,126,374 4,187,549 12,000,000 14,300,000

i. The balances included time deposits and debt instruments with no active market.
ii. The balances included financial liabilities exposed to fair value risk from interest rate fluctuation.
iii. The balances included demand deposits.
iv. The balances included financial liabilities exposed to cash flow risk from interest rate fluctuation.

Sensitivity analysis

To maintain the quality of receivables, the Company has established operating procedures to manage credit risk.

For individual customers, risk factors considered include the customer’s financial position, credit rating agency rating, the Company’s internal credit rating, and transaction history as well as current economic conditions that may affect the customer’s ability to pay. The Company also has the right to use some credit protection enhancement tools, such as requiring advance payments, to reduce the credit risks involving certain customers.

b) Financial related credit risk

Bank deposits and other financial instruments are credit risk sources required by the Company’s department of finance department to be measured and monitored. However, since the Company’s counter-parties are all reputable financial institutions and government agencies, there is no significant financial credit risk.

3) Liquidity risk

The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company’s operations.

The sensitivity analyses below were determined based on the Company’s exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year.

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The table below summarizes the maturity profile of the Company’s non-derivative financial liabilities based on contractual undiscounted payments.

December 31, 2016

Weighted Average Effective Interest Rate (%) Non-derivative financial liabilities Non-interest bearing - Fixed interest rate liabilities 0.78-6 Variable interest rate liabilities 1.5789-1.7895 December 31, 2015 Weighted Average Effective Interest Rate (%) Non-derivative financial liabilities Non-interest bearing - Fixed interest rate liabilities 0.7-1.17 Variable interest rate liabilities 0.89-1.5907	On Demand or Less than 1 Year $ 51,061,272 10,126,680 4,800,000 $ 65,987,952 On Demand or Less than 1 Year $ 37,612,537 11,074,375 4,700,000 $ 53,386,912	1-3 Years $ 19,661 - 7,200,000 $ 7,219,661 1-3 Years $ 21,210 - 9,600,000 $ 9,621,210	3 Years to 5 Years $ - - - $ - 3 Years to 5 Years $ - - - $ -	5+ Years $ - - -
				$ -
				5+ Years $ - - -
				$ -

The table below summarizes the maturity profile of the Company’s derivative financial instruments based on contractual undiscounted payments.

December 31, 2016 On Demand or Less than 1 Year Currency swap contracts Inflows $ 5,370,000 Outflows (5,304,775) $ 65,225 December 31, 2015 On Demand or Less than 1 Year Currency swap contracts Inflows $ 3,235,000 Outflows (3,212,900) $ 22,100	1-3 Years $ - - $ - 1-3 Years $ - - $ -	3 Years to 5 Years $ - - $ - 3 Years to 5 Years $ - - $ -	5+ Years $ - - $ - 5+ Years $ - - $ -

25. TRANSACTIONS WITH RELATED PARTIES

Significant transactions with related parties are summarized below.

a. Sales of goods

Related Parties Categories Subsidiaries Associates Other related parties Purchases of goods Related Parties Categories Subsidiaries Associates Other related parties	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2016 2015 $ 36,188,842 $ 23,938,054 453 - 69 462 $ 36,189,364 $ 23,938,516 For the Year Ended December 31
		2016 $ 112,061,362 9 - $ 112,061,371	2015 $ 97,618,457 - 19 $ 97,618,476

b. Purchases of goods

The sales prices and payment terms to related parties were not significantly different from those of sales to third parties. For other related party transactions, price and terms were determined in accordance with mutual agreements.

c. Receivables from related parties

Related Parties Categories Trade receivables Subsidiaries Other related parties Other receivables Subsidiaries Associates Other related parties		December 31	December 31
		2016 $ 14,667,811 4,163 $ 14,671,974 $ 389,140 700 7 $ 389,847	2015 $ 11,028,955 2 $ 11,028,957 $ 540,848 918 19 $ 541,785

The outstanding trade receivables from related parties are unsecured. For the years ended December 31, 2016 and 2015, no impairment loss was recognized for trade receivables from related parties.

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d. Payables to related parties

Related Parties Categories Trade payables Subsidiaries Other related parties Other payables Subsidiaries Other related parties Associates		December 31	December 31
		2016 $ 32,346,017 41,963 $ 32,387,980 $ 194,963 4,801 116 $ 199,880	2015 $ 18,782,250 75,918 $ 18,858,168 $ 748,387 7,295 - $ 755,682

The outstanding trade payables from related parties are unsecured.

e. Acquisition of property, plant and equipment

Related Parties Categories Subsidiaries	Purchase Price	Purchase Price	Purchase Price
	For the Year Ended December 31
		2016 $ 21,200	2015 $ 30,632

f. Disposal of property, plant and equipment

			For the Year Ended December	For the Year Ended December	For the Year Ended December	31
			2016			2015
Related Parties Categories	Proceeds			Gains	Proceeds			Gains
Subsidiaries	$	-	$	-	$ 359,680		$	36

h. Other revenues

Related Parties Categories Subsidiaries Associates Other related parties Compensation of management personnel Related Parties Categories Short-term employee benefits Post-employment benefits Termination benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2016 2015 $ 67,123 $ 160,635 3,172 3,748 639 648 $ 70,934 $ 165,031 For the Year Ended December 31
		2016 $ 605,482 21,413 231 $ 627,126	2015 $ 576,647 22,062 - $ 598,709

i. Compensation of management personnel

The remuneration of directors and key executives was determined by the remuneration committee having regard to the performance of individuals and market trends.

26. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

Pledge-time deposits		December	31
		2016 $ 310,357	2015 $ 10,308

Pledged assets - noncurrent included the refundable deposits that had been provided for government projects.

27. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

g. Operating expense

Related Parties Categories Subsidiaries Associates Other related parties	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2016 $ 373,153 2 61,628 $ 434,783	2015 $ 915,022 - 61,107 $ 976,129

a. CMP Consulting Service, Inc., KI, Inc., Aaron Wagner, The Stereo Shop, David Carney, Jr., Tina Corse, Cynthia R. Rall, Richard R. Rall, Aaron Deshaw and Don Cheung filed an antitrust group lawsuit against the Company 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, from October 2009 to September 2010. The Company has assigned lawyers in the United States as its representative in these lawsuits. In January 2017, the Company has reached a settlement with the plaintiff, and the contents of the settlement do not have a significant impact on the Company’s operation.
b. In the second quarter of 2013, the Attorney General of the State of Florida filed antitrust lawsuits against the Company and its subsidiaries - Philips & Lite-On Digital Solutions Corporation and Philips & Lite-On Digital Solutions USA, Inc. - as well as other companies with related businesses with the U.S. District Court for the Northern District of California (USDC-NDC). The Company assigned lawyers in the United States as its representative in these lawsuits. In the second quarter of 2014, the USDC-NDC allowed the plaintiff to proceed with the lawsuits but dismissed certain parts of these lawsuits. In January 2017, the Company reached a settlement with the plaintiff, and the contents of the settlement do not have a significant impact on the Company’s operation.

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c. In the second quarter of 2013, Dell Inc. and Dell Products L.P. filed a complaint with the United States District Court for Western District of Texas. In the fourth quarter of 2013, Acer Inc., Acer America Corporation, Gateway Inc. and Gateway U.S. Retail, Inc. filed a complaint with the United States District Court for the Northern District of California. In the fourth quarter of 2013, Ingram Micro Inc., and Synnex Corporation filed a complaint with the United States District Court for the Central District of California. In the third quarter of 2015, Alfred H. Siegel, the bankruptcy trustee of Circuit City Stores, Inc., filed a complaint with the United States District Court for the Northern District of California. In the fourth quarter of 2015, Peter Kravitz, the bankruptcy trustee of RadioShack Corporation, filed a complaint with the United States District Court for the Northern District of California. All these complaints constituted an antitrust group lawsuit against the Company and other companies with related businesses. The Company assigned lawyers as its representative in these lawsuits. Although the outcome of the proceedings had not been determined, the Company already accrued a reasonable amount in case of a loss on this lawsuit and will continue to recognize losses quarterly at this reasonably estimated amount until the settlement of this lawsuit.
d. From the second quarter of 2010 to the second quarter of 2014, petitioner Carlos Fogelman filed a motion for authorization to institute class action antitrust proceedings with the Superior Court of Quebec in the district of Montreal. The Fanshawe College of Applied Arts and Technology filed a statement of claim in Ontario court. Neil Godfrey filed a statement of claim with the Superior Court of British Columbia. Donald Woligroski filed a statement of claim in Manitoba court. Cindy Retallick filed a statement of claim in Saskatchewan court. All plaintiffs filed the antitrust group lawsuit against the Company and its subsidiaries - Philips & Lite-On Digital Solutions Corporation, Philips & Lite-On Digital Solutions USA, Inc. and other companies with related businesses. The Company assigned lawyers as its representative in these lawsuits. Although the outcome of the proceedings had not been determined, the Company accrued a reasonable amount in case of a loss on this lawsuit and will continue to recognize the losses quarterly on the basis of a reasonable estimation of the lawsuit until the settlement of this lawsuit.

28. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies and the exchange rates between foreign currencies and respective functional currencies were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

December 31, 2016

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 1,358,306 32.2000 (USD:NTD) EUR 1,994 33.8358 (EUR:NTD) HKD 10,470 4.1521 (HKD:NTD) CZK 12,460 1.2536 (CZK:NTD) JPY 6,455 0.2752 (JPY:NTD)	Carrying Amount $ 43,737,453 67,469 43,472 15,620 1,776 $ 43,865,790 (Continued)

Foreign
Currencies
Exchange Rate
Non-monetary items

Investments accounted for using equity
method

USD

1,859,803 32.2000 (USD:NTD)
HKD

2,967,484
4.1521 (HKD:NTD)
EUR

9,720 33.8358 (EUR:NTD)
JPY

1,286,006
0.2752 (JPY:NTD)

Financial liabilities

Monetary items

USD

1,409,144 32.2000 (USD:NTD)
JPY

42,621
0.2752 (JPY:NTD)
EUR

368 33.8358 (EUR:NTD)
HKD

3,944
4.1521 (HKD:NTD)

Non-monetary items

Investments accounted for using equity
method

USD

2,050 32.2000 (USD:NTD)
December 31, 2015
Foreign
Currencies
Exchange Rate
Financial assets
Monetary items
USD
$ 1,049,145 32.7750 (USD:NTD)
EUR

2,162 35.8034 (EUR:NTD)
HKD

7,184
4.2289 (HKD:NTD)
CZK

5,805
1.3261 (CZK:NTD)
JPY

5,513
0.2723 (JPY:NTD)

Non-monetary items

Investments accounted for using equity
method

USD

1,866,396 32.7750 (USD:NTD)
HKD

2,658,071
4.2289 (HKD:NTD)
EUR

10,398 35.8034 (EUR:NTD)
JPY

1,315,588
0.2723 (JPY:NTD)

Carrying
Amount
$ 59,819,632

12,321,288

328,879

353,909
$ 72,823,708
$ 45,374,437

11,729

12,452

16,376
$ 45,414,994
$ 66,015
(Concluded)
Carrying
Amount
$ 34,385,727

77,406

30,382

7,698

1,501
$ 34,502,714
$ 61,171,129

11,240,716

372,284

358,235
$ 73,142,364
(Continued)

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9) Trading in derivative instruments: Refer to Note 7 and Note 24 to the financial statements.

