Macronix - Interim / Quarterly Report 2012

Macronix International Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Three Months Ended March 31, 2012 and 2011

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS MARCH 31, 2012 AND 2011

(In Thousands of New Taiwan Dollars, Except Par Value)

ASSETS		2012			2011	LIABILITIES AND SHAREHOLDERS’ EQUITY	2012		2011
	A	mount	%	A	mount		Amount	%	Amount	%
CURRENT ASSETS Cash and cash equivalents (Note 4) Notes and accounts receivable, net (Note 5) Receivables from related parties, net (Note 17) Other receivables, net Inventories (Note 6) Deferred income tax assets, net Restricted assets – current (Note 18) Other current assets (Note 19) Total current assets LONG-TERM INVESTMENTS (Notes 7, 8, 9 and 20) Financial assets at fair value through profit or loss Available-for-sale financial assets - noncurrent Financial assets carried at cost - noncurrent Total long-term investments PROPERTY, PLANT AND EQUIPMENT (Notes 10 and 18) Cost: Land Buildings and structures Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Less: Accumulated depreciation Construction in progress and prepayments for Equipment Net property, plant and equipment INTANGIBLE ASSETS Deferred charges, net Software, net Net intangible assets OTHER ASSETS Deferred income tax assets - noncurrent Idle assets, net Restricted assets – noncurrent (Note 18) Other assets Total other assets TOTAL	$	$ 18,973,510 2,614,359 520,590 151,042 7,337,817 368,450 22,914 650,195 30,638,877 - 1,084,361 134,058 1,218,419 598,076 21,843,329 76,358,093 5,652,637 27,583 25,555 1,104,131 105,609,404 73,699,193 1,918,464 33,828,675 82,482 247,908 330,390 179,100 282,794 164,177 38,507 664,578 66,680,939	28 4 1 - 11 1 - 1 46 - 2 - 2 1 33 115 8 - - 2 159 111 3 51 - - - - 1 - - 1 100	$	$ 22,093,457 2,775,137 519,655 206,452 5,091,838 326,878 6,188 811,757	CURRENT LIABILITIES Short-term bank loans (Note 11) Notes and accounts payable Payables to related parties (Note 17) Income tax payable Accrued expenses Accrued bonuses to employee, directors and supervisors (Note 13) Payables for equipment Current portion of long-term bank loans (Notes 12、18 and 20) Other current liabilities Total current liabilities LONG-TERM LIABILITIES Long-term bank loans, net of current portion (Notes 12、18 and 20) Long-term notes and accounts payable Total long-term liabilities OTHER LIABILITIES Accrued pension cost Other liabilities Total other liabilities Total liabilities SHAREHOLDERS' EQUITY (Notes 13、14、15 and 20) Capital stock, $10 par value, authorized - 6,550,000 thousand shares Issued 3,392,197 thousand shares in 2012 and 3,378,175 thousand shares in 2011 Capital surplus Treasury stock transactions Donation Long-term investments Employee stock options Retained earnings Legal reserve Unappropriated earnings Other adjustments Unrealized gains on financial instruments Cumulative translation adjustments Treasury stock (at cost) – 3,757 thousand shares Total equity attributable to shareholders of the parent MINORITY INTERESTS Total shareholders' equity TOTAL	$ 125,465 1,853,825 87,128 343,175 1,804,780 530,775 542,236 1,979,718 109,049	- 3 - - 3 1 1 3 - 11 27 - 27 - - - 38 51 - - - - 4 6 1 - - 62 - 62 100	$ 4,272,445 2,097,074 107,950 776,195 1,846,244 1,339,469 4,519,120 111,237 78,424 15,148,158 3,379,236 1,050 3,380,286 363,556 2,303 365,859 18,894,303 33,781,743 18,704 37 2,073 332,702 1,630,512 9,759,166 875,901 (88,156) (142,365) 46,170,317 200,884 46,371,201 $ 65,265,504	7 3 - 1 3 2 7 - - 23 5 - 5 1 - 1 29 52 - - - 1 2 15 1 - - 71 - 71 100
					31,831,362
					35,280 1,317,818 195,424		7,376,151
							17,712,852 -
					1,548,522		17,712,852
					598,076 20,965,465 62,572,311 1,822,320 30,882 26,678 1,017,160		379,803 3,999
							383,802
							25,472,805
							33,921,967 25,075 37 3,685 317,653 2,407,003 3,994,438 641,767 (74,528) (142,365)
					87,032,892 67,960,635 11,887,114
					30,959,371
					99,056 69,371
					168,427
					392,474 281,740 36,210 47,398
							41,094,732 113,402
					757,822
					65,265,504		41,208,134
							$ 66,680,939

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

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

GROSS SALES SALES RETURNS AND ALLOWANCES NET SALES (Note 17) COST OF SALES (Notes 6 and 17) GROSS PROFIT OPERATING EXPENSES (Note 17) Sales and marketing General and administrative Research and development Total operating expenses INCOME (LOSS) FROM OPERATION NON-OPERATING INCOME AND GAINS Interest income (Note 20) Gain on disposal of assets, net Valuation gain on financial assets, net (Note 7) Others Total non-operating income and gains		2012				2011
		Amount $ 5,194,072 50,596 5,143,476 4,396,894 746,582 279,842 389,103 1,054,845 1,723,790 (977,208) 41,530 5,474 1,182 5,635 53,821		％		Amount $ 6,704,155 21,870 6,682,285 3,900,400 2,781,885 265,318 419,018 988,489 1,672,825 1,109,060 32,767 8,290 1,176 68,454 110,687		％
				100 85 15 5 8 21 34 (19) - - - - -				100 58 42 4 6 15 25 17 - - - 1 1

(Continued)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

NON-OPERATING EXPENSES AND LOSSES Interest expense（Notes 10 and 20） Foreign exchange losses, net Others Total non-operating expenses and losses INCOME (LOSS) BEFORE INCOME TAX INCOME TAX EXPENSE NET INCOME (LOSS) ATTRIBUTABLE TO: Shareholders of the parent Minority interests		2012				2011
		Amount		％		Amount		％
		$ 57,384 125,501 1,356 184,241 (1,107,628) 6,251 $ (1,113,879) $ (1,091,171) (22,708 ) $ 1,113,879)		- 2 - 2 ( 21) - ( 21) ( 21) - ( 21)		$ - 15,822 1,111 16,933 1,202,814 184,143 $ 1,018,671 $ 1,062,255 (43,584 ) $ 1,018,671		- - - - 18 3 15 16 (1 ) 15

CONSOLIDATED EARNINGS (LOSS) PER SHARE (Note 16) Basic Diluted	2012	2011
	Income Attributable to Shareholders of the Parent	Income Attributable to Shareholders of the Parent
	Before Income Tax After Income Tax $ (0.32) $ (0.32) $ (0.32) $ (0.32)	Before Income Tax After Income Tax $ 0.37 $ 0.32 $ 0.36 $ 0.31

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

(Concluded)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) attributable to shareholders of the parent Net loss attributable to minority interests Depreciation Amortization Equity in losses of equity method investees, net Gain on disposal of assets, net Valuation gain on financial instruments Deferred income tax Net changes in operating assets and liabilities: Notes and accounts receivable Receivables from related parties Other receivables Inventories Other current assets Notes and accounts payable Payables to related parties Income tax payable Accrued expenses Accrued bonuses to employees, directors and supervisors Other current liabilities Accrued pension cost Net cash provided by (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Decrease (increase) in restricted assets Proceeds from liquidation of financial assets carried at cost Proceeds from disposal of financial assets carried at cost Acquisitions of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in intangible assets		2012 $ (1,091,171) (22,708 ) 1,822,579 38,171 20,021 (5,474 ) (1,182 ) 5,648 255,121 397,473 (29,590) (869,693 ) (175,347 ) (301,034) 4,884 (5,791) (384,403) - 24,055 19,569 (298,872) 91 19,500 39,546 (793,859 ) 14,651 (210,496 )	2011
			$ 1,062,255 (43,584 ) 1,192,122 29,779 - (8,290 ) (1,176 ) 69,628 (364,289 ) 127,124 132,624 (1,105,559 ) (290,364 ) 200,585 14,816 111,229 (119,810 ) 190,253 (25,767 ) (1,030 ) 1,170,546 (33,514 ) - - (3,291,881 ) 8,902 (25,460 )

(Continued)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars)

Decrease (increase) in refundable deposits Decrease in other assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in short-term bank loans Increase in long-term bank loans Repayment of long-term bank loans Increase (decrease) in guarantee deposits Proceeds from exercise of employee stock options Increase in minority interests Net cash provided by financing activities EFFECT OF EXCHANGE RATE CHANGES NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid (excluding capitalized interest) Income tax paid NON-CASH FINANCING ACTIVITIES: Current portion of long-term bank loans Amounts reclassified from fixed assets to deferred assets Amounts reclassified from other assets to deferred assets INVESTING ACTIVITIES AFFECTING BOTH CASH AND NON-CASH ITEMS Acquisitions of property, plant and equipment Net decrease (increase) in payables to contractors and equipment suppliers and obligations under capital leases Cash paid		2012 $ 348 16,940 (913,279 ) (1,675,023) 2,170,000 (83,762 ) (172 ) 70,757 - 481,800 (23,236 ) (753,587 ) 19,727,097 $ 18,973,510 $ 64,307 $ 2,296 $ 1,979,718 $ 26 $ 13,380 $ 460,262 333,597 $ 793,859	2011
			( $ 248 ) 3,179 (3,339,022 ) 1,466,365 1,200,000 (2,117,096 ) 248 155,514 18,525 723,556 (14,080 ) (1,459,000 ) 23,552,457 $ 22,093,457 $ - $ 12,844 $ 111,237 $ - $ - $ 5,813,648 (2,521,767 ) $ 3,291,881

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

(Concluded)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

1. GENERAL

Macronix International Co., Ltd. (“MXIC”), a Republic of China (ROC) corporation, was incorporated in the Hsinchu Science Park (HSP), Taiwan on December 9, 1989. The Company operates principally as a designer, manufacturer and supplier of integrated circuits and memory chips. The Company also performs design, research and development, consultation, and trade of relevant products.

The Company’s shares have been listed on the Taiwan Stock Exchange (TSE) since March 15, 1995. The Company listed a portion of its shares on the NASDAQ Stock Market in the form of American Depositary Shares (ADSs) in May 1996 but delisted on October 29, 2007.

As of March 31, 2012 and 2011, the Company had 5,417 and 5,001 employees, respectively.

2. SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements are presented in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, Financial Supervisory Commission Executive Yuan issued the regulation on November 15, 2007, and accounting principles generally accepted in the ROC. Except the accounting changes as note 3, all significant accounting policies are the same as consolidated financial statements in 2011.

For the convenience of readers, the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the ROC. 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 consolidated financial statements shall prevail.

