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

 

November 22, 2016

 

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  ☒       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 ☒

 

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: November 22, 2016	By:	/s/ Joseph Tung
	Name:	Joseph Tung
	Title:	Chief Financial Officer

 

EXHIBIT INDEX

 

Exhibit No.	Description
Exhibit 99.1	Unaudited Condensed Consolidated Interim Financial Statements
Exhibit 99.2	Discussion of Interim Financial Results as of and for the Nine-Month Period Ended September 30, 2016

 

EXHIBIT 99.1

 

 

 

 

 

 

Advanced Semiconductor Engineering, Inc. and Subsidiaries   Condensed Consolidated Financial Statements for the Nine Months Ended September 30, 2015 and 2016

 

 

 

 

 

 

 

 

 

 

 

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS 

(Amounts in Thousands) 
(Unaudited)

 

		December 31,
		2015 (Adjusted)				September 30, 2016
ASSETS		NT$				NT$				US$ (Note 4)
CURRENT ASSETS
Cash and cash equivalents (Notes 4 and 6)		$	55,251,181			$	37,661,420			$	1,204,395
Financial assets at fair value through profit or loss -
current (Notes 4, 5 and 7)			3,833,701				813,831				26,026
Available-for-sale financial assets - current (Notes 4
and 8)			30,344				70,092				2,241
Trade receivables, net (Notes 4 and 9)			44,931,487				52,009,578				1,663,242
Other receivables (Notes 4)			429,541				936,417				29,946
Current tax assets (Note 4)			168,717				275,770				8,819
Inventories (Notes 4, 5 and 10)			23,258,279				23,635,153				755,841
Inventories related to real estate business (Notes 4, 5,
11, 23 and 34)			25,713,538				24,141,398				772,031
Other financial assets - current (Notes 4, 12 and 34)			301,999				1,047,303				33,492
Other current assets			2,814,053				2,778,234				88,847
Total current assets			156,732,840				143,369,196				4,584,880
NON-CURRENT ASSETS
Available-for-sale financial assets - non-current
(Notes 4 and 8)			924,362				1,103,939				35,303
Investments accounted for using the equity
method (Notes 4 and 13)			37,122,244				49,573,614				1,585,341
Property, plant and equipment (Notes 4, 5, 14, 23,
and 35)			149,997,075				145,208,855				4,643,711
Goodwill (Notes 4, 5 and 15)			10,506,519				10,512,448				336,183
Other intangible assets (Notes 4, 5, 16 and 23)			1,382,093				1,704,669				54,515
Deferred tax assets (Notes 4, 5 and 24)			5,156,515				5,236,508				167,461
Other financial assets - non-current (Notes 4, 12 and 34)			345,672				1,355,254				43,340
Long-term prepayments for lease (Note 17)			2,556,156				2,382,424				76,189
Other non-current assets			263,416				238,979				7,643
Total non-current assets			208,254,052				217,316,690				6,949,686
TOTAL		$	364,986,892			$	360,685,886			$	11,534,566

 

(Continued)

 

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS 

(Amounts in Thousands) 
(Unaudited)

 

		December 31,
		2015 (Adjusted)				September 30, 2016
LIABILITIES AND EQUITY		NT$				NT$				US$ (Note 4)
CURRENT LIABILITIES
Short-term borrowings (Note 18)		$	32,635,321			$	31,008,127			$	991,625
Short-term bills payable (Note 18)			4,348,054				1,999,342				63,938
Financial liabilities at fair value through profit or
loss -  current (Notes 4, 5 and 7)			3,005,726				3,953,520				126,432
Trade payables			34,138,564				37,856,245				1,210,625
Other payables (Note 20)			19,194,818				19,875,189				635,599
Current tax liabilities (Note 4)			6,746,022				5,622,933				179,819
Advance real estate receipts (Note 4)			2,703,706				530,873				16,977
Current portion of bonds payable (Notes 4 and 19)			14,685,866				9,384,865				300,124
Current portion of long-term borrowings (Notes 18
and 34)			2,057,465				6,272,817				200,602
Other current liabilities			3,180,767				3,500,698				111,950
Total current liabilities			122,696,309				120,004,609				3,837,691
NON-CURRENT LIABILITIES
Bonds payable (Notes 4 and 19)			23,740,384				26,871,735				859,346
Long-term borrowings (Notes 18 and 34)			42,493,668				43,941,187				1,405,219
Deferred tax liabilities (Notes 4, 5 and 24)			4,987,549				4,815,903				154,010
Net defined benefit liabilities (Notes 4, 5 and 21)			4,072,493				4,181,619				133,726
Other non-current liabilities			1,071,509				1,202,643				38,460
Total non-current liabilities			76,365,603				81,013,087				2,590,761
Total liabilities			199,061,912				201,017,696				6,428,452
EQUITY ATTRIBUTABLE TO OWNERS OF THE
COMPANY (Notes 4 and 22)
Share capital			79,185,660				79,509,050				2,542,662
Capital surplus			23,758,550				22,463,403				718,369
Retained earnings (Note 13)
Legal reserve			12,649,145				14,597,032				466,806
Special reserve			3,353,938				3,353,938				107,257
Unappropriated earnings			37,696,865				37,636,002				1,203,582
Total retained earnings			53,699,948				55,586,972				1,777,645
Other equity			5,080,790				(1,656,289	)			(52,967	)
Treasury shares			(7,292,513	)			(7,292,513	)			(233,211	)
Equity attributable to owners of the Company			154,432,435				148,610,623				4,752,498
NON-CONTROLLING INTERESTS (Notes 4 and 22)			11,492,545				11,057,567				353,616
Total equity			165,924,980				159,668,190				5,106,114
TOTAL		$	364,986,892			$	360,685,886			$	11,534,566

 

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

(Concluded)

 

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 

(Amounts in Thousands Except Earnings Per Share) 
(In Thousands of New Taiwan Dollars)
(Unaudited)

 

		For the Nine Months Ended September 30
		2015				2016
		NT$				NT$				US$ (Note 4)
OPERATING REVENUES (Note 4)		$	207,754,374			$	197,755,474			$	6,324,128
OPERATING COSTS (Notes 10, 21 and 23)			170,888,018				159,938,375				5,114,754
GROSS PROFIT			36,866,356				37,817,099				1,209,374
OPERATING EXPENSES (Notes 21 and 23)
Selling and marketing expenses			2,675,081				2,569,312				82,165
General and administrative expenses			7,983,571				8,371,727				267,724
Research and development expenses			8,124,096				8,300,488				265,446
Total operating expenses			18,782,748				19,241,527				615,335
OTHER OPERATING INCOME AND
EXPENSES (Notes 14 and 23)			(71,567	)			(704,251	)			(22,522	)
PROFIT FROM OPERATIONS			18,012,041				17,871,321				571,517
NON-OPERATING INCOME AND
EXPENSES
Other income (Note 23)			380,869				411,965				13,175
Other gains and losses (Note 23)			2,043,171				734,066				23,475
Finance costs (Note 23)			(1,698,197	)			(1,746,585	)			(55,855	)
Share of profit (loss) of associates and joint
ventures (Note 4)			(12,964	)			1,178,707				37,694
Total non-operating income and expenses			712,879				578,153				18,489
PROFIT BEFORE INCOME TAX			18,724,920				18,449,474				590,006
INCOME TAX EXPENSE (Notes 4, 5 and 24)			2,575,894				3,229,968				103,293
PROFIT FOR THE PERIOD			16,149,026				15,219,506				486,713

 

(Continued)

 

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 

(Amounts in Thousands Except Earnings Per Share) 
(In Thousands of New Taiwan Dollars)
(Unaudited)

 

 

		For the Nine Months Ended September 30
		2015				2016
		NT$				NT$				US$ (Note 4)
OTHER COMPREHENSIVE INCOME (LOSS)
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on translating
foreign operations		$	1,369,630			$	(6,743,531	)		$	(215,655	)
Unrealized loss on available- for-sale  financial
assets			(22,413	)			(52,969	)			(1,694	)
Share of other comprehensive loss of
associates and joint ventures accounted
for using the equity method			(62,823	)			(535,044	)			(17,110	)
			1,284,394				(7,331,544	)			(234,459	)
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD		$	17,433,420			$	7,887,962			$	252,254
NET PROFIT ATTRIBUTABLE TO:
Owners of the Company		$	15,505,955			$	14,369,687			$	459,536
Non-controlling interests			643,071				849,819				27,177
		$	16,149,026			$	15,219,506			$	486,713
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Owners of the Company		$	16,679,450			$	7,632,608			$	244,087
Non-controlling interests			753,970				255,354				8,167
		$	17,433,420			$	7,887,962			$	252,254
EARNINGS PER SHARE (Note 25)
Basic		$	2.03			$	1.88			$	0.06
Diluted		$	1.88			$	1.58			$	0.05
EARNINGS PER AMERICAN
DEPOSITARY SHARE (“ADS”)
Basic		$	10.13			$	9.38			$	0.30
Diluted		$	9.42			$	7.90			$	0.25

 

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

(Concluded)

 

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 

(Amounts in Thousands) 
(Unaudited)

 

Equity Attributable to Owners of the Company

Other Equity

Exchange

Differences on

Unrealized Gain

Share Capital

Retained Earnings

Translating

on Available-

Shares

Unappropriated

Foreign

for-sale

Non-controlling

(In Thousands)

