FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Report of Foreign Private Issuer
 
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
 
 
July 22, 2011
 
Commission File Number    001-16125
   
   
Advanced Semiconductor Engineering, Inc.
( Exact name of Registrant as specified in its charter)
   
26 Chin Third Road
Nantze Export Processing Zone
Kaoshiung, Taiwan
Republic of China
(Address of principal executive offices)
 
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
 
Form 20-F    X             Form 40-F          
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
____
 
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
____
 
 
 
 
 
 
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
 
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
 
Yes                   No     X   
 
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):
Not applicable
 
 
 
 
 
Signatures
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
     
ADVANCED SEMICONDUCTOR ENGINEERING, INC.
  
         
         
Date: July 22, 2011
By:
  
/s/ Joseph Tung
  
 
Name:
  
Joseph Tung
  
 
Title:
  
Chief Financial Officer
  
 
 
 
 
 
 
 
MINUTES
OF
2011 ANNUAL SHAREHOLDERS’ MEETING
OF
ADVANCED SEMICONDUCTOR ENGINEERING, INC.
 
(Translation)

 
1.    Time: Tuesday, June 28, 2011 at 10 a.m.
2.    Place: Zhuang Jing Auditorium, 600 Jiachang Rd., Nantz Processing Export Zone, Nantz District, Kaohsiung City
3.    Present : Total shares represented by shareholders and proxy present 5,056,212,592 shares is 85.16% of total outstanding shares of ASE 5,937,427,695 shares (excluding the shareholders who had no voting right stipulated in Company Law) .
4.    Chairperson's Remarks：(omitted)
5.    Status Reports
1.    2010 Business Report. (see Attachment I)
2.    Report by supervisors on review of the 2010 financial statements. (see Attachment II)
3.    Report on total amount for endorsement, guarantee and amount of loans to third parties.
4.    Report on the implementation of buying back shares from open market.
6.    Matters for Ratification
 
Item 1 (Proposed by the Board of Directors)
 
Proposal:
2010 final accounts for your recognition.
 
Explanation:
 
1.    The Company's 2010 financial statements have been audited and attested by Deloitte & Touche and reviewed by the Supervisors.
 
2.    Please ratify the financial statements and the 2010 Business Report.
 
Resolution:
The above proposals be and hereby were approved as proposed.
 

 
-1-
 
 
 
Item 2 (Proposed by the Board of Directors)
 
Proposal:
Please ratify the Company’s 2010 proposal for earnings distribution.
 
Explanation:
The Board of Directors has drafted the Company’s 2010 proposal for surplus distribution as shown in the table below in accordance with The Company Act and the Company’s Articles of Incorporation for your ratification.
 
 
Advanced Semiconductor Engineering, Inc.
2010 Surplus Distribution Proposal
 
          Unit: NT$
Items
Amount
Prior year retained earnings
2,429,954,392
Add: Current year gross profit
18,337,500,094
Subtract: Provision for 10% statutory  surplus reserve
1,833,750,009
Subtract: Provision for special surplus reserve
1,272,417,273
Current year earnings to be distributed
17,661,287,204
Items for distribution:
  
Dividends (note)
10,889,775,552
Current year retained earnings
6,771,511,652
   
Notes:
NT$304,200,000 to be distributed for Director and Supervisor remuneration
NT$1,523,133,000 to be distributed for employee bonuses, all in cash
 
 
President: Jason C.S. Chang           Manager: Richard H.P.  Chang         Accountant Manager: Joseph Tung
 
 
Note:1
A total of NT$10,889,775,552 is distributed as dividends, NT$1.8 per share, with NT$3,932,418,952 in cash (a cash dividend of NT$0.65 per share) and the remaining NT$6,957,356,600 in stock (115 shares for each 1,000 shares retained by converting earnings into capital stock). The above distribution of dividends to shareholders and the cash and stock dividend distribution rates are calculated based on the number (6,049,875,312) of shares recorded in the Register of Shareholders as of March 21, 2011. Later, if the Company’s ECB holders exercise the right of conversion, or new shares issued to employees against Employee Stock Option warrant, or new shares issued by the Company for a cash capital increase, or buyback of the Company’s stocks, or
 
 
 
-2-
 
 
 
    transfer or cancellation of the Company’s treasury stocks, which affect the cash distribution rate of the shareholders’ bonus, requiring adjustment, the management will request the shareholders’ meeting to authorize the board of directors to handle the situation plenipotentiarily and make the adjustment accordingly.
     
 
Note:2
In order to meet the implementation to Income Tax Integration, earnings of the most recent year will be priority in distributed this time.
 
Resolution:
The above proposals be and hereby were approved as proposed.
 
 
7.  Matters for Discussions
 
Item 1 (Proposed by the Board of Directors)
 
Proposal:
Please consider a share issue by converting earnings into equity stock.
 
Explanation:
 1.
To fund a factory expansion project, plans are being made to issue 695,735,660 new shares at a face value of NT$10 each to raise NT$6,957,356,600 with dividends of the same amount to be distributed in 2010.
 
  2.
Rules governing allotment of new shares: Based on the number of shares recorded in the Company's Register of Shareholders on March 21, 2011, namely 6,049,875,312, each 1,000 shares are eligible for an allotment of 115 shares for earnings converted into capital stock. If the number of shares eligible for dividend distribution changes as a result of conversion of offshore convertible bonds, exercise of stock options by employees, cash capital increases, buyback of company shares, or assignment or cancelation of treasury stock, shareholders are urged to authorize the board of directors to make corresponding adjustments, if any, to per-share dividends. Shareholders allotted fractions of a share will coordinate among themselves to combine and form whole shares within five days after the ex-dividend date. Share fractions failing to combine will be paid fractions of the face value in cash and the president will be authorized by the board to have them purchased by certain persons.
 
  3.
Rights and obligations of newly issued shares are the same as those of existing shares.
 
 
 
-3-
 
 
 
  4.
Ex-dividend date: The board is authorized to set the date after it is passed at the AGM and approved by the regulatory authority.
 
  5.
The factory expansion plan financed by the capital increase is expected to be completed by December 2014. Implementation of the plan is expected to boost the Company's competitiveness, improve its efficiency, and have a positive impact on shareholders' rights and interests. The board is authorized to make necessary changes if the capital increase must be changed as ordered by the regulatory authority or required by circumstances.
 
Resolution:
  
 
The above proposals be and hereby were approved as proposed.
 
Item 2 (Proposed by the Board of Directors)
 
Proposal:
To finance future capacity expansion, provide for working capital increases, repay bank loans, or cope with other needs for funds in the longer term, the AGM is urged to authorize the board to issue GDRs through cash capital increases, conduct domestic cash capital increases, or issue convertible bonds in Taiwan or overseas according to articles of incorporation, relevant regulations and the following rules.
 
Explanation:
 1.
The principles to authorize the board of directors to issue new common shares and GDR for capital increase in cash shall be as follows:
(1)   Shares issued via issuance of GDRs through cash capital increases shall not exceed 500 million with the board and president authorized to conduct only one issue and decide how many shares to be issued depending on market circumstances.
(2)   The price at which shares are issued via issuance of GDRs through cash capital increases shall not fall below 90% of the simple arithmetic mean of the share's closing price on the date the issue price is set and its closing price one, three or five days prior to the price-setting date as per "Self-imposed Rules Governing Underwriters Assisting Companies in Issuing Securities" announced by Taiwan Securities Association. If relevant regulations change, the pricing method may be changed accordingly. As share prices often fluctuate substantially in a short time, the president is authorized to set the issue price by following international practices after consulting the underwriter and considering international capital markets' circumstances, domestic market prices, and the book building status. The GDR's issue price is decided based on the fair market price of the
 
 
 
-4-
 
 
 
    company's common stock. Original shareholders may purchase common stock in Taiwan's stock market at a price close to the GDR's issue price without having to assume exchange and liquidity risks. In addition, shares issued via issuance of GDRs through cash capital increases will dilute the original shareholders' equity to a maximum of 8.26%, not a major impact on shareholders' rights and interests.
 
   
(3)   10% of common shares issued for capital increase in cash shall, according to Article 267 of The Company Act, be reserved for subscription by company employees and the remaining 90% will be fully appropriated for open issuance as the securities for GDR as the original shareholders have waived their rights for subscription in accordance with Article 28.1 of the Securities Trading Act. For the part that employees have not subscribed, the chairman of the board is authorized to contact specific party for purchase or, depending on the market requirements, list as the original securities for participation in the issuance of GDR.
(4)   Funds raised by shares issued via issuance of GDRs through cash capital increases shall be used to purchase materials overseas, provide for working capital increases, repay bank loans, purchase machinery and equipment and/or invest in other firms. Implementation shall be completed within 2 years after the funds are raised. The project is expected to boost the Company's competitiveness, improve its efficiency, and have a positive impact on shareholders' rights and interests.
(5)   The board of directors is authorized to set the major contents of the capital increase in cash plan, which includes issuance price, number of shares issued, issuance conditions, source of capital, plan items, amount of fund raised, estimated progress and estimated probable effect generated as well as the issuance plan of participation in the issuance of GDR.
(6)   Once the plan for capital increase in cash is approved by the competent regulatory authority, the board of directors will be authorized to proceed with matters related to issuance of new shares.
(7)   If the agreement on issuance time, issuance condition, issuance volume, issuance amount of capital increase in cash and participation in issuance of GDR as well as other matters related to capital increase in cash and participation in issuance of GDR needs update in future due to the decision by the competent regulatory authority and on the basis of operation evaluation, or the needs of objective environment, the board of directors shall be authorized to handle at its full discretion.
(8)   In conjunction with the issuance method of common shares for capital increase in cash and participation in GDR issuance, the chairman of the board or his designated representative is authorized to represent the Company in signing all documents related to the participation in the issuance of GDR as well as handling all needed matters related to the participation in the issuance of GDR.
 
 
 
-5-
 
 
 
   
(9)   For matters that are not covered herein, the board of directors may, in accordance with law, proceed at its discretion.
 
