Half Yearly Report

RNS Number : 4887T

Hon Hai Precision Industry Co Ld

29 September 2010

 

 

 

 

 

 

HON HAI PRECISION INDUSTRY CO., LTD.

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT ACCOUNTANTS

JUNE 30, 2009 AND 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

 

 

To The Board of Directors and Stockholders:

Hon Hai Precision Industry Co., Ltd.

 

We have reviewed the accompanying consolidated balance sheets of Hon Hai Precision Industry Co., Ltd. and its subsidiaries as of June 30, 2009 and 2010, and the related consolidated statements of income, of changes in stockholders'equity and of cash flows for the six-month periods then ended, expressed in thousands of New Taiwan dollars. These financial statements are the responsibility of the Company's management. Our responsibility is to issue a report on these financial statements based on our reviews. We did not review the financial statements of certain consolidated subsidiaries which statements reflect total assets of $173,622,645,000 and $184,674,091,000, constituting 19.27% and 14.50% of the consolidated total assets as of June 30, 2009 and 2010, respectively, and total revenues of $106,045,007,000 and $102,976,059,000, constituting 13.06% and 8.59% of the consolidated total operating revenues for the six-month periods then ended, respectively. Those statements were reviewed by other auditors, whose reports thereon have been furnished to us, and our conclusion expressed herein, insofar as it relates to the amounts included for these subsidiaries, is based solely on the reports of the other auditors.

Except as explained in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 36, "Review of Financial Statements" in the Republic of China. A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards in the Republic of China, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

As described in Notes 1(2) and 4(8), the financial statements of certain consolidated subsidiaries and long-term equity investments accounted for under the equity method and certain information disclosed in Note 11 were not reviewed by independent accountants, which statements reflect total assets (including long-term equity investments) of $224,115,144,000 and $280,104,664,000, constituting 24.88% and 21.99% of the consolidated total assets, and total liabilities of $80,670,377,000 and $129,159,537,000, constituting 17.03% and 16.58% of the consolidated total liabilities as of June 30, 2009 and 2010, respectively, as well as total net income (including investment income accounted for under the equity method) of $4,365,112,000 and $9,049,762,000, constituting 15.45% and 26.95% of the consolidated net income for the six-month periods then ended, respectively.

Based on our reviews and the reports of other auditors, except for the effect of such adjustments, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries and long-term investments been reviewed as explained in the preceding paragraph, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the "Rules Governing the Preparation of Financial Statements by Securities Issuers" and generally accepted accounting principles in the Republic of China.

As described in Note 3, effective January 1, 2009, the Company and subsidiaries adopted the amendments to R.O.C. SFAS No. 10, "Accounting for Inventories".

 

As disclosed in Note 2, the consolidated financial statements of Hon Hai Precision Industry Co., Ltd. and its subsidiaries as of and for the six-month period ended June 30, 2010 expressed in U.S. dollars are presented solely for the convenience of the reader and were translated from the financial statements expressed in New Taiwan dollars using the exchange rate of U.S.$1.00:NT$32.27, the noon buying rate in the City of New York for cable transfers in NT dollars per U.S. dollars as certified for custom purposes by the Federal Reserve Bank of New York as of June 30, 2010. This basis of translation is not in accordance with generally accepted accounting principles in the Republic of China.

 

PricewaterhouseCoopers, Taiwan

August 24, 2010

 

 

 

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

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

HON HAI PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30,

(EXPRESSED IN THOUSANDS OF DOLLARS)

(UNAUDITED)

		2009		2010		2010
		NT$		NT$		US$
						(Note 2)
ASSETS
Current Assets
Cash and cash equivalents (Note 4 (1))		$ 125,055,296		$ 249,758,233		$7,739,642
Financial assets at fair value through profit or loss - current (Note 4 (2))		374,131		110,270		3,417
Available-for-sale financial assets - current (Note 4 (3))		1,177,962		1,054,860		32,689
	Notes receivable, net (Notes 4 (4))		1,536,868		18,738,666		580,684
Accounts receivable, net (Notes 4 (4) )		245,834,055		350,336,955		10,856,428
Accounts receivable, net - related parties (Note 5)		15,635,304		17,491,873		542,047
	Other receivables (Notes 4(5) and 5)		16,933,789		28,195,618		873,741
Inventories, net (Notes 3 and 4 (6))		167,106,229		253,195,564		7,846,159
Prepayments (Note 5)		4,584,239		5,941,376		184,115
	Deferred income tax assets - current (Note 4 (14))		2,571,345		2,327,151		72,115
			580,809,218		927,150,566		28,731,037
Funds and Investments
Available-for-sale financial assets - non-current
	(Note 4 (3))		13,652,341		12,743,732		394,910
Financial assets carried at cost - non-current (Note 4 (7))		1,324,699		2,148,152		66,568
Long-term equity investments accounted for under the equity method (Note 4 (8))		28,623,380		33,401,829		1,035,074
Prepaid long-term investment(Note4(8))		-		33,033		1,024
	Other financial assets - non-current (Note 6)		85,145		23,481,870		727,668
			43,685,565		71,808,616		2,225,244
Property, Plant and Equipment (Notes 4 (9) and 5)
	Cost
Land		3,703,839		3,885,454		120,405
	Buildings and improvements		100,691,528		115,607,973		3,582,522
	Machinery		154,980,995		160,765,871		4,981,899
	Molding equipment		2,847,581		3,150,875		97,641
	Testing equipment		19,678,538		21,577,499		668,655
	Office equipment		12,776,776		13,748,520		426,046
Tooling equipment		3,093,551		3,246,397		100,601
	Other equipment		27,339,279		31,477,981		975,456
Cost and revaluation		325,112,087		353,460,570		10,953,225
	Less: Accumulated depreciation		( 105,281,210)		( 131,005,767)		(4,059,677)
Accumulated impairment		( 2,565,150)		( 3,623,071)		( 112,273)
	Construction in progress and prepayments for equipment		29,215,002		23,354,417		723,719
		246,480,729		242,186,149		7,504,994
Intangible Assets (Note 4 (10))
Goodwill		1,345,627		215,474		6,677
	Other intangible assets		653,575		316,356		9,804
			1,999,202		531,830		16,481
Other Assets
Deferred charges		5,175,561		5,482,188		169,885
Other assets - other (Notes 4(11) and 6)		22,763,368		26,574,145		823,494
			27,938,929		32,056,334		993,379
	TOTAL ASSETS		$ 900,913,643		$ 1,273,733,495		$ 39,471,134

(continued)

HON HAI PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)

JUNE 30,

(EXPRESSED IN THOUSANDS OF DOLLARS)

(UNAUDITED)

		2009		2010		2010
		NT$		NT$		US$
						(Note 2)
LIABILITIES AND STOCKHOLDERS' EQUITY
	Current Liabilities
Short-term loans (Note 4 (12))		$ 43,913,266		$ 171,430,469		$5,312,379
Financial liabilities at fair value through profit or loss - current (Note 4 (2))		52,153		73,246		2,270
Accounts payable		257,404,594		398,200,552		12,339,651
Accounts payable - related parties (Note 5)		18,547,701		21,104,777		654,006
	Income tax payable (Note 4 (14))		10,677,771		12,811,552		397,011
	Accrued expenses (Notes 4 (13)(19))		35,631,509		50,632,926		1,569,040
	Dividends payable (Note 4 (21))		8,156,086		17,157,864		531,697
	Payables for equipment (Note 5)		3,550,164		6,670,426		206,707
	Other payables (Note 4 (21))		6,351,030		5,972,878		185,091
	Receipts in advance		4,033,596		2,377,013		73,660
	Long-term liabilities - current portion (Note 4 (15))		17,855,921		6,000,000		185,931
	Accrued warranty liabilities		4,619,446		10,191,835		315,830
	Other current liabilities		3,473,030		4,513,049		139,853
			414,266,267		707,136,587		21,913,126
	Long-term Liabilities
	Bonds payable (Note 4 (15))		16,680,000		29,539,400		915,383
	Long-term loans (Note 4 (16))		33,958,350		33,275,250		1,031,151
			50,638,350		62,814,650		1,946,534
Other Liabilities
Reserve for retirement plan (Note 4 (17))		1,057,958		1,066,104		33,037
	Deferred income tax liabilities - non-current (Note 4 (14))		5,626,818		3,634,823		112,638
	Other liabilities - other		2,149,772		4,437,183		137,502
			8,834,548		9,138,110		283,177
	Total liabilities		473,739,165		779,089,347		24,142,837
	Stockholders' Equity
	Stockholders' Equity of Parent Company
	Capital stock (Note 4 (18))
	Common stock		85,789,319		85,789,319		2,658,485
	Stock dividends distributable		-		15,744,046		487,885
Capital reserve (Note 4 (20))
Paid-in capital in excess of par value of common stock		23,670,255		23,670,255		733,507
	Capital reserve from conversion of convertible bonds		18,482,483		18,482,483		572,745
	Capital reserve from long-term investments		13,274,789		14,339,295		444,354
	Capital reserve from conversion right (Note 4 (15))		1,195,200		1,195,200		37,037
	Retained earnings (Note 4 (21))
	Legal reserve		36,537,436		44,105,947		1,366,779
	Undistributed earnings		181,506,260		228,531,220		7,081,848
	Other adjustments of stockholders' equity
	Unrealized gain or loss on financial instruments (Note 4 (3))		12,258,097		11,298,347		350,119
	Cumulative translation adjustments		20,670,043		16,705,017		517,664
	Treasury stock		( 18,901)		( 18,901)		(586)
Total Stockholders' equity of parent company		393,364,981		459,842,228		14,249,837
	Minority interest		33,809,497		34,801,920		1,078,460
Total stockholders' equity		427,174,478		494,644,148		15,328,297
Commitments and Contingent Liabilities (Note 7)
	Subsequent Events (Note 9)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$ 900,913,643		$ 1,273,733,495		$ 39,471,134

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

See review report of independent accountants dated August 24, 2010.

HON HAI PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE SIX-MONTH PERIODS ENDED JUNE 30,

(EXPRESSED IN THOUSANDS OF DOLLARS,

EXCEPT EARNINGS PER SHARE DATA)

(UNAUDITED)

		2009				2010				2010
		NT$				NT$				US$
										(Note 2)
Operating revenues
Sales (Note 5)		$ 812,453,508				$ 1,198,835,545				$ 37,150,156
	Sales returns		(335,449)				(473,517)				( 14,673)
	Sales discounts		( 15,545)				( 3,089)				( 96)
	Net operating revenues		812,102,514				1,198,358,939				37,135,387
Operating costs
Cost of goods sold (Notes 3, 4 (6)(23) and 5)		( 736,225,492)				(1,098,192,650)				(34,031,381)
	Gross profit		75,877,022				100,166,289				3,104,006
	Operating expenses (Notes 4 (19)(23))
	Sales and marketing expenses		(14,096,367)				(21,904,546)				(678,790)
	General and administrative expenses		(17,811,468)				(21,406,010)				(663,341)
	Research and development expenses		(11,306,922)				(16,851,638)				(522,207)
	Total operating expenses		(43,214,757)				(60,162,194)				( 1,864,338)
	Operating income		32,662,265				40,004,095				1,239,668
Non-operating income and gains
	Interest income		413,045				1,263,826				39,164
Investment income accounted for under the equity method (Note 4 (8))		652,659				873,244				27,061
Foreign exchange gain - net		1,831,519				1,078,289				33,415
	Other non-operating income (Notes 5)		1,832,288				2,958,573				91,681
	Total non-operating income and gains		4,729,511				6,173,932				191,321
	Non-operating expenses and losses
	Interest expense		( 1,419,161)				(952,730)				( 29,524)
Loss on valuation of financial assets (Note 4 (2))		( 45,513)				( 63,023)				( 1,953)
	Loss on valuation of financial liabilities (Note 4 (2))		(206,048)				-				-
	Financing charges (Note 4 (4))		( 8,754)				( 50,756)				( 1,573)
	Impairment loss (Notes 4(7)(8)(9)(10))		( 1,325,354)				( 2,138,288)				( 66,262)
Other non-operating losses		(754,277)				(472,138)				( 14,631)
Total non-operating expenses and losses		( 3,759,107)				( 3,676,935)				(113,943)
Income before income tax		33,632,669				42,501,092				1,317,046
Income tax expense (Note 4 (14))		( 5,383,973)				( 8,926,218)				(276,610)
	Consolidated net income		$ 28,248,696				$ 33,574,874				$1,040,436
	Attributable to:
	Equity holders of the Company		$ 28,377,469				$ 34,738,417				$1,076,493
	Minority interest		(128,773)				( 1,163,543)				( 36,057)
		$ 28,248,696				$ 33,574,874				$1,040,436
		Before  income tax		After income tax		Before income tax		After income tax		Before income tax		After income tax
Earnings per common share (Note 4 (22))
Basic earnings per common share
Consolidated net income		$ 3.50		$ 2.94		$ 4.42		$ 3.49		$ 0.14		$ 0.11
	Minority interest (income) loss		(0.01)		0.01		0.11		0.12		-		-
	Net income attributable to equity holders of the Company		$ 3.49		$ 2.95		$ 4.53		$ 3.61		$ 0.14		$ 0.11
	Diluted earnings per common share
	Consolidated net income		$ 3.47		$ 2.92		$ 4.38		$ 3.46		$ 0.14		$ 0.11
	Minority interest (income) loss		(0.01)		0.01		0.10		0.12		-		-
	Net income attributable to equity holders of the Company		$ 3.46		$ 2.93		$ 4.48		$ 3.58		$ 0.14		$ 0.11

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

See review report of independent accountants dated August 24, 2010.

HON HAI PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE SIX-MONTH PERIODS ENDED JUNE 30,

(EXPRESSED IN THOUSANDS OF DOLLARS)

(UNAUDITED)

		Capital stock					Retained Earnings		Other Adjustments of Stockholders' Equity
		Common stock		Stock dividends distributable		Capital  reserves	Legal reserve	Undistributed earnings	Unrealized gain or loss on financial  instruments	Cumulative translation adjustments	Treasury stock	Minority interest	Total
2009 - New Taiwan Dollars
Balance at January 1, 2009		$ 74,146,236		$ -		$ 52,944,370	$ 31,024,118	$ 177,920,130	$4,727,053	$ 20,423,841	($18,901)	$ 33,153,976	$ 394,320,823
Appropriation of 2008 earnings
Legal reserve		-		-		-	5,513,318	( 5,513,318)	-	-	-	-	-
	Cash dividends		-		-	-	-	( 8,156,086)	-	-	-	-	( 8,156,086)
	Stock dividends		11,121,935		-	-	-	(11,121,935)	-	-	-	-	-
	Employees' stock bonus		521,148		-	3,448,441	-	-	-	-	-	-	3,969,589
	Consolidated net income for the period		-		-	-	-	28,377,469	-	-	-	(128,773)	28,248,696
	Unrealized gain on financial assets		-		-	-	-	-	6,025,809	-	-	-	6,025,809
	Adjustments due to changes in equities of long-term investments		-		-	229,916	-	-	1,505,235	-	-	-	1,735,151
	Cumulative translation adjustment		-		-	-	-	-	-	246,202	-	-	246,202
	Minority interest		-		-	-	-	-	-	-	-	784,294	784,294
Balance at June 30, 2009		$ 85,789,319		$ -		$ 56,622,727	$ 36,537,436	$ 181,506,260	$ 12,258,097	$ 20,670,043	($18,901)	$ 33,809,497	$ 427,174,478
	2010 - New Taiwan Dollars
	Balance at January 1, 2010		$ 85,789,319		$ -	$ 57,308,705	$ 36,537,436	$ 228,813,896	$ 16,902,917	$ 14,522,082	($18,901)	$ 34,855,525	$ 474,710,979
Appropriation of 2009 earnings (Note)
Legal reserve		-		-		-	7,568,511	( 7,568,511)	-	-	-	-	-
	Cash dividends		-		-	-	-	(17,157,864)	-	-	-	-	(17,157,864)
Stock dividends		-		10,294,718		-	-	(10,294,718)	-	-	-	-	-
Employees' stock bonus		-		5,449,328		-	-	-	-	-	-	-	5,449,328
	Consolidated net income for the period		-		-	-	-	34,738,417	-	-	-	( 1,163,543)	33,574,874
	Unrealized loss on financial assets		-		-	-	-	-	( 4,726,494)	-	-	-	( 4,726,494)
	Adjustments due to changes in equities of long-term investments		-		-	378,528	-	-	(878,076)	-	-	-	(499,548)
	Cumulative translation adjustment		-		-	-	-	-	-	2,182,935	-	-	2,182,935
	Minority interest		-		-	-	-	-	-	-	-	1,109,938	1,109,938
Balance at June 30, 2010		$ 85,789,319		$ 15,744,046		$ 56,687,233	$ 44,105,947	$ 228,531,220	$ 11,298,347	$ 16,705,017	($18,901)	$ 34,801,920	$ 494,644,148

 

 

		Capital stock					Retained Earnings		Other Adjustments of Stockholders' Equity
		Common stock		Stock dividends distributable		Capital  reserves	Legal reserve	Undistributed earnings	Unrealized gain or loss on financial  instruments	Cumulative translation adjustments	Treasury stock	Minority interest	Total
2010-US Dollars (Unaudited) ( Note 2)
Balance at January 1, 2010		$ 2,658,485		$-		$ 1,775,913	$ 1,132,242	$ 7,090,607	$ 523,797	$ 450,018	($ 586)	$ 1,080,122	$ 14,710,598
Appropriation of 2009 earnings		-		-		-	-	-	-	-	-	-	-
	Legal reserve		-		-	-	234,537	( 234,537)	-	-	-	-	-
	Cash dividends		-		-	-	-	( 531,697)	-	-	-	-	( 531,697)
	Stock dividends		-		319,018	-	-	( 319,018)	-	-	-	-	-
	Employees' stock bonus		-		168,867	-	-	-	-	-	-	-	168,867
	Consolidated net income for the period		-		-	-	-	1,076,493	-	-	-	(36,057)	1,040,436
	Unrealized loss on financial assets		-		-	-	-	-	( 146,467)	-	-	-	( 146,467)
	Adjustments due to changes in equities of long-term investments		-		-	-	-	-	-	-	-	-	-
	Cumulative translation adjustment		-		-	11,730	-	-	(27,211)	-	-	-	(15,481)
	Minority interest		-		-	-	-	-	-	67,646	-	-	67,646
Balance at June 30, 2010		-		-		-	-	-	-	-	-	34,395	34,395
		$ 2,658,485		$487,885		$ 1,787,643	$ 1,366,779	$ 7,081,848	$ 350,119	$ 517,664	($ 586)	$ 1,078,460	$ 15,328,297

 

Note: Directors' and supervisors' remuneration and employees' bonus in the amounts of $0 and $5,449,328, respectively, have been deducted from the consolidated statements of income.

 

 

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

See review report of independent accountants dated August 24, 2010.

HON HAI PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTH PERIODS ENDED JUNE 30,

 (EXPRESSED IN THOUSANDS OF DOLLARS)

(UNAUDITED)

		2009		2010		2010
		NT$		NT$		US$
						(Note 2)
CASH FLOWS FROM OPERATING ACTIVITIES
	Consolidated net income		$28,248,696		$33,574,874		$1,040,436
	Adjustments to reconcile consolidated net income to net cash provided by operating activities:
	Depreciation		16,989,664		17,057,001		528,572
	Amortization of intangible and other assets		2,548,636		2,135,992		66,191
	Provision (reversal of allowance) for doubtful accounts		1,160,211		( 579,040)		( 17,944)
	Loss (gain) on disposal of property, plant and equipment, net		21,721		( 188,675)		( 5,847)
	Loss on impairment		1,325,354		2,138,288		66,262
	Gain on valuation of financial assets and liabilities, net		( 38,332)		( 22,024)		( 682)
	Provision for inventory obsolescence and market price decline		1,189,326		439,587		13,622
	Investment income accounted for under the equity method		( 652,659)		( 873,244)		( 27,061)
	Amortization of discount of convertible bonds payable		197,563		-		-
	Gain on disposal of investments		-		( 12,544)		( 389)
	Changes in assets and liabilities:
	Financial assets at fair value through profit or loss		( 155,142)		-		-
	Notes receivable		( 562,018)		( 7,972,139)		(247,045)
	Accounts receivable		4,588,854		( 72,064,076)		( 2,233,160)
	Accounts receivable - related parties		( 844,267)		1,653,423		51,237
	Inventories		( 1,570,361)		( 70,555,562)		( 2,186,413)
	Other receivables		1,728,472		( 4,051,771)		(125,558)
	Prepayments		( 921,155)		( 1,420,232)		( 44,011)
	Accounts payable		4,958,635		116,478,491		3,609,498
	Accounts payable - related parties		4,889,755		2,297,286		71,190
	Accrued expenses		( 3,748,423)		5,685,707		176,192
	Accrued warranty liabilities		97,463		2,547,598		78,946
	Receipts in advance		1,714,887		( 1,353,489)		( 41,943)
	Income tax payable		( 1,932,291)		( 426,306)		( 13,210)
	Accrued pension liabilities		30,453		( 13,139)		( 407)
	Other payables and other current liabilities		2,540,519		2,082,349		64,529
Deferred income tax liabilities		( 2,428,536)		( 786,441)		( 24,371)
Net cash provided by operating activities		59,377,025		25,771,914		798,634
	CASH FLOWS FROM INVESTING ACTIVITIES
	Acquisition of property, plant and equipment		( 17,162,856)		( 20,426,373)		(632,983)
	Increase in other assets		( 1,141,738)		( 3,144,285)		( 97,437)
	Increase in long-term equity investments		( 235,000)		( 1,412,136)		( 43,760)
	Acquisition of land use right		( 336,870)		( 142,193)		( 4,406)
	Increase in other financial assets - non-current		34,056		( 19,931,083)		(617,635)
	Acquisition of financial assets carried at cost		( 30,000)		( 576,052)		( 17,852)
	Acquisition of subsidiary and assets, net of cash acquried		-		( 3,768,001)		(116,765)
	Proceeds from disposal of property, plant and equipment		1,350,917		1,173,296		36,359
	Increase in financial assets / liabilities at fair value through profit or loss		( 227,506)		( 49,111)		( 1,522)
	Net cash used in investing activities		( 17,748,997)		( 48,275,938)		( 1,496,001)

(Continued )HON HAI PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE SIX-MONTH PERIODS ENDED JUNE 30,

 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

(UNAUDITED)

		2009		2010		2010
		NT$		NT$		US$
						(Note 2)
CASH FLOWS FROM FINANCING ACTIVITIES
	(Decrease) increase in short-term loans		($ 16,271,180)		$ 91,351,358		$2,830,845
	(Decrease) increase in other liabilities - others		( 248,884)		1,508,982		46,762
	Increase in minority interest		784,294		1,109,938		34,395
Payment of employee's bonus accumulated before 2008		-		( 932,136)		( 28,886)
Net cash (used in) provided by financing activities		( 15,735,770)		93,038,142		2,883,116
	Net effect of changes in foreign currency exchange rates		20,670		1,680,975		52,091
Net increase in cash and cash equivalents		25,912,928		72,215,093		2,237,840
	Cash and cash equivalents at beginning of period		99,142,368		177,543,140		5,501,802
	Cash and cash equivalents at end of period		$125,055,296		$249,758,233		$7,739,642
Supplemental disclosures of cash flow information:
Cash paid during the period for interest		$ 1,499,601		$ 421,714		$13,068
	Cash paid during the period for income tax		$ 9.379.086		$ 10,069,796		$ 312,048
Cash paid for the acquisition of property, plant and equipment
Increase in property, plant and equipment		$ 12,614,653		$ 22,998,364		712,686
	Add: Payable - beginning		8,068,285		4,058,968		125,781
	Less: Payable - ending		(3,550,164)		(6,670,426)		(206,707)
	Effect of changes in foreign currency exchange rates		30,082		39,467		1,223
Cash paid		$ 17,162,856		$ 20,426,373		$ 632,983
Investing activities with no cash flow effect:
Unrealized (loss) gain on financial instruments
	Adjustment for change in value of available-for-sale financial assets		$ 6,025,809		($ 4,726,494)		(146,467)
	Evaluation of long-term investments accounted for under the equity method		1,505,235		( 878,076)		( 27,211)
		$ 7,531,044		($ 5,604,570)		($ 173,678)
	Financing activities with no cash flow effect:
	Cash dividends payable		$ 8,156,086		$ 17,157,864		$ 531,697
	Employees' bonus payable		$ 3,969,589		$ 5,449,328		$ 168,867
Fair value information of acquired subsidiary:
Current assets		$-		$ 2,093,844		$ 64,885
	Property, plant and equipment		-		2,189,168		67,839
Other assets		-		15,048		466
Current liabilities		-		( 203,784)		( 6,315)
Other liabilities		-		( 210,963)		( 6,537)
Total purchase price		-		3,883,313		120,338
	Less: minority interest		-		(47,712)		( 1,478)
	Cash of subsidiary		-		(67,600)		( 2,095)
Net assets of acquired subsidiary (less cash received)		$-		$ 3,768,001		$ 116,765

 

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

See review report of independent accountants dated August 24, 2010.HON HAI PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2009 AND 2010

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED)

(UNAUDITED)

1. HISTORY AND ORGANIZATION

1) Hon Hai Precision Industry Co., Ltd. (the Company) was established on February 20, 1974. The Company began to be listed on the Taiwan Stock Exchange in June 1991. The Company merged with Premier Image Technology Corporation (Premier Corp.) on December 1, 2006. The Company's issued and outstanding capital was $85,789,319. The main activities of the Company are the manufacture, processing and sales of connectors, cable, enclosures, wired/wireless communication products, optics products, power supply modules, and assemblies for use in the IT, communications, automotive equipment, precision molding, automobile, and consumer electronics industries. As of June 30, 2010, the Company and its subsidiaries had approximately 760,000 employees.