Amounts

Capital Surplus

Legal Reserve

Special Reserve

Earnings

Total

Operations

Financial Assets

Total

Treasury Shares

Total

Interests

Total Equity

BALANCE AT JANUARY 1, 2015

7,861,725

$

78,715,179

$

16,013,980

$

10,289,878

$

3,353,938

$

36,000,026

$

49,643,842

$

4,540,862

$

526,778

$

5,067,640

$

(1,959,107

)

$

147,481,534

$

8,209,860

$

155,691,394

Equity component of convertible bonds issued by

the Company

–

–

214,022

–

–

–

–

–

–

–

–

214,022

–

214,022

Change in capital surplus from investments in

associates and joint ventures accounted for using the

equity method

–

–

3,362

–

–

–

–

–

–

–

–

3,362

–

3,362

Profit for the nine months ended September 30, 2015

–

–

–

–

–

15,505,955

15,505,955

–

–

–

–

15,505,955

643,071

16,149,026

Other comprehensive income (loss) for the nine months ended

September 30, 2015, net of income tax

–

–

–

–

–

–

–

1,262,025

(88,530

)

1,173,495

–

1,173,495

110,899

1,284,394

Total comprehensive income (loss) for the nine months ended

September 30, 2015

–

–

–

–

–

15,505,955

15,505,955

1,262,025

(88,530

)

1,173,495

–

16,679,450

753,970

17,433,420

Appropriation of 2014 earnings

Legal reserve

–

–

–

2,359,267

–

(2,359,267

)

–

–

–

–

–

–

–

–

Cash dividends distributed by the Company

–

–

–

–

–

(15,589,825

)

(15,589,825

)

–

–

–

–

(15,589,825

)

–

(15,589,825

)

–

–

–

2,359,267

–

(17,949,092

)

(15,589,825

)

–

–

–

–

(15,589,825

)

–

(15,589,825

)

Acquisition of treasury shares

–

–

–

–

–

–

–

–

–

–

(5,333,406

)

(5,333,406

)

–

(5,333,406

)

Issue of dividends received by subsidiaries from the Company

–

–

292,351

–

–

–

–

–

–

–

–

292,351

–

292,351

Partial disposal of interests in subsidiaries and

additional acquisition of majority-owned

subsidiaries (Notes 21 and 28)

–

–

7,198,767

–

–

–

–

–

–

–

–

7,198,767

1,711,579

8,910,346

Spin-off of subsidiaries

–

–

(3,500

)

–

–

–

–

–

–

–

–

(3,500

)

3,500

–

Issue of ordinary shares under employee share options

41,518

425,999

440,933

–

–

–

–

–

–

–

–

866,932

–

866,932

Cash dividends distributed by subsidiaries

–

–

–

–

–

–

–

–

–

–

–

–

(232,148

)

(232,148

)

Additional non-controlling interest arising on issue of employee

share options by subsidiaries

–

–

–

–

–

–

–

–

–

–

–

–

292,233

292,233

BALANCE AT SEPTEMBER 30, 2015

7,903,243

$

79,141,178

$

24,159,915

$

12,649,145

$

3,353,938

$

33,556,889

$

49,559,972

$

5,802,887

$

438,248

$

6,241,135

$

(7,292,513

)

$

151,809,687

$

10,738,994

$

162,548,681

(Continued)

 

 

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 

(Amounts in Thousands) 
(Unaudited)

 

 

	Equity Attributable to Owners of the Company
																						Other Equity
																						Exchange
																						Differences on			Unrealized Gain
	Share Capital									Retained Earnings												Translating			on Available-
	Shares															Unappropriated						Foreign			for-sale												Non-controlling
	(In Thousands)			Amounts			Capital Surplus			Legal Reserve			Special Reserve			Earnings			Total			Operations			Financial Assets			Total			Treasury Shares			Total			Interests			Total Equity
ADJUSTED BALANCE AT JANUARY 1, 2016  (Note 13)		7,910,428		$	79,185,660		$	23,758,550		$	12,649,145		$	3,353,938		$	37,696,865		$	53,699,948		$	4,492,671		$	588,119		$	5,080,790		$	(7,292,513	)	$	154,432,435		$	11,492,545		$	165,924,980
Change in capital surplus from investments in
associates and joint ventures accounted for using the
equity method		–			–			8,283			–			–			–			–			–			–			–			–			8,283			–			8,283
Profit for the nine months ended September 30, 2016		–			–			–			–			–			14,369,687			14,369,687			–			–			–			–			14,369,687			849,819			15,219,506
Other comprehensive income (loss) for the nine months ended
September 30, 2016, net of income tax		–			–			–			–			–			–			–			(6,448,846	)		(288,233	)		(6,737,079	)		–			(6,737,079	)		(594,465	)		(7,331,544	)
Total comprehensive income (loss) for the nine months ended
September 30, 2016		–			–			–			–			–			14,369,687			14,369,687			(6,448,846	)		(288,233	)		(6,737,079	)		–			7,632,608			255,354			7,887,962
Appropriation of 2015 earnings
Legal reserve		–			–			–			1,947,887			–			(1,947,887	)		–			–			–			–			–			–			–			–
Cash dividends declared by the Company		–			–			–			–			–			(12,476,779	)		(12,476,779	)		–			–			–			–			(12,476,779	)		–			(12,476,779	)
		–			–			–			1,947,887			–			(14,424,666	)		(12,476,779	)		–			–			–			–			(12,476,779	)		–			(12,476,779	)
Issue of dividends received by subsidiaries from the Company		–			–			233,013			–			–			–			–			–			–			–			–			233,013			–			233,013
Actual disposal or acquisition of interest in subsidiaries (Note 28)		–			–			(20,552	)		–			–			(5,884	)		(5,884	)		–			–			–			–			(26,436	)		26,436			–
Changes in percentage of ownership interest in subsidiaries (Note 28)		–			–			(1,912,887	)		–			–			–			–			–			–			–			–			(1,912,887	)		(912,886	)		(2,825,773	)
Issue of ordinary shares under employee share options		26,262			323,390			396,996			–			–			–			–			–			–			–			–			720,386			–			720,386
Non-controlling interest arising from acquisition of
subsidiaries (Note 27)		–			–			–			–			–			–			–			–			–			–			–			–			7,021			7,021
Cash dividends distributed by subsidiaries		–			–			–			–			–			–			–			–			–			–			–			–			(236,426	)		(236,426	)
Additional non-controlling interest arising on issue of
employee share options by subsidiaries		–			–			–			–			–			–			–			–			–			–			–			–			425,523			425,523
BALANCE AT SEPTEMBER 30, 2016		7,936,690		$	79,509,050		$	22,463,403		$	14,597,032		$	3,353,938		$	37,636,002		$	55,586,972		$	(1,956,175	)	$	299,886		$	(1,656,289	)	$	(7,292,513	)	$	148,610,623		$	11,057,567		$	159,668,190
US DOLLARS (Note 4)
BALANCE AT SEPTEMBER 30, 2016		7,936,690		$	2,542,662		$	718,369		$	466,806		$	107,257		$	1,203,582		$	1,777,645		$	(62,557	)	$	9,590		$	(52,967	)	$	(233,211	)	$	4,752,498		$	353,616		$	5,106,114

 

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

(Concluded)

 

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(Amounts in Thousands) 
(Unaudited)

 

		For the Nine Months Ended September 30
		2015				2016
		NT$				NT$				US$ (Note 4)
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit before income tax		$	18,724,920			$	18,449,474			$	590,006
Adjustments for:
Depreciation expense			21,750,748				21,694,771				693,789
Amortization expense			421,472				343,868				10,997
Net loss (gain) on fair value change of financial assets
and liabilities at fair value through profit or loss			(3,196,273	)			1,492,157				47,719
Finance costs			1,698,197				1,746,585				55,855
Interest income			(192,162	)			(171,615	)			(5,488	)
Dividend income			(74,374	)			(20,625	)			(660	)
Compensation cost of employee share options			35,919				353,676				11,310
Share of loss (profit) of associates and joint ventures			12,964				(1,178,707	)			(37,694	)
Impairment loss recognized on financial assets			23,299				1,886				60
Reversal of impairment loss on financial assets			–				(27,664	)			(885	)
Impairment loss recognized on non- financial assets			154,815				1,199,970				38,374
Net gain on foreign currency exchange			1,383,924				(1,333,438	)			(42,643	)
Others			905,470				493,491				15,782
Changes in operating assets and liabilities
Financial assets held for trading			3,025,524				2,708,652				86,621
Trade receivables			(257,928	)			(7,049,447	)			(225,438	)
Other receivables			60,383				(189,591	)			(6,064	)
Inventories			(8,570,434	)			1,077,286				34,451
Other current assets			150,732				(179,052	)			(5,726	)
Financial liabilities held for trading			(1,148,709	)			(2,044,739	)			(65,390	)
Trade payables			4,288,374				3,717,681				118,890
Other payables			(1,959,645	)			(172,266	)			(5,509	)
Advance real estate receipts			1,754,391				(2,172,833	)			(69,486	)
Other current liabilities			314,503				239,510				7,659
Other operating activities items			190,377				38,013				1,216
			39,496,487				39,017,043				1,247,746
Interest received			182,419				164,867				5,272
Dividend received			74,374				4,037,857				129,129
Interest paid			(1,713,548	)			(1,668,975	)			(53,373	)
Income tax paid			(3,735,975	)			(4,838,659	)			(154,738	)
Net cash generated from operating activities			34,303,757				36,712,133				1,174,036
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of financial assets designated as at fair value
through profit or loss			(81,789,096	)			(52,981,180	)			(1,694,313	)

