Spokesperson : Acting Spokesperson : Global Headquarters ......Lite-On Technology was given the HP...

Spokesperson :Andrew LinChief Financial OfficerTel : 886-2-8798-2888e-mail : [email protected]

Acting Spokesperson :Ancel LeeVice President Finance DivisionTel : 886-2-8798-2888e-mail : [email protected]

Global Headquarters :No. 392, Ruey Kuang Road, Neihu Taipei 114, Taiwan, R.O.C.Tel : 886-2-8798-2888

Major Factory in Keelung :No. 14, Wu-Shin Street, Ta-Wu-Lung Industrial ZoneKeelung City 204, Taiwan. R.O.C.Tel : 886-2-2433-3333

Stock Affairs Department :1F, No. 392, Ruey Kuang Road, NeihuTaipei 114, Taiwan, R.O.C.Tel : 886-2-8798-2888www.liteon.com

Auditors :Clark Chen and James Wu Deloitte & Touche12F, No. 156, Sec. 3, Min-Sheng E. Road, Taipei 105, Taiwan, R.O.C. Tel : 886-2-2545-9988www.deloitte.com.tw

GDR and related information :Citibank, N.A.www.citibank.com/adr

Lite-On Technology Corporation website :www.liteon.com

21

03

13

17

26

27

28

28

29

30

35

49

50

50

51

52

53

63

68

05

11

33

61

Management Philosophy

Letter to Shareholders

Corporate OverviewCompany Prof i le

Organizat ion

Issuance of Corporate Bonds

Preferred Shares Status

Issuance of Global Depositary Receipts (GDRs)

Employee Stock Opt ion

Merger and Acquis i t ion

Introduct ion of L i te-On Cultural Foundat ion

Operational HighlightsBusiness Overv iew

Personnel Growth over the Last Two Years

Environmental Protect ion Expenditures

Labor Relat ions

Important Contracts

Major Legal Proceedings and Cont ingencies

Assets Acquis i t ion or Disposit ion

Financial InformationF inancia l Histor ica l Summary

Audited F inancia l Statements

C o n t e n t s

This annual report contains excerpts from the Chinese version of Lite-On Technology Corporation’s 2003 annual report, which was printed on April 30th, 2004 and published in accordance with “the Regulations of the Criteria Governing Information to be published in Annual Company Reports in the Republic of China.“ For more information, please refer to the Chinese version of the Company’s annual report.

3 4

VisionA World-Class Company Striving for Excellence

Business scale : exceeding US$8 billion in terms of revenues.

Leadership : being the absolute No. 1 position in the global market.

Profitability : reaching the “A” standard of the industry.

Corporate governance : realizing “transparency” ”independence” and “Fairness”.

Corporate citizenship : achieving “globalization” ”environmental protection” and “Societal responsibility”.

MissionShort-term : leading position for Optoelectronic components in Asia.

Long-term : global leader in digital integrated products.

StrategyGrowth : striving for competitive edge in the fast-growing markets.

Value : providing customers with differentiated products and technologies.

Stability : continuing to generate excellent profits and cash flows.

Lite-On Value Customer Satisfaction

Excellent in Execution

Innovation

Integrity

Business Philosophy

LITE-ON THE WORLD

5 6

R e p o r t t o S h a r e h o l d e r s

Becoming one of Multi-trillion corporations after the first year of merger

The year of 2003 was the first year after the four-in-one merger of Lite-On Technology. Thanks to the team efforts made by all of our colleagues as well as the encouragement and support from our shareholders, the consolidated global revenue of the Company, including the two major subsidiaries of Lite-On IT and Silitech with more than 50% shares held by the Company, reached NT$144.729 billion, of which the revenue of the parent company in Taiwan also reached NT$99.668 billion.

In terms of profits, the Company also earned and achieved a before-tax net income of NT$8.348 billion and after-tax earnings of NT$7.281 billion. This achievement enabled Lite-On Technology to rank among the top ten electronic companies of Taiwan for the year of 2003, and allowed Lite-On Technology to be honorably ranked the 61st in U.S. Business Week Global IT 100.

Besides the outstanding achievement in sales, Lite-On also achieved impressive results in its overall business performance. During the year of 2003, 85% of sales made by Lite-On Technology were contributed by products that were ranked top six in the world with respect to each of its global market share. Among which, the three product categories of Power, Image and Modem products were ranked top three in the world while Digital Display and LED products were ranked top six in the world.

Furthermore, after the four-in-one merger, thanks to the integration of procurement, information, sales and accounting departments that the raw material costs decreased substantially while the business efficiency increased, which has been highly recognized by our customers.

Lite-On Stands As the Leading Supplier of Optoelectronic Components

Through the first year of merger, the overall business performance of Lite-On Technology is gradually improved. Looking into the year of 2004, we estimate that the consolidated global revenue for this year will exponentially grow by over 40% compared to that of last year; targeting at the Company's product structure and market share, Lite-On Technology will position optoelectronic components as our main products to further display Lite-On Technology's leading position in Taiwan in the fields of LED, Power Supply, Digital Display, and Image products. In total the aforesaid four major types of products that relate to optoelectronic components will contribute to more than 80% of Lite-On's overall revenues.

Lite-On Technology has been devoted to vertical integration, that is, to provide a complete and multiple integration for components, modules, and systems, and has significantly contributed to Lite-On Technology's current growth. Besides products related to optoelectronic components, it is highly expected that mobile phone products and computer systems will become the next development target for next stage as the economic scale increases.

Dear shareholders,

On November 4, 2002, Lite-On Technology Corporation set the first example in Taiwan's securities history by the merger of four listed

companies, and kept the stock code of 2301 of Taiwan's first listed electronics company, Lite-On Electronics Inc. "New Lite-On" not

only symbolizes the entrepreneurial spirit of the first listed company in Taiwan's information technology industry, but also sets a new

milestone for the integration of Taiwan's high-tech industry to work toward the next climax.

7 8

"Customer First" as our Business Strategy"Customer First" is the attitude that is highly pursued by the Company. Lite-On Technology believes that our customers are the most important assets, so generating profits for our customers is indeed the main goal of business operation. We insist on a quality policy of zero-defect, on-time delivery, leading technology, and total customer satisfaction, and requires all employees to be able to listen to the customers, so as to grasp the trend, to generate market profits, and to jointly create a triple-win situation. Only when the customers are truly satisfied can a company enjoy an exceptional growth in profits.

To reach the goal of "customer satisfaction first," it is a must to adopt the strategy, so-called "Golden Triangle of Operating Excellence," that focuses on the best quality and consists of "growth," "value" and "stability." Regarding growth, we insist on striving for Lite-On's competitive edge in this fast-growing market; regarding value, Lite-On provides customers with differentiated products and technology to differentiate Lite-On's own value; regarding stability, Lite-On will continue to generate excellent profits and cash flow for our shareholders.

Establishment of Global Headquarters

The Lite-On Technology Building located in the Neihu Technology Park was inaugurated from June, 2003, and is the headquarters, as well as the R&D/information/finance centers. Moreover, this headquarters symbolizes that the Company has reached the milestone for advancing into the next stage of growth after Lite-On Technology's four-into-one merger.

Sixty percent of the foundation surface of the Lite-On Technology Building is covered by green space, providing an area of "technology, humanism, and environmental protection" as feedback to employees and society. In terms of planning on use of the building, the concept of "humanism" is emphasized, further stressing simple, practical and automated design; the building offers colleagues of the Company with a constructive, highly-efficient and human-centered working environment, to further improve the employee and corporate productivity. Besides, the appearance of the building resembles a model of both hands together that represents the respect shown by mankind to God, where "both hands together" stands for greeting and gratitude, just like both hands up raised to worship and thank God, which pass on Lite-On Technology's rich care for humanity and down-to-earth corporate culture.

Awards and Recognitions

Lite-On Technology has gone all the way to receive much recognition from the government and the customer, as it was granted many awards and certifications in the year of 2003, which directs enormous honor and inspiration to the Company that we remember with gratitude. A few examples are:

Lite-On Technology was honorably ranked the 61st in the U.S. Business Week Global IT 100.

Lite-On Technology was honorably ranked 6th in the "2003 Benchmark Enterprise Reputation Survey" conducted by Common Wealth Magazine.Lite-On Technology's Peripherals and Components Strategic Business Group honorably received the "Excellent Product Design Award" given by the Taiwan External Trade Development Council.Lite-On Technology was given the HP Best Supplier Award.The Taipei City Hsinyi Community College undertaken by Lite-On Cultural Foundation was awarded the "Outstanding Prize" in the review conducted by the Department of Education of Taipei City in 2002 and 2003 consecutively.

Gratitude Lite-On Technology will continue to work hard to constantly improve the corporate body and product competitiveness, in order to maintain corporate achievements and constant growth of profits, to generate the maximum benefits for shareholders, customers and employees, and to share the fruitful achievements together.

In conclusion, again Lite-On would like to sincerely thank all shareholders, customers, suppliers and our colleagues, for it is your encouragement and contribution that make Lite-On Technology capable of generating higher return on investment for investors, as well as help us in the pursuit of enlightening the world by the spirit of "quality" and "humanism," as we always have the vision of becoming a global excellent company. We hereby express our heartfelt appreciation!

9 10

Chairman

Chief Executive Officer

11 12

C o r p o r a t e O v e r v i e w

Management team members (from left to right): CEO David Lin, Chairman Raymond Soong, Deputy CEO Warren Chen,

President of Peripherals and Components SBG K.C. Terng, President of Image SBG Paul Lo, President of New Business

Development SBG Danny Liao, President of Communications SBG Ignatius Wei, and CFO Andrew Lin.

13 14

1.1 Established: March 17, 1989

1.2 Milestones On November 4th, 2002, Lite-On Electronics, Silitek, Lite-On Technology and GVC merged and became known as Lite-On

Technology Corporation. The remaining company inherits the Stock Code of 2301.

2004

Lite-On Technology selected as " 2003's No. 1 Optoelectronics Company in the Top 1000 Manufacturers" by Business Weekly

in Taiwan.

Lite-On Technology acquires Lite-On Enclosure Inc.

Lite-On Technology garners LED-Based White Emitting Cross-Licensing through the Peripherals & Components Strategic

Business Group with OSRAM.

The Peripherals & Components Strategic Business Group awarded "Supplier of the Year 2003" from INVENTEC.

The Lite-On Cultural Foundation selected to manage the "National Children Counseling Seminar" from 2001 to 2004 by

Children's Bureau of Interior R.O.C.

Silitech, one of Lite-On Technology's affiliates, issued initial public offering on the Taiwan Stock Exchange with Stock Code 3311.

2003

Lite-On Technology selected as "No. 61 among the Top 100 IT companies ranking" by Business Week of U.S..

Lite-On Technology selected as " Top Six Manufacturing Company" by Common Wealth Magazine in Taiwan.

Lite-On Technology Peripherals & Components Strategic Business Group wins the "Product Design Excellent Award" from the

China External Trade Development Council.

Lite-On Technology receives HP Best Supplier Award.

Chairman Raymond Soong selected as one of the "Top-10 Distinguished Entrepreneurs in IT Industry for 2002" by Excellence

Magazine of Taiwan.

The real estate management department of Lite-On Technology spins off as a separate entity known as the Lite-On Real Estate

Management Corporation.

"Build a New Home," a radio program broadcasted by the Lite-On Cultural Foundation, wins the 1st National Golden Voice

Award for the "Best Talk Program".

Taipei Shin-Yi Community College, managed by the Lite-On Cultural Foundation, wins "Excellence Award for Management and

Development" from the Bureau of Education Administration of Taipei City Government for the second consecutive year.

2002

Lite-On invites local and offshore Chinese students as well as professional designers to participate in the 3rd Annual Lite-On

Awards competition.

The Lite-On Cultural Foundation's Children Counseling Group receives the "Group & Personal Golden and Diamond Awards"

from the Taipei City Government.

The quarterly magazine Gen Shin Garden, published by the Lite-On Children Counseling Group, wins the "2002 Education

Publication Excellence Award" from the Executive Yuan of the Republic of China.

2001

Lite-On Electronics Inc. receives "Golden Award of Global Excellent Business Model" from the Ministry of Economic Affairs.

The Lite-On Cultural Foundation receives "Golden Wen-Xin Award" from the Council for Cultural Affairs (CCA) of

Executive Yuan.

The Lite-On Cultural Foundation selected to retain the right of managing the Taipei Shin-Yi Community College with a

common objective of offering lifelong learning opportunities to the community.

2000

With government approval, Silitek Corp., Lite-On Electronics Inc., Lite-On IT Corp. and Lite-On Enclosure Inc. form joint-

venture to build a 1.6 square-kilometer Guangzhou Science Park in China.

Lite-On Group donates NT$24 million and establish a Taiwanese elementary school in Dong-Guan, providing a good learning

environment to the children of Lite-On Taiwanese employees.

Lite-On launches the first Lite-On Awards, attracting more than 500 competitors from colleges and initiating the atmosphere

of innovation and research.

1999

The Optoelectronics business unit of Lite-On Technology spins off as a separate entity known as the Lite-On IT Corporation.

Lite-On Group acquires the GVC Corp.

Lite-On obtains construction license for a new global headquarter. Construction scheduled to begin on September 22 and

finish within three years.

Lite-On Group donates NT $31 million dollars to the victims of the September 21st earthquakes.