  2.
The principles to authorize the board of directors to conduct capital increase in cash at home shall be as follows:
(1)   Number of new shares issued for capital increase in cash shall not be in excess of 500,000,000 shares.
(2)   Face value of shares issued via cash capital increases is NT$10 per share. The issue price shall be decided by the president after consulting the underwriter as per "Self-imposed Rules Governing Underwriters Assisting Companies in Issuing Securities" announced by Taiwan Securities Association and market conditions at time of issue and approved by the regulatory authority.
(3)   Cash capital increases shall be conducted through book building. 10%-15% shall be set aside for subscription by employees as per Article 267 of the Company Act. The remainder, the right to subscribe for which is forfeited by original shareholders as per Article 28.1 of the Securities Exchange Act, shall be made available to the public through book building. In addition, if the Company’s employees have not subscribed sufficiently and adequately or waived the right to subscribe, the chairman may contact specific party for purchase.
(4)   Funds raised through cash capital increases shall be used to purchase materials from overseas, provide for working capital increases, repay bank loans, purchase machinery and equipment and/or invest in other firms. Implementation shall be completed within 2 years after the funds are raised. The project is expected to boost the Company's competitiveness, improve its efficiency, and have a positive impact on shareholders' rights and interests.
(5)   The board of directors is authorized to set the major contents of the capital increase in cash plan, which includes issuance price, number of shares issued, issuance conditions, plan items, amount of fund raised, estimated progress and estimated probable effect generated as well as the issuance plan of participation in the issuance of GDR. If a cash capital increase must be changed as ordered by the regulatory authority or required by circumstances, the board is authorized to make corresponding changes.
 
 
 
-6-
 
 
   
 
(6)   Once the plan for capital increase in cash is approved by the competent regulatory authority, the board of directors will be authorized to set the base date for capital increase.
(7)   With respect to the manner of issuance as mentioned in Section 2.3 above, the board of directors is authorized to make the amendment at its full discretion if amendment becomes necessary due to update of laws or regulations or the objective environment dictates the amendment.
(8)   For matters that are not covered herein, the board of directors may, in accordance with law, proceed at its discretion.
 
  3.
The principles to authorize the board of directors to conduct capital increase in cash by issuance of convertible corporate bond at home and ECB overseas:
(1)   Estimated number of shares for conversion: Not to exceed the number of shares registered in the application for update of the Company’s profit-seeing registration card.
(2)   Time of issuance: It depends on the capital needs by the Company and the market condition.
(3)   Interest rate: In principle, it shall be by the market interest rate then prevailing in the marketplace and reasonable, if possible.
(4)   Issuance duration: It depends on the capital needs by the Company
(5)   Issuance condition: Subject to negotiation with the lead underwriter and existing laws and regulations.
(6)   Funds raised through issuance of convertible bonds in Taiwan or overseas shall be used to purchase materials from overseas, provide for working capital increases, repay bank loans, purchase machinery and equipment and/or invest in other firms. Implementation shall be completed within 2 years after the funds are raised. The project is expected to boost the Company's competitiveness, improve its efficiency, and have a positive impact on shareholders' rights and interests.
(7)   The board of directors is authorized to set the issuance measures, amount of fund raised, plan items, estimated progress as well as estimated probable effect generated.
(8)   In conjunction with the issuance of the convertible corporate bond the chairman of the board or his designated representative is authorized to represent the Company in signing all documents related to the issuance of the convertible corporate bond as well as handling all needed matters related to the issuance of the convertible corporate bond.
 
 
 
-7-
 
 
 
   
(9)   For matters that are not covered herein, the board of directors may, in accordance with law, proceed at its discretion.
 
Resolution:
  
 
The above proposals be and hereby were approved as proposed.
 
Item 3 (Proposed by the Board of Directors)
 
Proposal:
Please discuss the revised version of the Company’s Articles of Incorporation.
 
Explanation:
 1.
To accomodate the Company's operating requirements, plans are being made to revise certain provisions in the articles of incorporation.
 
  2.
Please refer to Attachment IV for the table of comparison of revised Articles of Company’s Incorporation. Your consent is solicited.
 
Resolution:
The above proposals be and hereby were approved as proposed.

Other Resolutions and Extempore Motions：None.
 
Meeting Ended：Tuesday, June 28, 2011 at 10:27 a.m.
 
 
 
-8-
 
 
■Attachment I
 
 
Advanced Semiconductor Engineering, Inc.
Business Report
 
In 2010, the global economy continued the trend of recovery that had begun in 2009 and finally returned to prosperity. The economic growth in 2010 is expected to reach 4.8%. According to the report issued by the IEK ITIS project of Industrial Technology Research Institute, the output of Taiwan's semiconductor industry in 2010 experienced a significant growth of 41.5% compared with 2009, which was higher than the 31.6% growth rate of global semiconductor industry. The output of the assembly industry was NT$297 billion, a growth of 48.8% over 2009, whereas the output of the testing industry amounted to NT$132.7 billion, a growth of 51.5% compared with 2009. Although the economy has returned to the level before the eruption of the financial crisis, advanced nations and emerging economies have been growing at very different pace, the former moderately and the latter much more aggressively. Following the recovery from the crisis, exchange rate fluctuations, surging gold prices and credit crisis of EU member states were still among major concerns. The Company endeavored to achieve growth and performance while adopting prudent response measures to address a variety of challenges and changes in the industry landscape. The following is our report on the company’s operation for the past year:

"2010 Operating Results"
 
1.     Implementation results for the 2010 business plan
The Company’s combined revenues for 2010 were NT$188.7 billion, an increase of NT$103 billion over 2009, equivalent to a 120% growth. For semiconductor assembly and testing services, the Company's revenue in 2010 was NT$123 billion, a growth of 47%. Overall, 2010 was a very successful year for the Company. Apart from higher growth in performance compared to competitors and the industry as a whole, the Company's market share in the global assembly and testing foundry market increased by 2%. The proportion of IDM customers was also rising by the quarter and was now in the range of 38-39%. Meanwhile, a China-based chip maker also become one of our top ten customers. Furthermore, major Japanese IDMs continued to engage the Company in back-end services, and they accounted for 10% of our revenues. The Company's capital expenditures in 2010 was a record high, pushing copper wire bond assembly revenue as high as 18% of total revenues. In addition, the Company also achieved substantial gains in the expansion of production sites: During the second half of 2010, the Company acquired the Singapore plant of EEMS to enhance our market share in Southeast Asia and strengthen our competitiveness in the region; The Kaohsiung operations also expanded production capacity by acquisitions and by constructing new plants; Our plans for the second half of the year include capital increase for the subsidiary ASE Weihai in China, significantly expanding the assembly and testing capacity of discrete devices. We look forward to a substantial growth next year. Finally, the inauguration of the ASE Kunshan plant is also expected to contribute considerably to the Company's future profitability.

2.     Budget performance
No financial forecast was disclosed in 2010.
 
 
 
-9-
 

 
3.     Analysis of financial accounts and profitability
As of the end of 2010, the Company's paid-in capital was NT$60,519,872 thousands and shareholders' equity NT$88,556,369 thousands accounting for 55% of total assets of NT$161,626,460 thousands Its long-term capital are 350% of fixed assets and current ratio 69%. This year's ratios are at about the same levels as those in the preceding year. The Company's financial structure and ability to repay debts are relatively sound. This year's after-tax net profit rose to NT$18,337,500,000, a 172% increase over 2009. The Company's overall operating results and profitability are excellent, with performance greatly exceeding the level in 2009 and has brought the Company back to the profitability level before the global economic downturn, a significant achievement indeed.

4.     R&D overview
New technologies successfully developed by the Company in 2010 developed are categorized as follows: (1) For flip-chip assembly, 40 nano copper process / 40 nano copper process with tin and lead-free flip-chip assembly and wire-bond assembly of wafers with an ultra-low dielectric coefficient / lead-free flip-chip stacking assembly of wafers with a low dielectric coefficient, 40 μm nano pitch mixed flip-chip and wire-bond stacking assembly, copper process/ concealed laser cutting for thin wafers with a low dielectric coefficient, and fine pitch non-conductive flip-chip thin film substrate. (2) For wire-bond assembly, 32 nano copper / gold wire-bond assembly of wafers with an ultra-low dielectric coefficient, 45 nano copper / copper wire-bond assembly of wafers with an ultra-low dielectric coefficient, high-density aQFN assembly. (3) For system packaging, 200 mm through silicon wafer (TSV), 200 mm silicon substrate assembly, integrated passive component QFN/ LGA assembly, substrate embedded with active, passive components, RF wireless communications modules, and fan out flip-chip Map PoP. (4) For wafer assembly, 200 mm fan out WLP and 40 μm Pitch Cu Pillar Bump. The Company will continue to invest in equipment and advanced assembly and testing R&D, thus maintaining our position as the global leader in semiconductor assembly and testing.

"Outline of 2011 Business Plan"

1.     Operating policy
(1) Providing customers service of “ultimate quality” (2) creating long-term, stable profits for the Company and customers (3) working with partner firms to jointly create a prosperous future (4) being as flexible as possible in its business dealings.

2.     Projects sales volume and references
In light of current industry dynamics, future market demand and ASE’s capacity, the projected sales volume for 2011 is as follows:

Item
Project Sales
Assembly
Approx. 10.1 billion chips
Test
Approx. 1.4 billion chips
 
 
 
-10-
 
 

 
3.     Important production and sales policies
The popularity of consumer electronics products such as smart phones, tablet PCs, smart TVs and game consoles in recent years is expected to drive the continuing growth of the semiconductor industry. These products represent the impetus for the future growth of the Company's revenues. Tablet computers are especially significant since most of our customers are suppliers of tablet PC-related devices and components. Meanwhile, the Company will also focus on the conversion of copper processes to improve cooperation in the semiconductor industry supply chain and to reduce costs in keeping pace with the enormous demand for communications products in emerging markets as well as the trend toward lower costs in the production of smart phones. We continue to develop packaging and testing services with high added-value and high unit prices as well as sophisticated and innovative high-end integrated circuits, while delegating packaging and testing services for discrete components, which are of lower unit prices, less sophisticated and technologically less advanced, to our mainland operations. The purpose is to increase the Company's competitiveness and achieve a balance of development between corss strait.