2) Consolidated subsidiaries

A. Main activities of the subsidiaries and ownership of the Company:

		Relationship				Ownership
Names of		with the				Percentage (%)
subsidiaries		Company		Main operating activities		2009.06.30		2010.06.30
Foxconn (Far		Wholly-owned		Investment holdings in		100%		100%
	East) Ltd. and		subsidiary		Mainland China, Europe
	subsidiaries				and North America and
					Hong Kong electronics
					manufacturers
	Foxconn Holding		Wholly-owned		Investment holdings in Asia		100%		100%
	Ltd. and		subsidiary		Pacific and North America
	subsidiaries				hi-tech companies
Hyield Venture		Majority-owned		Venture capital investment		98%		98%
	Capital Co., Ltd.		subsidiary		company and investment
	and subsidiaries				holdings in electronics
				manufactures
Bao Shin		Wholly-owned		Domestic investment company		100%		100%
	International		subsidiary		and investment holdings in
	Investment				companies engaged in
	Co., Ltd. and				computer system and
subsidiaries				machinery business
Hon Yuan		Wholly-owned		Domestic investment company		100%		100%
	International		subsidiary		and investment holdings in
	Investment				companies engaged in
	Co., Ltd. and				computer system and
subsidiaries				machinery business
Hon Chi		Wholly-owned		Domestic investment company		100%		100%
	International		subsidiary		and investment holdings in
	Investment				companies engaged in IT and
	Co., Ltd. and				machinery business
	subsidiaries
	Lin Yih		Wholly-owned		Investment holdings in R.O.C.		100%		100%
	International		subsidiary		companies
	Investment
	Co., Ltd.
	Hon Hai/		Wholly-owned		Logistics services		100%		100%
	Foxconn		subsidiary
	Logistics
	California LLC.
	Hon Hai/		Wholly-owned		Logistics services		100%		100%
	Foxconn		subsidiary
	Logistics
	Texas LLC.
	Ambit		Wholly-owned		Investment holdings in Mainland China		100%		100%
	International		subsidiary		companies
	Ltd. and
	subsidiaries
	Foxconn		Wholly-owned		Asia pacific sales		100%		100%
	Singapore		subsidiary
	(Pte) Ltd. and
	subsidiaries
	Foxconn		Wholly-owned		Research and development		100%		100%
	International		subsidiary
	Inc.
	Altus Technology		Wholly-owned		Manufacture and design of cellular		100%		100%
	Inc.		subsidiary		phone and camera lens and marketing
					of sensors
	Premier Image		Majority-		Manufacture and sales of camera		99.96%		99.96%
	Technology		owned
	-Hong Kong		subsidiary
	Limited and
	subsidiaries
	Foxconn SA B.V.		Majority-		Investment holdings		95%		95%
	and subsidiaries		owned
			subsidiary
	Image & Vision		Wholly-owned		Investment holdings		100%		100%
	Investment		subsidiary
	Corporation
	Margini Holdings		Wholly-owned		Investment holdings of Vietnam		100%		100%
	Limited and		subsidiary		and Brazil process and both
	subsidiaries				domestic and export sales
					companies
	Syntrend		Majority-		Manufacturing and marketing of		80%		-
	Creative Park		owned		computer components, comput
	Co., Ltd.		subsidiary

A. The financial statements of certain consolidated subsidiaries as of and for the six-month periods ended June 30, 2009 and 2010 were not reviewed by independent accountants, which reflect total assets of $203,522,045 and $268,526,658, constituting 22.59% and 21.08% of the consolidated total assets, and total liabilities of $80,670,377 and $129,159,537, constituting 17.03% and 16.58% of the consolidated total liabilities, as of June 30, 2009 and 2010 respectively, as well as total net income of $3,751,757 and $9,067,458, constituting 13.28% and 27.01% of the consolidated net income for the six-month periods ended June 30 , 2009 and 2010, respectively.

B. Changes in consolidated subsidiaries

(1) In January, 2010 a subsidiary of the Company acquired 90% of Sony Corporation Baja California, S.A. De C.V, which was consolidated effective the acquisition date.

(2) In May, 2010, the Company established and held 80% owenership in Syntrend Creative Park Co., Ltd., which was consolidated, effective the acquisition date.

3) Majority-owned subsidiaries those were not included in the consolidated financial statements:

None.

4) Adjustments for subsidiaries with different balance sheet dates: None.

5) Special operating risks of the foreign subsidiaries: No significant special operating risks that would affect the financial statements.

6) Significant restriction on remittance of funds from the foreign subsidiaries to the Company: None.

7) The Company's common stock owned by its subsidiary:

As of June 30, 2009 and 2010, Hon Jin International Investment Co., Ltd. owned 961,344 and 961,344 shares, respectively, of the Company's common stock at a cost of $18,901.

8) Information on new issuance of convertible bonds and common stock by subsidiaries: None.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements of the Company and its subsidiaries (collectively referred herein as the Group) are prepared in accordance with the "Rules Governing the Preparation of Financial Statements by Securities Issuers" and accounting principles generally accepted in the Republic of China. The Group's significant accounting policies are summarized below:

1)Basis for preparation of consolidated financial statements

A. All majority-owned subsidiaries and controlled entities are included in the consolidated financial statements. Effective January 1, 2008, the Company prepares consolidated financial statements on a quarterly basis.

B. The income (loss) of the subsidiaries is included in (excluded from) the consolidated statement of income effective on the date the Company gains (loses) control over the subsidiaries.

C. Significant intercompany transactions and assets and liabilities arising from intercompany transactions are eliminated.

2) Convenience translation into U.S. dollars

The financial statements are stated in New Taiwan Dollars. Translation of the 2010 New Taiwan dollar amounts into U.S. dollar amounts is included solely for the convenience of the readers, using the Federal Reserve Bank of New York exchange rate on June 30, 2010 of NT$32.27 to US$1 uniformly applied for all the financial statements accounts. Such translation amounts are unaudited and should not be construed as representations that the New Taiwan Dollars amounts represent, have been, or could be converted into U.S. dollars at this rate or any other rate of exchange.

3) Translation of financial statements of foreign subsidiaries into New Taiwan Dollars

Assets and liabilities of foreign subsidiaries are translated into New Taiwan dollars using the exchange rates at the balance sheet date. Equity accounts are translated at historical rates except for beginning retained earnings, which is carried forward from prior year's balance. Dividends are translated at the rates prevailing at the date of declaration. Profit and loss accounts are translated at weighted-average rates of the year. The resulting translation differences are included in "cumulative translation adjustments" under stockholders' equity.

4) Criteria for classifying assets and liabilities as current or non-current items

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

1) Assets arising from operating activities that are expected to be realized or consumed, or are intended to be sold within the normal operating cycle;

2) Assets held mainly for trading purposes;

3) Assets that are expected to be realized within twelve months from the balance sheet date; and

4) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

1) Liabilities arising from operating activities that are expected to be paid off within the normal operating cycle;

2) Liabilities arising mainly from trading activities;

3) Liabilities that are to be paid off within twelve months from the balance sheet date; and

4) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date.

5) Use of estimates

The preparation of financial statements in conformity with R.O.C. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements and the amounts of revenues and expenses reported during the period. Actual results could differ from those assumptions and estimates.

6) Foreign currency transactions

A. The Company and its consolidated subsidiaries maintain their accounts in New Taiwan dollars and functional currencies, respectively. Transactions denominated in foreign currencies are translated into New Taiwan dollars and their functional currencies at the spot exchange rates prevailing at the transaction dates. Exchange gains or losses due to the difference between the exchange rate on the transaction date and the exchange rate on the actual receipt and payment are recognized in current year's profit or loss.

B. Receivables, other monetary assets and liabilities denominated in foreign currencies are translated at the spot exchange rates prevailing at the balance sheet date. Exchange gains or losses are recognized in profit or loss. However, exchange gains or losses on overseas inter-company accounts that are, in nature, deemed long term is accounted for as a reduction in stockholders' equity.

C. When a gain or loss on a non-monetary item is recognized directly in equity, any exchange component of that gain or loss shall be recognized directly in equity. Conversely, when a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss shall be recognized in profit or loss. However, non-monetary items that are measured on a historical cost basis are translated using the exchange rate at the date of the transaction.

7) Cash equivalents

Cash equivalents represent short-term, highly liquid investments which can be readily converted into fixed amount of cash and with a maturity period of less than three months. The statements of cash flows is compiled under the cash and cash equivalents basis.

8) Financial assets and financial liabilities at fair value through profit or loss

A. Equity investments are recognized using trade date accounting. Debt instruments, beneficiary certificates and derivative financial instruments are recognized and derecognized using settlement date accounting. All are recognized initially at fair value.

B. These financial instruments are subsequently remeasured and stated at fair value, and the gain or loss is recognized in profit or loss. The fair value of listed stocks, OTC stocks, closed-end mutual funds and deposit receipts is based on latest quoted fair prices of the accounting period. The fair value of open-end and balanced mutual funds is based on the net asset value at the balance sheet date.

C. For derivatives that do not qualify for hedge accounting, if the derivative is an option, then the transaction is recognized at fair value on the trade date, and if the derivatives is not an option, then the transaction is recognized at zero fair value on the trade date.

D. The derivative features (such as call options and put options) embedded in bonds payable issued by the Company is described in Note 2 (22).

9) Available-for-sale financial assets

A. Equity investments are recognized using trade date accounting. Bond investments are recognized and derecognized using settlement date accounting and are recognized initially at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset.

B. Available-for-sale financial assets are remeasured and stated at fair value, and the gain or loss is recognized in equity. The fair value of listed stocks, OTC stocks, closed-end mutual funds and deposit receipts is based on latest quoted fair prices of the accounting period. The fair value of open-end and balanced mutual funds is based on the net asset value at the balance sheet date.

C. If there is any objective evidence that the financial asset is impaired, the cumulative loss that had been recognized directly in equity shall be removed from equity and recognized in profit or loss. Impairment losses recognized previously in profit or loss for an investment in an equity instrument shall not be reversed through profit or loss, and if, subsequently, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss shall be reversed, with the amount of the reversal recognized in profit or loss.

10) Financial assets carried at cost

A. Investment in unquoted equity instruments is recognized using trade date accounting and is recognized initially at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset.

B. If there is any objective evidence that the financial asset is impaired, the impairment loss is recognized in profit or loss. Such impairment loss cannot be reversed.

11) Settlement date accounting

If an entity recognizes financial assets using settlement date accounting, any change in the fair value of the asset to be received during the period between the trade date and the settlement date / balance sheet date is not recognized for assets carried at cost or amortized cost. For financial asset or financial liability classified as at fair value through profit or loss, the change in fair value is recognized in profit or loss. For available-for-sale financial assets, the change in fair value is recognized directly in equity.

12) Accounts receivable

Accounts receivable are claims resulting from the sale of goods or services. The fair value of accounts receivable is calculated based on the imputed interest rate. Accounts receivable which are collectible within one year, and where the difference between the fair value and the value at maturity is insignificant are measured at carrying value.

13) Allowance for doubtful accounts

Allowance for doubtful accounts is provided based on past experience and the evaluation of the collectibility of accounts, notes and other receivables, taking into account the aging analysis of receivables.

14) Inventories

Effective January 1, 2009, the Group adopted the amendments to R.O.C. SFAS No. 10, "Accounting for Inventories". The perpetual inventory system is adopted for inventory recognition. Inventories are stated at cost. The cost is determined using the weighted-average method. At the end of period, inventories are evaluated at the lower of cost or net realizable value, and the individual item approach is used in the comparison of cost and net realizable value. The calculation of net realizable value is based on the estimated selling price in the normal course of business, net of estimated costs of completion and estimated selling expenses.

As the value of raw materials declines and the cost of finished goods is over the net realizable value, the net realizable value of raw materials is determined based on current replacement cost.

15) Long-term equity investments accounted for under the equity method

A. Long-term equity investments in which the Group holds more than 20% of the investee company's voting shares or has the ability to exercise significant influence on the investee's operational decisions are accounted for under the equity method. The excess of the initial investment cost over the acquired net asset value of the investee attributable to goodwill is no longer amortized from 2006. Retrospective adjustment of the amount of goodwill amortized in previous years is not required. Goodwill is subject to tests of impairment on an annual basis. The excess of acquired net asset value of investee over the initial investment cost is allocated proportionately and applied as a reduction to the book values of identifiable non-current assets, and any remaining amount of such excess after this allocation is credited to extraordinary gains.

B. Long-term investment in which the Group holds more than 50% of the investee company's voting shares or has the ability to control the investee's operational decisions are accounted for under the equity method and included in the consolidated financial statements on a quarterly basis.

C. For foreign investments accounted for under the equity method, the Group's proportionate share of the investee company's cumulative translation adjustment, resulting from translating the foreign investee company's financial statements into New Taiwan Dollars, is recognized by the Group and included as "cumulative translation adjustments" under stockholders' equity.

16) Property, plant and equipment

A. Property, plant and equipment are stated at cost. Interest costs incurred on the loans used to bring the assets to the condition and location necessary for their intended uses are capitalized. Significant servicing or betterments capable of generating future economic benefits are capitalized and depreciated accordingly. Maintenance and repairs are expensed as incurred.

B. Depreciation is provided on the straight-line method using the service life guidelines prescribed by the R.O.C. Government, which approximate the useful lives of the assets plus one year as residual value. Fully depreciated assets still in use are depreciated based on the residual values over the remaining useful lives. The useful lives of property, plant and equipment are 2 to 8 years, except for buildings which are 45 to 55 years.

17) Goodwill and other intangible assets

A. The excess of the initial acquisition cost over the fair value of the acquired identifiable tangible and intangible assets is attributable to goodwill.

B. Other intangible assets, mainly customer relationship, are stated at cost and amortized on a straight-line basis over 3 years.

18) Deferred charges and other assets

A. The costs of telephone network installation charges, computer software, molding and tools equipment are recorded as deferred charges and amortized over their estimated economic lives on a straight-line basis.

B. Land use rights are stated at cost and amortized over the lease period using the straight-line method.

19) Impairment of non-financial assets

The Group recognizes impairment loss when there is indication that the recoverable amount of an asset is less than its carrying amount. The recoverable amount is the higher of the fair value less costs to sell and value in use. The fair value less costs to sell is the amount obtainable from the sale of the asset in an arm's length transaction after deducting any direct incremental disposal costs. The value in use is the present value of estimated future cash flows to be derived from continuing use of the asset and from its disposal at the end of its useful life. When the impairment no longer exists, the impairment loss recognized in prior years shall be recovered. The recoverable amount of goodwill shall be evaluated periodically. Impairment loss will be recognized whenever there is indication that the recoverable amount of these assets is less than their respective carrying amount. Impairment loss of goodwill recognized in prior years is not recoverable in the following years

20) Warranty obligation

Warranty obligation is recognized based on the estimated warranty cost per unit and the number of units sold during the period.

21) Pension plan

Under the defined benefit pension plan, net periodic pension costs are recognized in accordance with the actuarial calculations. Net periodic pension costs include service cost, interest cost, expected return on plan assets, and amortization of unrecognized net transition obligation and gains or losses on plan assets. Unrecognized net transition obligation is amortized on a straight-line basis over 15 years. Under the defined contribution pension plan, net periodic pension costs are recognized as incurred.

22) Bonds payable

For bonds issued with embedded conversion, put, or call option feature after January 1, 2006, the issuer shall bifurcate the issuance price based on the substance of the contractual arrangement on initial recognition, and recognized the elements separately as a financial asset, financial liability, or an equity instrument.

These bonds are accounted for as follows:

A. The difference between the issue price and face value of convertible corporate bonds is accounted for as premium or discount which is required to be amortized over the period from the date of issuance to maturity date using the interest method and is recorded as "interest expense".

B. The value of any derivative features (such as a call option and put option) embedded in the compound financial instrument is recognized as "financial assets or financial liabilities at fair value through profit or loss". These derivative features are subsequently remeasured and stated at fair value on each balance sheet date, and the gain or loss is recognized in "gain or loss on valuation of financial assets or financial liabilities". At the maturity of the redemption period, if the fair value of common stock exceeds the redemption price, the fair value of the put option is recognized as "capital reserve"; however, if the fair value of common stock is lower than the redemption price, the fair value of the put option is recognized as "gain or loss".

C. A conversion right embedded in the bonds issued by the Company, which is convertible to an equity instrument, is recognized in "capital reserve from stock conversion option". When a bondholder exercises his/her conversion rights, the liability component of the bonds (including corporate bonds and embedded derivatives) shall be revalued at fair value on the conversion date, and the resulting difference shall be recognized as "gain or loss" in the current period. The book value of the common stock issued due to the conversion shall be based on the adjusted book value of the above-mentioned liability component plus the book value of the stock conversion option.

D. Costs incurred on issuance of convertible bonds are proportionately charged to the liabilities and equities of the underlying instruments based on initial recognition amount.

E. In the event that the bondholders may exercise put options within the following year, the underlying bonds payable shall be reclassified to current liabilities. The bonds payable whose put options are unexercised during the exercisable period shall be reclassified to non-current liabilities.

23) Income tax

A. Income tax expense is provided based on accounting income after adjusting for permanent differences. The provision for income tax includes deferred income tax for the expected future tax consequences of events that have been included in different periods for financial or tax reporting purposes. Deferred income tax assets and liabilities are determined using enacted tax rates in effect for the year(s) in which the differences are expected to reverse. Valuation allowance on deferred income tax assets is recognized to the extent that it is more likely than not that the income tax benefits will not be realized. Over or under provision of income tax from the previous years is recorded as adjustment to the current year's income tax expense. In accordance with the ROC Income Tax Law, the company's undistributed income is subject to an additional 10% corporate income tax. The tax is charged to income tax expense after the appropriation of earnings is approved by the stockholders in the following year.

B. Income tax credits are provided for in accordance with R.O.C. SFAS No. 12 "Accounting for Income Tax Credits". Income tax credits arising from acquisitions of equipment or technology, expenditures for research and development, training and development of employees and investments in qualified stocks are charged to deferred income tax assets and credited to income tax expense in the period the related expenditures are incurred.

C. Effective January 1, 2006, the Company adopted the Income Basic Tax Act (the "Act"). Under the Act, the income tax payable shall be the higher of the basic tax and the regular income tax in accordance with the Income Tax Law and other relevant laws.

D. As a result of the amendment of the Income Tax Law, the Company recalculated its deferred tax assets and liabilities and recorded the resulting difference in the current year income tax benefit or expense.

24) Government grants

In accordance with R.O.C. SFAS No. 29 "Government Grants", government grants related to assets are recognized as deferred income; for depreciable assets, it is recognized as income over the useful life period of the asset in the proportions in which depreciation expense on those assets is recognized, and for non-depreciable assets that require the fulfillment of certain obligations, it would then be recognized as income over the periods that bear the cost of meeting the obligations. If the government grant relates to receiving financial consideration, it is recognized as income when earned, or as deferred income and recognized in periods over which the grant will be earned.

25) Treasury stock

A. When shares are bought back by the Company, the treasury stock is accounted for as a deduction of the equity.

B. Any excess of the proceeds over the cost of the treasury stock reissued is recognized as an increase in additional paid-in capital from the treasury stock transaction and if the proceeds are less than the cost, the deficit is charged to the additional paid-in capital account. Should the paid-in capital in excess of par value of common stock balance be insufficient to absorb the deficit, the balance is charged to retained earnings.

C. Treasury stock cost is determined using the weighted-average cost method.

D. The Company's common stock owned by its subsidiaries is treated as treasury stock.

26) Share-based payment - employee compensation plan

Based on the employee stock options and the share-based payment agreements, the Company shall measure the services received during the vesting period by reference to the fair value of the equity instruments granted and account for those amounts as payroll expenses during that period.

27) Employees' bonuses and directors' and supervisors' remuneration

Effective January 1, 2008, pursuant to EITF 96-052 of the Accounting Research and Development Foundation, R.O.C., dated March 16, 2007, "Accounting for Employees' Bonuses and Directors' and Supervisors' Remuneration", the costs of employees' bonuses and directors' and supervisors' remuneration are accounted for as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and the amounts can be estimated reasonably. However, if the accrued amounts for employees' bonuses and directors' and supervisors' remuneration are significantly different from the actual distributed amounts resolved by the stockholders at their annual stockholders' meeting subsequently, the differences shall be recognized as gain or loss in the following year. In addition, according to EITF 97-127 of the Accounting Research and Development Foundation, R.O.C., dated March 31, 2008, "Criteria for Listed Companies in Calculating the Number of Shares of Employees' Stock Bonus", the Company calculates the number of shares of employees' stock bonus based on the closing price of the Company's common stock at the previous day of the stockholders' meeting held in the year following the financial reporting year, after taking into account the effects of ex-rights and ex-dividends.

28) Earnings per share

Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by taking into account the potentially dilutive securities which are assumed to have been converted to common stock at the beginning of the period.

29) Revenues and expenses

Revenues are recognized when the earning process is substantially completed and are realized or realizable. Related costs are recognized to match the timing of revenue recognition. Expenses, including research and development costs, are recognized as incurred.

3. CHANGES IN ACCOUNTING PRINCIPLES

Inventories

Effective January 1, 2009, the Group adopted the amendments to R.O.C. SFAS No. 10, "Accounting for Inventories". As a result of this change in accounting principle, the Group's loss on market price decline increased by $573,717, consolidated net income decreased by $550,768 and earning per share decreased by $0.06 for the six-month period ended June 30, 2009. Furthemorer, as a result of thr reclassification of loss on market price decline, operating cost increased by $1,187,761 and non-operating loss associated with inventories decreased by $1,187,761 for the six-month period ended June 30, 2009.

 

 

 

 

 

 

4. DETAILS OF SIGNIFICANT ACCOUNTS

(1)Cash and cash equivalents

		June 30,
		2009		2010
Cash on hand		$ 7,386,942		$ 6,109,101
	Checking accounts		284,268		430,137
	Savings deposits		35,470,028		37,634,840
Time deposits		60,128,750		200,671,130
		103,269,988		244,845,208
Cash equivalents		21,785,308		4,913,025
		$125,055,296		$ 249,758,233

Cash equivalents include the Sweep Fund and short-term commercial paper and bonds purchased with resale agreements with maturity less than three months

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

		June 30, 2009
		Book value		Contract amount (Nominal principal) (in thousands)
Financial assets held for trading
Gold futures contracts		$ 282,963		-
	Open-end funds		15,000		-
	Forward exchange contracts-offset		4,893		USD(BUY) 65,000
				BRL(SELL) 10,110
				TWD(SELL) 1,634,600
					JPY(SELL) 973,500
	Forward exchange contracts-open		71,275		HUF(BUY) 282,300
				JPY(BUY) 4,241,920
				MXN(BUY) 150,197
					RMB(BUY) 20,523
					USD(BUY) 461,300
					VND(BUY) 86,116,256
					BRL(SELL) 3,910
					EUR(SELL) 1,000
					INR(SELL) 14,279
					RMB(SELL) 3,135,440
					USD(SELL) 62,859
			$ 374,131
		June 30, 2009
		Book value		Contract amount (Nominal principal) (in thousands)
Financial liabilities held for trading
	Forward exchange contracts-offset		($ 19,210)		RMB(BUY) 67,940
				RUB(BUY) 91,980
					USD(BUY) 25,000
					USD(SELL) 13,000
					TWD(SELL) 327,050
					BRL(SELL) 18,917
				CZK(SELL) 114,468
Forward exchange contracts-open		(32,943)		EUR(BUY) 3,000
				HUF(BUY) 1,100,340
					JPY(BUY) 1,463,452
					MXN(BUY )26,288
					USD(BUY) 336,784
					BRL(SELL) 9,649
					EUR(SELL) 11,000
					HUF(SELL) 602,880
					INR(SELL) 2,276
				RMB(SELL) 2,188,240
					USD(SELL) 21,090
			($ 52,153)
		June 30, 2010
		Book value		Contract amount (Nominal principal) (in thousands)
Financial assets held for trading
Gold futures contracts		$ -		-
	Open-end funds		15,000		-
	Forward exchange contracts-open		95,270		BRL(BUY) 5,591
				EUR(BUY) 4,102
				JPY(BUY) 451,875
					MXN(BUY) 465,944
					USD(BUY) 119,696
				VND(BUY) 126,452,500
				BRL(SELL) 20,606
					EUR(SELL) 16,500
					INR(SELL) 316,119
					JPY(SELL) 1,700,000
					MXN(SELL )75,760
					RMB(SELL) 430,126
					USD(SELL) 48,227
			$ 110,270
Financial liabilities held for trading
	Forward exchange contracts-open		($ 73,246)		BRL(BUY) 6,144
				EUR(BUY) 2,000
					HUF(BUY) 420,600
					JPY(BUY) 20,425
					MXN(BUY) 25,194
					USD(BUY) 22,008
				BRL(SELL) 16,559
				EUR(SELL) 7,800
				INR(SELL) 258,870
					RMB(SELL) 8,277
					USD(SELL) 6,789
		($ 73,246)

1) For the six-month period ended June 30, 2010, the Group recognized a net loss of $63,023, including unrealized gain of $22,024.

2) For the six-month period ended June 30, 2009, the Group recognized a net loss of $251,561 including unrealized gain of $38,332.

 

 

 

 

(3) Available-for-sale financial assets

		June 30,
		2009		2010
	Current items:
Listed stocks		$ 72,093		$ 64,230
Adjustment of available-for-sale financial assets		1,105,869		990,630
			$ 1,177,962		$ 1,054,860
	Non-current items:
Listed stocks		$ 5,267,667		$ 4,864,592
Adjustment of available-for-sale financial assets		8,384,674		7,879,140
			$13,652,341		$ 12,743,732

The fair value of available-for-sale financial assets increased by $7,531,044 and decreased by $5,604,570 for the six-month periods ended June 30, 2009 and 2010, respectively, and is shown as an adjustment to stockholders' equity as unrealized gain or loss on financial instruments. 