1 . C O M P A N Y P R O F I L E

15 16

1992

Lite-On Electronics Inc. earns the IECQ/ISO 9000 certifications.

Lite-On Technology establishes a subsidiary company in the Kiel City, Germany.

Silitek Corp. establishes a Lite-On Peripherals, Ireland, Ltd. as a branch office in Limerick City, Britain to better service its

European customers.

1991

Lite-On acquires the Switching Power Supply plant of NPE Company in Britain and operates under the name Lite-On Ltd.

1990

Lite-On Electronics Inc. establishes plant in Penang, Malaysia to manufacture Switching Power Supply.

Silitek Corp. acquires Maxi Switch Company, the third largest manufacturer of keyboards in the U.S. and hence added

value to its product line.

1989

Lite-On Electronics Inc. introduces its Corporate Identity System (CIS).

Lite-On Electronics Inc. establishes its first overseas production facility in Bangkok, Thailand to manufacture

optoelectronics products.

Lite-On Technology is established with NT$110 million in capital to begin manufacture of color CRT monitors.

1983

Lite-On Electronics Inc. issued initial public offering with the Stock Code of 2301 as the first technology firm on Taiwan

Stock Exchange.

1975

Lite-On Electronics Inc. establ ished with NT $1 mil l ion in capital and init iates its LED production plant in Chung-

Ho City, Taipei.

1998

Lite-On Electronics Inc. Tianjin plant and Lite-On Technology Shijie plant begin operations.

Lite-On Cultural Foundation receives "Group Service Award of Social Education" from the Ministry of Education.

1997

Lite-On Group further expands its manufacturing and customer service capabilities through 5 new constructions and existing-

plant expansion in several parts of the world, bringing the total number of Lite-On Group's manufacturing facilities to 38 locations.

With improvements in environmental quality, Lite-On Electronics Inc., Lite-On Technology and Lite-On Electronics Inc. of

England all receive ISO-14000 certifications.

1996

Lite-On IT Technology establishes a holding company and a product development center in Singapore. Also, the company

starts building the China Factory.

1995

Lite-On Electronics Inc. Thailand plant is ISO-9002 certified.

Silitek Corp. rubber plant in Malaysia is ISO-9002 certified.

Lite-On Technology is publicly listed on the Taiwan Stock Exchange, Stock Code:2346.

1994

Lite-On Electronics Inc. Optoelectronics business unit and Lite-On Technology Keelung plant are both ISO 9001 certified.

Silitek Corporations' Keelung and Tamshui plants in Taiwan, and Malaysian plant receive ISO 9002 certifications.

1993

Seven plants of the Lite-On Group receive ISO-9000 certifications.

The Lite-On Cultural Foundation is founded to cultivate humanity and concern for enterprise cultures, to promote public

welfare, and to support children's growth.

17 18

2 . O R G A N I Z AT I O N

2.1 Organization System

Organization Chart Function Description

Above is the Orgnization Chart of Lite-On Technology as of April 30th, 2004. The company structure and staff members' organization balance business efficiency and scale, in order to achieve the collaborative effectiveness that comes from simplifying the organization, achieving balance between divisions, and emphasizing teamwork.

Board of Directors

Stock Affairs Internal Auditing

Chairman

CEO

Deputy CEO Shared Services

Corp. Procurement

Corp. Information Technology

Manufacturing Operation Excellence

Strategic Planning

Business Strategy Development

Technical Research Development

Global Strategic Account Management

Corp. Function

Finance

Legal

Human Resources

Real Estate Management

Functions

Internal Auditing

Stock Affairs

Corporate Procurement

Information Technology

Manufacturing Operation Excellence

Finance

Legal

Human Resources

Real Estate Management

Global Strategic Account Management

Technical Research & Development

Business StrategyDevelopment

Description

Adds value and improves operations via independent, objective consulting activities. Helps the company accomplish objectives through a systematic, disciplined approach that evaluates and improves upon existing risk-management, control, and governance processes.

Manages issues related to account opening, stocks transfers, inquiries and information update for shareholders.Manages the shareholder meetings. Manages issues related to dividend payout and capital stock increases.Applies income tax for dividend income.

Develops and executes corporate procurement strategies.

Develops IT strategies.Designs infrastructure architecture.Manages performance of IT investments.Automates business operations and processes.

Manages global manufacturing operations to ensure effective utilization of corporate resources. Overseas productivity improvements, logistic controls and customer satisfaction initiatives.

Provides financial services to enhance company’s profitable growth. Establishes stringent risk-control discipline.Promotes unyielding integrity towards operational transparency.Ensures flawless execution of financial plans to continuously expand shareholder value.

Provides legal advice and services to the company.Oversees regulatory legal compliance. Strengthens internal management controls.Applies for and maintains intellectual property rights to improve the company’s competitiveness in the industry.

Plans and executes human resources programs to meet the company’s strategic development needs and to ensure the continuous development of human-capital assets.Recruits, develops and retains staff sufficient to meet the company’s operation needs.Develops comprehensive, competitive compensation and benefits policies to attract and retain well-qualified people.Initiates performance-management systems and employee-development policies that improve the organization’s overall performance and competency.Initiates safety and health policies to protect the employees and ensure the compliance with safety laws. Offers services to all employees who need help with personal issues.

Cooperates with the company’s development and operational needs to integrate, plan, and structure the global plants and factories.Manages and operates the real estate of global headquarters.

Oversees global marketing & sales, business planning, customer service, and supply-chain management.

Assists each business unit in strengthening core competencies. Integrates technologies and product development activities.

Develops business strategies for mergers and acquisitions.

Strategic Business Group

New Business

DevelopmentComputerCommunicationsImage

Peripherals &

Components

19 20

Note 4

Note 5

Note 6

Note 7

Mr. Raymond Soong

Mr. Chung –Yiao Lin

Representative of

Dorcas Investment

Co., Ltd.

Mr. David Lin

Representative of

Lite-On Capital Inc.

(Note 1)

Mr. Y. J. Kao

Representative of

Sam–Foung

Investment Co., Ltd.

Chairman

Director

Director

Director

April 19th,

2001

April 19th,

2001

April 19th,

2001

April 19th,

2001

May 20th,

1992-May

19th, 1995

May 30th,

1995-May

29th, 1998

May 19th,

1998-May

18th, 2001

April 19th,

2001-April

18th,2004

April 19th,

2001-April

18th,2004

April 19th,

2001-April

18th,2004

April 19th,

2001-April

18th,2004

45,076,330

1,903

2,216,024

2,965,700

7.85%

0.39%

0.52%

95,415,870

7,278,843

18,187,237

6,643,413

4.25%

0.32%

0.81%

0.30%

18,006,990

212,727

7,727,566

2,122

0.80%

0.01%

0.34%

B.S., Electronic Engineering, Taipei College of Technology

Chief of Engineer of T.I. Corp.

Senior Engineer of RCA Corp. Taiwan Branch Office

Taiwan Theological College & Seminary

MBA, Tulane University

President of T.I. Corp. Taiwan Branch office

China College of Marine Technology & Commerce

Supervisor Fung-Ing

Soong

Spouse 35,377,011

23,664,674

23,664,674

23,619,674

3

3

3

3

2.2 Information of Board Members, Supervisors, Presidents, Vice Presidents, and other Executive Officers.

Board Members and Supervisors

Record Date: April 17th, 2004

Title Name

Shares % Shares % Shares % Shares %

DateElected

Term(Years)

Shareholdingwhen Elected

CurrentShareholding

Spouse & MinorShareholding

Use Other PersonalName to Held

the Shareholding

Education & ExperienceShareholding when Elected

2003 Based Pay and TransportationAllowance

Current Position with

Other Company

Board of Directors, Supervisors or Managers who are Spouse or within 2

Degrees of Consanguinity to Said Person

Title Name Relation

21 22

Note 8

Note 9

Note 10

Note 11

Note 12

Mr. Warren Chen Representative of Lite-On Capital Inc.

(Note 1)

Mr. Keh-Shew Lu

Representative of Da-

Song Investment Co.,

Ltd.

Mr. Lu-Bao Shu



Ltd. (Note 2)

Mrs. Fung-Ing Soong

Mr. David Lee



Ltd. (Note 3)

Director

Director

Director

Supervisor

Supervisor

April 19 th,

2001

April 19 th,

2001

April 19 th,

2001

April 19 th,

2001

April 19 th,

2001

April 19 th,

2001-April

18 th,2004

May 19 th,

1998-May

18 th, 2001

April 19 th,

2001-April

18 th,2004

May 19 th,

1998-May

18 th, 2001

April 19 th,

2001-April

18 th,2004

May 20 th,

1992-May

19 th, 1995

May 19 th,

1998-May

18 th, 2001

April 19 th,

2001-April

18 th, 2004

May 19 th,

1998-May

18 th, 2001

April 19 th,

2001-April

18 th, 2004

2,216,024

22,683,730

22,683,730

11,009,572

22,683,730

0.39%

3.95%

3.95%

1.92%

3.95%

18,187,237

56,656,189

56,656,189

18,006,990

56,656,189

0.81%

2.52%

2.52%

0.80%

2.52%

3,886,068

95,415,870

6,942

0.17%

4.25%

B.S., Chemical Engineering, Chinese Culture University;

Chief of MFG Dept. of T.I. Corp. Taiwan Branch Office

B.S., Electrical Engineering, National Cheng Kung University

M.S., Electrical Engineering, Texas Tech University

Ph. D., Electrical Engineering, Texas Tech University

Director, Asia of Texas Instruments Corp.

Senior Deputy Director, Memory Products

Senior Deputy Director, Analogy & Mixed Signal and Logic Products

B.S., Physics, National Cheng Kung University

Executive President, Philips Taiwan

Associate Professor of National Chiao Tong University

Chairman of Asia Pacific branch,, Member of Philip global

manufacturing consulting committee and Director of Asia Pacific Branch

Director of TSMC

Vice Chairman of, Walsin Lihwa Corp.

Chief Executive Officer of Hann Star Corp.

National Chiayi Teachers College

Department of Accounting, National Chengchi University

Chairman Raymond

Soong

Spouse

23,664,674

26,664,674

23,514,674

23,604,674

23,544,674

3

3

3

3

3


Board Members and Supervisors


Title Name

Shares % Shares % Shares % Shares %

DateElected

Term(Years)

Shareholdingwhen Elected

CurrentShareholding

Spouse & MinorShareholding

Use Other PersonalName to Held

the Shareholding

Education & ExperienceShareholding when Elected

2003 Based Pay and TransportationAllowance

Current Position with

Other Company

Board of Directors, Supervisors or Managers who are Spouse or within 2

Degrees of Consanguinity to Said Person

Title Name Relation

23 24


Board Members and Supervisors Information of the Major Shareholders of Institutional Investors

Information of Representative for Lite-On Technology’s Institutional Investors.

Notes:

1. SiTong Investment & NPort Investment Co., Ltd., the original director of the Company, has merged with Lite-On Capital, Inc. and becomes known as NPort Investment Co., Ltd., taking over the rights and obligations of SiTong Investment Co., Ltd. and NPort Investment Co., Ltd. and assigning Mr. David Lin and Mr. Warren Chen as representatives.

2. Mr. Lu-Bao Shu replaced Mr. Han-Chun Wang on August 13th, 2003.

3. Mr. David Lee replaced Mr. Y. T. Pan on June 17th, 2003.4. Mr. Raymond Soong: Director of the following companies - Ltc Group Ltd., Lite-On Technology (Europe)B.V., Lite-On Communications International Corp. , Lite-

