Transcend Information, Inc.
2017 ANNUAL REGULAR SHAREHOLDERS’ MEETING MINUTES(This English version is a translation based on the original Chinese version.
Where any discrepancy arises between the two versions, the Chinese version shall prevail. )Time: 9:00 a.m., June 16, 2017
Place: Transcend Information, Inc. (No. 70, XingZhong Rd., NeiHu Dist., Taipei 114, Taiwan)
Total share represented by shareholders present in person or by proxy are 377,584,018 shares(including 377,068,567 shares casted electronically), which is 87.65% of the total 430,761,675
outstanding shares.
Attended Directors: Shu, Chung-Wan, the chairman of Board of Directors
Attended Independent Directors: Wang, Yi-Hsin, the convener of Audit Committee
Attendees: Chen, Chin-Chang, the independent auditors of the Pricewaterhouse Coopers
Li, Dan, the lawyer of World Patent & Trademark Office
Chairman: Shu, Chung-Wan

Recorder: Chen, Hung-Jen

Call meeting to order: The aggregate shareholding of the shareholders present in person or by proxy
constituted a quorum. The Chairman called the meeting to order.
Chairman's Remarks: (Omitted)
I. Report Items(1) To report the business of 2016.
Please refer to Attachment I.
(2) Audit Committee’s review report.
Please refer to Attachment II.
(3) To report 2016 employees’ profit sharing bonus and directors’ compensation.
Explanatory Notes:
A. The remuneration of 2016 profit to employees would be NT$ 32,042,362 (distributed in cash);and that to directors would be NT$ 4,239,000.
B. The estimated remuneration to employees is NT$ 33,439,115 and the different amount should
be NT$ 1,396,753; the estimated remuneration to directors is NT$ 4,681,476 and the different
amount should be NT$ 442,476.
C. The difference will be recognized as expense in the statement of income in 2017.
.

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(4) The status of guarantees provided by the Company as of the end of 2016.
Explanatory Notes:
The Company provided a guarantee for Transcend Japan Inc. amounting to JPY 2,000,000
thousand, and the actual amount of guarantee draw down is JPY 0 by the end of 2016. Pursuant to
the Company’s “Procedures for Endorsement and Guarantee”, the limit of guarantee was NT$
8,130,774 thousand (approximate JPY 29,500,000 thousand).
II. Proposed Items(1) Adoption of 2016 Business Report and Financial Statements.
Explanatory Notes:
A. The parent company only financial statement and consolidated financial statement of theCompany for the year of 2016 have been audited by independent auditors, Mr. Chun-Yao, Linand Mr. Chien-Hung Chou, of the Pricewaterhouse Coopers.
B. The Business Report, Independent Auditors’ Report and Financial Statements are hereby also
attached. (Please refer to Attachment I, III, and IV)
C. It is submitted for ratification.
Resolution:
Votes in favor: 357,073,316 votes (including 356,586,148 votes casted electronically),
94.56% of the total represented share present; Votes against: 8,848 votes (including 8,848 votes
casted electronically); Votes invalid: 0 votes (including 0 votes casted electronically); Abstention
and no votes: 20,501,854 votes (including 20,473,571 votes casted electronically).
Resolved, the above proposal was approved as proposed.

.

~2~(2) Adoption of the proposal for distribution of 2016 earnings.
Explanatory Notes:
A. For appropriations of 2016 earnings, the Company will distribute cash dividend of NT$
2,476,879,631 (NT$5.75 per share) from the available retained earnings of 2016 after setting
aside legal reserve and special reserve.
B. Please refer to next page for the chart of 2016 earnings distribution.
C. Cash dividends will be distributed proportionately according to shareholders’ sharesownership registered in the Common Stockholders’ Roster as of the date of record.
D. To avoid the change in the total amount of common shares outstanding resulting from buybackof company shares, or transfer or cancellation of treasury stock, it is proposed that the
Chairman of the Board be authorized to adjust the cash to be distributed to each commonshare.
E. It is submitted for ratification.
Resolution:
Votes in favor: 357,073,316 votes (including 356,586,148 votes casted electronically),
94.56% of the total represented share present; Votes against: 8,848 votes (including 8,848 votes
casted electronically); Votes invalid: 0 votes (including 0 votes casted electronically); Abstention
and no votes: 20,501,854 votes (including 20,473,571 votes casted electronically)
Resolved, the above proposal was approved as proposed.

.

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Transcend Information, Inc.
The Chart of 2016 Earnings Distribution
For the year ended December 31, 2016
(Expressed in New Taiwan dollar)
Item

AmountUnappropriated retained earnings at beginning

4,717,264,021

Add: Adjustment on unappropriated earnings for 2016(

4,606,760)

Adjusted unappropriated retained earnings

4,712,657,261

Add: Net income for 2016

2,882,637,500

Less: Legal reserve (10%)

288,263,750

Less: Special reserve

123,998,030

Retained earnings available for appropriation as of

7,183,032,981

December 31, 2016
Less: Items of distribution Cash dividend to shareholders
Unappropriated retained earnings at end

Chairman：Shu, Chung-Wan

Remarks

2,476,879,631

Cash dividend(NT$5.75 per share)

4,706,153,350

General Manager：Shu, Chung-Cheng.

~4~

Accounting Supervisor：Chen, Hung-Jen

III. Discussion Items
Discussion Items (1)Subject: To approve cash distribution from capital surplus. (Proposed by the Board of Directors)
Explanatory Notes:
A. To comply with Article 241 of the Company Act.
B. The capital surplus derived from the issuance of new shares at a premium totaling NT$
107,690,419 will be distributed in cash of NT$0.25 per share.
C. Cash dividends will be distributed proportionately according to shareholders’ shares ownershipregistered in the Common Stockholders’ Roster as of the date of record.
D. To avoid the change in the total amount of common shares outstanding resulting from buyback ofcompany shares, or transfer or cancellation of treasury stock, it is proposed that the Chairman of
the Board be authorized to adjust the cash to be distributed to each common share.
E. It is submitted for approval.
Resolution:
Votes in favor: 357,069,316 votes (including 356,582,148 votes casted electronically), 94.56%
of the total represented share present; Votes against: 12,848 votes (including 12,848 votes casted
electronically); Votes invalid: 0 votes (including 0 votes casted electronically); Abstention and novotes: 20,501,854 votes (including 20,473,571 votes casted electronically)
Resolved, the above proposal was approved as proposed.
Discussion Items (2)Subject: To approve the amendments to “Procedures for Acquisition and Disposal of Assets”.
(Proposed by the Board of Directors)
Explanatory Notes:
A. To comply with amendments to “Regulations Governing the Acquisition and Disposal of Assets
by Public Companies”.
B. Please refer to Attachment V: the comparison table for the “Procedures for Acquisition and
Disposal of Assets”.
C. It is submitted for approval.
Resolution:
Votes in favor: 357,071,306 votes (including 356,584,138 votes casted electronically), 94.56%
of the total represented share present; Votes against: 8,858 votes (including 8,858 votes casted
electronically); Votes invalid: 0 votes (including 0 votes casted electronically); Abstention and novotes: 20,503,854 votes (including 20,475,571 votes casted electronically).

