1st Oct 2007 07:01
Hon Hai Precision Industry Co Ld01 October 2007 HON HAI PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS JUNE 30, 2006 AND 2007 For the convenience of readers and for information purpose only, the auditors'report and the accompanying financial statements have been translated intoEnglish from the original Chinese version prepared and used in the Republic ofChina. In the event of any discrepancy between the English version and theoriginal Chinese version or any differences in the interpretation of the twoversions, the Chinese-language auditors' report and financial statementsshall prevail. REVIEW REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Hon Hai Precision Industry Co., Ltd. We have reviewed the accompanying consolidated balance sheets of Hon HaiPrecision Industry Co., Ltd. and its subsidiaries as of June 30, 2006 and 2007,and the related consolidated statements of income, of changes in stockholders' equity and of cash flows for the six-month periods then ended, expressed inthousands of New Taiwan dollars. These financial statements are theresponsibility of the Company's management. Our responsibility is to issue areport on these financial statements based on our reviews. We did not reviewthe financial statements of certain consolidated subsidiaries which statementsreflect total assets of $114,856,788,000 and $172,103,072,000(US$5,237,464,151), constituting 23.39% and 23.70% of the respectiveconsolidated total assets as of June 30, 2006 and 2007, and total revenues of$141,188,243,000 and $153,676,114,000 (US$4,676,692,453), constituting 25.57%and 21.61% of the respective consolidated total operating revenues for thesix-month periods then ended, respectively. Those statements were reviewed byother auditors whose reports thereon have been furnished to us, and our report,insofar as it relates to the amounts included for these subsidiaries and PremierCorp., is based solely on the reports of the other auditors. As described in thefourth paragraph, the Company merged with Premier Image Technology Corporation(Premier Corp.) effective December 1, 2006 with the Company as the survivingentity. The consolidated financial statements of the Company and itssubsidiaries as of and for the six-month period ended June 30, 2006 was restatedto include the financial statements of Premier Corp. as of and for the six-monthperiod ended June 30, 2006, which was reviewed by other auditors. We conducted our reviews in accordance with the Statement of Auditing StandardsNo. 36, "Review of Financial Statements" in the Republic of China. A reviewconsists principally of inquiries of company personnel and analytical proceduresapplied to financial data. It is substantially less in scope than an auditconducted in accordance with generally accepted auditing standards in theRepublic of China, the objective of which is the expression of an opinionregarding the financial statements taken as a whole. Accordingly, we do notexpress such an opinion. Based on our reviews and the reports of other auditors, we are not aware of anymaterial modifications that should be made to the consolidated financialstatements referred to above in order for them to be in conformity with the "Rules Governing the Preparation of Financial Statements of Securities Issuers", "Business Entity Accounting Law!, "Regulation on Business EntityAccounting Handling" and generally accepted accounting principles in Republic ofChina. As explained in Notes 3 (1) and 10 (6) to the consolidated financial statements,the Company merged with Premier Corp. on December 1, 2006. The merger wasaccounted for under the pooling of interests method. The consolidated financialstatements as of and for the six-month period ended June 30, 2006 have beenrestated to include Premier Corp. for comparative purposes. As a result, totalassets increased by $24,574,206,000, constituting 5.00% of the consolidatedtotal assets as of June 30, 2006, and net income increased by $19,189,467,000,constituting 3.47% of the consolidated net income for the six-month period thenended. 