(4) Notes and accounts receivable - third parties

	June 30, 2009
	Amount	Allowance for doubtful accounts	Net amount
Notes receivable	$ 1,611,465	($ 74,597)	$ 1,536,868
Accounts receivable	249,617,481	(3,783,426)	245,834,055
	$251,228,946	($ 3,858,023)	$247,370,923

 

	June 30, 2010
	Amount	Allowance for doubtful accounts	Net amount
Notes receivable	$ 18,739,262	($ 596)	$ 18,738,666
Accounts receivable	353,543,220	(3,206,265)	350,336,955
	$372,282,482	($ 3,206,861)	$369,075,621

1. The Group factored its accounts receivable to certain financial institutions without recourse. Under the agreement, the Group is not required to bear uncollectible risk of the underlying accounts receivable, but is liable for the losses incurred on any business dispute, and did not provide any collateral. Accordingly, these accounts receivable meet the derecognition criteria for financial assets. The Group has derecognized the accounts receivable sold to financial institutions, net of the amount estimated for business disputes.

As of June 30, 2009 and 2010, the relevant information of accounts receivable factored but unsettled were as follows:

 

 

 

 

 

June 30, 2009
Institutions	Interest rate (%)	Accounts receivable sold/ derecognized	Amount advanced	Amount retained	Limit
Mega International Commercial Bank	0.55	$ 1,104,057	$ 1,104,057	$-	$ 16,405,000
Taipei Fubon Bank	0.60	1,072,887	1,072,887	-	22,967,000
		$ 2,176,944	$ 2,176,944	$-	$ 39,372,000

 

June 30, 2010
Institutions		Interest rate (%)		Accounts receivable sold/ derecognized		Amount advanced		Amount retained		Limit
Mega International Commercial Bank		1.08		$12,164,947		$12,164,947		$-		$ 16,075,000
Taipei Fubon Bank		1.35		21,058,250		21,058,250		-		32,150,000
	Mizuho Corporate Bank		0.86		6,430,000		6,430,000		-		6,430,000
	Sumitomo Mitsui Banking Corporation		1.20		4,822,500		4,822,500		-		11,252,500
	ING Bank N.V.		1.18		2,250,500		2,250,500		-		6,430,000
	Standard Chartered Commercial Bank		1.00		3,858,000		3,858,000		-		3,858,000
				$50,584,197		$50,584,197		$-		$ 76,195,500

 

2. For the six-month periods ended June 30, 2009 and 2010, the financing charges (expenses) incurred from accounts receivable factoring were $8,754 and $50,756 (shown as "financing charges"), respectively.

(5) Other receivables

		June 30,
		2009		2010
	Tax refund receivable		$11,737,375		$22,845,005
	Receivables for payments made on behalf of others		1,355,040		1,292,752
	Amount retained on accounts receivable sold		726,025		1,070,136
	Dividends receivable		216,361		288,607
	Others		2,898,988		2,699,118
		$16,933,789		$28,195,618

(6) Inventories

		June 30,
		2009		2010
Raw materials and supplies		$60,584,809		$ 105,767,589
	Work in process		33,862,101		53,817,602
	Finished goods		68,755,683		81,267,929
	Inventory in transit		13,627,231		22,467,833
			176,829,824		263,320,953
Less: Allowance for inventory obsolescence and market price decline		( 9,723,595)		( 10,125,389)
		$ 167,106,229		$ 253,195,564

Expenses and loss incurred on inventories for the six-month periods ended June 30, 2009 and 2010 were as follows:

		For the six-month periods ended June 30,
		2009		2010
	Cost of inventories sold		$ 735,037,731		$ 1,097,753,063
Loss on inventory obsolescence and market price decline		1,189,326		416,458
Others		(1,565)		23,129
			$ 736,225,492		$ 1,098,192,650

(7) Financial assets carried at cost

		June 30,
Name of investee company		2009		2010
Diamondhead Ventures Ltd.		$307,732		$ 333,692
Riverhood Capital Partners L.P.		-		203,541
	Global Strategic Investment Inc.		200,400		200,400
	Aptlna Acquisition L.P.		-		169,875
	Wimm. Labs Incorporated		-		160,750
	Shenzhen Yuto Printing Co., Ltd.		-		122,802
	Entire Technology Co., Ltd.		148,489		-
	Others		668,078		957,092
			$ 1,324,699		$2,148,152

1) The Group recognized impairment loss in the amounts of $0 and $120,864 (shown as "impairment loss") for the six-month periods ended June 30 2009 and 2010, respectively, on its investment accounted for under the equity method.

2) Entire Technology Co., Ltd., one of the company's investee companies, becomes listed in August 2009. Acordingly, the company reclassified such investment to "Available-for-sale financial assets - non-current".

3) These investments have no active quoted market price and their fair values cannot be measured reliably. Therefore, they were measured at cost.

(8) Long-term equity investments accounted for under the equity method

		June 30, 2010
		Ownership		June 30,
Investee Company		Percentage (%)		2009		2010
Foxconn Technology Co., Ltd.		31		$ 13,541,065		$ 14,532,305
Foxconn Advanced Technology, Ltd.- Cayman		43		3,719,846		5,522,080
Pan International Industrial Corporation		27		3,545,718		3,473,691
	Simplo Technology Co., Ltd.		9		1,730,200		1,824,044
	Ampower Holding Limited - Cayman		45		1,237,740		1,187,604
	Ways Technical Corp., Ltd.		24		1,129,884		1,148,195
	Multiwin Precision Ind. Co. Ltd.		29		-		1,114,215
	G-Tech Optoelectronics Corporation		42		725,397		787,619
	CyberTAN Technology, Inc.		11		523,799		561,498
Mediamarkt (China) International Retail Holding Limited-HK		25		-		643,000
	Uer Holding Corporation-Cayman		40		-		395,824
Alliance Fiber Optic Products Inc.		20		321,758		332,992
Diabell Co., Ltd.		20		283,831		313,193
Others				1,864,142		1,565,569
					28,623,380		33,401,829
	Add: Prepaid long-term investment				-		33,033
				$ 28,623,380		$ 33,434,862

 

1) The consolidated financial statements included investment income accounted for under the equity method of $613,355, and investment loss accounted for under the equity method of $17,696, constituting 2.17% and 0.05% of the consolidated net income for the six-month periods ended June 30, 2009 and 2010, respectively, and the related long-term investments of $20,593,099 and $11,578,006, constituting 2.29% and 0.91% of the consolidated total assets as of June 30, 2009 and 2010, respectively. These amounts were based on the financial statements of the investee companies for the same periods which were not audited or reviewed by independent accountants.

2) The Group recognized impairment loss amounting to $65,155 and $145,846 (shown as "impairment loss") for the six-month periods ended June 30, 2009 and 2010 on its investment accounted for under the equity method.

 

 

 

 

 

 

 (9) Property, plant and equipment

		June 30, 2009
		Original cost		Accumulated depreciation		Net book value
Land		$3,703,839		$ -		$ 3,703,839
	Buildings and improvements		100,691,528		( 15,707,025)		84,984,503
	Machinery		154,980,995		( 57,115,468)		97,865,527
	Molding equipment		2,847,581		(2,390,516)		457,065
	Testing equipment		19,678,538		( 10,488,760)		9,189,778
	Furniture and fixtures		12,776,776		(7,212,083)		5,564,693
	Tooling equipment		3,093,551		(1,465,840)		1,627,711
	Miscellaneous equipment		27,339,279		( 10,901,518)		16,437,761
Prepayments for equipment and construction in progress		29,215,002		-		29,215,002
		$ 354,327,089		($105,281,210)		249,045,879
	Less: Accumulated impairment						(2,565,150)
							$246,480,729
			June 30, 2010
		Original cost		Accumulated depreciation		Net book value
Land		$3,885,454		$ -		$ 3,885,454
	Buildings and improvements		115,607,973		( 20,986,808)		94,621,165
	Machinery		160,765,871		( 69,356,995)		91,408,876
	Molding equipment		3,150,875		(2,342,506)		808,369
	Testing equipment		21,577,499		( 13,353,637)		8,223,862
	Furniture and fixtures		13,748,520		(8,643,827)		5,104,693
	Tooling equipment		3,246,397		(1,550,751)		1,695,646
	Miscellaneous equipment		31,477,981		( 14,771,243)		16,706,738
Prepayments for equipment and construction in progress		23,354,417		-		23,354,417
		$ 376,814,987		($131,005,767)		245,809,220
	Less: Accumulated impairment						(3,623,071)
							$242,186,149

The Group recognized impairment loss of $ 299,949 and $772,770 (shown as "impairment loss") for the six-month periods ended June 30, 2009 and 2010, respectively.

 (10) Intangible assets

1)Business acquisition

On January 1, 2010, the Company acquired from Sony Corporation a portion of its Mexico plant's production equipment and 90% ownership of its subsidiary, Sony BAJA California, S.A.DE C.V., for a cost of US$119,900 thousand.

 

 

Fair value information of acquired subsidiary:
Current assets		$ 2,093,844
	Property, plant and equipment		2,189,168
	Other assets		15,048
	Current liabilities		( 203,784)
	Other liabilities		( 210,963)
	Total purchase price		3,883,313
	Less: minority interest		(47,712)
	Cash of subsidiary		(67,600)
	Net assets of acquired subsidiary (less cash received)		$ 3,768,001

 

2) Goodwill

		For the six-month periods ended June 30,
		2009		2010
	Net book value, January 1		$ 2,291,662		$ 1,317,381
	Impairment loss		( 960,250)		( 1,098,808)
	Cumulative translation adjustments		14,215		( 3,099)
	Net book value, June 30		$ 1,345,627		$215,474

A.The above amount mainly represents goodwill arising from the company's subsidiary's acquisition of Chi Mei Communication System, Inc. in 2005.

B.The Company's subsidiary recognized impairment loss on its goodwill amounting to $960,250 and $1,098,808 (shown as "impairment loss") for the six-month period ended June 30, 2009 and 2010, respectively.

3) Other intangible assets - customer relationship

In February 2008, the Company's subsidiary, Foxteq Holding Inc. - Cayman, signed an assets purchase agreement with Sanmina-SCI Corporation, Sanmina- SCI USA Inc., SCI Technology, Inc., Sanmina- SCI Systems De Mexico S.A. De C.V., Sanmina- SCI Hungary Electronics Manufacturing LLC. and Sanmina- SCI Australia Pty Ltd. for the acquisition of certain assets and liabilities of these companies. The acquisition cost was US$70 million. The acquisition was effective on July 7, 2008. The intangible assets - customer relationship arising from the above acquisition, amounted to $965,100, which were appraised by the Company and experts. The changes in the intangible assets - customer relationship for the six-month periods ended June 30, 2009 and 2010, respectively, are set forth below:

 

		June 30,
		2009		2010
	Net book value, January 1		$818,688		$ 476,011
	Amortization in current year		( 169,042)		( 160,776)
	Cumulative translation adjustments		3,929		1,121
Net book value, June 30		$653,575		$ 316,356

 (11) Other assets

		June 30,
		2009		2010
	Land use rights		$19,247,580		$21,030,475
	Others		3,515,788		5,543,670
		$22,763,368		$26,574,145

 For the six-month periods ended June 30, 2009 and 2010, the land use rights were as follows:

		For the six-month periods ended June 30,
		2009		2010
	Net book value, January 1		$19,091,762		$ 21,088,073
	Increase in current year		336,870		142,193
	Amortization in current year		( 182,021)		( 219,678)
	Cumulative translation adjustments		969		19,887
Net book value, June 30		$19,247,580		$ 21,030,475

(12) Short-term loans

		June 30,
		2009		2010
Credit loans		$ 43,913,266		$170,733,532
	Secured loans		-		696,937
			$ 43,913,266		$171,430,469
	Interest rates per annum		0.31% ~ 5.8%		0.32% ~ 6.83%

(13) Accrued expenses

		June 30,
		2009		2010
Awards and salaries payable		$ 9,602,716		$14,719,728
	Royalty fees payable		3,100,545		6,197,670
	Business Tax (VAT) payable		2,803,946		3,756,244
	Employees' bonuses payable		2,043,192		2,501,042
	Welfare fees payable		2,263,325		2,391,179
	Shipping fees payable		2,035,558		2,830,050
	Fees payable for tooling		177,886		1,731,712
	Tax payable (excluding VAT)		969,280		1,463,152
	Consumption goods expense payable		903,055		1,382,515
	Interest payable		394,326		708,641
	Molding payable		770,121		456,051
	Others		10,567,559		12,494,942
		$35,631,509		$50,632,926

 

 

(14) Income tax

1) Income tax expense and income tax payable are reconciled as follows:

		June 30,
		2009		2010
	Income tax expense		$5,383,973		$8,926,218
	Changes in deferred income tax		2,428,536		786,441
Less: Prepaid income tax and income tax withheld		(631,136)		(676,727)
Over provision of prior years' income tax		974,235		610,388
	Add: Income tax payable at the beginning of the period		2,522,163		3,165,232
	Income tax payable		$ 10,677,771		$ 12,811,552

2) As of June 30, 2009 and 2010, the deferred income tax assets and liabilities were as follows:

		June 30,
		2009		2010
	Deferred income tax assets		$3,041,259		$3,631,617
	Deferred income tax liabilities		($6,096,732)		($ 4,939,289)

3) The temporary differences and related amounts of deferred tax assets (liabilities) are listed as follows:

		June 30,
		2009				2010
		Amount		Tax effect		Amount	Tax effect
Current items:
Allowance for doubtful accounts		$ 1,999,061		$ 399,813		$729,941	$ 125,518
	Reserve for inventory obsolescence and market price decline		6,088,015		1,269,142	5,290,360	1,054,560
Unrealized exchange		6,797		1,445		( 2,661,952)	(450,175)
	losses(gains)
Product warranty		3,986,275		797,255		8,748,191	1,537,256
Others		522,583		103,690		( 143,985)	59,992
			$12,602,731		2,571,345	$ 11,962,555	2,327,151
	Non-current items:
	Reserve for pension cost		$831,116		166,223	$838,832	142,601
Foreign investment income accounted for under the equity method		( 30,483,661)		( 6,096,732)		( 26,358,845)	( 4,489,114)
Others		1,129,520		303,691		2,846,764	711,690
			($28,523,025)		( 5,626,818)	($22,673,249)	( 3,634,823)
					($3,055,473)		($1,307,672)

4) As of June 30, 2010, the Company's and Premier's income tax returns have been approved by the R.O.C. Tax Authority through 2007 and 2006, respectively.

(15) Bonds payable

		June 30,
		2009		2010
	2006 1st domestic convertible bonds payable		$18,000,000		$12,039,400
Less: Discount on bonds payable		( 144,079)		-
			17,855,921		12,039,400
First unsecured corporate bonds issue in 2005		11,500,000		11,500,000
	First debenture issuing of 2008		5,180,000		5,180,000
	First debenture issuing of 2009		-		6,820,000
			34,535,921		35,539,400
	Less: Current portion		( 17,855,921)		( 6,000,000)
Bonds payable - long term		$16,680,000		$29,539,400

1) 2006 1st domestic convertible bonds payable

A. On September 1, 2006, following the approval from the SFB, the Company issued domestic zero coupon unsecured bonds in the amount of $18,000,000. These convertible bonds cover a period of five years from November 10, 2006 to November 10, 2011.

B. The conversion price shall be adjusted based on the terms of the convertible bonds. As of June 30, 2010, the convertible bonds have not been converted. The conversion price was adjusted to $161.62 (in dollars) per share due to the declaration of based on the resolution approved at the stockholders' meeting in 2009.

C. Under the terms of the convertible bonds, all the stock dividends redeemed or converted bonds will be retired and not to be re-issued.

D. The bondholders may require the Company to redeem any bond at face value three years after the issuance. On November 10, 2009, bondholders have redeemed total of $5,960,600.

E. Under the terms of the convertible bonds, the rights and obligations of the new shares converted from convertible bonds are the same as those of the issued and outstanding common stock. 

F. The effective interest rate of the bonds was 2.32%.

G. The discount on convertible bonds is amortized during the expected outstanding period of 3 years, using the interest methods. Since November 10, 2009, the bonds have no longer had outstanding discount.

H. The fair value of conversion right in the amount of $1,195,200 was separated from bonds payable at issuance date, and was recognized in "Capital reserve from conversion right" in accordance with SFAS No. 36.

2) First unsecured corporate bonds issue in 2005

A) On September 14, 2005, following the approval from the SFB, the Company issued domestic unsecured bonds in the amount of $11,500,000. The terms of these domestic unsecured bonds are summarized as follows:

Type of bonds	Issuance date	Period	Amount	Nominal interest rate	Payment term
Bond Aa to Af	September 2005	5 years	$ 500,000	1.9800%	Principal is due at maturity. Interest is paid annually at simple interest rate.
Bond Ba to Bf	September 2005	5 years	$ 500,000	1.9703%	Principal is due at maturity. Interest is compounded semi-annually and paid annually.
Bond Ca to Cf	September 2005	7 years	$ 500,000	2.2500%	Principal is due at maturity. Interest is paid annually at simple interest rate.
Bond Da to De	September 2005	10 years	$ 500,000	2.3700%	Principal is due at maturity. Interest is paid annually at simple interest rate.

 

B) Bond Aa to Af and Bond Ba to Bf of 2005 1st unsecured bonds payables had been reclassified to "Current liabilities" in the third quarter of2009.

3) First debenture issue of 2008

On December 9, 2008, following the approval from the SFB, the Company issued domestic unsecured bonds in the amount of $5,180,000. The terms of these domestic unsecured bonds are summarized as follows:

Issuance date	Period	Amount	Nominal interest rate	Payment term
December 2008	3 years	$ 5,180,000	2.5%	Principal is due at maturity. Interest is paid annually at simple interest rate.

4) First debenture issuing of 2009

On January 12, 2009, following the approval from the SFB, the Company issued domestic unsecured bonds in the amount of $6,820,000. The terms of these domestic unsecured bonds are summarized as follows.

Issuance date	Period	Amount	Nominal interest rate	Payment term
October 2009	5 years	$ 6,820,000	1.7%	Pay half of principal each in the fourth and fifth year. Interest is paid annually at simple interest rate.

(16) Long-term loans

Institution		Loan period		June 30, 2009		Limit
Mizuho Corporate Bank Ltd., etc. syndicated loan		2008/8/21~2011/8/21		$17,553,350		(USD 535,000,000)
	〞		2008/9/11~2013/9/11		16,405,000		(USD 500,000,000)
				$33,958,350
	Interest rate				4.2288%~4.8438%

 

Institution		Loan period		June 30, 2010		Limit
Mizuho Corporate Bank Ltd., etc. syndicated loan		2008/8/21~2011/8/21		$17,200,250		(USD 535,000,000)
	〞		2008/9/11~2013/9/11		16,075,000		(USD 500,000,000)
				$33,275,250
	Interest rate				0.7472%~0.7972%

 

1) The Company's subsidiary entered into a syndicated credit facility agreement with Mizuho Corporate Bank Ltd. as the lead bank and obtained a credit line in the amount of US$1,035,000 thousand. The Company is the guarantor of the loan.

2) As the contract period of the loan is over twelve months, it was recognized as long-term loan.

3) Throughout the term of the syndicated term loan agreement, the Group shall maintain the following financial ratios, to be tested semi-annually and annually on an audited consolidated basis:

A. The current ratio shall not be less than one hundred percent (100%).

B. The ratio of total net debt to consolidated tangible net assets shall not exceed seventy percent (70%).

C. The interest coverage (income before income tax plus depreciation, amortization and interest expense divided by net interest expense) shall not be less than five hundred percent (500%).

D. Net debt is defined as total debt deducted by cash and cash equivalents.

E. The consolidated net tangible assets are defined as the consolidated total net assets of the Group deducted by goodwill acquired through merger and acquisition.

F. Net interest expense is defined as interest expense deducted by interest income.

The Company has not breached any of the above financial ratio commitments under the syndicated loan agreement.

(17) Retirement plan

1) The Company has a non-contributory and funded defined benefit pension plan in accordancewith the Labor Standards Law, covering all regular employees. The Company contributes monthly an amount equal to 2.1% of the employees' monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. The pension expenses under the defined benefit plan amounted to $34,795 and $29,795 for the six-month periods ended June 30, 2009 and 2010, respectively. The balance of the fund which is deposited with Bank of Taiwan was $552,318 and $583,664 as of June 30, 2009 and 2010, respectively.

2) In accordance with the Labor Pension Act, the Company has a defined contribution employee retirement plan covering all domestic employees. The Company contributes monthly an amount based on 6% of the employees' monthly salaries and wages to the employees' personal pension accounts with the Bureau of Labor Insurance. The pension expenses under this plan amounted to $114,186 and $129,160 for the six-month periods ended June 30, 2009 and 2010, respectively.

3) The subsidiaries in mainland China have defined contribution pension plans and contribute an amount monthly based on 8%~9% of employees' monthly salaries and wages to an independent fund administered by a government agency.

4) As of June 30, 2009 and 2010, the subsidiaries which participated in defined contribution pension plans recognized reserve according to the respective local laws for retirement plan in the amount of $226,842 and $227,272, respectively. Pension expenses in the amount of $1,690,494 and $2,319,732 were recognized for the six-month periods ended June June 30, 2009 and 2010, respectively.

(18) Capital stock

1) As of June 30, 2010, the Company's authorized shares were 9,300,000 thousand shares (including 200 million shares reserved for stock warrants or bonds issued with detachable warrants) and the issued and outstanding common stock were 8,578,932 thousand shares with a par value of $10 (in dollars) per share.

2) On June 8, 2010, the Company's shareholders adopted a resolution to increase the authorized shares to 9,300,000 thousand shares and to issue stock dividends at par value amounting to $10,294,718.

3) On June 8, 2010, the Company's shareholders approved employees' stock bonus amounting to $5,449,328 for 2009. The employee stock bonus of 52,845 thousand shares was determined based on the closing price of $103.12 (in dollars) on June 7, 2010, the previous day of the 2010 shareholders' meeting after taking into accounts the effects of ex-rights and ex-dividends. 

4) Pursuant to the resolution adopted at the stockholders' meeting held on September

 1, 1999, and after obtaining approval from the SFC, the Company issued 25 million units of global depository receipts (GDRs) in Europe, Asia and the USA, comprising 50 million shares of common stock (Deposited Shares). The issuance is amounted USD 347,250,000, the main terms and conditions of the GDRs are as follows:

A. Voting

Holders of GDRs have no right to directly exercise voting rights or attend the Company's stockholders' meeting, except when a motion is on the election of directors or supervisors.

A holder or holders together holding at least 51% of the GDRs outstanding at the relevant record date of the stockholders' meeting can instruct the Depositary to vote in the same direction in respect of one or more resolutions to be proposed at the meeting.

B. Sale and withdrawal of GDRs

Under the current R.O.C. law, shares represented by the GDRs may be withdrawn by holders of GDRs commencing three months after the initial issue of GDRs. A holder of a GDR may, provided that the Company has delivered to the custodian physical share certificates in respect of the Deposited Shares, request the Depositary to sell or cause to be sold on behalf of such holder the shares represented by such GDRs.

C. Dividends

GDR holders are entitled to receive dividends to the same extent as the holders of common stock subject to the terms of the Deposit Agreement and applicable laws of the R.O.C.

D. As of June 30, 2010, 134,023,000 units of GDRs were outstanding, which represents 268,047 thousand shares of common stock.

(19) Share-based payment - employee compensation plan

As of June 30, 2009 and 2010, the share-based payment transactions of Foxconn International Holdings Ltd. (Cayman), a subsidiary of the Company (listed on the Stock Exchange of Hong Kong), are set forth below:

Type of  arrangement	Grant date	Quantity granted	Contract period	Vesting conditions/ Restricted terms
Employee stock options	July 25, 2005	435,599,000	1 ~ 6 years	Note (1)
〞	September 12, 2007	2,400,000	1 ~ 6 years	〞
〞	September 12, 2007	300,000	1 ~ 3 years	〞
Share appreciation rights	January 1, 2006	7,343,564	1 ~ 3 years	-
Other share-based payment plans	December 29, 2006	5,748,145	-	Note (2)
〞	July 24, 2007	502,090	-	Note (3)
〞	December 28, 2007	20,459,322	-	Note (4)
〞	October 29, 2009	26,161,489	-	-
〞	April 27, 2010	9,435,264	-	-

Note:

(1)Vested upon completion of certain years' service.

(2)Of the shares granted, 2,737,718 shares cannot be sold within one to three years from the grant date.

(3)Of the shares granted, 407,000 shares cannot be sold within one to two years from the grant date.

(4)Of the shares granted, 20,362,078 shares cannot be sold within one to three years from the grant date.

 

1) Employee stock options

For the stock options granted with the compensation cost accounted for using the fair value method, their fair value on the grant date is estimated using the Black-Scholes option-pricing model. The weighted-average parameters used in the estimation of the fair value are as follows:

Grant date		Stock price (HK$)		Exercise price  (HK$)		Expected price   volatility		Expected dividend   yield rate		Risk-free  interest rate		Fair value per  share (US$)
July 25, 2005		$ 5.95		$ 6.06		30%		-		3.39%		$ 0.24
	September 12, 2007(A)		19.46		20.63		36%		-		3.92%		0.86

For the six-month periods ended June 30, 2009 and 2010, the weighted-average exercise price of employee stock options outstanding were US$0.73 and US$1.23 (in dollars) per share, respectively, and expenses incurred on employee stock options transactions were $66,174 (US$1,973 thousand) and $81,760 (US$2,563 thousand), respectively. Details of the employee stock options are set forth below:

		For the six-month periods ended June 30,
Employee Stock Options (In shares)		2009		2010
Options outstanding at beginning of period		308,100,192		264,831,013
	Options granted		-		-
	Options exercised		(16,000)		( 33,901,600)
	Options revoked		( 24,162,439)		( 2,034,880)
	Options outstanding at end of period		283,921,753		228,894,533
	Options exercisable at end of period		103,945,423		116,379,653

2) Share appreciation rights

For the six-month periods ended June 30, 2009 and 2010, the range of exercise price of stock appreciation rights outstanding were HK$3.96～HK$26.05 and HK$17.86～HK$25.65 (in dollars), respectively. As of June 30, 2009 and 2010, the liabilities on stock appreciation rights were $39,864 (US$1,215 thousand) and $5,851 (US$182 thousand), respectively (shown as "Accrued expenses"). For the six-month periods ended June 30, 2009 and 2010, expenses incurred on stock appreciation rights transactions were $8,855 (US$264 thousand) and $271 (US$9 thousand), respectively.