 

(Continued)

 

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(Amounts in Thousands) 
(Unaudited)

 

		For the Nine Months Ended September 30
		2015				2016
		NT$				NT$				US$ (Note 4)
Proceeds on sale of financial assets designated as at
fair value through profit or loss		$	84,672,199			$	54,592,483			$	1,745,842
Purchase of available-for-sale financial assets			(469,291	)			(1,192,678	)			(38,141	)
Proceeds on sale of available-for-sale  financial assets			1,972,254				867,336				27,737
Cash received from return of capital by available-for-sale
financial assets			30,545				28,927				925
Acquisition of associates and joint ventures			(35,673,097	)			(15,816,463	)			(505,803	)
Net cash outflow on acquisition of subsidiaries			–				(73,437	)			(2,348	)
Payments for property, plant and equipment			(24,695,271	)			(20,391,111	)			(652,098	)
Proceeds from disposal of property, plant and equipment			213,284				129,261				4,134
Payments for intangible assets			(393,507	)			(373,928	)			(11,958	)
Proceeds from disposal of intangible assets			–				5,482				175
Increase in other financial assets			(1,265,725	)			(1,754,676	)			(56,114	)
Increase in other non-current assets			(294,186	)			(177,245	)			(5,668	)
Net cash used in investing activities			(57,691,891	)			(37,137,229	)			(1,187,630	)
CASH FLOWS FROM FINANCING
ACTIVITIES
Net proceed from (repayment of) short-term borrowings			4,148,082				(384,911	)			(12,309	)
Repayment of short-term bills payable			–				(2,348,712	)			(75,111	)
Proceeds from issue of bonds			6,136,425				9,000,000				287,816
Repayment of bonds payable			–				(10,365,135	)			(331,472	)
Proceeds from long-term borrowings			29,382,813				48,963,098				1,565,817
Repayment of long-term borrowings			(16,649,534	)			(42,202,720	)			(1,349,623	)
Dividends paid			(15,297,474	)			(12,243,766	)			(391,550	)
Proceeds from exercise of employee share options			854,609				792,233				25,335
Payments for acquisition of treasury shares			(5,333,406	)			–				–
Proceeds from partial disposal of interests in subsidiaries			8,910,346				–				–
Increase (decrease) in non-controlling interests			36,517				(3,062,199	)			(97,928	)
Other financing activities items			(1,035	)			12,342				395
Net cash generated from (used in) financing activities			12,187,343				(11,839,770	)			(378,630	)
EFFECTS OF EXCHANGE RATE
CHANGES ON THE BALANCE OF
CASH AND CASH EQUIVALENTS			1,916,095				(5,324,895	)			(170,288	)
NET DECREASE IN CASH AND CASH
EQUIVALENTS			(9,284,696	)			(17,589,761	)			(562,512	)
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF THE PERIOD			51,694,410				55,251,181				1,766,907
CASH AND CASH EQUIVALENTS AT THE END OF
THE PERIOD		$	42,409,714			$	37,661,420			$	1,204,395

 

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

(Concluded)

  

ADVANCED SEMICONDUCTOR ENGINEERING, INC. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2016  

(Amounts in Thousands, Unless Stated Otherwise) 
(Unaudited)

 

1.

GENERAL INFORMATION

 

Advanced Semiconductor Engineering, Inc. (the “Company”), a corporation incorporated under the laws of Republic of China (the “ROC”), and its subsidiaries (collectively referred to as the “Group”) offer a comprehensive range of semiconductors packaging, testing, and electronic manufacturing services (“EMS”).

 

The Company’s ordinary shares are listed on the Taiwan Stock Exchange (the “TSE”) under the symbol “2311”. Since September 2000, the Company’s ordinary shares have been traded on the New York Stock Exchange (the “NYSE”) under the symbol “ASX” in the form of American Depositary Shares (“ADS”). The ordinary shares of its subsidiary, Universal Scientific Industrial (Shanghai) Co., Ltd (“USISH”), are listed on the Shanghai Stock Exchange (the “SSE”) under the symbol “601231”.

 

The condensed consolidated financial statements are presented in the Company’s functional currency, New Taiwan dollar (NT$).

 

2.

APPROVAL OF FINANCIAL STATEMENTS

 

The condensed consolidated financial statements were authorized for issue by management on November 7, 2016.

 

3.

APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ISSUED BY THE INTERNATIONAL ACCOUNTING STANDARDS BOARD (“IFRSs”)

 

a.

Amendments to IFRSs that are mandatorily effective for the current year

 

In the current year, the Group has applied the following new, revised or amended standards and interpretations that have been issued and effective:

 

New, Revised or Amended Standards and Interpretations				Effective Date Issued by International Accounting Standards Board (“IASB”)  (Note 1)
Amendments to IFRSs		Annual Improvements to IFRSs: 2012-2014 Cycle		January 1, 2016 (Note 2)
Amendments to IFRS 10, IFRS 12 and International Accounting Standard (“IAS”) 28		Investment Entities: Applying the Consolidation Exception		January 1, 2016
Amendments to IFRS 11		Accounting for Acquisitions of Interests in Joint Operations		January 1, 2016

(Continued)

 

New, Revised or Amended Standards and Interpretations				Effective Date Issued by International Accounting Standards Board (“IASB”) (Note 1)
IFRS 14		Regulatory Deferral Accounts		January 1, 2016
Amendments to IAS 1		Disclosure Initiative		January 1, 2016
Amendments to IAS 16 and IAS 38		Clarification of Acceptable Methods of Depreciation and Amortization		January 1, 2016
Amendments to IAS 16 and IAS 41		Agriculture: Bearer Plants		January 1, 2016

(Concluded)

 

Note 1:      The aforementioned new, revised or amended standards and interpretations are effective for annual period beginning on or after the effective dates, unless specified otherwise.

 

Note 2:      The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that occur in annual periods beginning on or after January 1, 2016; the remaining amendments are applied retrospectively for annual periods beginning on or after January 1, 2016.

 

The adoption of aforementioned standards or interpretations have no material effect on the Group’s accounting policies.

 

b.

New, revised or amended standards and interpretations in issue but not yet effective

 

The Group has not applied the following new, revised or amended standards and interpretations that have been issued but are not yet effective:

 

New, Revised or Amended Standards and Interpretations				Effective Date Issued by IASB (Note)
Amendments to IFRS 2		Classification and Measurement of Share-based Payment Transactions		January 1, 2018
Amendments to IFRS 4		Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts		January 1, 2018
IFRS 9		Financial Instruments		January 1, 2018
Amendments to IFRS 9 and IFRS 7		Mandatory Effective Date of IFRS 9 and Transition Disclosures		January 1, 2018
Amendments to IFRS 10 and IAS 28		Sale or Contribution of Assets between an Investor and its Associate or Joint Venture		To be determined by the IASB
IFRS 15		Revenue from Contracts with Customers		January 1, 2018
Amendments to IFRS 15		Clarifications to IFRS 15		January 1, 2018
IFRS 16		Leases		January 1, 2019
Amendments to IAS 7		Disclosure Initiative		January 1, 2017
Amendments to IAS 12		Recognition of Deferred Tax Assets for Unrealized Losses		January 1, 2017

Note:

The aforementioned new, revised or amended standards and interpretations are effective for annual period beginning on or after the effective dates, unless specified otherwise.

 

c.

Significant changes in accounting policy resulted from new, revised and amended standards and interpretations in issue but not yet effective

 

Except for the following, the Group believes that the adoption of aforementioned new, revised or

 

 

amended standards and interpretations will not have a material effect on the Group’s accounting policies. As of the date that the accompanying condensed consolidated financial statements were authorized for issue, the Group continues in evaluating the impact on its financial position and operating results as a result of the initial adoption of the below standards and interpretations. The related impact will be disclosed when the Group completes the evaluation.

 

IFRS 9 “Financial Instruments”

 

Recognition and measurement of financial assets

 

With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are subsequently measured at amortized cost or fair value. Under IFRS 9, the requirement for the classification of financial assets is stated below.

 

For the Group’s debt instruments that have contractual cash flows that are solely payments of principal and interest on the principal amount outstanding, their classification and measurement are as follows:

 

1)

For debt instruments, if they are held within a business model whose objective is to collect the contractual cash flows, the financial assets are measured at amortized cost and are assessed for impairment continuously with impairment loss recognized in profit or loss, if any. Interest revenue is recognized in profit or loss by using the effective interest method;

 

2)

For debt instruments, if they are held within a business model whose objective is achieved by both the collecting of contractual cash flows and the selling of financial assets, the financial assets are measured at fair value through other comprehensive income (FVTOCI) and are assessed for impairment. Interest revenue is recognized in profit or loss by using the effective interest method, and other gain or loss shall be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When the debt instruments are derecognized or reclassified, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss.