~5~

Resolved, the above proposal was approved as proposed.
IV. Election Items
Election Items (1)Subject: To elect one director. (Proposed by the Board of Directors)
Explanatory Notes:
A. Three-year term of the current directors started from June 12, 2015 and concluded on June 11,
2018.
B. The shareholders’ meeting shall elect one director. Three-year term of the new director will startfrom June 16, 2017 and conclude on June 11, 2018.
C. According to the regulations and Articles of Incorporate, a candidate nomination system shall be
adopted. Please refer to Attachment VI: the nomination list of the director.
D. It is submitted for election.
Resolution:
The list of persons elected as directors(NON-INDEPENDENT DIRECTORS)
Shareholder Account NO./ID NO.

Name

Numbers of Votes

A1203*****

LIN, CHIN-YU

350,100,019

V. Other Business and Special Motion
There is no special motion, the meeting was adjourned.

VI. Meeting Adjourned.

~6~

Attachment I

TRANSCEND INFORMATION INC.
BUSINESS REPORT
Compared to 2015, the global NAND Flash market has shifted away from oversupply and pricedecline in the second half of 2016. As 3D NAND suppliers were encountering unimproved yield rate,
supply of DRAM and NAND Flash dropped sharply, leading to supply shortage and raising price inthe second half of 2016. To respond to demand changes in consumer market, Transcend, as leading
manufacturer of storage and industrial-grade products, has executed our business strategy of deriving agreater portion of revenue from embedded market, developing new products and expanding into SSD
market. Although memory market was highly competitive in 2016, Transcend remained solid
operating performance and was able to pay back substantial profit sharing to all of our shareholders.
Hereby, we would like to thank our valued shareholders, clients, suppliers and employees for yourcontinued supports of Transcend.
Transcend’s consolidated revenue totaled NT$22.1 billion in 2016. Consolidated gross profit
totaled NT$4.95 billion. Gross profit rate is 22.4 percent. Operating income totaled 33.1 billion.
Income before tax totaled 32.4 billion. Net income totaled 28.8 billion. EPS is NT$ 6.69 calculated at
the weighted average of outstanding share capital amounting to 43 billion.
With excellent brand operation, Transcend has been awarded by its innovative products andsuperior product quality. For the tenth year in a row, Transcend Information appears on Interbrand's
Best Taiwan Global Brands ranking. Our seven cutting-edge products have won Taiwan ExcellenceAward for twelfth consecutive year. Moreover, the new launched product in 2016, the DrivePro 50
dashcam, has received the prestigious "Good Design Award 2016" for the top design quality.
As a leading brand in the market, Transcend focused on innovative research and development toensure that we can adapt quickly to the fast-changing IT industry. Transcend’s sales of solid-statedrives (SSDs) has been growing rapidly year over year. In 2016, we introduced the SSD220, which
adopted cost-effective TLC NAND flash to satisfy the demand of consumer SSDs. In addition,
Transcend has successfully gained advantage among competitors in memory industry by providing
high quality embedded products and professional technical service to our clients. Our industrial-grade
SSDs have significant growth which effectively generated sales revenue and profit in the second halfof 2016. Regarding strategic products, we also released our new personal cloud storage, the StoreJet
Cloud series. Featuring mobile access, automatic data backup, and media streaming, the StoreJet
Cloud allows users to freely access all their personal files anytime and anywhere.

.

~7~

Transcend focuses not only on sales performance, but also on corporate governance. We aim todisclose adequate information in order to provide comprehensive corporate information to ourshareholders and investors. For cooperate social responsibility, we have sponsored sport activities inhigh school and universities, including the High School Basketball League (HBL) and the Black
Panther High School Baseball Tournament, for over six years. We continued to execute the long-term
Baseball Mentoring Program aimed at underprivileged school baseball teams, expecting to serve as aplatform for young promising athletes to fulfill their dreams. As a result, we received “Sports Activists
Award” again from the Sports Affairs Council as our continuing contribution to promote sports in
Taiwan.
Looking to 2017, price of NAND flash chips will keep rising due to persistent supply shortage.
We may face challenges from dynamic and competitive industry environment; thus, we will implement
effective inventory management and purchasing strategy to maximize Transcend’s sales revenue andprofitability.
In addition to keeping investing in research and development, we will deploy more automatedproduction lines in our factories to improve product quality and enhance manufacturing efficiency.
Thanks to strong bond with our business partners and our distribution channels worldwide, we
continue to increase market share in each product category and build our brand awareness inmarketplace. Also, as a multinational corporation, we manage our 13 branches worldwide throughconcentrated management, expecting to ensure the local operation in different countries is consistent
with corporate operational objectives and to attain corporate sustainability.
Here again we sincerely thank all of our shareholders, for your continued support and for theconfidence that you have placed in us. We will make every effort to keep Transcend operational
excellence and look forward to sharing our progress with you.

Chairman：Shu, Chung-Wan
General Manager：Shu, Chung-Cheng
Accounting Supervisor：Chen, Hung-Jen.

~8~

Attachment II

Audit Report of Audit Committee

The Board of Directors has prepared the Company’s 2016 Business Report, Financial Statements andEarnings Distribution Proposal. Transcend Corporation’s Financial Statements have been audited andcertified by Mr. Chun-Yao, Lin and Mr. Chien-Hung Chou, the CPA of the Pricewaterhouse Coopers.
The Business Report, Financial Statements and Earnings Distribution Proposal have been reviewed
and considered to be complied with relevant rules by the undersigned, the audit committee ofTranscend Corporation. Pursuant to Article 14-4 of the Securities and Exchange Act and Article 219 of
the Company Act, we hereby submit this report.

The audit Committee of Transcend Corporation

Chairman of the audit Committee: Wang, Yi-ShinMarch 09, 2017.

~9~

Attachment III
REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE
To the Board of Directors and Shareholders of Transcend Information, Inc.

OpinionWe have audited the accompanying balance sheets of Transcend Information, Inc. (the “Company”) as
at December 31, 2016 and 2015, and the related statements of comprehensive income, of changes inequity and of cash flows for the years then ended, and notes to the financial statements, including asummary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, thefinancial position of the Company as at December 31, 2016 and 2015, and its financial performanceand its cash flows for the years then ended in accordance with the “Regulations Governing the
Preparations of Financial Reports by Securities Issuers”.

Basis for opinion
We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of
Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the
Republic of China (ROC GAAS). Our responsibilities under those standards are further described in
the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are
independent of the Company in accordance with the Code of Professional Ethics for Certified Public
Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethicalresponsibilities in accordance with the Code. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.