3) Other share-based payment plans

These share-based payments were granted to employees. For the six-month periods ended June 30, 2009 and 2010, expenses incurred on other share-based payments were $102,901 (US$3,068 thousand) and $283,683 (US$8,893 thousand), respectively.

(20) Capital reserve

1) Pursuant to the R.O.C. Company Law, for the capital reserve arising from donations and from paid-in capital in excess of par value on issuance of common stocks, an amount equal to up to 10% of the contributed capital can be capitalized, provided that there is no accumulated deficit, and the remainder is restricted to cover deficit. Further, accumulated deficit shall be first covered by retained earnings before capital reserve can be used to cover any accumulated deficit.

2) Under the R.O.C. SFB regulations, the Company may apply, once a year, to capitalize the capital reserves arising from paid-in capital in excess of par on the issuance of stocks for cash. The application shall be made after the year of the issuance, and the amount to be capitalized shall not exceed the prescribed amount.

3) According to rules of regulatory agency, capital reserve arising from long-term equity investments accounted for under the equity method can not be capitalized.

4) Please see Note 4 (15) for information on "Capital reserve from conversion right".

(21) Retained earnings

1) In accordance with the Company's Articles of Incorporation, current year's earning must be distributed in the following order:

A. offsetting accumulated deficits, if any;

B. Setting aside as legal reserve equal to 10% of current year's net income after tax and distribution pursuant to clause (A);

C. Setting aside a special reserve in accordance with applicable legal and regulatory requirement;

D. 8% as bonuses to employees; qualified employees includes employees of affiliates per criteria set by Board of Director; and

E. the remainder shall be distributed pursuant to the proposal of the board of directors in accordance with the Company's dividend policy.

The Company's dividend policy requires the board of directors to consider the Company's budget for future capital expenditures and funding needs when proposing the the distribution of earnings. The proposal should be resolved in the Meeting of the Stockholders. Dividends may be distributed in the form of cash or shares, or a combination of both, provided, however, that cash dividends distributed in respect of any fiscal year shall not exceed 90 percent of total dividends to stockholders. 2) The details of the undistributed earnings were as follows:

		June 30,
		2009		2010
	Before new tax system was adopted		$2,163,509		$ 2,163,509
	After new tax system was adopted
Subjected to additional 10% corporate income tax		120,623,446		150,965,282
	Not subjected to additional 10% corporate income tax		58,719,305		75,402,429
		$ 181,506,260		$ 228,531,220

3) The details of imputation system were as follows:

		June 30,
		2009		2010
Balance of stockholders deductible tax account		$ 21,141,842		$ 30,812,866
			December 31, 2009 (Estimated)		June 30, 2010 (Estimated)
	Tax deductible rate of earnings distribution		13.61%		17.14%

4) The appropriation of 2008 and 2009 earnings had been resolved at the stockholders' meeting on April 16, 2009 and June 8, 2010, respectively. Details are summarized below:

	2008 earnings		2009 earnings
	Amount	Dividends per share  (in dollars)	Amount	Dividends per share (in dollars)
Legal reserve	$ 5,513,318	$-	$ 7,568,511	$-
Stock dividends	11,121,935	1.5	10,294,718	1.2
Cash dividends	8,156,086	1.1	17,157,864	2.0
	$24,791,339	$ 2.6	$ 35,021,093	$ 3.2

The earnings distribution information are posted on the "Market Observation Post System" at the website of the TSEC.

 5) The estimated amounts of employees' bonus and directors' and supervisors' remuneration for 2009 are $5,449,328 and $0, respectively, based on a certain percentage (8% and 0%) of net income in 2009, after taking into account the legal reserve and other factors, as prescribed by the Company's Articles of Incorporation and are recognized as operating costs or operating expenses for 2009. The information of employees' bonus and directors' and supervisors' remuneration is posted on the "Market Observation Post System" at the website of the TSEC. The employee stock bonus of 52,845 thousand shares were determined by the closing price of the Company's common stock, $103.12 (in dollars), on June 7, 2010, the previous day of the 2010 shareholders' meeting after taking into account the effects of ex-rights and ex-dividends. The employee stock bonus less than one share is paid in cash in the amount of $53 (in dollars).

(22) Earnings per common share

		For the six-month period ended June 30, 2009
		Amount				Number of shares (in thousands)	Earnings per  common share
		Before tax		After tax			Before tax	After tax
Basic earnings per share:
Consolidated net income		$33,632,669		$28,248,696		9,607,327	$3.50	$ 2.94
Minority interest		( 66,834)		128,773			( 0.01)	0.01
	Net income attributable to equity holders of the Company		$33,565,835		$28,377,469		$3.49	$ 2.95
	Diluted earnings per share:
Consolidated net income		$33,632,669		$28,248,696			$3.45	$ 2.90
Minority interest		( 66,834)		128,773			( 0.01)	0.01
	Dilutive effect of stock equivalents: Convertible bonds		197,563		148,172	111,372	0.02	0.02
	Employees' bonus-2009		-		-	23,149	-	-
	Net income attributable to equity holders of the Company		$33,763,398		$28,525,641	9,741,848	$3.46	$ 2.93
			For the six-month period ended June 30, 2010
		Amount				Number of shares (in thousands)	Earnings per  common share
		Before tax		After tax			Before tax	After tax
Basic earnings per share:
Consolidated net income		$42,501,092		$33,574,874		9,614,042	$4.42	$ 3.49
Minority interest		1,037,501		1,163,543			0.11	0.12
	Net income attributable to equity holders of the Company		$43,538,593		$34,738,417		$4.53	$ 3.61
	Diluted earnings per share:
Consolidated net income		$42,501,092		$33,574,874			$4.38	$ 3.46
Minority interest		1,037,501		1,163,543			0.10	0.12
	Dilutive effect of stock equivalents: Convertible bonds		-		-	74,492	-	-
	Employees' bonus-2009		-		-	24,572	-	-
	Net income attributable to equity holders of the Company		$43,538,593		$34,738,417	9,713,106	$4.48	$ 3.58

 

1) Effective January 1, 2008, as employees' bonus could be distributed in the form of stock, the diluted EPS computation shall assume that distribution will be in the form of stocks in the calculation of the weighted-average number of common shares outstanding during the reporting year, taking into account the dilutive effects of stock bonus on potential common shares; whereas, the basic EPS shall be calculated based on the weighted-average number of common shares outstanding during the reporting year, of which shall include the shares of employees' stock bonus from the appropriation of prior year earnings, which have already been resolved at the stockholders' meeting held in the reporting year.

2) The number of shares had retroactively been adjusted by the stock dividends as of June 30, 2010.

(23)Personnel, depreciation and amortization expenses

		For the six-month periods ended June 30,
		2009		2010
Cost of sales
Personnel expenses
	Salaries		$ 21,968,148		$ 29,674,959
	Labor and health insurances		980,183		1,144,523
	Pension		1,139,147		1,486,989
	Others		443,756		589,425
			$ 24,531,234		$ 32,895,896
	Depreciation		$ 13,068,647		$ 12,333,306
	Amortization		$1,127,637		$1,227,745
Operating expenses
Personnel expenses
	Salaries		$ 17,983,864		$ 23,336,739
	Labor and health insurances		954,480		1,149,183
	Pension		700,328		991,698
	Others		265,822		357,299
			$ 19,904,494		$ 25,834,919
	Depreciation		$3,921,017		$4,723,695
	Amortization		$1,420,999		$ 908,247

 

5. RELATED PARTY TRANSACTIONS

1) Names of related parties and their relationship with the Company

Names of related parties		Relationship with the Company
Foxconn Technology Co., Ltd. and subsidiaries (FTCS)		Investee company accounted for under the equity method
Pan International Industrial Corporation and subsidiaries (PIICS)		"
Foxconn Advanced Technology, Ltd.-Cayman (FATS-Cayman)		An indirectly-owned investee company accounted for under the equity method
Foxsemicon Integrated Technology, Inc. and subsidiaries (FITI)		"
	CyberTAN Technology, Inc. (CyberTAN)		"
	Cheng Uei Precision Industry Co., Ltd. (CUPC)		The chairman is a brother of the Company's chairman
Chimei Innolux Corporation and subsidiaries (Chimei Innolux) (Original name:InnoLux Display Co., Ltd.)		Same major shareholder

All the transactions with subsidiaries disclosed below had been eliminated when preparing consolidated financial statements. Except for transactions with the above related parties, there were no other material transactions between related parties and the Company for the six-month periods ended June 30, 2009 and 2010. 

2) Significant transactions and balances with related parties

A. Sales

		For the six-month periods ended June 30,
		2009		%		2010		%
	FTCS		$ 35,772,417		4		$40,619,555		4
Chimei Innolux		4,465,914		1		3,629,297		-
	CyberTAN		5,180,450		1		2,470,690		-
Others		1,031,559		-		1,044,483		-
			$ 46,450,340		6		$47,764,025		4

The sales prices and credit terms to related parties were not significantly different from sales to third parties. For other particular related party transactions, prices and terms were determined in accordance with mutual agreements. The credit term is disclosed in Note 11 (G).

The Group sold materials to the above related parties for processing and repurchased finished goods from them, the sales amount of materials and repurchasing price of finished goods were offset against each other and shown in the net amount in the financial statements. B. Purchases

		For the six-month periods ended June 30,
		2009		%		2010		%
FTCS		$9,117,151		1		$ 9,481,236		1
	FATS-Cayman		4,046,783		1		8,661,128		1
	Chimei Innolux		4,290,859		1		5,745,278		1
PIICS		2,958,861		-		2,966,144		-
	Others		845,874		-		2,265,329		-
			$ 21,259,528		3		$29,119,115		3

The purchase prices and payment terms to related parties were not significantly different from purchases from third parties. For other related party transactions, prices and terms were determined in accordance with mutual agreements. The payment terms to third parties are between 30 to 90 days.

C. Accounts receivable - related parties

		June 30,
		2009		%		2010		%
FTCS		$ 10,336,108		4		$10,857,768		3
Chimei Innolux		2,798,275		1		4,650,602		1
	CyberTAN		1,867,844		1		1,582,830		1
Others		802,510		-		521,205		-
			15,804,737		6		17,612,405		5
Less: Allowance for doubtful accounts		(169,433)				( 120,532)
		$ 15,635,304				$17,491,873

D. Prepayment

	June 30,
	2009	2010
FITI	$116,610	$125,391

E. Other receivables

The Group purchased materials on behalf of FTCS and Chimei Innolux, etc. As of June 30, 2009 and 2010, other receivables amounted to $726,025 and $1,070,136, respectively.

F. Accounts payable - related parties

		June 30,
		2009		%		2010		%
FTCS		$ 12,143,345		4		$ 11,350,725		3
	FATS-Cayman		2,625,114		1		4,684,355		1
	Chimei Innolux		1,197,992		1		2,505,329		1
PIICS		2,308,805		1		1,935,066		-
	Others		272,445		-		629,302		-
			$ 18,547,701		7		$ 21,104,777		5

 

 

As of June 30, 2009 and 2010, a portion of accounts payable to FTCS in the amount of $5,935,656 and $4,715,890, respectively, pertains to purchases of materials made by FICS on behalf of the Group.

G. Property transactions

For the six-month period ended June 30, 2009
Counterparty	Transaction	Sales / purchase price	Gain on disposal	Receivables / (payables) at June 30, 2009
FTCS, Chimei Innolux, FAT-Cayman and FITI	Sale of fixed assets	$ 170,076	$261	$ 48,767
FTCS, Chimei Innolux, CyberTAN and PIICS	Acquisition of fixed assets	44,918	-	( 44,131)
For the six-month period ended June 30, 2010
Counterparty	Transaction	Sales / purchase price	Gain on disposal	Receivables / (payables) at June 30, 2010
FTCS, Chimei Innolux, FAT-Cayman and FITI	Sale of fixed assets	$ 208,349	$ -	$ 36,958
FTCS, Chimei Innolux, CyberTAN and PIICS	Acquisition of fixed assets	40,259	-	( 11,907)

H. Guarantees

In July 2008, the Company's subsidiary, Foxconn (Far East) Ltd., entered into a syndicated credit facility agreement with Mizuho Corporate Bank Ltd. as the lead bank and obtained a credit line in the amount of US$1,035,000 thousand. The Company is the guarantor of the loan.

 

 

 

 

 

 

 

6. PLEDGED ASSETS

As of June 30, 2009 and 2010, the assets pledged as collateral were as follows:

				June 30,
				2009			2010
Assets		Nature		Book value		Book value
Time deposits and cash (shown as other financial assets non-current)		Bond deposit as security for court proceedings, security deposit for employment of foreign employees and custom's deposits.		$85,145			$23,481,870
Account receivable		Short-term loans		-			546,013
	Fixed asset -Land and buildings		Short-term loans		-			91,026
	Other asset -Refundable deposit		Short-term loans and custom's deposits		111,746			-
				$196,891			$24,118,909

 

7. COMMITMENTS AND CONTINGENT LIABILITIES

As of June 30, 2010, the Group's significant commitments and contingent liabilities were as follows:

1) The Company entered into several contracts for the acquisition of machinery and construction of research center with total value of approximately $17,912 million. As of June 30, 2010, the unpaid balance on these contracts amounted to $2,854 million.

2) As of June 30, 2010, the company's subsidiaries' future minimum lease payments for factories and employees' dormitory were approximately $684 million as follows:

Year		Amount
2010.7~2011.12		$ 202,005
	2012		138,974
	2013		136,859
	2014		142,161
	2015 and thereafter		110,958
			$ 730,957

3) The Group entered into an agreement with Qualcomm Incorporated regarding mobile phone use right. Under the agreement, the Group shall pay royalties based on sales volume of the related products.

4) In December 2007, Mondis Technology Ltd. filed a lawsuit with the U.S. District Court for the Eastern District of Texas and reguested this court to issue an injunction against the Company, alleging infringement, among others, of its patent on panel display and claimed indemnities for its losses. The Company has appointed a legal counsel to attend to this case. On November 30, 2009, the Company also sued its suppliers - Lite-on, Tatung and TPV, seeking fulfillment of their liability for the case above. On January 15, 2010, Mondis added TV product into part of the scope of the litigation. The ultimate outcome of the lawsuit and the damages that may incur cannot be reasonably estimated as the litigation is still under trial and investigation.

5) In November 2008, Spansion Inc. requested the U.S. International Trade Commission (the "ITC") to conduct an investigation, alleging patent infringement that Samsung flashing IC was assembled into the Company's products. Spansion Inc. requested the U.S. ITC to issue an injunction to ban the Company's export of related products to the United States. Spansion Inc. has made an out-of-court settlement with Samsung on March 3, 2009. However, in March 1, 2009, Spansion Inc. filed for bankruptcy in the United States, and the bankruptcy court refused to approve their settlement. Therefore, the litigation is still under trial.

6) In March 2009, O2 Micro Int'l Ltd. filed a lawsuit against the Company and Ampower Holding Ltd., an investee company indirectly owned by the Company and accounted for under the equity method and claimed indemnities for its losses. O2 Micro Int'l Ltd. alleged that the Company and Ampower Holding Ltd. failed to comply with the out-of-court settlement relating to previous patent dispute litigation. Based on the opinion of the Company's legal counsel, the ultimate outcome of the lawsuit and the damages that the Company may incur cannot be reasonably estimated as the litigation is still under trial and investigation under the authority of the United States

8. SIGNIFICANT CATASTROPHE

On Febuary19, 2010, the Group's plant in Mexico was set on fire due to riot. There were no damages to the production lines, warehouses and equipment of the plant and the business operated as normal. Customer delivery schedule was unaffected.

9. SUBSEQUENT EVENTS

1) The Company's subsidiary, PCE Paragon Solutions Kft., has signed a share purchase agreement with Dell Global B.V. and Dell International Holding VIII B.V. in December 2009 and expected to pay the purchase price and transfer the legal title of the shares in the second half year of 2010.

2) In March 2010, the Company's board of directors resolved for Foxconn Singapore Pte. Limited, a subsidiary of the Company, to acquire 90.1% shareholding of Sony Slovakia, SPOL. S.R.O, a subsidiary of Sony Corporation.

3) On August 18, 2010, an approval was obtained from SFB for the Company to issue its 2010 1st Unsecured Euro Convertible Zero Coupon Bonds in the amount up to USD $1 billion.

10. OTHERS

1) Financial statement presentation:

Certain accounts in the June 30, 2009 consolidated financial statements were reclassified to conform to the June 30, 2010 consolidated financial statement presentation.

 

 

 

 

2) Fair value of financial instruments

		June 30, 2009
				Fair value
Non-derivative financial instruments		Book value		Quotation in an active market		Estimated using a valuation technique		Note
Assets:
Financial assets with fair values equal to book values		$404,995,312		$ -		$404,995,312		A
Open-end funds		15,000		15,000		-		B
Available-for-sale financial assets		14,830,303		14,830,303		-		C
Financial assets carried at cost - non-current		1,324,699		-		-		D
Refundable deposits		700,208		-		651,963		E
Liabilities:
Financial liabilities with fair values equal to book values		385,680,422		-		385,680,422		A
Long-term bonds payable		16,680,000				16,674,784		F
	Current bonds payable		17,855,921		-		17,487,940		F
Derivative financial instruments
Assets:
	Futures contracts		282,963		-		282,963		G
Forward exchange contracts  - open		71,275		-		71,275		G
Forward exchange contracts  - offset		4,893		-		4,893		G
	Liabilities:
Forward exchange contracts  - open		32,943		-		32,943		G
	Forward exchange contracts  - offset		19,210		-		19,210		G
Off-balance sheet financial instruments
	Guarantees		34,069,095 (US$1,035,000 thousand)		-		34,069,095 (US$1,035,000 thousand)		H

 

 

 

 

 

		June 30, 2010
				Fair value
Non-derivative financial instruments		Book value		Quotation in an active market		Estimated using a valuation technique		Note
Assets:
Financial assets with fair values equal to book values		$664,521,345		$ -		$664,521,345		A
Open-end funds		15,000		15,000		-		B
Available-for-sale financial assets		13,798,592		13,798,592		-		C
Financial assets carried at cost - non-current		2,148,152		-		-		D
Refundable deposits		1,082,385		-		1,053,929		E
Liabilities:
Financial liabilities with fair values equal to book values		694,251,789		-		694,251,789		A
Long-term bonds payable		29,539,400		-		28,758,807		F
Derivative financial instruments
	Assets:
Futures contracts		-		-		-		G
Forward exchange contracts		95,270		-		95,270		G
	Liabilities:
	Forward exchange contracts		73,246		-		73,246		G
Off-balance sheet financial instruments
	Guarantees		33,301,125 (US$1,050,000 thousand)		-		33,301,125 (US$1,050,000 thousand)		H

The methods and assumptions used to estimate the fair values of the above financial instruments are summarized below:

A. For short-term instruments, the fair values were determined based on their carrying values because of the short maturities of the instruments. This method was applied to cash and cash equivalents, notes and accounts receivable, other receivables, short-term loans, notes and accounts payable, accrued expenses, current portion of long-term liabilities, other payables and other current liabilities.

B. For Open-ended funds, the fair values were determined based on the funds' net assets at June 30, 2009 and 2010.

C. Available-for-sale financial assets are regarded as quoted in an active market 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. If the market for a financial instrument is not active, an entity establishes fair value by using a valuation technique. The fair values of available-for-sale financial assets are based on the quotation in the active markets as of June 30, 2009 and 2010.

D. As financial assets carried at cost are not quoted in an active market and their fair value cannot be measured reliably, they are measured at cost. 

E. The fair value of refundable deposits is based on the present value of expected future cash inflow, and the discount rate is based on the fixed rate of the one year time deposit given by the Post Office as of June 30, 2009 and 2010.

F. The fair value of convertible bonds issued after December 31, 2005 is based on the present value of expected cash flow amount. The discount rate is the effective interest rate of convertible bonds in the current market, whose contractual terms are similar to those of convertible bonds issued by the Company.

G. The fair values of derivative financial instruments which include unrealized gain or loss on unsettled contracts were determined based on the amounts to be received or paid assuming that the contracts were settled as of the reporting date.

H. The fair value of guarantees was based on the contract amounts.

3) Credit risk of off-balance sheet financial instruments

Please see Note 5. 2) H.

4) Financial risk control

A. The Group employs a comprehensive risk management and control system to clearly identify, measure, and control the various kinds of financial risk it faces, including market risk, credit risk, liquidity risk, and cash flow risk. Except for market risk, which is controlled by outside factors, the remainder of the foregoing types of risk can be controlled internally or removed from business processes. Therefore, the goal in managing each of these risks is to reduce them to zero.

As for market risk, the goal is to optimize its overall position through strict recommendation, execution and audit processes, and proper consideration of a) long-term trends in the external economic/financial environment, b) internal operating conditions, and c) the actual effects of market fluctuations.

B. The risk management and control system of the Group is administered within a framework of stratified responsibility:

(1) The board of directors formulates and approves the procedures; the senior officers

designated by the board make regular and unscheduled assessments of management

procedures, organizational structure, transaction flows, and whether there are any

abnormal circumstances;

(2) The legal department reviews and examines transaction agreements;

(3) The financing department makes recommendations with regard to transactions and is

responsible for carrying them out;

(4) The accounting department manages the accounts;

(5) The audit department undertakes audits.

Under this framework, with its strict adherence to proper segregation of duties and adequate internal control procedures, the Group seeks to minimize the potential adverse effects on the Group's financial performance.

5) Material financial risk information

A. Market risk

(1) Foreign exchange risk:

The Group's major purchase and sale transactions are conducted in USD. The fair value changes along with the foreign exchange rate fluctuations. However, the amounts and periods of the Group's accounts receivable and accounts payable are roughly equivalent, so the market risk could mostly be offset. When temporary gap rises, the Group would enter into the forward contract to hedge the risk. Accordingly, the Group expects no material risk as a whole.

(2) Equity price risk:

The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated balance sheet either as available-for-sale or at fair value through profit or loss. However, the Group expects no significant securities price risk.

(3) Futures market risk:

The Group is exposed to price risk because of investments in futures market instruments, which have fair value in the active market. The Group sets limits to control the transaction volume and the stop-loss amount of derivatives to reduce its futures market risk. As a result, there is no significant future market risk.

(4) Interest rate risk:

The long-term bonds issued by the Group all have fixed interest rates, so there is no interest rate risk.

(5) Stock price risk:

i. The domestic convertible bonds issued by the Company are compound instruments, which include the conversion rights, call option, put option. Except that the fair value of the bonds would be changed due to changes in market interest rate, their fair value is mainly subject to the changes in the Company's stock price. The Company could exercise the call option to mitigate the stock price risk adequately. 

ii. Furthermore, the call option has expired since November 10, 2009, three years after the issuing date, thus no related risk involved.

 

B. Credit risk

(1) Receivables:

With respect to receivables of the Group, most of the debtors are well-known international companies with very good credit standing. Moreover, the adequacy of the allowance for doubtful accounts is assessed regularly, so there is no material credit risk.

(2) Financial market:

i. The long-term exchange rate and futures transactions entered into by the Group are done with financial institutions with very good credit standing. Consequently, the likelihood that the credit risk would occur is low.

ii. Convertible bond payables of the Company were issued on the primary market, so that the Company is not exposed to credit risk that may arise from counterparties on the secondary market.

(3) Asset transactions:

The Group has investments in available-for-sale financial assets and financial assets that are measured at cost. Although the potential for credit risk does exist, there is an active market for available-for-sale financial assets, and for financial assets measured at cost, the Group performs impairment testing regularly. Moreover, the Group evaluated the counterparties' credit standing when entered into the transaction. Although the potential for credit risk does exist, the group doesn't expect material credit risk accordingly.

C. Liquidity risk

(1) Receivables:

As for receivables of the Group, the main debtors are well-known international companies with very good credit standing. There are no receivables overdue or with maturities over one year. Therefore, there is no material liquidity risk.

(2) Financial assets:

i. For available-for-sale financial assets held by the Group, there is an active market that allows these investments to be readily converted into certain amount of cash approximate to their fair values. The liquidity risk exposure is low.

ii. As for financial assets measured at cost, the liquidity risk is high as there is no active market. However, since the shareholding percentages are relatively low, they do not constitute major investments. Therefore, no material liquidity risk is expected.

(3) Foreign exchange transactions:

For forward foreign exchange transactions entered into by the Group, the targets of the transactions are all currencies traded on international foreign exchange markets with high trading volumes and a large number of traders bidding. Trading is active with high liquidity. Therefore, no material liquidity risk is expected.

 

(4) Futures transactions:

For futures transactions entered into by the Group, orders are placed on future exchanges in New York, Chicago or London. The numbers of available future targets and international market participants are adequate to facilitate easy entry and exit. Therefore, no material liquidity risk is expected.

(5) Working capital:

The Group has good operating and credit conditions and has sufficient working capital, so it expects no significant liquidity risk arising from insufficient capital to meet contract obligations.

(6) Convertible bonds:

i. Under the terms of the domestic convertible bonds issued by the Company on November 11, 2006, the bondholders have the right to require the Company to redeem any bonds at face value on November 10, 2009, three years after the issuing date. 

ii. A total amount of $5,960,600 convertible bonds had been redeemed. The Company expects no significant liquidity risk would arise as it has sufficient working capital to meet the funding requirements for bonds redemption even if all the outstanding bonds are redeemed.

iii. The outstanding convertible bonds in the amount of $12,039,400 will be redeemed on the maturity date, November 10, 2011.

D. Cash flow risk from movements in interest rates

(1) Long-term liabilities:

i. The Group does not have long-term financial assets and liabilities that are affected by interest rate changes. Therefore, there should be no material cash flow risk from movements in interest rates.

ii. As to the domestic bond payables issued by the Company, there should be no material cash flow risk from movements in interest rates due to the zero interest rate on the bond.

(2) Foreign exchange transactions:

The forward foreign currency transactions entered into by the Group are for the purpose of hedging against short-term gaps of the net positions of foreign currency assets and liabilities. As such, the amounts of the transactions are immaterial and their duration is short. Moreover, because of the equivalent foreign currency cash outflows and inflows, the group expects no significant funding demand. Therefore, no material cash flow risk is expected from movements in interest rates.