The consolidated entities were as follows:

As of March 31, 2012, MXIC has direct and indirect majority ownership in the following subsidiaries: MXB Inc. (“MXB”), Run Hong Investment, Ltd. (“Run Hong”), Hui Ying Investment, Ltd. (“Hui Ying”), Magic Pixel Inc. (“MPI”), Mxtran Inc. (“Mxtran”), Infomax Communication Co., Ltd. (“INFOMAX”), MoDioTek Co., Ltd. (“MoDioTek”), MaxRise Inc. (“MaxRise”), Macronix America Inc. (“MXA”), Macronix (BVI) Co., Ltd. (“MXBVI”), Magic Pixel Inc. (“MPI Samoa”), Magic Pixel Holding Company Limited (“MPI HK”), Magic Pixel (Shen Zhen) Co., Ltd. (“MPI SZ”), Mxtran Holding (Samoa) Co., Ltd (“Mxtran Samoa”), Mxtran (H.K.) Holding Co., Limited (“Mxtran HK”), Maxtran Technology Co., Ltd. (“Maxtran Beijing”), Infomax Holding Co., Ltd. (“Infomax Samoa”), Infomax Holding Company Limited (“Infomax HK”), Infomax Communication (Suzhou) Co., Ltd. (“Infomax SU”), Mosatek Co., Ltd. (“Mosatek Samoa”), Mosatek (HK) Company Limited (“Mosatek HK”), Modiotek (Suzhou) Co., Ltd. (“Modiotek SU”), New Trend Technology Inc. (“NTTI”), Macronix (Asia) Limited (“MX Asia”), Macronix Pte. Ltd. (“MPL”), Macronix Europe NV. (“MXE”), Macronix (Hong Kong) Co., Ltd. (“MXHK”) and Macronix Microelectronics (Suzhou) Co., Ltd. (“MXm”).

The following diagram presents the relationship and ownership percentage between MXIC and its consolidated subsidiaries as of March 31, 2012.

==> picture [470 x 266] intentionally omitted <==

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

MXIC
50.00% 100% 100% 72.54% 88.15% 92.69% 70.88% 79.70% 100% 100%
MXB Run Hong Hui Ying MPI Mxtran INFOMAX MoDioTek MaxRise MXA MXBVI
4.84% 4.99% 4.99% 4.99% 4.99% 4.99%
100% 100% 100% 100% 100% 100% 100% 100% 100%
MPI Mxtran Infomax Mosatek NTTI MXAsia MPL MXE MXHK
Samoa Samoa Samoa Samoa
100% 100% 100% 100% 100%
Mosatek
MPI HK Mxtran HK Infomax HK MXm
HK
100% 100% 100% 100%
MPI SZ Maxtran Infomax SU Modiotek
Brijing SU
----- End of picture text -----

The consolidated entities and the main operations of these subsidiaries were as follows:

Investor MXIC MXIC MXIC MXIC and Run Hong MXIC and Run Hong MXIC and Run Hong MXIC, Run Hong and Hui Ying MXIC and Run Hong MXIC MXIC MPI MPI Samoa MPI HK	Investees MXB Run Hong Hui Ying MPI Mxtran INFOMAX MoDioTek MaxRise MXA MXBVI MPI Samoa MPI HK MPI SU	Main Business Sales and marketing Investment company Investment company Research, development, design, manufacturing and sales of digital skill camera controller IC and flat panel display controller IC Research, development, design, manufacturing and sale of the Combi-SIM IC Research, development, design, manufacturing and sale of the baseband and analog chips Research, development, design, manufacturing and sale of the mobile audio chips and solutions IC design, Research, Development, design, manufacturing and sales of digital TV receivable chips Sales and marketing Investment company Investment company Investment company Development, sales and service of IC systems	Percentage of Ownership at March 31, 2012 50.00 100.00 100.00 77.38 93.14 97.68 80.86 84.69 100.00 100.00 100.00 100.00 -	Percentage of Ownership at March 31, 2011 50.00 100.00 100.00 35.65 93.14 97.68 80.86 84.69 100.00 100.00 100.00 100.00 100.00	Note
					1 －－－－－－－－－－－ 2

(Continued)

Investor	Investees	Main Business Research, develop (except IC design) and sales of application software and rendering of related technical consultation and services Investment company Investment company R&D on software and communication; sales of application; Technical consultation; Technical services; Technical training; Application software; Counseling on Business Management; Service of accounting and finance; Hardware, software, and related products of computer; Communication product; Electronic product; Importation/ Exportation for goods and technology; Agent for Importation/ Exportation Investment company Investment company Software system consulting service, software system design service, software integrating service Investment company Investment company Research, development, design and sales of application software and rendering of related technical consultation and services IC design Investment company After-sale service After-sale service Sales and marketing Design, maintenance and test of IC systems and rendering of related technical consultation and services	Percentage of Ownership at March 31, 2012 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	Percentage of Ownership at March 31, 2011 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	Note
MPI HK Mxtran Mxtran Samoa Mxtran HK INFOMAX Infomax Samoa Infomax HK MoDioTek Mosatek Samoa Mosatek HK MXBVI MXBVI MXBVI MXBVI MXBVI MXHK	MPI SZ Mxtran Samoa Mxtran HK Maxtran Beijing Infomax Samoa Infomax HK Infomax SU Mosatek Samoa Mosatek HK Modiotek SU NTTI MX Asia MPL MXE MXHK MXm				－－－－－－－－－－－－－－－－

(Concluded)

Note 1: MXB is in the process of liquidation in 2011. MXIC did not include MXB in its consolidated financial statements for the year ended December 31, 2011 because MXB is immaterial. However, MXB’s revenue and expense before liquidation had been included in the consolidated financial statements.

Note 2: MPI SU had completed the liquidation in 2011 and its revenue and expenses before liquidation had been included in the consolidated financial statements.

MXIC together with its subsidiaries are hereinafter referred to collectively as “the Company”. Minority interests are presented as a separate component of shareholders’ equity.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of MXIC and all its direct and indirect subsidiaries and other investees over which MXIC has controlling interests. All significant intercompany balances and transactions have been eliminated upon consolidation.

3. ACCOUNTING CHANGES

Recognition and Measurement of Financial Instruments

On January 1, 2011, the Company prospectively adopted the newly revised Statement of Financial Accounting Standards (SFAS) No. 34, “Financial Instruments: Recognition and Measurement.” The main revisions include (1) finance lease receivables are now covered by SFAS No. 34; (2) the scope of the applicability of SFAS No. 34 to insurance contracts is amended; (3) loans and receivables originated by the Company are now covered by SFAS No. 34; (4) additional guidelines on impairment testing of financial assets carried at amortized cost when the debtor has financial difficulties and the terms of obligations have been modified; and (5) accounting treatment by a debtor for modifications in the terms of obligations. The adoption resulted in an increase of $34,567 thousand in net income and of $0.01 in basic EPS after income tax for the three months ended March 31, 2011.

Operating Segments

On January 1, 2011, the Company adopted the newly issued SFAS No. 41, “Operating Segments.” This statement supersedes SFAS No. 20, “Segment Reporting.” The statement requires identification and disclosure of operating segments on the basis of how the Company’s chief operating decision maker regularly reviews information in order to allocate resources and assess performance. This newly issued SFAS No. 41 did not have significant effect on the Company’s disclosure of operating segments.

4. CASH AND CASH EQUIVALENTS

Petty cash Checking and savings accounts Time deposits Cash equivalents - repurchase agreements collateralized by bonds		March 31	March 31
		2012 $ 734 2,019,409 16,903,246 50,121 $ 18,973,510	2011 $ 1,058 4,363,428 17,628,895 100,076 $ 22,093,457

5. NOTES AND ACCOUNTS RECEIVABLE

Notes receivable Accounts receivable Less: Allowance for doubtful accounts Allowance for sales returns and discounts		March 31	March 31
		2012 $ 7,547 2,641,438 20,039 14,587 2,606,812 $ 2,614,359	2011 $ 12,190 2,862,126 88,238 10,941 2,762,947 $ 2,775,137

Movements of the allowance for doubtful accounts were as follows:

Balance, beginning of period Reversal of provision for doubtful accounts Amounts written off Translation adjustment Balance, end of period		Three months Ended March 31	Three months Ended March 31
		2012 $ 18 20,021 - - $ 20,039	2011 $ 139,397 (50,788 ) - (371 ) $ 88,238

Movements of the allowance for sales returns and discounts were as follows:

Balance, beginning of period Provision (reversal of provision) for sales returns and discounts Translation adjustment Balance, end of period		Three months Ended March 31	Three months Ended March 31
		2012 $ 11,987 2,638 (38 ) $ 14,587	2011 $ 14,455 (3,509) (5 ) $ 10,941

6. INVENTORIES

Finished goods and merchandise Work in process Raw materials Supplies and spare parts		March 31
		2012 $ 964,264 5,920,121 311,161 142,271 $ 7,337,817	2011 $ 795,557 3,614,358 505,319 176,604 $ 5,091,838

The allowance for inventory losses as of March 31, 2012 and 2011 was $958,260 thousand and $605,216 thousand, respectively.

The cost of inventories recognized as cost of goods sold for the three months ended March 31, 2012 and 2011 was $4,396,894 thousand and $3,900,400 thousand, respectively. The cost of goods sold for the three months ended March 31, 2012 and 2011 included $265,519 thousand and $32,646 thousand write-downs of inventories, respectively.

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets designated at fair value through profit or loss - foreign publicly - traded convertible bonds		March 31
		2012 $-	2011 $ 35,280

Net gains arising from financial assets designated at fair value through profit for the three months ended March 31, 2012 and 2011 were $1,182 thousand and $1,176 thousand, respectively.

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

Publicly traded stocks Foreign Publicly traded stocks - US$8,904 thousand in 2012 and US$13,226 thousand in 2011		March 31
		2012 $ 821,603 262,758 $ 1,084,361	2011 $ 928,972 388,846 $ 1,317,818

9. FINANCIAL ASSETS CARRIED AT COST

Non-publicly traded stocks Foreign non-publicly traded stocks - US$1,220 thousand in 2012 and 2011		March 31
		2012 $ 98,056 36,002 $ 134,058	2011 $ 159,556 35,868 $ 195,424

The above investments did not have quoted market prices in an active market and fair value could not be determined using established valuation techniques. Therefore, these equity securities were carried at cost.