~10~Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period. These matters were addressed in the context of
our audit of the financial statements as a whole and, in forming our opinion thereon, we do not provide
a separate opinion on these matters.
Evaluation of inventories
Description
Please refer to Notes 4(8), 5(2) and 6(5) to the financial statements for the details of the information
about the Company’s inventory accounting policy, estimates and assumption and allowance forinventory evaluation losses.
The percentage of the Company’s inventories in total assets is material and the Company applies
judgments and estimates in determing the net realizable value of inventories on balance sheet date. The
Company mainly produces DRAM and flash memory, and due to those products having short life cycle
and belong to a highly competitive industry, the market prices change frequently. Since the Company’s
inventories and the allowance for inventories evaluation losses are material to its financial statements,
the evaluation of inventories has been identified as a key audit matter.
How our audit addressed the matter
Our audit procedures performed in respect of the above key audit matter included the following:
A. Obtained an understanding of the Company’s operation and industry. Assessed the reasonablenessof the policy and procedures to recognise allowance for inventory evaluation losses.
B. Obtained an understanding of the Company’s inventory control procedures. Reviewed annual
inventory count plan and observed the annual physical count of inventory in order to assess theeffectiveness of inventory internal control.
C. Obtained relevant evaluation reports of inventory and tested the logic and accuracy of information
to assess the reasonableness of allowance for inventory evaluation losses.

~11~

Estimation of allowance for sales discountDescription
In consideration of business volume, the Company provides a variety of business incentives to specificcustomers or products, and based on that, the Company can estimate the allowance for sales discountmonthly. Please refer to Note 6(4) to the financial statements for the details of the information about
estimation of allowance for sales allowance.
Since the contracts are numerous and the result could affect the net revenue in the financial statements,
the estimation of allowance for sales discount has been identified as a key audit matter.
How our audit addressed the matter
Our audit procedures performed in respect of the above key audit matter included the following:
A. Obtained an understanding of the Company’s operation, industry and the procedure to recognise
allowance for sales discount.
B. Obtained an understanding of the Company’s sales procedures and interviewed management toassess the appropriateness of sales allowance contracts and internal control on estimation ofallowance.
C. Obtained the evaluation list of allowance for sales discount, and tested material sales allowance
contracts and recalculated it to assess the reasonableness of allowance in the Company’s
determination.
Responsibilities of management and those charged with governance for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements inaccordance with the “Regulations Governing the Preparations of Financial Reports by Securities
Issuers”, and for such internal control as management determines is necessary to enable thepreparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing the Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless management either intends to liquidate the Company or
to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including audit committee, are responsible for overseeing theCompany’s financial reporting process.
~12~

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with ROC GAAS will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:










Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overrideof internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Company
to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including thedisclosures, and whether the financial statements represent the underlying transactions and eventsin a manner that achieves fair presentation.
~13~



Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Company to express an opinion on the financial statements. We areresponsible for the direction, supervision and performance of the audit. We remain solely
responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.

~14~

From the matters communicated with those charged with governance, we determine those matters thatwere of most significance in the audit of the financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulationprecludes public disclosure about the matter or when, in extremely rare circumstances, we determinethat a matter should not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of such communication.

March 9, 2017----------------------------------------------------------------------------------------------------------------------------- -------------------The accompanying financial statements are not intended to present the financial position and results of operations and cash
flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic ofChina. The standards, procedures and practices in the Republic of China governing the audit of such financial statements
may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, theaccompanying financial statements and report of independent accountants are not intended for use by those who are notinformed about the accounting principles or auditing standards generally accepted in the Republic of China, and theirapplications in practice.
As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability
for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from thetranslation.

~15~

TRANSCEND INFORMATION, INC.
PARENT COMPANY ONLY BALANCE SHEETS(Expressed in thousands of New Taiwan Dollars)
December 31, 2016
AssetsAMOUNT

December 31, 2015%

AMOUNT%

Current assets
Cash and cash equivalents$

1,560,837

7-

active market - current
Notes receivable, net$

2,400,616

10-

15,768-366,295

1

607,917

3

5,348

-

959

-

Accounts receivable, net

1,815,255

8

2,000,096

8

Accounts receivable- related parties, net

1,184,712

5914,0174

141,234

1

128,738

1

Inventories

4,818,926

21

4,219,148

18

Other current financial assets

8,638,735

37

8,467,013

35

Financial assets at fair value through profit
or loss - current
Investment in debt instrument without

Other receivables

Other current assets, others

12,480-15,568-18,543,822

80

18,769,840

79

179,5801

184,304

1

method2,499,769

11

2,928,897

12

Property, plant and equipment

1,653,180

7

1,718,153

7

Investment property, net

210,3711

213,2961

Deferred tax assets

53,944-42,708-Other non-current assets

78,219-46,592-

Non-current Assets

4,675,063

20

5,133,950

21

23,218,885

100

23,903,790

100

Current Assets
Non-current assets
Available-for-sale financial assets non-current
Investments accounted for using equity

Total Assets$(Continued)

~16~

$

TRANSCEND INFORMATION, INC.
PARENT COMPANY ONLY BALANCE SHEETS(Expressed in thousands of New Taiwan Dollars)
December 31, 2016
AMOUNT%

Liabilities and Equity

December 31, 2015
AMOUNT%

Current liabilities
Short-term borrowings

$

-

-

-

$

492,375

2

-

13

-

1,702,172

7

1,495,689

6

Accounts payable - related parties

570,3593

566,463

3

Other payables

335,5901

298,512

1

324

-

86

-

Current tax liabilities

90,367-269,336

1

Other current liabilities

4,166

-

2,134

-

Current Liabilities

2,702,978

11

3,124,608

13

Deferred tax liabilities

167,7691

259,110

1

Other non-current liabilities

21,204-

17,991-

Non-current Liabilities

188,9731

277,1011

2,891,951

12

3,401,709

14

4,307,617

19

4,307,617

18

4,799,075

20

4,799,075

20

Legal reserve

3,748,946

16

3,426,756

14

Special reserve

21,691---

7,595,294

33

7,990,324

34

21,691)-

20,502,081

86

23,903,790

100

Financial liabilities at fair value throughprofit or loss - current
Accounts payable

Other payables - related parties

Non-current liabilities

Total Liabilities
EquityShare capital
Common stock
Capital surplus
Capital surplus
Retained earnings

Unappropriated retained earnings
Other equity interest
Other equity interest(

145,689)

Total Equity- (20,326,934

88

23,218,885

100

Significant contingent liabilities andunrecognized contract commitments
Significant events after the balance sheet
date
Total Liabilities and Equity$$

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

~17~

TRANSCEND INFORMATION, INC.
PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME(Expressed in thousands of New Taiwan Dollars, except Earnings Per Share)

Items
Operating Revenue
Operating Costs
Gross Profit
Unrealized gross profit on sales tosubsidiaries
Realized gross profit on sales tosubsidiaries
Gross Profit, net
Operating Expenses
Sales and marketing expenses
Administrative expenses
Research and development expenses
Total operating expenses
Operating Profit
Non-operating Income and Expenses
Other income
Other gains and losses
Finance costs
Share of loss of associates and joint
ventures accounted for under equity
methodTotal non-operating income andexpensesProfit before Income Tax
Income tax expense
Profit for the Year
Other Comprehensive Income
Components of other comprehensive
income that will not be reclassified to
profit or loss
Losses on remeasurements of defined
benefit plans
Share of other comprehensive income ofassociates and joint ventures accounted forunder equity method, components of othercomprehensive income that will not bereclassified to profit or loss
Components of other comprehensive
income that will be reclassified to profit
or loss
Exchange differences on translation offoreign financial statements
Unrealized loss on available-for-salefinancial assets
Income tax related to components of othercomprehensive income that will bereclassified to profit or loss
Total Comprehensive Income
Earnings Per Share
Basic earnings per share
Diluted earnings per share$((