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, 2007expressed in US dollars are presented solely for the convenience of the readersand were translated from the New Taiwan dollar financial statements using theexchange rate prevailing at June 30, 2007 of US$1.00:NT$32.86. This basis oftranslation is not in accordance with generally accepted accounting principlesin the Republic of China. PricewaterhouseCoopers Taipei, Taiwan September 5, 2007 The accompanying consolidated financial statements are not intended topresent the financial position and results of operations and cash flows inaccordance with accounting principles and practices generally accepted incountries and jurisdictions other than the Republic of China. The standards,procedures and practices in the Republic of China governing the audit of suchconsolidated financial statements may differ from those generally accepted incountries and jurisdictions other than the Republic of China. Accordingly, theaccompanying consolidated financial statements and report of the independentaccountants are not intended for use by those who are not informed about theaccounting principles or auditing standards generally accepted in the Republicof China, and their applications in practice. HON HAI PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, (EXPRESSED IN THOUSANDS OF DOLLARS) (UNAUDITED) 2006 2007 2007 New Taiwan Dollars US DollarsASSETS (Restated) (Unaudited) (Note 2)Current AssetsCash and cash equivalents (Note 4 (1)) $ 73,800,394 $133,845,028 $ 4,073,190Financial assets at fair value through profit or 2,106,387 55,292 1,683loss- current (Note 4 (2))Available-for-sale financial assets - current (Note 754,481 1,412,685 42,9914 (3))Notes receivable, net (Notes 4 (4) and 6) 1,162,754 814,235 24,779Accounts receivable, net (Notes 4 (5) and 6) 152,429,784 190,719,064 5,803,988Accounts receivable, net - related parties (Note 5) 7,177,217 8,252,040 251,127Other receivables (Note 5) 4,385,026 8,577,780 261,040Inventories, net (Notes 4 (6) and 6) 109,925,810 142,411,020 4,333,872Prepayments 3,891,332 2,191,035 66,678Deferred income tax assets - current (Note 4 (12)) 674,513 1,595,681 48,560 356,307,698 489,873,860 14,907,908Funds and Investments Available-for-sale financial assets - non-current (Note 4 (3)) 3,286,093 35,423,465 1,078,012 Financial assets carried at cost - non-current 5,001,199 1,805,045 54,931(Note 4 (7)) Long-term equity investments accounted for under 10,086,616 23,032,777 700,937the equity method (Note 4 (8)) Prepaid long-term investment (Note 4 (8)) - 2,606,110 79,309 18,373,908 62,867,397 1,913,189Other Financial Assets - Non-Current (Note 6) 1,084,213 392,698 11,950Property, Plant and Equipment (Notes 4 (9), 5 and 6) Cost Land 3,465,888 4,034,446 122,777 Buildings 28,343,497 43,031,883 1,309,552 Machinery and equipment 75,142,966 102,495,364 3,119,153 Molding equipment 4,099,741 3,182,564 96,852 Testing equipment 7,273,245 11,638,849 354,195 Office equipment 7,182,975 8,522,510 259,358 Tools and equipment 1,858,623 2,240,290 68,177 Other equipment 7,835,915 14,424,579 438,971Cost and revaluation increments 135,202,850 189,570,485 5,769,035Less:Accumulated depreciation ( 43,270,570) ( 57,252,003) ( 1,742,301)Accumulated impairment ( 521,471) ( 650,031) ( 19,782)Construction in progress and prepayments for 15,751,174 26,275,533 799,621equipment 107,161,983 157,943,984 4,806,573Intangible Assets (Note 4 (10))Goodwill 2,241,914 2,294,883 69,838Other intangible assets 2,039,119 8,139,704 247,709 4,281,033 10,434,587 317,547Other AssetsDeferred charges 2,321,882 3,181,237 96,812Other assets - other (Note 6) 1,570,390 1,602,830 48,778 3,892,272 4,784,067 145,590TOTAL ASSETS $491,101,107 $726,296,593 $ 22,102,757 (continued) HON HAI PRECISION INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONTINUED) JUNE 30, (EXPRESSED IN THOUSANDS OF DOLLARS) (UNAUDITED) 2006 2007 2007 New Taiwan Dollars US Dollars (Restated) (Unaudited) (Note 2)LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities Short-term loans (Note 4 (11)) $ 30,886,576 $ 82,474,111 $ 2,509,863 Financial liabilities at fair value through profit or 57,769 10,365 315loss - current (Note 4 (2)) Accounts payable 151,001,921 186,092,046 5,663,179 Accounts payable - related parties (Note 5) 13,139,024 9,200,289 279,984 Income tax payable (Note 4 (12)) 5,765,368 9,820,441 298,857 Accrued expenses 19,896,611 32,790,425 997,883 Dividends payable 13,168,761 15,504,416 471,833 Other payables (Note 5) 7,066,424 10,994,799 334,595 Receipts in advance 2,043,098 3,287,462 100,044 Current portion of long-term liabilities (Notes 4 (13) 5,037,325 - -(14)) Other current liabilities 3,738,517 5,987,447 182,211 251,801,394 356,161,801 10,838,764Long-term Liabilities Bonds payable (Note 4 (13)) 11,500,000 28,559,121 869,115 Long-term loans (Note 4 (14)) 171,035 69,107 2,103 11,671,035 28,628,228 871,218Other Liabilities Accrued pension liabilities (Note 4 (15)) 862,879 910,472 27,708 Deferred income