Foreign Currencies Exchange Rate Financial liabilities Monetary items USD 1,069,740 32.7750 (USD:NTD) CZK 13,733 1.3261 (CZK:NTD) JPY 64,068 0.2723 (JPY:NTD) EUR 484 35.8034 (EUR:NTD) HKD 3,764 4.2289 (HKD:NTD)	Carrying Amount $ 35,060,726 18,211 17,446 17,338 15,917 $ 35,129,638

10) Information on investees: See Table 5 below.
b. Information on investments in mainland China:
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area. See Table 6 below.
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: See Table 3 and 4 below.

Non-monetary items Investments accounted for using equity method HKD 67,556 4.2289 (HKD:NTD) USD 2,070 32.7750 (USD:NTD)	$ 285,688 67,844 $ 353,532 (Concluded)

For the years ended December 31, 2016 and 2015 net foreign exchange loss were $28,322 thousand and $27,501 thousand. It is impractical to disclose net foreign exchange gains or losses by each significant foreign currency due to the variety of the foreign currency transactions of the group entities.

29. SEPARATELY DISCLOSED ITEMS

a. Information on significant transactions and information on investees:
1) Financing provided to others: None.
2) Endorsements/guarantees provided: See Table 1 below.
3) Marketable securities held (excluding investment in subsidiaries, associates and joint ventures): See Table 2 below.
4) Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the paid-in capital: None.
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None.
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: See Table 3 below.
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: See Table 4 below.

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TABLE 1

LITE-ON TECHNOLOGY CORPORATION

ENDORSEMENT/GUARANTEE PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2016 (Amounts in Thousands of New Taiwan Dollars)

No.	Endorsement/ Guarantee Provider	Guaranteed Party		Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party (Note 2)	Maximum Balance for the Period	Ending Balance	Amount Actually Drawn	Amount of Endorsement/ Guarantee Collateralized by Properties	Ratio of Accumulated Endorsement/ Guarantee to Net Equity Per Latest Financial Statements (%)	Maximum Endorsement/ Guarantee Amount Allowable (Note 2)	Guarantee Provided by Parent Company	Guarantee Provided by A Subsidiary	Guarantee Provided to Subsidiaries In Mainland China	Note
		Name	Nature of Relationship (Note 1)
0	Lite-On Technology Corporation	Lite-On Technology (Europe) B.V. Lite-On Mobile Pte. Ltd. Silitek Elec. (Dongguan) Co., Ltd. Guangzhou Lite-On Mobile Electronic Components Co., Ltd.	b b c c	$ 7,593,154 7,593,154 7,593,154 7,593,154	$ 69,651 7,994,400 1,332,400 866,060	$ 64,288 6,440,000 1,288,000 -	$ 64,288 6,440,000 1,288,000 -	$ - - - -	0.08 8.48 1.70 -	$ 30,372,614 30,372,614 30,372,614 30,372,614	Yes Yes Yes Yes	No No No No	No No Yes Yes

Note 1: Relationship between the Company and endorsee/guarantee are as follows:

a. Business relationship.
b. A subsidiary in which the Company holds directly over 50% of equity interest.
c. An investee in which the Company and its subsidiaries hold over 50% of equity interest.
Note 2: a. The aggregate amount of guarantees/endorsements by Lite-On Technology Corporation should not exceed 40% of its net worth, and the amount of guarantees/endorsements for any single entity should not exceed 10% of its net worth.
b. Limits on endorsement/guarantee amount provided to each guaranteed party and maximum endorsement/guarantee amount allowable were calculated on the basis of the net worth of the endorsement/guarantee provider, as shown in its most recent audited financial statements.

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TABLE 2

LITE-ON TECHNOLOGY CORPORATION

MARKETABLE SECURITIES HELD DECEMBER 31, 2016 (In Thousands of New Taiwan Dollars)

Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		December 31, 2016	December 31, 2016		Note
				Units (In Thousands)	Carrying Value	Percentage of Ownership (%)	Fair Value
Lite-On Technology Corporation	Common stock EPISTAR Corporation Wistron Corporation Com2B Corp. Avamax Corp. Aetas Technology, Inc. AuriaSolar Co., Ltd. Z-Com, Inc. Fong Han Electronics Co., Ltd. Xepex Electronics Co., Ltd. North America Micro-Electronic & Software, Incorporated Action Media Technologies, Inc. Oplink Communications, Inc. Taiwan Changxing Technology Co., Ltd. Preferred stock Arkologic Holdings Limited PI-CORAL Convertible bond Xepex Electronics Co., Ltd.	- - - - Member of the board of directors - - - - - - - - - - -	Available-for-sale financial assets - non-current 〃〃〃〃〃〃〃〃〃〃〃〃〃〃 Debt investments with no active market - non-current	5,908 5,130 5,000 559 4,026 41,400 2,974 1,167 - 5 38 1 462 11,111 1,139 150	$ 136,769 127,995 19,009 - - - 23,794 - - 1,154 - 910 4,620 - - -	0.55 0.20 11.11 6.99 8.07 19.71 4.10 6.67 - 2.67 - 0.01 15.40 7.66 10.65 -	$ 136,769 127,995 19,009 - - - 23,794 - - 1,154 - 910 4,620 - - -	Note Note Note Note Note Note Note Note Note

Note: The carrying value of financial instruments were all assessed for impairment.