Year ended December 31
2016
2015
AMOUNT%AMOUNT
21,324,583
100 $
24,021,076
17,220,152) (81) (20,267,171) (4,104,431
19
3,753,905
94,548)

- (

%
100
84)
16

34,559)-34,5594,044,442

19

70,8573,790,203

16

536,210) (178,309) (150,689) (865,208) (3,179,234

2) (
1) (
1) (
4) (
15

572,201) (198,052) (134,062) (904,315) (2,885,888

2)
1)
1)
4)
12

127,822
185,333) (1,631)

11)- (144,734
502,588
1,657)

2-

46,023- (2,415)-$

13,119)3,166,115
283,478) (2,882,637

15
1) (
14 $

643,250
3,529,138
307,236) (3,221,902

2
14
1)
13

($

4,263)- ($2,283)

-

(

344)

-

-

-

(

143,703) (1) (33,575)-(

4,724)- (48,335)-

5,708
3,143,417

13

(
(
(
(

(
(

(
(

$

24,4292,754,032

$
$

13

$

6.69
6.68

$
$

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

~18~

7.48
7.47

TRANSCEND INFORMATION, INC.
PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY(Expressed in thousands of New Taiwan Dollars)
Capital Reserves

Retained Earnings

Common stock

Additional
paid-in capital

Donated assets
receive

Net assets
from merger

Legal reserve

$

$

$

$

$

Unappropriatedretained earnings

Other equity interest
Exchangedifferences on
Unrealized gaintranslation ofor loss on
foreign financial
available-for-salestatements
financial assets

Total equity

-

$

$

$ 20,718,605

SpecialreserveYear ended December 31, 2015
Balance at January 1, 2015

4,307,617

4,759,841

4,106

35,1283,053,235$

8,504,167

104,927($

50,416 )Appropriations of 2014 earnings
Legal reserve

-

-

-

-

373,521-(373,521 )--Cash dividends

-

-

-

-

-

-

(

3,359,941 )

-

-

-

-

-

-

-

-

3,221,902--

Net income for the year
Other comprehensive loss for theyear
Balance at December 31, 2015

-

-

-

-

-

2,283 ) ((3,359,941 )
3,221,902-(

27,867 ) (48,335 ) ($4,307,617$

4,759,841

$

4,106

$

35,128$3,426,756$-$

7,990,324$

77,060($98,751 )$ 20,502,081

78,485 )$4,307,617$

4,759,841

$

4,106

$

35,128$3,426,756$-$

7,990,324$

77,060($98,751 )$ 20,502,081

Year ended December 31, 2016
Balance at January 1, 2016
Appropriation of 2015 earnings
Legal reserve

-

-

-

-

322,190-(

Special reserve

-

-

-

-

-

21,691

Cash dividends

-

-

-

-

-

-

-

-

-

-

-

-

Net income for the year
Other comprehensive loss for theyear
Balance at December 31, 2016$

4,307,617$

4,759,841

$

4,106

$

35,128$3,748,946$

322,190 )--(

21,691 )--(2,929,179 )--

2,882,637

-

-

-

(

21,691$

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

~19~

4,607 ) (7,595,294($

119,274 ) (42,214 ) ($(2,882,637

4,724 ) (103,475 )2,929,179 )

128,605 )$ 20,326,934

TRANSCEND INFORMATION, INC.
PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS(Expressed in thousands of New Taiwan Dollars)
Years ended December 31
2016
2015
CASH FLOWS FROM OPERATING ACTIVITIESProfit before tax
Adjustments
Adjustments to reconcile profit (loss)
Unrealized gross profit on sales to subsidiaries
Realized gross profit on sales to subsidiaries
Net loss on financial assets at fair value through profit or loss
Loss (gain) on disposal of financial assets
Share of (gain) loss of associates and joint ventures accounted for using
equity method
Provision for bad debt expense
Net (gain) loss on financial liabilities at fair value through profit or loss
Depreciation
Interest income
Interest expense
Dividend income
Loss on disposal of property, plant and equipment
Changes in operating assets and liabilities
Changes in operating assets
Notes and accounts receivable
Other receivables
Inventories
Other current assets, others
Changes in operating liabilities
Notes and accounts payable
Other payables
Other payables - related parties
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Cash dividends received
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities$

3,166,115

94,54834,559 )15,7689,100((

46,023 )1,392
13 )127,654
119,234 )
1,631
8,574 )
184

(
(
(

(
(
(

(

(
(

$

34,55970,857 )
37,777
343 )

(
(

2,415
3,550
13
133,619
136,145 )
1,657
11,016 )-((91,635 )1,186 )
599,778 )
3,088(

210,379
37,078238
2,032
34,136 )2,734,069
312,775
107,924
1,631 )
540,595 )2,612,542((((

171,722 )2,795,477 )((3,529,138

40,750 )118,351
1,822,485
1,393 )(

2,707,842 )
52,229 )902 )1,308 )
759
2,661,538
1,170,843
143,085
1,657 )
508,078 )3,465,731((

CASH FLOWS FROM INVESTING ACTIVITIES
Increase in other current financial assets
Acquisition of investment in debt instrument without active markets
Proceeds from disposal of investment in debt instrument without active
markets
Acquisition of property, plant and equipment (including investment
property)
Proceeds from disposal of property, plant and equipment(Increase) decrease in other current financial assets
Net cash flows from (used in) investing activities((

2,383,359 )
751,339 )3,027,999(((

729,290

60,030 )90
31,627 )
30,767 )(492,375 )2,929,179 )
3,421,554 )
839,779 )2,400,616
1,560,837((((

51,853 )42,3492,414,912 )(CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings
Payment of cash dividends
Net cash flows used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

(
(
(
(
$

$

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

~20~

14,025 )3,359,941 )
3,373,966 )
2,323,147 )
4,723,763
2,400,616

Attachment IV
REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE
PWCR16000236
To the Board of Directors and Shareholders of Transcend Information, Inc.

