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Transcend Interim / Quarterly Report 2015

Dec 8, 2015

52092_rns_2015-12-08_0e1d9a86-3513-4c22-812f-18535a37accc.pdf

Interim / Quarterly Report

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TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND REVIEW REPORT OF INDEPENDENT ACCOUNTANTS SEPTEMBER 30, 2015 AND 2014

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

Assets Notes September 30, 2015
AMOUNT		 % December 31, 2014
AMOUNT		 % September 30, 2014
AMOUNT		 %
Current assets
Cash and cash equivalents 6(1) \$
9,004,394		 39 \$
11,565,344		 44 \$
9,330,568		 39
Current financial assets at fair value 6(2)
through profit or loss 72,411 - 53,545 - 23,869 -
Current bond investments without 6(3)
active market 959,393 4 637,025 3 613,131 3
Notes receivable, net 1,480 - - - 4,722 -
Accounts receivable, net 6(4) 2,954,222 13 2,993,131 11 2,679,993 11
Accounts receivable- related 7
parties, net 10,019 - - - - -
Other receivables 116,125 1 283,316 1 220,300 1
Other receivables - related parties 7 - - - - 14,371 -
Inventories, net 6(5) 5,704,056 25 6,364,987 24 6,267,305 27
Other current assets 85,965 - 44,515 - 59,834 -
Current Assets 18,908,065 82 21,941,863 83 19,214,093 81
Non-current assets
Available-for-sale financial 6(6)
assets-non-current 167,812 1 232,639 1 235,153 1
Investments accounted for using 6(7)
equity method 325,227 2 332,593 1 323,366 1
Property, plant and equipment, net 6(8), 7 and
8 3,083,854 13 3,160,974 12 3,178,771 14
Investment property, net 6(9) 295,387 1 298,614 1 297,974 1
Deferred tax assets 73,754 - 92,319 1 92,934 1
Other non-current assets 6(10) and 8 189,602 1 234,238 1 239,453 1
Non-current Assets 4,135,636 18 4,351,377 17 4,367,651 19
Total Assets \$
23,043,701		 100 \$
26,293,240		 100 \$
23,581,744		 100

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Expressed in thousands of New Taiwan Dollars)

(The consolidated balance sheets as of September 30, 2015 and 2014 are reviewed, not audited)

(Continued)

Liabilities and Equity Notes September 30, 2015
AMOUNT
%		 December 31, 2014
AMOUNT
%		 September 30, 2014
AMOUNT
%
Current liabilities
Short-term borrowings 6(11) \$
410,850		 2 \$ 903,300 4 \$ 278,000 1
Financial liabilities at fair value 6(2)
through profit or loss - current 11,409 - - - - -
Notes payable - - 8 - 3 -
Accounts payable 1,831,249 8 3,202,531 12 2,469,542 11
Accounts payable to related parties 7 46,533 - 74,185 - 93,894 -
Other payables 354,203 1 475,052 2 435,202 2
Current tax liabilities 148,717 1 319,927 1 182,148 1
Other current liabilities 17,333 - 60,063 - 49,369 -
Current Liabilities 2,820,294 12 5,035,066 19 3,508,158 15
Non-current liabilities
Deferred tax liabilities 400,009 2 485,378 2 403,521 2
Other non-current liabilities 6(12) 68,913 - 54,191 - 55,225 -
Non-current Liabilities 468,922 2 539,569 2 458,746 2
Total Liabilities 3,289,216 14 5,574,635 21 3,966,904 17
Share capital 6(13)
Common stock 4,307,617 19 4,307,617 16 4,307,617 18
Capital surplus 6(14)
Capital surplus 4,799,075 21 4,799,075 18 4,799,075 20
Retained earnings 6(15)
Legal reserve 3,426,756 15 3,053,235 12 3,053,235 13
Unappropriated retained earnings 7,183,720 31 8,504,167 32 7,476,096 32
Other equity interest 6(16)
Other equity interest 37,317 - 54,511 1 ( 21,183) -
Total equity attributable to
owners of parent 19,754,485 86 20,718,605 79 19,614,840 83
Total Equity 19,754,485 86 20,718,605 79 19,614,840 83
Commitments and contingent 9
liabilities
Total Liabilities and Equity \$
23,043,701		 100 \$ 26,293,240 100 \$ 23,581,744 100

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Expressed in thousands of New Taiwan Dollars)

(The consolidated balance sheets as of September 30, 2015 and 2014 are reviewed, not audited)

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Expressed in thousands of New Taiwan Dollars, except Earnings Per Share) (UNAUDITED)

Three months ended September 30 Nine months ended September 30
2015 2014 (Restated) 2015 2014 (Restated)
Items Notes AMOUNT % AMOUNT % AMOUNT % AMOUNT %
Operating Revenue 6(17) and 7 \$ 6,087,629 100 \$
6,791,191		 100
\$		 18,244,298 100
\$		 20,242,462 100
Operating Costs 6(5) and 7 ( 5,025,598)( 82)( 5,339,698)( 79)( 14,777,751)( 81)( 16,016,661)( 79)
Gross Profit 1,062,031 18 1,451,493 21 3,466,547 19 4,225,801 21
Operating Expenses 6(20)
Sales and marketing expenses ( 297,389)( 5)( 334,735)( 5)( 883,799)( 5)( 911,551)( 5)
General and administrative expenses ( 93,996)( 1)( 106,930)( 1)( 244,886)( 1)( 301,166)( 1)
Research and development expenses ( 35,753)( 1)( 45,069)( 1)( 100,615)( 1)( 133,391)( 1)
Total operating expenses ( 427,138)( 7)( 486,734)( 7)( 1,229,300)( 7)( 1,346,108)( 7)
Operating Profit 634,893 11 964,759 14 2,237,247 12 2,879,693 14
Non-operating Income and Expenses
Other income 6(18) 29,712 - 44,038 - 124,318 1 144,621 1
Other gains and losses 6(19) 595,723 10 116,952 2 416,887 2 118,327 -
Finance costs ( 463) -
(		 876) -
(		 2,861) -
(		 7,622) -
Share of loss of associates and joint ventures accounted for under equity 6(7)
method ( 2) -
(		 1,359) -
(		 7,366) -
(		 897) -
Total non-operating income and expenses 624,970 10 158,755 2 530,978 3 254,429 1
Profit before Income Tax 1,259,863 21 1,123,514 16 2,768,225 15 3,134,122 15
Income tax expense 6(21) ( 173,693)( 3)( 157,252)( 2)( 355,210)( 2)( 427,074)( 2)
Profit for the Period \$ 1,086,170 18 \$
966,262		 14
\$		 2,413,015 13
\$		 2,707,048 13
Other Comprehensive Income
Components of other comprehensive income that will be reclassified to
profit or loss
Cumulative translation differences for foreign operations 6(16) \$ 173,339 3 \$
58,315		 1
\$		 57,389 -
(\$		 1,259) -
Unrealized loss on available-for-sale financial assets 6(6) ( 24,869) -
(		 66,668)( 1)( 64,827) -
(		 29,269) -
Income tax on other comprehensive income 6(16)(21) ( 29,467)( 1)( 9,914) -
(		 9,756) - 214 -
Other
Comprehensive
Income (Loss) for the
Period		 \$ 119,003 2
(\$		 18,267) -
(\$		 17,194) -
(\$		 30,314) -
Total Comprehensive Income \$ 1,205,173 20 \$
947,995		 14
\$		 2,395,821 13
\$		 2,676,734 13
Net Profit attributable to:
Owners of parent \$ 1,086,170 18 \$
966,262		 14
\$		 2,413,015 13
\$		 2,707,048 13
Comprehensive Income attributable to:
Owners of parent \$ 1,205,173 20 \$
947,995		 14
\$		 2,395,821 13
\$		 2,676,734 13
Earnings Per Share 6(22)
Basic earnings per share \$ 2.52 \$ 2.24
\$		 5.60
\$		 6.28
Diluted earnings per share \$ 2.52 \$ 2.24
\$		 5.60
\$		 6.28

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Expressed in thousands of New Taiwan Dollars)

(UNAUDITED)

Equity attributable to owners of the parent
Capital Reserves Retained Earnings Other equity interest
Notes Common stock Additional
paid-in capital		 Capital surplus,
donated assets
received		 Capital surplus,
net assets from
merger		 Legal reserve Unappropriated
retained earnings		 Currency
translation
differences of
foreign
operations		 Unrealised gain or
loss on
available-for-sale
financial assets		 Total equity
For the nine months ended September 30, 2014
Balance at January 1, 2014 \$ 4,307,617 \$ 4,759,841 \$
4,106		 \$
35,128		 \$ 2,733,339 \$
7,975,047		 \$
27,764		 (\$ 18,633 ) \$ 19,824,209
Appropriation of 2013 earnings 6(15)
Legal reserve - - - - 319,896 (
319,896 )		 - - -
Cash dividends - - - - - (
2,886,103 )		 - - ( 2,886,103 )
Net income for the period - - - - - 2,707,048 - - 2,707,048
Other comprehensive loss for the period 6(6)(16) - - - - - - (
1,045 ) (		 29,269 ) ( 30,314 )
Balance at September 30, 2014 \$ 4,307,617 \$ 4,759,841 \$
4,106		 \$
35,128		 \$ 3,053,235 \$
7,476,096		 \$
26,719		 (\$ 47,902 ) \$ 19,614,840
For the nine months ended September 30, 2015
Balance at January 1, 2015 \$ 4,307,617 \$ 4,759,841 \$
4,106		 \$
35,128		 \$ 3,053,235 \$
8,504,167		 \$
104,927		 (\$ 50,416 ) \$ 20,718,605
Appropriations of 2014 earnings 6(15)
Legal reserve - - - - 373,521 (
373,521 )		 - - -
Cash dividends - - - - - (
3,359,941 )		 - - ( 3,359,941 )
Net income for the period - - - - - 2,413,015 - - 2,413,015
Other comprehensive income (loss) for the period 6(6)(16) - - - - - - 47,633 (
64,827 ) (		 17,194 )
Balance at September 30, 2015 \$ 4,307,617 \$ 4,759,841 \$
4,106		 \$
35,128		 \$ 3,426,756 \$
7,183,720		 \$
152,560		 (\$ 115,243 ) \$ 19,754,485