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TABLE 3

LITE-ON TECHNOLOGY CORPORATION

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2016

(Amounts in Thousands of New Taiwan Dollars)

Company Name	Related Party	Nature of Relationship		Transaction Details	Transaction Details		Abnormal Transaction	Abnormal Transaction	Notes/Accounts (Payable) or Receivable	Notes/Accounts (Payable) or Receivable	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
Lite-On Technology Corporation	Philip & Lite-On Digital Solutions Corp. Lite-On Technology (Changzhou) Co., Ltd. China Bridge Express (Wuxi) Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Japan Ltd. Lite-On Trading USA, Inc. Lite-On Sales & Distribution Inc. Lite-On China Holding Co., Ltd. Lite-On Technology (Changzhou) Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On, Inc. Li Shin International Enterprise Corp. Lite-On Overseas Trading Co., Ltd. Lite-On Automotive Electronics (Guangzhou) Co., Ltd.	Note 1 Note 2 Note 2 Note 1 Note 1 Note 2 Note 2 Note 2 Note 2 Note 1 Note 2 Note 1 Note 1 Note 2	Sale Sale Sale Sale Sale Sale Sale Sale Purchase Purchase Purchase Purchase Purchase Purchase	$ (23,627,190) (1,075,660) (1,143,329) (3,528,473) (608,388) (4,399,638) (1,943,838) (152,686) 1,176,235 21,907,646 163,708 3,264,919 85,211,776 481,162	(16) (1) (1) (2) - (3) (1) - 1 17 - 3 66 -	About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days About 90 days	Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing Cost-plus pricing	No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference No significant difference	$ 5,996,229 414,917 544,026 1,159,868 160,262 1,462,746 632,684 154,510 (508,539) (7,918,051) - (352,208) (23,414,894) (148,180)	14 1 1 3 - 3 1 - (1) (20) - (1) (58) -

Note 1: Equity-method investee.

Note 2: Investee of the equity-method investee.

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TABLE 4

LITE-ON TECHNOLOGY CORPORATION

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2016

(Amounts in Thousands of New Taiwan Dollars)

Company Name	Related Party	Nature of Relationship	Ending Balance of Notes Receivable-inter	Ending Balance of Trade Receivables-inter	Ending Balance of Other Receivables-inter	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Bad Debts
							Amount	Action Taken
Lite-On Technology Corporation	Philip & Lite-On Digital Solutions Corp. Lite-On Technology (Changzhou) Co., Ltd. China Bridge Express (Wuxi) Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Japan Ltd. Lite-On Trading USA, Inc. Lite-On Sales & Distribution Inc. Lite-On Overseas Trading Co., Ltd. Lite-On China Holding Co., Ltd.	Note 1 Note 2 Note 2 Note 1 Note 1 Note 2 Note 2 Note 1 Note 2	$ - - - - - - - - -	$ 5,996,229 414,917 544,026 1,159,868 160,262 1,462,746 632,684 4,098,762 154,510	$ 210 3,341 - 223,803 24,180 - 2 30,786 -	4.72 2.40 2.69 3.40 3.74 3.46 5.10 - 1.03	$ - 2,330 - - 15 - - - -	- - - - - - - - -	$ 1,817,358 - 126,502 1,116,170 16,394 450,209 228,366 2,173,903 -	$ - - - - - - - - -

Note 1: Equity-method investee.

Note 2: Investee of the equity-method investee.

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TABLE 5

LITE-ON TECHNOLOGY CORPORATION

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE FOR THE YEAR ENDED DECEMBER 31, 2016