(3) Financial assets:

As the investments of the Group are not interest-rate type products, there is no cash flow risk from movements in interest rates.11.ADDITIONAL DISCLOSURES REQUIRED BY THE SECURITIES AND FUTURE COMMISSION

(1)Related information of significant transactions

(The portions of transaction information with related parties were based on the financial statements of the company for the same period which was not reviewed by independent accountants.)

 All the transactions with subsidiaries disclosed below had been eliminated when preparing consolidated financial statements. The disclosure information as follows is for reference only.

1) Financial activities to any company or person: None

2) Guarantee information:

	Parties being guaranteed
Name of the company providing guarantee	Name	Relationship with the Company	The limit of guarantee For such party	The highest outstanding guarantee amount 2010	The outstanding guarantee amount at 6/30/2010	The amount of guarantee with collateral placed	The ratio of accumulated guarantee amount to net assets of the Company	The ceiling of the outstanding guarantee to the respective party
Hon Hai Precision Industry Co., Ltd.	Foxconn(Far East) Ltd.-Cayman	A wholly owned subsidiary	(Note)	NTD$ 33,301,125 (US$1,035,000,000)	NTD$ 33,301,125 (US$1,035,000,000)	-	7.24%	(Note)

Note1: The Company's total guarantee to others should not be in excess of the Company's net assets.

Note2: The policy for endorsements and guarantees provided by the Company is as follows: limit on endorsements and guarantees provided for a single party is 50% of the Company's net assets; ceiling amount of total of the Company's endorsements and guarantees provided for all subsidiaries of which the Company directly and indirectly holds more than 50% of their voting shares or for all companies which directly or indirectly hold more than 50% voting shares respectively, is 100% of the Company's net assets.

Note3: The net assets referred above are based on the latest audited or reviewed financial statements.

3) Marketable securities held as of June 30, 2010

						June 30, 2010
		Relationship		General ledger		Number of shares				Percentage		Market value/
	Type and name of marketable securities (Note 1)		with the Company		accounts (Note 2)		(in thousands)		Book value		of ownership		Net worth
Common stock of Pan International Industrial Corporation		Investee company accounted for under the equity method		(1)		102,065		$ 2,700,030		21		$2,942,859
Common stock of Foxconn Technology Co., Ltd.		"		(1)		98,849		4,797,348		10		4,757,114
Common stock of Media Tek Inc.		None		(2)		2,130		963,825		-		963,825
Common stock of Chimei Innolux Corporation (Original name: Innolux Display Co., Ltd.)		Same major shareholder		(3)		129,148		4,313,530		2		4,313,530

Note 1: Marketable securities disclosed above include listed stocks and open-end funds only.

Note 2: Code of general ledger accounts: (1) Long-term investments accounted for under the equity method

(2) Available for sale financial assets-current

(3) Available for sale financial assets-non current

4) Marketable securities acquired or sold during the six-month periods ended June 30,2010 in excess of $100,000 or over 20% of the company's contributed capital: None.

5) Acquisition of real estate exceeding the amount of $100,000 or 20% of the Company's contributed capital: None.

6) Disposal of real estate $100,000 or over 20% of the Company's contributed capital: None.

1) 7) Related party purchases or sales transactions exceeding the amount of $100,000, or 20% of the Company's contributed capital:

Descriptions of and reasons

for difference in transaction

terms compared to

Notes and accounts

Transactions

non-related party

receivable/(payable)

Percentage of

Percentage of total

total purchases,

notes and accounts

Relationship

sales, or other

Credit

receivable/ payable

Company

Counterparty

with the Company

Purchases/sales

Amount

related accounts

terms

Unit price

Terms

Balance

balance

Note

Hon Hai Precision Industry Co., Ltd.

Foxconn (Far East) Ltd. and subsidiaries

Wholly-owned subsidiary and its subsidiaries

Sales

$ 25,959,910

3

45-90 days

Note 1

Note 1

$9,713,033

4

"

Foxconn Singapore Pte. Ltd.

Wholly-owned subsidiary

"

3,643,308

1

90 days

"

"

1,491,341

1

"

CyberTAN Technology, Inc.

An indirectly-owned investee company accounted for under the equity method

"

2,358,884

-

60 days

"

"

1,083,092

-

"

Foxconn Japan Co., Ltd.

Wholly-indirectly-owned subsidiary

"

1,608,352

-

90 days

"

"

1,162,528

-

"

Chimei Innolux Corporation Same major shareholder (Original name: Innolux Display Co., Ltd.)

"

1,605,671

-

90 days

"

"

951,056

-

"

Ambit Microsystem (Shanghai) Co., Ltd.

Wholly-indirectly-owned subsidiary

"

1,301,185

-

60 days

"

"

1,524,233

1

"

Ingrasys Technology Inc.

"

"

1,227,521

-

60 days

"

"

534,500

-

"

Foxconn CMMSG Industria de Eletronticos LTD.A.-Brazil

"

"

1,196,758

-

90 days

"

"

2,539,199

1

"

Ennoconn Corporation

"

"

550,058

-

60 days

"

"

227,454

-

"

Foxconn Technology Pte., Ltd.

Wholly-indirectly-owned subsidiary of FTC

"

514,633

-

90 days

"

"

244,562

-

"

Cheng Uei Precision Industry Co., Ltd.

The chairman is a brother of the Company's chairman

"

278,799

-

30-90 days

"

"

86,719

-

"

Foxteq Australia Pty Ltd.

Wholly-indirectly-owned subsidiary

"

272,733

-

60 days

"

"

149,866

-

"

Pan International Industrial Corporation (PIIC)

Investee company accounted for under the equity method

"

160,364

-

90 days

"

"

103,438

-

"

Fukui Precision Component (Shenzhen) Co., Ltd.

Wholly-indirectly-owned subsidiary of Foxconn Advanced Technology Ltd.

Purchases

127,652

-

90 days

"

"

89,024

-

Hon Hai Precision Industry Co., Ltd.

Best Leap Enterprises Limited

Wholly-indirectly-owned subsidiary

Purchases

$ 213,032,080

25

90 days

Note 1

Note 1

($ 67,875,991)

( 26)

"

Foxconn (Far East) Ltd.  and subsidiaries

Wholly-owned subsidiary and its subsidiaries

"

127,027,274

15

30-90days

"

"

( 37,566,954)

( 14)

Note 2

"

Universal Field International Limited

Wholly-indirectly-owned subsidiary

"

103,862,795

12

90 days

"

"

( 26,454,462)

( 10)

"

Jumbo Rise Management Limited

"

"

17,783,842

2

Invoice Date

"

"

(3,798,728)

( 2)

"

AMB Logistics Ltd.

"

"

11,910,037

2

60 days

"

"

-

-

Note 3

"

NSG Technology, Inc.

"

"

3,555,765

1

30 days

"

"

-

-

Note 4

"

Chimei Innolux Corporation Same major shareholder (Original name: Innolux Display Co., Ltd.)

"

2,512,518

-

60 days

"

"

(1,096,511)

( 1)

"

CyberTAN Technology, Inc.

An indirectly-owned investee company accounted for under the equity method

"

1,900,506

-

75 days

"

"

( 473,875)

-

"

IRIS World Enterprise Limited

Wholly-indirectly-owned subsidiary of Foxconn Advanced Technology Ltd.

"

1,703,427

-

90 days

"

"

( 865,492)

-

"

Innolux Corporation

Wholly-indirectly-owned subsidiary of Chimei InnoLux

"

1,6818,821

-

45 days

"

"

( 845,487)

-

"

Foxconn Technology Pte. Ltd.

Wholly-indirectly-owned subsidiary of FTC

"

1,071,857

-

90 days

"

"

( 426,248)

-

"

Foxconn Technology Co., Ltd.  (FTC)

Investee company accounted  for under the equity method

"

458,281

-

60 days

"

"

(265,761)

-

"

Best Vision Technology Pte.

Wholly-indirectly-owned subsidiary of PIIC

"

421,557

-

90 days

"

"

( 254,168)

-

Hon Hai Precision Industry Co., Ltd.

FTP Technology Inc.

Wholly-indirectly-owned subsidiary of FTC

Purchases

$ 264,013

-

60 days

Note 1

Note 1

($ 128,979)

-

"

FTC Technology Inc..

Wholly-indirectly-owned subsidiary of FTC

"

202,388

-

"

"

"

(83,749)

-

"

Funing Precision Component Co., Ltd.

Wholly-indirectly-owned subsidiary

"

186,864

-

"

"

"

(78,737)

-

"

New Ocean Precision Component (Ganzhou) Co., Ltd.

Wholly-indirectly-owned subsidiary of PIIC

"

134,364

-

"

"

"

( 169,069)

-

"

Heroic Legend Enterprises

Wholly-indirectly-owned

Processing and

13,412,385

28

Note 1

"

"

(7,573,565)

( 17)

Ltd.

subsidiary

molding costs

(shown as accrued

expenses)

"

Foxconn (Far East) Ltd. and

Wholly-owned subsidiary and

"

12,352,479

25

"

"

"

( 12,826,791)

( 28)

subsidiaries

its subsidiaries

(shown as accrued

expenses)

920,017

2

(shown as prepayment)

"

Success Rise Enterprises Ltd.

Wholly-indirectly-owned

"

10,639,375

22

"

"

"

(5,335,784)

( 12)

subsidiary

(shown as accrued

expenses)

"

Franklin Management Ltd.

"

"

5,744,765

12

"

"

"

(11,224,860)

( 25)

(shown as accrued expenses)

"

Carston Ltd.

"

"

2,483,064

5

"

"

"

(7,707,563)

( 17)

(shown as accrued

expenses)

"

Hon Hai / Foxconn Logistics

Wholly-owned subsidiary

Logistics

407,074

22

30 days

"

"

(70,464 )

-

Texas LLC.

Expenses

(shown as accrued expenses)

"

Hon Hai/Foxconn Logistics

"

"

279,728

15

"

"

"

( 81,455)

-

California LLC.

(shown as accrued expenses)

Note1: The prices and terms to related parties were not significantly different from transactions with third parties. For other particular related party transactions, prices and terms were determined in accordance with mutual agreements.

Note2: As of June 30, 2010, the Company's prepayment was $163,582

Note3: As of June 30, 2010, the Company's prepayment was $907,817

Note4: As of June 30, 2010, the Company's prepayment was $571,627

8) Receivables from related parties exceeding the amount of $100,000 or 20% of the Company's contributed capital as of June 30, 2010:

										Overdue receivables
				Relationship with		Balance of receivables		Turnover				Subsequent	Allowance for
	Company		Counterparty		the Company		from related parties		rate	Amount	Actions taken	collection	bad debt
	Hon Hai Precision Industry Co., Ltd.		Foxconn (Far East) Ltd. and subsidiaries		Wholly-owned subsidiary and its subsidiaries		$9,713,033		7.61	$-	-	$ 3,350,318	$-
	"		Futaihua Industrial (Shenzhen) Limited		Wholly-indirectly-owned subsidiary		54,327,354		-	240	Subsequent Collection	23,264,629	-
						(Shown as other receivables) (Note)					"
"		Universal Field International Limited		"		46,691,584		-		120	"	19,625,885	-
						(Shown as other receivables) (Note)
"		Foxconn (Far East) Ltd. and subsidiaries		Wholly-owned subsidiary and its subsidiaries		36,562,808		-		2,823	"	4,159,695	-
						(Shown as other receivables) (Note)
"		Foxconn CMMSG Industria De Electronicos Ltda.-Brazil		Wholly-indirectly-owned subsidiary		2,539,199		1.87		992,133	"	2,429	23,980
"		Ambit Microsystem (Shanghai) Co., Ltd.		"		1,524,233		5.37		35,136	"	-	6,568
"		Foxconn Singapore Pte. Ltd.		Wholly-owned subsidiary		1,491,341		5.24		100,513	"	499,959	7,756
	"		Foxconn Japan Co. Ltd.		Wholly-indirectly-owned subsidiary		1,162,528		3.30	1,576	"	347,909	6,759
	"		CyberTAN Technology, Inc.		An indirectly-owned investee company accounted for under the equity method		1,083,092		4.40	24,432	"	537,912	5.518
"		Chimei Innolux Corporation (Original name: Innolux Display Co., Ltd.)		Same major shareholder		951,056		3.58		19,060	"	318,386	1,879
"		Ingrasys Technology Inc.		Wholly-indirectly-owned subsidiary		534,500		5.00		-	-	211,700	2,673
"		Foxconn Technology Pte. Ltd.		Wholly-indirectly-owned subsidiary of FTC		244,562		7.54		25,835	Subsequent Collection	36,670	280
"		New Ocean Precision Component (Ganzhou) Co., Ltd.		Wholly-indirectly-owned subsidiary of PIIC		236,059		2.34		52,823	"	52,861	1,365
"		Ennconn Corporation		Wholly-indirectly-owned subsidiary		227,454		6.43		-	-	101,712	1,137
"		Foxteq Australia Pty Ltd.		"		149,866		2.21		-	-	25,730	750
	"		Fuhong Precision Component		"		132,029		4.75	-	-	24,962	660
	"		Pan International Industrial Corporation (PIIC)		Investee company accounted for under the equity method		103,438		2.96	-	-	46,535	517

Note: Receivables for payments made on behalf of others.

9) Information on derivative transactions: Please see Note 4(2).(2)Disclosure information of investee company

(The portions of transaction information with related parties were based on the financial statements of the company for the same period which was not reviewed by independent accountants.)

All the transactions with subsidiaries disclosed below had been eliminated when preparing consolidated financial statements. The disclosure information as follows is for reference only.

1) Information on Investee Companies:

												Held by the Company at June 30, 2010
									Original												Investment
								investment amount				Number of						Nero income (loss)		Income (loss)
						Main operating		June 30,		December 31,		shares		Percentage of				of the investee		recognized by
	Investor		Investee company		Address		Activities		2010		2009		(in thousands)		ownership (%)		Book value		company(Note1)		the Company		Note
Hon Hai Precision Industry Co., Ltd.		Foxconn (Far East) Ltd.		Cayman Islands		Investment holding		$ 23,331,010		$ 13,239,347		$ 1,315,522		100		$ 332,664,182		$ 20,509,326		$ 20,899,524
"		Hyield Venture Capital Co., Ltd.		Taipei		"		3,900,000		3,900,000		390,000		98		14,126,949		245,422		239,058
	"		Bao Shin International Investment Co., Ltd.		Taipei		"		2,998,500		2,998,500		415,000		100		7,932,912		372,694		374,951
	"		Ambit International Ltd.		British Virgin Islands		"		1,788,146		1,788,146		53,100		100		7,552,032		378,428		375,014
	"		Foxconn Technology Co., Ltd.		Taipei		Manufacture and design of monitors		481,782		481,782		98,849		10		4,797,348		2,761,353		234,576		Note 3
	"		Hon Yuan International Investment Co., Ltd.		Taipei		Investment holding		1,611,500		1,611,500		193,900		100		3,105,678		110,417		110,513
"		Pan International Industrial Corporation		Taipei		Manufacture and marketing of cables		2,042,398		2,042,398		102,065		21		2,700,030		148,220		47,302		Note 2
	"		Foxconn Holding Ltd.		British Virgin Islands		Investment holding		1,454,284		1,134,653		46,297		100		3,161,824		( 241,951)		( 239,202)
"		Hon Chi International Investment Co., Ltd.		Taipei		"		1,500,500		1,500,500		192,200		100		2,702,560		132,851		129,519
"		Lin Yih International Investment Co., Ltd.		Taipei		Investment holding		904,411		904,411		95,500		100		975,695		4,163		4,099
	"		Foxconn SA B.V.		Netherland		"		1,713,437		1,390,079		36,658		95		1,230,628		(36,591)		(34,761)
	"		Premier Image Technology (H.K) Ltd.		Hong Kong		Purchase and the sales of cameras and related parts		22,311		22,311		1,409		2		150,877		547,744		1,386		Note 5
	"		Image & Vision Investment Corporation		British Virgin Islands		Investment holding		108,250		108,250		3,251		100		127,736		(207)		(207)
"		Altus Technology Inc.		Taipei		Manufacture, design and marketing of cellular phone, camera lens and sensors		865,177		865,177		65		65		79,080		68		44		Note 4
	"		Syntrend Creative Park Co., Ltd.		Taipei		Manufacture and marketing  of computer componeents		344,000		-		34,400		80		344,000		-		-
	"		Margini Holdings Limited		British Virgin Islands		Investment holding		7,153,970		7,153,970		220,000		100		5,901,082		47,699		48,717
	"		Others						191,791		166,694		-		-		314,198		23,823		24,974
						Total		$ 50,411,467		$ 39,307,718						$ 387,866,811		$ 25,003,459		$ 22,215,507

 

Note 1: The investment income recognized for this period had eliminated unrealized gain or loss on the transactions between the Company and its investees.

Note 2: The Company and the directly and indirectly investee companies own 26.67% of Pan International Industrial Corporation's outstanding shares.

Note 3: The Company and the direct and indirect investee companies own 30.34% of Foxconn Technology Co., Ltd.'s outstanding shares.

Note 4: The Company and the direct and indirect investee companies own 100% of Altus Technology Inc.'s outstanding shares.

Note 5: The Company and the direct and indirect investee companies own 99.96% of Premier Image Technology (H.K) Ltd.'s outstanding shares.

 

												Held by the Company at June 30, 2010
									Original												Investment
								investment amount				Number of						Net Income (loss)		Income (loss)
						Main operating		June 30,		December 31,		shares		Percentage of				of the investee		recognized by
	Investor		Investee company		Address		Activities		2010		2009		(in thousands)		ownership (%)		Book value		company		the Company		Note
Hyield, Hon Yuan, Bao Shin and Hon Chi		Foxsemicon Integrated Technology Inc.		Miaoli		Manufacture of semiconductor machinery and sales of computer components		$ 448,110		$ 448,110		21,663		20		$ 117,701		$16,904		$ 5,482
	Hyield, Hon Yuan, Bao Shin and Hon Chi		Foxconn Technology Co., Ltd.		Taipei		Manufacture and design of monitors		1,992,567		1,992,567		196,101		20		9,734,957		2,761,353		457,693
	Hon Yuan, Bao Shin and Hon Chi		Pan International Industrial Corporation		Taipei		Manufacture and marketing of cables		551,939		551,939		27,646		6		762,318		148,220		12,920
	Hyield, Hon Yuan, Bao Shin, Lin Yih and Hon Chi		Altus Technology Inc.		Taipei		Manufacture, marketing and design of cellular phone, camera lens and sensors		284		284		35		35		43,364		69		24
	Hyield		AnTec Electronic System Co., Ltd.		Taipei		Manufacture of cable, electronic equipment and electron component of motor vehicles		970,000		970,000		60,010		100		411,507		(11,314)		( 4,078)
	Hyield, Hon Yuan, Bao Shin, Lin Yih and Hon Chi		CyberTAN Technology, Inc.		Hsinchu		Manufacture, design and marketing of wireless network equipment		357,396		357,396		35,122		11		561,498		163,972		12,816
	Bao Shin		Ennconn Corporation		Taipei		Design and manufacture of single board computer, embedded board, industrial motherboard		244,291		244,291		21,825		52		340,663		60,419		34,464
Bao Shin		UVAT Technology Co., Ltd.		Taoyuan		Manufacture and sales of vacuum sputtering system and vacuum coating service		180,000		180,000		7,558		19		194,931		35,407		7,487
	Hyield and Bao Shin		Simplo Technology Co., Ltd.		Hsinchu		Information service, manufacture of lighting equipment, data storage and processing system, electronic components, battery, power generation/ transmission/ distribution machinery, and wireless communication system		$ 1,433,855		$ 1,433,855		19,966		9		$ 1,824,044		$1,593,752		$ 115,803
Hon Chi, Hon Yuan, and Bao Shin		Foxnum Technology Co., Ltd.		Taipei		Manufacture and sales of machinery, computer and peripheral devices		460,650		460,650		46,065		90		480,576		175,710		158,497
	Hyield, Hon Yuan, Bao Shin and Hon Chi		G-TECH Optoelectronics Corporation		Miaoli		Manufacture of glass, glass products and electronic components		810,000		810,000		56,501		37		787,619		83,013		32,028
	Hyield and Bao Shin		Advanced Microelectronic Products, Inc.		Hsinchu		Research, development, design, manufacture and sales of integrated circuit and semi-conductor components		187,820		142,820		25,699		15		148,282		( 86,067)		( 20,333)
	Foxconn International Holdings Ltd. - Cayman		Ways Technical Corp., Ltd.		Taoyuan		Manufacture of plastic articles, surface treatment, and manufacture and processing of electronic components		1,045,489		1,045,489		21,409		23		1,148,195		22,493		( 12,266)
	Hyield and Bao Shin		Bionet Corporation		Taipei		Extraction, testing, storage and research on umbilical cord blood stem cells, mesenchymal stem cells, and primary teeth		100,000		100,000		3,393		8		99,074		( 28,106)		(2,193)
	Hyield		Ingrasys Technology Inc.		Taoyuan		Design, research, manufacture and sales of data storage and processor		222,340		222,340		14,000		97		413,475		49,843		48,124
Hyield, Hon Yuan, Bao Shin and Hon Chi		Others						924,795		924,795		-		-		971,796		191,719		9,873

Note: Hyield Venture Capital Co., Ltd. is referred to as Hyield.

Hon Chi International Investment Co., Ltd. is referred to as Hon Chi.

Hon Yuan International Investment Co., Ltd. is referred to as Hon Yuan.

Bao Shin International Investment Co., Ltd. is referred to as Bao Shin.

Lin Yih International Investment Co., Ltd. is referred to as Lin Yih.

 

2) Financial activities with any company or person 

							Maximum						Nature of		Total				Allowance for						Loan		Total loan
							Balance		Ending		Interest		Financial		Transaction		Reason for		Doubtful		Assert Pledge				limit per		limit of the
Name of company		Name of Counterparty		Account		During 2010		Balance		Rate		Activity		Amount		Financing		Accounts		Item		Value		counterparty		company loan
Hongfujin Precision Industry (Shenzhen) Co., Ltd.		Fujin Precision Industrial (Jincheng) Co., Ltd.		Entrusted Loans		$ 1,726,753		$ -		-		Short term financing		$ -		Business operation		$ -		None		$ -		Note1		Note1
	"		Futaijie Science & Technology Development (Shenzhen) Co., Ltd.		"		140,007		94,770		1.98%		"		-		"		-		"		-		"		"
	"		Futaikang Precision Component (Shenzhen) Co., Ltd.		"		51,336		47,385		1.98%		"		-		"		-		"		-		"		"
	"		Fu Ding Precision Component (Shenzhen) Co., Ltd.		"		473,850		473,850		1.98%		"		-		"		-		"		-		"		"
	Foxconn Precision Component (Shenzhen) Co., Ltd.		Shenzhen Fuhongjie Technology Service Co. Ltd.		"		186,676		156,371		1.98%		"		-		"		-		"		-		"		"
	Foxconn (Kunshan) Computer Connector Co., Ltd.		Foxconn Electronic Industrial Development (Kunshan)Co., Ltd.		"		790,253		794,646		1.71%		"		-		"		-		"		-		"		"
	"		Kangzhun Electronic Technology (Kunshan) Co., Ltd.		"		1,755,294		824,499		1.71%		"		-		"		-		"		-		"		"
	"		Fuxiang Precision Industrial (Kunshan) Co., Ltd.		"		2,290,330		-		-		"		-		"		-		"		-		"		"
	Hongzhun Precision Tooling (Kunshan) Co., Ltd.		Foxconn Electronic Industrial Development (Kunshan)Co., Ltd.		"		961,916		961,916		1.71%		"		-		"		-		"		-		"		"
	"		Kangzhun Electronic Technology (Kunshan) Co., Ltd.		"		616,005		616,005		1.71%		"		-		"		-		"		-		"		"
	Ambit Microsystem (Shanghai) Co., Ltd.		Foxconn Electronic Industrial Development (Kunshan)Co., Ltd.		"		772,376		772,376		1.71%		"		-		"		-		"		-		"		"
	"		Fuxiang Precision Industrial (Kunshan) Co., Ltd.		"		328,531		-		-		"		-		"		-		"		-		"		"
	Fulin Electronical Technology (Changshu) Co., Ltd.		Foxconn Electronic Industrial Development (Kunshan)Co., Ltd.		"		284,310		284,310		1.71%		"		-		"		-		"		-		"		"
	"		Fuxiang Precision Industrial (Kunshan) Co., Ltd.		"		281,598		-		-		"		-		"		-		"		-		"		"
	Fuzhun Precision Tooling (Huaian) Co., Ltd.		Fuyu Electronical Technology (Huaian)Co., Ltd.		Entrusted Loans		$436,477		$ -		-		Short term financing		$ -		Business operation		$ -		None		$ -		Note1		Note1
	Fuxing Precision Component (Huaian) Co., Ltd.		Fuyu Electronical Technology (Huaian)Co., Ltd.		"		93,866		-		-		"		-		"		-		"		-		"		"
	Hongfutai Precision Electrons(Yantai) Co., Ltd.		Foxconn Precision Electronics (Yantai) Co., Ltd.		"		1,060,268		1,042,470		4.37%		"		-		"		-		"		-		"		"
	Fu Tai Kang Electronics Development (Yantai) Ltd.		Foxconn Precision Electronics (Yantai) Co., Ltd.		"		900,315		900,315		4.37%		"		-		"		-		"		-		"		"
	Foxconn (Far East) Ltd.		Margini Holdings Ltd.		Other Receivables- financing		408,301		408,301		0.00%		"		-		"		-		"		-		"		"
	"		Fuxiang Precision Industrial (Kunshan) Co., Ltd.		"		3,217,500		3,217,500		0.34%		"		-		"		-		"		-		"		"
	"		Kangzhun Electronic Technology (Kunshan) Co., Ltd.		"		1,930,500		1,930,500		0.34%		"		-		"		-		"		-		"		"
	Foxconn (Far East) Ltd.		Foxconn (Kunshan) Computer Connector Co., Ltd.		"		968,468		968,468		0.34%		"		-		"		-		"		-		"		"
	"		Fujin Precision Industrial (Jincheng) Co., Ltd.		"		643,500		643,500		0.35%		"		-		"		-		"		-		"		"
	"		Hongfutai Precision Electrons(Yantai) Co., Ltd.		"		5,989,376		5,989,376		0.35%		"		-		"		-		"		-		"		"
	Foxconn (Far East) Ltd.		Fuyu Electronical Technology (Huaian)Co., Ltd.		"		1,930,500		1,930,500		0.35%		"		-		"		-		"		-		"		"
	"		Carston Ltd.		Other Receivables		823,614		-		-		"		-		"		-		"		-		"		"
	"		Heroic Legend Enterprises Ltd.		"		1,054,696		343,951		0.00%		"		-		"		-		"		-		"		"
	"		Franklin Management Ltd.		"		2,333,653		2,333,653		0.00%		"		-		"		-		"		-		"		"
	Shenzhen Fu Tai Hong Precision Industry Co., Ltd.		Foxconn Precision Electronics (Taiyuan) Co., Ltd.		Entrusted Loans		3,519,975		1,089,855		1.98%		"		-		"		-		"		-		Note2		Note2
	Foxconn Precision Component (Beijing) Co., Ltd.		Futaijing Precision Electronics (Beijing) Co., Ltd.		"		1,089,855		1,089,855		1.98%		"		-		"		-		"		-		"		"
	"		Foxconn Precision Electronics (Langfang) Co., Ltd.		"		6,382,888		5,638,815		1.98%		"		-		"		-		"		-		"		"
	"		Foxconn(Tianjin) Precision Industry Co., Ltd.		"		710,775		710,775		1.98%		"		-		"		-		"		-		"		"
	Execustar International Ltd.		Foxconn Precision Electronics (Langfang) Co., Ltd.		Other Receivables		$546,975		$546,975		0.44%		Short term financing		$ -		Business operation		$ -		None		$ -		Note2		Note2
Foxconn International Holdings Ltd.		Foxconn Precision Electronics (Taiyuan) Co., Ltd.		"		6,113,250		6,113,250		0.76%		"		-		"		-		"		-		"		"
"		Futaijing Precision Electronics (Beijing) Co., Ltd.		"		4,311,450		4,311,450		0.75%		"		-		"		-		"		-		"		"
"		Foxconn Precision Electronics (Langfang) Co., Ltd.		"		5,759,325		5,759,325		1.58%		"		-		"		-		"		-		"		"

Note 1: The policy for loans granted mutually between overseas subsidiaries of which the Company directly or indirectly holds 100% of their voting shares is as follows: ceiling on total loans granted by an overseas subsidiary to all overseas subsidiaries is 20% of the Company's net assets; limit on loans granted by an overseas subsidiary to a single overseas subsidiary is 10% of the Company's net assets.