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in thousands of New Taiwan Dollars)

(UNAUDITED)

For the nine-month periods ended September 30,
Notes 2015 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated profit before tax for the period \$ 2,768,225 \$ 3,134,122
Adjustments to reconcile profit before tax to net cash provided by operating
activities:
Income and expenses having no effect on cash flows
Net loss (gain) on financial assets at fair value through profit or loss 6(2)(19) 41,707 ( 23,869 )
Gain on disposal of financial assets 6(3)(19) ( 1,926 ) ( 9,244 )
Share of loss of associates and joint ventures accounted for using equity 6(7)
method 7,366 897
Provision for bad debt expense 6(4) 2,881 10,564
Net loss on financial liabilities at fair value through profit or loss 6(2)(19) 11,409 -
Depreciation 6(20) 181,708 176,597
Interest expense 2,861 7,622
Interest income
Dividend income		 6(18)
6(19)		 (
(		 110,093 )
11,016 )		 (
(		 130,984 )
13,740 )
Loss (gain) on disposal of property, plant and equipment 6(19) 795 ( 375 )
Changes in assets/liabilities relating to operating activities
Net changes in assets relating to operating activities
Net gain on financial assets at fair value through profit or loss ( 58,901 ) -
Notes and accounts receivable 25,485 40,624
Other receivables 129,753 53,387
Other receivables - related parties - ( 14,371 )
Inventories 660,931 ( 1,191,366 )
Other current assets ( 41,450 ) ( 23,484 )
Net changes in liabilities relating to operating activities
Notes and accounts payable		 ( 1,398,942 ) ( 153,161 )
Other payables ( 120,849 ) 41,392
Other current liabilities ( 42,730 ) ( 644 )
Other non-current liabilities 14,722 5,876
Cash generated from operations 2,061,936 1,909,843
Interest received 147,531 111,825
Interest paid ( 2,861 ) ( 7,661 )
Income tax paid ( 602,980 ) ( 490,719 )
Net cash provided by operating activities 1,603,626 1,523,288
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of bond investments without active markets
Acquisition of bond investments without active markets		 ( 1,327,743
1,639,085 )		 ( -
475,311 )
Acquisition of property, plant and equipment (including investment 6(8)
property) ( 76,659 ) ( 29,952 )
Proceeds from disposal of property, plant and equipment 6(8) 271 11,121
Increase in investments accounted for using equity method 6(7) - ( 103,008 )
Cash dividends received 11,016 13,740
Decrease (increase) in other non-current assets 44,636 ( 55,762 )
Net cash used in investing activities ( 332,078 ) ( 639,172 )
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings ( 506,400 ) ( 295,140 )
Payment of cash dividends 6(15) ( 3,359,941 ) ( 2,886,103 )
Net cash used in financing activities
Effect of foreign exchange rate changes		 ( 3,866,341 )
33,843		 (
(		 3,181,243 )
11,810 )
Decrease in cash and cash equivalents ( 2,560,950 ) ( 2,308,937 )
Cash and cash equivalents at beginning of period 11,565,344 11,639,505
Cash and cash equivalents at end of period \$ 9,004,394 \$ 9,330,568

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2015 AND 2014 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED) (UNAUDITED)

1. HISTORY AND ORGANIZATION

Transcend Information, Inc. (the "Company") was incorporated under the provisions of the Company Law of the Republic of China (R.O.C.) in August 1989. The main activities of the Company and its subsidiaries (collectively referred herein as the "Group") are manufacturing, processing and the sale of computer software and hardware, peripheral equipment and other computer components. The Securities and Futures Commission of the Republic of China had approved the Company's shares to be listed on the Taiwan Stock Exchange and the shares started trading on May 3, 2001.

  1. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorized for issuance by the Board of Directors on November 5, 2015.

    1. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS
  • (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards ("IFRS") as endorsed by the Financial Supervisory Commission ("FSC")

According to Financial-Supervisory-Securities-Auditing No. 1030010325 issued on April 3, 2014, commencing 2015, companies with shares listed on the TWSE or traded on the Taiwan GreTai Securities Market or Emerging Stock Market shall adopt the 2013 version of IFRS (not including IFRS 9, 'Financial instruments') as endorsed by the FSC and the "Regulations Governing the Preparation of Financial Reports by Securities Issuers " effective January 1, 2015 (collectively referred herein as the "2013 version of IFRSs") in preparing the consolidated financial statements. The impact of adopting the 2013 version of IFRS is listed below:

A. IAS 1, 'Presentation of financial statements'

The amendment requires entities to separate items presented in OCI classified by nature into two groups on the basis of whether they are potentially reclassifiable to profit or loss subsequently when specific conditions are met. If the items are presented before tax then the tax related to each of the two groups of OCI items (those that might be reclassified and those that will not be reclassified) must be shown separately. Based on the Group's assessment, the adoption of the standard has no significant impact on its consolidated financial statements, and the Group has adjusted its presentation of the statement of comprehensive income.

B. IFRS 12, 'Disclosure of interests in other entities'

The standard integrates the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. Based on the Group's assessment, the adoption of the standard has no significant impact on its consolidated financial statements, and the Group has disclosed additional information about its interests in consolidated entities and unconsolidated entities accordingly.

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

None.

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

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

Effective Date by
International Accounting
New Standards, Interpretations and Amendments Standards Board
IFRS 9, 'Financial instruments' January 1, 2018
Sale or contribution of assets between an investor and its associate or
joint venture (amendments to IFRS 10 and IAS 28)		 January 1, 2016
Investment entities: applying the consolidation exception
(amendments to IFRS 10, IFRS 12 and IAS 28)		 January 1, 2016
Accounting for acquisition of interests in joint operations
(amendments to IFRS 11)		 January 1, 2016
IFRS 14, 'Regulatory deferral accounts' January 1, 2016
IFRS 15, 'Revenue from contracts with customers' January 1, 2018
Disclosure initiative (amendments to IAS 1) January 1, 2016
Clarification of acceptable methods of depreciation and amortisation
(amendments to IAS 16 and IAS 38)		 January 1, 2016
Agriculture: bearer plants (amendments to IAS 16 and IAS 41) January 1, 2016
Defined benefit plans: employee contributions
(amendments to IAS 19R)		 July 1, 2014
Equity method in separate financial statements (amendments to IAS 27) January 1, 2016
Recoverable amount disclosures for non-financial assets
(amendments to IAS 36)		 January 1, 2014
Novation of derivatives and continuation of hedge accounting
(amendments to IAS 39)		 January 1, 2014
IFRIC 21, 'Levies' January 1, 2014
Improvements to IFRSs 2010-2012 July 1, 2014
Improvements to IFRSs 2011-2013 July 1, 2014
Improvements to IFRSs 2012-2014 January 1, 2016

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Except for the compliance statement, basis of preparation, basis of consolidation and additional descriptions that are set out below, the rest of the principal accounting policies applied in the preparation of these consolidated financial statements are the same as those disclosed in Note 4 to the consolidated financial statements as of and for the year ended December 31, 2014. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

  • A. The consolidated financial statements of the Group have been prepared in accordance with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" and the International Accounting Standard 34, "Interim Financial Reporting" endorsed by the FSC.
  • B. The consolidated financial statements as of and for the nine months ended September 30, 2015 should be read together with the consolidated financial statements as of and for the year ended December 31, 2014.

(2) Basis of preparation

  • A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
  • (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit (loss).
  • (b) Available-for-sale financial assets measured at fair value.
  • (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligations.
  • B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the "IFRSs") requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:

Basis for preparation of these consolidated financial statements is the same as that for the preparation of the consolidated financial statements as of and for the year ended December 31, 2014.

Ownership (%)
Name of
Investor		 Name of
Subsidiary		 Main Business
Activities		 September
30, 2015		 December
31, 2014		 September 30, 2014 Description
Transcend
Taiwan		 Saffire Investment Ltd.
(Saffire)		 Investment holding company 100 100 100 -
〞 Transcend Japan Inc.
(Transcend Japan)		 Wholesaler of computer memory
modules and peripheral products		 100 100 100 -
〞 Transcend Information
Inc. (Transcend USA)		 Wholesaler of computer memory
modules and peripheral products		 100 100 100 -
〞 Transcend Korea Inc.
(Transcend Korea)		 Wholesaler of computer memory
modules and peripheral products		 100 100 100 -
Saffire
Investment Ltd.		 Memhiro Pte. Ltd.
(Memhiro)		 Investment holding company 100 100 100 -
Memhiro Pte.
Ltd.		 Transcend Information
Europe B.V. (Transcend
Europe)		 Wholesaler of computer memory
modules and peripheral products		 100 100 100 -
〞 Transcend Information
Trading GmbH, Hamburg
(Transcend Germany)		 Wholesaler of computer memory
modules and peripheral products		 100 100 100 -
〞 Transcend Information
(Shanghai), Ltd.
(Transcend Shanghai)		 Manufacturing, processing and
sale of computer software and
hardware, peripheral equipment
and other computer components		 100 100 100 -
〞 Transtech Trading
(Shanghai) Co., Ltd.
(Transtech Shanghai)		 Wholesaler of computer memory
modules, peripheral equipment
and other computer components		 100 100 100 -
〞 Transcend Information
(Hong Kong), Ltd.
(Transcend Hong Kong)		 Wholesaler of computer memory
modules and peripheral products		 100 100 100 -

B. Subsidiaries included in the consolidated financial statements:

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

D. Adjustment for subsidiaries with different balance sheet dates: None.

E. Significant restrictions: None.

F. Subsidiaries that have non-controlling interests that are material to the Group: None.

(4) Employee benefits

Except for additional descriptions set out below, the rest of the principal accounting policies applied in the preparation of these consolidated financial statements are the same as those disclosed in the consolidated financial statements as of and for the year ended December 31, 2014.