"Development Strategy"

According to estimates provided by the IEK ITIS project of Industrial Technology Research Institute, in 2011 the semiconductor industry will continue to grow but at a slower rate, which is projected to be 8.7%. The assembly and testing sectors are estimated to grow at about 10.3% and 11.1%, respectively. With the price of gold rising substantially, our competitors' copper wire bonding process capability is also catching up, and with local IC manufacturers and major overseas component integration vendors becoming more willing to adopt copper processing, the Company will be investing a significant amount of capital expenditure to expand our copper wire bonding machines in order to achieve a 35% proportion of wire bonding for the entire year. The continuing expansion of operations outsourced by integrated device manufacturers (IDMs) in 2011 is the main driving force behind the high growth of Taiwan's IC packaging and testing industry. The Company is committed to raising the proportion of revenues from IDM customers. In addition, China's economic growth in 2010 ranked highest among East Asian emerging markets, and aggressive pursuit of the expansion of our China operations is also the niche of the Company's continued growth.


 
-11-
 


"Impacts of Competition, Legislation and Operating Environment"

The improving global economy has helped to materialize the benefits from the programs introduced by the Company during the financial crisis of the past two years on human resources, production lines, cost planning and integrated solutions; we have since achieved unprecedented revenues and profits. With the government's liberalization and encouragement of establishing presence in China by Taiwanese enterprises and with the signing of ECFA, the Company has invested in and set up production plants in China, utilizing the vast amount of human resources available locally to improve our product lines and increase our competitiveness. Our improved market share has further accelerated the Company's growth. Faced with the fluctuations in the New Taiwan dollar exchange rate and the rise of the IC packaging and testing industry in China, the Company is committed to improving our position constantly and the adoption of adequate risk management and control measures. The Company and the management team are not complacent with past achievements. In stead we strive to further improve our competitiveness and set the goal of creating higher profits for our shareholders in appreciation of their support.
 
President: Jason C.S. Chang   Manager: Richard H.P. Chang   Accountant Manager: Joseph Tung
 
 
 
-12-
 
 
 
■Attachment II
 
Supervisors' Report
 
We have examined the Company's 2010 financial statements, and the Company's business report, earnings distribution proposals, etc. that have been prepared and submitted by the Board of Directors and audited and attested by certified public accountants, Kung Chun Chi and Chiu Hui Yin of Deloitte & Touche, and do not find any discrepancy. We hereby respectfully prepare and present this Report in accordance with Article 219 of The Company Act for your review.

Advanced Semiconductor Engineering, Inc.

 
 
Advanced Semiconductor Engineering, Inc.
 
Supervisors: YY Tseng
 
John Ho
 
Sam Liu
 
TS  Chen
 
Jerry Chang
 
April 12, 2011
 

 
-13-
 
 
■Attachment III
 
 
 
Advanced Semiconductor Engineering, Inc.

Financial Statements for the
Years Ended December 31, 2010 and 2009 and
Independent Auditors’ Report
 
 
 
 
 
-14-
 

 
INDEPENDENT AUDITORS’ REPORT


The Board of Directors and Shareholders
Advanced Semiconductor Engineering, Inc.

We have audited the accompanying balance sheets of Advanced Semiconductor Engineering, Inc. (the “Company”) as of December 31, 2010 and 2009, and the related statements of income, changes in shareholders’ equity and cash flows for the years then ended.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China.  Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the years then ended, in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the requirements of the Business Accounting Law and Guidelines Governing Business Accounting relevant to financial accounting standards, and accounting principles generally accepted in the Republic of China.

As discussed in Note 9 to the accompanying financial statements, the Company and its subsidiaries completed the tender offerings for the common shares of Universal Scientific Industrial Co., Ltd. (“USI”) in February and August 2010, respectively. Thereafter, the USI shareholdings held by the Company and its subsidiaries are increased to 98.9%.

As discussed in Note 3 to the accompanying financial statements, starting from January 1, 2009, the Company adopted Statements of Financial Accounting Standards No. 10 “Accounting for Inventories”.
 
 
-15-
 

 
We have also audited the consolidated financial statements of the Company and its subsidiaries as of and for the years ended December 31, 2010 and 2009, and have issued a modified unqualified opinion with an explanatory paragraph.


 
March 17, 2011



 


Notice to Readers

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

For the convenience of readers, 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.  If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.
 
 
-16-
 
 
 
ADVANCED SEMICONDUCTOR ENGINEERING, INC.

BALANCE SHEETS
DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Par Value)


   
2010
    
2009
      
2010
    
2009
  
ASSETS
  
Amount
    
%
    
Amount
    
%
  
LIABILITIES AND SHAREHOLDERS’ EQUITY
  
Amount
    
%
    
Amount
    
%
  
                                                   
CURRENT ASSETS
                        
CURRENT LIABILITIES
                        
Cash
   $ 1,632,102       1     $ 4,079,270       3  
Financial liabilities at fair value through profit or loss - current
   $ 488,769       -     $ 61,195       -  
Financial assets at fair value through profit or loss - current
     72,586       -       15,747       -  
Hedging derivative liabilities - current
     457,494       -       122,495       -  
Accounts receivable, net
     9,587,062       6       9,279,406       7  
Accounts payable
     6,231,596       4       5,253,226       4  
Accounts receivable from related parties
     99,534       -       52,032       -  
Accounts payable to related parties
     1,090,674       1       1,061,115       1  
Receivable for income tax refund
     -       -       99,330       -  
Income tax payable
     744,222       -       808,739       1  
Other receivables
     714,388       -       873,015       1  
Accrued expenses
     4,287,655       3       2,574,102       2  
Other receivables from related parties
     1,080,395       1       163,854       -  
Other payables to related parties
     9,348,575       6       5,875,663       4  
Inventories
     2,910,324       2       2,086,376       2  
Payable for properties
     1,244,836       1       1,755,397       1  
Deferred income tax assets - current
     461,417       -       700,357       -  
Other payables
     383,581       -       291,588       -  
Other current assets
     194,779       -       242,226       -  
Current portion of capital lease obligations
     1,504       -       9,048       -  
                                 
Other current liabilities
     164,547       -       292,383       -  
Total current assets
     16,752,587       10       17,591,613       13                                    
                                 
Total current liabilities
     24,443,453       15       18,104,951       13  
LONG-TERM INVESTMENTS
                                                                  
Available-for-sale financial assets - noncurrent
     102,790       -       -       -  
LONG-TERM LIABILITIES
                                
Financial assets carried at cost - noncurrent
     364,551       -       467,468       -  
Hedging derivative liabilities - noncurrent
     159,279       -       311,778       -  
Equity method investments
     101,116,457       63       79,873,491       60  
Long-term bank loans
     47,214,226       29       42,165,604       32  
                                 
Capital lease obligations
     238       -       1,749       -  
Total long-term investments
     101,583,798       63       80,340,959       60                                    
                                 
Total long-term liabilities
     47,373,743       29       42,479,131       32  
PROPERTY, PLANT AND EQUIPMENT
                                                                  
Cost
                                
OTHER LIABILITIES
                                
Land
     1,558,201       1       1,558,201       1  
Accrued pension cost
     1,251,957       1       1,072,012       1  
Buildings and improvements
     20,100,741       12       18,278,699       14  
Guarantee deposits received
     938       -       878       -  
Machinery and equipment
     63,587,917       39       54,595,445       41                                    
Transportation equipment
     63,102       -       66,613       -  
Total other liabilities
     1,252,895       1       1,072,890       1  
Furniture and fixtures
     846,113       1       968,773       1                                    
Leased assets
     17,221       -       39,825       -  
    Total liabilities
     73,070,091       45       61,656,972       46  
Total cost
     86,173,295       53       75,507,556       57                                    
Accumulated depreciation
     49,468,469       30       48,492,479       37  
CAPITAL STOCK
                                
Accumulated impairment
     64,072       -       -       -  
Common Stock - NT$10 par value
                                
      36,640,754       23       27,015,077       20  
Authorized - 8,000,000 thousand shares
                                
Construction in progress
     465,003       -       128,315       -  
Issued - 6,051,987 thousand shares in 2010 and 5,479,878 thousand shares
                                
Machinery in transit and prepayments
     1,703,819       1       3,239,679       3  
　in 2009
     60,519,872       38       54,798,783       41  
                                 
Capital received in advance
     299,698       -       135,205       -  
Total property, plant and equipment
     38,809,576       24       30,383,071       23                                    
                                 
Total capital stock
     60,819,570       38       54,933,988       41  
INTANGIBLE ASSETS
                                                                  
Patents
     42,831       -       62,194       -  
CAPITAL SURPLUS
                                
Goodwill
     957,167       1       957,167       1  
Capital in excess of par value
     1,197,845       1       1,311,421       1  
Deferred pension cost
     44,024       -       50,393       -  
Treasury stock transactions
     2,136,353       1       827,285       1  
                                 
Long-term investment
     3,527,240       2       3,538,222       3  
Total intangible assets
     1,044,022       1       1,069,754       1  
Employee stock options
     319,147       -       -       -  
                                 
Accrued interest on convertible bonds
     -       -       656,827       -  
OTHER ASSETS
                                                                  
Assets leased to others
     1,806,424       1       2,439,452       2  
Total capital surplus
     7,180,585       4       6,333,755       5  
Idle assets
     4,744       -       86,062       -                                    
Guarantee deposits - noncurrent
     12,950       -       12,193       -  
RETAINED EARNINGS
     24,972,944       16       13,229,409       10  
Deferred charges
     621,772       -       570,778       -                                    
Deferred income tax assets - noncurrent
     841,140       1       694,669       1  
OTHER EQUITY ADJUSTMENTS
                                
Restricted assets
     149,447       -       84,447       -  
Unrealized gain or loss on financial instruments
     246,303       -       25,498       -  
                                 
Cumulative translation adjustments
     (1,120,618 )     (1 )     3,276,508       2  
Total other assets
     3,436,477       2       3,887,601       3  
Unrecognized pension cost
     (398,103 )     -       (248,641 )     -  
                                 
Treasury stock - 151,792 thousand shares in 2010 and 322,532 thousand shares in 2009
     (3,144,312 )     (2 )     (5,934,491 )     (4 )
                                                                   
                                 
Other equity adjustments, net
     (4,416,730 )     (3 )     (2,881,126 )     (2 )
                                                                   
                                 
  Total shareholders' equity
     88,556,369       55       71,616,026       54  
                                                                   
TOTAL
   $ 161,626,460       100     $ 133,272,998       100  
TOTAL
   $ 161,626,460       100     $ 133,272,998       100  
 
(With Deloitte & Touche audit report dated March 17, 2011)
 
 
-17-
 
 
ADVANCED SEMICONDUCTOR ENGINEERING, INC.

STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Per Share Data)


   
2010
    
2009
  
   
Amount
    
%
    
Amount
    
%
  
                         
REVENUES
   $ 68,005,684       101     $ 46,805,576       101  
                                 
LESS:  SALES DISCOUNTS AND ALLOWANCES
     666,278       1       671,262       1  
                                 
NET REVENUES
     67,339,406       100       46,134,314       100  
                                 
COST OF REVENUES
     50,633,615       75       35,554,473       77  
                                 
GROSS PROFIT
     16,705,791       25       10,579,841       23  
                                 
OPERATING EXPENSES
                                
Research and development
     2,775,607       4       2,036,633       4  
Selling
     745,295       1       783,222       2  
General and administrative
     2,823,686       5       1,941,215       4  
                                 
Total operating expenses
     6,344,588       10       4,761,070       10  
                                 
INCOME FROM OPERATIONS
     10,361,203       15       5,818,771       13  
                                 
NON-OPERATING INCOME AND GAINS
                                
Interest income
     10,559       -       19,363       -  
Gain on valuation of financial assets, net
     455,097       1       808,585       2  
Equity in earnings of equity method investments
     9,918,123       15       2,762,236       6  
Foreign exchange gain, net
     457,124       1       -       -  
Other
     396,382       -       462,648       1  
                                 
Total non-operating income and gains
     11,237,285       17       4,052,832       9  
                                 
NON-OPERATING EXPENSES AND LOSSES
                                
Interest expense
     1,060,346       2       1,070,718       3  
Loss on valuation of financial liabilities, net
     872,900       1       572,952       1  
Foreign exchange loss, net
     -       -       3,631       -  
Impairment loss
     161,024       -       -       -  
Other
     471,629       1       556,611       1  
                                 
Total non-operating expenses and losses
     2,565,899       4       2,203,912       5  
                                 
INCOME BEFORE INCOME TAX
     19,032,589       28       7,667,691       17  
                                 
INCOME TAX EXPENSE
     695,089       1       923,145       2  
                                 
NET INCOME
   $ 18,337,500       27     $ 6,744,546       15  
(Continued)
 
 
-18-
 
 
ADVANCED SEMICONDUCTOR ENGINEERING, INC.

STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Per Share Data)

   
2010
    
2009
  
   
Before
Income
Tax
    
After
Income
Tax
    
Before
Income
Tax
    
After
Income
Tax
  
                         
EARNINGS PER SHARE (EPS)
                        
Basic EPS
   $ 3.22     $ 3.10     $ 1.35     $ 1.19  
Diluted EPS
   $ 3.16     $ 3.04     $ 1.33     $ 1.17  

PRO FORMA INFORMATION

Had the Company’s shares held by subsidiaries been accounted for as available-for-sale financial assets rather than treasury stock (after tax):

   
2010
    
2009
  
             
Net income for calculation of basic EPS purpose
   $ 19,646,568     $ 6,905,441  
                 
Net income for calculation of diluted EPS purpose
   $ 19,502,171     $ 6,878,969  
                 
EARNING PER SHARE
                
Basic EPS
   $ 3.25     $ 1.14  
Diluted EPS
   $ 3.19     $ 1.13  

 
(With Deloitte & Touche audit report dated March 17, 2011) (Concluded)
 
 
-19-
 
 
 
ADVANCED SEMICONDUCTOR ENGINEERING, INC.

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars) 

                           
Other Equity Adjustments
        
   
Capital Stock
          
Retained Earnings
    
Unrealized
Gain or Loss on Financial
Instruments
    
Cumulative Translation
Adjustments
    
  Unrecognized
Pension Cost
     Treasury Stock    
Total Shareholders'
Equity
  
   
Common Stock
    
Capital Received
in Advance
    
Capital Surplus
    
Legal Reserve
    
Unappropriated
Earnings
    
Total
                      
                                                                   
BALANCE, JANUARY 1, 2009
   $ 56,904,278     $ 3,387     $ 6,373,287     $ 2,915,029     $ 6,306,375     $ 9,221,404     $ (439,438 )   $ 4,873,957     $ (230,401 )   $ (7,034,480 )   $ 69,671,994  
                                                                                         
Appropriations of 2008 earnings
                                                                                        
Legal reserve
     -       -       -       616,005       (616,005 )     -       -       -       -       -       -  
Cash dividends - 5.0%
     -       -       -       -       (2,736,568 )     (2,736,568 )     -       -       -       -       (2,736,568 )
                                                                                         
Adjustment of equity method investments
     -       -       1,369       -       27       27       380,464       -       8,793       -       390,653  
                                                                                         
Cash dividends paid to subsidiaries
     -       -       160,895       -       -       -       -       -       -       -       160,895  
                                                                                         
Change in unrealized gain on cash flow hedging financial instruments
     -       -       -       -       -       -       84,472       -       -       -       84,472  
                                                                                         
Stock options exercised by employees
     74,245       131,818       32,726       -       -       -       -       -       -       -       238,789  
                                                                                         
Net income in 2009
     -       -       -       -       6,744,546       6,744,546       -       -       -       -       6,744,546  
                                                                                         
Cumulative translation adjustments
     -       -       -       -       -       -       -       (1,597,449 )     -       -       (1,597,449 )
                                                                                         
Change in net loss not recognized as pension cost
     -       -       -       -       -       -       -       -       (27,033 )     -       (27,033 )
                                                                                         
Acquisition of treasury stock - 109,274 thousand shares
     -       -       -       -       -       -       -       -       -       (1,314,273 )     (1,314,273 )
                                                                                         
Retirement of treasury stock - 217,974 thousand shares
     (2,179,740 )     -       (234,522 )     -       -       -       -       -       -       2,414,262       -  
                                                                                         
BALANCE, DECEMBER 31, 2009
     54,798,783       135,205       6,333,755       3,531,034       9,698,375       13,229,409       25,498       3,276,508       (248,641 )     (5,934,491 )     71,616,026  
                                                                                         
Appropriations of 2009 earnings
                                                                                        
Legal reserve
     -       -       -       674,455       (674,455 )     -       -       -       -       -       -  
Stock dividends - 8.4%
     4,615,775       -       -       -       (4,615,775 )     (4,615,775 )     -       -       -       -       -  
Cash dividends - 3.6%
     -       -       -       -       (1,978,190 )     (1,978,190 )     -       -       -       -       (1,978,190 )
                                                                                         
Issuance of common stock from capital surplus
     879,195       -       (879,195 )     -       -       -       -       -       -       -       -  
                                                                                         
Adjustment of equity method investments
     -       -       (9,510 )     -       -       -       124,744       -       (22,109 )     -       93,125  
                                                                                         
Change in unrealized loss on available-for-sale financial assets
     -       -       -       -       -       -       (9,290 )     -       -       -       (9,290 )
                                                                                         
Disposal of treasury stock held by subsidiaries
     -       -       1,271,532       -       -       -       -       -       -       3,975,384       5,246,916  
                                                                                         
Disposal of equity method investments
     -       -       (1,472 )     -       -       -       -       -       8       -       (1,464 )
                                                                                         
Cash dividends paid to subsidiaries
     -       -       37,536       -       -       -       -       -       -       -       37,536  
                                                                                         
Change in unrealized gain on cash flow hedging financial instruments
     -       -       -       -       -       -       105,351       -       -       -       105,351  
                                                                                         
Compensation recognized for employee stock options
     -       -       319,147       -       -       -       -       -       -       -       319,147  
                                                                                         
Stock options exercised by employees
     226,119       164,493       108,792       -       -       -       -       -       -       -       499,404  
                                                                                         
Net income in 2010
     -       -       -       -       18,337,500       18,337,500       -       -       -       -       18,337,500  
                                                                                         
Cumulative translation adjustments
     -       -       -       -       -       -       -       (4,397,126 )     -       -       (4,397,126 )
                                                                                         
Change in net loss not recognized as pension cost
     -       -       -       -       -       -       -       -       (127,361 )     -       (127,361 )
                                                                                         
Acquisition of treasury stock - 37,000 thousand shares
     -       -       -       -       -       -       -       -       -       (1,185,205 )     (1,185,205 )
                                                                                         
BALANCE, DECEMBER 31, 2010
   $ 60,519,872     $ 299,698     $ 7,180,585     $ 4,205,489     $ 20,767,455     $ 24,972,944     $ 246,303     $ (1,120,618 )   $ (398,103 )   $ (3,144,312 )   $ 88,556,369  
 
(With Deloitte & Touche audit report dated March 17, 2011)
 
 
-20-
 
 
ADVANCED SEMICONDUCTOR ENGINEERING, INC.