(Amounts in Thousands of New Taiwan Dollars or Thousands of Foreign Currencies)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance as	of December 31, 2016	of December 31, 2016	Net Income (Loss) of the Investee	Share of Profits/Loss of Investee	Note
				December 31, 2016	December 31, 2015	Shares (In Thousands)	Percentage of Ownership (%)	Carrying Value
Lite-On Technology Corporation	Silitech Technology Corp. Lite-On Integrated Service Inc. Dragonjet Corporation Logah Technology Corp. Lite-On Capital Corp. Lite-On Electronics H.K. Ltd. Lite-On Electronics (Thailand) Co., Ltd. Lite-On Japan Ltd. Lite-On International Holding Co., Ltd. LTC Group Ltd. Lite-On Technology USA, Inc. Lite-On Electronics (Europe) Ltd. Lite-On Technology (Europe) B.V. Lite-On Overseas Trading Co., Ltd. Lite-On Singapore Pte. Ltd. Lite-On Semiconductor Corp. Lite-On Vietnam Co., Ltd. Li Shin International Enterprise Corp. Eagle Rock Investment Ltd. Canfield Ltd. Lite-On Mobile Pte. Ltd. Leotek Electronics Holding Limited LET (HK) Ltd. High Yield Group Co., Ltd. Lite-On Information Technology B.V. Philip & Lite-On Digital Solutions Corp. Lite-Space Technology Company Limited Lite-On Automotive Electronics Mexico, S.A. DE C.V. Lite-On Automotive Service USA Inc. Lite-On Automotive Electronics (Europe) B.V. Lite-On Automotive International (Cayman) Co., Ltd.	New Taipei City, Taiwan Taipei City, Taiwan New Taipei City, Taiwan Kaohsiung City, Taiwan Taipei City, Taiwan Hong Kong Thailand Japan British Virgin Islands British Virgin Islands USA United Kingdom Netherlands British Virgin Islands Singapore New Taipei City, Taiwan Vietnam British Virgin Islands British Virgin Islands Apia, Samoa Singapore Hong Kong Hong Kong British Virgin Islands Netherlands Taipei City, Taiwan Hong Kong Mexico USA Netherlands Cayman	Manufacture and sale of modules and plastic products Information outsourcing and system integrate Manufacture and sale of computer peripherals, printers, digital cameras, modules and plastic products Development, manufacture and sale of LCD TV inverters Investment activities Sale of LED optical products Manufacture and sale of LED optical products Sale of LED optical products and power supplies Investment activities Investment activities Investment activities Manufacture and sale of power supplies Market research and after-sales service Merchandising business Manufacture and supply computer peripheral products Manufacture of image sensor and rectifier Electronic contract manufacturing Manufacture and sale of computer and appliance components Import and export business and investment activities Import and export business and investment activities Manufacture and sale of mobile phone modules and design for assembly line Holding company Sale of optical disc drives Holding company Market research and customer service Sale of optical disc drives Sale of computer components Production, manufacture, sale, import and export of photovoltaic device, key electronic components, telecommunications equipment, information technology equipment, semiconductor applications, general lighting, automotive electronics, renewable energy products and services and maintenance of automotive system Sale of automotive parts and other electronic products Sale of automotive parts and other electronic products Investment activities	$ 324,685 25,886 1,069,080 402,787 4,096,367 7,339,481 529,106 248,305 US$ 335,825 $ 1,098,752 US$ 55,172 $ 44,559 2,543,184 168,947 US$ 63,788 773,618 US$ 12,000 $ 56,929 341 7,142 EUR 250,329 US$ - 251,322 2,271,806 1,163,591 267,113 149,968 US$ 4,950 US$ - EUR 1,090 US$ 100,626	$ 324,685 25,886 1,069,080 402,787 4,096,367 7,339,481 529,106 248,305 US$ 335,825 $ 1,380,308 US$ 55,172 $ 44,559 2,543,184 168,947 US$ 63,788 773,618 US$ 3,000 $ 56,929 341 7,142 EUR 250,329 US$ 1,010 42 2,271,806 1,163,591 267,113 149,968 US$ 4,950 US$ 60 EUR 1,090 US$ 100,626	60,757 3,400 26,727 31,683 209,545 17,865 5,030 6,162 335,825 32,916 470 300 331 5,143 51,777 57,204 - 1,748 10 200 162,886 - 62,060 68,138 11,018 17,150 5,100 146 - 24 11,967	33.87 100.00 29.62 28.10 100.00 100.00 100.00 49.49 100.00 100.00 100.00 100.00 54.00 100.00 100.00 18.46 100.00 100.00 100.00 33.33 100.00 - 100.00 100.00 100.00 49.00 39.23 99.00 - 100.00 100.00	$ 1,334,704 47,155 1,025,933 199,468 1,442,800 12,293,534 1,411,616 353,908 21,476,229 288,603 2,312,102 49,011 273,799 329,214 18,442,116 1,406,307 362,838 (66,015) 1,228,407 5,092 8,005,173 - 27,754 5,431,907 16,579 291,107 55,551 62,596 - 38,501 1,948,415	$ (109,202) 6,406 88,044 (122,188) 43,569 HK$ 488,442 THB 136,745 JPY 75,201 US$ (46,493) US$ (109) US$ 3,385 GBP 149 EUR 719 US$ 2,833 US$ 111,194 $ 439,969 US$ 120 US$ 20 US$ (2,494) US$ (27) US$ (8,887) HK$ 2 HK$ 12,191 US$ 10,269 EUR (14) $ 41,824 US$ 1,127 MXN (11,074) US$ 1 EUR (63) US$ 8,382	$ (36,987) 6,406 26,082 (34,338) 10,690 1,985,446 124,999 11,138 (1,555,633) (15,370) 85,576 6,603 12,384 92,516 3,585,196 76,613 3,675 623 (87,204) 475 (294,441) 9 50,119 670,065 (502) 20,494 14,314 (19,138) 40 (2,143) 218,167	Subsidiary Subsidiary Associate Associate (Note 3) Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate (Note 3) Subsidiary Subsidiary (Note 2) Subsidiary Associate Subsidiary Subsidiary (Note 1) Subsidiary Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary (Note 1) Subsidiary Subsidiary

(Continued)

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(Concluded)

Note 1: Dissolved after liquidation in December 2016.

Note 2: Credit balance of long-term equity investment under the equity method has been transferred to the credit balance of other liabilities - investment using the equity method.

Note 3: Information on net income (loss) of the investee has not been approved by its board of directors, so it is shown as an estimated amount. For the final amount of Net Income (Loss), refer to the financial statements published on the Market Observation Post System.

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TABLE 6

LITE-ON TECHNOLOGY CORPORATION

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2016

(Amounts in Thousands of New Taiwan Dollars or Thousands of Foreign Currencies)