(1) Pensions

Defined benefit plans

  • A. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date).
  • B. Remeasurement arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.
  • C. Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. Also, the related information is disclosed accordingly.
  • (2) Employees', directors' and supervisors' remuneration

Employees' remuneration and directors' and supervisors' remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal obligation or constructive obligation and those amounts can be reliably estimated.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

There was no significant change during this period. Please refer to Note 5 to the consolidated financial statements as of and for the year ended December 31, 2014 for related information.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

September 30, 2015 December 31, 2014 September 30, 2014
Cash on hand and petty cash \$
1,296		 \$
1,523		 \$
1,054
Checking accounts and demand
deposits 1,267,335 2,245,438 3,698,654
Time deposits 7,328,175 8,925,923 5,314,492
Cash equivalents -
Bond with repurchase agreement 407,588 392,460 316,368
Total \$
9,004,394		 \$
11,565,344		 \$
9,330,568
  • A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
  • B. Cash and cash equivalents pledged as collateral had been reclassified as 'other non-current assets' in the amount of \$3,042 as of September 30, 2014. Please refer to Note 8 for details. As of September 30, 2015 and December 31, 2014, the Group had no cash and cash equivalents pledged to others.
  • C. As of September 30, 2015, December 31, 2014 and September 30, 2014, the bond with

repurchase agreement recognized as cash equivalents is 30-day highly-liquid investments with annual interest rate of 1.50%.

(2) Current financial assets/liabilities at fair value through profit or loss

Items September 30, 2015 December 31, 2014 September 30, 2014
Current item :
Financial assets held for trading
Beneficiary certificates \$ 60,571 \$ -
\$		 -
Non-hedging derivatives 11,789 53,545 23,869
72,360 53,545 23,869
Valuation adjustment of financial
assets held for trading 51 - -
\$ 72,411 \$
53,545		 \$ 23,869
Financial liabilities held for trading
Non-hedging derivatives (\$ 11,409) \$
-		 \$ -

A. The Group recognized net gain of \$6,066, \$42,660, \$91,261 and \$36,028 on financial assets/liabilities held for trading for the three months and nine months ended September 30, 2015 and 2014, respectively.

B. The non-hedging derivative financial assets/liabilities transactions and contract information are as follows:

(Unit: in thousand dollars)
September 30, 2015
(Notional Principal) Contract Period
EUR 8,800 August 25, 2015 to February 8, 2016
JPY 2,500,000 August 26, 2015 to February 16, 2016
Contract Amount

(Unit: in thousand dollars)

September 30, 2015
Contract Amount
Derivative financial liabilities (Notional Principal) Contract Period
Current items:
Forward foreign exchange EUR 3,600 April 24, 2015 to October 19, 2015
contracts
〞 〞 8,800 July 8, 2015 to January 4, 2016
〞 HKD 18,000 September 4, 2015 to February 1, 2016

(Unit: in thousand dollars)

December 31, 2014
Contract Amount
Derivative financial assets (Notional Principal) Contract Period
Current items:
Forward foreign exchange
contracts EUR 16,000 November 6, 2014 to April 20, 2015
〞 〞 4,200 November 25, 2014 to April 23, 2015
〞 〞 5,200 November 25, 2014 to May 18, 2015
〞 〞 3,900 December 10, 2014 to June 8, 2015
〞 JPY
1,910,000		 November 10, 2014 to April 27, 2015
〞 〞 800,000 December 10, 2014 to June 8, 2015
(Unit: in thousand dollars)
September 30, 2014
Contract Amount
Derivative financial liabilities (Notional Principal) Contract Period
Current items:
Forward foreign exchange
contracts		 EUR 9,000 June 13, 2014 to December 1, 2014

The Group entered into forward foreign exchange contracts to buy USD (sell EUR, JPY and HKD) to hedge exchange rate risk of export proceeds. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

  • C. The Group has no financial assets at fair value through profit or loss pledged to others.
  • (3) Current bond investments without active markets
Items September 30, 2015 December 31, 2014 September 30, 2014
Current items:
Funds-bonds \$
351,298		 \$
51,500		 \$
50,361
Bond with repurchase agreement 608,095 585,525 562,770
\$
959,393		 \$
637,025		 \$
613,131
  • A. The Group's fund-bonds are from Shanghai Pudong Development Bank, Fubon Bank (China) Co, Ltd., Bank of China and Industrial and Commercial Bank of China which are well-known banks in Mainland China. The Group's bonds with repurchase agreement are from Yuanta Asset Management Limited.
  • B. The Group recognized gain on disposal of financial assets of \$8,355, \$3,445, \$17,918 and \$9,244 in profit or loss for the three months and nine months ended September 30, 2015 and 2014, respectively.
  • C. No bond investments without active market were pledged to others.

(4) Accounts receivable

September 30, 2015 December 31, 2014 September 30, 2014
Accounts receivable \$ 2,990,562 \$ 3,026,355 \$ 2,736,508
Less: Allowance for bad debts ( 36,340) ( 33,224) ( 56,515)
\$ 2,954,222 \$ 2,993,131 \$ 2,679,993

A. The Group has insured credit insurance that covers accounts receivable of its major customers. Should bad debt occur, the Group will receive 90% of the losses resulting from non-payment.

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

September 30, 2015 December 31, 2014 September 30, 2014
Up to 30 days \$
472,891		 \$
620,543		 \$
444,464
31 to 90 days 42,536 19,446 36,925
91 to 180 days 50 1,037 1,853
\$
515,477		 \$
641,026		 \$
483,242

The above ageing analysis was based on past due date.

C. Movement analysis of financial assets that were impaired is as follows:

  • (a) As of September 30, 2015, December 31, 2014 and September 30, 2014, the Group's accounts receivable that were impaired amounted to \$36,340, \$33,224 and \$56,515, respectively.
  • (b) Movements on the Group's provision for impairment of accounts receivable are as follows:
2014
Individual provision Individual provision
At January 1 \$ 33,224 \$ 47,322
Provision for impairment 2,980 10,564
Reversal of impairment ( 99) -
Write-offs during the period ( 721) ( 1,627)
Net exchange differences 956 256
At September 30 \$ 36,340 \$ 56,515

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

September 30, 2015 December 31, 2014 September 30, 2014
Group 1 \$
950,048		 \$
905,678		 \$
680,737
Group 2 1,488,697 1,446,427 1,516,014
\$
2,438,745		 \$
2,352,105		 \$
2,196,751

Group 1: Customers with credit line under \$20,000, after a comprehensive consideration of revenues, capital, and operational performance.

Group 2: Customers with credit line over \$20,000, after a comprehensive consideration of revenues, capital, and operational performance.

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

(5) Inventories

September 30, 2015
Allowance for
Cost valuation loss Book value
Raw materials \$
3,439,566		 (\$ 52,444) \$
3,387,122
Work in process 754,715 ( 8,425) 746,290
Finished goods 1,599,197 ( 28,553) 1,570,644
Total \$
5,793,478		 (\$ 89,422) \$
5,704,056
December 31, 2014
Allowance for
Cost valuation loss Book value
Raw materials \$
3,864,256		 (\$ 85,740) \$
3,778,516
Work in process 856,658 ( 14,430) 842,228
Finished goods 1,771,056 ( 26,813) 1,744,243
Total \$
6,491,970		 (\$ 126,983) \$
6,364,987
September 30, 2014
Allowance for
Cost valuation loss Book value
Raw materials \$
3,401,107		 (\$ 73,487) \$
3,327,620
Work in process 1,189,576 ( 17,771) 1,171,805
Finished goods 1,805,587 ( 37,707) 1,767,880
Total \$
6,396,270		 (\$ 128,965) \$
6,267,305
A.
The cost of inventories recognized as expense:		 Three months ended September 30,
2015 2014
Cost of inventories sold
(Gain on reversal of) loss on inventory		 \$ 5,039,795 \$
5,290,528
write-down ( 14,197) 49,170
\$ 5,025,598 \$
5,339,698
Nine months ended September 30,
2015 2014
Cost of inventories sold \$ 14,815,320 \$
15,964,670
(Gain on reversal of) loss on inventory
write-down		 ( 37,569) 51,991
\$ 14,777,751 \$
16,016,661

The reversal of inventory write-down for the nine months ended September 30, 2015 was caused by aggressively disposing the slow-moving inventory.

B. No inventories were pledged to others.

Items September 30, 2015 December 31, 2014 September 30, 2014
Non-current items:
Listed stocks \$ 281,930 \$ 281,930 \$ 281,930
Others 31,125 31,125 31,125
Subtotal 313,055 313,055 313,055
Valuation adjustments of
available-for-sale financial
assets ( 115,243) ( 50,416) ( 47,902)
Accumulated impairment ( 30,000) ( 30,000) ( 30,000)
Total \$ 167,812 \$ 232,639 \$ 235,153

(6) Available-for-sale financial assets - non-current

A. The Group recognized \$24,869, \$66,668, \$64,827 and \$29,269 in other comprehensive loss for fair value change for the three months and nine months ended September 30, 2015 and 2014, respectively.