On Technology International Inc., Lite-On Capital Inc., Quanix Technology Inc., Lite-On Technology Mexico S.A.DE C.V., LTC International Ltd., Titanic Capital Services Ltd., Lite-On Computer (Dongquan) Co., Ltd., Great Adelphi International Ltd., Seelfu Co., Ltd., Lite-On IT (Hong Kong) Co., Ltd., High Yield Group Co., Ltd., Lite-On IT (Guangzhou) Co., Ltd., Lite-On IT (Guangzhou) Co., Ltd., Lite-On Electronics (Thailand) Co., Ltd., Lite-On, Inc, Lite-On Electronics (Europe) Ltd., Lite-on Electronics Ltd., Lite-On Electronic (Singapore)Co., Ltd., Lite-on Electronics (BVI) .Inc., Lite-On Ltd., Lite-On (Europe) Inc., Lite-On Electronic (Tianjin)Co., Ltd., Lite-On Electronic (Hong Kong) Co., Ltd., Funbo Enterprises Limited, Ltd., Lite-On Electronic (Dongquan) Co., Ltd., Lite-On Electronic (Guangzhou) Co., Ltd., China Bridge (BVI) Ltd., Zhong Bao Holding (China) Ltd., Lite-On Technology(China)Inc., Ltd., China Bridge Express(WuXi) Co., Ltd., Silitek Corporation (M) Sdn. Bhd., Maxi Switch Inc., Maxi Switch S. A. DE C.V., Lite-On Peripherals (Hong Kong) Limited, Yet Foundate Ltd., Silitek Plating Ltd., Ltd., Lite-On Peripherals Inc., Silitech Technology (Europe) Limited, Lite-On Peripherals Ireland Limited, Lite-On Computer Peripherals GmbH, Lite-On Peripherals de. Mexico S.A. de C.V., Lite-On Peripherals Pte. Ltd., Silitek Electronic (Dongquan) Co., Ltd., Xurong Electronic (Dongquan) Co., Ltd., Xurong Electronic (Shen Zhen)Co., Ltd., Silitek Electronic (Guangzhou) Co., Ltd., Yet Foundate Electronic (Guangzhou) Co., Ltd., Lite-On Information Technology Co., Ltd., E-Business Limited., I-Solutions Limited, Silitek Netherlands B.V., Starshine Technology Corp. Silitech (BVI) Holding Ltd., Silitech (Bermuda) Holding Ltd., Silitech Technology Corporation Sdn. Bhd., Silitech Technology Corporation Limited, G-Com(BVI) Technology Ltd., Giga-Radio Comm. (BVI) Co.,Ltd., G-Prime Computer Company Ltd., GVC (Cayman) Corp., GVC Corporation Ltd., Lite-On Communication (Guangzhou) Co., Ltd., E-LITEON Corporation, Investnet.com Ltd., Lite-On Eoking Inc. Lite-On Integrated Service Inc., Lite-On Eco Technology Inc., Lite-On ECO Corporation, Liteon-On Computer Technology (Guangzhou) Co., Ltd., Lite-On Information Technology Co., Ltd., Lite-On International Holding Co., Ltd., Lite-On USA Holding Co., Ltd., Lite-On Technology USA, Inc., Lite-On Trading USA, Inc., Lite-On Semiconductor Co., Ltd. Actron Technology Corporation., Lite-On IT Co., Ltd. Silitech Technology Corporation, Min-Sin Investment Co., Ltd., Da-Song Investment Co., Ltd., Tung-Young Investment Co., Ltd. Yuan-Pao Development Investment Co., Ltd., Da-Rung Investment Co., Ltd. Shanghaii Sue-Fu Electronic Co., Ltd., DIODES,INC., DYNA International Holding, Lite-On Semi. (Hong Kong) Co., Ltd., Hong Kong Laing-Min Co., Ltd., DYNA International Co., Lite-On Semi. (WuXi)Co., Ltd., Tailink Venture Found Co., Ltd., Co-Tech Copper Foil Corp.

5. Mr. Chung-Yiao Lin: Chairman of Dorcas Investment Co. Ltd. & Chai-An Investment Co., Ltd.

6. Mr. David Lin: Director of the following companies - Ltc Group Ltd., Lite-On Technology International Inc., Lite-On Capital Inc., Quanix Technology Inc., Lite-On Technology Mexico S.A.DE C.V., LTC International Ltd., Titanic Capital Services Ltd., Lite-On Computer (Dongquan) Co., Ltd., Great Adelphi International Ltd., Dongquan Sue-Fu Computer Co., Ltd., Lite-On Mexico SA DE C.V., Lite-On Opto (Guangzhou) Co., Ltd., Lite-On Electronics (Thailand) Co., Ltd., Lite-On, Inc, Lite-On Electronics (Europe) Ltd., Lite-on Electronics Ltd., Lite-On Electronic (Singapore)Co., Ltd., Lite-On Ltd., Lite-On Electronic (Tianjin)Co., Ltd., Lite-On Electronic (Hong Kong) Co., Ltd., Funbo Enterprises Limited., China Bridge (BVI) Ltd., Zhong Bao Holding (China) Ltd., China Bridge(China) Ltd., China Bridge Express(WuXi)Co., Ltd., Silitek Corporation (M) Sdn. Bhd., Maxi Switch Inc., Maxi Switch S. A. DE C.V., Lite-On Peripherals (Hong Kong) Limited, Yet Foundate Ltd., Silitek Plating Ltd., Lite-On Peripherals Inc., Silitech Technology (Europe) Limited, Lite-On Peripherals Ireland Limited, Lite-On Computer Peripherals GmbH, Lite-On Peripherals de. Mexico S.A. de C.V., Lite-On Peripherals Pte. Ltd., Silitek Electronic (Dongquan) Co., Ltd., Xurong Electronic (Dongquan) Co., Ltd., Xurong Electronic (Shen Zhen)Co., Ltd., Silitek Electronic (Guangzhou) Co., Ltd., Yet Foundate Electronic (Guangzhou) Co., Ltd., Lite-On Information Technology Co., Ltd., E-Business Limited., I-Solutions Limited, Silitek Netherlands B.V., Starshine Technology Corp. Silitech (BVI) Holding Ltd., Silitech (Bermuda) Holding Ltd., Silitech Technology Corporation Sdn. Bhd., Silitech Technology Corporation Limited, G-Com(BVI) Technology Ltd., Giga-Radio Comm. (BVI) Co.,Ltd., G-Prime Computer Company Ltd., GVC Subic Corp., Maxtech Holding Inc., GVC (Cayman) Corp., G-Tech USA, Inc., GVC Holding Inc., Maxtech Int'l Corp., GVC Corporation Ltd., Lite-On Communication (Guangzhou) Co., Ltd., E-LITEON Corporation, Investnet.com Ltd., Lite-On Eoking Inc. Lite-On Integrated Service Inc., Lite-On Eco Technology Inc. Lite-On ECO Corporation, Lite-On Computer (Guangzhou) Co., Ltd., Lite-On Information Technology(Shanghaii)Co., Ltd., Lite-On International Holding Co., Ltd., Lite-On USA Holding Co., Ltd., Lite-On Technology USA, Inc., Lite-On Trading USA, Inc., Lite-On Semi., Co., Ltd. Lite-On IT Co., Ltd., Silitech Technology Corp. ,Shanghai SeeFu Electronic Co., Ltd., DYNA International Holding, Lite-On Semi. (Hong Kong) Co., Ltd., HongKong MinLiang Co., Ltd., DYNA International Co., Lite-On Semi. (WuXi)Co., Ltd.

7. Mr. Warren Chen: Director of Lite-On IT Co., Ltd., Lite-On Electronics (Thailand) Co., Ltd., Lite-On, Inc, Lite-On Electronic (Singapore)Co., Ltd., Lite-On Ltd., Lite-On Electronic (TainJian)Co., Ltd., Lite-On Electronic (Hong Kong) Co., Ltd., Funbo Enterprises Ltd., China Bridge (BVI) Ltd., Zhong Bao Holding (China) Ltd., Lite-On Peripherals Inc. , Lite-On Technology USA, Inc., Epistal Corp. Supervisor of Lite-On Eoking Inc. Lite-On Integrated Service Inc., Lite-On Eco Technology Inc. Lite-On Automotive Corp.

8. Mr. Keh-Shew Lu: Partner and President of Pu-Shin Investment Corp. Consultant of Winbond Electronic Corp. Director of American Zeev and AmericanTriscent and Diodes Inc

9. Mr. Lu-Bao Shu: Chairman of Taiwan Philips Quality Culture Foundation. Honor Speaker of National Chiao Tung University Director of Winbond Electronic Corp., Corporate Synergy Development Center & Vanguard International Semiconductor Corporation.

10.Mrs. Fung-Ing Soong Director of Da-Song Investment Co., Ltd., Ming-Sin Investment Corp. Tung-Yuang Investment Corp. Yuan-Pao Development Investment Co.Ltd., Da-Rung Investment Co., Ltd.

11.Mr. David Lee Director of Lite-On Automotive Corp. and Alltek Tech. Corp. Ltd., Supervisor of Actron Technology Corporation, and President of Dyna Investment Co. Ltd.



Name of Institutional Investors

Dorcas Investment Co., Ltd.

Sam-Foung Investment Co., Ltd.

Lite-On Capital Inc.

Da-Song Investment Co., Ltd.

Major Institutional Shareholders

Paul Lin and Jenny Chang

Simon Wu, H.J. Kao, I.S. Wu and M.C. Wu

Lite-On Technology Corporation

Raymond Soong and Fung-Ing Soong

Name of Institutional Investors


Major Institutional Shareholders

Not Applicable

25 26

Directors and Supervisors’ Status of Independence

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Mr. Raymond Soong

Mr. Chung-Yiao Lin Representative of Dorcas Investment Co., Ltd.

Mr. David Lin Representative of Lite-On Capital , Inc. (Note 1)

Mr. Y.C. Kao Representative of Sam-Foung Investment Co., Ltd.

Mr. Warren Chen Representative of Lite-On Capital , Inc.

Mr. Keh-Shew Lu Representative of Da-Song Investment Co., Ltd.

Mr. Lu-Bao Shu Representative of Da-Song Investment Co., Ltd.

Mrs. Fung-Ing Soong

Mr. David LeeRepresentative of Da-Song Investment Co., Ltd.


Name

Criteria Minimum 5 Years’ Experience in Business,

Legal, Financial or Corporate Operation

(Yes/No)

Status of Independence (Note 2) Remarks

Note for Status of Independence

1. SiTong Investment & NPort Investment Co., Ltd., the original Chairman of the Company, has merged with Lite-On Capital, Inc. and becomes known as NPort Investment Co.,

Ltd., taking over the rights and obligations of SiTong Investment Co., Ltd. and NPort Investment Co., Ltd. and assigning Mr. David Lin and Mr. Warren Chen as representatives.

2. i. Not an employee of the Company, or Director, Supervisor or employee of the Company affiliates.

ii. Not a shareholder listed among the top10 owning most of the Company’s shares, or directly or indirectly owns 1% or more of the issued shares of the Company.

iii. Not a spouse or to the 2nd degree of lineal consanguinity of anyone in the aforementioned 2 categories.

iv. Not a Director, Supervisor, or an employee of any investor institution that owns 5% or more of the Company’s issued shares, or a Director, Supervisor, or an employee of

the top 5 listed investor institution that owns most of the company’s shares.

v. Not a Director, Supervisor, or manager, or a shareholder owning 5% or more of stocks of any specific company or institute entity maintaining financial or business

relationships with the Company.

vi. Not a business owner, partner, Director, Supervisor, manager or spouse of thereof of a joint venture, solo venture, corporate or institutional entity that provides financial,

business, or legal consultation services to the Company or its affiliates.

vii. Not an investor institution or the representative thereof set forth in Article 27 of the Corporation Law.

As of April 30, 2004

Issue Date

Face Value

Issuance and Listing

Issue Price

Total Amount

Coupon Rate

Term

Guarantor

Trustee

Underwriter

Attorney

Accountant

Payment Method

Outstanding Amount

Conditions on Redemption or Early Repayment

Restriction Clause

Name of The Credit Rating Institution, Date Rated, and

Results on Rating of The Corporate Bond

Other Rights

The Amount of Converted Common Stock,

Global Depositary Receipt, or Other Securities Upon

the Date of Annual Report Released

Issuance, Conversion, or Warrants

Dilution Effect and Other Adverse Effects on

Existing Shareholders

Name of Custodian Institution Handling Exchange

September 25 and 26, 2003

NT$ 5,000,000

Taiwan

As per face value

NT$ 4,000,000,000

Note 1

5 years

Expiration date: September 25 and 26, 2008

CitiBank Taipei Branch

Bank SinoPac

N/A

Hui-Chi Kuo Modern Law Office

Clark Chen, James Wu

Qing-Xiang Chen and Jin-Shun Wu (Deloitte & Touche)

30%, 30% and 40% of Principal will be

paid on the third, fourth and fifth year.

NT$ 4,000,000,000

N/A

Note 2

N/A

N/A

N/A

N/A

N/A

3 . Issuance of Corporate Bonds

3.1 Issue Status:

Bond Type First Secured Common Corporate Bond

27 28

Note 1:

Security A NT$400,000.000:If 6M LIBOR 0.90%, coupon rate is 6M LIBOR

If 0.90% 6M LIBOR 2.00%, coupon rate is 3.05%;

If 6M LIBOR 2.00%, coupon rate is (4.0001%-6M LIBOR) MIN0.

Security B NT$400,000.000: If 6M LIBOR 0.90%, coupon rate is 6M LIBOR



Security C NT$200,000.000:If 6M LIBOR 0.90%, coupon rate is 6M LIBOR



Security D NT$400,000.000:If 6M LIBOR 1.00%, coupon rate is 6M LIBOR



Security E NT$300,000.000: If 6M LIBOR 1.00%, coupon rate is 6M LIBOR



Security F NT$300,000.000: If 6M LIBOR 1.00%, coupon rate is 6M LIBOR



Security G NT$200,000.000:If 6M LIBOR 0.90%, coupon rate is 6M LIBOR



Security H NT$300,000.000:If 6M LIBOR 0.90%, coupon rate is 6M LIBOR



Security I NT$300,000.000: If 6M LIBOR 0.90%, coupon rate is 6M LIBOR



Security J NT$200,000.000: If 6M LIBOR 0.90%, coupon rate is 6M LIBOR



Security K NT$300,000.000: If 6M LIBOR 0.90%, coupon rate is 6M LIBOR



Security L NT$200,000.000: If 6M LIBOR 0.90%, coupon rate is 6M LIBOR



Security M NT$300,000.000: If 6M LIBOR 0.90%, coupon rate is 6M LIBOR



Security N NT$200,000.000:If 6M LIBOR 0.90%, coupon rate is 6M LIBOR



The first coupon date is two business days before the issuing date for each Security. The coupon rate is adjusted by 6M LIBOR on the following coupon dates that are two business days before the basic coupon date of every 6 months starting from the issuing date and is calculated by simple rate on the basic coupon date . The face rate shall not be lower than %. (the business day here means the business days of banks in London. In case of holidays, one business before the basic coupon date is recognized.)