10. PROPERTY, PLANT AND EQUIPMENT

Cost: Land Buildings and structures Machinery equipment Research and development equipment Transportation equipment Leasehold assets Leasehold improvement Miscellaneous equipment Construction in progress and prepayments for equipment			Three Months Ended March 31, 2012	Three Months Ended March 31, 2012	Three Months Ended March 31, 2012
		Balance, Beginning of Year $ 598,076 21,717,424 75,224,281 2,381,513 28,192 - 26,553 1,096,751 6,097,550 107,170,340	Additions $ - 131,670 1,293,362 3,201,339 2,100 - - 10,876 (4,179,086) $ 460,261	Disposals $ - - (70,532 ) (18,747 ) (2,657 ) - - (1,545 ) - $ (93,481 )	Reclassification $ - - (89,018 ) (89,018 - - - (42 ) - $ (42)	Translation Adjustment Balance, End of Year $ - $ 598,076 (5,765 ) 21,843,329 - 76,358,093 (486 ) 5,652,637 (52 ) 27,583 - - (998 ) 25,555 (1,909 ) 1,104,131 - 1,918,464 $ (9,210 )107,527,868 (Continued)	Balance, End of Year $ 598,076 21,843,329 76,358,093 5,652,637 27,583 - 25,555 1,104,131 1,918,464
							107,527,868

Accumulated depreciation: Buildings and structures Machinery equipment Research and development equipment Transportation equipment Leased assets Leasehold improvement Miscellaneous equipment			Three Months Ended March 31, 2012	Three Months Ended March 31, 2012	Three Months Ended March 31, 2012
		Balance, Beginning of Year 14,287,420 55,390,754 1,326,924 19,501 - 21,709 917,325 71,963,633 $ 35,206,707	Additions $ 300,033 1,378,051 118,801 712 - 475 24,507 $ 1,822,579	Disposals $ - (61,620 ) (18,747 ) (2,451 ) - - (1,486 ) $ (84,304 )	Reclassification $ - 3,253 (3,253 ) - - - (2 ) $ (2)	Translation Adjustment Balance, End of Year $ (317 ) 14,587,136 - 56,710,438 (207 ) 1,423,518 (48 ) 17,714 - - (784 ) 21,400 (1,357 ) 938,987 $ (2,713 ) 73,699,193 $ 33,828,675 (Concluded)

Cost: Land Buildings and structures Machinery equipment Research and development equipment Transportation equipment Leasehold assets Leasehold improvement Miscellaneous equipment Construction in progress and prepayments for equipment Accumulated depreciation: Buildings and structures Machinery equipment Research and development equipment Transportation equipment Leased assets Leasehold improvement Miscellaneous equipment			Three Months Ended March 31, 2011	Three Months Ended March 31, 2011	Three Months Ended March 31, 2011
		Balance, Beginning of Year $ 598,076 20,665,899 60,817,179 1,891,926 30,882 - 26,826 1,019,247 8,216,363 93,266,398 13,198,719 51,579,362 1,249,220 19,258 - 21,185 861,767 66,929,511 $ 26,336,887	Additions $ - 316,560 1,776,747 26,838 - - - 22,752 3,670,751 $ 5,813,648 $ 272,016 849,002 45,794 762 - 445 24,103 $ 1,192,122	Disposals $ - (18,469 ) (105,348 ) (12,820 ) - - - (22,297 ) - $ (158,934 ) $ (18,468 ) (105,348 ) (12,672 ) - - - (21,834 ) $ (158,322 )	Reclassification $ - - 83,733 (83,733 ) - - - (2,955 ) - $ (2,955) $ - 76,049 (76,049 ) - - - (2,955 ) $ (2,955)	Translation Adjustment $ - 1,475 - 109 - - (148 ) 413 - $ 1,849 $ 41 - 40 (1 ) - (113 ) 312 $ 279	Balance, End of Year $ 598,076 20,965,465 62,572,311 1,822,320 30,882 - 26,678 1,017,160 11,887,114 98,920,006 13,452,308 52,399,065 1,206,333 20,019 - 21,517 861,393 67,960,635 $ 30,959,371

Information on interest capitalization is summarized as follows:

Total interests Capitalized interests Capitalization rate	Three Months Ended March 31
	2012 2011 $ 76,207 $ 22,892 18,823 22,892 1.48% 1.35%

11. SHORT-TERM BANK LOANS

Letter of credit loan: US$4,252 thousand, with interest rates which ranged 0.84%-2.04% in 2012; US$99,329 thousand and JPY3,808,920 thousand, with interest rates which ranged 0.77% -1.43% in 2011		March 31
		2012 $ 125,465	2011 $ 4,272,445

12. LONG-TERM BANK LOANS

Repayable semi-annually from December 2012 to December 2015, with annual floating interest which ranged 1.54% -1.55% in 2012 and at 1.30% in 2011 Repayable semi-annually from March 2013 to September 2014, with annual floating interest at 1.81% in 2012 Repayable according to an agreed loan payment term to maturity date, with annual floating interest at 1.54% in 2012 and 1.35% in 2011 Repayable quarterly from March 2013 to September 2014, with annual floating interest at 1.65% in 2012 Repayable quarterly from March 2013 to March 2015, with annual floating interest at 1.62% in 2012 Repayable semi-annually from March 2012 to September 2014, with annual floating interest at 1.81% in 2012 Repayable monthly from May 2003 to April 2016, with annual floating interest at 1.84% in 2012 and ranged 1.62%-1.67% in 2011 Repayable quarterly from September 2013 to September 2014, with annual floating interest at 2.08% in 2012 Repayable semi-annually from June 2008 to June 2011, with annual floating interest at 2.17% in 2011 Less - current portion		March 31	March 31
		2012 $ 15,030,000 1,600,000 1,500,000 500,000 400,000 333,333 279,237 50,000 - 19,692,570 1,979,718 $ 17,712,852	2011 $ 2,500,000 - 600,000 - - - 347,621 - 42,852 3,490,473 111,237 $ 3,379,236

For expansion of production capability and for long-term operation needs, the Company made a Syndicated Loan of $18 billion for 5 years, with Taiwan Cooperative Commercial Bank and other 14 financial organizations in September 2010. The line of credit has been used $16.53 billion as of March 31, 2012.

The loan agreement requires the maintenance of certain financial ratios based on semi-annual and annual consolidated financial statements.

The details of long-term loans pledged as collateral are shown in Note 18.

13. SHAREHOLDERS’ EQUITY

Capital Surplus

Capital surplus can only be used to offset a deficit under the Company Law. However, the capital surplus generated from donations and the excess of the issuance price over the par value of capital stock may be appropriated as stock dividends, which is limited to a certain percentage of the Company’s paid-in capital. Under the revised Company Law issued on January 4, 2012, the aforementioned capital surplus also may be distributed in cash. The capital surplus from long-term investments may not be used for any purpose.

Retained Earnings Distribution and Dividends Policy

MXIC’s Articles of Incorporation provide that any profit after annual closing should be used first to cover income tax and accumulated deficit. Then appropriate for legal reserve 10% of the remaining amount (until the amount of the legal reserve equals the amount of MXIC’s capital stock) and appropriate for (or reverse) special reserve in accordance with law. Appropriation for remuneration to directors and supervisors should be made at 2% of the remaining amount. Any remaining amount will be added to the undistributed earnings from previous years and distributed in the following manner: (a) shareholders’ dividends -- 85%; (b) employees’ bonus -- 15%. Employees’ bonus will be distributed in the same form as the distribution of dividends to shareholders on a proportionate basis.

Distributions, except for the remuneration to directors and supervisors, may be made in the form of cash dividend or stock dividend, as determined by the shareholders at an Annual General Meeting. Both the shareholders’ bonus and employees’ bonus take the form of cash dividend as the first choice. Nevertheless, it still depends on the MXIC’s financial, sales or operating condition. MXIC’s Articles of Incorporation provide that no more than 50% of the current year’s total amount of distributable earnings can be made in the form of stock dividend. Furthermore, with the approval of the shareholders at such meetings, the dividend and bonus may be held wholly or partially as retained earnings for distribution in future years.

Employees eligible to receive stock dividends may include employees of affiliated companies if they meet the criteria set by the Board of Directors.

Due to the net loss for the three months ended March 31, 2012, there was no accrual for bonus to employees and remuneration to directors and supervisors. For the three months ended March 31, 2011, the accrued bonus to employees was $169,773 thousand, and the accrued remuneration to directors and supervisors was $20,480 thousand. The bonus to employees represented 16% of net income. The remuneration to directors and supervisors was 1.8% of net income. Material differences between such estimated amounts and the amounts proposed by the board of directors in the following year are adjusted for in the current year. If the actual amounts subsequently resolved by the shareholders differ from the proposed amounts, the differences are recorded in the year of shareholders’ resolution as a change in accounting estimate. If a share bonus is resolved to be distributed to employees, the number of shares is determined by dividing the amount of the share bonus by the closing price (after considering the effect of cash and stock dividends) of the shares of the day immediately preceding the shareholders’ meeting.

MXIC no longer has supervisors since June 10, 2009. The required duties of supervisors are being fulfilled by the Audit Committee.

Legal reserve shall be appropriated until it has reached MXIC’s paid-in capital. This reserve may be used to offset a deficit. Under the revised Company Law issued on January 4, 2012, when the legal reserve has exceeded 25% of MXIC’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Under the Integrated Income Tax System that became effective on January 1, 1998, ROC resident shareholders are allowed a tax credit from their proportionate share in the income tax paid by MXIC on earnings generated since January 1, 1998.

The appropriations of earnings for 2011 and 2010 had been proposed in the Board of Directors’ meeting on March 13, 2012 and had been approved in the shareholders’ meeting on June 10, 2011, respectively. The appropriations and dividends per share were as follows:

Legal capital reserve Cash dividends Stock dividends	Appropriation of Earnings For For Year 2011 Year 2010 $ 288,272 $ 776,491 1,288,408 5,735,394 1,288,408 - $ 2,865,088 $ 6,511,885	Dividends Per Share (NT$)
	For Year 2011 $ 288,272 1,288,408 1,288,408 $ 2,865,088	For For Year 2011 Year 2010 $0.38 $1.70 0.38

The bonus to employees and the remuneration to directors and supervisors for 2010 and 2009 were approved in the shareholders’ meeting on June 10, 2011 and June 9, 2010, respectively. The appropriations were as follows:

Approved amounts Reflected in financial statements	For year 2010 Remuneration to Directors Bonus to and Employees Supervisors $ 1,012,129 $ 139,768 1,008,689 140,527 $ 3,440 $ (759 )	For year 2009
		Remuneration to Directors Bonus to and Employees Supervisors $ 878,689 $ 102,534 874,331 102,960 $ 4,358 $ (426 )

The differences between the approved amounts of the bonus to employees and the remuneration to directors and supervisors and the accrual amounts reflected in the financial statements for the years ended December 31, 2010 and 2009 were primarily due to changes in estimates (numbers of the outstanding shares and income tax expense) had been adjusted in profit and loss for the year ended December 31, 2011 and 2010, respectively.

The bonus to employees and the remuneration to directors and supervisors for 2011 amounted to $454,732 thousand and $51,889 thousand, respectively, were proposed in the Board of Directors’ meeting on March 13, 2012. The amounts of the bonus to employees and the remuneration to directors and supervisors proposed by the Board of Directors were lower by $23,115 thousand and $1,039 thousand compared with the amounts accrued in the financial statements for the year ended December 31, 2011. The differences were primarily due to change in estimates (numbers of the outstanding shares and income tax expense). The differences will be adjusted in profit and loss for the years ended December 31, 2012 after approval in the shareholders’ meeting.

The 2011 appropriations of earnings, bonus to employees and remuneration to directors and supervisors will be resolved by the shareholders in their meeting scheduled for June 6, 2012.

Information about the appropriations of earnings is available on the Market Observation Post System website of the Taiwan Stock Exchange.