 

Except for above, all other financial assets are measured at fair value through profit or loss. However, the Group may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative gains or losses previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss.

 

The impairment of financial assets

 

IFRS 9 requires that impairment loss on financial assets is recognized by using the “Expected Credit Losses Model”. The credit loss allowance is required for financial assets measured at amortized cost, financial assets mandatorily measured at FVTOCI, lease receivables, contract assets arising from IFRS 15 “Revenue from Contracts with Customers”, certain written loan commitments and financial guarantee contracts. A loss allowance for the 12-month expected credit losses is required for a financial asset if its credit risk has not increased significantly since initial recognition. A loss allowance for full lifetime expected credit losses is required for a financial asset if its credit risk has increased significantly since initial recognition and is not low. However, a loss allowance for full lifetime expected credit losses is required for trade receivables that do not constitute a financing transaction.

 

For purchased or originated credit-impaired financial assets, the Group takes into account the expected credit losses on initial recognition in calculating the credit-adjusted effective interest rate. Subsequently, any changes in expected losses are recognized as a loss allowance with a corresponding gain or loss recognized in profit or loss.

 

Hedge accounting

 

The main changes in hedge accounting amended the application requirements for hedge accounting to better reflect the entity’s risk management activities. Compared with IAS 39, the main changes include: (1) enhancing types of transactions eligible for hedge accounting, specifically broadening the risk eligible for hedge accounting of non-financial items; (2) changing the way hedging derivative instruments are accounted for to reduce profit or loss volatility; and (3) replacing retrospective effectiveness assessment with the principle of economic relationship between the hedging instrument and the hedged item.

 

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture”

 

The amendments stipulated that, when the Group sells or contributes assets that constitute a business (as defined in IFRS 3) to an associate or joint venture, the gain or loss resulting from the transaction is recognized in full. Also, when the Group loses control over a subsidiary that contains a business but retains significant influence or joint control, the gain or loss resulting from the transaction is recognized in full.

 

Conversely, when the Group sells or contributes assets that do not constitute a business to an associate or joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the unrelated investors’ interest in the associate or joint venture, i.e. the Group’s share of the gain or loss is eliminated. Also, when the Group loses control over a subsidiary that does not contain a business but retains significant influence or joint control in an associate or a joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the unrelated investors’ interest in the associate or joint venture, i.e. the Group’s share of the gain or loss is eliminated.

 

IFRS 15 “Revenue from Contracts with Customers” and amendments

 

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and will supersede IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations from January 1, 2018.

 

When applying IFRS 15, an entity shall recognize revenue by applying the following steps:

 

—

Identify the contract with the customer;

 

—

Identify the performance obligations in the contract;

 

—

Determine the transaction price;

 

—

Allocate the transaction price to the performance obligations in the contracts; and

 

—

Recognize revenue when the entity satisfies a performance obligation.

 

In identifying performance obligations, IFRS 15 and related amendment require that a good or service is distinct if it is capable of being distinct (for example, the Group regularly sells it separately) and the promise to transfer it is distinct within the context of the contract (i.e. the nature of the promise in the contract is to transfer each of those goods or services individually rather than to transfer combined items).

 

When IFRS 15 and related amendment are effective, the Group may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this Standard recognized at the date of initial application.

 

IFRS 16 “Leases”

 

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of related interpretations.

 

Under IFRS 16, if the Group is a lessee, it shall recognize right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for low-value and short-term leases. The Group may elect to apply the accounting method similar to the accounting for operating lease under IAS 17 to the low-value and short-term leases. On the consolidated statements of comprehensive income, the Group should present the depreciation expense charged on the right-of-use asset separately from interest expense accrued on the lease liability; interest is computed by using effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of the lease liability are classified within financing activities; cash payments for interest portion are classified within operating activities.

 

The application of IFRS 16 is not expected to have a material impact on the accounting of the Group as lessor.

 

When IFRS 16 becomes effective, the Group may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of the initial application of this Standard recognized at the date of initial application.

 

Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Losses”

 

The amendment clarifies that the difference between the carrying amount of the debt instrument measured at fair value and its tax base gives rise to a temporary difference, even though there are unrealized losses on that asset, irrespective of whether the Group expects to recover the carrying amount of the debt instrument by sale or by holding it and collecting contractual cash flows.

 

In addition, in determining whether to recognize a deferred tax asset, the Group should assess a deductible temporary difference in combination with all of its other deductible temporary differences, unless the tax law restricts the utilization of losses to deduction against income of a specific type, in which case, a deductible temporary difference is assessed in combination only with other deductible temporary differences of the appropriate type. The amendment also stipulates that, when determining whether to recognize a deferred tax asset, the estimate of probable future taxable profit may include some of the Group’s assets for more than their carrying amount if there is sufficient evidence that it is probable that the Group will achieve this, and that the estimate for future taxable profit should exclude tax deductions resulting from the reversal of deductible temporary differences.

 

4.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

a.

Statement of Compliance

 

The condensed consolidated financial statements have been prepared in accordance with IAS 34 “Interim Financial Reporting”. The condensed consolidated financial statements are not subject to qualification relating to the application of IFRSs.

 

The consolidated financial statements are condensed as they do not include all of the information required for a complete set of annual financial statements, and they should be read in conjunction with the Group’s annual audited consolidated financial statements and related notes thereto for the year ended December 31, 2015 prepared in accordance with IFRSs.

 

 

b.

Basis of consolidation

 

Subsidiaries included in condensed consolidated financial statements were as follows:

 

						Percentage of Ownership (%)
Name of Investee		Main Businesses		Establishment and Operating Location		December 31, 2015		September 30, 2016
A.S.E. Holding Limited		Holding company		Bermuda		100.0		100.0
J & R Holding Limited (“J&R Holding”)		Holding company		Bermuda		100.0		100.0
Innosource Limited		Holding company		British Virgin Islands		100.0		100.0
Omniquest Industrial Limited		Holding company		British Virgin Islands		100.0		100.0
ASE Marketing & Service Japan Co., Ltd.		Engaged in marketing and sales services		Japan		100.0		100.0
ASE Test, Inc.		Engaged in the testing of semiconductors		Kaohsiung, ROC		100.0		100.0
USI Inc. (“USIINC”)		Engaged in investing activity and established in April 2015		Nantou, ROC		99.2		99.2
Luchu Development Corporation		Engaged in the development of real estate properties		Taipei, ROC		86.1		86.1
TLJ Intertech Inc. (“TLJ”)		Engaged in information software services and 60% shareholdings were acquired by ASE Test, Inc. in May 2016		Taipei, ROC		–		60.0
Alto Enterprises Limited		Holding company		British Virgin Islands		100.0		100.0
Super Zone Holdings Limited		Holding company		Hong Kong		100.0		100.0
ASE (Kun Shan) Inc.		Engaged in the packaging and testing of semiconductors		Kun Shan, China		100.0		100.0
ASE Investment (Kun Shan) Limited		Holding company		Kun Shan, China		100.0		100.0
Advanced Semiconductor Engineering (China) Ltd.		Will engage in the packaging and testing of semiconductors		Shanghai, China		100.0		100.0
ASE Investment (Labuan) Inc.		Holding company		Malaysia		100.0		100.0
ASE Test Limited (“ASE Test”)		Holding company		Singapore		100.0		100.0
ASE (Korea) Inc.		Engaged in the packaging and testing of semiconductors		Korea		100.0		100.0
J&R Industrial Inc.		Engaged in leasing equipment and investing activity		Kaohsiung, ROC		100.0		100.0
ASE Japan Co., Ltd.		Engaged in the packaging and testing of semiconductors		Japan		100.0		100.0
ASE (U.S.) Inc.		After-sales service and sales support		U.S.A.		100.0		100.0
Global Advanced Packaging Technology Limited, Cayman Islands		Holding company		British Cayman Islands		100.0		100.0
ASE WeiHai Inc.		Engaged in the packaging and testing of semiconductors		Shandong, China		100.0		100.0
Suzhou ASEN Semiconductors Co., Ltd.		Engaged in the packaging and testing of semiconductors		Suzhou, China		60.0		60.0
Anstock Limited		Engaged in financing activity		British Cayman Islands		100.0		100.0
Anstock II Limited		Engaged in financing activity		British Cayman Islands		100.0		100.0
ASE Module (Shanghai) Inc.		Will engage in the production and sale of electronic components and printed circuit boards		Shanghai, China		100.0		100.0
ASE (Shanghai) Inc.		Engaged in the production of substrates		Shanghai, China		100.0		100.0
ASE Corporation		Holding company		British Cayman Islands		100.0		100.0
ASE Mauritius Inc.		Holding company		Mauritius		100.0		100.0
ASE Labuan Inc.		Holding company		Malaysia		100.0		100.0
Shanghai Ding Hui Real Estate Development Co., Ltd.		Engaged in the development, construction and sale of real estate properties		Shanghai, China		100.0		100.0
Shanghai Ding Qi Property Management Co., Ltd.		Engaged in the management of real estate properties		Shanghai, China		100.0		100.0
Advanced Semiconductor Engineering (HK) Limited		Engaged in the trading of substrates		Hong Kong		100.0		100.0
Shanghai Ding Wei Real Estate Development Co., Ltd.		Engaged in the development, construction and leasing of real estate properties		Shanghai, China		100.0		100.0
Shanghai Ding Yu Real Estate Development Co., Ltd.		Engaged in the development, construction and leasing of real estate properties		Shanghai, China		100.0		100.0
Shanghai Ding Fan Department Store Co., Ltd.		Will engage in department store business and was established in July 2016		Shanghai, China		–		100.0
Kun Shan Ding Yue Real Estate Development Co., Ltd.		Engaged in the development, construction and leasing of real estate properties		Kun Shan, China		100.0		100.0
Kun Shan Ding Hong Real Estate Development Co., Ltd.		Engaged in the development, construction and leasing of real estate properties		Kun Shan, China		100.0		100.0
ASE Electronics Inc.		Engaged in the production of substrates		Kaohsiung, ROC		100.0		100.0
ASE Test Holdings, Ltd.		Holding company		British Cayman Islands		100.0		100.0