Investor Company	Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital (Note 2)	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2016	Investment of Flows	Investment of Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2016	Net Income (Loss) of the Investee Company (Note 2)	Percentage of Ownership	Share of Profits/Loss (Note 2)	Carrying Amount as of December 31, 2016 (Note 2)	Accumulated Inward Remittance of Earnings as of December 31, 2016	Note
						Outflow	Inflow
Lite-On Technology Corporation	Lite-On Computer Tech (Dongguan) Co., Ltd. DongGuan G-Pro Computer Co., Ltd. Lite-On Electronics (Tianjinn) Co., Ltd. Lite-On Electronics (Dongguan) Co., Ltd. Silitek Elec. (Dongguan) Co., Ltd. Lite-On Electronics (Guangzhou) Co., Ltd. China Bridge (China) Co., Ltd. Lite-On Network Communication (Dongguan) Limited Lite-On Communications (Guangzhou) Co., Ltd. Dong Guan G-Tech Computers Co., Ltd. Lite-On Tech (Guangzhou) Co., Ltd. COMMIT Incorporated Lite-On Elec and Wire (Guangzhou) Co., Ltd. Lite-On (Guangzhou) Infortech Co., Ltd. Lite-On (Guangzhou) Precision Tooling Co., Ltd. Lite-On Digital Electronics (Dongguan) Co., Ltd. Lite-On Li Shin Technology (Ganzhou) Co., Ltd. Lite-On Technology (Xianging) Co., Ltd. Lite-On Technology (Jiangsu) Co., Ltd. Lite-On Technology (Guangzhou) Investment Co., Ltd. Lite-On Technology (Ying Tan) Co., Ltd. Lite-On Power Technology (Dongguan) Co., Ltd.	Manufacture and sale of display device Manufacture and sale of system products ODM services Manufacture of electronic components Manufacture and sale of keyboards Manufacture and sale of printers and scanners Investment, sales agent Manufacture and sale of IT products Manufacture and sale of mobile terminal equipment Manufacture and sale of computer case Manufacture and sale of computer case Manufacture and sale of application software and multimedia product design Manufacture and sale of mobile terminal equipment Information outsourcing Manufacture and sale of modules Manufacture and sale of computer peripheral products Manufacture and sale of electronic components Manufacture and sale of electronic components Development, manufacture, sale and installation of power supplies and transformers and provision of technology consulting services, maintenance equipment and precision instruments Investment activities Manufacture and sale of new-type electronic components Development, manufacture and sale of electronic components, power supplies and provision technology consulting services	$ 528,080 (US$ 16,400 ) 701,572 (HK$ 168,968 ) 2,141,300 (US$ 66,500 ) 1,139,880 (US$ 35,400 ) 154,560 (US$ 4,800 ) 1,178,520 (US$ 36,600 ) 966,000 (US$ 30,000 ) 456,274 (US$ 14,170 ) 790,832 (US$ 24,560 ) 417,278 (HK$ 100,498 ) 1,069,040 (US$ 33,200 ) 1,033,169 (US$ 32,086 ) 509,082 (US$ 15,810 ) 40,894 (US$ 1,270 ) 586,040 (US$ 18,200 ) 96,600 (US$ 3,000 ) 386,400 (US$ 12,000 ) 209,300 (US$ 6,500 ) 4,862,200 (US$ 151,000 ) 2,576,000 (US$ 80,000 ) 354,200 (US$ 11,000 ) 514,298 (US$ 15,972 )	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1	$ 916,702 (US$ 28,469 ) 734,192 (US$ 22,801 ) 2,141,236 (US$ 66,498 ) 1,139,880 (US$ 35,400 ) 154,560 (US$ 4,800 ) 1,178,520 (US$ 36,600 ) 957,789 (US$ 29,745 ) 456,274 (US$ 14,170 ) 790,832 (US$ 24,560 ) 370,300 (US$ 11,500 ) 1,069,040 (US$ 33,200 ) 19,320 (US$ 600 ) 509,082 (US$ 15,810 ) 75,477 (US$ 2,344 ) 392,840 (US$ 12,200 ) 96,600 (US$ 3,000 ) 429,419 (US$ 13,336 ) 209,300 (US$ 6,500 ) 4,862,200 (US$ 151,000 ) 2,576,000 (US$ 80,000 ) 354,200 (US$ 11,000 ) 514,298 (US$ 15,972 )	$ - - - - - - - - - - - - - - - - - - - - - -	$ - - - - - - - - - - - - - - - - - - - - - -	$ 916,702 (US$ 28,469 ) 734,192 (US$ 22,801 ) 2,141,236 (US$ 66,498 ) 1,139,880 (US$ 35,400 ) 154,560 (US$ 4,800 ) 1,178,520 (US$ 36,600 ) 957,789 (US$ 29,745 ) 456,274 (US$ 14,170 ) 790,832 (US$ 24,560 ) 370,300 (US$ 11,500 ) 1,069,040 (US$ 33,200 ) 19,320 (US$ 600 ) 509,082 (US$ 15,810 ) 75,477 (US$ 2,344 ) 392,840 (US$ 12,200 ) 96,600 (US$ 3,000 ) 429,419 (US$ 13,336 ) 209,300 (US$ 6,500 ) 4,862,200 (US$ 151,000 ) 2,576,000 (US$ 80,000 ) 354,200 (US$ 11,000 ) 514,298 (US$ 15,972 )	$ 499 (CNY 92 ) 379,507 (CNY 77,787 ) 273,540 (CNY 56,067 ) 419,035 (CNY 85,889 ) 693,419 (CNY 142,129 ) 442,000 (CNY 90,596 ) 19,862 (CNY 4,071 ) 303,705 (CNY 62,250 ) - 7,186 (CNY 1,473 ) - - - 8,026 (CNY 1,645 ) - 6,318 (CNY 1,295 ) 101,108 (CNY 20,724 ) 108,290 (CNY 22,196 ) 299,919 (CNY 61,474 ) (420,065 ) (CNY -86,100 ) 54,472 (CNY 11,165 ) 96,922 (CNY 19,866 )	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 1.87 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	$ 499 (CNY 92 ) 379,507 (CNY 77,787 ) 273,540 (CNY 56,067 ) 419,035 (CNY 85,889 ) 693,419 (CNY 142,129 ) 442,000 (CNY 90,596 ) 19,862 (CNY 4,071 ) 303,705 (CNY 62,250 ) - 7,186 (CNY 1,473 ) - - - 8,026 (CNY 1,645 ) - 6,318 (CNY 1,295 ) 101,108 (CNY 20,724 ) 108,290 (CNY 22,196 ) 299,919 (CNY 61,474 ) (420,065 ) (CNY -86,100 ) 54,472 (CNY 11,165 ) 96,922 (CNY 19,866 )	$ 426,877 (HK$ 102,810) 1,185,371 (HK$ 285,487 ) 2,937,387 (HK$ 707,446 ) 1,473,489 (HK$ 354,878 ) 1,919,171 (HK$ 462,217 ) 13,017,668 (HK$ 3,135,201 ) 1,243,720 (HK$ 299,540 ) 1,399,083 (HK$ 336,958 ) - 656,559 (HK$ 158,127 ) - - - 164,905 (HK$ 39,716 ) - 91,811 (HK$ 22,112 ) 408,587 (HK$ 98,405 ) 224,595 (US$ 6,975 ) 7,210,969 (HK$ 1,736,704 ) 1,795,625 (HK$ 432,462 ) 435,956 (US$ 13,539 ) 774,757 (HK$ 186,594 )	$ - - - - - - - - - - - - - - - - - - - - - -	Note 3 Note 3 Note 3 Note 3 Note 3

(Continued)