6M LIBOR: 6 month LIBOR means the Fixing Rates of USD 6-Month LIBOR listed on Page 3750 of Money line Telerate at 11 o’clock on the coupon date (London time).

Note 2: Based upon the original restriction on the consolidated report (annual certification), the cap of leverage ratio is 125%, the bottom line of current ratio is 100%, the bottom line of TIE ratio is 300%, tangible net worth should be at least NT$35,000,000,000.

3.2 Information of Convertible Corporate Bond: None

3.3 Information of Exchangeable Corporate Bond: None

3.4 Status of Overall declaration on issue Corporate Bond: None

3.5 Information of Corporate Bond with Stock Option: None

4. Preferred Shares Status : N/A

5. IsIssuance of Global Depositary Receipts (GDRs)

6. Employee Stock Option : N/A

Issuance & Listing

Total Amount

Offering Price per GDR

Units Issued

Underlying Securities

Common Shares Represented

Rights and Obligations of GDR Holders

Trustee

Depositary Bank

Custodian Bank

GDRs Outstanding

Apportionment of The Expenses For The Issuance and

The Maintenance

Important Terms and Conditions in The Deposit

Agreement and The Custody Agreement

Closing Price per GDR

2003 High

Low

Average

As of April 30, 2004 High

Low

Average

London Stock Exchange

US$ 71,295,000

US$14.55

4,900,000 Units

Common Shares from Cash Injection

49,000,000 Shares

Same as Those of Common Share Holders

Citibank,

Citibank,

Citibank,

1,914,720 Units

Borne by the Company

US$ 12.871

US$ 8.895

US$ 10.866

US$ 12.317

US$ 10.510

US$ 11.411

Issue Date

ItemsSeptember 25, 1996

29 30

8.1 The FoundersThe Lite-On Culture Foundation was founded in 1993 with initial funds donated by the three founders of the Lite-On

Group: Mr. Raymond Soong, Mr. Paul Lin and Mr. Simon Wu. The Lite-On Group continues to allocate NT$10 million

annually to support the Foundation's initiatives and plans.

8.2 Primary Areas of Focus

Managing the Taipei Shin-Yi Community College

With a common objective of offering lifelong learning opportunities to the community, 12 community colleges have

been set up in different districts of the Taipei city. The Foundation is selected to retain the rights of managing the Taipei

Shin-Yi Community College on June 29th, 2001 offering 110 courses to about 3,000 students in each semester.

Encouraging Volunteers to Offer Counseling Services to Children

Children are the hope of a nation, and only healthy children grow up to be

healthy adults. The children's counseling group recruits volunteering parents from elementary and junior high schools

and provides them with training sessions before assigning them to cases from the student counseling offices at schools.

The first "Children Counseling Group" was set up in Min- Zu Elementary School of Taipei City in March, 1998. There are

more than 40 groups of 20 to 30 volunteers serving at elementary schools located in Taipei City, Taipei County, Chong-

Li, Hshin-Chu, Chang-Hua and Kao-Shiung. More than 1,000 volunteers are available to service from each of more than

100 schools applying to join this counseling program. (More than 100,000 volunteers have been trained in the past years.)

Broadcasting Educational Programs on Radio

The Foundation started a radio program, "Love in Your Community", with Good News Broadcasting Station on July 1st,

1997. This program was renamed twice to "Build a New Home" on January 1st 2001 and then "Community College

EASY GO" on August 1st, 2003. The program is broadcasted for one hour on various subjects, including life-time

learning, environment protection, art and life, health, community counseling services, local literatures and history,

community services, volunteering services, teenager issues, senior welfares, government policy promotion and oversea

community introduction, from Monday to Saturday.

Community Development Serials

The Foundation has published 17 titles of" Community Development" series with the sponsorship of Bureau of Interior,

R.O.C., including Community Encyclopedia, Windows of Communities, The Stories of Community, Searching for the

Root, The Hear of Grass, Another Flavor in Life, Build A New Home, Build Our Home Together, Global Village, Life in

BeiTou, Footprint, Love in the Neighborhood, A Sandglass of Time, A Palette for Youth, Build A home with Sunshine,

Communication with Your Heart and Build A Network of Love.

7 . Merger and Acquisit ion:

7.1 Evaluation made by the leading manager of new stock issuance for merger or acquisition in the last quarter: None.

7.2 The information of the merged companies has been approved by the Board of Directors as of the printing date of this Annual Report.

Note: The related financial information has been audited by accountants by December 31st 2003. Except the Per

Share data and unless otherwise specified, all numbers are represented in thousand NT Dollars.

LITE-ON ENCLOSURE INC.

4F, 29-1, Lane 66, Juei-Kwang Rd., NeiHu Dist., Taipei.

Raymond Soong

NT$950,000

Process and assembling of computers and

Peripherals and plastic finished products.

Computer cases and Bare bone systems

(note)

NT$3,656,270

NT$2,527,058

NT$1,129,212

NT$6,001,205

NT$1,081,663

NT$569,215

NT$142,799

NT$1.5

Company name

Company Address

Person in charge

Paid-in-capital

Core Business

Main products

Financial statement of the last fiscal year

Total Asset

Total Debit

Total shareholder's equity

Operating Income

Operating Gross Profit

operating profit and loss

profit and loss

Earning Per Share

8 . Introduction of Lite-On Cultural Foundation

31 32

8.3 Awards and Achievements

The Lite-On Children Counseling GroupThe Foundation received the Group and Personal Award for Youth Volunteer Service from National Youth Commission in 2001.Junior High School, Lee Shan Elementary School and Da Hu Elementary School received the Group and Personal Golden and Diamond Awards from the Taipei City Government.Children Counseling Groups at Min Zu Elementary School received the Group Golden and Diamond Awards from the Taipei City Government.Children Counseling Groups at Min Zu Elementary School, Jian Kang Elementary School and Fu Lin Elementary School received the Personal Golden and Diamond Awards from the Taipei City Government.The quarterly magazine Gen Shin Garden, published by the Lite-On Children Counseling Group, won the "2002 Education Publication Excellence Award" from the Executive Yuan of the Republic of China.The Lite-On Cultural Foundation was selected to manage the "National Children Counseling Seminar" from 2001 to 2002 by Children's Bureau of Interior R.O.C.

Broadcasting ProgramsThe program, "Love in your community", received the Golden Bell Award (Society Development Award) from the Government Information Office of Executive Yuan in 1997 and received the Broadcast Culture Award (Special Cultural Report Award) from the Council for Cultural Affairs of Executive Yuan in 1998."Searching for the Root", a unit of "Build a New Home", was recognized as Excellent Culture Program and authorized to produce 104 sections by the Council for Cultural Affairs of Executive Yuan in 2001 and 2002."Build a New Home," a radio program broadcasted by the Lite-On Cultural Foundation, won the National Golden Voice Award for the Best Talk Program" in 2002.

Taipei Shin-Yi Community College, managed by the Lite-On Cultural Foundation, won "Excellence Award for Management and Development" from the Bureau of Education Administration of Taipei City Government for the second consecutive year.

The Foundation received "The Group Service Award of Social Education" from the Ministry of Education in 1998.

The Foundation received the "Golden Wen-Xin Award" in 1998 and "Wen-Xin Award" in 2001 from the Council for Cultural Affairs (CCA) of Executive Yuan.

Mr. Paul Chang, the Secretary-General of the Foundation, received "Educational Award" from the Educational and Academic Association, R.O.C. in 2001.

The Foundation was selected to manage an inspection tour for post-earthquake reconstruction, in addition to visiting the culture in Kobe, Japan under the leadership of the Chairman of Council for Culture Affairs with 20 members including government officers, director of the culture centers and professionals.

8.4 Milestones

Managed more than 20 Community Volunteer Seminars.

Promoted diversified cultural activities in various communities in the Great Taipei area.

Promoted cultural activities in Dong Kang of Ping Tong County since 1993 with the involvement of all schools, Town

Halls and Cultural Center of Ping Tong County.

Assisted more than 10 elementary schools and kindergartens to promote children theater education (renamed to

Dynamic Teaching Programs). The program adopts the open learning style, demonstrating the trend of education

revolution and applying methods of dramas in the teaching of kindergartens and elementary schools to build an active

and happy learning environment.

Promoted cultural activities for poetry, painting, plays, music and photograph to improve the "cultural atmosphere" of

enterprises.

Promoted cultural exchange with Mainland China and other foreign countries (such as U.S.A.,UK. Malaysia and Japan).

Lite-On Children Counseling Group provided counseling services to 14 young victims of 921 Earthquake, 8 from Taipei

and 6 from central Taiwan.

O p e r a t i o n a l H i g h l i g h t s

35 36

1 . B u s i n e s s O v e r v i e w

1.1 Business Scope

15%

7%

9%

5%

Opto

Peripheral

Digital Display

Peripherals & Components

Optoelectronic products -- including LED, alphanumeric displays and infrared products for:

Computers and peripherals.Communications and consumer products.Industrial and OA (Office Automation) equipmentAutomotive and automotive related-products, such as traffic lights, outdoor and indoor indication boards, dashboard display in autos and brake lamps.

Power supplies for:Desktop, notebook and high-end office computersAutomation equipmentCommunication and network equipment Printers, faxes, scanners and set-top boxes

Keyboards for:PCsMobile phonesPDAs

CRT color displaysLCD displaysMFM LCD TVsFront and rear projectors

LED lamp and SMD LED (ultra- bright LED and circuit board indicators).

LED display (RGB LED display, numeric display, dot matrix displays, alphanumeric LED displays, graphic LED displays, IC driver built-in LED).

Infrared products (infrared emitting diodes, photodiodes, photo-transistors, photo interrupters, photo couplers, receiver modules, photo links, and IrDA).

Power supplies for desktop and notebook PCs.Power supplies for fax machines, printers and scanners.DC – DC converters.Power supplies for servers and workstations.Power supplies for set top boxes.Power supplies for communication and network equipment.

All types of keyboards

CRT color displays, LCD displays, MFM LCD TVs, projector LCD TV, front and rear projectors.

StrategicBusinessGroups

Strategic Business Units

Major Product Lines Major Products Weight ofBusinessin 2003(%)

64%

Office Consumer &

Solutions

Image Management

Image

Handheld

Solutions

Portable Image Devices

Wireless

Computer Systems

Network Access

Magnetic

Image

Communications

Computers

New Business

Development

Image scanners

Printers

Faxes

PDAs

MFPs

Image-related products

Printers

MFPs

Pocket PCs

PDAs

Smart phones

IA-related devices

Image portable-devices

Wireless and communication

products:

GSM handsets

GPRS handsets

3G handsets

Bluetooth products

Motherboards – Celeron and PIV

Desktop PCs – Bare-Bone

and complete systems

Broadband, WLAN and

communication products:

Network interface cards

Switches

Routers

Internal, external and ADSL

modems

Wireless and networking

products.

Design Transformer

Scanners, printers, scanning

modules, faxes, PDAs and MFPs

Printers and MFPs

PDAs, pocket PCs and wireless

PDAs.

Image portable products.

GSM, GPRS and 3G handsets,

and Bluetooth products.

Motherboards – Celeron and PIV

Desktop PCs – Bare-Bone and

complete systems

NIC

Network Interface Cards,

switches and routers.

Internal, external and ADSL

modems, wireless and

networking products.

Transformer

StrategicBusinessGroups

Strategic Business Units

Major Product Lines Major Products Weight ofBusinessin 2003(%)

37 38

To strengthen R&D for software and System on Chip – In the future, 3C products will become “lighter, thinner,

connected better, cheaper, and saving more”, and should be “ready to use, handy, and easy to use”. Lite-On

Technology will focus on developing the technology of software and System on Chip, as well as the R&D capability

thereof.

To enhance intellectual property – encouraging innovation, controlling patents, creating advantage in unfair

competition, and avoiding repeated R&D time and expenses by professional IP management, as well as reducing R&D

costs.

To establish Lite-On R&D Center – Integrating current R&D technology platforms and promoting e-design in order to

increase the efficiency of R&D and shorten the R&D time; participating more in large scale projects in the production or

governmental fields, in order to upgrade technology level; and recruiting outstanding talents from National Defense

and cooperating with colleges to establish Incubator Centers, in order to contribute to the development of

professionals and further develop R&D capability for the Company.

Electronic Circuit Design, System Integration Design and testing, and software development and integration

R&D for Switch Power Supplier and packaging technology of OPTO semiconductor

Power Electronics

World-System digital video processing

ATSC/DVB-C/DVB-T/DVB-S

Cellular mobile communication in GSM/GPRS, TDMA, WCDMA

Wireless Projection Technology and Digital Image Optical Projection Technology.

High Precision Ink Jet and Laser Printing Technology.

Integration of Opto-Electro-Mechanical Devices

Color Image Processing

High-speed paper feeding

Laser Optics

Wireless, Internet, Communications and OPTO Technology Integration

System Movement Stimulation and Control

Development and design of software, hardware, and facility for PDA and other mobile devices

Development and application of software and hardware for open platform

Design and development of software and hardware for multimedia processing

Software and hardware design for intelligent display devices

Opto-Mechanical module and image capturing module.