14. EMPLOYEE STOCK OPTION PLANS

MXIC

MXIC has four employee stock option plans (“2003 Plan”, “2004 Plan”, “2005 Plan” and “2007 Plan”) approved by the ROC Securities and Futures Bureau (SFB) to grant options up to 200,000 thousand units, 200,000 thousand units, 200,000 thousand units and 120,000 thousand units, respectively. Each stock option may subscribe for one new share of common stock of MXIC. The options are valid for six years subsequent to the grant dates and vested at certain percentages subsequent to the second anniversary of the grant date. The options are granted at the exercise price equal to the higher of closing price of MXIC’s common shares listed on the TSE or the MXIC’s net asset value per common share on the grant date. As stipulated in the plans, the exercise price and quantity are subject to adjustments for any changes in capital structure or cash dividends.

As of March 31, 2012, there had been 7,448 thousand of employee stock options exercised for which 7,448 thousand common shares were issued but have not been officially registered with the Ministry of Economic Affairs, ROC.

Information with respect to MXIC’s stock option plans is as follows:

Unit: Option Numbers in Thousand and NT$ Per Share

Three months ended March 31, 2012 Beginning balance Options exercised Options cancelled Ending balance Three months ended March 31, 2011 Beginning balance Options exercised Options cancelled Ending balance	2007 Plan Number of Outstanding Weighted- Stock average Option Exercise Rights Price 49,794 $ 9.50 (7,448) 9.50 (61 ) 9.50 42,285 9.50 2007 Plan Number of Outstanding Weighted- Stock average Option Exercise Rights Price 68,334 $ 10.50 (13,447) 10.50 (227 ) 10.50 54,660 10.50	2005 Plan Number of Outstanding Weighted- Stock average Option Exercise Rights Price 37 $ 4.00 - - (37) 4.00 - - 2005 Plan Number of Outstanding Weighted- Stock average Option Exercise Rights Price 19,521 $ 5.90 (4,144) 5.90 - - 15,377 5.90
			2004 Plan
			Number of Outstanding Weighted- Stock average Option Exercise Rights Price 40 $ 7.78 (11) 7.60 (29 ) 7.85 - -

The number and exercise prices of outstanding options had been adjusted to reflect the stock dividends and the cancellation of common stock.

As of March 31, 2012, information about MXIC’s outstanding and exercisable option was as follows:

Options Issued on or After January 1, 2004 and Outstanding Number Outstanding (Thousand) Remaining Contractual Life (in Years) Exercise Price (NT$/Per Share) 42,285 1.74 $ 9.5		Options Exercisable
		Number Exercisable (Thousand) Exercise Price (NT$/Per Share) 42,285 $ 9.5

MoDioTek

Approved by the Board of Directors of MoDioTek on April 2, 2007, December 3, 2007, August 18, 2008 and December 11, 2008, MoDioTek was authorized to issue employee stock options for 1,500 thousand units, 579 thousand units, 671 thousand units and 40 thousand units, respectively. Each stock option may subscribe for one new share of new common stock of MoDioTek. The options are valid for six years subsequent to second anniversary of the grant date or the early of the first anniversary of the grant date or date of application for share listing on the TSE or GreTai Securities Market. As stipulated in the plans, the exerxise price and quantity are subject to adjustments for any changes of capital structure or cash dividends.

Information with respect to MoDioTek’s stock option plan is as follows:

			Three months Ended March 31	Three months Ended March 31	Three months Ended March 31	Three months Ended March 31
			2012			2011
		Number of				Number of
		Outstanding				Outstanding
		Stock Option Weighted- average			Stock Option		Weighted- average
			Rights Exercise Prices			Rights	Exercise Prices
		(Thousand) (NT$/Per Share)				(Thousand)	(NT$/Per Share)
Balance, beginning of year			2,040 $	10.35		2,289	$ 10.35
Options cancelled			(22 )	-		(39 )	-
Balance, end of year			2,018	10.35		2,250	10.35
As of March 31,	2012,	information about MoDioTek’s outstanding and exercisable option was as
follows:
	Options Issued on or After January 1, 2004 and
			Outstanding			Options Exercisable
Exercise Price	Number		Remaining	Exercise Price		Number	Exercise Price
(NT$/Per	Outstanding		Contractual Life	(NT$/Per		Exercisable	(NT$/Per
Share)	(Thousand)		(in Years)	Share)		(Thousand)	Share)
$ 10.00		1,109	1.00	$ 10.00		1,109	$ 10.00
10.00		403	1.67	10.00		403	10.00
11.40		486	2.38	11.40		486	11.40
11.40		20	2.70	11.40		20	11.40
		2,018				2,018

As of March 31, 2012, information about MoDioTek’s outstanding and exercisable option was as follows:

Mxtran

Approved by the Board of Directors of Mxtran on April 2, 2007, May 4, 2007, November 16, 2007, December 21, 2007 and August 12,2011, Mxtran was authorized to issue employee stock options for 1,409 thousand units, 74 thousand units, 17 thousand units and 1,564 thousand units and 2,344 thousand units, respectively. Each stock option may subscribe for one new share of new common stock of Mxtran. The options are valid for six years subsequent to the grant dates and vested at certain percentages subsequent to the second anniversary of the grant date. As stipulated in the plans, the exercise price and quantity are subject to adjustments for any changes of capital structure or cash dividends.

Mxtran cancelled and increased its share capital for 12,000 thousand shares and 20,000 thousand shares on March 5, 2009 and March 9, 2009, respectively. Each stock option has subscribed for 0.4 common stock share and the exercise price was subject to adjustments for any change of capital struture.

Information with respect to Mxtran’s stock option plan is as follows:

Balance, beginning of year Options cancelled Balance, end of year	Three months Ended March 31	Three months Ended March 31
	2012 Number of Outstanding Stock Option Rights (Thousand) Weighted- average Exercise Prices (NT$/Per Share) 2,664 $ 10.31 (35 ) 10.31 2,629 10.31	2011
		Number of Outstanding Stock Option Rights (Thousand) Weighted- average Exercise Prices (NT$/Per Share) 1,078 $ 12.32 (145 ) 12.32 933 12.32

As of March 31, 2012 information about Mxtran’s outstanding and exercisable option was as follows:

Exercise Price (NT$/Per Share) $ 12.07 12.55 10.00	Options Issued on or After January 1, 2004 and Outstanding Number Outstanding (Thousand) Remaining Contractual Life (in Years) Exercise Price (NT$/Per Share) 169 1.02 $ 12.07 184 1.73 12.55 2,276 5.36 10.00 2,629	Options Exercisable
		Number Exercisable (Thousand) Exercise Price (NT$/Per Share) 169 $ 12.07 184 12.55 - 10.00 353

Options granted during the three months ended March 31, 2012 were priced using the Black-Scholes pricing model and the inputs to the model were as follows:

Grant-date share price (NT$)	3.23
Exercise price (NT$)	10.00
Expected volatility	44.82%
Expected life (years)	4.25
Expected dividend yield	-
Risk-free interest rate	1.11%

The compensation cost for the three months ended March 31, 2012 was minor; thus, it was not recognized.

INFOMAX

Approved by the Board of Directors of INFOMAX on April 2, 2007, November 16, 2007, December 21, 2007, April 2, 2010 and January 26, 2011, INFOMAX was authorized to issue employee stock options for 2,577 thousand units, 423 thousand units, 1,910 thousand units, 8,654 thousand units and 1,346 thousand units, respectively. Each stock option may subscribe for one new share of new common stock of INFOMAX. The options authorized on April 2, 2007, November 16, 2007, December 21, 2007 and January 26, 2011 are valid for six years, eight years, eight years and six years, respectively, subsequent to the grant dates. The options authorized on April 2, 2010 are valid in the early of six years to the grant dates or two months to the date of application for share listing on the TSE or Gre Tai Securities Market. As stipulated in the plans, the exercise price and quantity are subject to adjustments for any changes of capital structure or cash dividends.

Information with respect to INFOMAX’s stock option plan is as follows:

Balance, beginning of year Options granted Options cancelled Balance, end of year	Three months Ended March 31	Three months Ended March 31
	2012 Number of Outstanding Stock Option Rights (Thousand) Weighted- average Exercise Prices (NT$/Per Share) 10,943 $ 10.00 - - (709 ) 10.00 10,234 10.00	2011
		Number of Outstanding Stock Option Rights (Thousand) Weighted- average Exercise Prices (NT$/Per Share) 12,294 $ 10.00 1,346 10.00 (1,003 ) 10.00 12,637 10.00

As of March 31, 2012 information about INFOMAX’s outstanding and exercisable option was as follows:

Exercise Price (NT$/Per Share) $ 10.00 10.00 10.00	Options Issued on or After January 1, 2004 and Outstanding Number Outstanding (Thousand) Remaining Contractual Life (in Years) Exercise Price (NT$/Per Share) 1,780 1.25 $ 10.00 1,213 3.98 10.00 7,241 4.36 10.00 10,234	Options Exercisable
		Number Exercisable (Thousand) Exercise Price (NT$/Per Share) 1,879 $ 10.00 1,278 10.00 - 10.00 3,157

Options granted during the three months ended March 31, 2012 were priced using the Black-Scholes pricing model and the inputs to the model were as follows:

Grant-date share price (NT$) 5.17 Exercise price (NT$) 10.00 Expected volatility 37.82% Expected life (years) 4.25 Expected dividend yield Risk-free interest rate 0.91%

For the three months ended March 31, 2012 and 2011, compensation cost recognized were $254 thousand and $530 thousand, respectively. As of March 31, 2012, the estimated percentage of forfeiture due to termination of employment over the remaining vesting period was 3%.

MaxRise

Approved by the Board of Directors of MaxRise on January 12, 2007, April 18, 2007, November 16, 2007, December 21, 2007, August 14, 2008, April 15, 2009, May 5, 2010 and January 3, 2011, MaxRise was authorized to issue employee stock options for 1,160 thousand units, 230 thousand units, 110 thousand units, 1,350 thousand units, 780 thousand units, 225 thousand units, 863 thousand units and 2,007 thousand units, respectively. Each stock option may subscribe for one new share of new common stock of MaxRise. The options are valid for six years subsequent to the grant dates and vested at certain percentages subsequent to the second anniversary of the grant date. As stipulated in the plans, the exercise price and quantity are subject to adjustments for any changes of capital structure or cash dividends.

Information with respect to MaxRise’s stock option plan is as follows:

Balance, beginning of year Options granted Options cancelled Balance, end of year	Three months Ended March 31	Three months Ended March 31
	2012 Number of Outstanding Stock Option Rights (Thousand) Weighted- average Exercise Prices (NT$/Per Share) 3,034 $ 11.07 - - (150 ) 10.00 2,884 11.13	2011
		Number of Outstanding Stock Option Rights (Thousand) Weighted- average Exercise Prices (NT$/Per Share) 1,455 $ 12.60 2,007 10.00 (55 ) 14.01 3,407 11.04

The weighted-average exercise prices of outstanding options had been adjusted to reflect the capital reduction making up for losses.