Lite-On Technology Corporation 2016 Annual Report

247 Lite-On Technology Corporation 2016 Annual Report

248

Investor Company	Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital (Note 2)	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2016	Investment of Flows	Investment of Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2016	Net Income (Loss) of the Investee Company (Note 2)	Percentage of Ownership	Share of Profits/Loss (Note 2)	Carrying Amount as of December 31, 2016	Accumulated Inward Remittance of Earnings as of December 31, 2016
						Outflow	Inflow
Lite-On Technology Corporation	Changzhou Leotek New Energy Trade Limited Lite-On Opto Technology (Guangzhou) Co., Ltd. Lite-On Auto Electric Technology (Guangzhou) Ltd. Lite-On IT Opto Tech (BH) Co., Ltd. Lite-On Automotive Electronics (Guangzhou) Co., Ltd. Lite-On Automotive (Wuxi) Co., Ltd. Huizhou Li Shin Electronic Co., Ltd. Huizhou Fu Tai Electronic Co., Ltd. Lite-On Technology (Shanghai) Ltd. Li Shin Technology (Huizhou) Ltd. Beijing Lite-On Mobile Electronic and Telecommunication Components Co., Ltd. Guangzhou Lite-On Mobile Engineering Plastics Co., Ltd. Guangzhou Lite-On Mobile Electronic Components Co., Ltd. Shenzhen Lite-On Mobile Precision Molds Co., Ltd. Zhuhai Lite-On Mobile Technology Company Ltd. Lite-On Young Fast (Huizhou) Co., Ltd. Lite-on Green Technologies (Nanjing) Corporation Changzhou Binhu Thin Film Solar Greenhouse Co., Ltd. Epricrystal (Changzhou) Co., Ltd. Dongguan Lite-On Computer Co., Ltd.	Wholesale, import and export and installation of street lights, signal lights, scenery lights and new-type electronic components Manufacture and sale of optical disc drives Manufacture and sale of optical disc drives Manufacture and sale of optical disc drives Manufacture, sale and processing of electronic products Manufacture, sale and processing of electronic products Manufacture of computer peripheral products Manufacture of computer peripheral products Manufacture and sale of energy saving equipment Manufacture and sale of electronic components and peripheral materials Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line Manufacture and sale of mobile phone modules and design for assembly line Modules of touch panels Solar energy engineering Manufacture and sale of solar energy equipment Manufacture, design and sale of light-emitting diode products Manufacture and sale of computer hosts and components	$ 32,200 (US$ 1,000 ) 1,384,600 (US$ 43,000 ) 64,400 (US$ 2,000 ) 1,771,000 (US$ 55,000 ) 199,640 (US$ 6,200 ) 161,000 (US$ 5,000 ) 203,102 (US$ 6,308 ) 31,191 (US$ 969 ) 2,286,200 (US$ 71,000 ) 193,200 (US$ 6,000 ) 515,200 (US$ 16,000 ) 630,154 (US$ 19,570 ) 1,291,220 (US$ 40,100 ) 265,734 (HK$ 64,000 ) 2,688,043 (CNY 579,595 ) 322,000 (US$ 10,000 ) 24,150 (US$ 750 ) 278,036 (CNY 59,950 ) 4,669,000 (US$ 145,000 ) 64,400 (US$ 2,000 )	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1	$ 32,200 (US$ 1,000 ) 1,384,600 (US$ 43,000 ) 64,400 (US$ 2,000 ) 1,771,000 (US$ 55,000 ) 189,018 (US$ 5,870 ) 161,000 (US$ 5,000 ) 131,035 (US$ 4,069 ) 2,093 (US$ 65 ) 2,093,000 (US$ 65,000 ) - 1,686,121 (US$ 52,364 ) 2,918,189 (US$ 90,627 ) 3,714,332 (US$ 115,352 ) 420,256 (US$ 13,051 ) 500,034 (US$ 15,529 ) 209,300 (US$ 6,500 ) 24,150 (US$ 750 ) 96,494 (US$ 2,997 ) 869,400 (US$ 27,000 ) 64,400 (US$ 2,000 )	$ - - - - - - - - 193,200 (US$ 6,000 ) - - - - - - - - - - -	$ - - - - - - - - - - - - - - - - - - - -	$ 32,200 (US$ 1,000 ) 1,384,600 (US$ 43,000 ) 64,400 (US$ 2,000 ) 1,771,000 (US$ 55,000 ) 189,018 (US$ 5,870 ) 161,000 (US$ 5,000 ) 131,035 (US$ 4,069 ) 2,093 (US$ 65 ) 2,286,200 (US$ 71,000 ) - 1,686,121 (US$ 52,364 ) 2,918,189 (US$ 90,627 ) 3,714,332 (US$ 115,352 ) 420,256 (US$ 13,051 ) 500,034 (US$ 15,529 ) 209,300 (US$ 6,500 ) 24,150 (US$ 750 ) 96,494 (US$ 2,997 ) 869,400 (US$ 27,000 ) 64,400 (US$ 2,000 )	$ 1,830 (CNY 375 ) (76,261 ) (CNY -15,631 ) 17,939 (CNY 3,677 ) 388,201 (CNY 79,569 ) 201,372 (CNY 41,275 ) 66,718 (CNY 13,675 ) 132,035 (CNY 27,063 ) 4,454 (CNY 913 ) 201,465 (CNY 41,294 ) 7,874 (CNY 1,614 ) (289,152 ) (CNY -59,267 ) 58,565 (CNY 12,004 ) 496,906 (CNY 101,850 ) (104,221 ) (CNY -21,362 ) (441,312 ) (CNY -90,455 ) 781 (CNY 160 ) 50,700 (CNY 10,392 ) - 4,284 (CNY 878 ) (707 ) (CNY -145 )	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 19.90 21.55 100.00	$ 1,830 (CNY 375 ) (76,261 ) (CNY -15,631 ) 17,939 (CNY 3,677 ) 388,201 (CNY 79,569 ) 201,372 (CNY 41,275 ) 66,718 (CNY 13,675 ) 132,035 (CNY 27,063 ) 4,454 (CNY 913 ) 201,465 (CNY 41,294 ) 7,874 (CNY 1,614 ) (289,152 ) (CNY -59,267 ) 58,565 (CNY 12,004 ) 496,906 (CNY 101,850 ) (104,221 ) (CNY -21,362 ) (441,312 ) (CNY -90,455 ) 781 (CNY 160 ) 50,700 (CNY 10,392 ) - 483 (CNY 99 ) (707 ) (CNY -145 )	$ 14,989 (CNY 3,232 ) 2,190,115 (US$ 68,016 ) 135,948 (US$ 4,222 ) 3,755,100 (US$ 116,618 ) 1,365,738 (HK$ 328,927 ) 600,913 (HK$ 144,725 ) 660,647 (US$ 20,517 ) 61,631 (US$ 1,914 ) 2,371,981 (US$ 73,664 ) 388,557 (US$ 12,067 ) 859,193 (US$ 26,683 ) 1,810,477 (US$ 56,226 ) 4,485,557 (US$ 139,303 ) 347,116 (US$ 10,780 ) 1,159,710 (CNY 250,056 ) (16,615 ) (US$ -516 ) (5,796 ) (US$ -180 ) 4,508 (US$ 140 ) 881,238 (CNY 190,012 ) 98,901 (CNY 21,325 )	$ - - - - - - - - - - - - - - - - - - - -