OpinionWe have audited the accompanying consolidated balance sheets of Transcend Information, Inc. and its
subsidiaries (the “Group”) as at December 31, 2016 and 2015, and the related consolidated statementsof comprehensive income, of changes in equity and of cash flows for the years then ended, and notes
to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at December 31, 2016 and 2015, and its
consolidated financial performance and its consolidated cash flows for the years then ended inaccordance with the “Regulations Governing the Preparations of Financial Reports by Securities
Issuers” and the International Financial Reporting Standards, International Accounting Standards,
IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion
We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of
Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the
Republic of China (ROC GAAS). Our responsibilities under those standards are further described in
the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of ourreport. We are independent of the Group in accordance with the Code of Professional Ethics for
Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our otherethical responsibilities in accordance with the Code. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
~21~

Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in
the context of our audit of the consolidated financial statements as a whole and, in forming our opinion
thereon, we do not provide a separate opinion on these matters.
Evaluation of inventories
Description
Please refer to Notes 4(9), 5(2) and 6(5) to the consolidated financial statements for the details of theinformation about Group’s inventory accounting policy, estimates and assumption and allowance forinventory evaluation losses.
The percentage of the Group’s inventories in total assets is material and the Group applies judgments
and estimates in determing the net realizable value of inventories on balance sheet date. The Group
mainly produces DRAM and flash memory, and due to those products having short life cycle andbelong to a highly competitive industry, the market prices change frequently. Since the Group’s
inventories and the allowance for inventories evaluation losses are material to its financial statements,
the evaluation of inventories has been identified as a key audit matter.
How our audit addressed the matter
Our audit procedures performed in respect of the above key audit matter included the following:
A. Obtained an understanding of the Group’s operation and industry. Assessed the reasonableness ofthe policy and procedures to recognise allowance for inventory evaluation losses.
B. Obtained an understanding of the Group’s inventory control procedures. Reviewed annual
inventory count plan and observed the annual physical count of inventory in order to assess theeffectiveness of inventory internal control.
C. Obtained relevant evaluation reports of inventory and tested the logic and accuracy of information
to assess the reasonableness of allowance for inventory evaluation losses.

~22~Estimation of allowance for sales discountDescription
In consideration of business volume, the Group provides a variety of business incentives to specificcustomers or products, and based on that, the Group can estimate the allowance for sales discountmonthly. Please refer to Note 6(4) to the consolidated financial statements for the details of theinformation about estimation of allowance for sales allowance.
Since the contracts are numerous and the result could affect the net revenue in the consolidated
financial statements, the estimation of allowance for sales discount has been identified as a key audit
matter.
How our audit addressed the matter
Our audit procedures performed in respect of the above key audit matter included the following:
A. Obtained an understanding of the Group’s operation, industry and the procedure to recognise
allowance for sales discount.
B. Obtained an understanding of the Group’s sales procedures and interviewed management to assess
the appropriateness of sales allowance contracts and internal control on estimation of allowance.
C. Obtained the evaluation list of allowance for sales discount, and tested material sales allowance
contracts and recalculated it to assess the reasonableness of allowance in the Group’s
determination.
Other matter –Parent company only financial reports
We have audited and expressed an unqualified opinion on the parent company only financial
statements of Transcend Information, Inc. as at and for the years ended December 31, 2016 and 2015.

~23~

Responsibilities of management and those charged with governance for the consolidated financial
statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with the “Regulations Governing the Preparations of Financial Reports by
Securities Issuers” and the International Financial Reporting Standards, International AccountingStandards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory
Commission, and for such internal control as management determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing theGroup’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including audit committee, are responsible for overseeing the Group’s
financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with ROC GAAS will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
~24~











override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group tocease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.

~25~

From the matters communicated with those charged with governance, we determine those matters thatwere of most significance in the audit of the consolidated financial statements of the current period andare therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of such
communication.

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results ofoperations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions otherthan the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of suchfinancial statements may differ from those generally accepted in countries and jurisdictions other than the Republic ofChina. Accordingly, the accompanying consolidated financial statements and report of independent accountants are notintended for use by those who are not informed about the accounting principles or auditing standards generally accepted in
the Republic of China, and their applications in practice.
As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability
for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from thetranslation.

~26~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Expressed in thousands of New Taiwan Dollars)
December 31, 2016
AMOUNT%

Assets

December 31, 2015
AMOUNT%

Current assets
Cash and cash equivalents$

1,842,670

8-

active market - current
Notes receivable, net$

2,663,362

11-

15,768-366,2952

897,180

4

5,348

-

959

-

2,841,228

12

3,203,340

13

Accounts receivable- related parties, net

21,369

-

9,347

-

Other receivables

146,6191

129,031

1

Inventories

5,166,821

23

4,513,756

19

Other current financial assets

8,702,590

38

8,532,006

35

Other current assets, others

36,389-52,486-

19,129,329

84

20,017,235

83

179,5801

184,304

1

282,6101

317,55512,740,210

12

2,995,091

13

Investment property, net

277,316

1

290,5811

Deferred tax assets

77,759-72,777-

Other non-current assets

204,2501

185,7061

Non-current Assets

3,761,725

16

4,046,014

17

22,891,054

100

24,063,249

100

Financial assets at fair value through profit
or loss - current
Investment in debt instrument without

Accounts receivable, net

Current Assets
Non-current assets
Available-for-sale financial assets non-current
Investments accounted for using equity
methodProperty, plant and equipment

Total Assets$(Continued)

~27~

$

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Expressed in thousands of New Taiwan Dollars)
December 31, 2016
AMOUNT%

Liabilities and Equity

December 31, 2015
AMOUNT%

Current liabilities
Short-term borrowings

$

-

-

-

$

901,425

4

-

13

-

1,740,266

8

1,589,1127

Accounts payable - related parties

48,218-58,560-

Other payables

390,5332

366,932

2

Current tax liabilities

96,138-280,861

1

Other current liabilities

44,415-36,092-Current Liabilities

2,319,570

10

3,232,995

14

Deferred tax liabilities

167,8171

259,348

1

Other non-current liabilities

76,733-

68,825-

Non-current Liabilities

244,5501

328,17312,564,120

11

3,561,168

15

4,307,617

19

4,307,617

18

4,799,075

21

4,799,075

20

Legal reserve

3,748,946

16

3,426,756

14

Special reserve

21,691---

7,595,294

33

7,990,324

33

21,691)-

20,502,081

85

24,063,249

100

Financial liabilities at fair value throughprofit or loss - current
Accounts payableNon-current liabilities

Total Liabilities
Equity attributable to owners of parent
Share capital
Common stock
Capital surplus
Capital surplus
Retained earnings

Unappropriated retained earnings
Other equity interest
Other equity interest(

145,689)

Total Equity- (20,326,934

89

22,891,054

100

Significant contingent liabilities andunrecognized contract commitments
Significant events after the balance sheet
date
Total Liabilities and Equity$$

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

~28~

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

Items
Operating Revenue
Operating Costs
Gross Profit
Operating Expenses
Sales and marketing expenses
Administrative expenses
Research and development expenses
Total operating expenses
Operating Profit
Non-operating Income and Expenses
Other income
Other gains and losses
Finance costs
Share of loss of associates and joint
ventures accounted for under equity
methodTotal non-operating income andexpensesProfit before Income Tax
Income tax expense
Profit for the Year
Other Comprehensive Income
Components of other comprehensive
income that will not be reclassified to
profit or loss
Losses on remeasurements of defined
benefit plans
Share of other comprehensive income ofassociates and joint ventures accounted forunder equity method, components of othercomprehensive income that will not bereclassified to profit or loss
Components of other comprehensive
income that will be reclassified to profit
or loss
Exchange differences on translation offoreign financial statements
Unrealized loss on available-for-salefinancial assets
Income tax related to components of othercomprehensive income that will bereclassified to profit or loss
Total Comprehensive Income
Net Profit attributable to:
Owners of parent
Comprehensive Income attributable to:
Owners of parent
Earnings Per Share
Basic earnings per share
Diluted earnings per share