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars)

   
Year Ended December 31
  
   
2010
    
2009
  
             
CASH FLOWS FROM OPERATING ACTIVITIES
            
Net income
   $ 18,337,500     $ 6,744,546  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation
     6,149,218       5,611,664  
Amortization
     344,999       349,617  
Compensation cost of share-based payments
     240,108       -  
Provision for inventory valuation
     76,763       112,025  
Impairment loss on financial assets
     41,739       -  
Impairment loss on non-financial assets
     119,285       -  
Equity in earnings of equity method investments
     (9,918,123 )     (2,762,236 )
Cash dividends received from equity method investments
     2,507,350       1,784,475  
Deferred income taxes
     131,490       281,359  
Other
     (290,788 )     376,609  
Changes in operating assets and liabilities
                
Financial assets for trading
     (56,839 )     (15,747 )
Accounts receivable
     (324,032 )     (4,464,864 )
Accounts receivable from related parties
     (47,502 )     (24,692 )
Other receivables
     (140,787 )     51,931  
Other receivables from related parties
     (50,497 )     (135,897 )
Inventories
     (900,711 )     (678,765 )
Other current assets
     45,415       (53,902 )
Financial liabilities for trading
     427,574       (21,043 )
Accounts payable
     978,370       2,487,122  
Accounts payable to related parties
     29,559       262,494  
Income tax payable
     (64,517 )     165,995  
Accrued expenses
     1,713,553       275,091  
Other payables
     91,993       (64,192 )
Other payables to related parties
     384,944       69,561  
Other current liabilities
     (127,836 )     121,833  
                 
Net cash provided by operating activities
     19,698,228       10,472,984  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
Acquisition of available-for-sale financial assets
     (1,470,000 )     (570,000 )
Proceeds from disposal of available-for-sale financial assets
     1,470,173       570,058  
Proceeds from disposal of bond investments with no active market
     -       450,000  
Acquisition of financial assets carried at cost
     (23,947 )     (104,914 )
Cash received from return of capital on financial assets carried at cost
     14,784       -  
Acquisition of equity method investments
     (13,730,817 )     (23,614,725 )
Proceeds from disposal of equity method investments
     18,000       20,814,031  
Cash received from return of capital on equity method investments
     3,169       -  
Acquisition of property, plant and equipment
     (15,210,386 )     (5,574,392 )
Proceeds from disposal of property, plant and equipment
     216,522       101,739  
(Continued)
 
 
-21-
 
 
ADVANCED SEMICONDUCTOR ENGINEERING, INC.

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars)

   
Year Ended December 31
  
   
2010
    
2009
  
             
Decrease in guarantee deposits
   $ 1,275     $ 2,768  
Increase in deferred charges
     (372,510 )     (256,365 )
Decrease (increase) in other receivables
     450,000       (450,000 )
Increase in restricted assets
     (65,000 )     (300 )
                 
Net cash used in investing activities
     (28,698,737 )     (8,632,100 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
                
Increase in other payables to related parties
     3,316,080       4,893,800  
Proceeds from long-term bank loans
     29,369,947       27,680,050  
Repayment of long-term bank loans
     (23,459,700 )     (28,263,090 )
Repayment of bonds payable
     -       (1,375,000 )
Repayment of capital lease obligations
     (9,055 )     (18,413 )
Increase (decrease) in guarantee deposits received
     60       (121 )
Cash dividends
     (1,978,190 )     (2,736,568 )
Proceeds from exercise of stock options by employees
     499,404       238,789  
Acquisition of treasury stock
     (1,185,205 )     (1,314,273 )
                 
Net cash provided by (used in) financing activities
     6,553,341       (894,826 )
                 
NET INCREASE (DECREASE) IN CASH
     (2,447,168 )     946,058  
                 
CASH, BEGINNING OF YEAR
     4,079,270       3,133,212  
                 
CASH, END OF YEAR
   $ 1,632,102     $ 4,079,270  
                 
SUPPLEMENTAL INFORMATION
                
Interest paid
   $ 1,095,413     $ 1,194,519  
Less:  capitalized interest
     43,533       22,603  
Interest paid (excluding capitalized interest)
   $ 1,051,880     $ 1,171,916  
                 
Income tax paid
   $ 519,421     $ 471,854  
                 
Cash paid for acquisition of property, plant and equipment
                
Acquisition of property, plant and equipment
   $ 14,598,373     $ 6,838,333  
Decrease (increase) in payables
     612,013       (1,263,941 )
    $ 15,210,386     $ 5,574,392  
Cash received from disposal of property, plant and equipment
                
Proceeds from disposal of property, plant and equipment
   $ 232,404     $ 140,891  
Increase in other receivables
     (15,882 )     (39,152 )
    $ 216,522     $ 101,739  
(Continued)
 
 
-22-
 
 
ADVANCED SEMICONDUCTOR ENGINEERING, INC.

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars)

   
Year Ended December 31
  
   
2010
    
2009
  
             
Cash received from disposal of equity method investments
            
Proceeds from disposal of equity method investments
   $ 18,000     $ 29,608,501  
Increase in prepaid investments
     -       (8,794,470 )
    $ 18,000     $ 20,814,031  
Cash paid for acquisition of equity method investments
                
Acquisition of equity method investments
   $ 13,730,817     $ 32,409,195  
Capitalization from other receivables
     -       (8,794,470 )
    $ 13,730,817     $ 23,614,725  
Cash received from return of capital on long-term investments
                
Cash received from return of capital on equity method investments
   $ 904,587     $ 3,169  
Increase in other receivables from related parties
     (901,418 )     (3,169 )
    $ 3,169     $ -  
                 
FINANCING ACTIVITIES NOT AFFECTING CASH FLOWS
                
Current portion of capital lease obligations
   $ 1,504     $ 9,048  

 
(With Deloitte & Touche audit report dated March 17, 2011) (Concluded)
 
 
-23-
 
 
 
 
Advanced Semiconductor Engineering, Inc. and Subsidiaries
 
Consolidated Financial Statements as of
December 31, 2009 and 2010 and for the
Years Ended December 31, 2008, 2009 and 2010 and
Report of Independent Registered Public Accounting Firm
 
 
 
-24-
 
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
The Board of Directors and Shareholders
Advanced Semiconductor Engineering, Inc.


We have audited the accompanying consolidated balance sheets of Advanced Semiconductor Engineering, Inc. (a corporation incorporated under the laws of the Republic of China) and its subsidiaries (collectively, the “Company”) as of December 31, 2009 and 2010, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2010, all expressed in New Taiwan dollars.  These consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants, auditing standards generally accepted in the Republic of China (“ROC”) and the Standards of the Public Company Accounting Oversight Board (United States).  Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2009 and 2010, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the ROC.

As discussed in Note 2 to the consolidated financial statements, the Company completed the tender offerings for the common shares of Universal Scientific Industrial Co., Ltd. (“USI”) in February and August 2010, respectively.  Thereafter, the USI shareholdings held by the Company were increased to 98.9%.  As a result, the consolidated results of operations of USI and its subsidiaries from the date of acquisition to December 31, 2010 have been included in the consolidated financial statements referred to above.

As discussed in Note 3 to the consolidated financial statements, starting from January 1, 2009, the Company adopted the newly revised ROC Statement of Financial Accounting Standards (“SFAS”) No.10, “Accounting for Inventories”.  Besides, starting from January 1, 2008, the Company changed its method of accounting for bonuses paid to employees, directors and supervisors upon adoption of Interpretation 96-052, “Accounting for Bonuses to Employees, Directors and Supervisors” issued by the ROC Accounting Research and Development Foundation (“ARDF”) in March 2007.
 
 
 
-25-
 

 
Accounting principles generally accepted in the ROC differ in certain significant respects from accounting principles generally accepted in the United States of America.  Information relating to the nature and effect of such differences is presented in Note 32 to the consolidated financial statements.

Our audits also comprehended the translation of New Taiwan dollar amounts into U.S. dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 2 to the consolidated financial statements.  Such U.S. dollar amounts are presented solely for the convenience of the readers.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 28, 2011 expressed an unqualified opinion on the Company’s internal control over financial reporting.



Deloitte & Touche
Taipei, Taiwan
The Republic of China
April 28, 2011
 
 
 
-26-
 

 
ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Par Value)
 
   
December 31
      
December 31
  
   
2009
    
2010
      
2009
    
2010
  
ASSETS
  
NT$
    
NT$
    
US$
  
LIABILITIES AND SHAREHOLDERS’ EQUITY
  
NT$
    
NT$
    
US$
  
                                       
CURRENT ASSETS
                  
CURRENT LIABILITIES
                  
Cash and cash equivalents
   $ 22,557,494     $ 23,397,557     $ 802,936  
Short-term borrowings
   $ 13,024,993     $ 14,154,518     $ 485,742  
Financial assets at fair value through profit or loss - current
     1,024,711       1,195,273       41,018  
Financial liabilities at fair value through profit or loss - current
     74,530       488,818       16,775  
Available-for-sale financial assets - current
     3,995,524       338,094       11,603  
Hedging derivative liabilities - current
     122,495       457,494       15,700  
Hedging derivative assets - current
     -       163,670       5,617  
Accounts payable
     8,954,015       24,389,249       836,968  
Accounts receivable, net
     17,811,541       32,870,448       1,128,018  
Income tax payable
     1,181,485       2,739,711       94,019  
Other receivables
     1,226,747       1,590,006       54,564  
Accrued expenses
     4,346,028       7,843,657       269,172  
Guarantee deposits - current
     256,876       14,914       512  
Payable for properties
     3,433,235       4,085,408       140,199  
Inventories
     4,955,227       13,170,779       451,983  
Advance real estate receipts
     1,507,472       41,375       1,420  
Inventories related to construction business
     7,251,193       10,125,370       347,473  
Current portion of long-term bank loans
     923,284       2,990,176       102,614  
Deferred income tax assets - current
     893,622       919,261       31,546  
Current portion of capital lease obligations
     12,055       28,838       990  
Other current assets
     1,425,810       1,813,553       62,236  
Other current liabilities
     994,497       2,515,258       86,316  
                                                   
Total current assets
     61,398,745       85,598,925       2,937,506  
Total current liabilities
     34,574,089       59,734,502       2,049,915  
                                                   
LONG-TERM INVESTMENTS
                        
LONG-TERM LIABILITIES
                        
Available-for-sale financial assets - noncurrent
     -       310,426       10,653  
Hedging derivative liabilities - noncurrent
     311,778       159,279       5,466  
Financial assets carried at cost - noncurrent
     692,059       843,740       28,955  
Long-term bank loans
     48,990,517       52,363,718       1,796,970  
Bond investments with no active market - noncurrent
     96,090       87,420       3,000  
Capital lease obligations
     3,718       10,782       370  
Equity method investments
     4,371,841       1,158,498       39,756                            
                         