As of March 31, 2012, information about MaxRise’s outstanding and exercisable option was as follows:

Exercise Price (NT$/Per Share) $ 10.00~14.90	Options Issued on or After January 1, 2004 and Outstanding Number Outstanding (Thousand) Remaining Contractual Life (in Years) Exercise Price (NT$/Per Share) 2,887 3.92 $ 11.13	Options Exercisable
		Number Exercisable (Thousand) Exercise Price (NT$/Per Share) 655 $ 10.00~14.90

Options granted during the year ended December 31, 2011 and 2010 were priced using the Black-Scholes pricing model and the inputs to the model were as follows:

Grant-date share price (NT$) Exercise price (NT$) Expected volatility Expected life (years) Expected dividend yield Risk-free interest rate	Years Ended December 31
	2011 2010 $ 1.55 $ 2.58 10.00 10.00 32.48% 34.84% 4.25 4.25 - - 0.96% 0.84%

The compensation costs for the three months ended March 31, 2012 and 2011 were minor; thus, it was not recognized.

MPI

Approved by the Board of Directors of MPI on June 18, 2007, MPI was authorized to issue employee stock options for 2,400 thousand units. Each stock option may subscribe for one new share of new common stock of MPI. The options are valid for six years subsequent to the grant date and vested at certain percentages subsequent to the second anniversary of the grant date. As stipulated in the plans, the exercise price and quantity are subject to adjustments for any changes of capital structure or cash dividends.

Information with respect to MPI’s stock option plan is as follows:

Balance, beginning of year Options cancelled Balance, end of year	Three months Ended March 31	Three months Ended March 31
	2012 Number of Outstanding Stock Option Rights (Thousand) Weighted- average Exercise Prices (NT$/Per Share) 167 $ 67.30 ( 6 ) 67.60 161 67.30	2011
		Number of Outstanding Stock Option Rights (Thousand) Weighted- average Exercise Prices (NT$/Per Share) 979 $ 47.30 ( 56 ) 47.30 923 47.30

As of March 31, 2012 information about MPI’s outstanding and exercisable option was as follows:

Exercise Price	Options Issued on or After January 1, 2004 and Outstanding	Options Issued on or After January 1, 2004 and Outstanding	Options Issued on or After January 1, 2004 and Outstanding	Options Exercisable Number Exercisable (Thousand) Exercise Price (NT$/Per Share) 161 $ 67.30	Options Exercisable Number Exercisable (Thousand) Exercise Price (NT$/Per Share) 161 $ 67.30
	Number Outstanding (Thousand) 161	Remaining Contractual Life (in Years) 1.22	Exercise Price (NT$/Per Share)		Exercise Price (NT$/Per Share)
$ 67.30			$ 67.30		$ 67.30

Had the Company used the fair value based method to evaluate the options, using the Black-Scholes model, the assumptions and pro forma results of the Company for the three months ended March 31, 2012 and 2011 would have been as follows:

MXIC Method Black-Scholes model Assumptions Risk-free interest rate Expected life (in years) Expected volatility Expected dividend yield MoDioTek Method Black-ScholesModel Assumptions Risk-free interest rate Expected life (in years) Expected volatility Expected dividend yield	Three Months Ended March 31
	2012 2011 1.55%~2.54% 1.55%~2.54% 4.38 4.38 51.16%~57.50% 51.16%~57.50% - - 1.90%~2.68% 1.90%~2.68% 6 6 - - - -

Mxtran
Method	Black-ScholesModel
Assumptions	Risk-free interest rate	1.90%~2.68 %	1.90%~2.68 %
	Expected life (in years)	6	6
	Expected volatility	-	-
	Expected dividend yield	-	-
			(Continued)

			Three Months	Three Months	Ended	March	31
			2012			2011
INFOMAX
Method	Black-ScholesModel
Assumptions	Risk-free interest rate	0.91%~2.68%			0.91%~2.68%
	Expected life (in years)		6~8			6~8
	Expected volatility		-			-
	Expected dividend yield		-			-
MaxRise
Method	Black-ScholesModel
Assumptions	Risk-free interest rate	0.96%~2.68%			0.84%~2.68%
	Expected life (in years)		6			6
	Expected volatility		-			-
	Expected dividend yield		-			-
MPI
Method	Black-ScholesModel
Assumptions	Risk-free interest rate	2.20%~2.68%			2.20%~2.68%
	Expected life (in years)		6			6
	Expected volatility		-			-
	Expected dividend yield		-			-
Consolidated	net income (loss) attributable to shareholders of the parent:
	Net income (loss) as reported	$	(1,091,171)		$	1,062,255
	Pro forma net income (loss)	$	(1,091,171)		$	1,057,196
Consolidated	earnings (loss) per share (EPS (LPS) ) - after income tax (NT$):
	Basic EPS (LPS) as reported	$		(0.32)	$		0.32
	Pro forma basic EPS (LPS)	$		(0.32)	$		0.31
	Diluted EPS (LPS) as reported	$		(0.32)	$		0.31
	Pro forma diluted EPS (LPS)	$		(0.32)	$		0.30
						(Concluded)

15. TREASURY STOCK

As of March 31, 2012 and 2011, the information about MXIC’s issued shares held by the subsidiary is as follows:

Company Shares (Thousand) March 31, 2012 Hui Ying Investment, Ltd. 3,757 March 31, 2011 Hui Ying Investment, Ltd. 3,757	Original Carrying Value Market Value $ 142,365 $ 41,324 $ 142,365 $ 73,256

The subsidiary holding MXIC’s issued shares retains shareholders’ rights and privileges on these shares, except for the right to participate in MXIC’s issuance of capital stock for cash and the right of voting.

16. CONSOLIDATED EARNINGS (LOSS) PER SHARE

Three months ended March 31, 2012 Consolidated basic and diluted LPS Loss attributable to common shareholders of the parent Three months ended March 31, 2011 Consolidated basic EPS Income attributable to common shareholders of the parent Effect of dilutive potential common stock Stock options Bonus to employees Consolidated diluted EPS Income attributable to common shareholders of the parent plus effect of potential dilutive common stock		Number of Amounts (Numerator) Shares Before After (Denominator) Income Tax Income Tax (in Thousands) $(1,085,873) $( 1,091,171) 3,385,204 Number of Amounts (Numerator) Shares Before After (Denominator) Income Tax Income Tax (in Thousands) $ 1,236,689 $ 1,062,255 3,368,351 - - 37,567 - - 66,470 $ 1,236,689 $ 1,062,255 3,472,388	EPS (LPS) (NT$)
			Before After Income Income Tax Tax $ (0.32) $ (0.32) EPS (NT$)

			Before After Income Income Tax Tax $ 0.37 $ 0.32 $ 0.36 $ 0.31
		Before Income Tax $ 1,236,689 - - $ 1,236,689

The ARDF issued Interpretation 2007-052 that requires companies to recognize bonuses paid to employees, directors and supervisors as compensation expenses beginning January 1, 2008. These bonuses were previously recorded as appropriations from earnings. If the Company may settle the bonus to employees by cash or shares, the Company should presume that the entire amount of the bonus will be settled in shares and the resulting potential shares should be included in the weighted average number of shares outstanding used in the calculation of diluted EPS, if the shares have a dilutive effect. The number of shares is estimated by dividing the entire amount of the bonus by the closing price of the shares at the balance sheet date. Such dilutive effect of the potential shares should be included in the calculation of diluted EPS until the shareholders resolve the number of shares to be distributed to employees at their meeting in the following year. The bonus to employees, which had no dilutive effect on the basic loss per share of the Company, was not included in the calculation of diluted loss per share for the three months ended March 31, 2012.

As disclosed in Note 14 to the financial statements, the Company uses treasury stock method, according to SFAS No. 24 “Earnings per Share”, to determine whether the employee stock options are potential ordinary stocks. The aforementioned stock options were not included in the calculation of diluted loss per share because they were antidilutive for the three months ended March 31, 2012.

17. RELATED PARTY TRANSACTIONS

Except as disclosed elsewhere in the consolidated financial statements and other notes, the following is a summary of significant related party transactions:

a. Related parties and their relationships associated with the Company:

Related Parties	Relationship
Ardentec Corporation (“Ardentec”) Macronix Education Foundation (“MXIC Education”) MegaChips Corporation (“MegaChips”) Others	MXIC serves as its Board of Director Same chairman with MXIC Its subsidiary, Shun Ying Investment, serves as MXIC’s Board of Director Related parties over which the Company has control or exercises significant influence but with which the Company had no material transactions.

b. Significant transactions with related parties:

1) Sales to related parties were as follows:

Related Parties MegaChips Others		Three Months Ended March 31	Three Months Ended March 31	Three Months Ended March 31
		2012 Amount ％of Net Sales $ 1,464,048 28 174 - $ 1,464,222 28		2011
				Amount ％of Net Sales $ 2,608,452 39 371 - $ 2,608,823 39

Sales prices to related parties are not comparable with those with external customers as the Company is the sole provider for them. The sales term to the related parties is between 30 to 60 days after monthly closing, similar to those with external customers.

2) Subcontract processing charges from related parties were as follows:

Related Parties Ardentec		Three Months Ended March 31	Three Months Ended March 31	Three Months Ended March 31
		2012 Amount % $ 94,661 2		2011
				Amount % $ 96,178 2

The subcontract processing charges of Ardentec are comparable to those with other vendors. The payment term is 75 days after monthly closing.

3) Operating expenses

Related Parties MXIC Education Others		Three Months Ended March 31	Three Months Ended March 31	Three Months Ended March 31
		2012 Amount ％of Operating Expense $ 6,250 - 224 - $ 6,474 -		2011
				Amount ％of Operating Expense $ 6,500 - 1,594 - $ 8,094 -

4) Accounts receivable

Related Parties MegaChips Others		March 31	March 31
	2012	％ 100 - 100	2011
	Amount $ 520,590 - $ 520,590		Amount $ 519,617 38 $ 519,655	％ 100 - 100

5) Accounts payable

Related Parties Ardentec Others			March	March	31
		2012	％ 100 - 100		2011
		Amount $ 87,128 - $ 87,128			Amount $ 101,238 6,712 $ 107,950	％ 94 6 100

18. PLEDGED ASSETS

The Company pledged its assets for gas purchase agreement, land lease agreement with the Hsinchu Science Park Administration,for domestic sales guarantee with the Taipei Customs Office and for long-term bank loans. Assets pledged as collaterals were as follows:

Pledged time deposits - current (showed as restricted assets, current) Property, plant and equipment, net Pledged time deposits - non-current (showed as restricted assets - noncurrent)		March 31	March 31
		2012 $ 22,914 18,001,751 164,177 $ 18,188,842	2011 $ 6,188 4,187,625 36,210 $ 4,230,023

19. SIGNIFICANT COMMITMENTS AND CONTINGENCIES

As of March 31, 2012, the Company's commitments and contingencies were as follows:

a. MXIC had significant equipment contracts totaling approximately $1,478,139 thousand. As of March 31, 2012, MXIC has paid $672,119 thousand of this amount pursuant to these contracts. Future irrevocable payment in total is $806,020 thousand. Unused letters of credit for purchases of imported machinery and equipment amounted to $43,557 thousand.
b. The land on which MXIC is located is being leased from the Hsinchu Science Park Administration under renewable operating lease agreements. The lease term is from 1994 to 2029. Future minimum annual rentals under the leases are as follows:

Year Amount 2ndto 4thquarter, 2012 2012 2013 2014 2015 2016 and later	$ 56,625 75,501 70,779 46,247 17,304 204,156
	$ 470,612

The offices on which MXA, MXE, Mxtran , MaxRise and MPI are located were leased under renewable operating leases. These leases will expire in 2012 to 2015.