B. No available-for-sale financial assets were pledged to others.

(7) Investments accounted for using equity method

Investee Company September 30, 2015 December 31, 2014 September 30, 2014
Taiwan IC Packaging Corp. \$
325,227		 \$
332,593		 \$
323,366

A. The basic information of the associates that are material to the Group is as follows:

Principal Shareholding ratio
Associates place of September December September Nature of Methods of
name business 30, 2015 31, 2014 30, 2014 relationship measurement
Taiwan IC Taiwan 12.88% 12.88% 12.88% Packaging of Equity method
Packaging Corp. semi-conductors

Taiwan IC Packaging Corporation issued new shares in September 2014. The Group subscribed for 10,843 thousands of new shares, increasing the book value of investments accounted for using equity method by \$103,008. The percentage of ownership decreased to 12.88% after the subscription.

B. The summarized financial information of the associates that are material to the Group is as follows: Balance sheet

Taiwan IC Packaging Corp.
September 30, 2015 December 31, 2014 September 30, 2014
Current assets \$ 2,251,665 \$ 2,553,825 \$ 2,583,830
Non-current assets 1,660,083 1,481,686 1,443,563
Current liabilities ( 339,019) ( 397,229) ( 455,395)
Non-current liabilities ( 47,487) ( 75,239) ( 79,274)
Total net assets \$ 3,525,242 \$ 3,563,043 \$ 3,492,724
Share in associate's net assets \$ 454,060 \$ 458,929 \$ 449,871
Net equity differences ( 128,833) ( 126,336) ( 126,505)
Carrying amount of the associate \$ 325,227 \$ 332,593 \$ 323,366

Statement of comprehensive income

Taiwan IC Packaging Corp.
Three months ended Three months ended
September 30, 2015 September 30, 2014
Revenue \$ 422,073 \$ 594,797
Loss for the period from
continuing operations (\$ 10) (\$ 10,808)
Total comprehensive loss (\$ 10) (\$ 10,808)
Taiwan IC Packaging Corp.
Nine months ended Nine months ended
September 30, 2015 September 30, 2014
Revenue \$ 1,408,337 \$ 1,635,833
Loss for the period from (\$ 55,872) (\$ 15,351)
continuing operations
Total comprehensive loss (\$ 55,872) (\$ 15,351)

C. Share of loss of investments accounted for using the equity method is as follows:

Three months ended September 30,
Investee Company 2015 2014
Taiwan IC Packaging Corp. (\$ 2)
(\$		 1,359)
Nine months ended September 30,
Investee Company 2015 2014
Taiwan IC Packaging Corp. (\$ 7,366)
(\$		 897)

D. The Group's investment in Taiwan IC Packaging Corporation has quoted market price. The fair value of Taiwan IC Packaging Corporation was \$362,382, \$521,022 and \$513,245 as of September 30, 2015, December 31, 2014 and September 30, 2014, respectively.

(8) Property, plant and equipment

Office
Land Buildings Machinery Vehicles Equipment Others Total
At January 1, 2015
Cost \$
724,203		 \$ 2,774,759 \$ 824,587 \$ 9,402 \$ 48,271
\$		 64,797 \$
4,446,019
Accumulated depreciation -
(		 730,255) ( 467,879) ( 6,120) ( 36,300)
(		 44,491)
(		 1,285,045)
\$
724,203		 \$ 2,044,504 \$ 356,708 \$ 3,282 \$ 11,971
\$		 20,306 \$
3,160,974
Nine months ended September 30, 2015
Opening net book amount \$
724,203		 \$ 2,044,504 \$ 356,708 \$ 3,282 \$ 11,971
\$		 20,306 \$
3,160,974
Additions(including transfer) - 27,484 36,797 - 5,034 5,995 75,310
Disposals -
(		 641) ( 1)
(		 147) ( 188)
(		 89)
(		 1,066)
Depreciation charge -
(		 87,798) ( 80,235) ( 901) ( 3,141)
(		 3,771)
(		 175,846)
Net exchange differences 4,407 17,602 2,268 41 12 152 24,482
Closing net book amount \$
728,610		 \$ 2,001,151 \$ 315,537 \$ 2,275 \$ 13,688
\$		 22,593 \$
3,083,854
At September 30, 2015
Cost \$
728,610		 \$ 2,826,854 \$ 864,374 \$ 8,058 \$ 47,277
\$		 68,731 \$
4,543,904
Accumulated depreciation -
(		 825,703) ( 548,837) ( 5,783) ( 33,589)
(		 46,138)
(		 1,460,050)
\$
728,610		 \$ 2,001,151 \$ 315,537 \$ 2,275 \$ 13,688
\$		 22,593 \$
3,083,854
Office
Land Buildings Machinery Vehicles Equipment Others Total
At January 1, 2014
Cost \$ 729,847 \$ 2,780,284 \$ 863,765 \$
12,411
\$		 53,981 \$
71,969		 \$
4,512,257
Accumulated depreciation -
(		 648,599) ( 431,096)
(		 9,238)
(		 39,088)
(		 53,361)
(		 1,181,382)
\$ 729,847 \$ 2,131,685 \$ 432,669 \$
3,173		 \$
14,893		 \$
18,608		 \$
3,330,875
Nine months ended September 30, 2014
Opening net book amount \$ 729,847 \$ 2,131,685 \$ 432,669 \$
3,173
\$		 14,893 \$
18,608		 \$
3,330,875
Additions(including transfer) - 1,815 19,862 1,615 1,461 4,854 29,607
Disposals - -
(		 10,082)
(		 189)
(		 335)
(		 140)
(		 10,746)
Depreciation charge -
(		 87,998) ( 74,761)
(		 1,067)
(		 3,108)
(		 3,812)
(		 170,746)
Net exchange differences ( 1,685) 37 1,575 18
(		 193) 29
(		 219)
Closing net book amount \$ 728,162 \$ 2,045,539 \$ 369,263 \$
3,550		 \$
12,718		 \$
19,539		 \$
3,178,771
At September 30, 2014
Cost \$ 728,162 \$ 2,739,390 \$ 804,965 \$
9,139
\$		 52,219 \$
75,945		 \$
4,409,820
Accumulated depreciation -
(		 693,851) ( 435,702)
(		 5,589)
(		 39,501)
(		 56,406)
(		 1,231,049)
\$ 728,162 \$ 2,045,539 \$ 369,263 \$
3,550		 \$
12,718		 \$
19,539		 \$
3,178,771

Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

(9) Investment property

Land Buildings Total
At January 1, 2015
Cost \$
137,037		 \$ 236,633 \$ 373,670
Accumulated depreciation and
impairment - ( 75,056) ( 75,056)
\$
137,037		 \$ 161,577 \$ 298,614
Nine months ended September 30, 2015
Opening net book amount \$
137,037		 \$ 161,577 \$ 298,614
Additions - 1,350 1,350
Depreciation charge - ( 5,862) ( 5,862)
Net exchange differences - 1,285 1,285
Closing net book amount \$
137,037		 \$ 158,350 \$ 295,387
At September 30, 2015
Cost \$
137,037		 \$ 238,335 \$ 375,372
Accumulated depreciation and
impairment - ( 79,985) ( 79,985)
\$
137,037		 \$ 158,350 \$ 295,387
Land Buildings Total
At January 1, 2014
Cost \$
137,037		 \$ 232,509 \$ 369,546
Accumulated depreciation and
impairment - ( 66,314) ( 66,314)
\$
137,037		 \$ 166,195 \$ 303,232
Nine months ended September 30, 2014
Opening net book amount \$
137,037		 \$ 166,195 \$ 303,232
Additions - 345 345
Depreciation charge
Net exchange differences		 - (
-		 5,851)
248		 ( 5,851)
248
Closing net book amount \$
137,037		 \$ 160,937 \$ 297,974
At September 30, 2014
Cost \$
137,037		 \$ 233,206 \$ 370,243
Accumulated depreciation and
impairment		 - ( 72,269) ( 72,269)

A. Rental income from the investment property and direct operating expenses arising from investment property are shown below:

Three months ended September 30,
2015 2014
\$ 4,761 \$ 5,923
\$ 1,753 \$ 1,720
\$ 225 \$ 186
2015 2014
\$ 14,225 \$ 13,637
\$ 5,186 \$ 5,178
633
\$ 676 Nine months ended September 30,
\$
  • B. The fair value of the investment property held by the Group was \$1,491,037, \$1,829,038 and \$1,463,310 as of September 30, 2015, December 31, 2014 and September 30, 2014, respectively, which was based on the transaction prices of similar properties in the same area.
  • C. No investment property was pledged to others.
  • (10) Other non-current assets
September 30, 2015 December 31, 2014 September 30, 2014
Long-term prepaid rents \$
117,629		 \$
117,884		 \$
114,933
Guarantee deposits paid 36,874 67,592 67,213
Others 35,099 48,762 57,307
\$
189,602		 \$
234,238		 \$
239,453

In May 2005, the Group signed a land-use right contract with the People's Republic of China for the use of land with a term of 50 years. All rentals had been paid on the contract date. The Group recognized rental expenses of \$727, \$706, \$2,163 and \$2,099 for the three months and nine months ended September 30, 2015 and 2014, respectively.

(11) Short-term borrowings

Type of borrowings September 30, 2015 Interest rate Collateral
Bank borrowings:
Secured \$
410,850		 0.38-0.63% Transcend Japan's
Land and Buildings
Type of borrowings December 31, 2014 Interest rate Collateral
Bank borrowings:
Secured \$
396,900		 0.63-0.64% Transcend Japan's
Land and Buildings
Unsecured 506,400 0.93-0.95% -
\$
903,300
Type of borrowings September 30, 2014 Interest rate Collateral
Bank borrowings:
Secured \$
278,000		 0.64-0.65% Transcend Japan's
Land and Buildings

(12) Pensions

  • A.(a)The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees' service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees' monthly salaries and wages to the retirement fund deposited with the Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.
  • (b)For the aforementioned pension plan, the Group recognized pension costs of \$274, \$351, \$823 and \$1,051 for the three months and nine months ended September 30, 2015 and 2014, respectively.
  • (c)Expected contributions to the defined benefit pension plans of the Group for the year ended December 31, 2016 amounted to \$2,254.