  

(Continued)

 

						Percentage of Ownership (%)
Name of Investee		Main Businesses		Establishment and   Operating Location		December 31, 2015		September 30,   2016
ASE Holdings (Singapore) Pte. Ltd.		Holding company		Singapore		100.0		100.0
ASE Singapore Pte. Ltd.		Engaged in the packaging and testing of semiconductors		Singapore		100.0		100.0
ISE Labs, Inc.		Engaged in the testing of semiconductors		U.S.A.		100.0		100.0
ASE Electronics (M) Sdn. Bhd.		Engaged in the packaging and testing of semiconductors		Malaysia		100.0		100.0
ASE Assembly & Test (Shanghai) Limited		Engaged in the packaging and testing of semiconductors		Shanghai, China		100.0		100.0
ASE Trading (Shanghai) Ltd.		Engaged in trading activity		Shanghai, China		100.0		100.0
Wuxi Tongzhi Microelectronics Co., Ltd.		Engaged in the packaging and testing of semiconductors		Wuxi, China		100.0		100.0
Huntington Holdings International Co., Ltd.		Holding company		British Virgin Islands		99.2		99.2
Unitech Holdings International Co., Ltd.		Holding company		British Virgin Islands		99.2		99.2
Real Tech Holdings Limited		Holding company		British Virgin Islands		99.2		99.2
Universal ABIT Holding Co., Ltd.		In the process of liquidation		British Cayman Islands		99.2		99.2
Rising Capital Investment Limited		Holding company		British Virgin Islands		99.2		99.2
Rise Accord Limited		Holding company		British Virgin Islands		99.2		99.2
Universal Scientific Industrial (Kunshan) Co., Ltd.		Engaged in the manufacturing and sale of computer assistance system and related peripherals		Kun Shan, China		99.2		99.2
USI Enterprise Limited (“USIE”)		Engaged in the services of investment advisory and warehousing management		Hong Kong		96.7		98.8
Universal Scientific Industrial (Shanghai) Co., Ltd. (“USISH”)		Engaged in the designing, manufacturing and sale of electronic components		Shanghai, China		75.7		77.3
Universal Global Technology Co., Limited		Holding company		Hong Kong		75.7		77.3
Universal Global Technology (Kunshan) Co., Ltd.		Engaged in the designing and manufacturing of electronic components		Kun Shan, China		75.7		77.3
Universal Global Technology (Shanghai) Co., Ltd.		Engaged in the processing and sales of computer and communication peripherals as well as business in import and export of goods and technology		Shanghai, China		75.7		77.3
Universal Global Electronics (Shanghai) Co., Ltd.		Engaged in the sale of electronic components and telecommunications equipment		Shanghai, China		75.7		77.3
Universal Global Industrial Co., Limited		Engaged in manufacturing, trading and investing activity		Hong Kong		75.7		77.3
Universal Global Scientific Industrial Co., Ltd. (“UGTW”)		Engaged in the manufacturing of components of telecomm and cars and provision of related R&D services		Nantou, ROC		75.7		77.3
USI America Inc.		Engaged in the manufacturing and processing of motherboards and wireless network communication and provision of related technical service		U.S.A.		75.7		77.3
Universal Scientific Industrial De Mexico S.A. De C.V.		Engaged in the assembling of motherboards and computer components		Mexico		75.7		77.3
USI Japan Co., Ltd.		Engaged in the manufacturing and sale of computer peripherals, integrated chip and other related accessories		Japan		75.7		77.3
USI Electronics (Shenzhen) Co., Ltd.		Engaged in the design, manufacturing and sale of motherboards and computer peripherals		Shenzhen, China		75.7		77.3
Universal Scientific Industrial Co., Ltd. (“USI”)		Engaged in the manufacturing, processing and sale of computers, computer peripherals and related accessories		Nantou, ROC		99.0		76.5

(Concluded)

 

c.

Other significant accounting policies

 

Except for the following, the accounting policies applied in these condensed consolidated financial statements are consistent with those applied in the Group’s consolidated financial statements for the year ended December 31, 2015.

 

1)

Retirement benefits

 

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events.

 

 

2)

Taxation

 

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income the tax rate that would be applicable to expected total annual earnings.

 

d.

U.S. Dollar Amounts

 

A translation of the condensed consolidated financial statements into U.S. dollars is included solely for the convenience of the readers, and has been translated from New Taiwan dollar (NT$) at the exchange rate as set forth in the statistical release by the U.S. Federal Reserve Board of the United States, which was NT$31.27 to US$1.00 as of September 30, 2016. The translation should not be construed as a representation that the NT$ amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.

 

5.

CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

 

Except those discussed below, the same critical accounting judgments and key sources of estimation uncertainty of condensed consolidated financial statements have been followed in these condensed consolidated financial statements as were applied in the preparation of the Group’s consolidated financial statements for the year ended December 31, 2015.

 

For the associate accounted for using the equity method, the Group recognized goodwill which is included within the carrying amount of the investment as of each investment date as the excess of cost of investments over the Group’s share of the net fair value of the associate’s identifiable assets acquired and the liabilities assumed at the respective investment dates; as a result, it involves critical accounting judgment and estimates when determining aforementioned fair values. The management engaged external appraiser to identify and evaluate the associate’s identifiable tangible assets, intangible assets and liabilities. The scope of such evaluation includes assumptions as current replacement cost of tangible assets, the categories of intangible assets and their expected economic benefits, growth rates and discount rates used in cash flow analysis. The amounts of differences between fair value of identified tangible and intangible assets and the carrying amount at each respective investment dates are depreciated or amortized over their remaining useful lives or expected future economic benefit lives. The management considered that the related evaluation and assumption has appropriately reflected the fair value of identifiable assets acquired and liabilities assumed.

 

6.

CASH AND CASH EQUIVALENTS

 

		December 31,  2015				September 30, 2016
			NT$				NT$				US$ (Note 4)
Cash on hand		$	8,806			$	8,146			$	260
Checking accounts and demand deposits			50,291,823				29,027,930				928,300
Cash equivalents			4,950,552				8,625,344				275,835
		$	55,251,181			$	37,661,420			$	1,204,395

 

Cash equivalents include time deposits that are of a short maturity of three months or less from the date of acquisitions, and are highly liquid, readily convertible to known amounts in cash and the risk of changes in

 

 

values is insignificant. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investments or other purposes.

 

7.

FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (“FVTPL”)

 

		December 31,  2015				September 30, 2016
			NT$				NT$				US$ (Note 4)
Financial assets designated as at FVTPL
Private-placement convertible bonds		$	100,500			$	100,583			$	3,217
Structured time deposits			1,646,357				–				–
			1,746,857				100,583				3,217
Financial assets held for trading
Open-end mutual funds			573,242				584,424				18,689
Forward exchange contracts			18,913				55,645				1,779
Swap contracts			1,452,611				38,451				1,230
Quoted shares			37,058				34,728				1,111
Foreign currency option contracts			5,020				–				–
			2,086,844				713,248				22,809
		$	3,833,701			$	813,831			$	26,026
Financial liabilities held for trading
Conversion option, redemption option and put option of convertible bonds (Note 19)		$	2,632,565			$	2,224,051			$	71,124
Swap contracts			290,176				1,708,293				54,631
Forward exchange contracts			69,207				10,825				346
Interest rate swap contracts			119				8,791				281
Foreign currency option contracts			13,659				1,560				50
		$	3,005,726			$	3,953,520			$	126,432

 

The Group invested in structured time deposits and private-placement convertible bonds, and all included embedded derivative instruments which are not closely related to the host contracts. The Group designated the entire contracts as financial assets at FVTPL on initial recognition.