Future minimum annual rentals under the operating leases are as follows:

Year	Amount
2ndto 4thquarter, 2012	$	9,088
2013		2,508
2014		2,066
2015		944
	$	14,606

c. MXIC entered into a technology development and foundry service agreement with E Company in June 2006, the term for the agreement is five and seven years, respectively, from the commencement date. MXIC had paid off the entire technology development fees on December 31, 2007.
d. MXIC entered into the Phase-Change Memory technology agreement with IBM Company in January 2010, and the term of the agreement is from January 2010 to January 2013. Under the agreement, both parties have to share in the related expenditures of the technology development. As of March 31, 2012, MXIC had paid US$7,392 thousand.
e. MXIC entered into the Patents Cross-License Agreement with J Company in December 2009, and the term of the agreement is from December 2009 to December 2015. Under the agreement, MXIC has to pay the royalty of the Patents Cross-License Agreement.
f. According to Share Purchase Agreement and Amendment between Tower and MXBVI in December 2000 and November 2006, Tower established a prepaid account consisting of a credit balance in favor of MXBVI. The credit balance of the prepaid account will be increased when MXBVI’s contracted purchase price of Tower’s shares exceeds market price. Such Tower prepayments can be used for MXBVI’s future purchase of wafers, conversion to Tower’s shares and payment for royalty. When the prepayments were used by the Company for purchase of wafers from Tower, the Company classified certain amount of the prepayments as part of accounts receivable (converted wafer credit) from Tower and to be paid by Tower on or before to December 31, 2009. As of March 31, 2012, the total amount of accounts receivable from Tower prepayments was US$7,480 thousand (classified as other current assets) with a full allowance for doubtful receivables. However, MXBVI entered into the payment term agreement with Tower in December 2009, and the term of the agreement is payment in eight installments from December 2009 to September 2011. As of December 31, 2011, Tower has paid off the eight installments.

20. DISCLOSURES FOR FINANCIAL INSTRUMENTS

a. Fair values of financial instruments were as follows:

Nonderivative financial instruments Assets Financial assets at fair value through profit or loss - noncurrent Available-for-sale financial assets - noncurrent Financial assets carried at cost - noncurrent Liabilities Long-term bank loans (including current portion)	March 31	March 31
	2012 Carrying Amount Fair Value $ - $ - 1,084,361 1,084,361 134,058 - 19,692,570 19,692,570	2011
		Carring Amount Fair Value $ 35,280 $ 35,280 1,317,818 1,317,818 195,424 - 3,490,473 3,490,473

b. Methods and assumptions for the fair values of financial instruments
1) The above financial instruments do not include cash and cash equivalents, notes and accounts receivable (including related parties), other receivables, pledged time deposits, short-term bank loans and notes and accounts payable (including related parties). The carrying amounts of these instruments reported in the balance sheets approximate their fair values.
2) Fair values of financial assets at fair value through profit or loss were based on their quoted market price.
3) Available-for-sale financial assets have quoted market prices in an active market; the quoted market prices are the basis of fair values.
4) Financial assets carried at cost are investments in unquoted shares, which have no quoted prices in an active market and entail an unreasonably high cost to obtain verifiable fair values. Therefore, no fair value is presented.
5) Fair value of long-term bank loans is estimated using discounted cash flow analysis, based on the Company’s current incremental borrowing rates for borrowings with similar characteristics (e.g. similar maturity dates). The fair values of long-term bank loans with floating interest rates are equivalent to their carrying values.
c. As of March 31, 2012 and 2011, financial assets (liabilities) exposed to fair value interest rate risk and cash flow interest rate risk were as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	March 31
	2012 2011 $ 16,569,661 $ 17,066,808 ( 125,465) ( 4,272,445) 2,590,206 5,067,989 ( 19,692,570) ( 3,490,473)

d. Interest income and expense on financial assets and liabilities, excluding those at fair value through profit and loss, for the three months ended March 31, 2012 and 2011 were as follows:

Total interest income Total interest expenses (Including capitalized amount)	Three months ended March 31
	2012 2011 $ 41,530 $ 32,767 76,207 22,892

e. The Company did not enter into derivative contracts for the three months ended March 31, 2012 and 2011, respectively.
f. Unrealized Valuation Gain (Loss) on Financial Instruments

Components of unrealized gain (loss) on financial instruments were summarized as follows:

Available-for-
sale Financial
Assets
Recognized by
the Company’s
Ownership
Percentages in
the Investees
Period ended March 31, 2012
Balance, beginning of period
$ 385,366
$ 46,729

Recorded as a separate component of
shareholders’ equity

133,416

76,256

Balance, end of period
$ 518,782
$ 122,985

Period ended March 31, 2011
Balance, beginning of period
$ 763,403
$ 275,029

Recorded as a separate component of
shareholders’ equity

(142,258
)

(20,273
)
Balance, end of period
$ 621,145
$ 254,756

Total
$ 432,095
209,672
$ 641,767
$ 1,038,432

(162,531
)
$ 875,901

g. Financial risks
1) Market price risk. The financial instruments held by the Company are exposed to interest rate, foreign exchange rate and price risks.
2) Credit risk. The Company is exposed to credit risk in the event of non-performance of the counter parties to forward contracts on maturity. Contracts with positive fair values at the balance sheet date are evaluated for credit risk. In order to manage this risk, the Company conducts transactions only with financial institutions with good credit ratings. As a result, no material losses resulting from counter party defaults are anticipated. Credit risk represents the positive net settlement amount of those contracts with positive fair value on the balance sheet date. The positive net settlement amount represents the loss that would be incurred by the Company if the counter parties breached the contracts. The banks, which are the counter parties to the foregoing derivative financial instruments, are reputable financial institutions. Management believes its exposure related to the potential default by those counter-parties is low.

3) Liquidity risk. Investment in financial assets carried at cost do not have an active market, thus, the liquidity risk of those investment is material. The Company has sufficient operating capital to meet cash demand.
4) The cash flow risk of interest rate. As of March 31, 2012, long-term bank loans have floating interest rates, which are affected by changes in market interest rates.

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

As of March 31, 2012 and 2011, the information for material foreign financial assets and liabilities were as follows:

(In thousands)

Financial Assets Monetary items JPY KRW USD RMB HKD EUR SGD Non-monetary items USD Financial Liabilities Monetary items JPY USD RMB EUR HKD CHF SGD	2012 Foreign Exchange Currencies Rate $ 3,159,321 0.36 269,802 0.03 129,478 29.51 6,729 4.69 2,698 3.80 1,847 39.41 444 23.49 11,768 29.51 808,367 0.36 44,283 29.51 2,296 4.69 312 39.41 202 3.80 106 32.71 4 23.49	2011
		Foreign Exchange Currencies Rate $ 6,210,660 0.36 71,255 0.03 191,118 29.40 3,647 4.48 3,895 3.78 18,007 41.71 409 23.34 15,646 29.40 6,323,645 0.36 235,645 29.40 3,282 4.48 17,663 41.71 20 3.78 - - 25 23.34

22. SUMMARY OF SIGNIFICANT RELATED PARTY TRANSACTIONS

The following is a summary of significant related party transactions:

Transaction subject	Transaction Object	Relation (Note 1)	Transaction Summary	Transaction Summary	Transaction Summary	Transaction Summary
			Account	Amount	Term of Transaction (Note 6)	% of Total Assets or Total Revenues
Three months ended March 31,2012
MXIC	MXHK	2	Sales	$525,133	Note 2	10%
			Notes and accounts receivable	328,170		1%
	MXE	2	Operatingexpenses	17,630		-
			Accountspayable	12,065		-
	MXA	1	Sales	123,313	Note 2	2%
			Operatingexpenses	38,328		-
			Notes and accounts receivable	41,424		-
			Accountspayable	33,173		-
	Mxtran	1	Sales	17	Note 3	-
			Rental revenue	1,403	Note 4	-
			Other revenue (Software, mold,etc.)	349	Note 5	-
			Notes and accounts receivable	423		-
			Other receivables	179		-
	MoDioTek	1	Sales	64	Note 3	-
			Rental revenue	1,398	Note 4	-
			Other revenue (Software, mold,etc.)	182	Note 5	-
			Notes and accounts receivable	377		-
			Other receivables	115		-
	MXAsia	2	Operatingexpenses	32,546		-
			Accountspayable	10,710		-
	MPL	2	Operatingexpenses	6,313		-
			Accountspayable	1,907		-
	INFOMAX	1	Rental revenue	1,309	Note 4	-
			Other revenue (Software, mold,etc.)	77	Note 5	-
			Notes and accounts receivable	556		-
			Other receivables	21		-
	MaxRise	1	Rental revenue	877	Note 4	-
	MPI	1	Sales	67	Note 3	-
			Rental revenue	1,092	Note 4	-
			Other revenue (Software, mold,etc.)	60	Note 5	-
			Notes and accounts receivable	67		-
			Other receivables	61		-

(Continued)

Transaction subject	Transaction Object	Relation (Note 1)	Transaction Summary	Transaction Summary	Transaction Summary	Transaction Summary
			Account	Amount	Term of Transaction (Note 6)	% of Total Assets or Total Revenues
Three months ended March 31,2011
MXIC	MXHK	2	Sales	$533,060	Note 2	8%
			Commission	10,976		-
			Notes and accounts receivable	368,184		1%
			Accountspayable	4,471		-
	MXE	2	Operatingexpenses	8,770		-
			Accountspayable	6,308		-
	MXA	1	Sales	159,283	Note 2	2%
			Operatingexpenses	41,589		-
			Notes and accounts receivable	76,604		-
			Accountspayable	39,817		-
	Mxtran	1	Sales	63	Note 3	-
			Rental revenue	889	Note 4	-
			Other revenue (Software, mold,etc.)	239	Note 5	-
			Notes and accounts receivable	256		-
			Other receivables	151		-
	MoDioTek	1	Sales	59	Note 3	-
			Rental revenue	1,419	Note 4	-
			Other revenue (Software, mold,etc.)	356	Note 5	-
			Notes and accounts receivable	738		-
			Other receivables	146		-
	MXAsia	2	Operatingexpenses	31,616		-
			Accountspayable	12,785		-
	MPL	2	Operatingexpenses	5,434		-
			Accountspayable	1,985		-
	INFOMAX	1	Rental revenue	1,240	Note 4	-
			Other revenue (Software, mold,etc.)	112	Note 5	-
			Notes and accounts receivable	554		-
	MaxRise	1	Rental revenue	664	Note 4	-
	MPI	1	Sales	89	Note 3	-
			Rental revenue	1,094	Note 4	-
			Other revenue (Software, mold,etc.)	80	Note 5	-
			Notes and accounts receivable	111		-

(Concluded)

Note 1: 1. Transaction was between the parent company and subsidiaries. 2. Transaction was between the parent company and indirect subsidiaries.