Hardware design for OPTO switching

Operation System Design for OPTO Control

Automation Product Testing

Image Processing Analysis and Simulation Technology

Word, Graphic, and Voice Identification Technology

Human-Machine Interface Design

Design of Control Chips for A/D Signals

Unit: Thousand of NT dollars

1.2 Major Future R&D Directions :

1.3 R&D Focus in 2004 :

1.4 Technology Development and R&D Overview

R&D Expenditures

Item 2003 As of March 31st, 2004

R&D Expenditures 1,873,467 432,936

II Successfully Developed Technologies and Products

Category

Display

OPTO

Networking

Major Products

1. Color Monitors (15”, 17”, 19”)

2. Planar LCD Monitors (17”, 19”)

3. LCD TV

4. MFM LCD TV

1. Lamp Light Emitting Diode (Lamp LED)

2. Surface-Mounting Device Light Emitting Diode (SMD LED)

3. Signal Digital Light Emitting Diode (Single Digital LED)

4. IrDA Communication Module

5. Line Dot Matrix Light Emitting Diode (Line Dot Matrix LED)

6. Infrared Coupler

7. Infrared Light Emitting Diode (Intared LED)

8. Infrared Detector

9. OPTO switch

10. Active Display

11. Micro SMD Coupler

12. New Style 4Mbps Fir IrDA Product Packaging

13. New Style AIInGap/GaN Ultra-Bright LED

14. PDIC Detector

15. Plastic Optical Fiber Digital Stereo Connector

1. NIC

2. Network Switching Hub

3. Routers

4. Broadband Gateway

5. Power Line Network Equipment

6. Bluetooth Wireless Modem Communications Products

(IAD with built-in VOIP Function)

7. 1394 Interface Card

8. 10/100 NIC Card

9. Power line/ Wireless / VPN / Firewall Router

10. 24/48 Port L2 Intelligent Switch

11. 16/24 Port Smart Switch

12. Wireless LAN 802.11b, 802.11a/802.11g, 802.11/a+b combo, 802.11b/g/a

13. ADSL Modem

39 40

Lite-On Technology is strategically positioned as a global leading provider of Optoelectronics components. Lite-On Technology's

major products, including Digital Display, Power Supply, Imaging products and LED, account for 76% of the 2003 global

consolidated revenue. The market and sales analysis for Lite-On Technology's major products are as follows:

(1) Optoelectronics

According to IEK, the market size of Light Emitting Diode (LED) reached US$4.3 billion in 2003, 11% increase from 2002.

IEK also estimates the market size to grow 12% to US$4.8 billion in 2004. During the early stages of the LED development,

application for LED was limited to the point source for consumer and electronic products. However, as LED brightness and

efficiency have improved since 2000, LED has become the key source of backlight for portable devices including mobile

phones and PDAs. The upsurge in these portable devices over the recent years also strengthened the growth of LED.

LED products can be divided into two categories, visible and invisible. The market for visible products such as Infrared has

stabilized as demand has not picked up for short-distance wireless communication. Visible LED, on the other hand, has

grown considerably due to the improvement of brightness and emitting efficiency. The technology development coupled

with the continuous cost-cutting efforts by LED vendors in Taiwan led to an escalation in market demand for LED.

(2) Digital display

According to Gartner, the demand for desktop displays in 2004 will grow 12% from 127 million units in 2003 to 141 million

units. While LCD monitors account for 37% of the desktop display market in 2003, this figure is to grow to 48% in 2004

and 65% in 2005. In 2005, the worldwide market for LCD monitors will officially surpass that of the CRT monitors. Gartner

estimates that LCD monitor shipment will grow at a strong 2004-2008 CAGR of 22.5%. In 2008, the demand for CRT

monitors will shrink to less than 10% while LCD monitors occupy 90% of the worldwide desktop display market.

LCD and CRT products each account for 45% and 55% of the monitor output of Lite-On Technology in 2003 respectively.

The shipment of LCD has doubled since 2002. Aside from serving global leading PC providers for their bundle packages, the

Company continues to endeavor in cultivating LCD sales by winning more orders. While customers increase the purchase of

LCD monitors, the percentage of LCD monitors is expected to increase 10% - 15% and to account for 55% - 65% of the

total sales of monitors with the decrease in CRT sales.

Global Market size of LED (2000 - 2004 estimated) (unit: million)

Source: IEK, January 2004

6,000

5,000

4,000

3,000

2,000

1,000

0

LED

2000 2001 2002 2003 2004

3,737 3,321 3,870 4,304 4,796

Category

Handset

PC System

Image

H.I.S

Major Products

1. GSM Mobile Phone

2. GPRS Mobile Phone

1. Mother Board - Celeron & PIV (Models of uATX, ATX)

2. Desktop - Bare bone system

3. Desktop - Complete System

1. High - End Inkjet Printers

2. Laser Printers

3. Multi-functional Peripheral for printing, scanning, copying and faxing.

4. Ultra Thin CIS color Scanners

5. High Definition CCD Speed Dial Color Scanner

6. Color CCD and CIS Scanner Module

7. Copier Image Scanning Modules

8. Surface Mounted Technology and PCB Assembly

9. Thermal transfer printer

10. Wireless Module

11. PDA

12. Personal Media Player

13. Camera Module

14. Digital Camera

1. DT Keyboard

2. Smartcard Keyboard

3. NB Keyboard

4. Slim Keyboard

5. 27Mhz RF Keyboard & Mouse

6. Bluetooth Wireless Keyboard

7. Internet Phone Keyboard

II Successfully Developed Technologies and Products

2 . Market and Sales Overview

2.1 Market and Sales Analysis

Major Products of the Company :

41 42

According to Display Search, LCD TV shipment will reach 8.1 million units in 2004, up 104% from the 3.9 million

units in 2003. Though growth may slow down after 2004, LCD TV shipment is estimated to continue escalating

with high growth rates, reaching 30 million units by 2007. This explosive growth can be attributed primarily to the

increase in the supply of large-size panels, in addition to the demand for 2004 Athens Olympics and the emerging

broadcasting technology, Digital TV. Special features of LCD TV will also promote the growth on the demand end,

including its absence of radiation and lower power consumption.

With the customers' approval on the quality of the LCD TVs, Lite-On Technology has started shipping 17" MFM

LCD TVs since 4Q in 2003. The shipment in 2004 will increase substantially, making LCD TV another strong

driving force for the Digital Display products of Lite On Technology.

Global LCD monitor shipment (2000 - 2008 estimated)

Source: Gartner Feb.2004

200,000

150,000

100,000

50,000

0

CRT(000)

LCD(000)

2000 2001 2002 2003 2004 2005 2006 2007 2008

112,253 98,070 83,376 79,554 73,563 53,881 40,335 23,569 16,979

6,771 15,762 32,424 47,093 67,904 100,065 121,004 139,090 152,813

Global Output of LCD TV (2000 - 2007 estimated)

Source: Display research, 2003

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

LCD TV(000)

2000 2001 2002 2003 2004 2005 2006 2007

181 615 1,351 3,968 8,076 13,062 23,981 31,081

Scanner

Scanners have traditionally been a popular bundle choice of on-line PC purchace which saw strong demand in the past few

years. However, as digital cameras gain popularity, scanners are being replaced, result of which is the decrease in demand.

In addition, the emergence (MFPs) has also helped shrinking the scanner market as the price gap between MFPs and the

traditional scanners squeezes. Lite-On Technology expects to see the trend become more evident in the future. According to

IDC, worldwide scanner shipment in 2003 reduced 7% to 15.3 million units. IDC also estimates 2004 to see the scanner

market further scaled down to 14.7 million units, down 3% from the 15.3 million units in 2003.

Source: Gartner, Feb 2004

Global shipment units of printers (2000 - 2008 estimated)

66,00064,00062,00060,00058,00056,00054,00052,000

Printer(000)

2000 2001 2002 2003 2004 2005 2006 2007 2008

64,665 63,991 58,938 63,503 65,213 66,898 68,969 66,725 64,480

Source: IDC,May,2003

Global Shipment Units of Flatbed Scanners (2001 - 2007 estimated)

20,00018,00016,00014,00012,00010,0008,0006,0004,0002,000

0

Scanner(000)

2001 2002 2003 2004 2005 2006 2007

18,666 16,461 15,273 14,694 14,408 14,335 14,472

(3) Image Products: Printers, Scanners, and Multi Function Printers Products

Printer

According to Gartner, the total global output of inkjet printers was 63 million units, up 7% from 2003. The global

production of inkjet printers will reach 65 million units with an annual growth rate of 3%.

In addition to the launch of Multi Functional Printer (MFP), the single-function printers are also being replaced by the

emerging Photo Printers, which have become the most popular products with the promotion from HP, Epson and other

global printer manufacturers. Lite-On Technology is planning strategically to step into the field of photo-printing in 2004.

43 44

b. The global SPS technology is trending toward modulization, miniaturization, integration and high-frequency.With the dramatic development of IC processing technology, electronic products continue to become smaller and cheaper, as do their

power supply component. (See Chart 1 below) As power supplies are required to handle rated power, the application of IC

technology is more difficult to integrate. As a result, power supply remains a major obstacle in making electronic devices smaller

and cheaper. In order to overcome this problem, the development of SPS technology is moving in four directions: modularization,

miniaturization, integration and higher frequency. With much room for further growth, manufacturers are still able to stay

competitive via product differentiation and portfolio diversification. Thus, the SPS manufacturers with leading technology and scale

have still been able to maintain favorable sales and profit gains amid fierce competition in a maturing market.

a. SPS manufacturers in Taiwan are actively pursuing the market outside of PC.

The market of the local SPS industry in Taiwan is still focused on exportation, making Taiwan the No.1 Power supply vendor

for PC's. Even though the industry's big players are getting bigger, Taiwan's PC SPS share is expected to keep growing. The

communications industry is the secondary market for SPS, with 30% of overall market. At present, SPS for non-PC

products represents about 12% of Taiwan's overall SPS output, indicating that there is still ample room for future growth in

the non-PC sector. The explosive growth of smart handhelds witnessed worldwide indicates that the demand for compact

and low-cost SPS will see rapid increase.

Global shipment units of inkjet MFP (2000 - 2008 estimated)

Source: Gartner,Feb,2004

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

MEP(000)

2000 2001 2002 2003 2004 2005 2006 2007 2008

5,882 8,028 10,174 19,569 30,997 41,453 51,485 58,877 63,269

Multi Function Printers (MFPs)

MFP integrates the function of copying, printing and scanning into one. The 4-in-1s represent a printer with the above

mentioned features plus the faxing capability. MFPs have become a critical office item to reduce cost and save space in

enterprises. U.S. and Europe currently account for over 70% of the global MFP market. According to Gartner, global MFP

shipment reached 19 million units in 2003, up 90% from 2002. IDC further expects the market to see 30 million units with

an annual growth rate of 63%.

Lite-On Technology has had extensive experiences in manufacturing printers and scanners. As of 2003, Lite-On Technology

owns 24% of flatbed scanner market. Lite-On Technology expects to see MFPs integrating more functions in 2004.

(4) Switching Power Supply

The Switching Power Supply (SPS) market has been growing steadily, however with the application of SPS still focused

mainly upon IT products. Statistics from MicroTech Consultants indicate that the global market value of SPS was about

US$173 billion in 2003, with slight increase from 2002. The market value of 2004 is estimated to be US$174 billions with

an annual growth rate of 2%. Because of a wide variety in applications, SPS not only has been little influenced by the

short-term downturn of the IT industry, but has been able to maintain steady growth. SPS products can be categorized into

two types of products, AC/DC converters with space 73% share and DC/DC converters with 27%. Currently, SPS for IT

products is the primary application with 43% market share, followed by communication and industrial equipment, at 20%

and 16% respectively.

Source of Information: Energy & Resource Laboratories of Industrial Technology Research Institute

Chart 1 Global Development of SPS Products

Trend Note

The range of SPS application is wide, with different IT product structures requiring different circuit designs, and specification requirements from customers serving as the standard of design and production. Therefore, automatic mass production and major upstream components, such as adapters, may be replaced by power modular IC.

While electronic products are getting significantly smaller, SPS must do the same. As a result, the components of SPS must offer small size, lightweight, and higher efficiency and frequency. Components such as adapters, electronic sensors, and capacitors used for wave filtering will help achieve compactness and lightness along with increases in switching frequency.

Integration is important for SPS miniaturization, resulting in miniaturization of adopted components and radiator surface. Smaller radiator surface creates a temperature increase. So, loss of power inside circuit must be reduced to solve the electrical- and heat-related insulation problems.

High frequency allows SPS to achieve miniaturization, although the technology is not limited to circuit methods, and can be related to semiconductor components, magnetic components, capacitors, control circuit, and assembly technology. The challenge is to develop a circuit with limited loss of high frequency and limited components.

Modularization

Miniaturization

Integration

High Frequency

Focus primarily on exportation, the Lite-On Technology's customers are located worldwide, including U.S., Europe, Japan, China, and South East Asia.

Distributing Areas of Major Products

Global market shares for the Company's major products in 2003 are:

Global Market Shares

Major Products

Monitor (CRT/LCD)Mobile PhonePC SystemsAnalog ModemsLED & OptoSPS (DT/NB/Server)Image Products PC Keyboards

2003 Market Shares ( percentage)

5%1% 1%15%6%12% / 33% / 24%25%20%

45 46

Following are estimates on market scale and growth associated with the Company's major products by renowned research

institutions, such as IDC and Garther.