Note 2: The policy for loans granted by overseas subsidiaries of which FOXCONN INTERNATIONAL HOLDINGS LTD. directly or indirectly holds 100% of their voting shares is as follows: ceiling on total loans granted by an overseas subsidiary to all parties is 60% of the net assets of FOXCONN INTERNATIONAL HOLDINGS LTD.; limit on loans granted by an overseas subsidiary to a single party is 30% of the net assets value of FOXCONN INTERNATIONAL HOLDINGS LTD.

3) Guarantee information:

Parties being guaranteed

Name of guarantor

Name of company

Relationship with the Company

Limit of guarantee for such party

Highest outstanding guarantee amount  in 2010

Outstanding guarantee amount as of  6/30/2010

Amount of guarantee with  collateral placed

Ratio of accumulated guarantee amount to net assets of the Company

Ceiling of the outstanding guarantee to the respective party

Hongfujin Precision Industry (Shenzhen) Co., Ltd.

Futaihua Industrial (Shenzhen) Limited

The company and its subsidiaries hold more than 50% of common shares of the investee company

Note

$ 6,113,250

$ 6,113,250

$-

1.33%

Note

"

Fuhuajie Industrial (Shenzhen) Limited

The company and its subsidiaries hold more than 50% of common shares of the investee company

"

1,308,241

1,308,241

-

0.28%

Note

Note1: Guarantees to overseas subsidiaries of which the Company directly and indirectly hold 100% of their voting shares should not exceed 50% of the Company's net assets; the limit of guarantee for a single entity should not be in excess of 20% the Company's net assets.

 Note2: The net assets referred above are based on the latest audited or reviewed financial statements.

 

 

 

4)Marketable securities held as of June 30, 2010:

				Relationship				June 30, 2010
		Type and name of		of the issuers with		General ledger		Number of shares				Ownership		Market Value/
	Name of investors		marketable securities (Note 1)		the investee company		account (Note 2)		(in thousands)		Book value		percentage		Net worth
Bon Shin International Investment Co., Ltd.		Common stock of Pan International Industrial Corporation		Investee company accounted for under the equity method		(1)		3,462		$101,799		1		$ 84,551
"		Common stock of Foxconn Technology Co., Ltd.		"		(1)		89,267		4,402,793		9		4,295,976
"		Common stock of CyberTAN Technology Inc.		Indirect investee company accounted for under the equity method		(1)		2,182		34,873		1		34,873
	"		Common stock of SimploTechnology Co., Ltd.		"		(1)		9,680		884,292		4		502,925
	"		Common stock of Advanced Microelectronic Products, Inc.		"		(1)		11,017		47,359		6		75,729
	"		Common stock of Bionet Corporation		"		(1)		1,696		49,537		4		32,575
	"		Common stock of AcBel Polytech Inc.		None		(2)		1,000		21,400		-		21,400
"		Common stock of Entire Technology Co., Ltd.		"		(2)		1,676		309,973		2		309,973
Hon Chi International Investment Co., Ltd.		Common stock of Pan International Industrial Corporation		Investee company accounted for under the equity method		(1)		7,193		196,506		1		175,681
"		Common stock of Foxconn Technology Co., Ltd.		"		(1)		22,546		1,151,323		2		1,085,054
"		Common stock of CyberTAN Technology Inc.		Indirect investee company accounted for under the equity method		(1)		2,835		45,317		1		45,317
	"		Common stock of Tul Corporation		None		(2)		2,044		98,725		3		98,725
	Hon Yuan International Investment Co., Ltd.		Common stock of Pan International Industrial Corporation		Investee company accounted for under the equity method		(1)		16,991		464,013		4		414,988
"		Common stock of Foxconn Technology Co., Ltd.		"		(1)		24,152		1,228,580		3		1,162,311
Hon Yuan International Investment Co., Ltd.		Common stock of CyberTAN Technology Inc.		Indirect investee company accounted for under the equity method		(1)		10,035		160,436		3		160,436
	"		Common stock of Unimicron Corporation		None		(2)		2,800		132,720		-		132,720
	"		Common stock of Entire Technology Co., Ltd.		"		(2)		2,070		419,376		3		419,376
	Lin Yih International Investment Co., Ltd.		Common stock of AcBel Polytech Inc.		None		(2)		6,714		143,680		1		143,680
	"		Common stock of CyberTAN Technology Inc.		Indirect investee company accounted for under the equity method		(1)		10,035		160,436		3		160,436
	Foxconn Holding Ltd.		S.A.S Dragon Holdings Ltd.		None		(2)		46,000		333,574		19		333,574
	"		Alliance Fiber Optic Products, Inc.		Indirect investee company accounted for under the equity method		(1)		8,000		332,992		20		332,992
	Foxconn (Far East) Ltd.- Cayman		Foxconn International Holdings Ltd. -Cayman		Subsidiary owned by Foxconn (FarEast) Ltd. -Cayman		(1)		5,081,035		79,369,144		71		79,369,114
	Foxconn (Far East) Ltd.- Cayman		Alibaba.com Limited		None		(2)		17,549		$ 1,137,301		-		$1,137,301
	Hyield Venture Capital Co., Ltd.		Common stock of Cheng Uei Precision Industry Co., Ltd.		The chairman is a brother of the Company's chairman		(2)		2,044		106,288		-		106,288
	"		Common stock of TXC Corporation		None		(2)		560		28,056		-		28,056
	"		Common stock of Unimicron Corporation		"		(2)		4,000		189,600		-		189,600
	"		Common stock of Chipbond Technology Corporation		"		(2)		3,003		144,144		1		144,144
	"		Common stock of Foxlink Image Technology Co., Ltd.		"		(2)		3,400		63,580		2		63,580
	"		Chimei Innolux Corporation (Original name: Innolux Display Co., Ltd.)		Same major shareholder		(2)		153,888		5,139,875		2		5,139,875
	"		Common stock of Foxconn Technology Co., Ltd.		Investee company accounted for under the equity method		(1)		60,136		2,952,261		6		2,894,044
	"		Common stock of CyberTAN Technology Inc.		Indirect investee company accounted for under the equity method		(1)		10,035		160,436		3		160,436
	"		Common stock of Simplo Technology Co., Ltd.		"		(1)		10,286		939,752		5		534,427
	"		Common stock of Advanced Microelectronic Products, Inc.		"		(1)		14,682		100,923		9		100,923
	"		Common stock of Bionet Corporation		"		(1)		1,697		49,537		4		32,575
	Foxconn International Holdings Ltd. -Cayman		Common stock of Ways Technical Corp., Ltd.		"		(1)		21,409		1,148,195		23		1,148,195
	"		Diabell Co., Ltd.		"		(1)		75		313,193		20		313,193

Note1: Marketable securities disclosed above included listed stocks and open-end funds only.

Note2: Code of general ledger accounts: (1)Long-term investment accounted for under the equity method (2)Available for sale financial assets-non-current

5) Marketable securities acquired or sold during the six-month periods ended June 30, 2010 in excess of $100,000 or 20% of total contributed capital:None

6) Acquisition of real estate exceeding the amount of $100,000 or 20% of total contributed capital: None.

7) Disposal of real estate exceeding the amount of $100,000 or 20% of total contributed capital: None.

 

8) Related party purchases or sales transactions in excess of $100,000 or 20% of total contributed capital: please see information on significant transactions in Note 11(1) and the following disclosures.

Difference with general

Notes and accounts

Transactions

transactions

receivable (payable)

Relationship with

Percentage of

Percentage

Company

Counterparty

the Company

Purchases /sales

Amount

purchases / sales

Terms

Unit price

Terms

Balance

of balance

Note

Ambit Microsystems (Zhong shan) Corporation

Unique Logistics Ltd.

An affiliate

Sales

$ 1,763,865

100

45 days

Note

Note

$ 338,912

99

Unique Logistics Ltd.

Ambit Microsystems (Zhong shan) Corporation

"

"

917,439

30

60 days

"

"

218,215

26

Ambit Microsystem (Shanghai) Co., Ltd.

Amworld Microsystems (Shanghai) Ltd.

An affiliate

Sales

$539,926

2

60 days

Note

Note

$ 302,910

3

"

AMB Logistics Ltd.

"

"

16,454,351

68

"

"

"

1,789,038

20

"

Foxway Precision Industry (Hangzhou) Co., Ltd.

"

"

233,456

1

90 days

"

"

173,930

2

"

Hongfutai Precision Electrons(Yantai) Co., Ltd.

"

"

359,979

1

"

"

"

148,666

2

"

Hongfujin Precision Industry (Yantai) Co., Ltd.

"

"

153,480

1

"

"

"

130,258

1

"

IRIS World Enterprises Ltd.

"

Purchases

205,447

-

90 days

"

"

(15,122)

(1)

FIH (Hong Kong) Limited

Sutech Industry Inc.

"

Sales

9,388,626

33

75 days

"

"

4,061,718

35

"

Foxconn Reynosa S.A. De.C.V.

"

"

933,638

3

"

"

"

757,784

7

FIH (Hong Kong) Limited

Foxconn Do Brasil Ind. E Comercio De Electronicos Ltda.

"

"

526,327

2

30 days

"

"

168,796

1

"

Chi Mei Communication Systems Inc.

"

"

935,080

3

90 days

"

"

446,133

4

"

FIH Europe Limited (Hungary)

"

"

1,014,128

4

30 days

"

"

397,011

3

"

Foxconn India PVT. Ltd.

"

"

171,536

1

45 days

"

"

147,611

1

"

Foxconn Precision Electronics (Langfang) Co., Ltd.

"

"

931,635

3

"

"

"

950,410

8

"

Foxconn Precision Electronics (Yantai) Co., Ltd.

"

Purchases

1,929,133

7

60 days

"

"

( 298,399)

( 3)

Honxun Electrical Industry (Hangzhou) Co., Ltd.

Hongfujin Precision Industry (Yantai) Co., Ltd.

"

"

505,494

74

60 days

"

"

( 457,335)

(12)

"

IRIS World Enterprises Ltd.

"

"

124,798

18

90 days

"

"

(59,698)

( 2)

Shenzhen Fu Tai Hong Precision Industry Co., Ltd.

FIH (Hong Kong) Limited

"

Sales

21,238,603

58

60 days

"

"

1,711,802

14

"

Futaijing Precision Electronics (Beijing) Co., Ltd.

"

"

145,968

-

45 days

"

"

558,218

5

"

Foxconn Precision Electronics (Langfang) Co., Ltd.

"

"

1,325,577

4

"

"

"

1,575,624

13

"

Hongfujin Precision Industry (Shenzhen) Co., Ltd.

"

"

410,346

1

"

"

"

266,202

2

"

Fuhuajie Industrial (Shenzhen) Limited

"

"

125,038

-

30 days

"

"

87,868

1

Shenzhen Fu Tai Hong Precision Industry Co., Ltd.

Hon Fujin Precision Industry (Taiyuan) Co., Ltd.

An affiliate

Purchases

$167,813

1

60 days

Note

Note

($121,877)

( 1)

"

Fuzhun Precision (Shenzhen) Industry Co., Ltd.

"

"

251,377

1

90 days

"

"

( 287,010)

( 2)

"

IRIS World Enterprises Ltd.

"

"

119,541

-

60 days

"

"

( 104,369)

( 1)

Foxconn Precision Component (Beijing) Co., Ltd.

Futaijing Precision Electronics (Beijing) Co., Ltd.

"

Sales

2,416,777

43

45 days

"

"

1,820,958

68

"

Shenzhen Fu Tai Hong Precision Industry Co., Ltd.

"

"

146,810

3

"

"

"

46,567

2

"

FIH (Hong Kong) Limited

"

"

930,507

17

30 days

"

"

114,512

4

Foxconn(Tianjin) Precision Industry Co., Ltd.

FIH (Hong Kong) Limited

"

"

387,245

45

60 days

"

"

10,730

4

Foxconn Precision Electronics (Taiyuan) Co., Ltd.

Foxconn Precision Electronics (Langfang) Co., Ltd.

"

"

320,962

16

45 days

"

"

314,731

24

"

FIH (Hong Kong) Limited

"

"

1,016,489

50

75 days

"

"

245,431

19

"

Foxconn Precision Component (Beijing) Co., Ltd.

"

"

132,612

7

45 days

"

"

88,821

7

"

Shenzhen Fu Tai Hong Precision Industry Co., Ltd.

"

"

150,440

7

60 days

"

"

137,027

11

Futaijing Precision Electronics (Beijing) Co., Ltd.

FIH (Hong Kong) Limited

"

"

248,234

1

30 days

"

"

78,842

1

"

Chi Mei Communication System ,Inc.

"

"

207,393

1

60 days

"

"

170,470

2

Futaijing Precision Electronics (Beijing) Co., Ltd.

Foxconn Precision Electronics (Langfang) Co., Ltd.

"

Sales

212,607

1

45 days

"

"

159,907

2

"

Chimei Innolux Corporation (Original name: Innolux Display Co., Ltd.)

"

Purchases

352,417

10

60 days

"

"

( 184,860)

(2)

Foxconn Precision Electronics (Langfang) Co., Ltd.

Eliteday Enterprises Limited

"

Sales

8,321,445

51

"

"

"

1,632,920

32

"

Shenzhen Fu Tai Hong Precision Industry Co., Ltd.

"

"

1,637,112

10

30 days

"

"

671,732

13

"

Foxconn Precision Component (Beijing) Co., Ltd.

"

"

319,638

2

45 days

"

"

255,068

5

"

Futaijing Precision Electronics (Beijing) Co., Ltd.

"

"

235,138

1

"

"

"

185,762

4

Foxconn Precision Electronics (Langfang) Co., Ltd.

Fujin Precision Industrial (Jincheng) Co., Ltd.

An affiliate

Purchases

$459,215

10

45 days

Note

Note

($163,601)

( 1)

"

Hongfujin Precision Industry (Shenzhen) Co., Ltd.

"

"

227,892

5

60 days

"

"

( 173,210)

( 1)

"

Hon Fujin Precision Industry (Taiyuan) Co., Ltd.

"

"

155,959

4

"

"

"

( 102,880)

( 1)

"

IRIS World Enterprises Ltd.

"

"

305,568

7

"

"

"

( 208,510)

( 2)

"

Fuzhun Precision (Shenzhen) Industry Co., Ltd.

"

"

197,372

4

30 days

"

"

( 180,417)

( 2)

Eliteday Enterprises Limited

FIH Europe Limited (Hungary)

"

Sales

933,421

11

60 days

"

"

413,372

7

"

Foxconn Reynosa S.A. De.C.V.

"

"

223,862

3

"

"

"

199,705

3

"

Foxconn Do Brasil Ind. E Comercio De Eletronicos Ltda.

"

"

212,608

3

"

"

"

118,424

2

Fujin Precision Industry (Shenzhen) Co., Ltd.

Honfujin Precision Electronics (Shenzhen) Co., Ltd.

"

Subcontract Revenue

265,268

95

90 days

"

"

106,082

99

Honfujin Precision Electronics (Shenzhen) Co., Ltd.

Fu Ding Precision Component (Shenzhen) Co., Ltd.

An affiliate

Sales

714,582

2

"

"

"

426,653

2

"

ShenZhen Fu Tai Hong Precision Industry Co., Ltd.

"

"

688,515

1

"

"

"

556,188

3

"

Carston Ltd.

"

Subcontract Revenue

2,869,153

6

"

"

"

193,247

1

"

Heroic Legend Enterprises Ltd.

"

"

11,881,147

25

"

"

"

212,892

1

"

Franklin Management Ltd.

"

"

3,056,367

6

"

"

"

249,473

1

"

Fujin Precision Industrial (Jincheng) Co., Ltd.

"

Sales

110,737

-

"

"

"

95,774

1

"

Hongzhun Precision Tooling (Kunshan) Co., Ltd.

"

"

125,923

-

"

"

"

114,455

1

"

Futaihua Industrial (Shenzhen) Limited

"

"

3,264,060

7

"

"

"

2,416,203

11

"

Fuhuajie Industrial (Shenzhen) Limited

"

"

111,307

-

"

"

"

93,418

-

"

Premier Image Technology (China) Ltd.

"

"

116,029

-

"

"

"

75,017

1

"

Hon Fujin Precision Industry (Taiyuan) Co., Ltd.

"

Purchases

392,269

-

"

"

"

( 107,007)

( 1)

"

Fuhuigang Industrial (Shenzhen) Co., Ltd.

"

Processimg and molding cost

277,509

7

"

"

"

( 57,036)

-

Honfujin Precision Electronics (Shenzhen) Co., Ltd.

Innocom Technology (Shenzhen) Co., Ltd.

An affiliate

Sales

$ 1,087,084

2

90 days

Note

Note

$ 689,203

3

"

Foxnum Technology Co., Ltd.

"

Purchases

184,582

-

"

"

"

( 28,623)

-

Fu Ding Precision Component (Shenzhen) Co., Ltd.

Beyond Maximum Industrial Limited

"

Subcontract Revenue

3,195,121

96

"

"

"

659,177

89

Fuhong Precision Component (Shenzhen) Co., Ltd.

Best Matrix Enterprises Ltd.

"

"

783,986

96

30 days

"

"

185,315

89

Champ Tech Optical (Foshan) Corporation

Premier Image Technology (China) Ltd.

"

Sales

316,844

96

90 days

"

"

107,128

93

Fuhonyang Precision Industrial (Shenzhen) Co., Ltd.

Best Ever Industries Limited

"

"

632,592

48

30 days

"

"

84,623

35

"

Futaihua Industrial (Shenzhen) Limited

"

"

254,766

19

60 days

"

"

68,817

29

Kangzhun Electronic Technology (Kunshan) Co., Ltd.

Ambit Microsystem (Shanghai) Co., Ltd.

"

"

125,432

1

30 days

"

"

48,151

-

"

Foxconn Technology Pte. Ltd.

"

Purchases

688,007

4

90 days

"

"

( 869,300)

( 5)

"

IRIS World Enterprises Ltd.

"

"

123,516

1

90 days

"

"

( 125,309)

( 1)

Fuxiang Precision Industrial (Kunshan) Co., Ltd.

Smart Top International Ltd.

"

Sales

696,865

6

"

"

"

-

-

Foxconn Kunshan Computer Connector Co., Ltd.

Fuzhun Precision (Shenzhen) Industry Co., Ltd.

"

Purchases

107,631

2

60 days

"

"

( 32,668)

( 1)

Foxconn Electronic Industrial Development (Kunshan) Co., Ltd.

Foxconn (Kunshan) Computer Connector Co., Ltd.

"

Subcontract Revenue

4,190,714

99

30 days

"

"

1,808,128

97

Best Leap Enterprises Limited

Fusing International Inc. Pte. Ltd.

"

Sales

3,366,165

2

"

"

"

2,463,096

4

"

Futaihua Industrial (Shenzhen) Limited

"

"

416,772

-

"

"

"

287,547

-

"

Foxconn Technology Pte. Ltd.

"

"

1,269,006

1

"

"

"

1,111,839

2

Skilltop Limited

Foxconn Image& Printing Product Pte. Ltd.

"

"

1,418,927

100

"

"

"

1,220,937

95

Hongfutai Precision Electrons(Yantai) Co., Ltd.

Yantaishi Fulitong International Trading Co., Ltd.

"

"

1,068,431

1

120 days

"

"

1,100,632

4

"

Dragon Spirit Ind. Ltd.

"

"

18,451,550

20

30 days

"

"

4,468,664

15

"

Hongfujin Precision Industry (Yantai) Co., Ltd.

"

889,211

1

30 days

"

"

778,501

3

"

Universal Field International Limited

"

"

67,372,160

71

30 days

"

"

22,162,320

73

"

Foxconn Technology Pte. Ltd.

"

Purchases

573,383

1

90 days

"

"

( 280,833)

(1)

Hongfutai Precision Electrons(Yantai) Co., Ltd.

Yantai Fu Zhun Precision Industry Co,. Ltd.

An affiliate

Purchases

$105,491

-

30 days

Note

Note

($ 49,614)

-

"

Foxconn Technology Co., Ltd.

"

"

191,514

-

90 days

"

"

( 145,068)

-

"

Pan-Interation Industrial Co.

"

"

125,621

-

"

"

"

( 77,425)

-

"

IRIS World Enterprises Ltd.

"

"

1,134,962

1

90 days

"

"

( 599,721)

( 1)

Futaijie Science & Technology Development (Shenzhen) Co., Ltd.

Hongfujin Precision Industry (Shenzhen) Co., Ltd.

"

Sales

123,584

100

"

"

"

10,778

44

Glorious Falcon International Ltd.

Hongfutai Precision Electrons(Yantai) Co., Ltd.

"

"

614,430

23

30 days

"

"

52,295

15

"

Chimei Innolux Corporation (Original name: Innolux Display Co., Ltd.)

"

"

226,163

8

90 days

"

"

-

-

Foxconn CZ S.R.O-Czech

Foxconn Rus, LLC

"

"

432,799

1

45 days

"

"

185,475

2

"

Chimei Innolux Corporation (Original name: Innolux Display Co., Ltd.)

"

Purchases

319,186

2

"

"

"

( 56,999)

( 1)

"

CyberTAN Technology Inc.

"

"

287,680

2

"

"

"

(2,721)

-

Foxconn Global Services Division S.R.O.-Czech

Foxconn CZ S.R.O. -Czech

"

Sales

228,911

14

"

"

"

78,714

18

Fujin Precision Industrial (Jincheng) Co., Ltd.

Hongfujin Precision Industry (Shenzhen) Co., Ltd.

"

"

349,718

7

90 days

"

"

223,011

15

"

Futaihua Industrial (Shenzhen) Limited

"

"

421,387

9

"

"

"

500,278

34

"

Best Ever Industries Limited

"

"

2,217,975

47

30 days

"

"

186,702

13

"

Foxnum Technology Co., Ltd.

"

Purchases

325,461

-

"

"

"

( 202,678)

-

Hongzhun Precision Tooling (Kunshan) Co., Ltd.

Hongfujin Precision Industry (Shenzhen) Co., Ltd.

"

Sales

378,900

13

90days

"

"

414,555

15

"

Kangzhun Electronic Technology (Kunshan) Co., Ltd.

"

"

692,955

23

"

"

"

445,794

16

"

Foxconn (Kunshan) Computer Connector Co., Ltd.

"

"

107,614

4

"

"

"

64,638

2

"

Foxconn (Kunshan) Computer Connector Co., Ltd.

"

"

435,202

15

"

"

"

595,243

21

"

Foxconn Electronic Industrial Development (Kunshan) Co., Ltd.

"

"

826,005

28

"

"

"

911,339

32

Foxconn Electronics Inc.

Beyond Maximan Industrial Ltd.

"

"

280,142

92

"

"

"

158,816

82

Shenzhen Fuhongjie Technology Service Co., Ltd.

FIH (Hong Kong) Limited

An affiliate

Sales

$168,524

34

30 days

Note

Note

$53,501

46

"

Carston Ltd.

"

Subcontract Revenue

326,248

66

"

"

"

62,337

54

Fuzhun Precision Tooling (Huaian) Co., Ltd.

Foxconn Electronic Industrial Development (Kunshan) Co., Ltd.

"

Sales

172,902

31

"

"

"

158,678

27

"

Fuyu Electronical Technology (Huaian) Co., Ltd.