Note 2: The sale price referred to the product price of end customer.

Note 3: The sale price referred to cost plus mark up.

Note 4: MXIC leased office to related parties and collected rental revenue according to the floor space per month.
Note 5: MXIC had signed contract with related parties. The related transaction term was negotiated bilaterally, so there was no comparable basis.
Note 6: The transaction terms with related parties were 30 to 60 days after monthly closing and were similar to those with third parties.

23. SEGMENT FINANCIAL INFORMATION

Pursuant to SFAS No. 41, “Operating Segments”, the Company determined its operating segments based on business activities as follows:

Memory products and wafer fabrication IC design

The company determined its operating segments based on business activities. There was no material inconsistency between the accounting policies used by operating segments and the accounting policies described in Note 2.

a. Segment revenues and results

Segment Revenue Three Months Ended March 31 2012 2011 $ 5,125,260 $ 6,666,637 18,216 15,648 $ 5,143,476 $ 6,682,285	Segment Profit	Segment Profit
	Three Months Ended March 31
2012 $ 5,125,260 18,216 $ 5,143,476	2012 $ (789,415 ) (187,793 ) (977,208 ) - 3,994 5,474 (125,501 ) 1,182 (15,569 ) $ (1,107,628)	2011 $ 1,319,521 (210,461 ) 1,109,060 - 32,767 8,290 (15,822 ) 1,176 67,343 $ 1,202,814

b. Segment assets

Memory products and wafer fabrication IC design Total segment assets		March 31	March 31
		2012 $ 65,482,960 1,197,979 $ 66,680,939	2011 $ 63,512,680 1,752,824 $ 65,265,504

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

Under Rule No. 0990004943 issued by the Financial Supervisory Commission (FSC) on February 2, 2010, the Company pre-discloses the following information on the adoption of International Financial Reporting Standards (IFRSs) as follows:

a. On May 14, 2009, the FSC announced the “Framework for Adoption of International Financial Reporting Standards by Companies in the ROC.” In this framework, starting 2013, companies with shares listed on the TSE or traded on the Taiwan GreTai Securities Market or Emerging Stock Market should prepare their financial statements in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, and the Interpretations as well as related guidances translated by the ARDF and issued by the FSC. To comply with this framework, the Company has set up a project team and made a plan to adopt the IFRSs. Leading the implementation of this plan is the assistant general manager of the finance division. The important plan items, responsible divisions and plan progress are listed as follows.

Plan Item	Responsible Division	Plan Progress
1. Establish the IFRSs taskforce	Finance Center	Finished
2. Set up a work plan for IFRSs	Finance Center	Finished
adoption
3. Complete the identification of GAAP	Finance Center	Finished
differences and impact
4. Complete the identification of	Finance Center	Finished
consolidated entities under IFRSs
5. Complete the evaluation of impact on	Finance Center	Finished
the Company as a result of the
exemptions and adoptions under
IFRS 1 “First-time Adoption of
International Financial Reporting
Standards”
6. Complete evaluation of the IT	Finance Center and	Finished
systems	Information Technology
	Center
7. Complete modification to the	Finance Center	Finished
relevant internal controls
8. Determine IFRSs accounting policies	Finance Center	Finished
9. Determine the selected exemptions	Finance Center	Finished
and adoptions under IFRS1
“First-time Adoption of International
Financial Reporting Standards”

(Continued)

Plan Item

Responsible Division Plan Progress

Complete the preparation of opening date balance sheet under IFRSs
Finance Center
In progress according to the plan
Prepare comparative financial information under IFRSs for 2012
Finance Center
In progress according to the plan
Complete modification to the Finance Center and Auditing In progress according relevant internal controls Office to the plan

(Concluded)

b. As of March 31, 2012, the Company had assessed the material differences, shown below, between the existing accounting policies and the accounting policies to be adopted under IFRSs:
1) Reconciliation of consolidated balance sheet as of January 1, 2012

ROC GAAP		Effect of Tra	Effect of Tra	nsition to IFRSs	nsition to IFRSs			IFRSs	Note
Item CURRENT ASSETS Cash and cash equivalents Notes and accounts receivable, net Receivables from related parties, net Other receivables, net Inventories Deferred income tax assets - current Restricted assets - current Other current assets Total current assets Long-trem investments Financial assets at fair value through profit or loss - noncurrent Available-for-sale financial assets - noncurrent Financial assets carried at cost - noncurrent Total long-term investments Net propety , plant and equipment Intangible assets - Deferred income tax assets - noncurrent Other assets Restricted assets - noncurrent Total other assets Total assets CURRENT LIABILITIES Short-term bank loans Notes and accounts payable Payables to related parties Income tax payable Accrued expenses Accrued bonuses to employees , directors and supervisors Payables on equipment Other current liabilities Current portion of long-term bank loan Total current liabilities Total long-term liabilities	Amount	Difference of recognition and measurement		Presentation difference (Re-classification)			Amount $ 19,727,097 2,901,450 918,063 121,452 6,468,003 - 23,005 475,391 30,634,461 39,357 879,392 154,491 1,073,240 30,089,530 148,475 5,407,302 553,198 65,439 164,177 6,190,116 $ 68,135,822 1,800,488 2,154,754 82,244 348,966 2,189,183 530,775 875,833 161,458 1,527,718 9,671,419 16,078,719	Item
	$ 19,727,097 2,889,463 918,063 121,452 6,468,003 133,299 23,005 474,848 30,755,230 39,357 879,392 154,491 1,073,240 35,206,707 172,068 - 419,899 332,514 164,177 916,590 $ 68,123,835 1,800,488 2,154,754 82,244 348,966 2,189,183 530,775 875,833 85,504 1,527,718 9,595,465 16,078,719		$ - - - - - - - - - - - - - - - - - - - - $ - - - - - - - - 63,967 - 63,967 -		$ - 11,987 - - - (133,299) - 543 (120,769) - - - - (5,117,177) (23,593) 5,407,302 133,299 (267,075) - 5,273,526 $ 11,987 - - - - - - - 11,987 - 11,987 -			CURRENT ASSETS Cash and cash equivalents Notes and accounts receivable, net Receivables from related parties, net Other receivables Inventories Deferred income tax assets - current Other current assets Other current assets Total current assets Long-trem investments Financial assets at fair value through profit or loss - noncurrent Available-for-sale financial assets - noncurrent Financial assets carried at cost - noncurrent Total noncurrent assets Net propety , plant and equipment Intangible assets Prepayments for equipment Deferred income tax assets - noncurrent Other assets – noncurrent Other assets – noncurrent Total other assets Total assets CURRENT LIABILITIES Short-term bank loans Notes and accounts payable Payables to related parties Income tax payable Accrued expenses Accrued bonuses to employees , directors and supervisors Payables on equipment Other current liabilities Current portion of long-term bank loan Total current liabilities Noncurrent liabilities	1 2 3 4, 6 3, 5 6 2 3, 4, 5 1, 8

(Continued)

ROC GAAP		Effect of Tran	Effect of Tran	sition to IFRSs	sition to IFRSs			IFRSs	Note
Item Accrued pension costs Other liabilities Total other liabilities Total liabilities EQUITY Capital stock Capital Reserve Legal capital Reserve Unappropriated earnings Unrealized gains on financial instruments Cumulative translation adjustments Treasury stock Total equity attributable to shareholders of the parent Minority investments Total shareholders equity Total liabilities and equity	Amount	Difference of recognition and measurement		Presentation difference (Re-classification)			Amount	Item
	$ 360,234 3,661 363,895 26,038,079 33,847,486 349,925 2,407,003 5,085,609 432,095 (29,881) (142,365 ) 41,949,872 135,884 42,085,756 $ 68,123,835		$ 262,415 - 262,415 326,382 - (3,436) - (309,101) - (167) (16,696) (329,400) 3,018 (326,382) $ -		$ - - - 11,987 - - - - - - - - - - $ 11,987		$ 622,649 3,661 626,310 26,376,448 33,847,486 346,489 2,407,003 4,776,508 432,095 (30,048) (159,061 ) 41,620,472 138,902 41,759,374 $ 68,135,822	Accrued pension costs Other noncurrent liabilities Total liabilities Capital stock Capital Reserve Legal capital Reserve Unappropriated earnings Other equity Other equity Treasury stock Total equity attributable to shareholders of the parent Non-Controlling Interest Total shareholders equity Total liabilities and equity	9 7 8, 9, 10 8 10 7, 8, 9

(Concluded)

Note 1: The allowance for sales returns and discounts is belonged to debt provision under IFRSs. Accordingly, the adjusted item under Notes and Accounts Receivable - allowance for sales returns and discounts $11,987 thousand is reclassified to Other Current Liabilities.
Note 2: All the deferred income tax assets are regarded as noncurrent assets under IFRSs. Accordingly, the Deferred Income Tax Assets - Current $133,299 thousand is relocated to Deferred Income Tax Assets - Noncurrent.
Note 3: The acquisition of Land Use Right in Mainland China is reclassified to Prepaid Rents - Current $543 thousand and Prepaid Rents - Noncurrent $23,920 thousand according to IAS 17.
Note 4: The idle assets $290,125 thousand is reclassified to Fixed Assets under IFRSs.
Note 5: The other deferred assets $870 thousand under Other Assets is reclassified to Intangible Assets under IFRSs.
Note 6: The prepayments for equipment $5,407,302 thousand under Fixed Assets is reclassified to Other Assets under IFRSs.
Note 7: Capital surplus - long term investment (stock options issued by subsidiaries) $3,436 thousand is adjusted to Non-Controlling Interest under IFRSs.
Note 8: The Accumulating Compensated Absences accrued $63,967 thousand under IFRSs.

Note 9: The Accrued Pension Cost in total of $262,415 thousand is recognized under IFRSs.

Note 10: The treasury stock should be retroactively adjusted under IFRSs. As a result, an entry debit Treasury Stock and credit Retained Earning in amount of $16,696 thousand should be prepared.