Future Supply, Demand and Growth

(1) Lite-On Technology is equipped with unparallel R&D capabilities. For any of Lite On Technology's products, including

display, peripherals and components, printers, scanners, networking and wireless, the Company offers total solution

and one-stop shop to differentiating itself from conventional EMS/ODM suppliers.

(2) As for Image products, Lite-On Technology owns the design technology and production capability for scanner and inkjet

printer modules. This makes Lite-On Technology the number-one choice for ODM/OEM by global customers.

(3) In terms of digital display products, Lite-On Technology has proven the economies of scale, as well as maintenance of

good relationships with key component suppliers to achieve flexibility in better serving the customers.

(4) In terms of component products, Lite-On Technology has the advantage in the ability to integrate the upstream and the

downstream, allowing Lite-On Technology to be ahead of the industry in new product development.

(5) Today's global market is driven by demand for products with shorter lifecycles which require continuous innovation, cost

reduction and better customer service. These concerns are shared throughout the IT and electronics industries. Lite-On

Technology's highly efficient and dedicated management team excels at running a multinational enterprise, tackling

approaching challenges in ways that continue to add value to our competitive advantage.

Competitive Niche and Development Vision

Market Related to the Company’s Major Products

CRT Monitor

LCD Monitor

PC Systems

Mobile Phone (GSM/GPRS/CDMA)

SPS (DT/NB/Server)

MFP (Inkjet/Laser)

Printers (Inkjet/Laser)

Scanners (excluding MFP Scanning Module)

Keyboards for DT PC

Keyboards for NB PC

Estimated Market Scale in 2004

more than 50,000k units

more than 63,000k units

more than 100,000K Units


more than 100,000K/40,000K/7,500K Units






Estimated Compound Growth Rate in the Next 2~3 Years (%)

about -18%

20 ~ 25%

5%

more than 10%

5%~10%

about 15 ~ 20%

about 5%

about -2.5%

10 ~ 13%

15 ~ 20%

2.2 Main Function of Major Products

Product

Monitor

Projector

PC

Motherboard

NIC

Switch

ADSL

Analog Modem

ADSL Modem

Gigabite Ethernet Card

Power line

GSM/GPRS

Optoelectronics

Switching Power Supply

Image

Human Input Solution

Personal Image Device

Main Function

For PC and workstation use, and to assist terminal display of CAD/CAM models, image layout, internet-based information, and multi-media interactive images.

For conference, presentation, home theater and entertainment.

For home and office use.

For general PC use.

Equipment to connect a PC terminal to the Internet.

Network center hub to control the Internet traffic and central management.

A safety screen gateway between home network and broadband Internet to prevent hacker intrusion, and enabling multiple users to share the same Internet account as IP sharing functions.

Digital-to-analog and vice-versa signal converter, necessary for a PC to access the Internet.

High-speed transmission specification that is 30-to-120 times faster than the 56K modems. A mainstream communication product.

High-speed Internet transmission for enterprise and personal use.

Physical connection providing PC access to the Internet, ideal for family Internet access use.

A widely applied global telephone system, especially for mobile phones (voicemail and information transmission).

Widely applied in communications network, computer, and peripheral-related products, including consumer electronic products, automation facilities, medical treatment equipment, traffic signs and industrial indicators, Opto switches, display panels for indoor and outdoor use, car panels, stereoes, brake lights, wireless information transmission products, and more.

Provides high-quality power supply for PCs, communication, and automation facilities in enterprise and personal use.

Scanning, printing, copying, faxing input/output-related products and Internet-related products, such as PDAs

Computer keyboards and input devices for the Internet and e-business.

Built-in P.I.D. for mobile phones and portable devices.

Unfavorable Factors and Responses

Unfavorable Factors Responses

1. Close connection with the fluctuation in global

economy.

2. The great impact of exchange rate change on the

profits

1. Diversify the product portfolio to manage risks in the

fluctuations of the global economy.

2. Establish risk-managing measures against exchange-rate

risk responding to the fluctuation of exchange rates.

47 48

D i s p l a y 6,000 5,100 28,881,300 6,887 6,363 42,013,907

P C S y s t e m 7,920 1,638 9,309,414 5,031 2,484 8,707,496

N e t w o r k i n g 15,200 3,703 1,332,526 17,460 9,636 3,943,059

H a n d s e t 1,338 945 2,005,650 8,400 4,054 5,933,337

O P T O 1,275,400 513,084 880,312 2,423,866 2,423,866 3,624,903

P o w e r 5,000 5,394 2,613,012 44,453 44,453 15,851,827

I m a g e 553 553 937,314 6,352 6,318 8,950,339

H . I . S 2,313 2,313 441,339 10,865 10,865 1,132,137

To t a l 1,313,724 532,730 46,400,867 2,523,314 2,508,039 90,157,005

D i s p l a y

P C S y s t e m

N e t w o r k i n g

H a n d s e t

O P T O

P o w e r

I m a g e

H . I . S

O t h e r s

To t a l

20 288,174 5,045 28,494,427 18,350 6,556 41,856,374

7 31,970 1,631 9,277,444 10 152,647 2,067 9,241,850

188 142,237 2,870 1,483,804 130 63,712 11,021 4,999,815

297 406,256 1,290 3,132,043 960 1,429,849 3,199 5,413,837

112,913 157,639 394,347 720,033 390,776 950,155 2,770,332 4,888,495

1,120 376,030 4,274 2,180,010 8,390 2,317,875 35,512 14,502,190

634 1,432,539 2,012 459,170 4,036 10,110,330

89 21,277 2,359 561,354 616 78,920 16,027 3,286,145

115,323 465,849 17,438 1,127,907

114,634 1,538,906 412,450 47,747,503 402,894 5,488,116 2,848,750 95,426,943

All foreign and domestic Lite-On Technology factories retain a cooperative, long-term relationship with material

suppliers. In terms of component supplies, Lite-On holds regular meetings with strategic suppliers to exchange

information on market supply and price trends. In turn, the suppliers are able to provide goods on time and help Lite-

On achieve competitive production costs through reasonable pricing. This leads to smoother, more cost-effective

production and enables Lite-On to provide customers with the best goods and services.

Notes: 1. Productivity means the capacity to produce by current facilities under normal operation, after taking into concerns on shut down and holidays.

2. If one product can substitute another, we will merge the production capacity and attach a detail description. 3. Calculation Method:

For 2002, Lite-On Technology has included Lite-On Technology annual production, and the 2002 November and December production value of Silitek Corp, Lite-On Electronics, and GVC Corp. are included.

Notes: 1. Calculation Method:For 2002, Lite-On Technology has included Lite-On Technology annual sales volume and value, and the 2002 November and December sales volume and value of Silitek Corp, Lite-On Electronics, and GVC Corp. are included.

2.3 Status of Material Supply 2.5 Production volume in the past two years:

2.6 Sales volume in the past two years:

Unit: Thousand of NT Dollars

Lite-On 12,762,118 13%

Trading USA,

Inc.

NMV 6,178,013 13% 9,835,168 9%

Due to the impact of the four-in-one merger, economic recovery in the industry as well as the complete product lines of the Company, key technical platform, one-stop shopping and professional R&D team, the sales revenues from major customers of 2003 increases significantly comparing to that of 2002. Established in April 2003, Lite-On Trading USA, Inc. mainly manages US domestic sales to provide customers excellent channels for purchase and after sales service and contributed to significant growth in sales.

2.4 List of Major Customers

List of Major Customers in the Past Two Years

2002 2003Name of Customer Amount % of Annual Sales Amount % of Annual Sales

Titanic Capital 21,691,320 49% 40,914,485 45%

Service

Yet Foundate Ltd. 1,370,664 3% 10,350,090 11%

Great Adelphi Intl. 5,442,436 12% 6,198,835 7%

Lite-On Computer 4,420,007 10% 2,543,098 3%

Technology (DG) Ltd.

Unit: Thousand of NT Dollars

The purchase amounts of products from Titanic Capital Service, Yet Fundate Ltd, Great Adelphi Intl. and Lite-On Computer Technology (DG) Ltd that are all subsidiaries of the Company as well as oversea production sites, have been increased dramatically due to significant sales growth resulting from the impact of merger and economic recovery in the industry.

List of Major Suppliers in the Past Two Years

2002 2003Name of Customer Amount % of Annual Sales Amount % of Annual Sales

Unit: Thousand of parts, sets, or NT Dollars

Unit: Thousand of parts, sets, or NT Dollars

2002 2003

2002 2003

Productivity Volume Value Productivity Volume ValueProductionvalue

Major Product(or by SBU)

Year

ProductionvalueMajor Product

(or by SBU)

Year

Domestic Sales Export Sales

Volume Value Volume Value Volume Value Volume Value

Domestic Sales Export Sales

49 50

4000

3000

2000

1000

0

Staff

Direct Labor

Total

Average Age

Average Years ofEmployment

100

90

80

70

60

50

40

30

20

10

0

2,608 2,739 2,724

1,003 696 622

3,611 3,435 3,346 31.53 32.45 32.87

3.43 3.85 3.78

Ph. D. 0.30%

MS / MA 13.65%

College 65.27%

High School 17.48%

Others 3.29%

Ph. D. 0.62%

MS / MA 17.85%

College 67.63%

High School 9.44%

Others 4.46%

Ph. D. 0.59%

MS / MA 18.46%

College 69.17%

High School 8.62%

Others 3.16%

Lite-On Technology has long recognized an enterprise’s responsibility to protect the environment. Lite-On believes that a company can only be truly

recognized as a responsible global company when it is environmentally aware and has demonstrated this belief by proactive corporate initiatives.

Lite-On Environmental Protection Goals:

To ensure minimum impact on the environment during research, development, manufacturing, and servicing processes.

To comply with environmental protection laws and regulations, as well as related environmental protection requirements from government agencies.

To instill a sense of responsibility for environmental protection in all employees, fostered a shared commitment as responsible global citizens.

To provide necessary environmental protection training to all relevant personnel to enhance employee sensitivity to and awareness of environmental

protection.

To establish a self-evaluation mechanism promoting pollution prevention and continuous environmental improvements.

At present, following Lite-On’s commitment to environmental protection, manufacturing processes and material used in all company factories are

pollution free and comply thoroughly with all CFC regulations. Furthermore, all waste is handled by qualified handling firms, in compliance with the

regulations of the Environmental Protection Administration.

In the future, Lite-On Technology will continue its commitment to pollution prevention and environmental improvement programs.

The policy of green products is set up in Lite-On Technology for each of business departments to comply with:

Prevent use, manufacturing and sales of products containing environmentally controlled materials to carry out the concept of environmental

protection.

Comply with regulations of RoHS to meet customers’ needs.

Build a platform of green supplier management to work with suppliers and customers for environmental protection.

5.1 Lite-On Technology values its relationship with employees. The Company continues to endeavor toward enhancing communications between

management and staff in all departments, with focus on key objectives, capabilities, and functions. In addition, internal communication meetings

are periodically held by top management to keep employees informed of the strategic directions of the Company. An employee hotline and an

employee suggestion box also keep communication open between employees and management.

5.2 Lite-On Technology views the talents of its employees as a major asset. To encourage advancement, the company devotes considerable resources

to employee training programs. The Company also provides a variety of training programs for all management levels to keep them well informed

in today's unpredictable business environment. Lite-On Technology invites distinguished college professors to conduct courses, and well-known

lecturers from the Institute of Information Industry (III) to share current industry trends. The Company also invites respectable public figures to

disclose their interests and achievements in different aspects of life to encourage employees to pursue a more balanced professional and personal

lifestyle.

5.3 Lite-On Technology has formed an Employee Welfare Committee, Retirement Pension Supervision Board and Safety & Health Committee to oversee

administration of the employee benefits. Lite-On Technology has also established safety and health practices. The Company's policies, systems,

and other welfare measures are delivered through internal training programs and the bi-monthly "Lite-On" internal publication.

5.4 No damages or losses were incurred by labor disputes in the year 2003.

3 . Personnel Growth over the Last Two Years 4 . Environmental Protection Expenditures

5 . Labor Relat ions

Based on data of in-house employees for the last 2 years and up to April, 30th . 2004

2004 (as of April 30th, 2004)2002 2003

Percentage byEducation

Background

51 52

1. A lawsuit of quality argument is filed between the Company’s display department and Viewsonic. The two parties have agreed upon

a private settlement in March 2004 and withdrew the initial lawsuit. A settlement agreement is planed to be signed in May 2004.

2. Bureau of Environmental Protection of Taichung City lodged an accusation against the former GVC Corp. for waste disposal and

required the Company to verify the obligations of all carriers. The Company shall seek compensation of transportation expenses

shared by these carriers. Currently, the transportation expenses cannot be estimated. This case resulted from subcontractor of the

qualified waste-disposing company authorized by the Company and may be involved in a violation of administrative disciplinary

action regulated by the Bureau of Environmental Protection on the Company for the waste transportation expenses. Therefore, the

Company has filed a lawsuit against such administrative disciplinary action, which has been withdrawn by the Taichung City

Government.

3. Lite-On has received a court-ordered compensation of US$4.4 million as a result of debt collection by the former GVC Corp. in the

U.S. It is confirmed that the Client does not have the asset. The Company has filed a lawsuit against the owner of the Client.