  • B.(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the "New Plan") under the Labor Pension Act (the "Act"), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees' monthly salaries and wages to the employees' individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

  • (b)The Group's Mainland China subsidiaries have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People's Republic of China (PRC) are based on certain percentage of employees' monthly salaries and wages, ranging from 12.5% to 22%. Other than the monthly contributions, the Group has no further obligations.

  • (c)Transcend Japan, Transcend Korea, Transcend USA, Transcend Europe and Transcend Germany have a defined contribution plan. Monthly contributions are based on a certain percentage of employees' monthly salaries and wages and are recognized as pension costs accordingly. Other than the monthly contributions, the Group has no further obligations.
  • (d)The pension costs under defined contribution pension plans of the Group for the three months and nine months ended September 30, 2015 and 2014 were \$11,710, \$11,792, \$36,248 and \$33,734, respectively.

(13) Share capital

As of September 30, 2015, the Company's authorized capital was \$5,000,000, consisting of 500,000 thousand shares of ordinary stock (including 25 thousand shares reserved for employee stock options). The paid-in capital was \$4,307,617 with a par value of \$10 (in dollars) per share, consisting of 430,762 thousand shares of ordinary stock outstanding. All proceeds from shares issued have been collected.

(14) Capital surplus

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

(15) Retained earnings

  • A. In accordance with the Company's Articles of Incorporation, the current year's earnings, if any, shall first be used to pay all taxes and to offset prior years' operating losses and then 10% of the remaining amount shall be set aside as legal reserve. The Company shall also set aside special reserve in accordance with the regulations. On the premise that there is no effect on the Company's normal operations and no violation of regulations, the Company shall reserve certain amount for maintaining stability of dividends. The remainder, if any, is distributable earnings to be appropriated as resolved by stockholders at the stockholders' meeting.
  • B. The Company distributes dividends taking into consideration the Company's economic environment and growth phases, future demands of funds, long-term financial planning, and the cash flow needs of stockholders. Cash dividends shall account for at least 5% of the total dividend distributed.

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

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

  • E. For information relating to employees' remuneration (bonuses) and directors' and supervisors' remuneration, please refer to Note 6(20).
  • F. The appropriation of earnings of years 2014 and 2013 had been resolved at the stockholders' meeting on June 12, 2015 and June 12, 2014, respectively. Details are summarized below:
Years ended December 31,
2014 2013
Dividends
per share		 Dividends
per share
Amount (in dollars) Amount (in dollars)
Legal reserve \$
373,521		 \$ 319,896
Cash dividends 3,359,941 \$ 7.8 2,886,103 \$ 6.7
Total \$
3,733,462		 \$ 3,205,999
Years ended December 31,
2014 2013
Directors' and supervisors' remuneration \$ 6,049 \$ 5,192
Employees' cash bonus 30,243 25,962
\$ 36,292 \$ 31,154

The above appropriation of earnings of years 2014 and 2013 as resolved by the shareholders was in agreement with those amounts recognized in the 2014 and 2013 financial statements.

(16) Other equity items

Unrealised gain Cumulative
or loss on translation differences
available-for-sale for foreign
financial assets operations Total
At January 1, 2015 (\$ 50,416) \$ 104,927 \$ 54,511
Change in unrealised gains or
losses for available-for-sale
financial assets ( 64,827) -
(		 64,827)
Cumulative translation
differences for foreign
operations - 57,389 57,389
Effect from income tax - ( 9,756) ( 9,756)
At September 30, 2015 (\$ 115,243) \$ 152,560 \$ 37,317
Unrealised gain
or loss on
available-for-sale
financial assets		 Cumulative
translation differences
for foreign
operations		 Total
At January 1, 2014 (\$ 18,633) \$ 27,764 \$ 9,131
Change in unrealised gains or
losses for available-for-sale
financial assets ( 29,269) -
(		 29,269)
Cumulative translation
differences for foreign
operations - ( 1,259) ( 1,259)
Effect from income tax - 214 214
At September 30, 2014 (\$ 47,902) \$ 26,719 (\$ 21,183)

(17) Operating revenue

Three months ended September 30,
2015 2014
Sales revenue \$
6,087,629		 \$ 6,791,191
Nine months ended September 30,
2015 2014
Sales revenue \$
18,244,298		 \$ 20,242,462
(18) Other income
Three months ended September 30,
2015 2014
Interest income \$ 24,951
\$		 38,115
Rental revenue 4,761 5,923
Total \$ 29,712
\$		 44,038
Nine months ended September 30,
2015 2014
Interest income \$ 110,093
\$		 130,984
Rental revenue 14,225 13,637
Total \$ 124,318
\$		 144,621

(19) Other gains and losses

Three months ended September 30,
2015 2014
Net (loss) gain on financial assets at fair value
through profit or loss (\$ 4,028) \$ 36,028
Net gain on financial liabilities at fair value
through profit or loss 10,094 6,632
Gain on disposal of financial assets 8,355 3,445
Loss on disposal of property, plant and
equipment ( 554) ( 438)
Net currency exchange gain 558,555 54,060
Dividend income 11,016 13,740
Others 12,285 3,485
Total \$ 595,723 \$ 116,952
Nine months ended September 30,
2015 2014
Net gain on financial assets at fair value
through profit or loss \$ 104,100 \$ 36,028
Net loss on financial liabilities at fair value
through profit or loss ( 12,839) -
Gain on disposal of financial assets 17,918 9,244
(Loss) gain on disposal of property, plant
and equipment ( 795) 375
Net currency exchange gain 271,177 41,167
Dividend income 11,016 13,740
Others 26,310 17,773
Total \$ 416,887 \$ 118,327

(20) Expenses by nature

Three months ended September 30,
2015 2014
Wages and salaries \$ 373,236 \$ 403,726
Labor and health insurance fees 38,982 57,194
Pension costs 11,984 12,143
Other personnel expenses 19,320 24,775
Depreciation on property, plant and
equipment (including investment property) 61,739 58,598
Nine months ended September 30,
2015 2014
Wages and salaries \$ 1,085,974 \$ 1,179,080
Labor and health insurance fees 119,585 133,284
Pension costs 37,071 34,785
Other personnel expenses 54,843 55,602
Depreciation on property, plant and
  • A. According to the Articles of Incorporation of the Company, when distributing earnings, the equipment (including investment property) 181,708 176,597
  • Company shall distribute bonus to the employees that account for at least 1% of the total distributable earnings; and pay remuneration to the directors and supervisors that account for 0.2% of the total distributable amount. However, in accordance with the Company Act amended in May 20, 2015, a company shall distribute employee remuneration, based on the current year's profit condition, in a fixed amount or a proportion of profits. If a company has accumulated deficit, earnings should be channeled to cover losses. Aforementioned employee remuneration could be paid by cash or stocks. Specifics of the compensation are to be determined in a board meeting that registers two-thirds of directors in attendance, and the resolution must receive support from half of participating members. The resolution should be reported to the shareholders' meeting. Qualification requirements of employees, including the employees of subsidiaries of the company meeting certain specific requirements, entitled to receive aforementioned stock or cash may be specified in the Articles of Incorporation. Taking into consideration of the Company's actual procedures, the Company's Articles of Incorporation has not been revised in accordance with the amended Company Act. Thus, all accruals are based on the unrevised Articles of Incorporation.
  • B. For the three months and nine months ended September 30, 2015 and 2014, employees' remuneration (bonus) was accrued at \$12,792, \$8,696, \$26,232 and \$24,363, respectively. The aforementioned amounts were recognized in salary expenses.

The difference between employees' bonus and directors' and supervisors' remuneration of 2014 as resolved by the stockholders and the amount recognized in the 2014 financial statements by \$3,377 will be adjusted in the 2015 statement of comprehensive income.

Information about the appropriation of employees' bonus and directors' and supervisors' remuneration by the Company as proposed by the Board of Directors and resolved by the stockholders will be posted in the "Market Observation Post System" at the website of the Taiwan Stock Exchange.

(21) Income tax

A. Income tax expense

(a)Components of income tax expense:

Three months ended September 30,
2015 2014
Current tax:
Current tax on profits for the period \$ 155,406 \$ 139,057
Prior year income tax underestimated - 862
Total current tax 155,406 139,919
Deferred tax:
Origination and reversal of temporary
differences 18,287 17,333
Total deferred tax 18,287 17,333
Income tax expense \$ 173,693 \$ 157,252
Nine months ended September 30,
2015 2014
Current tax:
Current tax on profits for the period \$ 425,840 \$ 414,955
Prior year income tax underestimated 5,930 17,945
Total current tax 431,770 432,900
Deferred tax:
Origination and reversal of temporary
differences ( 76,560) ( 5,826)
Total deferred tax ( 76,560) ( 5,826)
Income tax expense \$ 355,210 \$ 427,074

(b)The income tax relating to components of other comprehensive income is as follows:

Three months ended September 30,
2015 2014
Cumulative translation differences
for foreign operations		 \$ 29,467 \$ 9,914
Nine months ended September 30,
2015 2014
Cumulative translation differences
for foreign operations		 \$ 9,756 (\$ 214)
  • B. The investment plan of the Company to increase capital to expand the business of "manufacturing of computers, electronic products and optical products, printing and reproduction of recorded media, and computer system designing services" qualified for "The Guidelines for the Calculation of Exempt Income for the Five-year Profit-seeking Enterprise Income Tax Exemption by Manufacturing Industries and their Related Technical Services Industries Increasing New Investment from July 1, 2008 to December 31, 2009", which indicates the Company is entitled to operating income tax exemption for 5 consecutive years (ending December 2016).
  • C. As of September 30, 2015, the Company's income tax returns through 2012 have been assessed and approved by the National Taxation Bureau of Taipei, Ministry of Finance.
  • D. Unappropriated retained earnings:
September 30, 2015 December 31, 2014 September 30, 2014
Earnings generated in and
before 1997 \$
121,097		 \$
121,097		 \$
121,097
Earnings generated in and
after 1998 7,062,623 8,383,070 7,354,999
\$
7,183,720		 \$
8,504,167		 \$
7,476,096
  • E. As of September 30, 2015, December 31, 2014 and September 30, 2014, the balance of the imputation tax credit account was \$691,247, \$971,495 and \$759,453, respectively. The creditable tax rate was 14.82% for 2014 and is estimated to be 11.70% for 2015.
  • (22) Earnings per share
Three months ended September 30, 2015
Weighted-average
outstanding
common shares		 Earnings
per share
Profit after tax (in thousands) (in dollars)
Basic earnings per share
Profit attributable to owners of parent \$ 1,086,170 430,762 \$ 2.52
Diluted earnings per share
Profit attributable to owners of parent \$ 1,086,170 430,762
Dilutive potential ordinary shares :
Employees' bonus -
316
Profit attributable to owners of parent
plus assumed conversion of all
dilutive potential ordinary shares \$ 1,086,170 431,078 \$ 2.52
Nine months ended September 30, 2015
Weighted-average
outstanding Earnings
common shares per share
Profit after tax (in thousands) (in dollars)
Basic earnings per share
Profit attributable to owners of parent		 \$ 2,413,015 430,762 \$ 5.60
Diluted earnings per share
Profit attributable to owners of parent \$ 2,413,015 430,762
Dilutive potential ordinary shares :
Employees' bonus		 -
469
Profit attributable to owners of parent
plus assumed conversion of all
dilutive potential ordinary shares \$ 2,413,015 431,231 \$ 5.60
Profit after tax Three months ended September 30, 2014
Weighted-average
outstanding
common shares
(in thousands)		 Earnings
per share
(in dollars)
Basic earnings per share
Profit attributable to owners of parent \$ 966,262 430,762 \$ 2.24
Diluted earnings per share
Profit attributable to owners of parent		 \$ 966,262 430,762
Dilutive potential ordinary shares :
Employees' bonus		 -
241
Profit attributable to owners of parent
plus assumed conversion of all
dilutive potential ordinary shares \$ 966,262 431,003 \$ 2.24
Nine months ended September 30, 2014
Weighted-average
outstanding Earnings
common shares per share
Profit after tax (in thousands) (in dollars)
Basic earnings per share
Profit attributable to owners of parent \$ 2,707,048 430,762 \$ 6.28
Diluted earnings per share
Profit attributable to owners of parent \$ 2,707,048 430,762
Dilutive potential ordinary shares :
Employees' bonus -
383
Profit attributable to owners of parent
plus assumed conversion of all
dilutive potential ordinary shares \$ 2,707,048 431,145 \$ 6.28

(23) Operating leases

A. The Group leases land and buildings to others under operating lease agreements. Rental revenue of \$4,761, \$5,923, \$14,225 and \$13,637 were recognized for these leases in profit or loss for the three months and nine months ended September 30, 2015 and 2014, respectively. The leases for buildings have terms expiring between 2016 and 2017, and all these lease agreements are not renewable at the end of the lease period. The future aggregate minimum lease payments receivable under non-cancellable operating leases are as follows:

September 30, 2015 December 31, 2014 September 30, 2014
Not later than one year \$
19,255		 \$
19,085		 \$
18,767
Later than one year but not
later than five years 10,031 24,218 28,432
\$
29,286		 \$
43,303		 \$
47,199

B. On April 8, 2009, the Company signed a land lease contract with its major stockholders, Won Chin and Cheng Chuan, to build a new plant on the leased land. The lease has a term of 10 years from April 10, 2009 to April 9, 2019. The annual rental payment is \$35,633 (exclusive of tax), which was determined based on the average rent of land near the leased land shown in the appraisal report issued by CCIS Real Estate Joint Appraisers Firm. Rent was paid on the contract date and becomes payable on the same date each following year until the end of the lease. The Group recognized rental expenses of \$8,909, \$8,909, \$26,724 and \$26,724 for the three months and nine months ended September 30, 2015 and 2014, respectively. The future aggregate minimum lease payments payable under non-cancellable operating leases are as follows:

September 30, 2015 December 31, 2014 September 30, 2014
Not later than one year \$
37,415		 \$
37,415		 \$
37,415
Later than one year but not
later than five years 96,655 124,716 134,070
\$
134,070		 \$
162,131		 \$
171,485

7. RELATED PARTY TRANSACTIONS

(1) Significant transactions and balances with related parties

A. Sales

Three months ended September 30,
Other related parties 2015 2014
\$ 38,293 \$ -
Nine months ended September 30,
2015 2014
Other related parties \$ 38,293 \$ -

The sales prices charged to related parties are almost equivalent to those charged to third parties. The credit term to Hitron Tech. Inc. is 30 days after the arrival date of shipment. The credit term to third parties is 30 to 60 days after monthly billings.

B. Purchases of goods

Three months ended September 30,
2015 2014
Investments accounted for using equity method \$ 86,926 \$ 113,830
Nine months ended September 30,
2015 2014
Investments accounted for using equity method \$ 336,116 \$ 258,808

The purchase prices charged by related parties are almost equivalent to those charged by third parties. The credit term from Taiwan IC Packaging Corporation is 30 days after monthly billings. The credit term from third parties is 30 to 45 days after monthly billings.

C. Accounts receivable

September 30, 2015 December 31, 2014 September 30, 2014
Receivables from other related
parties \$ 10,019 \$
-		 \$
-

The receivables from related parties arise mainly from sales transactions. The credit term to Hitron Tech. Inc. is 30 days after the arrival date of shipment. The receivables are unsecured and bear no interest. There are no provisions for receivables from related parties.

D. Accounts payable

September 30, 2015 December 31, 2014 September 30, 2014
Payables to related parties-
Investments accounted for
using equity method \$ 46,533 \$ 74,185 \$ 93,894

The payables to related parties arise mainly from purchase transactions and are due 30 days after the date of purchase. The payables bear no interest.

E. Property transactions

Disposal of property, plant and equipment:

For the nine months ended September 30, 2014, the Group sold property, plant and equipment to Taiwan IC Packaging Corporation, the investment accounted for using equity method, at book value of \$10,497. In addition to the above disposal transactions, the Group made purchases of property, plant, and equipment on behalf of Taiwan IC Packaging Corporation in the amount of \$3,874. As of September 30, 2014, the other receivable amounted to \$14,371. There was no property transaction for the nine months ended September 30, 2015.

F. Lease contracts

On April 8, 2009, the Company signed a land lease contract with its major stockholders, Won Chin and Cheng Chuan, to build a new plant on the leased land. Please refer to Note 6(23) for details.

(2) Compensation of key management

Three months ended September 30,
2015 2014
Salaries and other short-term employee benefits \$
12,396		 \$ 23,036
Nine months ended September 30,
2015 2014
Salaries and other short-term employee benefits \$
57,919		 \$ 75,357

8. PLEDGED ASSETS

The Group's assets pledged as collateral are as follows:

Nature of assets September 30, 2015 December 31, 2014 September 30, 2014 Pledge purpose
Property, plant and
equipment		 \$ 157,743 \$ 957,822 \$
968,215		 Long-term and
short-term loans
Other non-current assets
Time deposit - - 3,042 Patent deposit
\$ 157,743 \$ 957,822 \$
971,257

9. COMMITMENTS AND CONTINGENT LIABILITIES

As of September 30, 2015, except for the provision of endorsements and guarantees mentioned in Note 13(1) B and the lease contract described in Notes 6(23) and 7, there are no other commitments and contingent liabilities.

10. SIGNIFICANT CATASTROPHE

None.

11. SIGNIFICANT SUBSEQUENT EVENT

None.

12. OTHERS

(1) Capital risk management

There is no significant change in this period. Please refer to Note 12 to the consolidated financial statements as of and for the year ended December 31, 2014 for the related information.

(2) Financial instruments

A. Fair value information of financial instruments

There is no significant change in this period. Please refer to Note 12 to the consolidated financial statements as of and for the year ended December 31, 2014 for the related information.

B. Financial risk management policies

There is no significant change in this period. Please refer to Note 12 to the consolidated financial statements as of and for the year ended December 31, 2014 for the related information.

C. Significant financial risks and degrees of financial risks

There is no significant change except the following information. Please refer to Note 12 to the consolidated financial statements as of and for the year ended December 31, 2014 for the related information.

Foreign exchange risk

The Group's businesses involve some non-functional currency operations (the Company's functional currency: NTD; the subsidiaries' functional currencies: JPY, KRW, USD, EUR, GBP and RMB, etc.). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

September 30, 2015
Foreign Foreign Currency
Currency Amount Exchange Rate Book Value
Financial assets USD:NTD \$
315,465		 32.8700 \$
10,369,335
JPY:NTD 122,940 0.2739 33,673
EUR:NTD 4,378 36.9200 161,636
Financial liabilities USD:NTD \$
44,612		 32.8700 \$
1,466,396
USD:RMB 2,353 6.3505 77,343
December 31, 2014
Foreign Foreign Currency
Currency Amount Exchange Rate Book Value
Financial assets USD:NTD \$
331,867		 31.6500 \$
10,503,591
JPY:NTD 1,090,586 0.2646 288,569
EUR:NTD 16,468 38.4700 633,524
RMB:NTD 353,396 5.0920 1,799,492
USD:RMB 51,329 6.2156 1,624,554
Financial liabilities USD:NTD \$
138,173		 31.6500 \$
4,373,175
September 30, 2014
Foreign Foreign Currency
Currency Amount Exchange Rate Book Value
Financial assets USD:NTD \$
119,722		 30.4200 \$
3,641,943
RMB:NTD 572,092 4.9340 2,822,702
USD:RMB 49,556 6.1654 1,507,494
JPY:NTD 2,313,925 0.2780 643,271
EUR:NTD 11,630 38.5900 448,802
Financial liabilities USD:NTD \$
125,929		 30.4200 \$
3,830,760

The total exchange gain, including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Group for the three months and nine months ended September 30, 2015 and 2014, amounted to \$558,555, \$54,060, \$271,177 and \$41,167, respectively.