 

At each balance sheet date, the outstanding swap contracts not accounted for hedge accounting were as follows:

 

				Notional Amount
Currency		Maturity Period		(In Thousands)
December 31, 2015
Sell NT$/Buy US$		2016.01-2016.12		NT$57,554,138/US$1,802,834
Sell US$/Buy CNY		2016.01-2016.03		US$353,881/CNY2,255,872
Sell US$/Buy JPY		2016.03		US$67,125/JPY8,240,000
Sell US$/Buy NT$		2016.01		US$91,750/NT$3,005,494

 

(Continued)

 

				Notional Amount
Currency		Maturity Period		(In Thousands)
September 30, 2016
Sell EUR/Buy US$		2016.10		EUR4,960/US$5,573
Sell JPY/Buy US$		2016.10		JPY38,308/US$380
Sell NT$/Buy US$		2016.10-2017.09		NT$62,646,431/US$1,951,500
Sell US$/Buy CNY		2016.10		US$52,535/CNY349,800
Sell US$/Buy JPY		2016.11-2016.12		US$83,036/JPY8,420,000
Sell US$/Buy KRW		2016.10-2016.11		US$20,000/KRW22,232,000
Sell US$/Buy NT$		2016.10-2016.11		US$51,600/NT$1,621,665

(Concluded)

 

At each balance sheet date, the outstanding forward exchange contracts not accounted for hedge accounting were as follow:

 

				Notional Amount
Currency		Maturity Period		(In Thousands)
December 31, 2015
Sell NT$/Buy US$		2016.02		NT$325,400/US$10,000
Sell US$/Buy CNY		2016.01-2016.03		US$121,000/CNY780,252
Sell US$/Buy JPY		2016.01		US$14,000/JPY1,713,388
Sell US$/Buy KRW		2016.01		US$8,000/KRW9,420,350
Sell US$/Buy MYR		2016.01-2016.02		US$6,000/MYR25,525
Sell US$/Buy NT$		2016.01-2016.03		US$155,000/NT$5,088,230
Sell US$/Buy SGD		2016.01-2016.02		US$11,400/SGD16,079
September 30, 2016
Sell NT$ /Buy US$		2016.10-2016.11		NT$10,147,295/US$325,000
Sell US$/Buy CNY		2016.10-2016.11		US$65,000/CNY433,976
Sell US$/Buy JPY		2016.10-2016.11		US$21,864/JPY2,227,835
Sell US$/Buy KRW		2016.10-2016.11		US$26,400/KRW29,134,690
Sell US$/Buy MYR		2016.10-2016.11		US$9,000/MYR36,944
Sell US$/Buy SGD		2016.10-2016.12		US$11,100/SGD14,988

 

At each balance sheet date, the outstanding foreign currency option contracts not accounted for hedge accounting were as follows:

 

Currency		Maturity Period		(In Thousands)
December 31, 2015
Buy US$ Call/CNY Put		2017.08 (Note)		US$2,000/CNY13,800
Buy US$ Put/CNY Call		2016.03		US$20,000/CNY131,600
Sell US$ Put/CNY Call		2017.08 (Note)		US$1,000/CNY 6,900
September 30, 2016
Buy US$ Call/CNY Put		2017.08 (Note)		US$2,000/CNY13,800
Sell US$ Put/CNY Call		2017.08 (Note)		US$1,000/CNY 6,900

Note:

The contracts will be settled once a month and the counterparty has the right to early terminate the contracts, or the contracts will be early terminated, or both parties will have no obligation to settle the contracts when the specific criteria is met. Partial of the aforementioned outstanding contracts as of September 30, 2015 were early terminated.

 

At each balance sheet date, the outstanding interest rate swap contracts not accounted for hedge accounting were as follows:

 

Maturity Period		Notional Amounts (In Thousands)		Range of Interest Rates Paid		Range of Interest Rates Received
December 31, 2015
2016.10		NT$1,000,000		4.60% (Fixed)		0.00%-5.00% (Floating)
September 30, 2016
2016.10		NT$1,000,000		4.60%  (Fixed)		0.00%-5.00% (Floating)

 

8.

AVAILABLE-FOR-SALE FINANCIAL ASSETS

 

		December 31, 2015				September 30, 2016
			NT$				NT$				US$ (Note 4)
Unquoted ordinary shares		$	249,217			$	506,502			$	16,197
Limited partnership			476,612				448,913				14,356
Quoted ordinary shares			197,580				160,243				5,124
Open-end mutual funds			16,037				44,207				1,414
Unquoted preferred shares			15,260				14,166				453
			954,706				1,174,031				37,544
Current			30,344				70,092				2,241
Non-current		$	924,362			$	1,103,939			$	35,303

 

9.

TRADE RECEIVABLES, NET

 

		December 31, 2015				September 30, 2016
			NT$				NT$				US$ (Note 4)
Trade receivables		$	45,014,393			$	52,063,840			$	1,664,977
Less:  Allowance for doubtful debts			82,906				54,262				1,735
Trade receivables, net		$	44,931,487			$	52,009,578			$	1,663,242

 

a.

Trade receivables

 

The Group’s average credit terms were 30 to 90 days. Allowance for doubtful debts is assessed by reference to the collectability of receivables by evaluating the account aging, historical experience and current financial condition of customers.

 

As of December 31, 2015 and September 30, 2016, except that the Group’s five largest customers accounted for 26% and 33% of accounts receivable, respectively, the concentration of credit risk is insignificant for the remaining accounts receivable.

 

Aging of receivables based on the past due date

 

		December 31,  2015				September 30, 2016
			NT$				NT$				US$ (Note 4)
Not past due		$	40,409,227			$	47,741,458			$	1,526,750
1 to 30 days			3,901,300				3,695,299				118,174
31 to 90 days			495,664				532,980				17,044
More than 91 days			208,202				94,103				3,009
Total		$	45,014,393			$	52,063,840			$	1,664,977

Aging of receivables that were past due but not impaired

 

		December 31, 2015				September 30, 2016
			NT$				NT$				US$ (Note 4)
1 to 30 days		$	3,086,796			$	3,669,497			$	117,349
31 to 90 days			344,265				333,527				10,666
Total		$	3,431,061			$	4,003,024			$	128,015

 

Except for those impaired, the Group had not provided an allowance for doubtful debts on trade receivables at each balance sheet date since there has not been a significant change in credit quality and the amounts were still considered collectible. The Group did not hold any collateral or other credit enhancements over these balances nor did it have a legal right to offset against any amounts owed by the Group to counterparties.

 

Movement of the allowance for doubtful trade receivables

 

		Impaired Individually				Impaired Collectively				Total
			NT$				NT$				NT$
Balance at January 1, 2015		$	28,305			$	55,840			$	84,145
Impairment losses recognized			20,411				2,888				23,299
Amount written off as uncollectible			–				(208	)			(208	)
Effect of foreign currency exchange differences			(177	)			(871	)			(1,048	)
Balance at September 30, 2015		$	48,539			$	57,649			$	106,188
Balance at January 1, 2016		$	39,046			$	43,860			$	82,906
Impairment losses recognized (reversed)			(29,013	)			1,349				(27,664	)
Effect of foreign currency exchange differences			(691	)			(289	)			(980	)
Balance at September 30, 2016		$	9,342			$	44,920			$	54,262

		Impaired Individually				Impaired Collectively				Total
			US$ (Note 4)				US$ (Note 4)				US$ (Note 4)
Balance at January 1, 2016		$	1,249			$	1,402			$	2,651
Impairment losses recognized (reversed)			(928	)			43				(885	)
Effect of foreign currency exchange differences			(22	)			(9	)			(31	)
Balance at September 30, 2016		$	299			$	1,436			$	1,735

 

b.

Transfers of financial assets

 

Factored trade receivables of the Company were as follows:

 

Counterparties

Receivables Sold (In Thousands)

Amounts Collected (In Thousands)

Advances Received At Period-end (In Thousands)

Interest Rates on Advances Received (%)

Credit Line (In Thousands)

For the nine months ended September 30, 2015

Citi bank

US$

47,555

US$

–

US$

47,555

1.03

US$

92,000

For the nine months ended September 30, 2016

Citi bank

US$

–

US$

41,849

US$

–

–

US$

66,000

 

Pursuant to the factoring agreement, losses from commercial disputes (such as sales returns and discounts) should be borne by the Company, while losses from credit risk should be borne by the banks. The Company also issued promissory notes to the banks for commercial disputes which remained undrawn since. The promissory notes amounted to US$5,000 thousand and US$2,000 thousand as of December 31, 2015 and September 30, 2016, respectively. As of September 30, 2016, there was no significant losses from commercial disputes in the past and the Company does not expect any significant commercial dispute losses in the foreseeable future.

 

10.

INVENTORIES

 

		December 31, 2015				September 30, 2016
			NT$				NT$				US$ (Note 4)
Finished goods		$	10,012,182			$	6,639,252			$	212,320
Work in process			1,692,346				4,664,874				149,180
Raw materials			9,672,894				11,071,692				354,068
Supplies			852,251				788,774				25,225
Raw materials and supplies in transit			1,028,606				470,561				15,048
		$	23,258,279			$	23,635,153			$	755,841

 

The cost of inventories recognized as operating costs for the nine months ended September 30, 2015 and 2016 were NT$170,887,198 thousand and NT$158,489,852 thousand (US$5,068,431 thousand), respectively, which included write-down of inventories at NT$3,724 thousand and NT$313,124 thousand (US$10,013 thousand), respectively.

 

11.

INVENTORIES RELATED TO REAL ESTATE BUSINESS

 

		December 31, 2015				September 30, 2016
			NT$				NT$				US$ (Note 4)
Land and buildings held for sale		$	5,431			$	667			$	21
Construction in progress			23,956,678				22,453,205				718,043
Land held for construction			1,751,429				1,687,526				53,967
		$	25,713,538			$	24,141,398			$	772,031

 

Land and buildings held for sale located in Shanghai Zhangjiang was completed and successively sold. Construction in progress is mainly located on Caobao Road and Hutai Road in Shanghai, China and Lidu Road and Xinhong Road in Kun Shan, China. The capitalized borrowing costs for the nine months ended September 30, 2015 and 2016 is disclosed in Note 23.