"

"

315,219

56

"

"

"

202,806

35

Fuyu Electronical Technology (Huaian) Co., Ltd.

Success Rise Enterprises Ltd.

"

Subcontract Revenue

3,581,824

100

"

"

"

-

-

Hongfujin Precision Industry (Wuhan) Co., Ltd.

Top Step Enterprises Limited

"

Sales

30,991,550

84

90days

"

"

9,407,386

85

"

FTP Technology Inc.

"

Purchases

345,271

1

60days

"

"

( 206,540)

( 1)

"

Nanning Funing Precision Electronics Co., Ltd.

"

"

121,351

-

30days

"

"

( 86,471)

-

"

Best Vision Technology Pte. Ltd.

"

"

451,658

1

"

"

"

( 381,997)

( 2)

Hongfujin Precision Industry (Yantai ) Co., Ltd.

Ambit Microsystem (Shanghai) Co., Ltd.

"

Sales

211,956

-

90days

"

"

80,883

1

Competition Team Technology Pte.Ltd.

"

"

1,567,306

2

30days

"

"

297,089

2

Hongfutai Precision Electrons(Yantai) Co., Ltd.

"

"

582,724

1

90days

"

"

471,852

4

"

Full Profit International Limited

"

"

830,287

1

30days

"

"

545,237

4

"

Universal Field International Limited

"

Sales

37,854,097

48

30 days

"

"

4,220,843

31

"

Foxconn Technology Co., Ltd.

"

"

38,036,571

48

"

"

"

8,111,247

-

"

Foxconn Technology Pte. Ltd.

"

Purchases

149,836

-

"

"

"

( 8,434)

-

"

Yantai Fu Zhun Precision Industry Co., Ltd.

"

"

153,124

-

"

"

"

( 8,370)

-

"

Foxconn Technology Co., Ltd.

"

"

28,687,562

32

90days

"

"

(4,650,573)

13

"

Pan-Interation Industrial Co.

"

"

698,974

1

"

"

"

( 448,913)

(1)

"

IRIS World Enterprises Ltd.

"

"

1,455,522

2

"

"

"

( 636,501)

(2)

Universal Field International Limited

Hongfutai Precision Electrons(Yantai) Co., Ltd.

"

Sales

1,322,001

1

"

"

"

649,522

-

"

Hongfujin Precision Electrons(Yantai) Co., Ltd.

"

"

358,495

-

30days

"

"

89,858

-

Top Step Enterprises Limited

Hongfujin Precision Industry (Wuhan) Co., Ltd.

An affiliate

Sales

$ 3,469,848

11

45days

Note

Note

$ 153,075

2

Foxconn Technology CZ S.R.O-Czech

Chimei Innolux Corporation (Original name: Innolux Display Co., Ltd.)

"

Purchases

413,544

23

"

"

"

928,790

1

Fugion Material Technology (Shenzhen) Limited

Fu Ding Precision Component (Shenzhen) Co., Ltd.

"

"

1,331,292

49

90days

"

"

346,931

22

Fulin Electronical Technology (Changshu) Co., Ltd.

Fuxian Precision Industry (Kunshan) Co., Ltd.

"

"

121,031

11

"

"

"

-

-

Ambit Microsystem (Shanghai) Co., Ltd.

"

"

858,268

80

"

"

"

-

-

Huaian Fulitong Trading Co., Ltd.

Fu Yu Electronical Technology (Huaian) Co., Ltd.

"

Sales

102,967

17

30days

"

"

43,647

72

Futaihua Industrial (Shenzhen) Limited

Hongfujin (Shenzhen) Industry Co., Ltd.

"

"

197,340

-

90days

"

"

170,405

-

"

Best Leap Enterprises Limited

"

"

218,761,737

98

"

"

"

69,216,658

95

"

FTP Technology Inc.

"

Purchases

2,767,717

1

"

"

"

( 1,830,159)

(4)

"

FTC Technology Inc.

"

"

120,354

-

"

"

"

( 40,206)

-

"

Fuzhun Precision (Shenzhen) Industry Co., Ltd.

"

"

326,810

-

"

"

"

( 299,292)

(1)

"

IRIS World Enterprises Ltd.

"

"

2,495,984

1

"

"

"

( 1,295,425)

( 3)

Fuhuajie Industrial (Shenzhen) Limited

Skilltop Limited

"

Sales

1,278,239

5

45days

"

"

2,266,411

24

"

Foxconn Image & Printing Product Pte. Ltd.

"

"

24,752,715

90

30days

"

"

7,211,604

76

"

IRIS World Enterprises Ltd.

"

"

487,290

2

90 days

"

"

( 401,272)

( 13)

Foxconn Precision Electronics (Yantai) Co., Ltd.

IRIS World Enterprises Ltd.

"

"

161,048

3

"

"

"

(85,273)

(4)

Foxconn Japan Ltd.

Chimei Innolux Corporation (Original name: Innolux Display Co., Ltd.)

"

Purchases

692,628

29

"

"

"

( 189,701)

( 13)

Premier Image Technology (China) Ltd.

Fuhonyang Precision Industrial (Shenzhen) Co., Ltd.

"

Sales

115,851

1

"

"

"

71,264

1

"

Hongfujin Precision Industry (Wuhan) Co., Ltd.

"

"

1,899,249

8

"

"

"

7,874

-

"

Futaihua Industrial (Shenzhen) Limited

"

"

696,438

3

"

"

"

358,597

5

"

Jumbo Rise Management Limited

"

"

17,819,405

79

"

"

"

4,483,038

66

Premier Image Technology (China) Ltd.

Foxconn MOEBG Industrial De Electronicos Ltda. -Brasil

An affiliate

Sales

$477,507

2

"

Note

Note

$ 271,154

4

"

Hon Fujin Precision Industry (Taiyuan) Co., Ltd.

"

Purchases

106,932

1

"

"

"

( 102,374)

( 1)

"

Pan International Industrial Corporation

"

"

138,928

1

"

"

"

( 100,653)

( 1)

"

Pan International Industry Co. Ltd.

"

"

469,170

2

"

"

"

( 281,242)

( 3)

"

IRIS World Enterprises Ltd.

"

"

143,977

1

"

"

"

( 92,703)

( 1)

Note: The prices and terms to related parties were not significantly different from transaction with third parties. For other related party transactions, prices and terms were determined in accordance with mutual agreements.

9) Receivable from related parties in excess of $100,000 or over 20% of total contributed capital: please refer to information on significant transactions in Note 11(1) and the following disclosures.

 

								Balance of				Overdue receivables					Allowance for
								receivable									doubtful
							Relationship with		from related		Turnover				Action adopted for	Subsequent	accounts
			Company		Counterparty		the company		parties		rate		Amount		overdue accounts	collection	provided
		Ambit Microsystems (Zhong shan) Corporation		Unique Logistics Ltd.		An affiliate		$ 338,912		-		$ -		-		$ 338,197	$-
		Unique Logistics Ltd.		Ambit Microsystems (Zhong shan) Corporation		"		218,215		5.30		-		-		201,303	-
			Ambit Microsystem (Shanghai) Co., Ltd.		Amworld Microsystems (Shanghai) Ltd.		"		302,910		5.86		-		-	-	-
			"		Foxway Precision Industry (Hangzhou) Co., Ltd.		"		173,930		1.14		-		-	-	-
			"		Hongfujin Precision Electrons(Yantai) Co., Ltd.		"		130,258		4.01		-		-	-	-
			"		AMB Logistics Ltd.		"		1,789,038		-		-		-	-	-
			"		Hongfutai Precision Electrons(Yantai) Co., Ltd.		"		148,666		6.13		62,854		Subsequent collection	41,671	-
			FIH (Hong Kong) Limited		Sutech Industry Inc.		"		4,061,718		3.89		-		-	1,195,981	-
			"		Foxconn Reynosa S.A. De. C.V.		"		757,784		3.61		-		-	47,224	-
			"		Foxconn Do Brasil Ind. E Comercio De Eletronicos Ltda.		"		168,796		4.13		-		-	16,933	-
			"		Chi Mei Communication System ,Inc		"		446,133		2.70		-		-	10,965	-
			"		FIH Europe Limited (Hungary)		"		397,011		4.73		-		-	100,119	-
			"		Foxconn India PVT. Ltd.		"		147,611		3.20		-		-	12,468	-
			"		Foxconn Precision Electronics (Langfang) Co., Ltd.		"		950,410		3.13		-		-	67,893	-
		Shenzhen Fu Tai Hong Precision Industry Co., Ltd.		FIH (Hong Kong) Limited		"		1,711,802		7.03		-		-		1,109,188	-
		"		Futaijing Precision Electronics (Beijing) Co., Ltd.		"		558,218		0.58		-		-		3,814	-
		"		Foxconn Precision Electronics (Langfang) Co., Ltd.		"		1,575,624		1.44		-		-		6,227	-
			"		Hongfujin Precision Industry (Shenzhen) Co., Ltd.		"		266,202		4.16		-		-	14,738	-
			Foxconn Precision Component (Beijing) Co., Ltd.		Futaijing Precision Electronics (Beijing) Co., Ltd.		An affiliate		$ 1,820,958		3.70		$ -		-	$789	$-
			"		FIH (Hong Kong) Limited		"		114,512		-		-		-	114,512	-
			Foxconn Precision Electronics (Taiyuan) Co., Ltd.		Foxconn Precision Electronics (Langfang) Co., Ltd		"		314,731		2.32		-		-	52,342	-
			"		FIH (Hong Kong) Limited		"		245,431		5.41		-		-	235,175	-
			"		Shenzhen Fu Tai Hong Precision Industry Co., Ltd.		"		137,027		1.39		-		-	5,869	-
			Futaijing Precision Electronics (Beijing) Co., Ltd.		Chi Mei Communication System ,Inc		"		170,470		4.90		-		-	47,703	-
			"		Foxconn Precision Electronics (Langfang) Co., Ltd		"		159,907		5.03		-		-	12,343	-
			Foxconn Precision Electronics (Langfang) Co., Ltd.		Eliteday Enterprises Limited		"		1,632,920		-		-		-	671,485	-
			. "		Shenzhen Fu Tai Hong Precision Industry Co., Ltd.		"		671,732		2.90		-		-	24,978	-
			"		Foxconn Precision Component (Beijing) Co., Ltd.		"		255,068		1.94		-		-	17,435	-
			"		Futaijing Precision Electronics (Beijing) Co., Ltd.		"		185,762		3.58		-		-	27,043	-
			Eliteday Enterprises Limited		FIH Europe Limited (Hungary)		"		413,372		7.50		-		-	32,242	-
			"		Foxconn Reynosa SA. DE C.V.		"		199,705		3.71		-		-	5,958	-
			"		Foxconn Do Brasil Ind. E Comercio De Eletronicos Ltda.		"		118,424		7.04		-		-	3,397	-
		Fujin Precision Industry (Shenzhen) Co., Ltd.		Hongfujin Precision Industry (Shenzhen) Co., Ltd		"		106,082		-		-		-		44,456	-
			Hongfujin Precision Industry (Shenzhen) Co., Ltd.		Fu Ding Precision Component (Shenzhen) Co., Ltd.		"		426,653		5.04		47,084		Subsequent collection	149,012	-
		"		Honxun Electrical Industry (Hangzhou) Co., Ltd.		"		457,335		2.69		163,195		"		199,224	-
			"		Shenzhen Fu Tai Hong Precision Industry Co., Ltd.		"		556,188		2.20		15,627		"	171,750	-
			"		Foxconn Precision Electronics (Langfang) Co., Ltd		"		173,210		2.54		546		"	34,483	-
			"		Carston Ltd.		"		193,247		3.53		-		-	-	-
			"		Heroic Legend Enterprises Ltd.		"		212,892		-		-		-	-	-
			"		Franklin Management Ltd.		"		249,473		3.43		-		-	-	-
			"		Hongzhun Precision Tooling (Kunshan) Co., Ltd.		"		114,455		4.16		5		Subsequent collection	288	-
			"		Futaihua Industrial (Shenzhen) Limited		"		2,416,203		3.09		5,199		"	135,897	-
			"		Innocom Technology (Shenzhen) Co., Ltd.		"		689,203		3.81		-		-	-	-
			Fu Ding Precision Component (Shenzhen) Co., Ltd.		Beyond Maximum Industrial Limited		"		659,177		3.79		-		-	-
			Fuhong Precision Component (Shenzhen) Co., Ltd.		Best Matrix Enterprises Ltd.		"		185,315		0.09		-		-	-	-
			Champ Tech Optical (Foshan) Corporation		Premier Image Technology (China) Ltd.		"		107,128		8.07		-		-	-	-
			Foxconn Electronic Industrial Development (Kunshan) Co., Ltd.		Foxconn (Kunshan) Computer Connector Co., Ltd.		"		1,808,128		5.46		-		-	-	-
			Best Leap Enterprises Limited		Fusing International Inc. Pte. Ltd.		"		2,436,096		2.58		-		-	463,925	-
			"		Futaihua Industrial (Shenzhen) Limited		"		287,547		1.78		35,187		-	3,643	-
			Best Leap Enterprises Limited		Foxconn Technology Pte. Ltd.		An affiliate		$ 1,111,839		2.25		$ -		-	$ -	$ -
			Skilltop Limited		Foxconn Image & Printing Product Pte. Ltd.		"		1,220,937		5.00		256,628		Subsequent collection	79,129	-
			Hongfutai Precision Electrons(Yantai) Co., Ltd.		Yantaishi Fulitong International Trading Co., Ltd.		"		1,100,632		2.23		249,391		"	-	-
			"		Hongfujin Precision Industry (Yantai) Co., Ltd.		"		778,501		3.38		35,502		"	35,502	-
			"		Dragon Spirit Ind. Ltd.		"		4,468,664		8.48		91,970		"	91,970	-
			"		Universal Field International Limited		"		22,162,320		4.94		23,266		"	23,266	-
			Foxconn CZ S.R.O-Czech		Foxcinn Rus, LLC		"		185,475		0.18		-		-	698	-
			Fujin Precision Industrial (Jincheng) Co., Ltd.		Hongfujin Precision Industry (Shenzhen) Co., Ltd.		"		223,011		3.88		-		-	-	-
			"		Futaihua Industrial (Shenzhen) Limited		"		500,278		3.37		-		-	-	-
			"		Foxconn Precision Electronics (Langfang) Co., Ltd.		"		163,601		5.81		-		-	-	-
			"		Best Ever Industries Limited		"		186,702		-		-		-	-	-
			Hongzhun Precision Tooling (Kunshan) Co., Ltd.		Hongfujin Precision Industry (Shenzhen) Co., Ltd.		"		414,555		0.80		340		Subsequent collection	81,452	-
			"		Kangzun Electronic Industrial (Kunshan) Co., Ltd.				445,794		0.80		176,415		"	112,984	-
			"		Foxconn (Kunshan) Computer Connector Co., Ltd.		"		595,243		0.32		330,231		"	35,260	-
			"		Foxconn Electronic Industrial Development (Kunshan) Co., Ltd.		"		911,339		0.57		130,857		"	116,260	-
			Foxconn Electronics Inc.		Beyond Maximum Industrial Ltd.		"		158,816		1.85		-		-	-	-
			Fuzhun Precision Tooling (Huaian) Co., Ltd.		Foxconn (Kunshan) Computer Connector Co., Ltd.		"		191,553		0.44		183,027		Subsequent collection	-	-
			"		Foxconn Electronic Industrial Development(Kunshan) Co., Ltd.		"		158,678		2.48		78,510		"	-	-
			"		Fuyu Electronical Technology (Huaian) Co., Ltd.		"		202,806		3.14		81,275		Subsequent collection	-	-
			Hongfujin Precision Industry (Wuhan) Co., Ltd.		Top Step Enterprises Limited		"		9,407,386		9.47		-		-	3,067,605	-
			Hongfujin Precision Industry (Yantai) Co., Ltd.		Competition Team Technology Pte. Ltd.		"		297,089		3.00		134,721		-	-	-
			"		Hongfutai Precision Electrons(Yantai) Co., Ltd		"		471,852		4.56		-		-	52,390	-
			"		Full Profit International Limited-Samoa		"		545,237		4.51		194,353		Subsequent collection	321,911	-
			"		Universal Field International Limited		"		4,220,843		8.99		797		"	4,220,821	-
			"		Foxconn Technology Co., Ltd.		"		8,111,247		8.09		168,837		"	5,640,633	-
			Universal Field International Limited		Hongfutai Precision Electrons(Yantai) Co., Ltd.		"		649,533		3.68		4,214		"	266,061	-
			"		Hongfujin Precision Electrons(Yantai) Co., Ltd.		"		18,274,672		0.02		26,019		"	9,291,350	-
			Top Step Enterprises Limited		Hongfujin Precision Industry (Wuhan) Co., Ltd.		"		153,075		-		-		-	-	-
			Foxconn Technology CZ S.R.O-Czech		Chimei Innolux Corporation (Original name: Innolux Display Co., Ltd.		"		928,790		3.02		714,458		Subsequent collectin	-	-
			Fugion Material Technology (Shenzhen) Limited		Fu Ding Precision Component (Shenzhen) Co., Ltd.		"		346,931		4.00		346,931		"	-	-
			Futaihua Industrial (Shenzhen) Limited		Hongfujin Precision Industry (Shenzhen) Co., Ltd.		An affiliate		$ 170,405		0.16		$ -		-	$ 11,787	$-
			"		Best Leap Enterprises Limited		"		69,216,658		7.65		-		-	43,296,487	-
			Fuhuajie Industrial (Shenzhen) Limited		Skilltop Limited		"		2,266,411		0.57		154,425		Subsequent collection	-	-
			"		Foxconn Image & Printing Product Pte. Ltd.		"		7,211,604		2.09		19,024		"	-	-
			Foxconn Precision Electronics (Yantai) Co., Ltd.		FIH (Hong Kong) Limited		"		298,399		-		31		"	31	-
			Premier Image Technology (China) Ltd.		Futaihua Industrial (Shenzhen) Limited		"		358,597		3.23		-		-	205,978	-
			"		Jumbo Rise Management Limited		"		4,483,038		8.79		-		-	2,735,210	-
			"		Foxconn MOEBG Industria De Electronics Ltda.-Brazil		"		271,154		4.82		-		-	55,594	-

 

10) Information on derivative transactions 

a) As of June 30, 2010, the information on derivative financial instruments of investee companies is as follows:

 

Derivative financial instrument	Contract amount (in thousands)		Maturity	Book Value	Fair Value
Forward exchange contracts:
BUY JPY/SELL BRL	JPY	43,750	99.7.9	$ 194	$ 194
	BRL	887
BUY JPY/SELL USD	JPY	250,000	99.7.5~99.7.9	3,079	3,079
	USD	2,727
BUY JPY/ SELL INR	JPY	173,125	99.7.2~99.8.27	1,022	1,022
	INR	89,488
BUY USD/ SELL BRL	USD	20,000	99.7.1~99.8.13	2,537	2,537
	BRL	36,278
BUY USD/ SELL INR	USD	8,378	99.7.2~99.10.1	( 2,663)	( 2,663)
	INR	394,230
BUY USD/ SELL MXN	USD	6,000	99.7.16	3,280	3,280
	MXN	75,760
BUY USD/ SELL EUR	USD	5,644	99.7.2~99.8.17	596	596
	EUR	4,600
BUY EUR/ SELL INR	EUR	1,602	99.7.2~99.8.27	392	392
	INR	91,271
BUY EUR/ SELL USD	EUR	1,000	99.7.1	(186)	(186)
	USD	1,229
SELL EUR/ BUY HUF	EUR	1,500	99.7.27	( 1,152)	( 1,152)
	HUF	420,600
SELL USD/ BUY MXN	USD	38,000	99.7.22~99.9.23	7,700	7,700
	MXN	491,138
SELL USD/ BUY BRL	USD	6,500	99.7.1~99.7.14	(935)	(935)
	BRL	11,735
SELL EUR/ BUY USD	EUR	18,200	99.7.1~99.10.21	24,145	24,145
	USD	23,216
SELL RMB/ BUY USD	RMB	409,121	99.7.6~99.8.11	8,053	8,053
	USD	60,000
SELL JPY/ BUY USD	JPY	1,700,000	99.7.7~99.7.22	24,020	24,020
	USD	18,466
SELL USD/ BUY VND	USD	6,500	99.7.9~99.12.17	4,577	4,577
	VND	126,452,500
SELL USD/BUY JPY	USD	60	99.7.21	(53,905)	(53,905)
	JPY	5,425
SELL RMB/ BUY EUR	RMB	29,282	99.72.2~99.7.23	1,270	1,270
	EUR	3,500

 

 

 

 

 

b) Additional disclosure:

As of June 30, 2010, the company recognized net gain of $16,431 on derivative transactions (including net gain of $22,024 on valuation of financial assets and liabilities on June 30, 2010).

 