tax liabilities - non-current (Note 4 5,332,424 6,030,074 183,508(12)) Other liabilities - other 1,162,212 1,786,368 54,363 7,357,515 8,726,914 265,579Total liabilities 270,829,944 393,516,943 11,975,561Stockholders' EquityStockholders' Equity of Parent Company Capital stock (Note 4 (16)) Common stock 42,699,099 51,681,388 1,572,775 Stock dividends distributable 9,180,687 11,226,278 341,640 Capital reserve (Note 4 (17)) Paid-in capital in excess of par value of common stock 21,553,307 20,221,815 615,393 Capital reserve from conversion of convertible bonds 16,922,211 18,482,483 562,461 Capital reserve from long-term investments 9,939,462 11,860,352 360,936 Capital reserve from stock warrants (Note 4 (13)) - 1,195,200 36,373 Retained Earnings (Note 4 (18)) Legal reserve 17,273,084 23,255,167 707,704 Undistributed earnings 84,741,533 118,029,559 3,591,892 Other adjustments of stockholders' equity Unrealized gain or loss on financial instruments 2,080,422 42,317,086 1,287,799 (Note 4 (3)) Cumulative translation adjustments ( 619,808) 7,694,146 234,149 Treasury stock ( 18,901) ( 18,901) ( 575)Total Stockholders' equity of parent company 203,751,096 305,944,573 9,310,547Minority interest 16,520,067 26,835,077 816,649Total stockholders' equity 220,271,163 332,779,650 10,127,196Commitments and Contingent Liabilities (Note 7)TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $491,101,107 $726,296,593 $ 22,102,757 The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated September 5, 2007. 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) 2006 2007 2007 New Taiwan Dollars US Dollars (Restated) (Unaudited) (Note 2)Operating revenuesSales (Note 5) $ 552,846,607 $ 711,813,600 $ 21,662,009Sales returns ( 295,001) ( 260,942) ( 7,941)Sales discounts ( 302,554) ( 296,154) ( 9,013)Net operating revenues 552,249,052 711,256,504 21,645,055Operating costsCost of goods sold (Notes 4 (20) and 5) ( 495,804,856) ( 640,999,335) ( 19,506,979)Gross profit 56,444,196 70,257,169 2,138,076Operating expenses (Note 4 (20))Sales and marketing expenses ( 8,683,460) ( 10,441,404) ( 317,754)General and administrative expenses ( 10,467,549) ( 14,025,331) ( 426,821)Research and development expenses ( 4,903,411) ( 5,916,217) ( 180,043)Total operating expenses ( 24,054,420) ( 30,382,952) ( 924,618)Operating income 32,389,776 39,874,217 1,213,458Non-operating income and gains Interest income 538,086 1,162,378 35,374Gain on valuation of financial liabilities (Note 4 102,312 175,831 5,351(2)) Investment income accounted for under the equity 1,349,765 1,782,114 54,233method (Note 4 (8)) Gain on disposal of investments (Note 4 (7)) 376,907 559,905 17,039 Foreign exchange gain - net 169,024 984,838 29,971 Other non-operating income (Notes 4 (9) and 5) 947,318 1,544,666 47,007 3,483,412 6,209,732 188,975Non-operating expenses and losses Interest expense ( 1,154,912) ( 2,316,903) ( 70,508) Loss on valuation of financial assets (Note 4 ( 11,254) ( 20,814) ( 634)(2)) Provision for inventory obsolescence and market - ( 1,589,983) ( 48,387)price declines Other non-operating losses (Note 4 (9)) ( 521,565) ( 520,742) ( 15,847) ( 1,687,731) ( 4,448,442) ( 135,376)Income before income tax 34,185,457 41,635,507 1,267,057Income tax expense (Note 4 (12)) ( 7,820,808) ( 7,301,040) ( 222,186)Consolidated net income $ 26,364,649 $ 34,334,467 $ 1,044,871Attributable to: Equity holders of the Company $ 23,758,971 $ 31,261,071 $ 951,341 Minority interest 2,605,678 3,073,396 93,530 $ 26,364,649 $ 34,334,467 $ 1,044,871 Before After Before After Before After income income income income income income tax tax tax tax tax taxEarnings per common share (Note 4 (19))Basic earnings per common shareConsolidated net income $ 5.43 $ 4.19 $ 6.62 $ 5.46 $ 0.20 $ 0.17Minority interest income ( 0.46) ( 0.41) ( 0.51) ( 0.49) ( 0.01) ( 0.02)Net income attributable to equity holders of theCompany $ 4.97 $ 3.78 $ 6.11 $ 4.97 $ 0.19 $ 0.15Diluted earnings per common shareConsolidated net income $ 5.43 $ 4.19 $ 6.61 $ 5.45 $ 0.20 $ 0.17Minority interest income ( 0.46) ( 0.41) ( 0.50) ( 0.48) ( 0.01) ( 0.02)Net income attributable to equity holders of theCompany $ 4.97 $ 3.78 $ 6.11 $ 4.97 $ 0.19 $ 0.15 The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated September 5, 2007. To view the full text of this announcement, please follow the link below; http://www.rns-pdf.londonstockexchange.com/rns/8325e_-2007-10-1.pdf This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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