Phison Electronics Corporation 2018 Annual Report Contents

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Phison Electronics Corporation 2018 Annual Report Contents Stock Code:8299 Phison Electronics Corporation 2018 ANNUAL REPORT Notice to Readers For the convenience of readers, the 2018 ANNUAL REPORT has been translated into English from the original Chinese version prepared and used in the Republic of China and is not an official document of the shareholders’ meeting. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese version of the 2018 ANNUAL REPORT shall prevail. Annual Report is available in the following websites. Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw Corporation Website:www.phison.com Printedon May 24, 2019 Spokesperson Name: Yu Zhi Chyang Title: Senior Special Assistant Tel: (037) 586-896 ext.1019 E-mail: [email protected] Deputy Spokesperson Name: Lu Kuo Ting Title: Project Manager Tel: (037) 586-896 ext. 2622 E-mail: [email protected] Headquarters, Branches and Plant Headquarter Address:10F.-6, No.251, Fuxing 1st St., Zhubei City, Hsinchu County 302, Taiwan (R.O.C.) Tel: (03)657-9299 Zhunan Branch and Plant Zhunan Branch Address:No.1, Qunyi Rd.,Jhunan Township, Miaoli County 350, Taiwan (R.O.C.) Zhunan 2 Factory Address:No.1-1, Qunyi Rd., Jhunan Township, Miaoli County 350, Taiwan (R.O.C.) Zhunan 3 Factory Address:No.1-2, Qunyi Rd., Jhunan Township, Miaoli County 350, Taiwan (R.O.C.) and No.1-3, Qunyi Rd., Jhunan Township, Miaoli County 350, Taiwan (R.O.C.) Tel: (037)586-896 Stock Transfer Agent Registrar, Horizon Security Corp. Address: 3F., No.236, Sec. 4, Hsin-I Rd., Da’an Dist., Taipei City 106, Taiwan (R.O.C.) Website: www.honsec.com.tw Tel: (02)2326-8818 Accounting Firm Auditors: Dai Xin Wei and Fan Yu Wei Deloitte Touche Tohmatsu Limited Address: 20F., No. 100, Songren Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C.) Website: www.deloitte.com.tw Tel: (02)2725-9988 Overseas Securities Exchange: None. Corporation Website: www.phison.com Phison Electronics Corporation 2018 Annual Report Contents I. Letter to Shareholders ............................................................................................ 1 II. Company Profile ...................................................................................................... 4 2.1 Date of Incorporation........................................................................................................................... 4 2.2 Company History ................................................................................................................................. 4 III. Corporate Governance Report .............................................................................. 6 3.1 Organization ........................................................................................................................................ 6 3.2 Profile of Directors, Supervisors and Management Team ................................................................... 8 3.3 Remuneration of Directors, Supervisors, President, and Vice Presidents ......................................... 14 3.4 Implementation of Corporate Governance ........................................................................................ 19 3.5 Information Regarding the Company’s Audit Fee and Independence .............................................. 60 3.6 Replacement of CPA. ........................................................................................................................ 61 3.7 The company's chairperson, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its certified public accountant or at an affiliated enterprise of such accounting firm. .......................................... 61 3.8 Stock Transfer and Pledge of Directors, Supervisors, Management Team and Major Shareholders Who Own 10% of the Stock Before the Annual Report is Published. .............................................. 61 3.9 Relationship among the Top Ten Shareholders ................................................................................. 63 3.10Consolidated Number of Shares owned by Company, Directors, Supervisors, Management Team and Businesses Controlled Directly or Indirectly by this Company .................................................. 64 IV. Capital Overview ................................................................................................... 66 4.1 Capital and Shares ............................................................................................................................. 66 4.2 Status of Corporate Bonds ................................................................................................................. 71 4.3 Status of Preferred Stocks. ................................................................................................................. 71 4.4 Status of Global Depository Receipts. ............................................................................................... 71 4.5 Status of Employee Stock Option Plan .............................................................................................. 72 4.6 Issuance of New Restricted Employee Shares. .................................................................................. 72 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions. ............................... 72 4.8 Finance Plans and Implementation .................................................................................................... 72 V. Operation Overview .............................................................................................. 73 5.1 Business Activities ............................................................................................................................ 73 5.2 Market and Sales Overview ............................................................................................................... 80 5.3 Human Resources in the Previous Two Years Before the Publication of the Annual Report ........... 87 5.4 Environmental Protection Expenditure ............................................................................................. 87 5.5 Labor Relations ................................................................................................................................. 88 5.6 Important Contracts ........................................................................................................................... 90 VI. Financial Information ........................................................................................... 91 6.1 Five-Year Financial Summary ........................................................................................................... 91 6.2 Five-Year Financial Analysis ............................................................................................................ 95 6.3 2018 Supervisors’ Review Report ..................................................................................................... 98 6.4 The Consolidated Financial Statements for the Year of 2018 ........................................................... 99 6.5 The Audited Nonconsolidated Financial Statement for the Year of 2018 ......................................... 99 6.6 The Company should disclose the financial impact to the Company if the Company and its affiliated companies have incurred any financial or cash flow difficulties in 2018 and as of the date of this Annual Report. ....................................................................................................................... 99 VII. Financial Status and Operating Results Review and Risk Matters ............... 100 7.1 Financial Status Analysis ................................................................................................................. 100 7.2 Operating Results Analysis ............................................................................................................. 102 7.3 Analysis of Cash Flow ..................................................................................................................... 104 7.4 Recent Years Major Capital Expenditures and Impact on Financial and Business ......................... 105 7.5 Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Next Year ................................................................................................. 105 7.6 Risk Management and Analysis ...................................................................................................... 105 7.7 Other Major Events. ........................................................................................................................ 110 VIII.Special Disclosure ............................................................................................... 111 8.1 Summary of Affiliated Companies .................................................................................................. 111 8.2 Private Placement of securities during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report ................................................................................. 122 8.3 Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years ................ 122 8.4 Other Necessary Statements ...........................................................................................................
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