6 . I m p o r t a n t C o n t r a c t s

6.1 Major Business Contracts

6.2 Bank Contracts

Terms

3.08.1999~ 3.07.2004

5.18.2001~ 5.18.2006

7.23.2001~ 7.23.2004

8.08.2003~ 8.08.2008

Content

Extend CP Every Three Months

Middle or Long-Term Secured Loan

Revolving CP

Middle or Long-Term Loan

Restriction Clause

Required to MaintainCertain Financial Ratio




Party

ABN AMRO Bank, Taiwan

Chiao Tung Bank, Taiwan

ABN AMRO Bank and other 9 Participant Banks in Taiwan

Citibank and other Participant Banks in Taiwan

Nature of the Contract

CP Revolving Credit Limit (Note 1)

Long Term Loan (Note 1)

CP Revolving Credit Limit (Note 1)

SyndicationLoan Agreement

Nature of the Contract

ODM/OEMAgreement

Sales Agreement

Cross-LicenseAgreement

Parties

Confidential

Confidential

Osram

Terms

Confidential

Confidential

Confidential

Restriction Clause

Confidentiality

Confidentiality

Confidentiality

Description

Manufacturing monitors, power supplies, scanners, keyboards, multi-function peripherals, mobile phones, modems and other products.

Sales of color monitors and optpelectronic component products.

Cross-licensed to manufacture and sell white LEDs with conversion technology.

Note 1: Originally signed by Silitek Corporation.



7 . Major Legal Proceedings and Contingencies

April 30, 2004Units : Thousand of NT Dollars

8 . Assets Acquisition or Disposition

Lite-On Technology Corporation :

Ta Chong Bond Fund

Chung Hsing Ping-An Bond Fund

First Global Investment Trust Duoli Bond Fund

First Global Investment Trust Duoli-2 Bond Fund

First Global Investment Trust Wan Tai Bond Fund

Jih Sun Bond Fund

Tai-Yu Long River Bund Fund

Solomon Bond Fund

Phoenix Bond Fund

Kirin Bond Fund

Mega Diamond Bond Fund

JF Taiwan Bond Fund

JF First Bond Fund

Fuhwa Bond Fund

TIIM Bond Fund

PCA Bond Fund

2003/10 – 2004/02

2003/04 – 2004/04

2004/02 – 2004/04

2004/04

2003/01 – 2004/04

2003/03 – 2004/04

2003/04 – 2004/02

2003/01 – 2004/04

2004/02 – 2004/04

2003/07 – 2004/04

2003/02 – 2004/04

2003/04

2003/01 – 2003/02

2004/01 – 2004/04

2003/02 – 2004/04

2003/04 – 2004/04

1,000,000

2,080,000

700,000

500,000

2,600,000

1,700,000

850,000

2,600,000

520,000

310,000

2,450,000

500,000

300,000

350,000

2,790,000

1,100,000

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Assets Acquisition Date(yy/mm) Purchase Price Relation with

the CompanySeller Purpose

8.1 Major Asset-Related Transactions of Lite-On Technology Corporation and Subsidiaries Occurred in 2003 and as of April 30, 2004:

Major Assets Acquisition:

53 54

Major Assets Acquisition: April 30, 2004Units : Thousand of NT Dollars


PCA Well Pool Fund

Prudential Financial Bond Fund

NITC Taiwan Bond Fund

NITC Bond Fund

Barits Bond Fund

Increment Securities Investment Trust Fund

Sheng Hua 1699 Bond Fund

James Bond Fund

ABN AMRO Select Bond Fund

KGI Victory Fund

Fubon Ju-I Fund

Truswell Bond Fund

Invesco GP R.O.C. Bond Fund

Shinkong NT$ High Yield Fund

Shinkong Chi-Shin Fund

Dresolner Bond Fund

United Bond Fund

Union Bond Fund

Polaris De-Li Bond Fund

Polaris De-Bao Bond Fund

Lite-On International Holding Co., Ltd.

GVC (Cayman) Corp.

Lite-On Enclosure Inc.

Neihu Office Building

2003/01 – 2004/04

2003/01 – 2004/04

2004/02 – 2004/04

2003/10 – 2004/01

2003/01 – 2004/02

2003/04 – 2004/04

2003/01 – 2004/04

2003/01 – 2003/02

2003/01 – 2004/02

2003/04 – 2003/11

2004/02 – 2004/04

2003/09 – 2004/04

2003/01 – 2004/04

2004/04

2003/01 – 2004/01

2003/02 – 2004/01

2003/02 – 2004/04

2003/04 – 2004/04

2003/01 – 2004/01

2003/12 – 2004/01

2003/01 – 2003/12

2004/01 – 2004/04

92/10 - 2004/04

2003/01 – 2003/06

2,200,000

1,980,000

750,000

950,000

2,800,000

1,850,000

1,275,000

300,000

2,300,000

450,000

1,000,000

1,850,000

1,400,000

500,000

1,700,000

2,100,000

1,580,000

800,000

2,650,000

600,000

695,553

350,333

834,484

300,701

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

Director and

manager of

Lite-On

Enclosure Inc.

None

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Assets Acquisition Date(yy/mm)

PurchasePrice

Relation with the CompanySeller Purpose


Lite-On Capital Inc. :

MEGA Diamond Bond Fund

NITC Bond Fund

Increment Securities Investment Trust Fund


Lite-On IT Corporation :

NITC Bond Fund


ABN AMRO Bond Fund

Prudential Bond Fund

Union Bond Fund

First Global Investment Trust Duoli-2 Bond Fund


Wanpao Security Investment Trsut Fund


Grant Cathey Bond Fund

JF First Bond Fund

President James Bond Fund

Fubon Ju-I II Fund


Solomon Bond Fund

B.B. Bond Fund


JF Taiwan Bond Fund

Prudential Well Pool Fund

The First Global Investment Trust Wan Tai Bond

Fund

2003/01 – 2004/04

2003/01 – 2003/12

2003/01 – 2004/03

2003/11 – 2004/03

2003/03 – 2004/04

2003/01 – 2004/04

2003/01 – 2004/04

2003/01 – 2004/04

2003/04 – 2004/04

2003/06 – 2004/04

2003/02 – 2004/04

2003/07 – 2004/04

2004/02 – 2004/04

2003/04 – 2004/04

2003/01 – 2004/04

2003/03 – 2004/04

2003/05 – 2004/04

2003/04 – 2004/04

2003/03 – 2004/04

2003/03 – 2004/04

2003/01 – 2004/04

2003/01 – 2004/04

2003/01 – 2004/04

2003/01 – 2004/04

545,000

800,000

1,200,000

370,132

1,950,000

2,140,000

2,530,000

870,000

1,450,000

1,450,000

1,610,000

680,000

850,000

1,450,000

1,660,000

1,485,000

1,120,000

2,530,000

1,740,000

2,340,000

2,240,000

1,450,000

1,850,000

1,660,000

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A


PurchasePrice


Solectron

( Singapore) and

Da Yi Liu, Zong De

Song and etc.

METROPOLITAN

CONSTRUCTION

CO., LTD el

The Neihu Office Building

has been set aside to Lite-

On Real Estate

Management Company on

July 1st, 2003 and signed a

leasing contract with the

Company for the purpose

of office building.

55 56



Barits Bond Fund

Dresdner Bond Fund

Cathay Bond Fund

The First Global Investment Trust Duoli

Bond Fund

The IIT High Yield Fund


President Homerun Bond Fund

Fubon Ju-I Bond Fund


Shinkong Chi-shin Fund

KGI Victory Fund

Capital International Bond Fund

Shinkong Chishun Fund

TIIM Bond Fund


Ta Chong Bond Fund

HSBC NTD Money Management Fund

Fubon Ju-I 3 Bond Fund

Transcend Fortune Bond Fund

Far Eastern Alliance Taiwan Bond Fund

UBS Taiwan Bond Fund

UBS Soaring Eagle Bond Fund

The IIT Increment Fund

AIG Taiwan Bond Fund



2003/01 – 2004/04

2003/01 – 2004/04

2003/03 – 2004/04

2003/03 – 2004/04

2003/04 – 2004/04

2003/04 – 2004/04

2004/04 – 2004/04

2003/01 – 2004/04

2003/04 – 2004/04

2003/03 – 2004/04

2003/03 – 2003/04

2003/04 – 2003/07

2003/04 – 2004/04

2003/05 – 2004/04

2003/05 – 2004/04

2003/05 – 2004/04

2003/03 – 2004/04

2003/10 – 2004/04

2003/11 – 2004/04

2003/06 – 2003/10

2003/03 – 2004/04

2003/03 – 2004/04

2003/04 – 2004/04

2004/01 – 2004/04

2004/01 – 2004/04

2004/01 – 2004/04

1,660,000

1,810,000

1,950,000

1,740,000

1,450,000

595,000

892,000

1,710,000

1,660,000

2,030,000

580,000

4,200,000

1,450,000

2,650,000

1,260,000

1,660,000

1,550,000

690,000

1,080,000

5,900,000

1,450,000

2,320,000

1,620,000

580,000

580,000

580,000

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A


PurchasePrice




United Weili Bond Fund

Ta Chong Gallop Bond Fund

HSBC NTD Money Management Fund 2

Truswell Bond Fund

Truswell Premier Fund

High Yield Group Co., Ltd

GVC (Cayman) Corp.

G-Tech USA, Inc.

Lite-On International Holding Co., Ltd. :

Lite-On USA Holding Co., Ltd.

Lite-On USA Holding Co., Ltd.

Lite-On Technology USA Co. Ltd.

Lite-On Technology USA Co., Ltd. :

Lite-On Trading USA Inc.

High Yield Group Co., Ltd.

Lite-On Opto Technology (Guang Zhou) Ltd.

2004/01 – 2004/04

2004/01 – 2004/04

2004/01 – 2004/04

2004/02 – 2004/04

2004/02 – 2004/04

2003/01 – 2003/12

2004/03 - 2004/03

2003/01 – 2003/12

2003/01 – 2003/12

2003/01 – 2003/12

2003/01 – 2003/12

790,000

580,000

780,000

580,000

580,000

372,892

USD 10,500

USD 20,000

USD 20,000

USD 12,000

USA 13,410

None

None

None

None

None

None

None

None

None

None

None

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

None


PurchasePrice


Note: List includes only the assets whose acquisition price reaches 20% of the real capital or NTD300 million.

57 58

Major Assets Disposition:


Ta Chong Bond Fund


First Global Investment Trust Wan

Tai Bond Fund

Jih Sun Bond Fund

Tai-Yu Long River Bund Fund

Solomon Bond Fund

Kirin Bond Fund


JF Taiwan Bond Fund

JF First Bond Fund

TIIM Bond Fund

PCA Bond Fund

PCA Well Pool Fund

Prudential Financial Bond Fund

NITC Bond Fund

Barits Bond Fund

Increment Securities Investment

Trust Fund


James Bond Fund


KGI Victory Fund

Fubon Ju-I Fund

Truswell Bond Fund


2003/10 – 2004/02

2003/04 – 2004/04

2003/01 – 2004/04

2003/03 – 2004/04

2003/04 – 2004/02

2003/01 – 2004/04

2003/07 – 2004/04

2003/02 – 2004/04

2003/04

2003/01 – 2003/02

2003/02 – 2004/04

2003/04 – 2004/04

2003/01 – 2004/04

2003/01 – 2004/04

2003/10 – 2004/01

2003/01 – 2004/02

2003/04 – 2004/04

2003/01 – 2004/04

2003/01 – 2003/02

2003/01 – 2004/02

2003/04 – 2003/11

2004/02 – 2004/04

2003/09 – 2004/04

2003/01 – 2004/04

2003/12 – 2004/03

2003/06 – 2004/03

2003/03 – 2004/03

2003/03 – 2004/03

2003/06 – 2004/03

2003/03 – 2004/03

2003/09

2003/03 – 2004/03

2003/06

2003/02 – 2003/03

2003/03 – 2004/03

2003/06 – 2003/09

2003/03 – 2004/03

2003/03 – 2004/03

2003/12 – 2004/03

2003/02 – 2004/03

2003/06 – 2004/03

2003/03 – 2004/03

2003/02 – 2003/03

2003/01 – 2004/03

2003/06 – 2003/12

2004/03

2003/09 – 2004/03

2003/02 – 2003/08

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

1,002,720

1,435,650

2,107,995

1,204,378

852,426

2,106,542

301,523

1,956,509

501,766

300,501

2,298,222

804,033

1,707,128

1,484,942

953,957

2,808,019

1,354,571

1,260,974

300,550

2,304,889

450,990

501,100

1,354,178

901,883

2,720

5,650

7,995

4,378

2,426

6,542

1,523

6,509

1,766

501

8,222

4,033

7,128

4,942

3,507

8,019

4,571

5,974

550

4,889

990

1,100

4,178

1,883


Assets AcquisitionDate (yy/mm)

DispositionDate (yy/mm)

OutstandingAmount

Disposed Price

Profitor Loss Buyer

Relation withthe Company


Shinkong Chi-Shin Fund

Dresolner Bond Fund

United Bond Fund

Union Bond Fund



Lite-On IT Corporation

Innoveta Technologies, Inc.