Sensitivity analyses relating to foreign exchange rate risks are primarily for financial reporting period-end date of foreign currency monetary item. If the New Taiwan dollar exchange rate to the U.S. dollar increases or decreases by 1%, the Group's net income will increase or decrease by \$89,029 and \$1,888 for the nine months ended September 30, 2015 and 2014, respectively.

  • (3) Fair value information
  • A. Details of the fair value of the Group's financial assets and financial liabilities not measured at fair value are provided in Note 12(2)A. Details of the fair value of the Group's investment property measured at cost are provided in Note 6(9).
  • B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

Level 1: Inputs that are quoted prices (unadjusted) in active markets for identical assets or

liabilities. A market is regarded as active if it meets all the following conditions: the items traded in the market are homogeneous; willing buyers and sellers can normally be found at any time; and prices are available to the public. The fair value of the Group's investment in certain equity instruments is included in Level 1.

  • Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). The fair value of the Group's investment in derivative instruments is included in Level 2.
  • Level 3: Inputs for the asset or liability cannot be based on observable market data. The fair value of the Group's investment in certain equity investment without active market is included in Level 3.
  • C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at September 30, 2015, December 31, 2014 and September 30, 2014 is as follows:
September 30, 2015 Level 1 Level 2 Level 3 Total
Financial assets:
Available-for-sale financial assets
Equity securities \$ 166,687 \$ - \$ 1,125 \$ 167,812
Financial assets at fair value
through profit or loss \$ 60,622 \$ 11,789 \$ - \$ 72,411
Financial liabilities:
Financial liabilities at fair value
through profit or loss \$ - (\$ 11,409) \$ - (\$ 11,409)
December 31, 2014 Level 1 Level 2 Level 3 Total
Financial assets:
Available-for-sale financial assets
Equity securities \$ 231,514 \$ - \$ 1,125 \$ 232,639
Financial assets at fair value
through profit or loss \$ - \$ 53,545 \$ - \$ 53,545
September 30, 2014 Level 1 Level 2 Level 3 Total
Financial assets:
Available-for-sale financial assets
Equity securities \$ 234,028 \$ - \$ 1,125 \$ 235,153
Financial assets at fair value
through profit or loss \$ - \$ 23,869 \$ - \$ 23,869

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

  • E. Forward foreign exchange contracts' resulting fair value estimates are included in level 2, and valued based on the current forward exchange rate.
  • F. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
  • G. The financial instruments of Level 3 had no changes for the nine months ended September 30, 2015 and for the year ended December 31, 2014.

13. SUPPLEMENTARY DISCLOSURES

  • (1) Significant transactions information
  • A. Loans to others: None.
  • B. Provision of endorsements and guarantees to others: Please refer to table 1.
  • C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 2.
  • D. Acquisition or sale of the same security with the accumulated cost exceeding \$300 million or 20% of the Company's paid-in capital: None.
  • E. Acquisition of real estate reaching NT\$300 million or 20% of paid-in capital or more: None.
  • F. Disposal of real estate reaching NT\$300 million or 20% of paid-in capital or more: None.
  • G. Purchases or sales of goods from or to relate parties reaching NT\$100 million or 20% of the Company's paid-in capital or more: Please refer to table 3.
  • H. Receivables from related parties reaching NT\$100 million or 20% of paid-in capital or more: Please refer to table 4.
  • I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Note 6(2).
  • J. Significant inter-company transactions during the reporting periods: Please refer to table 5.
  • (2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China):Please refer to table 6.

  • (3) Information on investments in Mainland China
  • A. Basic information: Please refer to table 7.
  • B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

14. SEGMENT INFORMATION

(1) General information

The Group operates business only in a single industry, allocating resources and assessing performance of the Group as a whole, and has identified that the Group has only one reportable operating segment.

(2) Segment information

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

Three months ended September 30,
2015 2014
Segment revenue \$ 6,087,629 \$ 6,791,191
Segment income \$ 1,086,170 \$ 966,262
Nine months ended September 30,
2015 2014
Segment revenue \$ 18,244,298 \$ 20,242,462
Segment income \$ 2,413,015 \$ 2,707,048

(3) Reconciliation for segment income (loss)

Sales between segments are carried out at arm's length. The revenue from external customers reported to the chief operating decision-maker is measured in a manner consistent with that in the statement of comprehensive income.

Provision of endorsements and guarantees to others

For the nine months ended September 30, 2015

Expressed in thousands of NTD

(Except as otherwise indicated)

Party being Maximum
outstanding Outstanding Ratio of Provision of
endorsed/guaranteed Limit on endorsement/ endorsement/ accumulated Ceiling on endorsements/ Provision of Provision of
Relationship endorsements/ guarantee guarantee Amount of endorsement/ total amount of guarantees by endorsements/ endorsements
with the guarantees amount as of amount at endorsements/ guarantee amount endorsements/ parent guarantees by /guarantees to
endorser/ provided for a September 30, September 30, Actual amount guarantees to net asset value guarantees company to subsidiary to the party in
Number Endorser/ guarantor single party 2015 2015 drawn down secured with of the endorser/ provided subsidiary parent Mainland
(Note 1) guarantor Company name (Note 2) (Note 3) (Note 4) (Note 4) (Note 5) collateral guarantor company (Note 6) (Note 7) company China Footnote
0 Transcend Taiwan Transcend Japan Inc. 2 \$
3,950,897		 \$
547,800		 \$
547,800		 \$
410,850		 - 2 \$
7,901,794		 Y - - -

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:

(a)The Company is '0'.

(b)The subsidiaries are numbered in order starting from '1'.

Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following six categories; fill in the number of category each case belongs to:

(a)Having business relationship

(b)The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.

(c)The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.

(d)The endorsed/guaranteed parent company directly or indirectly owns more than 50% voting shares of the endorser/guarantor subsidiary.

(e)Mutual guarantee of the trade as required by the construction contract.

(f)Due to joint venture, each shareholder provides endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.

Note 3: Not exceeding 20% of the Company's net asset value. (\$19,754,485*20%=\$3,950,897)

Note 4: The maximum outstanding endorsement/guarantee amount during and as of September 30, 2015 is JPY\$2,000,000.

Note 5: The actual amount of endorsement drawn down is JPY\$1,500,000.

Note 6: Not exceeding 40% of the Company's net asset value. (\$19,754,485*40%=\$7,901,794)

Note 7: Fill in 'Y' for those cases of provision of endorsements/guarantees by listed parent company to subsidiary.

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

For the nine months ended September 30, 2015

Table 2 Expressed in thousands of NTD

(Except as otherwise indicated)

As of September 30, 2015
Marketable securities Relationship with the General Book value Footnote
Securities held by (Note 1) securities issuer (Note 2) ledger account Number of shares (Note 3) Ownership (%) Fair value (Note 4)
Transcend Taiwan Stocks
Alcor Micro Corp. - Non-current
available-for-sale
financial assets		 6,220,933 \$ 126,907 8 \$ 126,907 -
Hitron Tech. Inc. Other relative parties 〞 3,060,017 39,780 1 39,780 -
Skyviia Corp. - 〞 259,812 - 2 -
-
Dramexchange Tech Inc. - 〞 60,816 1,125 1 1,125 -
\$ 167,812
Bonds
Yuanta Asset Management Limited -
bond with repurchase agreement rated as
investment-grade bonds by S&P		 - Current bond
investment without
active market		 \$ 608,095 - - -
Transcend Shanghai Finance products
Money funds of ICBC - Financial assets at
fair value through
profit or loss		 \$ 11,789 - 11,789 -
Structured deposits financial products of
Fubon Bank(China) Co., Ltd., Industrial
and Commercial Bank of China and
Bank of China		 - Current bond
investment without
active market		 \$ 351,298 - - -

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities within the scope of IAS 39 'Financial instruments: recognition and measurement'.

Note 2: Leave the column blank if the issuer of marketable securities is non-related party.

Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities measured at fair value; fill in the acquisition cost or amortised cost deducted by accumulated impairment for the marketable securities not measured at fair value.

Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions.