Accumulated Investment in Mainland China as of December 31, 2016 (Note 2)		Investment Amounts Authorized by Investment Commission, MOEA(Note	2)	Upper	Limit on Investment
$36,472,283 (US$1,132,679)		$38,316,390 (US$1,189,950)			Note 4

Note 1: Indirect investment in Mainland China through holding companies.

Note 2: Amount was recognized based on the audited financial statements.

Note 3: Lite-On Electronics (Guangzhou) Co., Ltd. merged with Lite-On Tech (Guangzhou) Co., Ltd., Lite-On (Guangzhou) Precision Tooling Co., Ltd., Lite-On Communications (Guangzhou) Co., Ltd. and Lite-On Elec and Wire (Guangzhou) Co., Ltd., with the Lite-On Electronics (Guangzhou) Co., Ltd. as the survivor entity. Because the merging process was still under way, the change in the amount of investment in Mainland China has not yet been registered with the Ministry of Economic Affairs.

Note 4: Under Order No. 09704604680 and Order No. 10420404350 issued by the Ministry of Economic Affairs, R.O.C. on August 29, 2008 and February 16, 2015, respectively, the Company acquired a certification-approved by the Industrial Development Bureau and valid from February 9, 2015 to February 8, 2018 - of its status as operation headquarters in the ROC. Thus, the Company has no limitation on the amount of investing in Mainland China.

(Concluded)

Lite-On Technology Corporation 2016 Annual Report

249 Lite-On Technology Corporation 2016 Annual Report

250

www.liteon.com

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Lite-On Technology Corporation

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Chairman: Raymond Soong

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AI assistant

LTC — Annual Report 2016

51997_rns_2017-07-04_6b899a77-7ae3-4fda-8de5-1a5c5d2a271b.pdf

Spokesperson:

Acting Spokesperson:

Global Headquarters:

Major Factory:

Stock Affairs Department:

Auditors:

GDR and related information:

Table of Contents

Contact Information

Members of Top Management

1. Letter to Shareholders

2. Corporate Overview

3. Corporate Governance

4. Capital and Shares

5. Financial Information

MEMBERS OF TOP MANAGEMENT

LETTER TO SHAREHOLDERS

Dear Shareholders,

Business Performance

Future Outlook

Corporate Social Responsibility

Raymond Soong

Warren Chen

Corporate Overview

2.1 COMPANY PROFILE

2.2 Lite-On Corporate Values

Customer Satisfaction

Excellence in Execution

Innovation

Integrity

Corporate Governance

3.1 Introduction

2.3 Organization Chart

3.1.1 Major Resolutions of the General Meeting

3.1.2 Board of Directors

2. The Board and the Functional Committees

3. Board Meetings Attendance

Important Notice:

3.1.3 Audit Committee

Chairperson: Independent Director Kuo-Feng Wu

Members: Independent Director Harvey Chang, Independent Director Edward Yang and Independent Director Albert Hsueh

(1) The operation of the Audit Committee

Important Notice:

(2) The participation of the supervisors in the Board

3.1.4 Compensation Committee

Chairperson: Independent Director Harvey Chang

3.1.5 The Growth Strategic Committee

Chairperson: Independent Director Edward Yang

3.2 Anti-corruption

1. Gifts and hospitality:

2. Principles governing business-related payments:

Grievance channels:

3.3 Corporate Risk Management

The Risk Management Framework

Risk Management Life Cycle

Internal Audit

The PDCA Cycle

‧ Risk Management Projects

‧ Raising Safety Awareness

‧ Protecting Critical Assets

‧ Establishing Safety Systems and Rules

3.4 Information Regarding Board Members and Management

3.4.1 . The profiles of the directors and the independent directors

Note 5: Vice Chairman, DIODES, INC. and Lite-On Semiconductor Corp.

3.4.2. Independent Status of the Directors

3.5 Internal Control System Execution Status

3.5.1 Statement of Internal Control System

3.5.2 If CPA was Engaged to Conduct a Special Audit of Internal Control System,

Provide Its Audit Report: None.

Lite-On Technology Corporation

Statement of Internal Control System

3.6 Reprimands on the Company and its Staff

Capital and Shares

4.1 The Top-10 Shareholders and Information of Related Parties

4.2 The Structure of Shareholders

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

Financial Information

LTC Annual Report 2016