 

As of December 31, 2015 and September 30, 2016, inventories related to real estate business of NT$24,837,046 thousand and NT$11,978,732 thousand (US$383,074 thousand), respectively, are expected to be recovered longer than twelve months.

 

Refer to Note 34 for the carrying amount of inventories related to real estate business that had been pledged by the Group to secure bank borrowings.

 

12.

OTHER FINANCIAL ASSETS

 

		December 31, 2015				September 30, 2016
			NT$				NT$				US$ (Note 4)
Unsecured subordinate corporate bonds		$	–			$	1,000,000			$	31,980
Time deposits with original maturity over three months			220,545				948,086				30,319
Pledged time deposits (Note 34)			207,359				235,913				7,544
Guarantee deposits			197,513				210,966				6,746
Others (Note 34)			22,254				7,592				243
			647,671				2,402,557				76,832
Current			301,999				1,047,303				33,492
Non-current		$	345,672			$	1,355,254			$	43,340

 

In June 2016, the Group acquired 1,000 units of perpetual unsecured subordinate corporate bonds in the amount of NT$1,000,000 thousand (US$31,037 thousand). The corporate bonds are in denomination of NT$1,000 thousand with annual interest rate at 3.5% as of September 30, 2016.

 

13.

INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

 

		December 31,  2015				September 30, 2016
			NT$				NT$				US$ (Note 4)
Investments in associates		$	36,508,403			$	48,869,930			$	1,562,838
Investments in joint ventures			613,841				703,684				22,503
		$	37,122,244			$	49,573,614			$	1,585,341

a.

Investments in associates

 

1)

Investments in associates accounted for using the equity method consisted of the following:

 

						Carrying Amount
				Operating		December 31,  2015				September 30, 2016
Name of Associate		Main Business		Location		NT$				NT$				US$ (Note 4)
Material associate
Siliconware Precision Industries Co., Ltd. (“SPIL”)		Engaged in assembly, testing and turnkey services of integrated circuits		ROC		$	35,141,701			$	45,675,004			$	1,460,665
Associates that are not individually material
Deca Technologies Inc.（”DECA”）		Holding company and the group engaged in manufacturing, development and marketing of wafer level packaging and interconnect technology		British Cayman Islands			–				1,892,542				60,523
Hung Ching Development & Construction Co. (“HC”)		Engaged in the development, construction and leasing of real estate properties		ROC			1,294,191				1,266,121				40,490
Hung Ching Kwan Co. (“HCK”)		Engaged in the leasing of real estate properties		ROC			332,444				324,959				10,392
Advanced Microelectronic Products Inc. (“AMPI”)		Engaged in manufacturing of integrated circuit		ROC			40,216				11,453				366
							36,808,552				49,170,079				1,572,436
		Less: Deferred gain on transfer of land					300,149				300,149				9,598
						$	36,508,403			$	48,869,930			$	1,562,838

 

2)

At each balance sheet date, the percentages of ownership held by the Group were as follows:

 

					December 31, 2015				September 30,  2016
	SPIL				24.99	%			33.29	%
	DECA				–				22.07	%
	HC				26.22	%			26.22	%
	HCK				27.31	%			27.31	%
	AMPI				18.24	%			17.38	%

 

3)

In September 2015, the Company acquired 725,749 thousand ordinary shares and 10,650 thousand units of ADS (one ADS represents five ordinary shares) of SPIL at NT$45 per ordinary share. The percentage of ownership was 24.99% and, as a result, the Company obtained significant influence over SPIL.

 

In March and April 2016, the Company acquired additional 258,300 thousand ordinary shares and ADS (one ADS represents five ordinary shares) of SPIL from open market with a total consideration of NT$13,735,498 thousand (US$439,255 thousand) which was paid in cash. As the result, the percentage of ownership increased from 24.99% to 33.29%.

 

As of September 30, 2016, the Company has completed the identification of the difference between the cost of the investment and the Company’s share of the net fair value of SPIL’s identifiable assets and liabilities. Therefore, the Company has retrospectively adjusted the comparative financial statements for prior periods. As of December 31, 2015, the retrospective adjustments are summarized as follows:

 

		Before adjusted				After adjusted
			NT$				NT$
Investments accounted for using the equity method - SPIL		$	35,423,058			$	35,141,701
Retained earnings		$	53,981,305			$	53,699,948

 

In June 2016, the Company’s board of directors approved to enter into and execute a joint share exchange agreement with SPIL. Please refer to Note 37.

 

4)

In July 2016, the Company acquired 98,490 thousand preferred shares issued by DECA at US$0.608 per share with a total consideration of NT$1,934,062 thousand (US$59,882 thousand). The percentage of ownership was 22.07% and the Company obtained significant influence over DECA. As of September 30, 2016, the Company has not completed the identification of the difference between the cost of the investment and the Company’s share of the net fair value of DECA’s identifiable assets and liabilities.

 

5)

The convertible bond holders of AMPI exercised the conversion option in September 2016 and, as a result, the percentage of ownership held by the Company decreased from 18.24% to 17.38%.

 

6)

Fair values (Level 1 inputs in terms of IFRS 13) of investments in associates with available published price quotation are summarized as follows:

 

				December 31, 2015				September 30, 2016
					NT$				NT$				US$ (Note 4)
	SPIL			$	40,741,700			$	48,753,100			$	1,559,101
	HC			$	1,149,549			$	1,170,138			$	37,420
	AMPI			$	104,255			$	83,271			$	2,663

7)

Summarized financial information in respect of the Group’s material associate

 

The summarized financial information below represents amounts shown in SPIL’s consolidated financial statements prepared in accordance with IFRSs as issued by IASB and adjusted by the Group for equity method accounting purposes.

 

		December 31, 2015				September 30, 2016
			NT$				NT$				US$ (Note 4)
Current assets		$	48,785,212			$	44,914,756			$	1,436,353
Non-current assets			74,424,040				75,278,522				2,407,372
Current liabilities			(30,677,239	)			(30,432,003	)			(973,201	)
Non-current liabilities			(23,002,788	)			(26,339,259	)			(842,317	)
Equity		$	69,529,225			$	63,422,016			$	2,028,207
Proportion of the Group’s ownership			24.99	%			33.29	%			33.29	%

(Continued)

 

		December 31, 2015				September 30, 2016
			NT$				NT$				US$ (Note 4)
Net assets attributable to the Group		$	17,375,353			$	21,113,189			$	675,190
Adjustments for fair value of identifiable assets acquired
Goodwill			8,254,294				12,782,259				408,770
Tangible assets			3,249,580				3,819,232				122,137
Intangible assets			6,268,474				7,960,324				254,568
Carrying amount		$	35,141,701			$	45,675,004			$	1,460,665

(Concluded)

 

The above tangible assets and intangible assets are mainly depreciated or amortized over 10 years.

 

		For the Nine Months Ended September 30, 2016
			NT$				US$ (Note 4)
Operating revenue		$	62,934,405			$	2,012,613
Gross profit		$	14,121,937			$	451,613
Profit before income tax		$	8,292,368			$	265,186
Net profit for the period		$	7,253,481			$	231,963
Other comprehensive loss for the period			(1,518,518	)			(48,562	)
Total comprehensive income for the period		$	5,734,963			$	183,401
Cash dividends received from SPIL		$	3,941,740			$	126,055

 

8)

Aggregate information of associates that are not individually material

 

		For the Nine Months Ended September 30
		2015				2016
			NT$				NT$				US$ (Note 4)
The Group’s share of:
Net profit (loss) for the period		$	118,754			$	(13,186	)		$	(422	)
Other comprehensive loss for the period			(62,823	)			(37,574	)			(1,201	)
Total comprehensive income (loss) for the period		$	55,931			$	(50,760	)		$	(1,623	)

 

The investments accounted for using the equity method and the share of profit or loss and other comprehensive loss of the investments in associates for the nine months ended September 30, 2015 and 2016 was based on the associates’ financial statements prepared in accordance with IFRSs as issued by IASB and adjusted by the Group for equity method accounting purposes.

 

 

b.

Investments in joint ventures

 

1)

The Group’s investment in joint ventures that are not individually material and were accounted for using the equity method consisted of ASE Embedded Electronics Inc. (“ASEEE”). In May 2015, the Group and TDK Corporation (“TDK”) entered into an agreement to establish a joint venture to invest in ASEEE. The Croup invested NT$618,097 thousand in August 2015 and participated ASEEE’s capital increase in cash with NT$146,903 thousand (US$4,698 thousand) in September 2016. As of December 31, 2015 and September 30, 2016, the percentage of ownership are both 51%. ASEEE are located in ROC and engaged in the production of embedded substrate. According to the joint arrangement, the Group and TDK must act together to direct the relevant operating activities and, as a result, the Group does not control ASEEE. The investment in ASEEE is accounted for using the equity method.