$
(

(
(
(
(

Year ended December 31
2016
2015
AMOUNT%AMOUNT
22,104,915
100 $
24,913,287
17,153,222) (78) (20,211,736) (4,951,693
22
4,701,551

%
100
81)
19

1,089,435) (403,824) (150,689)
1,643,948) (3,307,745

5) (
2) (
- (
7) (
15

1,096,006) (419,887) (134,062) (1,649,955) (3,051,596

4)
2)
1)
7)
12

(
(

138,978
166,253) (2,502)

11)- (162,637
517,669
3,636)

1
2-(

34,601)- (15,038)-($64,378)3,243,367
360,730) (2,882,637

15
2) (
13 $

661,632
3,713,228
491,326) (3,221,902

3
15
2)
13

($

4,263)- ($2,283)

-

(

344)

-

-

-

(

143,703) (1) (33,575)-(

4,724)- (48,335)-($24,4292,754,032

12

$

5,708
3,143,417

13$

2,882,637

13$

3,221,902

13$

2,754,032

12$

3,143,417

13

6.69
6.68

$
$

$
$

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

~29~

7.48
7.47

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Expressed in thousands of New Taiwan Dollars)
Equity attributable to owners of the parent
Retained Earnings

Capital Reserves

Common stock

Additional
paid-in capital

Donated assets
receive

Net assets
from merger

Legal reserve

$

$

$

$

$

Unappropriatedretained earnings

Other equity interest
Exchangedifferences on
Unrealized gaintranslation ofor loss on
foreign financial
available-for-salestatements
financial assets

Total equity

-

$

$

$ 20,718,605

SpecialreserveYear ended December 31, 2015
Balance at January 1, 2015

4,307,617

4,759,841

4,106

35,1283,053,235$

8,504,167

104,927($

50,416 )Appropriations of 2014 earnings
Legal reserve

-

-

-

-

373,521-(373,521 )--Cash dividends(

3,359,941 )--

3,221,902--

27,867 ) (48,335 ) (

-

-

-

-

-

-

Net income for the year

-

-

-

-

-

-

Other comprehensive loss for the
year

-

-

-

-

-

-

(

Balance at December 31, 2015

2,283 ) ((3,359,941 )
3,221,902
78,485 )$4,307,617$

4,759,841

$

4,106

$

35,128$3,426,756$-$

7,990,324$

77,060($98,751 )$ 20,502,081$

4,307,617$

4,759,841

$

4,106

$

35,128$3,426,756$-$

7,990,324$

77,060($98,751 )$ 20,502,081

Year ended December 31, 2016
Balance at January 1, 2016
Appropriation of 2015 earnings
Legal reserve

-

-

-

-

322,190-(322,190 )---Special reserve

-

-

-

-

-

21,691(

21,691 )---Cash dividends(

2,929,179 )--

2,882,637--

119,274 ) (4,724 ) (

-

-

-

-

-

-

Net income for the year

-

-

-

-

-

-

Other comprehensive loss for the
year

-

-

-

-

-

-

(

21,691$

Balance at December 31, 2016$

4,307,617$

4,759,841

$

4,106

$

35,128$3,748,946$

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

~30~

4,607 ) (7,595,294($

42,214 ) ($103,475 )(2,929,179 )
2,882,637
128,605 )$ 20,326,934

TRANSCEND INFORMATION, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of New Taiwan Dollars)
Years ended December 31
2016
2015
CASH FLOWS FROM OPERATING ACTIVITIESProfit before tax
Adjustments
Adjustments to reconcile profit (loss)
Net loss on financial assets at fair value through profit or loss
Loss (gain) on disposal of financial assets
Share of loss of associates and joint ventures accounted for using equity
methodProvision for bad debt expense
Net (gain) loss on financial liabilities at fair value through profit or loss
Depreciation
Interest income
Interest expense
Dividend income
Loss on disposal of property, plant and equipment
Changes in operating assets and liabilities
Changes in operating assets
Notes receivable
Accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Other current assets, others
Changes in operating liabilities
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Cash dividends received
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities$

3,243,367

15,7689,100
34,6011,449
13 )
229,566
120,589 )2,502
8,574 )
289

(
(
(

(
(
(
(

(

(
(

$

37,7784,888 )(

15,0382,549
13243,897
143,861 )3,636
11,016 )960((

4,389 )
361,242
12,022 )968 )653,065 )
16,097(((

151,154
10,342 )23,601
8,323
3,645
3,290,742
8,574
109,279
2,502 )
622,848 )2,783,245

(
(
(
(
(

170,584 )2,795,477 )((

3,713,228

959 )
213,426 )
9,347 )
118,240
1,851,231
7,971 )(

8)
1,613,419 )
15,625 )108,120 )23,971 )12,351
3,846,310
11,016
179,906
3,636 )
731,172 )3,302,424((

CASH FLOWS FROM INVESTING ACTIVITIES
Increase in other current financial assets
Acquisition of investment in debt instrument without active markets
Proceeds from disposal of investment in debt instrument without active
markets
Acquisition of property, plant and equipment (including investment
property)
Proceeds from disposal of property, plant and equipment(Increase) decrease in other current financial assets
Net cash flows from (used in) investing activities((

2,202,894 )
1,722,585 )

3,309,487((

1,463,601

47,607 )147
18,544 )277,422(940,725 )2,929,179 )
3,869,904 )
11,455 )820,692 )2,663,362
1,842,670

(
(
(
(
(

87,083 )381
48,5322,500,048 )(CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings
Payment of cash dividends
Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

(
(
(
(
(
$

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

~31~

$

14,025 )3,359,941 )
3,373,966 )
1,280 )
2,572,870 )
5,236,232
2,663,362

Attachment V
TRANSCEND INFORMATION INC.
COMPARISON TABLE FOR THE “PROCEDURES FOR ACQUISITION AND DISPOSAL OF ASSETS”
Proposed Amendment

Currently in EffectExplanation

Article 3：Scope of assets

Article 3：Scope of assets

Modify wording to comply

1. Investments in stocks, government bonds,

1. Long-term and Short-term investments inwith “Regulations Governing

corporate bonds, financial bonds, securities

stocks, government bonds, corporate bonds,

the Acquisition and Disposal

representing interest in a fund, depositaryfinancial bonds, securities representing interestof Assets by Public

receipts, call (put) warrants, beneficial interestin a fund, depositary receipts, call (put)Companies”.

securities, and asset-backed securities.

warrants, beneficial interest securities, and(omitting)asset-backed securities.
(omitting)

Article 8：Operating procedures

Article 8：Operating procedures

Modify wording to comply(omitting)(omitting)with “Regulations Governing

3. The responsible unit for implementation of

3. The responsible unit for implementation of

the Acquisition and Disposal

Long-term and Short-term investments inLong-term and Short-term investments inof Assets by Public

securities is financial department; and of Realsecurities is financial department; and of Real

Companies”.

property and other fixed assets is the unit

property and other fixed assets is the unit

specifically responsible for such matters. Other

specifically responsible for such matters. Other

assets should be appraised by the responsible

assets should be appraised by the responsible

unit before implement.

unit before implement.