2) Reconciliation of consolidated balance sheet as of March 31, 2012

ROC GAAP		Effect of Tra	Effect of Tra	nsition to IFRSs	nsition to IFRSs			IFRSs	Note
Item CURRENT ASSETS Cash and cash equivalents Notes and accounts receivable, net Receivables from related parties, net Other receivables, net Inventories Deferred income tax assets - current Restricted assets - current Other current assets Total current assets Long-trem investments Financial assets at fair value through profit or loss - noncurrent Available-for-sale financial assets - noncurrent Financial assets carried at cost - noncurrent Total long-term investments Net propety , plant and equipment Intangible assets - Deferred income tax assets - noncurrent Other assets Restricted assets - noncurrent Total other assets Total assets CURRENT LIABILITIES Short-term bank loans Notes and accounts payable Payables to related parties Income tax payable Accrued expenses Accrued bonuses to employees , directors and supervisors Payables on equipment Other current liabilities Current portion of long-term bank loan Total current liabilities Total long-term liabilities Accrued pension costs Other liabilities Total other liabilities Total liabilities EQUITY Capital stock Capital Reserve Legal capital Reserve Unappropriated earnings Unrealized gains on financial instruments Cumulative translation adjustments Treasury stock Total equity attributable to shareholders of the parent Minority investments Total shareholders equity Total liabilities and equity	Amount	Difference of recognition and measurement		Presentation difference (Re-classification)			Amount $ 18,973,510 2,628,946 520,590 151,042 7,337,817 - 22,914 650,739 30,285,558 - 1,084,361 134,058 1,218,419 32,876,749 307,566 1,234,720 547,550 60,787 164,177 2,007,234 $ 66,695,526 125,465 1,853,825 87,128 343,175 1,804,780 530,775 542,236 183,337 1,979,718 7,450,439 17,712,852 640,340 3,999 644,339 25,807,630 33,921,967 342,766 2,407,003 3,691,200 641,767 (74,495) (159,061 ) 40,771,147 116,749 40,887,896 $ 66,695,526	Item
	$ 18,973,510 2,614,359 520,590 151,042 7,337,817 368,450 22,914 650,195 30,638,877 - 1,084,361 134,058 1,218,419 33,828,675 330,390 - 179,100 321,301 164,177 664,578 $ 66,680,939 125,465 1,853,825 87,128 343,175 1,804,780 530,775 542,236 109,049 1,979,718 7,376,151 17,712,852 379,803 3,999 383,802 25,472,805 33,921,967 346,450 2,407,003 3,994,438 641,767 (74,528) (142,365 ) 41,094,732 113,402 41,208,134 $ 66,680,939		$ - - - - - - - - - - - - - - - - - - - - $ - - - - - - - - 59,701 - 59,701 - 260,537 - 260,537 320,238 - (3,684) - (303,238) - 33 (16,696) (323,585) 3,347 (320,238) $ -		$ - 14,587 - - - (368,450) - 544 (353,319) - - - - (951,926) (22,824) 1,234,720 368,450 (260,514) - 1,342,656 $ 14,587 - - - - - - - 14,587 - 14,587 - - - - 14,587 - - - - - - - - - - $ 14,587			CURRENT ASSETS Cash and cash equivalents Notes and accounts receivable, net Receivables from related parties, net Other receivables Inventories - Other current assets Other current assets Total current assets Long-trem investments Financial assets at fair value through profit or loss - noncurrent Available-for-sale financial assets - noncurrent Financial assets carried at cost - noncurrent Total noncurrent assets Net propety , plant and equipment Intangible assets Prepayments for equipment Deferred income tax assets - noncurrent Other assets – noncurrent Other assets – noncurrent Total other assets Total assets CURRENT LIABILITIES Short-term bank loans Notes and accounts payable Payables to related parties Income tax payable Accrued expenses Accrued bonuses to employees , directors and supervisors Payables on equipment Other current liabilities Current portion of long-term bank loan Total current liabilities Noncurrent liabilities Accrued pension costs Other noncurrent liabilities Total liabilities Capital stock Capital Reserve Legal capital Reserve Unappropriated earnings Other equity Other equity Treasury stock Total equity attributable to shareholders of the parent Non-Controlling Interest Total shareholders equity Total liabilities and equity	1 2 3 4, 6 3, 5 6 2 3, 4, 5 1, 8 9 7 8, 9, 10 8 10 7, 8, 9

Note 1: The allowance for sales returns and discounts is belonged to debt provision under IFRSs. Accordingly, the adjusted item under Notes and Accounts Receivable - allowance for sales returns and discounts $14,587 thousand is reclassified to Other Current Liabilities.

Note 2: All the deferred income tax assets are regarded as noncurrent assets under IFRSs. Accordingly, the Deferred Income Tax Assets - Current $368,450 thousand is relocated to Deferred Income Tax Assets - Noncurrent.
Note 3: The acquisition of Land Use Right in Mainland China is reclassified to Prepaid Rents - Current $544 thousand and Prepaid Rents - Noncurrent $23,194 thousand according to IAS 17.
Note 4: The idle assets $282,794 thousand is reclassified to Fixed Assets under IFRSs.
Note 5: The other deferred assets $914 thousand under Other Assets is reclassified to Intangible Assets under IFRSs.
Note 6: The prepayments for equipment $1,234,720 thousand under Fixed Assets is reclassified to Other Assets under IFRSs.
Note 7: Capital surplus - long term investment (stock options issued by subsidiaries) $3,684 thousand is adjusted to Non-Controlling Interest under IFRSs.
Note 8: The Accumulating Compensated Absences accrued $59,701 thousand under IFRSs.
Note 9: The Accrued Pension Cost in total of $260,537 thousand is recognized under IFRSs.
Note 10: The treasury stock should be retroactively adjusted under IFRSs. As a result, an entry debit Treasury Stock and credit Retained Earning in amount of $16,696 thousand should be prepared.
3) Reconciliation of consolidated statement of comprehensive income for the three months ended March 31, 2012

ROC GAAP		Effect of Tran	Effect of Tran	sition to IFRSs	sition to IFRSs			IFRSs Item Note Net Sales Cost of sales 1, 2 Realized gross profit Operating expenses Sales and marketing 1, 2 General and administrative 1, 2 Research and development 1, 2 Total operating expenses Loss from operations Non-operating income and gains Interest income Gain on disposal of assets, net Valuation gain on financial assets, net Others Total non-operaing income and gains Non-operating expenses and losses Interest expense Foreign exchange loss, net Others Total non-operating expenses and losses Loss before income tax Income tax expense Consolidated net loss
Item Net Sales Cost of sales Realized gross profit Operating expenses Sales and marketing General and administrative Research and development Total operating expenses Loss from operations Non-operating income and gains Interest income Gain on disposal of assets, net Valuation gain on financial assets, net Others Total non-operaing income and gains Non-operating expenses and losses Interest expense Foreign exchange loss, net Others Total non-operating expenses and losses Loss before income tax Income tax expense Consolidated net loss	Amount	Difference of recognition and measurement		Presentation difference (Re-classification)			Amount
	$ 5,143,476 4,396,894 746,582 279,842 389,103 1,054,845 1,723,790 (977,208 ) 41,530 5,474 1,182 5,635 53,821 57,384 125,501 1,356 184,241 (1,107,628) 6,251 $ (1,113,879 )		$ - (2,727) 2,727 (405) (1,538) (1,274) (3,217) 5,944 - - - - - - - - - 5,944 - 5,944		$ - - - - - - - - - - - - - - - - - - -		$ 5,143,476 4,394,167 749,309 279,437 387,565 1,053,571 1,720,573 (971,264 ) 41,530 5,474 1,182 5,635 53,821 57,384 125,501 1,356 184,241 (1,101,684) 6,251 $ (1,107,935 )

(Continued)

ROC GAAP	Effect of Tran	sition to IFRSs			IFRSs Item Note Exchange differences on translating foreign operations Net valuation gain on available-for-sale financial assets Other comprehensive income for the period, net of tax effect Total comprehensive income for the period
Item Amount	Difference of recognition and measurement	Presentation difference (Re-classification)		Amount
				$ (44,446) 209,672 165,226 $ (942,709 )

(Concluded)

Note 1: Adjustment of Accumulating Compensated Absences under IFRSs.

Note 2: djustment of Accrued Pension Cost under IFRSs.

c. IFRS 1, “First-time Adoption of International Financial Reporting Standards,” established the procedures for the Company’s first consolidated financial statements prepared in accordance with IFRSs. According to IFRS 1, the Company is required to determine the accounting policies under IFRSs and retrospectively apply to those accounting policies in its opening balance sheet at the date of transition to IFRSs; except for optional exemptions and mandatory exceptions to such retrospective application provided under IFRS 1. The main optional exemptions the Company adopted are summarized as follows:
1) The Company elected not to apply IFRS 3, “Business Combinations,” retrospectively to business combinations occurred before December 31, 2011.
2) The Company elected to take the optional exemption from applying IFRS 2, “Share-based Payment,” retrospectively for the share-based payment transactions granted and vested before December 31, 2011.
3) An entity becomes a first-time adopter later than its subsidiary the entity shall, in its consolidated financial statements, measure the assets and liabilities of the subsidiary at the same carrying amounts as in the financial statements of the subsidiary, after adjusting for consolidation and equity accounting adjustments and for the effects of the business combination in which the entity acquired the subsidiary.
4) The Company elected to recognize all cumulative actuarial gains and losses in retained earnings as of January 1, 2012.

The Company’s aforementioned optional exemptions based on IFRS 1, “First-time Adoption of International Financial Reporting Standard” may be changed by the management’s other considerations and assessments. Actual results may differ from these assessments.

d. The Company has prepared the above assessments in compliance with (a) the 2010 version of the IFRSs translated by the ARDF and issued by the FSC and (b) the Guidelines Governing the Preparation of Financial Reports by Securities Issuers amended and issued by the FSC on December 22, 2011. These assessments may be changed as the FSC may issue new rules governing the adoption of IFRSs, and as other laws and regulations may be amended to comply with the adoption of IFRSs. Actual results may differ from these assessments.

25. APPROVAL ON FINANCIAL STATEMENTS

These financial statements were approved by the Company’s management on April 25, 2012.

AI assistant

Macronix — Interim / Quarterly Report 2012

52013_rns_2013-06-26_b2f46837-85f7-4a86-b10d-aff0c86e84af.pdf

Macronix International Co., Ltd. and Subsidiaries

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS MARCH 31, 2012 AND 2011

(In Thousands of New Taiwan Dollars, Except Par Value)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2012 AND 2011 (In Thousands of New Taiwan Dollars)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

1. GENERAL

2. SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

3. ACCOUNTING CHANGES

Recognition and Measurement of Financial Instruments

Operating Segments

4. CASH AND CASH EQUIVALENTS

5. NOTES AND ACCOUNTS RECEIVABLE

6. INVENTORIES

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

9. FINANCIAL ASSETS CARRIED AT COST

10. PROPERTY, PLANT AND EQUIPMENT

11. SHORT-TERM BANK LOANS

12. LONG-TERM BANK LOANS

13. SHAREHOLDERS’ EQUITY

Capital Surplus

Retained Earnings Distribution and Dividends Policy

14. EMPLOYEE STOCK OPTION PLANS

MXIC

MoDioTek

Mxtran

INFOMAX

MaxRise

MPI

15. TREASURY STOCK

16. CONSOLIDATED EARNINGS (LOSS) PER SHARE

17. RELATED PARTY TRANSACTIONS

a. Related parties and their relationships associated with the Company:

1) Sales to related parties were as follows:

2) Subcontract processing charges from related parties were as follows:

3) Operating expenses

4) Accounts receivable

5) Accounts payable

18. PLEDGED ASSETS

19. SIGNIFICANT COMMITMENTS AND CONTINGENCIES

20. DISCLOSURES FOR FINANCIAL INSTRUMENTS

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

22. SUMMARY OF SIGNIFICANT RELATED PARTY TRANSACTIONS

23. SEGMENT FINANCIAL INFORMATION

b. Segment assets

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

Plan Item

Responsible Division Plan Progress

2) Reconciliation of consolidated balance sheet as of March 31, 2012

25. APPROVAL ON FINANCIAL STATEMENTS

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Macronix Interim / Quarterly Report 2012