Total long-term liabilities
     49,306,013       52,533,779       1,802,806  
Total long-term investments
     5,159,990       2,400,084       82,364                            
                         
OTHER LIABILITIES
                        
PROPERTY, PLANT AND EQUIPMENT
                        
Accrued pension cost
     2,729,844       3,250,439       111,546  
Cost
                        
Deferred income tax liabilities
     180,955       372,525       12,784  
Land
     2,374,530       3,065,169       105,188  
Other
     470,200       409,195       14,042  
Buildings and improvements
     41,186,763       50,322,341       1,726,916                            
Machinery and equipment
     131,206,473       157,001,044       5,387,819  
Total other liabilities
     3,380,999       4,032,159       138,372  
Transportation equipment
     201,003       247,876       8,506                            
Furniture and fixtures
     3,800,859       5,097,742       174,940  
    Total liabilities
     87,261,101       116,300,440       3,991,093  
Leased assets and leasehold improvements
     343,204       436,640       14,984                            
Total cost
     179,112,832       216,170,812       7,418,353  
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT
                        
Less:  Accumulated depreciation
     (109,231,262 )     (122,437,240 )     (4,201,690 )
Capital stock
                        
Less:  Accumulated impairment
     (5,401 )     (191,210 )     (6,561 )
Common Stock - at par value of NT$10 each
                        
      69,876,169       93,542,362       3,210,102  
Authorized - 8,000,000 thousand shares
                        
Construction in progress
     4,167,279       1,773,002       60,844                            
Machinery in transit and prepayments
     5,320,412       4,538,548       155,750  
Issued - 5,479,878 thousand shares in 2009 and 6,051,987 thousand shares
　in 2010
     54,798,783       60,519,872       2,076,866  
                         
Capital received in advance
     135,205       299,698       10,285  
Property, plant and equipment, net
     79,363,860       99,853,912       3,426,696  
Total capital stock
     54,933,988       60,819,570       2,087,151  
                         
Capital surplus
                        
INTANGIBLE ASSETS
                        
Capital in excess of par value
     1,311,421       1,197,845       41,107  
Goodwill
     9,419,005       10,408,023       357,173  
Treasury stock transactions
     827,285       2,136,353       73,313  
Land use rights
     1,385,144       2,173,907       74,602  
Long-term investments
     3,538,222       3,527,240       121,045  
Other intangible assets
     1,428,549       2,666,190       91,496  
Employee stock options
     -       319,147       10,952  
                         
Other
     656,827       -       -  
Total intangible assets
     12,232,698       15,248,120       523,271  
Total capital surplus
     6,333,755       7,180,585       246,417  
                         
Retained earnings
     13,229,409       24,972,944       856,999  
OTHER ASSETS
                        
Other equity adjustments
                        
Assets leased to others
     586,067       20,889       716  
Unrealized gain on financial instruments
     25,498       246,303       8,452  
Idle assets
     419,781       1,249,047       42,864  
Cumulative translation adjustments
     3,276,508       (1,120,618 )     (38,456 )
Guarantee deposits - noncurrent
     50,628       78,453       2,692  
Unrecognized pension cost
     (248,641 )     (398,103 )     (13,662 )
Deferred charges
     958,560       1,381,510       47,409                            
Deferred income tax assets - noncurrent
     1,621,017       2,067,877       70,964  
Treasury stock - 322,532 thousand shares in 2009 and 151,792 thousand shares in 2010
     (5,934,491 )     (3,144,312 )     (107,904 )
Restricted assets
     177,565       236,516       8,117  
Total other equity adjustments
     (2,881,126 )     (4,416,730 )     (151,570 )
Other
     5,884       4,432       152                            
                         
Total equity attributable to shareholders of the parent
     71,616,026       88,556,369       3,038,997  
Total other assets
     3,819,502       5,038,724       172,914                            
                         
MINORITY INTEREST
     3,097,668       3,282,956       112,661  
                                                   
                         
    Total shareholders' equity
     74,713,694       91,839,325       3,151,658  
                                                   
TOTAL
   $ 161,974,795     $ 208,139,765     $ 7,142,751  
TOTAL
   $ 161,974,795     $ 208,139,765     $ 7,142,751  
 
 
The accompanying notes are an integral part of the consolidated financial statements.
 
(With Deloitte & Touche audit report dated April 28, 2011)
 
 
 
-27-
 
 
 
ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
 
   
Year Ended December 31
  
   
2008
    
2009
    
2010
  
   
NT$
    
NT$
    
NT$
    
US$
  
NET REVENUES
                        
Packaging
   $ 73,391,622     $ 67,935,456     $ 101,071,294     $ 3,468,473  
Testing
     19,021,360       15,795,108       21,956,997       753,500  
Electronic manufacturing service
     -       -       59,577,374       2,044,522  
Other
     2,017,930       2,044,750       6,137,132       210,608  
                                 
Total net revenues
     94,430,912       85,775,314       188,742,797       6,477,103  
                                 
COST OF REVENUES
                                
Packaging
     58,917,026       55,387,593       79,750,674       2,736,811  
Testing
     12,766,132       11,342,103       13,711,338       470,533  
Electronic manufacturing service
     -       -       53,095,183       1,822,072  
Other
     664,571       703,948       1,641,029       56,315  
                                 
Total cost of revenues
     72,347,729       67,433,644       148,198,224       5,085,731  
                                 
GROSS PROFIT
     22,083,183       18,341,670       40,544,573       1,391,372  
                                 
OPERATING EXPENSES
                                
Research and development
     3,671,204       3,611,950       6,162,191       211,469  
Selling
     1,158,637       1,209,199       2,909,643       99,850  
General and administrative
     5,694,224       4,310,692       7,373,733       253,045  
                                 
Total operating expenses
     10,524,065       9,131,841       16,445,567       564,364  
                                 
INCOME FROM OPERATIONS
     11,559,118       9,209,829       24,099,006       827,008  
                                 
NON-OPERATING INCOME AND GAINS
                                
Interest income
     326,772       173,870       215,228       7,386  
Gain on valuation of financial assets, net
     286,914       934,938       1,169,434       40,132  
Equity in earnings of equity method investments
     77,450       330,117       72,980       2,504  
Foreign exchange gain, net
     282,031       4,203       317,553       10,898  
Other
     671,627       620,194       781,752       26,827  
                                 
Total non-operating income and gains
     1,644,794       2,063,322       2,556,947       87,747  
                                 
NON-OPERATING EXPENSES AND LOSSES
                                
Interest expense
     1,813,296       1,508,023       1,386,011       47,564  
Loss on valuation of financial liabilities, net
     732,204       645,774       1,092,316       37,485  
Loss on disposal of property, plant and equipment
     6,910       26,208       445,276       15,281  
Impairment loss
     293,319       11,117       251,402       8,627  
Other
     882,418       693,639       657,319       22,557  
                                 
Total non-operating expenses and losses
     3,728,147       2,884,761       3,832,324       131,514  
                                 
INCOME BEFORE INCOME TAX
     9,475,765       8,388,390       22,823,629       783,241  
                                 
INCOME TAX EXPENSE
     2,268,282       1,484,922       3,628,740       124,528  
                                 
NET INCOME
   $ 7,207,483     $ 6,903,468     $ 19,194,889     $ 658,713  
                                 
ATTRIBUTABLE TO
                                
Shareholders of the parent
   $ 6,160,052     $ 6,744,546     $ 18,337,500     $ 629,290  
Minority interest
     1,047,431       158,922       857,389       29,423  
                                 
    $ 7,207,483     $ 6,903,468     $ 19,194,889     $ 658,713  
 (Continued)
 
 
-28-
 
 
 
ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Data)
 
   
Year Ended December 31
  
   
2008
    
2009
    
2010
  
   
NT$
    
NT$
    
NT$
    
US$
  
                         
EARNINGS PER SHARE
                        
Basic earnings per share
                        
Before income tax
   $ 1.24     $ 1.35     $ 3.22     $ 0.11  
After income tax
   $ 1.04     $ 1.19     $ 3.10     $ 0.11  
                                 
Diluted earnings per share
                                
Before income tax
   $ 1.21     $ 1.33     $ 3.16     $ 0.11  
After income tax
   $ 1.02     $ 1.17     $ 3.04     $ 0.10  
                                 
EARNINGS PER ADS
                                
Basic earnings per ADS
                                
Before income tax
   $ 6.19     $ 6.75     $ 16.11     $ 0.55  
After income tax
   $ 5.19     $ 5.94     $ 15.52     $ 0.53  
                                 
Diluted earnings per ADS
                                
Before income tax
   $ 6.06     $ 6.67     $ 15.79     $ 0.54  
After income tax
   $ 5.08     $ 5.86     $ 15.21     $ 0.52  

The accompanying notes are an integral part of the consolidated financial statements.
 