(omitting)(omitting)

Article 9：Authority to approve

Article 9：Authority to approve

The Company proposes to

In acquiring and disposing of assets, except in

In purchasing and selling of Long-term andamend the “Procedures for

trading of bonds under repurchase and resale

Short-term investments in securities, theAcquisition or Disposal ofagreements, or subscription or redemption ofCompany shall submit the transaction to

Assets” to comply withmoney market funds issued by domestic

President and Chairman for approval. If theamendment to “Regulations

securities investment trust enterprises, whichtransaction amount reaches 20 percent of theGoverning Acquisition or

should be approved by financial supervisor, thecompany's paid-in capital or NT$300 million or

Disposal of Assets by PublicCompany shall submit the transaction tomore, it shall be submitted to Board for

Companies”, and to fit with

President or Chairman for approval. In

approval.

the Company’s practicalacquiring or disposing of real property from or

operation.

to a related party, or assets other than real
property from or to a related party and thetransaction amount reaches 20 percent or moreof paid-in capital or NT$300 million or more,
except in trading of bonds under repurchase andresale agreements, or subscription orredemption of money market funds issued by~32~

Proposed Amendment

Currently in EffectExplanation

domestic securities investment trust enterprises,
the Company shall submit the transaction to
Audit Committee and Board for approval.
Article 10：In acquiring or disposing of real

Article 10：In acquiring or disposing of real

Modify Chinese wording toproperty or equipment where the transaction

property or equipment where the transaction

comply with “Regulations

amount reaches 20 percent of the company's

amount reaches 20 percent of the company's

Governing the Acquisition

paid-in capital or NT$300 million or more, thepaid-in capital or NT$300 million or more, theand Disposal of Assets bycompany, except transacting with a government

company, except transacting with a government

Public Companies”.

agency, engaging others to build on its own

agency, engaging others to build on its own

land, engaging others to build on rented land, orland, engaging others to build on rented land, or

acquiring or disposing of equipment for

acquiring or disposing of equipment forbusiness use, shall obtain an appraisal reportbusiness use, shall obtain an appraisal reportprior to the date of occurrence of the event fromprior to the date of occurrence of the event froma professional appraiser and shall further

a professional appraiser and shall further

comply with thecomply with thefollowing provisions:following provisions:(omitting)(omitting)

Article 11：The procedures for Acquisition or

Article 11：The procedures for Acquisition or

The Company proposes to

Disposal of Investments in Securities

Disposal of Investments in Securities

amend the “Procedures for

In acquiring or disposing of Securities, shall,

In acquiring or disposing of Securities, except

Acquisition or Disposal ofprior to the date of occurrence of the event,when in compliance with the following, shall,

Assets” to comply withobtain financial statements of the issuing

prior to the date of occurrence of the event,amendment to “Regulations

company for the most recent period, certified or

obtain financial statements of the issuing

Governing Acquisition orreviewed by a certified public accountant, forcompany for the most recent period, certified or

Disposal of Assets by Public

reference in appraising the transaction price,reviewed by a certified public accountant, forCompanies”, and to fit withand if the transaction amount reaches 20 percent

reference in appraising the transaction price,

the Company’s practicalof the company's paid-in capital or NT$300

and if the transaction amount reaches 20 percent

operation.

million or more, the company shall additionallyof the company's paid-in capital or NT$300

engage a certified public accountant prior to themillion or more, the company shall additionallydate of occurrence of the event to provide an

engage a certified public accountant prior to theopinion regarding the reasonableness of thedate of occurrence of the event to provide antransaction price. If the CPA needs to use theopinion regarding the reasonableness of thereport of an expert as evidence, the CPA shalltransaction price:

do so in accordance with the provisions of

1. Securities acquired through cash contribution

Statement of Auditing Standards No. 20

in an incorporation by promotion or by public

published by the ARDF. This requirement does

offering.

not apply, however, to publicly quoted prices of

2. Securities issued at face value by an issuing

securities that have an active market, or wherecompany carrying out a cash capital increase in~33~

Proposed Amendment

Currently in Effectotherwise provided by regulations of theaccordance with relevant laws and regulations,

Financial Supervisory Commission (FSC).

with this Corporation as a sponsor of the issue.
3. Securities issued by an investee company
wholly invested by this Corporation that is
carrying out a cash capital increase, with thisCorporation as a sponsor of the issue.
4. Securities listed and traded on the Taiwan
Stock Exchange (TWSE) or on the GreTai
Securities Market (GTSM) and emerging
stocks.
5. Government bonds or bonds in repurchase or
reverse purchase agreements.
6. Domestic funds or overseas funds.
7. TWSE or GTSM listed securities acquired or
disposed of in accordance with the TWSE or
GTSM rules governing the purchase of listed
securities by reverse auction or rules governing
the auction of listed securities.
8. Securities acquired through thisCorporation’s sponsorship of a cash capitalincrease by a public company, when the
securities acquired are not privately placed.
9. Subscription to fund shares before theestablishment of a fund in accordance with
Article 11, paragraph 1 of the Securities
Investment Trust and Consulting Act and the
Financial Supervisory Commission's 1
November 2004 Order No.
Financial-Supervisory-Securities-IV-093000524
9.
10. Subscription or redemption of domestic
private placement funds, provided that the trust
agreement for the fund specifies an investment
strategy in which, aside from securities margintransactions and open positions held insecurities-related products, the investment
scope of the remaining portion is the same asthat of a publicly offered fund.

~34~

Explanation

Proposed Amendment

Currently in EffectExplanation

Article 12：The procedures for Related Party

Article 12：The procedures for Related Party

Modify wording to comply

Transactions

Transactions

with “Regulations Governing(omitting)(omitting)

the Acquisition and Disposal

3. Appraisal and Operating procedures

3. Appraisal and Operating proceduresof Assets by Public

In acquiring or disposing of real property fromIn acquiring or disposing of real property from

Companies”.

or to a related party, or assets other than realor to a related party, or assets other than real

property from or to a related party and theproperty from or to a related party and thetransaction amount reaches 20 percent or moretransaction amount reaches 20 percent or moreof paid-in capital or NT$300 million or more,of paid-in capital or NT$300 million or more,

except in trading of bonds under repurchase andexcept in trading of bonds under repurchase andresale agreements, or subscription or

resale agreements, or subscription orredemption of money market funds issued byredemption of domestic money market funds,

domestic securities investment trust enterprises,

the company may not proceed to enter into a

the company may not proceed to enter into atransaction contract or make a payment until thetransaction contract or make a payment until thefollowing matters have been approved by thefollowing matters have been approved by the

Audit Committee and the Board:

Audit Committee and the Board:(omitting)(omitting)
Article 13：The procedures for acquisition or

Article 13：The procedures for acquisition or

Modify Chinese wording todisposition of memberships and intangible

disposition of memberships and intangible

comply with “Regulations

assetsassetsGoverning the Acquisition

In acquiring or disposing of memberships or

In acquiring or disposing of memberships or

and Disposal of Assets byintangible assets where the transaction amountintangible assets where the transaction amountPublic Companies”.

reaches 20 percent of the company's paid-in

reaches 20 percent of the company's paid-in

capital or NT$300 million or more, thecapital or NT$300 million or more, thecompany, except transacting with a government

company, except transacting with a government

agency, the company shall additionally engage

agency, the company shall additionally engage

a certified public accountant prior to the date ofa certified public accountant prior to the date ofoccurrence of the event to provide an opinion

occurrence of the event to provide an opinion

regarding the reasonableness of the transaction

regarding the reasonableness of the transaction

price. CPA shall do so in accordance with theprice. CPA shall do so in accordance with theprovisions of Statement of Auditing Standards

provisions of Statement of Auditing Standards

No. 20 published by the ARDF.