Purchases or sales of goods from or to related parties reaching NT\$100 million or 20% of paid-in capital or more

For the nine months ended September 30, 2015

Table 3 Expressed in thousands of NTD

(Except as otherwise indicated)

Differences in transaction terms compared to
Transaction third party transactions Notes/accounts receivable (payable)
Percentage of total Percentage of
Sales sales total notes/accounts
Purchaser/seller Counterparty Relationship with the counterparty (purchases) Amount (purchases) Credit term Unit price Credit term Balance receivable (payable) Footnote
Transcend Taiwan Transcend Japan Inc. The Company's subsidiary Sales \$ 1,608,242 9 120 days after monthly
billings		 No significant
difference		 30 to 60 days after monthly
\$
billings to third parties		 268,548 9 -
〞 Transcend Information Europe B.V. Subsidiary of Memhiro 〞 1,557,926 9 〞 〞 〞 246,841 8 -
〞 Transcend Information, Inc. The Company's subsidiary 〞 789,624 4 〞 〞 〞 206,234 7 -
〞 Transcend Korea Inc. The Company's subsidiary 〞 639,523 4 60 days after monthly
billings		 〞 〞 61,523 2 -
〞 Transtech Shanghai Subsidiary of Memhiro 〞 593,674 3 120 days after monthly
billings		 〞 〞 233,695 8 -
〞 Transcend Information Trading GmbH,
Hamburg		 Subsidiary of Memhiro 〞 515,707 3 〞 〞 〞 10,080 - -
〞 Transcend Information (H.K) Ltd. Subsidiary of Memhiro 〞 428,556 2 〞 〞 〞 65,953 2 -
Transcend Information Europe
B.V.		 Transcend Information Trading GmbH,
Hamburg		 Together with Transcend
Information Europe B.V. are
controlled by parent company		 〞 432,989 26 30 days after receipt of
goods		 〞 7 to 60 days after receipt of
goods to third parties		 36,278 16 -
Transcend Taiwan Transcend Shanghai Subsidiary of Memhiro (Purchases) ( 471,004) ( 3) 60 days after receipt of
goods		 Note 1 7 to 30 days after receipt of
(
goods to third parties		 1,266,543) ( 42) -
〞 Taiwan IC Packaging Corp. Associate accounted for using the
equity method		 〞 ( 336,116) ( 2) 30 days after monthly
billings		 No significant
difference		 30 to 45 days after monthly
(
billings to third parties		 46,533) ( 2) -

Note 1: The purchase transactions between Transcend Taiwan and Transcend Shanghai were attributed to processing of supplied materials. No other similar transactions can be used for comparison. Note 2: The Company's sales to subsidiaries were equivalent to subsidiaries' purchases from the Company; accordingly, the Company did not disclose the information on subsidiaries' purchases from the Company.

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

September 30, 2015

Table 4

Expressed in thousands of NTD

(Except as otherwise indicated)

Amount collected
Relationship Balance as of September Overdue receivables subsequent to the Allowance for
Creditor Counterparty with the counterparty 30, 2015 Turnover rate Amount Action taken balance sheet date doubtful accounts
Transcend Taiwan Transcend Information Europe B.V. Subsidiary of Memhiro \$
246,841		 9.86 \$ - - \$
154,555		 \$
-
〞 Transcend Japan Inc. Subsidiary of the Company 268,548 12.66 - - 202,722 -
〞 Transcend Information Inc. Subsidiary of the Company 206,234 7.61 - - 59,593 -
〞 Transtech shanghai Subsidiary of Memhiro 233,695 7.03 - - -
-
Transcend Shanghai Transcend Taiwan Parent company 1,266,543 0.66 - - 1,266,543 -

Significant inter-company transactions during the reporting periods

For the nine months ended September 30, 2015

Expressed in thousands of NTD

(Except as otherwise indicated)

Transaction

Number Relationship Percentage of consolidated total operating
(Note 1) Company name Counterparty (Note 2) General ledger account Amount Transaction terms revenues or total assets (Note 3)
0 Transcend Taiwan Transcend Japan Inc. 1 Sales \$
1,608,242		 There is no significant difference in unit price from
those to third parties.		 9%
〞 〞 Transcend Information Europe B. V. 〞 〞 1,557,926 〞 9%
〞 〞 Transcend Information, Inc. 〞 〞 789,624 〞 4%
〞 〞 Transcend Korea Inc. 〞 〞 639,523 〞 4%
〞 〞 Transtech Trading (Shanghai) Co., Ltd. 〞 〞 593,674 〞 3%
〞 〞 Transcend Information Trading GmbH, Hamburg 〞 〞 515,707 〞 3%
〞 〞 Transcend Information (H.K) Ltd. 〞 〞 428,556 〞 2%
〞 〞 Transcend Information (Shanghai), Ltd. 〞 Purchases 471,004 Processing with supplied materials. No other similar
transactions can be used for comparison.		 3%
〞 〞 Transcend Japan Inc. 〞 Accounts Receivable 268,548 120 days after monthly billings 1%
〞 〞 Transcend Information Europe B. V. 〞 〞 246,841 〞 1%
〞 〞 Transcend Information (Shanghai), Ltd. 〞 Accounts Payable 1,266,543 60 days after receipt of goods 5%
1 Transcend Information Europe B. V. Transcend Information Trading GmbH, Hamburg 3 Sales 432,989 There is no significant difference in unit price from
those to third parties.		 2%

(Individual transactions not exceeding 1% of the consolidated total revenue and total assets are not disclosed.)

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(a) Parent company is "0".

(b) Subsidiaries were numbered from 1.

Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):

(a) Parent company to subsidiary.

(b) Subsidiary to parent company.

(c) Subsidiary to subsidiaries.

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Information on investees

Nine months ended September 30, 2015

Table 6

Expressed in thousands of NTD

(Except as otherwise indicated)

Initial investment amount Shares held as at September 30, 2015 Net profit (loss)
of the investee for the nine		 Investment income (loss)
recognised by the Company
for the nine months ended
Balance Balance Ownership months ended September September 30, 2015
Investor Investee Location Main business activities as at September 30, 2015 as at December 31, 2014 Number of shares (%) Book value 30, 2015 (Note 1) Footnote
Transcend Taiwan Saffire Investment Ltd. B.V.I. Investments holding
company		 \$
1,202,418 \$		 1,202,418 36,600,000 100 \$
3,110,122 (\$		 27,028) (\$ 29,637) Note 2
Transcend Japan Inc. Japan Wholesaler of computer
memory modules and
peripheral products		 89,103 89,103 6,400 100 153,650 ( 24,550) ( 24,550) Note 2
Transcend Information, Inc. United States of America Wholesaler of computer
memory modules and
peripheral products		 38,592 38,592 625,000 100 125,255 ( 12,048) ( 12,048) Note 2
Transcend Korea Inc. Korea Wholesaler of computer
memory modules and
peripheral products		 6,132 6,132 40,000 100 23,458 ( 7,849) ( 7,849) Note 2
Taiwan IC Packaging Corp. Taiwan Packaging of Semi
conductors		 354,666 354,666 51,842,975 12.88 325,227 ( 55,872) ( 7,366) Note 5
Saffire Investment Ltd. Memhiro Pte Ltd. Singapore Investments holding
company		 1,156,920 1,156,920 55,132,000 100 3,152,282 ( 26,991) ( 26,991) Note 3
Memhiro Pte Ltd. Transcend Information
Europe B.V.		 Netherlands Wholesaler of computer
memory modules and
peripheral products		 1,693 1,693 100 100 136,080 ( 37,395) ( 37,388) Note 4
Transcend Information Trading
GmbH, Hamburg		 Germany Wholesaler of computer
memory modules and
peripheral products		 2,288 2,288 - 100 66,409 8,803 8,803 Note 4
Transcend Information (H.K.)
Ltd.		 Hong Kong Wholesaler of computer
memory modules and
peripheral products		 7,636 7,636 2,000,000 100 3,734 ( 4,709) ( 4,709) Note 4

Note 1: The Company does not directly recognise the investment income (loss) except for the subsidiaries directly held.

Note 2: Subsidiaries of the Company.

Note 3: Subsidiary of Saffire.

Note 4: Subsidiaries of Memhiro.

Note 5: Please refer to Note 6 (7).

Information on investments in Mainland China

For the nine months ended September 30, 2015

Table 7 Expressed in thousands of NTD

(Except as otherwise indicated)

Investee in Mainland
China
Transcend Information
(Shanghai), Ltd.		 Main business activities
Manufacturer and seller of
computer memory modules,
storage products and disks		 Paid-in capital
\$
1,134,178		 Investment
method
(Note 1)
(2)		 Accumulated
amount of
remittance from
Taiwan to
Mainland China
as of January 1,
2015
\$
1,134,178		 Remitted to
Mainland China
-		 Amount remitted from Taiwan
to Mainland China/
Amount remitted back
to Taiwan for the nine months
ended September 30, 2015
Remitted back
to Taiwan
-		 Accumulated
amount
of remittance
from Taiwan to
Mainland China
as of September
30, 2015
\$
1,134,178 \$		 Net income of
investee as of
September 30,
2015
66,934		 Ownership
held by
the
Company
(direct or
indirect)
100		 Investment income
(loss) recognised
by the Company
for the nine
months ended
September 30, 2015
(Note 2)
\$
66,934 \$		 Book value of
investments in
Mainland China
as of September
30, 2015
2,918,050 \$		 Accumulated
amount
of investment
income
remitted back to
Taiwan as of
September 30,
2015
356,704		 Footnote
-
Transtech Trading
(Shanghai) Co., Ltd.		 Manufacturer and seller of
computer memory modules,
storage products and disks.
Wholesaler and agent of
computer memory modules and
peripheral products. Retailer of
computer components.		 16,310 (2) 16,310
-		 - 16,310 ( 10,755) 100 (
10,755)		 4,013 - -
Company name Accumulated amount of
remittance from Taiwan to
Mainland China
as of September 30, 2015		 Investment
amount approved
by the Investment
Commission of
the Ministry of
Economic Affairs
(MOEA)		 Ceiling on
investments in
Mainland China
imposed by the
Investment
Commission of
MOEA
Transcend Information
(Shanghai), Ltd.
Transtech Trading
(Shanghai) Co., Ltd.		 \$
1,134,178
16,310		 \$
1,134,178 \$
16,310		 -
-

\$ 1,150,488 \$ 1,150,488 \$ 11,852,691

Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to:

(1) Directly invest in a company in Mainland China.

(2) Through investing in an existing company in the third area (Memhiro Pte Ltd.), which then invested in Mainland China. (3) Others.

Note 2: The financial statements that are reviewed and attested by R.O.C. parent company's CPA.

Note 3: The numbers in this table are expressed in New Taiwan Dollars

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