(With Deloitte & Touche audit report dated April 28, 2011) (Concluded)
  
 
 
-29-
 
 
ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Amount in Thousands)
 
                     
Retained Earnings
    
Other Equity Adjustments
              
   
Capital Stock
    
Capital Received in Advance
    
Capital Surplus
    
Legal Reserve
    
Unappropriated Earnings
    
Total
    
Unrealized Gain (Loss) on Financial Instruments
    
Cumulative Translation Adjustments
    
Unrecognized Pension Cost
    
Treasury Stock
    
Minority Interest
    
Total Shareholders' Equity
  
                                                                         
New Taiwan Dollars
                                                                        
                                                                         
BALANCE, JANUARY 1, 2008
   $ 54,475,589     $ 491,883     $ 6,394,834     $ 1,698,504     $ 12,199,709     $ 13,898,213     $ 402,518     $ 2,179,808     $ (6,516 )   $ (2,662,968 )   $ 14,566,527     $ 89,739,888  
 
Appropriations of 2007 earnings
                                                                                                
Legal reserve
     -       -       -       1,216,525       (1,216,525 )     -       -       -       -       -       -       -  
Compensation to directors and supervisors
     -       -       -       -       (216,000 )     (216,000 )     -       -       -       -       -       (216,000 )
Bonus to employees - cash
     -       -       -       -       (383,205 )     (383,205 )     -       -       -       -       -       (383,205 )
Bonus to employees - stock
     383,205       -       -       -       (383,205 )     (383,205 )     -       -       -       -       -       -  
Cash dividends - 17.1%
     -       -       -       -       (9,361,728 )     (9,361,728 )     -       -       -       -       -       (9,361,728 )
Stock dividends - 0.9%
     492,723       -       -       -       (492,723 )     (492,723 )     -       -       -       -       -       -  
Issuance of common stock from capital surplus
     1,094,939       -       (1,094,939 )     -       -       -       -       -       -       -       -       -  
Adjustment of equity method investments
     -       -       1,014       -       -       -       (432,247 )     -       (8,190 )     (3,271,523 )     (250,883 )     (3,961,829 )
Cash dividends received by subsidiaries from parent company
     -       -       535,100       -       -       -       -       -       -       -       -       535,100  
Change in unrealized gain (loss) on available-for-sale financial assets
     -       -       -       -       -       -       (18,014 )     -       -       -       -       (18,014 )
Change in unrealized gain (loss) on cash flow hedging financial instruments
     -       -       -       -       -       -       (391,695 )     -       -       -       -       (391,695 )
Stock options exercised by employees
     198,067       (58,565 )     101,268       -       -       -       -       -       -       -       -       240,770  
Conversion of convertible bonds
     259,755       (429,931 )     436,010       -       -       -       -       -       -       -       -       265,834  
Net income in 2008
     -       -       -       -       6,160,052       6,160,052       -       -       -       -       1,047,431       7,207,483  
Changes in minority interest
     -       -       -       -       -       -       -       -       -       -       1,435,527       1,435,527  
Changes in minority interest from acquisition of subsidiaries
     -       -       -       -       -       -       -       -       -       -       (14,509,854 )     (14,509,854 )
Cumulative translation adjustments
     -       -       -       -       -       -       -       2,694,149       -       -       -       2,694,149  
Change in net loss not recognized as pension cost
     -       -       -       -       -       -       -       -       (215,695 )     -       -       (215,695 )
Acquisition of treasury stock - 108,700 thousand shares
     -       -       -       -       -       -       -       -       -       (1,099,989 )     -       (1,099,989 )
 
BALANCE, DECEMBER 31, 2008
     56,904,278       3,387       6,373,287       2,915,029       6,306,375       9,221,404       (439,438 )     4,873,957       (230,401 )     (7,034,480 )     2,288,748       71,960,742  
 
Appropriations of 2008 earnings
                                                                                                
Legal reserve
     -       -       -       616,005       (616,005 )     -       -       -       -       -       -       -  
Cash dividends - 5.0%
     -       -       -       -       (2,736,568 )     (2,736,568 )     -       -       -       -       -       (2,736,568 )
Adjustment of equity method investments
     -       -       1,369       -       27       27       380,464       -       8,793       -       -       390,653  
Cash dividends received by subsidiaries from parent company
     -       -       160,895       -       -       -       -       -       -       -       -       160,895  
Change in unrealized gain (loss) on cash flow hedging financial instruments
     -       -       -       -       -       -       84,472       -       -       -       -       84,472  
Stock options exercised by employees
     74,245       131,818       32,726       -       -       -       -       -       -       -       -       238,789  
Net income in 2009
     -       -       -       -       6,744,546       6,744,546       -       -       -       -       158,922       6,903,468  
Changes in minority interest
     -       -       -       -       -       -       -       -       -       -       213,335       213,335  
Cumulative translation adjustments
     -       -       -       -       -       -       -       (1,597,449 )     -       -       433,118       (1,164,331 )
Change in net loss not recognized as pension cost
     -       -       -       -       -       -       -       -       (27,033 )     -       3,545       (23,488 )
Acquisition of treasury stock - 109,274 thousand shares
     -       -       -       -       -       -       -       -       -       (1,314,273 )     -       (1,314,273 )
Retirement of treasury stock - 217,974 thousand shares
     (2,179,740 )     -       (234,522 )     -       -       -       -       -       -       2,414,262       -       -  
 
BALANCE, DECEMBER 31, 2009
     54,798,783       135,205       6,333,755       3,531,034       9,698,375       13,229,409       25,498       3,276,508       (248,641 )     (5,934,491 )     3,097,668       74,713,694  
 
Appropriations of 2009 earnings
                                                                                                
Legal reserve
     -       -       -       674,455       (674,455 )     -       -       -       -       -       -       -  
Stock dividends - 8.4%
     4,615,775       -       -       -       (4,615,775 )     (4,615,775 )     -       -       -       -       -       -  
Cash dividends - 3.6%
     -       -       -       -       (1,978,190 )     (1,978,190 )     -       -       -       -       -       (1,978,190 )
Issuance of common stock from capital surplus
     879,195       -       (879,195 )     -       -       -       -       -       -       -       -       -  
Adjustment of equity method investments
     -       -       (9,510 )     -       -       -       124,744       -       (22,109 )     -       -       93,125  
Change in unrealized gain (loss) on available-for-sale financial assets
     -       -       -       -       -       -       (9,290 )     -       -       -       (2,467 )     (11,757 )
Disposal of treasury stock held by subsidiaries
     -       -       1,271,532       -       -       -       -       -       -       3,975,384       -       5,246,916  
Disposal of equity method investments
     -       -       (1,472 )     -       -       -       -       -       8       -       -       (1,464 )
Cash dividends received by subsidiaries from parent company
     -       -       37,536       -       -       -       -       -       -       -       -       37,536  
Change in unrealized gain (loss) on cash flow hedging financial instruments
     -       -       -       -       -       -       105,351       -       -       -       -       105,351  
Compensation recognized for employee stock options granted
     -       -       319,147       -       -       -       -       -       -       -       -       319,147  
Stock options exercised by employees
     226,119       164,493       108,792       -       -       -       -       -       -       -       -       499,404  
Net income in 2010
     -       -       -       -       18,337,500       18,337,500       -       -       -       -       857,389       19,194,889  
Changes in minority interest
     -       -       -       -       -       -       -       -       -       -       (453,713 )     (453,713 )
Changes in minority interest from acquisition of subsidiaries
     -       -       -       -       -       -       -       -       -       -       (130,034 )     (130,034 )
Cumulative translation adjustments
     -       -       -       -       -       -       -       (4,397,126 )     -       -       (82,906 )     (4,480,032 )
Change in net loss not recognized as pension cost
     -       -       -       -       -       -       -       -       (127,361 )     -       (2,981 )     (130,342 )
Acquisition of treasury stock - 37,000 thousand shares
     -       -       -       -       -       -       -       -       -       (1,185,205 )     -       (1,185,205 )
 
BALANCE, DECEMBER 31, 2010
   $ 60,519,872     $ 299,698     $ 7,180,585     $ 4,205,489     $ 20,767,455     $ 24,972,944     $ 246,303     $ (1,120,618 )   $ (398,103 )   $ (3,144,312 )   $ 3,282,956     $ 91,839,325  
 
U.S. Dollars
                                                                                                
                                                                                                 
BALANCE, DECEMBER 31, 2010
   $ 2,076,866     $ 10,285     $ 246,417     $ 144,320     $ 712,679     $ 856,999     $ 8,452     $ (38,456 )   $ (13,662 )   $ (107,904 )   $ 112,661     $ 3,151,658  


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

(With Deloitte & Touche audit report dated April 28, 2011)
 
 
 
-30-
 
 
ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
 
   
Year Ended December 31
  
   
2008
    
2009
    
2010
  
   
NT$
    
NT$
    
NT$
    
US$
  
                         
CASH FLOWS FROM OPERATING ACTIVITIES
                        
Net income
   $ 7,207,483     $ 6,903,468     $ 19,194,889     $ 658,713  
Adjustments to reconcile net income to net cash provided by operating activities:
                                
Depreciation
     16,333,515       16,775,929       18,473,333       633,951  
Amortization
     911,337       862,153       1,381,140       47,397  
Impairment loss
     293,319       11,117       251,402       8,627  
Compensation cost for employee stock options granted
     -       -       319,147       10,952  
Equity in earnings of equity method investments
     (77,450 )     (330,117 )     (72,980 )     (2,504 )
Cash dividends received from equity method investments
     292,094       82,299       20,589       706  
Loss on disposal of property, plant and equipment
     6,910       26,280       445,276       15,281  
Provision for inventory valuation and obsolescence
     510,038       191,904       340,268       11,677  
Deferred income taxes
     701,722       229,744       55,764       1,914  
Other
     206,604       380,136       (783,535 )     (26,889 )
Changes in operating assets and liabilities
                                
Financial assets for trading
     1,064,514       (487,231 )     (75,120 )     (2,578 )
Accounts receivable
     7,474,046       (6,470,810 )     (1,248,494 )     (42,845 )
Other receivable
     223,690       (129,022 )     (617,803 )     (21,201 )
Inventories
     767,071       (1,509,143 )     (2,171,624 )     (74,524 )
Construction in progress related to property development
     (591,148 )     (6,107,080 )     (2,874,177 )     (98,633 )
Other current assets
     96,399       (411,045 )     (132,716 )     (4,554 )
Financial liabilities for trading
     38,545       (8,346 )     410,778       14,097  
Accounts payable
     (4,345,030 )     3,786,668       1,656,567       56,848  
Income tax payable
     27,949       (83,789 )     1,462,879       50,202  
Accrued expenses
     111,446       259,250       2,239,267       76,845  
Advance real estate receipts
     -       1,507,472       (1,466,097 )     (50,312 )
Other current liabilities
     (524,255 )     37,391       156,341       5,365  
                                 
Net cash provided by operating activities
     30,728,799       15,517,228       36,965,094       1,268,535  
                                 