(3)Disclosure of information on indirect investments in Mainland China

1)Information on investments in Mainland China

Name of investee in Mainland China		Main activities of investee		Capital		Method of investment  (Note 1)		Balance of amount remitted from Taiwan as of Jan. 1, 2010		Transactions during Jan. 1 ~June 30, 2010				Balance of amount remitted from Taiwan as of June 30, 2010	Ownership percentage held by the Company  (Direct/indirect)	Investment income (loss) recognized during Jan. 1~June.   30, 2010 (Note 2)	Book value of investment as of June. 30, 2010	Profit remitted to Taiwan during Jan. 1~ June 30, 2010
										Remittance out		Remittance in
Foxconn Precision Component (Beijing) Co., Ltd.		Manufacturing of telecommunication cases		$ 2,211,920 (US$ 68,800 thousand)		(2)		$-		$-		$ -		$ -	71.13%	$ 287,162	$16,216,316	$ -
Fujin Precision Industry (Shenzhen) Co., Ltd.		Manufacturing and processing of computer cases, computer peripherals, etc.		1,686,268 (US$ 52,450 thousand)		(2)(3)		160,750 (US$ 5,000 thousand)		-		-		160,750 (US$ 5,000 thousand)	100%	31,244	2,307,210	140,174 (US$ 4,360 thousand)
	Shenzhen Fu Tai Hong Precision Industry Co., Ltd.		Manufacturing and marketing of computer cases, micro ribbon connectors for terminals, etc.		5,739,418 (US$178,520 thousand)		(2)		-		-		-	-	71.13%	( 1,771,107)	13,416,569	-
	Foxconn Precision Component (Shenzhen) Co., Ltd.		Manufacturing of connectors, micro ribbon connectors for terminals, micro-computers, mouse cables, monitor cables, etc.		798,606 (US$ 24,840 thousand)		(2)(3)		96,450 (US$ 3,000 thousand)		-		-	96,450 (US$ 3,000 thousand)	100%	4,026	1,293,722	-
	Honxun Electrical Industry (Hangzhou) Co., Ltd.		Manufacturing and marketing of computer cases, micro ribbon connectors for terminals, etc.		4,076,620 (US$126,800 thousand)		(2)		-		-		-	-	71.13%	274,401	5,451,027	-
	Hongzhun Precision Tooling (Shenzhen) Co., Ltd.		Manufacturing and marketing of computer cases and computer peripherals, etc.		482,250 (US$ 15,000 thousand)		(2)		-		-		-	-	100%	( 568)	640,305	-
	Foxconn Computer Connectors (Kunshan) Co., Ltd.		Manufacturing of connectors, micro ribbon connectors for terminals, micro- computers, mouse cables, monitor cables, etc.		1,433,890 (US$ 44,600 thousand)		(2)(3)		160,750 (US$ 5,000 thousand)		-		-	160,750 (US$ 5,000 thousand)	100%	994,029	5,299,667	229,551 (US$ 7,140 thousand)
Fu Ding Precision Component (Shenzhen) Co., Ltd.		Manufacturing and marketing of connectors, micro ribbon connectors for terminals, etc.		1,446,750 (US$ 45,000 thousand)		(2)		-		-		-		-	100%	100,816	3,047,083	-
	Hong Fujin Precision Industrial (Shenzhen) Co., Ltd.		Manufacturing and marketing of computer case and computer peripherals, etc.		5,433,350 (US$169,000 thousand)		(2)		-		-		-	-	100%	3,003,112	52,352,322	1,125,893 (US$ 35,020 thousand)
	Foxconn Electronic Industrial Development (Kunshan) Co., Ltd.		Manufacturing and marketing of computer cases, micro ribbon connectors for terminals, etc.		$ 2,186,200 (US$ 68,000 thousand)		(2)		$ -		$-		$ -	$ -	100%	$ 112,206	$ 3,125,333	$-
	Futaije Science & Technology Development (Shenzhen) Co., Ltd.		Manufacturing and design of computer components keyboards, etc.		385,800 (US$ 12,000 thousand)		(2)		-		-		-	-	100%	14,415	546,461	-
	Fuhon Precision Component (Shenzhen) Co., Ltd.		Manufacturing and marketing of connectors, micro ribbon connectors for terminals, etc.		369,725 (US$ 11,500 thousand)		(2)		-		-		-	-	100%	75,213	1,194,889	69,766 (US$ 2,170 thousand)
	Hongzhun Precision Tooling (Kunshan) Co., Ltd.		Manufacturing and marketing of computer cases		2,764,900 (US$ 86,000 thousand)		(2)		-		-		-	-	100%	888,505	8,547,242	87,448 (US$ 2,720 thousand)
	Kangzhun Precision Tooling (Kunshan) Co., Ltd.		Manufacturing and marketing of computer components, computer peripherals, etc.		2,893,500 (US$ 90,000 thousand)		(2)		-		-		-	-	100%	27,365	6,806,413	-
	Futaikang Precision Computer (Shenzhen) Co., Ltd.		Manufacturing and marketing of connectors, micro ribbon connectors for terminals, etc.		184,863 (US$ 5,750 thousand)		(2)		-		-		-	-	100%	6,542	266,189	-
	Fuxing Precision Component (Huaian) Co., Ltd.		Manufacturing and marketing of switching hub and router cases		192,900 (US$ 6,000 Thousand)		(2)		-		-		-	-	100%	-	163,500	-
	Fujin Precision Industrial (Jincheng) Co., Ltd.		Manufacturing and marketing of computer cases		6,526,450 (US$ 20,300 thousand)		(2)		-		-		-	-	100%	112,567	6,614,073	-
	Honyeh Precision Component (Kunshan) Co., Ltd.		Manufacturing and marketing of computer components		186,470 (US$ 5,800 thousand)		(2)		-		-		-	-	100%	( 10,008)	315,621	46,618 (US$ 1,450 thousand)
	Fuhonyang Precision Industrial (Shenzhen) Co., Ltd.		Manufacturing and marketing of connectors, micro ribbon connectors for terminals, computer cases, etc.		578,700 (US$ 18,000 thousand)		(2)		-		-		-	-	100%	23,794	1,129,219	-
	Foxway Precision Industry (Hangzhou) Co., Ltd.		Manufacturing and marketing of router components		401,875 (US$ 12,500 thousand)		(2)		-		-		-	-	100%	(22,550)	828,936	-
	Hongfutai Precision Electrons (Yantai) Co., Ltd.		Manufacturing and marketing of auto digital signal process device and components		$ 4,372,400 (US$136,000 thousand)		(2)		$ -		$-		$ -	$ -	100%	$ 901,485	$13,195,210	$ -
	Ambit Microsystems (Zhong shan) Corporation		Manufacturing and marketing of power supplies		1,324,580 (US$ 41,200 thousand)		(2)(3)		787,675 (US$ 24,500 thousand)		-		-	787,675 (US$ 24,500 thousand)	100%	320,895	2,621,455	-
	Ambit Microsystems (Shanghai) Co., Ltd.		Manufacturing and marketing of power supplies, modems and ADSL devices		2,359,810 (US$ 73,400 thousand)		(2)(3)		1,478,900 (US$ 46,000 thousand)		-		-	1,478,900 (US$ 46,000 thousand)	100%	218,814	6,458,857	-
	Amlink (Shanghai) Co., Ltd.		Manufacturing and marketing of power supplies, modems and ADSL devices		643,000 (US$ 20,000 thousand)		(2)(3)		225,050 (US$7,000 thousand)		-		-	225,050 (US$ 7,000 thousand)	44.81%	53,836	517,496	-
	Competition Media (Shenzhen) Co., Ltd.		Manufacturing and marketing of optical pickup head and components of CD-ROM		1,157,400 (US$ 36,000 thousand)		(2)		-		-		-	-	100%	2,705	665,287	-
	Fuxian Precision Industry (Kunshan) Co., Ltd.		Manufacturing and marketing of computer case		4,501,000 (US$140,000 thousand)		(2)		-		-		-	-	100%	(162,228)	5,071,741	-
	Dong Guan Hong Song Precision Component Co., Ltd.		Manufacturing and marketing of keypad and computer Components		321,500 (US$ 10,000 thousand)		(2)		-		-		-	-	100%	19,494	176,129	-
	Foxconn (Tianjin) Precision Industry Co., Ltd.		Manufacturing and marketing of wireless phone and components		1,697,520 (US$52,800 thousand)		(2)		-		-		-	-	71.13%	(84,200)	920,338	-
	Fugion Material Technology (Shenzhen) Limited		Manufacturing and marketing of potassium aurous cyanide		118,955 (US$ 3,700 thousand)		(2)		-		-		-	-	70%	28,105	125,567	-
	Antec Automotive Electric System (Kunshan) Co., Ltd.		Manufacturing and marketing of automobile		144,997 (US$ 4,510 thousand)		(2)		-		-		-	-	100%	2,344	(42,494)	-
	Liuzhou Antec Fangshen Electric System Co., Ltd.		Manufacturing and marketing of automobile		47,582 (US$ 1,480 thousand)		(2)		-		-		-	-	55%	468	10,624	-
	Foxconn Precision Electronics (Yantai) Co., Ltd.		Manufacturing and marketing of telecommunication peripherals		1,318,150 (US$ 41,000 thousand)		(2)		$ 1,054,199 (US$ 32,790 thousand)		$-		$ -	$ 1,054,199 (US$ 32,790 thousand)	100%	( $ 95,806)	$ 867,805	$ -
	Premier Image Technology (China) Limited		Manufacturing and sale of cameras.		4,879,084 (US$ 151,760 thousand)		(2)(3)		20,898 (US$650 thousand)		-		-	20,890 (US$650 thousand)	99.96%	522,650	11,911,800	-
	Fu Zhun Precision Tooling (Huai an) Co., Ltd.		Designing, manufacturing and marketing of computer components		2,128,330 (US$ 66,200 thousand)		(2)		-		-		-	-	100%	215,683	3,167,743	-
	Fu Yu Electronical Technology (Huaian) Co., Ltd.		Designing and marketing of connectors and cables		4,700,330 (US$146,200 thousand)		(2)		-		643,000 (US$ 20,000 thousand)		-	643,000 (US$ 20,000 thousand)	100%	529,090	6,670,067	-
	CJ Electric System Co., Ltd.		Manufacturing and marketing of automobile		70,730 (US$ 2,200 thousand)		(2)		-		-		-	-	50%	22,280	91,185	-
	Foxconn Precision Electronics (Taiyuan) Co., Ltd.		Manufacturing and marketing of micro ribbon connectors for terminals, etc.		2,748,825 (US$ 85,500 thousand)		(2)		-		-		-	-	71.13%	(82,239)	1,663,455	-
	Hongfujin Precision Industry (Huizhou)		Manufacturing and marketing of computer cases, router, notebook, etc.		1,060,950 (US$ 33,000 thousand)		(2)		-		-		-	-	100%	( 24,112)	1,212,097	-
	Fukui Precision Component (Shenzhen) Co., Ltd.		Manufacturing and marketing of electronics devices and cable		3,382,180 (US$105,200 thousand)		(2)		-		-		-	-	42.87%	122,015	2,175,607	-
	Futaijing Precision Electronics (Beijing) Co., Ltd.		Manufacturing and marketing of computer cases, micro ribbon connectors for terminals, etc.		2,411,250 (US$ 75,000 thousand)		(2)		-		-		-	-	71.13%	( 42,068)	2,719,701	-
	Foxconn Precision Electronics (Langfang) Co., Ltd.		Manufacturing and marketing of cell phone and components		3,182,850 (US$ 99,000 thousand)		(2)		-		-		-	-	71.13%	720,512	6,501,954	-
	Foxconn(Tianjin) Precision Industry Co., Ltd.		Manufacturing and marketing of GSM, CDMA phone and components		(Note 3)		(2)		-		-		-	-	-	-	-	-
	Foxconn Good Field Precision Industry (Dalian) Co., Ltd.		Manufacturing and marketing of electronics calculator and components		30,221 (US$ 940 thousand)		(2)		-		-		-	-	40%	2,244	41,865	-
	FuMeng Electronical Technology (Huaian) Co., Ltd.		Manufacturing and marketing of micro ribbon connectors for terminals		257,200 (US$ 8,000 thousand)		(2)		$-		$-		$ -	$ -	100%	$ 11,550	$ 597,766	$ -
	Hongfujin Precision Industry (Wuhan) Co., Ltd.		Manufacturing and marketing of computer and digital camera components		7,806,020 (US$242,800 thousand)		(2)		-		-		-	-	100%	737,810	8,057,764	-
	Amworld Microsystems (Shanghai) Ltd.		Manufacturing and marketing of switch supply and modem		546,550 (US$ 17,000 thousand)		(2)		-		-		-	-	100%	2,826	576,985	-
	Hongqunsheng Precision Electronics (Yingkou) Co., Ltd.		Manufacturing and marketing of printed circuit board		1,077,025 (US$ 33,500 thousand)		(2)		-		-		-	-	42.87%	( 27,406)	410,553	-
	Hongqisheng Precision Electronics (Qinhuangdao) Co., Ltd.		Manufacturing and marketing of electronics calculator and component		3,247,150 (US$101,000 thousand)		(2)		-		-		-	-	42.87%	( 58,854)	1,262,635	-
	Hongfujin Precision Industry (Yantai) Co., Ltd.		Manufacturing and marketing of computer components, computer		1,639,650 (US$ 51,000 thousand)		(2)		-		-		-	-	100%	3,652,083	18,084,813	-
	Foxconn (Nanjing) Communications Co., Ltd.		Manufacturing and marketing of handset and components		321,500 (US$ 10,000 thousand)		(2)		-		-		-	-	71.13%	( 52,268)	218,818	-
	Foxconn (Nanjing) Software Co., Ltd.		Computer software, hardware and other digital product		1,028,800 (US$ 32,000 thousand)		(2)		-		-		-	-	100%	( 39,490)	817,013	-
	Foxconn (Qinhuangdao) Technology Co., Ltd.		Backlight and antenna component.		257,200 (US$ 8,000 thousand)		(2)		-		-		-	-	100%	2	287,216	-
	Honghuasheng Precision Electronics (Yantai) Co., Ltd.		Print circuit board products manufacturing and sales		2,758,470 (US$ 85,800 thousand)		(2)		-		-		-	-	42.87%	( 27,406)	410,553	-
	Fulin Electronical Technology (Changshu) Co., Ltd.		Manufacturing and marketing of computer components, computer		1,752,175 (US$ 54,500 thousand)		(2)		-		-		-	-	100%	(4,058)	1,722,895	-
	Fuyang Electronical Technology (Changshu) Co., Ltd.		Manufacturing and marketing of computer components, computer		1,626,790 (US$ 50,600 thousand)		(2)		$-		$-		$ -	$ -	100%	2,371	$1,655,557	$ -
	Fu Tai Kang Electronics Development (Yantai) Ltd.		Marketing of computer chassis and metal stamping parts		964,500 (US$ 30,000 thousand)		(2)		-		-		-	-	100%	11,795	1,098,670	-
	Hongfujin Precision Industry (Qinhuangdao) Co., Ltd.		Connector related business		385,800 (US$ 12,000 thousand)		(2)		-		-		-	-	100%	4,000	427,556	-
	Foxconn (Shenyang) precision Industry Co., Ltd.		Numeric control machine tool manufacturing		1,763,106 (US$ 54,840 thousand)		(2)		-		-		-	-	69.23%	1,892	1,247,276	-
	Hong Heng Sheng Electronical Technology (Huaian) Co., Ltd.		Print circuit board product manufacturing and sales		2,925,650 (US$ 91,000 thousand)		(2)		-		-		-	-	42.87%	( 34,803)	1,178,853	-
	Alibaba (China) Technology Co., Ltd.		Providing software and technology services		(Note 4)		(2)		-		-		-	-	-	-	-	-
	Alibaba (China) Software Co., Ltd.		Providing software and technology services		(Note 4)		(2)		-		-		-	-	-	-	-	-
	Alibaba (Shanghai) Technology Co., Ltd.		Providing software and technology services		(Note 4)		(2)		-		-		-	-	-	-	-	-
	Beijing Sinya Online Information Technology Co., Ltd.		Providing software and technology services		(Note 4)		(2)		-		-		-	-	-	-	-	-
	Hongfuqiang Precision Electronics (Yingkou) Co., Ltd.		Manufacturing and marketing of computer components, computer		80,375 (US$ 2,500 thousand)		(2)		-		-		-	-	100%	-	81,337	-
	Fuding Electronical Technology (Jiashan) Co., Ltd.		Manufacturing and marketing of computer components, computer		1,832,550 (US$ 57,000 thousand)		(2)		-		-		-	-	100%	-	1,514,531	-
	Fuhuajie Industrial (Shenzhen) Limited		Manufacturing and marketing of computer components, computer		3,697,250 (US$115,000 thousand)		(2)		964,500 (US$ 30,000 thousand)		2,572,000 (US$ 80,000 thousand)		-	3,536,500 (US$ 110,000 thousand)	100%	( 354,900)	3,151,693	-
	GDS Software (Shenzhen) Co., Ltd.		Computer software, hardware and other digital product		(Note5)		(2)		$-		$ -		$ -	$ -	-	$ -	$ -	$ -
	Futaihua Industrial (Shenzhen) Limited		Manufacturing and marketing of computer components, computer		$ 4,951,100 (US$154,000 thousand)		(2)		-		3,825,850 (US$119,000 thousand)		-	3,825,850 (US$119,000 thousand)	100%	1,439,682	19,340,313	-
	Dong Guan Eson Precision Tooling Co., Ltd.		Manufacturing and marketing of telecommunication cases		225,372 (US$ 7,010 thousand)		(2)		-		-		-	-	29.39%	690	66,273	-
	Kunshan Eson Precision Engineering Co., Ltd.		Manufacturing and marketing of electronic components		964,822 (US$ 30,010 thousand)		(2)		-		-		-	-	29.39%	18,622	483,883	-
	Wuxi XinGuan Metal Science & Technology Co., Ltd.		Manufacturing and marketing of plastic mould		450,100 (US$ 14,000 thousand)		(2)		-		-		-	-	29.39%	10,080	455,052	-
	Kunshan Eson Technology Inc.		Manufacturing and marketing of computer components, computer		224,086 (US$ 6,970 thousand)		(2)				-		-	-	9.7%	8,454	144,567	-
	Yantai Jiray Electronic Technology Co., Ltd.		Manufacturing and marketing of monitoring device		165,894 (US$ 5,160 thousand)		(2)		-		-		-	-	19.1%	5,348	44,738	-
	Yantai Zheng Yi Precision Electronic Co., Ltd.		"		70,730 (US$ 2,200 thousand)		(2)		-		-		-	-	29.39%	(1,160)	19,190	-
	Guangzhou OED Technologies Co., Ltd.		Manufacturing and marketing of mould and tooling		176,825 (US$ 5,500 thousand)		(2)		-		-		-	-	5.88%	(1,428)	6,884	-
	MediaMarkt (Shanghai) Commercial & Trading Company Limited		E-book key material and components manufacturing and sales		(Note 6)		(2)		-		-		-	-	-	-	-	-
	Honfujin Precision Electronics (Chongqing) Co., Ltd.		Manufacturing and marketing of computer chassis and metal stamping parts		1,339,048 (US$ 41,650 thousand)		(2)		1,339,048 (US$41,650 thousand)		-		-	1,339,048 (US$ 41,650 thousand)	100%	( 61,889)	1,282,994	-
	System Integration Electronics (Hangzhou)Co.,Ltd.		Manufacturing and marketing of electronic components, network communication equipment, high-end routers and high-end switches		(Note 7)		(2)		$-		$-		$-	$ -	100%	($ 61,889)	$1,282,994	$ -
	Champ Tech OpticalL (Foshan) Corporation		Manufacturing and marketing of Optical Lens		$ 866,443 (US$ 26,950 thousand)		(2)		-		1,079,919 (US$ 33,590 thousand)		-	1,079,919 (US$33,590 thousand)	100%	51,813	1,074,597	-
	Innovation (Beijing) Software Development Co., Ltd.		Manufacturing and marketing of computer components, comput and Software Development		(Note 8)		(2)		-		-		-	-	-	-	-	-
	MediaMarkt (Shanghai) Consulting Service Company		Consulting Service		(Note 9)		(2)		-		-		-	-	-	-	-	-
	Spreadcomm Technology Corp		Software Development on Mobile Devices		19,290 (US$ 600 thousand)		(2)		-		-		-	-	71.31%	(1,501)	4,811	-

 

Accumulated amount wired out from Taiwan to mainland China as of June 30, 2010	Investment amount approved by FIC of MOEA	Ceiling of investment amount of the Company
NT$ 14,408,987	NT$ 132,115,924	(Note 10)
US$44,818	US$ 410,936

 

 

 

 

 

 

Note 1: The methods of remittance of investments to mainland China are as follows:

(1) Company funds are remitted from Taiwan through an investee company located outside of Taiwan and mainland China.

 (2) Investee company established by the Company and located outside of Taiwan and mainland China remits its own funds directly to the investee companies located in mainland China.

(3) Investee company located outside of Taiwan and mainland China remits its own funds directly to the investee companies located in mainland China.

(4) Directly investing in companies in mainland China.

(5) Others.

Note 2: The portions of transaction information with related parties were based on the financial statements of the company for the same period which was not reviewed by independent accountants.

Note 3: The Company was approved by Investment Commission, MOEA of an investment of US$ 2,902 thousands in Tianjin Foxconn Precision Industry Co., Ltd., which hasn't been established as of June 30, 2010.

Note 4: The Company held indirectly 0.347% ownership of the Mainland China subsidiaries of Alibaba (China) Technology Co., Ltd., Alibaba (China) Software Co., Ltd., Alibaba (Shanghai) Technology Co., Ltd., and Beijing Sinya Online Information Technology Co., Ltd.. The investment amount of the Company approved by the Investment Commission of the Ministry of Economic Affairs in the above four indirect subsidiaries was US$372,179, US$18,905, US$1 and US$1, respectively.

Note 5: The Company was approved by Investment Commission, MOEA of an investment of US$8,000 in GDS Software (Shenzhen) Co., Ltd. As of June 30, 2010, the funds have not been remitted.

Note 6: The Company was approved by Investment Commission, MOEA of an investment of US$50,000 in Media Market (Shanghai) Commercial & Trading Company Limited. As of June 30, 2010, license for operation was acquired, where as the funds have not been remitted; there is no operating activities in substance.

Note 7: The Company was approved by Investment Commission, MOEA of an investment of US$11,283 in System Integration Electronics (Hangzhou) Co., Ltd. As of June 30, 2010, the funds have not been remitted.

Note 8: The Company was approved by Investment Commission, MOEA of an investment of US$26,600 in Innovation (Beijing) Software Development Co., Ltd. As of June 30, 2010, the funds have not been remitted 

Note 9: The Company was approved by Investment Commission, MOEA of an investment of US$8,750 in MediaMarkt (Shanghai) Consulting Service Company As of June 30, 2010, the funds have not been remitted 

Note10: Pursuant to the Jing-Shen-Zi Letter No. 09704604680 of the Ministry of Economic Affairs, R.O.C., dated August 29, 2008, as the Company has obtained the certificate of being qualified for operating headquarters, issued by the Industrial Development Bureau, MOEA, the ceiling amount of the investment in Mainland China is not applicable to the Company.

2) Significant transactions with investee in Mainland China:

The Company subcontracted the processing of products to Foxconn (Far East) Ltd.'s subsidiaries located in Mainland China. All intercompany transactions were eliminated when preparing consolidated financial statements.

	Relationship with	Transactions		Difference with general transactions		Ending	Note
	the company	Purchases / sales	Amount	Unit price	Terms	Balance
Foxconn (Far East) Ltd. and its subsidiaries	Wholly-owned subsidiary and its subsidiaries	Sales	$25,959,910	Note	Note	$9,713,033
Best Leap Enterprises Limited	Indirect investee company accounted for under the equity method	Purchases	213,032,080	"	"	( 67,875,991)
Foxconn (Far East) Ltd. and its subsidiaries	Wholly-owned subsidiary and its subsidiaries	"	127,027,274	"	"	( 37,566,954)
Universal Field International Limited	Indirect investee company accounted for under the equity method	"	103,862,795	"	"	( 26,454,462)
Jumbo Rise Management Limited	"	"	17,783,482	"	"	(3,798,728)

Note: The prices and terms to related parties were not significantly different from transaction with third parties. For other related party transactions, prices and terms were determined in accordance with mutual agreements.

 

	For the six-month periods ended June 30, 2009			For the six-month periods ended June 30, 2010
	Processing Cost	Prepayments	Payable	Processing Cost	Prepayments	Payable
Heroic Legend Enterprises Ltd.	$14,368,653	$ -	$ 10,452,962	$ 13,412,385	$-	$ 7,573,565
Foxconn (Far East) Ltd., and subsidiaries	7,887,427	905,301	10,743,140	12,352,479	920,017	12,826,791
Success Rise Enterprises Ltd.	8,365,307	-	-	10,639,375	-	5,335,784
Franklin Management Ltd.	10,665,720	-	9,565,800	5,744,765	-	11,224,860
Carston Ltd.	2,827,422	-	10,355,215	2,483,064	-	7,707,563
	$44,114,529	$ 905,301	$ 41,208,117	$ 44,632,068	$920,017	$ 44,668,563

(4) The relationship and significant transactions between the Company and its subsidiaries

For the six-month periods ended June 30, 2009

				Description of transactions
							The percentage of total
							consolidated revenue or total
Number (Note a)	Name of company	Name of counterparties	Relationship (Note b)	Account	Amount	Transaction terms	consolidated assets (Note d)
0	Hon Hai Precision Industry Co., Ltd.	Foxconn (Far East) Ltd. and subsidiaries	1	Sales	$22,533,211	Note c	3
0	"	"	1	Accounts receivable	10,521,583	"	1
0	"	"	1	Purchases	218,889,406	"	27
0	"	"	1	Accounts payable	79,879,811	"	9
0	"	"	1	Processing and molding costs	44,114,529	"	5
0	"	"	1	Accrued Expenses	41,208,117		5
0	"	"	1	Other receivable	57,500,522	"	6
0	"	Premier Image Technology (H.K.), Ltd.	1	Purchases	11,611,545	"	1
1	Ambit Microsystem (Shanghai) Co., Ltd.	AMB Logistics Ltd.	3	Sales	10,908,866	"	6
2	Hong Fujin Precision Industrial (Shenzhen) Co., Ltd.	Heroic Legend Enterprises Ltd.	3	Subcontract revenue	10,960,798	"	1
3	Hongfutai Precision Electronics (Yantai) Co., Ltd.	Dragon Spirit Ind. Ltd.	3	Sales	20,700,388	"	3
3	"	Universal Field International Limited	3	"	38,478,317		5
4	Hongfujin Precision Industry (Yantai) Co., Ltd.	"	3	Sales	27,255,871	"	3
4	"	"	3	Accounts receivable	10,303,173		1
5	Premier Image Technology (H.K.), Ltd.	Premier Image Technology (China) Limited	3	"	12,136,964	"	1
6	Futaihua Industrial (Shenzhen) Limited	Best Leap Enterprises Limited	3	Sales	100,459,099	"	12
6	"	"	3	Accounts receivable	45,566,891	"	5
7	Shenzhen Fu Tai Hong Industry Co., Ltd.	FIH (Hong Kong) Limited	3	Sales	39,481,532	"	5
7	"	"	3	Accounts receivable	14,727,418	"	2

 

 

 

 

 

 

For the six-month periods ended June 30, 2010

				Description of transactions
							The percentage of total
							consolidated revenue or total
Number (Note a)	Name of company	Name of counterparties	Relationship (Note b)	Account	Amount	Transaction terms	consolidated assets (Note d)
0	Hon Hai Precision Industry Co., Ltd.	Foxconn (Far East) Ltd. and subsidiaries	1	Sales	$ 25,959,910	Note c	2
0	"	"	1	Purchases	127,027,274	"	11
0	"	"	1	Processing and molding costs	12,352,479	"	1
0	"	"	1	Accounts payable	37,566,954	"	3
0	"	"	1	Accrued expense	12,826,791	"	1
0	"	"	1	Other receivable	36,562,808	"	3
0	"	Best Leap Enterprises Limited	1	Purchases	213,032,080	"	18
0	"	"	1	Accounts payable	67,875,991	"	5
0	"	Universal Field International Limited	1	Purchases	103,862,795	"	9
0	"	"	1	Accounts payable	26,454,462	"	2
0	"	Universal Field International Limited	1	Other receivable	46,691,584	"	4
		Jumbo Rise Management Limited	1	Purchase	17,783,842		1
0	"	Heroic Legend Enterprises Ltd.	1	Processing and molding costs	13,412,385	"	1
0	"	Futaihua Industrial (Shenzhen) Limited	1	Other receivable	54,327,354	"	4
1	Ambit Microsystem (Shanghai) Co.,Ltd.	AMB Logistics Ltd.	3	Sales	16,454,351	"	1
2	Hongfutai Precision Electronics (Yantai) Co., Ltd.	Dragon Sprit Ind. Ltd.	3	Sales	18,451,550	"	2
2	"	Universal Field International Limited	3	"	67,372,160	"	6
2	"	"	3	Accounts receivable	22,162,320	"	2
3	Hongfujin Precision Electronics (Yantai) Co., Ltd.	"	3	Sales	37,854,097	"	3
4	Futaihua Industrial (Shenzhen) Limited	Best Leap Enterprises Limited	3	"	218,761,737	"	18
4	"	"	3	Accounts receivable	69,216,658	"	5
5	Fuhuajie Industrial (Shenzhen) Limited	Foxconn Image & Printing Product Pte. Ltd.		Sales	24,752,715		2
6	Shenzhen Fu Tai Hong Industry Co., Ltd.	FIH (Hong Kong) Limited	3	"	21,238,603	"	2
7	Hongfujin Precision Industry (Shenzhen) Co., Ltd	Top Step Enterprises Limited	3	"	30,991,550	"	3
Number (Note a)	Name of company	Name of counterparties	Relationship (Note b)	Account	Amount	Transaction terms	consolidated assets (Note d)
8	Premier Image Technology (China) Limited	Jumbo Rise Management Limited	3	"	$ 17,819,405	"	1

Note a: The information of transactions between the Company and the consolidated subsidiaries should be noted in "Number" column.

 1. Number o represents the Company.

 2. The consolidated subsidiaries are numbered in order from number 1.

Note b: The transaction relationships with the counterparties are as follow:

1. The Company to the consolidated subsidiaries.

2. The consolidated subsidiaries to the Company.

3. The consolidated subsidiaries to another consolidated subsidiaries.

Note c: The prices and terms to related parties were not significantly different from transaction with third parties. For other related party transactions, prices and terms were determined in accordance with mutual agreements.

Note d: In calculating the ratio, the transaction amount is divided by consolidated total assets for balance sheet accounts and is divided by consolidated total revenues for income statement accounts.

Note e: For balance sheet accounts, transactions exceeding 1% of the consolidated total assets should be disclosed; for income statement accounts, transactions exceeding 1% of the consolidated total revenue should be disclosed.

All the transactions had been eliminated when preparing consolidated financial statement.

Note f: The portions of transaction information with related parties were based on the financial statements of the company for the same period which was not reviewed by independent accountants.

12) In accordance to with R.O.C. FAS No.23, segement information is not applicable for interim financial statements.