No. 20 published by the ARDF.

Article 16: The procedures for assets in

Article 16: The procedures for assets in

Modify wording to comply

connection with mergers, demergers,

connection with mergers, demergers,

with “Regulations Governing

acquisitions, or transfer of sharesacquisitions, or transfer of shares

the Acquisition and Disposal

1. Appraisal and Operating procedures

1. Appraisal and Operating proceduresof Assets by Public(1) The Company that conducts a merger,(1) The Company that conducts a merger,

Companies”.

~35~Proposed Amendment

Currently in Effectdemerger, acquisition, or transfer of shares,

demerger, acquisition, or transfer of shares,

prior to convening the board of directors toprior to convening the board of directors toresolve on the matter, shall engage a CPA,

resolve on the matter, shall engage a CPA,

attorney, or securities underwriter to give anattorney, or securities underwriter to give an

opinion on the reasonableness of the shareopinion on the reasonableness of the shareexchange ratio, acquisition price, or distribution

exchange ratio, acquisition price, or distributionof cash or other property to shareholders, andof cash or other property to shareholders, andsubmit it to the board of directors for

submit it to the board of directors fordeliberation and passage. However, thedeliberation and passage.

requirement of obtaining an aforesaid opinion(omitting)

Explanation

on reasonableness issued by an expert may be
exempted in the case of a merger by a publiccompany of a subsidiary in which it directly or
indirectly holds 100 percent of the issued sharesor authorized capital, and in the case of amerger between subsidiaries in which the publiccompany directly or indirectly holds 100
percent of the respective subsidiaries’ issued
shares or authorized capital.
(omitting)
Article 19：Information Disclosure Procedures

Article 19：Information Disclosure Procedures

Modify wording to comply

The items and standards, time limits, and

1. Items and standards of public announcementwith “Regulations Governing

procedures of public announcement andand regulatory filing

the Acquisition and Disposal

regulatory filing for acquisition or disposal of(1) Acquisition or disposal of real property fromof Assets by Public

assets shall comply with the regulations

or to a related party, or assets other than realCompanies”.

prescribed by the supervisory authorities.

property from or to a related party and thetransaction amount reaches 20 percent or moreof paid-in capital or NT$300 million or more,
except in trading of government bonds, bonds
under repurchase and resale agreements, or
subscription or redemption of domestic money
market funds.
(2) Merger, demerger, acquisition, or transfer ofshares.
(3) Losses from derivatives trading reaching thelimits on aggregate losses or losses on
individual contracts set out in the procedures
adopted by the company.

~36~

Proposed Amendment

Currently in Effect(4) Where an asset transaction other than any of
those referred to in the preceding threesubparagraphs, a disposal of receivables by afinancial institution, or an investment in themainland China area reaches 20 percent or moreof paid-in capital or NT$300 million or more;
except the following:
A. Trading of government bonds.
B. Securities trading by investment
professionals on foreign or domestic securities
exchanges or over-the-counter markets, or
subscription of securities by a securities firm,
either in the primary market in accordance with
relevant regulations.
C. Trading of bonds under repurchase andresale agreements, or subscription orredemption of domestic money market funds.
D. The type of asset acquired or disposed isequipment for business use, the trading
counterparty is not a related party, and thetransaction amount does not reach NT$500
million or more.
E. Where land is acquired under an arrangement
on engaging others to build on the company's
own land, engaging others to build on rented
land, joint construction and allocation of
housing units, joint construction and allocationof ownership percentages, or joint construction
and separate sale, and the amount the company
expects to invest in the transaction does notreach NT$500 million or more.
(5) The amount of transactions above shall becalculated as follows; and "Within thepreceding year" as used in the following
paragraph refers to the year preceding the dateof occurrence of the current transaction. Items
duly announced in accordance with theseregulations need not be counted toward the~37~

Explanation

Proposed Amendment

Currently in Effecttransaction amount.
A. The amount of any individual transaction.
B. The cumulative transaction amount ofacquisitions and disposals of the same type ofunderlying asset with the same trading
counterparty within the preceding year.
C. The cumulative transaction amount of real
property acquisitions and disposals (cumulativeacquisitions and disposals, respectively) within
the same development project within thepreceding year.
D. The cumulative transaction amount ofacquisitions and disposals (cumulativeacquisitions and disposals, respectively) of thesame security within the preceding year.
2. Time limits of public announcement andregulatory filing
Acquisition and disposal of assets existing
public announcement item referred to thepreceding paragraph, and the transaction
amount reaches the standards of publicannouncement of this Article, the Company
shall make public announcements and file thereports within 2 days counting inclusively fromthe date of occurrence of the event.
3. Procedures of public announcement andregulatory filing(1) The Company shall publicly announce andreport the relevant information on the FSC's
designated website.
(2) The Company shall compile monthly reportson the status of derivatives trading engaged in
up to the end of the preceding month by itself
and any subsidiaries that are not domestic
public companies and enter the information in
the prescribed format into the information
reporting website designated by the FSC by the10th day of each month.

~38~

Explanation

Proposed Amendment

Currently in Effect(3) When the Company at the time of publicannouncement makes an error or omission in an
item required by regulations to be publicly
announced and so is required to correct it, all
the items shall be again publicly announced andreported in their entirety.
(4) The Company acquiring or disposing ofassets shall keep all relevant contracts, meeting
minutes, log books, appraisal reports and CPA,
attorney, and securities underwriter opinions at
the company headquarters, where they shall be
retained for 5 years except where another act
provides otherwise.
(5) Where any of the following circumstances
occurs with respect to a transaction that theCompany has already publicly announced andreported in accordance with the precedingarticle, a public report of relevant information
shall be made on the information reporting
website designated by the FSC within 2 days
counting inclusively from the date ofoccurrence of the event:A. Change, termination, or rescission of acontract signed in regard to the originaltransaction.
B. The merger, demerger, acquisition, ortransfer of shares is not completed by thescheduled date set forth in the contract.
C. Change to the originally publicly announced
and reported information.

~39~

Explanation

Attachment VI
TRANSCEND INFORMATION INC.
THE NOMINATION LIST OF THE DIRECTOR(NON-INDEPENDENT DIRECTOR)
Name

Education

Experience

Present position

Institute of Power

Chief sales officer of Transcend

Mechanical Engineering,

Information. Inc.

Vice President of Sales of

National Tsing Hua

Purchasing Director of Transcend

Transcend Information. Inc.

University

Information Inc.

LIN, CHIN-YU

Shares3,103~40~