CASH FLOWS FROM INVESTING ACTIVITIES
                                
Acquisition of available-for-sale financial assets
     (7,692,649 )     (42,695,001 )     (16,670,994 )     (572,100 )
Proceeds from disposal of available-for-sale financial assets
     16,714,277       38,971,185       20,883,928       716,676  
Acquisition of bond investments with no active market
     (450,000 )     (97,740 )     -       -  
Proceeds from disposal of bond investments with no active market
     -       450,000       -       -  
Acquisition of financial assets carried at cost
     (74,477 )     (154,544 )     (42,892 )     (1,472 )
Cash received from return of capital by financial assets carried at cost
     6,295       3,203       28,556       980  
Proceeds from disposal of held-to-maturity financial assets
     50,000       -       -       -  
Acquisition of equity method investments
     -       (84,000 )     -       -  
Cash received from return of capital by equity method investments
     -       -       3,169       109  
Acquisition of subsidiaries
     (26,490,526 )     -       (6,181,583 )     (212,134 )
Acquisition of property, plant and equipment
     (18,583,343 )     (11,445,621 )     (34,109,113 )     (1,170,526 )
Proceeds from disposal of property, plant and equipment
     187,521       93,116       261,010       8,957  
Decrease (increase) in guarantee deposits
     429,082       (246,280 )     255,260       8,760  
Decrease (increase) in restricted assets
     87,652       13,851       (17,834 )     (612 )
Increase in other assets
     (442,555 )     (337,864 )     (713,149 )     (24,473 )
Acquisition of intangible assets
     (100,444 )     (1,020 )     (231,813 )     (7,955 )
(Continued)
 
 
-31-
 
 
 
ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
 
   
Year Ended December 31
  
   
2008
    
2009
    
2010
  
   
NT$
    
NT$
    
NT$
    
US$
  
                         
Decrease (increase) in other receivables
   $ -     $ (450,000 )   $ 450,000     $ 15,442  
                                 
Net cash used in investing activities
     (36,359,167 )     (15,980,715 )     (36,085,455 )     (1,238,348 )
                                 
CASH FLOWS FROM FINANCING ACTIVITIES
                                
Proceeds from (repayments of):
                                
Short-term borrowings
     (1,702,051 )     4,245,726       (2,714,111 )     (93,140 )
Short-term bills payable
     (149,831 )     -       -       -  
Bonds payable
     (5,549,983 )     (1,375,000 )     -       -  
Proceeds from long-term bank loans
     42,020,525       31,145,664       32,586,219       1,118,264  
Repayments of long-term bank loans and capital lease obligations
     (11,858,119 )     (33,385,917 )     (25,792,377 )     (885,119 )
Increase (decrease) in guarantee deposits received
     (48,634 )     28,800       (2,269 )     (78 )
Proceeds from exercise of stock options by employees
     240,770       238,789       499,404       17,138  
Compensation to directors and supervisors and bonus to employees
     (599,205 )     -       -       -  
Cash dividends, net of cash dividends received by subsidiaries
     (8,826,628 )     (2,575,673 )     (1,940,654 )     (66,598 )
Repurchase of treasury stock
     (1,099,989 )     (1,314,273 )     (1,185,205 )     (40,673 )
Increase in minority interest
     1,435,527       213,335       250,448       8,595  
                                 
Net cash provided by (used in) financing activities
     13,862,382       (2,778,549 )     1,701,455       58,389  
                                 
EFFECT OF EXCHANGE RATE CHANGES
     748,981       (339,400 )     (1,741,031 )     (59,747 )
                                 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
     8,980,995       (3,581,436 )     840,063       28,829  
                                 
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
     17,157,935       26,138,930       22,557,494       774,107  
                                 
CASH AND CASH EQUIVALENTS, END OF YEAR
   $ 26,138,930     $ 22,557,494     $ 23,397,557     $ 802,936  
                                 
SUPPLEMENTAL INFORMATION
                                
Interest paid
   $ 1,896,001     $ 1,832,333     $ 1,683,056     $ 57,758  
Less:  Capitalized interest
     (176,801 )     (173,169 )     (296,827 )     (10,186 )
Interest paid (excluding capitalized interest)
   $ 1,719,200     $ 1,659,164     $ 1,386,229     $ 47,572  
                                 
Income tax paid
   $ 1,538,611     $ 1,338,967     $ 2,110,097     $ 72,412  
                                 
Cash paid for acquisition of property, plant and equipment
                                
Acquisition of property, plant and equipment
   $ 16,623,705     $ 12,631,932     $ 34,761,050     $ 1,192,898  
Decrease (increase) in payable
     1,963,582       (1,186,311 )     (651,937 )     (22,372 )
Increase in capital lease obligations
     (3,944 )     -       -       -  
    $ 18,583,343     $ 11,445,621     $ 34,109,113     $ 1,170,526  
Cash received from disposal of property, plant and equipment
                                
Proceeds from disposal of property, plant and equipment
   $ 100,162     $ 115,263     $ 290,165     $ 9,958  
Decrease (increase) in other receivables
     87,359       (22,147 )     (29,155 )     (1,001 )
    $ 187,521     $ 93,116     $ 261,010     $ 8,957  
                                 
(Continued)
 
 
 
-32-
 
 
ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
 
   
Year Ended December 31
  
   
2008
    
2009
    
2010
  
   
NT$
    
NT$
    
NT$
    
US$
  
                         
FINANCING ACTIVITIES NOT AFFECTING CASH FLOWS
                        
Current portion of long-term bank loans
   $ 2,670,845     $ 923,284     $ 2,990,176     $ 102,614  
Current portion of capital lease obligations
     23,133       12,055       28,838       990  
Payable to minority interest
     -       -       718,023       24,640  
Bonds converted to capital stock
     265,834       -       -       -  


The Company acquired ASE WeiHai Inc. (“ASE WeiHai”) in January 2008 for NT$212,856 thousand, minority interest of ASE Test Limited (“ASE Test”) in May 2008 for NT$26,309,311 thousand, and also acquired 60.07% shareholdings of USI in February 2010 for NT$13,475,056 thousand (US$462,424 thousand).  The net cash payments and fair values of acquired assets and liabilities of ASE WeiHai Inc. and USI at acquisition dates were shown as follows:
 
   
As of Acquisition Dates
  
   
2008
    
2010
  
   
NT$
    
NT$
    
US$
  
                   
Current assets
   $ 218,070     $ 29,599,348     $ 1,015,764  
Long-term investments
     -       497,508       17,073  
Property, plant and equipment, net
     669,159       6,866,077       235,624  
Other assets
     2,986       4,743,627       162,787  
Current liabilities
     (706,649 )     (19,490,014 )     (668,840 )
Long-term bank loans (including current portion)
     -       (100,000 )     (3,432 )
Other liabilities
     -       (365,877 )     (12,556 )
      183,566       21,750,669       746,420  
Percentage of acquired shareholdings
     100.00 %     60.07 %     60.07 %
      183,566       13,065,626       448,374  
Goodwill
     29,290       409,430       14,050  
Total consideration
     212,856       13,475,056       462,424  
Less:  Acquired through delivery of treasury stock
     -       (5,246,916 )     (180,059 )
      212,856       8,228,140       282,365  
Less:  Cash received of acquired companies at acquisition dates
     (31,641 )     (8,842,323 )     (303,442 )
Net cash outflow (inflow) from the acquisitions
   $ 181,215     $ (614,183 )   $ (21,077 )

The Company further acquired 20.8% shareholdings of USI in August 2010 for cash consideration of NT$4,667,117 thousand (US$160,162 thousand).


 
-33-
 

In addition, the Company, through ASE Singapore Pte. Ltd. (“ASE Singapore”), acquired 100% shareholdings of EEMS Test Singapore Pte. Ltd. from its parent company, EEMS Asia Pte. Ltd. in August 2010 for US$72,163 thousand.  The net cash payments and carrying values of acquired assets and liabilities of EEMS Test Singapore Pte. Ltd. at the acquisition date were shown as follows:

   
As of Acquisition Date
  
   
NT$
    
US$
  
             
Current assets
   $ 653,487     $ 22,426  
Property, plant and equipment, net
     1,352,212       46,404  
Other assets
     145,239       4,984  
Current liabilities
     (102,224 )     (3,508 )
Long-term bank loans (including current portion)
     (105,773 )     (3,630 )
      1,942,941       66,676  
Goodwill
     361,384       12,402  
Total consideration
     2,304,325       79,078  
Less:  Cash received of acquired company at acquisition date
     (175,676 )     (6,029 )
                 
Net cash outflow from the acquisition
   $ 2,128,649     $ 73,049  


The accompanying notes are an integral part of the consolidated financial statements.
 
(With Deloitte & Touche audit report dated April 28, 2011) (Concluded)
 

 
-34-
 
 
 
■Attachment IV
 
Advanced Semiconductor Engineering, Inc.
 
Table of Comparison of the Revised Articles of Incorporation
 
Original Provisions
Provisions after Revision
Article 6:
The Company's registered capital is NT$80 billion, divided into 8 billion shares with a face value of NT$10 per share. Stock options worth NT$8 billion are set aside for employee subscription. The board is authorized to issue the remainder in several batches.
Article 6:
The Company's registered capital is NT$95 billion, divided into 9.5 billion shares with a face value of NT$10 per share. Stock options worth NT$8 billion are set aside for employee subscription. The board is authorized to issue the remainder in several batches.
Article 27:
The articles of incorporation were passed at a founders' meeting held on March 11, 1984.
The first amendment was made on May 3, 1984.
．
．
The thirty-fifth amendment was made on June 19, 2008.
The thirty-sixth amendment was made on June 25, 2009.
The thirty-seventh amendment was made on June 14, 2010.
 
Article 27:
The articles of incorporation were passed at a founders' meeting held on March 11, 1984.
The first amendment was made on May 3, 1984.
．
．
The thirty-fifth amendment was made on June 19, 2008.
The thirty-sixth amendment was made on June 25, 2009.
The thirty-seventh amendment was made on June 14, 2010.
The thirty-eighth amendment was made on June 28, 2011.
 
 
-35-