 

2)

Aggregate information of joint venture that is not individually material

 

		For the Nine Months Ended September 30
		2015				2016
		NT$				NT$				US$ (Note 4)
The Group’s share of net loss and total comprehensive loss for the period		$	(195	)		$	(57,252	)		$	(1,831	)

 

3)

The investments accounted for using the equity method and the share of loss and other comprehensive loss for the investments in the joint venture for the nine months ended September 30, 2015 and 2016, respectively, was based on the joint venture’s financial statements prepared in accordance with IFRSs as issued by IASB and adjusted by the Group for equity method accounting purposes.

 

14.

PROPERTY, PLANT AND EQUIPMENT

 

The carrying amounts of each class of property, plant and equipment were as follows:

 

		December 31, 2015				September 30, 2016
		NT$				NT$				US$ (Note 4)
Land		$	3,381,300			$	3,339,803			$	106,805
Buildings and improvements			59,801,054				57,676,078				1,844,454
Machinery and equipment			78,715,309				73,399,437				2,347,280
Other equipment			1,814,994				1,841,436				58,888
Construction in progress and machinery in transit			6,284,418				8,952,101				286,284
		$	149,997,075			$	145,208,855			$	4,643,711

 

For the nine months ended September 30, 2015

 

		Land				Buildings and improvements				Machinery and equipment				Other equipment				Construction in progress and machinery in transit				Total
		NT$				NT$				NT$				NT$				NT$				NT$
Cost
Balance at January 1, 2015		$	3,348,018			$	86,725,254			$	233,669,627			$	7,182,574			$	5,862,217			$	336,787,690
Additions			–				53,050				173,239				204,926				22,698,232				23,129,447
Disposals			–				(202,257	)			(5,877,465	)			(203,255	)			(8,992	)			(6,291,969	)

 

(Continued)

 

		Land				Buildings and improvements				Machinery and equipment				Other equipment				Construction in progress and machinery in transit				Total
		NT$				NT$				NT$				NT$				NT$				NT$
Reclassification		$	–			$	6,638,011			$	14,094,445			$	289,476			$	(20,893,867	)		$	128,065
Effect of foreign currency exchange differences			34,556				34,066				31,141				40,687				207,628				348,078
Balance at September 30,2015		$	3,382,574			$	93,248,124			$	242,090,987			$	7,514,408			$	7,865,218			$	354,101,311
Accumulated depreciation and impairment
Balance at January 1, 2015		$	–			$	30,329,544			$	149,497,980			$	5,365,887			$	7,164			$	185,200,575
Depreciation expense			–				3,537,606				17,636,686				576,456				–				21,750,748
Impairment losses recognized			–				117,646				31,155				–				2,290				151,091
Disposals			–				(185,390	)			(5,693,081	)			(196,852	)			–				(6,075,323	)
Reclassification			–				322				601				(4,102	)			–				(3,179	)
Effect of foreign currency exchange differences			–				(65,898	)			126,631				35,553				–				96,286
Balance at September 30,2015		$	–			$	33,733,830			$	161,599,972			$	5,776,942			$	9,454			$	201,120,198

 

(Concluded)

 

For the nine months ended September 30, 2016

 

		Land				Buildings and improvements				Machinery and equipment				Other equipment				Construction in progress and machinery in transit				Total
		NT$				NT$				NT$				NT$				NT$				NT$
Cost
Balance at January 1, 2016		$	3,381,300			$	94,447,932			$	243,283,607			$	7,722,408			$	6,397,760			$	355,233,007
Additions			–				(19,825	)			100,380				76,145				21,128,121				21,284,821
Disposals			–				(387,024	)			(8,033,648	)			(84,143	)			(215,773	)			(8,720,588	)
Reclassification			–				3,316,244				14,388,566				594,599				(18,299,584	)			(175	)
Acquisitions through business combinations			–				–				–				1,159				–				1,159
Effect of foreign currency exchange differences			(41,497	)			(2,534,611	)			(4,762,613	)			(194,188	)			(42,550	)			(7,575,459	)
Balance at September 30, 2016		$	3,339,803			$	94,822,716			$	244,976,292			$	8,115,980			$	8,967,974			$	360,222,765
Accumulated depreciation and impairment
Balance at January 1, 2016		$	–			$	34,646,878			$	164,568,298			$	5,907,414			$	113,342			$	205,235,932
Depreciation expense			–				3,845,108				17,236,723				612,940				–				21,694,771
Impairment losses recognized			–				620				876,153				5,564				4,509				886,846
Disposals			–				(332,480	)			(7,790,959	)			(76,588	)			(100,049	)			(8,300,076	)
Reclassification			–				(5,200	)			2,979				2,221				–				–
Acquisitions through business combinations			–				–				–				824				–				824
Effect of foreign currency exchange differences			–				(1,008,288	)			(3,316,339	)			(177,831	)			(1,929	)			(4,504,387	)
Balance at September 30, 2016		$	–			$	37,146,638			$	171,576,855			$	6,274,544			$	15,873			$	215,013,910

 

		Land				Buildings and improvements				Machinery and equipment				Other equipment				Construction in progress and machinery in transit				Total
		US$ (Note 4)				US$ (Note 4)				US$ (Note 4)				US$ (Note 4)				US$ (Note 4)				US$ (Note 4)
Cost
Balance at January 1,2016		$	108,132			$	3,020,401			$	7,780,096			$	246,959			$	204,597			$	11,360,185
Additions			–				(634	)			3,210				2,435				675,667				680,678
Disposals			–				(12,377	)			(256,912	)			(2,691	)			(6,900	)			(278,880	)
Reclassification			–				106,052				460,140				19,015				(585,212	)			(5	)
Acquisitions through business combinations			–				–				–				37				–				37
Effect of foreign currency exchange differences			(1,327	)			(81,056	)			(152,306	)			(6,210	)			(1,361	)			(242,260	)
Balance at September 30,2016		$	106,805			$	3,032,386			$	7,834,228			$	259,545			$	286,791			$	11,519,755
Accumulated depreciation and impairment
Balance at January 1,2016		$	–			$	1,107,991			$	5,262,817			$	188,916			$	3,625			$	6,563,349
Depreciation expense			–				122,965				551,222				19,602				–				693,789
Impairment losses recognized			–				20				28,019				178				144				28,361
Disposals			–				(10,633	)			(249,151	)			(2,449	)			(3,200	)			(265,433	)
Reclassification			–				(166	)			95				71				–				–
Acquisitions through business combinations			–				–				–				26				–				26
Effect of foreign currency exchange differences			–				(32,245	)			(106,054	)			(5,687	)			(62	)			(144,048	)
Balance at September 30,2016		$	–			$	1,187,932			$	5,486,948			$	200,657			$	507			$	6,876,044

Due to the Group’s future operation plans and capacity evaluation or production demands in segment of packaging and testing, the Group believed that a portion of property, plant and equipment was not used and recognized an impairment loss of NT$151,091 thousand and NT$886,846 thousand (US$28,361 thousand) under the line item of other operating income and expenses in the consolidated statements of comprehensive income for the nine months ended September 30, 2015 and 2016, respectively. The recoverable amount of a portion of the impaired property, plant and equipment is determined by its fair value less costs of disposal, of which the fair value is based on the quoted prices of assets with similar obsolescence provided by the vendors in market. The recent quoted prices of assets are a Level 3 input in terms of IFRS 13 because the market is not very active. The recoverable amount of the other portion of the impaired property, plant and equipment is determined on the basis of its value in use. The Group expects to derive zero future cash flows from these assets.

 

Each class of property, plant and equipment was depreciated on a straight-line basis over the following useful lives:

 

Buildings and improvements
Main plant buildings		10-40 years
Cleanrooms		10-20 years
Others		3-20 years
Machinery and equipment		2-10 years
Other equipment		2-20 years

 

The capitalized borrowing costs for the nine months ended September 30, 2015 and 2016 ,respectively, are disclosed in Note 23.

 

15.

GOODWILL

 

		Cost				Accumulated impairment				Carrying amount
		NT$				NT$				NT$
Balance at January 1, 2015		$	12,434,411			$	1,988,996			$	10,445,415
Effect of foreign currency exchange differences			63,855				–				63,855
Balance at September 30, 2015		$	12,498,266			$	1,988,996			$	10,509,270
Balance at January 1, 2016		$	12,495,515			$	1,988,996			$	10,506,519
Acquisitions through business combinations			83,892				–				83,892
Effect of foreign currency exchange differences			(77,963	)			–				(77,963	)
Balance at September 30, 2016		$	12,501,444			$	1,988,996			$	10,512,448

 

		Cost				Accumulated impairment				Carrying amount
		US$ (Note 4)				US$ (Note 4)				US$ (Note 4)
Balance at January 1, 2016		$	399,601			$	63,607			$	335,994
Acquisitions through business combinations			2,683				–				2,683
Effect of foreign currency exchange differences			(2,494	)			–				(2,494	)
Balance at September 30, 2016		$	399,790			$	63,607			$	336,183

16.

OTHER INTANGIBLE ASSETS

 

The carrying amounts of each class of other intangible assets were as follows:

 

		December 31, 2015				September 30, 2016
		NT$				NT$				US$ (Note 4)
Customer relationships		$	274,402			$	214,167			$	6,849
Computer software			953,322				954,310				30,518
Patents and acquired specific technology			15,696				411,530				13,161
Others			138,673				124,662				3,987