Silitech Technology Corporation

Lite-On Capital Inc. :

MEGA Diamond Bond Fund

NITC Bond Fund

Increment Securities Investment

Trust Fund


NITC Bond Fund


ABN AMRO Bond Fund


Union Bond Fund

First Global Investment Trust Duoli-2

Bond Fund


2003/01 – 2004/01

2003/02 – 2004/01

2003/02 – 2004/04

2003/04 – 2004/04

2003/01 – 2004/01

2003/12 – 2004/01

2003/01 – 2004/04

2003/01 – 2003/12

2003/01 – 2004/03

2003/03 – 2004/04

2003/01 – 2004/04

2003/01 – 2003/07

2003/01 – 2004/04

2003/04 – 2004/04

2003/06 – 2004/04

2003/02 – 2004/04

2003/02 – 2004/03

2003/03 – 2004/03

2003/03 – 2004/03

2003/06 – 2004/03

2003/02 – 2004/03

2003/12 – 2004/03

2004/01 – 2004/04

2004/01 – 2004/04

2003/01 – 2004/04

2003/03 – 2004/03

2003/03 – 2003/09

2003/03 – 2004/03

2003/03 – 2004/03

2003/03 – 2004/03

2003/03 – 2003/09

2003/03 – 2004/03

2003/06 – 2004/03

2003/06 – 2004/04

2003/03 – 2004/03

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

TDK

U.S.A.

Corp.

1,704,105

2,105,962

1,083,153

601,554

2,656,166

601,130

2,068,290

380,825

1,674,476

431,999

803,484

1,004,821

1,455,045

1,643,437

1,744,341

874,362

1,165,025

1,163,932

1,113,006

4,105

5,962

3,153

1,554

6,166

1,130

1,557,182

321,068

1,067,563

1,999

3,484

4,821

5,045

3,437

4,341

4,362

5,025

3,932

3,006




OutstandingAmount

Disposed Price

Profitor Loss Buyer


59 60


Wanpao Security Investment

Trsut Fund


Grant Cathey Bond Fund

JF First Bond Fund

President James Bond Fund

Fubon Ju-I II Fund


Solomon Bond Fund

B.B. Bond Fund


JF Taiwan Bond Fund

Prudential Well Pool Fund

The First Global Investment

Trust Wan Tai Bond Fund

Barits Bond Fund

Dresdner Bond Fund

Cathay Bond Fund

The First Global Investment

Trust Duoli Bond Fund

The IIT High Yield Fund


President Homerun Bond Fund

Fubon Ju-I Bond Fund


2003/07 – 2004/04

2003/03 – 2004/04

2003/04 – 2004/04

2003/01 – 2004/04

2003/03 – 2004/04

2003/05 – 2004/04

2003/04 – 2004/04

2003/03 – 2004/04

2003/03 – 2004/04

2003/01 – 2004/04

2003/01 – 2004/04

2003/01 – 2004/04

2003/01 – 2004/04

2003/01 – 2004/04

2003/01 – 2004/04

2003/03 – 2004/04

2003/03 – 2004/04

2003/04 – 2004/04

2003/04 – 2004/04

2003/04 – 2004/04

2003/01 – 2004/04

2003/04 – 2004/04

2003/09 – 2004/03

2003/03 – 2004/03

2003/06 – 2003/04

2003/03 – 2003/12

2003/03 – 2004/03

2003/06 – 2004/03

2003/06 – 2004/03

2003/03 – 2004/03

2003/03 – 2004/03

2003/03 – 2004/03

2003/06 – 2004/03

2003/03 – 2004/03

2003/03 – 2004/03

2003/03 – 2004/03

2003/03 – 2004/03

2003/03 – 2004/04

2003/03 – 2004/03

2003/06 – 2004/03

2003/06 – 2004/09

2003/06 – 2003/12

2003/03 – 2004/03

2003/06 – 2004/03

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

391,585

833,122

1,454,941

1,163,803

1,204,371

872,548

2,033,696

1,455,413

2,054,679

1,745,266

1,163,089

1,456,446

1,167,334

2,005,383

1,315,028

1,953,378

1,454,557

1,164,906

582,764

874,097

1,214,357

1,164,704

1,585

3,122

4,941

3,803

4,371

2,548

3,696

5,413

4,679

5,266

3,089

6,446

7,334

5,383

5,028

3,378

4,557

4,906

2,764

4,097

4,357

4,704


Shinkong Chi-shin Fund

KGI Victory Fund

Capital International Bond Fund

Shinkong Chishun Fund

TIIM Bond Fund


Ta Chong Bond Fund

HSBC NTD Money

Management Fund

Fubon Ju-I 3 Bond Fund

Transcend Fortune Bond Fund

Far Eastern Alliance Taiwan

Bond Fund

UBS Taiwan Bond Fund

UBS Soaring Eagle Bond Fund

The IIT Increment Fund

AIG Taiwan Bond Fund

HSBC NTD Money Management

Fund 2

2003/03 – 2004/04

2003/03 – 2003/04

2003/04 – 2003/07

2003/04 – 2004/04

2003/05 – 2004/04

2003/05 – 2004/04

2003/05 – 2004/04

2003/03 – 2004/04

2003/10 – 2004/04

2003/11 – 2004/04

2003/06 – 2003/10

2003/03 – 2004/04

2003/03 – 2004/04

2003/04 – 2004/04

2004/01 – 2004/04

2004/01 – 2004/04

2003/03 – 2004/04

2003/03 – 2004/06

2003/06 – 2004/08

2003/06 – 2004/03

2003/06 – 2004/03

2003/06 – 2004/03

2003/06 – 2004/03

2003/03 – 2004/03

2003/12 – 2004/03

2003/12 – 2004/03

2003/06 – 2003/12

2003/03 – 2004/03

2003/03 – 2004/04

2003/06 – 2004/03

2004/03 – 2004/04

2004/01 – 2004/03

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

None

1,744,992

581,874

419,779

1,164,814

1,154,600

973,804

1,163,921

1,261,623

491,823

581,512

591,584

1,452,779

2,324,088

1,124,874

581,278

490,815

4,992

1,874

-221

4,814

4,600

3,804

3,921

1,623

1,823

1,512

1,584

2,779

4,088

4,874

1,278

815

Note: List includes only the assets whose disposition price reaches 20% of the real capital or NTD 300 million.




OutstandingAmount

Disposed Price

Profitor Loss Buyer





OutstandingAmount

Disposed Price

Profitor Loss Buyer


Major Assets Disposition:

61 62

F i n a n c i a l I n f o r m a t i o n

63 64

Current Assets 8,744,879 13,353,779 17,390,233 34,501,324 45,884,378 45,369,589

Long-Term Investment 6,864,221 9,980,925 12,400,856 25,239,734 30,223,137 31,794,306

Fixed Assets 936,414 1,099,845 1,237,896 7,387,659 4,022,951 3,982,427

Other Assets 1,713,608 1,757,205 109,143 1,189,078 664,251 862,385

Total Assets 18,259,122 26,191,754 31,291,444 68,418,546 80,794,717 82,008,707

Current 4,717,569 8,892,745 14,066,794 25,926,702 31,469,410 30,657,208

Liabilities 4,743,694 9,308,479 15,256,302 28,886,409 (Note 1) -

Long-Term Liabilities 4,937,976 6,068,913 3,145,181 1,436,994 4,393,002 4,250,000

Other Liabilities 13,297 10,607 38,392 350,924 460,404 717,272

Total 9,668,842 14,972,265 17,250,367 27,549,023 36,322,816 35,624,480

Liabilities 9,694,967 15,387,999 18,439,875 30,508,730 (Note 1) -

Capital Stock 4,934,778 5,741,989 7,488,181 19,094,383 22,476,906 22,476,906

Capital Surplus 3,290,818 3,063,218 3,213,767 17,794,499 15,929,977 15,934,670

Retained 598,554 3,079,516 3,389,762 5,988,417 8,598,465 10,816,622

Earnings 16,193 1,083,991 1,124,032 3,028,710 (Note 1) -

8,590,280 11,219,489 14,041,077 40,869,523 44,471,901 46,384,227

8,564,155 10,803,755 12,851,569 37,909,816 (Note 1) -

Net Sales 14,221,178 25,506,819 27,564,818 48,710,703 99,667,848 33,273,964

Gross Profit 1,324,090 2,471,403 2,327,730 4,149,125 9,518,028 2,743,811

Operating Income (Loss) ( 65,417 ) 511,852 97,862 692,546 2,201,082 1,007,125

Non-Operating Income 1,175,525 3,159,198 334,506 4,371,994 6,879,374 1,753,014

Non-Operating Expenses ( 661,450 ) ( 660,466 ) ( 521,795 ) ( 467,790 ) ( 732,593 ) ( 377,132 )

Net Income (Loss) before Tax 448,658 3,010,584 2,355,283 4,596,750 8,347,863 2,383,007

for Active Operating Departments

Income (Loss) for Active 448,658 3,010,584 2,355,283 5,126,750 7,280,863 2,218,157

Operating Departments

Income (Loss) for Inactive 152,780 11,450 ( 4,951 ) - - -

Operating Departments

Net Income (Loss) 601,438 3,022,034 2,350,332 5,126,750 7,280,863 2,218,157

Earnings (Losses) per Share

(Note 1) 1.22 5.27 3.24 4.91 3.32 1.01

(Note 2) 0.62 3.10 2.44 4.16 - -

01/01/2004 – 03/31/2004(Note 3)1999 2000 2001 2002 2003

5 . Financial Information

1. Financial Historical Summary1.1 Brief Balance Sheet and Income Statement for the Last 5 Years

Balance Sheet Income Statement

CPA’s Opinions for the Last 5 Years.

Year

Items

After Distribution

01/01/2004 – 03/31/2004(Note 2)1999 2000 2001 2002 2003

Year

Items

Financial Data for the Last 5 Years

Unit: Thousand of NT Dollar Unit: Thousand of NT Dollar

Note1: Distribution will be confirmed after being resolved in the 2004 shareholders meeting.

Note2: The balance sheet as of 03/31/2004 has been audited and verified by CPA Chen Chiung Hsiang, Wu Chin Shun of DELOITTE &

TOUCHE on 04/20/2004.

Note 1: Calculated according to weighted averages of the shares in the market.

Note 2: Calculated according to total shares after the increase of capital reserve fund and surplus adjustments.

Note 3: The income statement as of 03/31/2004 has been audited and verified by CPA Chen Chiung Hsiang and Wu Chin Shun of

DELOITTE & TOUCHE on 04/20/2004.

Before Distribution

After Distribution

Before Distribution

After Distribution

Before Distribution

After Distribution

Before DistributionTotal

Stockholders Equity


Year

1999

2000

2001

2002

2003

Names of CPA

Wu Chin Shun, Hsu Shun Hsiung



Chen Chiung Hsiang, Wu Chin Shun

Chen Chiung Hsiang, Wu Chin Shun

Audit Opinions

Modified Unqualified Opinion





65 66

52.95

1,444.69

185.37

123.76

2.21

4.24

86

6.23

4.88

59

17.45

0.89

5.19

7.27

( 1.33 )

12.19

3.68

1.22

0.62

(7.95)

(29.77)

(2.71)

(48.70)

0.12

57.16

1,571.89

150.16

108.52

7.40

7.92

46

8.32

7.12

44

23.62

0.99

15.19

30.51

8.91

52.63

11.63

5.27

3.10

31.56

46.65

15.91

3.77

12.95

55.13

1,388.34

123.63

97.25

5.50

7.27

50

7.85

4.65

47

22.27

0.88

9.54

18.61

1.31

31.39

8.53

3.24

2.44

26.22

128

19.53

23.70

(0.23)

40.27

572.66

133.07

109.97

18.14

5.13

71

9.64

3.29

38

6.59

0.71

10.69

18.67

3.63

24.07

10.52

4.91

4.16

0.21

142

2.02

5.95

1.63

44.96

1,214.65

145.81

113.38

55.14

5.52

66

11.63

4.96

31

24.77

1.23

9.91

17.06

9.79

37.14

7.31

3.32

-

10.30

79

1.13

1.53

1.08

43.44

1,275.03

147.99

129.08

48.04

(Note 4)

(Note 4)

(Note 4)

(Note 4)

(Note 4)

(Note 4)

(Note 4)

(Note 4)

(Note 4)

(Note 4)

(Note 4)

6.67

1.01

-

(12.60)

53

(7.06)

1.29

1.05

1.2 Financial Analysis

01/01/2004 – 03/31/2004(Note 3)1999 2000 2001 2002 2003

Year

Analyzed Items


Unit: Thousand of NT Dollar

Note 1: Calculated according to weighted averages of the shares in the market

Note 2: Calculated according to total shares after the increase of capital reserve fund and surplus adjustments.

Note 3: The financial analysis as of 03/31/2004 has been audited and verified by CPA Chen Chiung Hsiang and Wu Chin Shun of

DELOITTE & TOUCHE on 04/20/2004.

Note 4: The only quarter of the fiscal year is not taken into consideration in the financial analysis.

Financial

Structure (%)

Solvency

Operation

Ability

Profitability

Cash Flow

(%)

Leverage

Degree

Debt Ratio

Long-Term Funds to Fixed Assets

Current Ratio (%)

Quick Ratio (%)

Number of Times of Interest Assurance (Times)

Turnover Rate of Receivables (Times)

Number. of Cashing Days of Receivables on Average

Turnover Rate of Inventory (Times)

Turnover Rate of Payable (Times)

Number of Average Sales Days

Turnover Rate of Fixed Assets (Times)

Turnover Rate of Total Assets (Times)

Asset Return Ratio(%)

Return Rate of Shareholders’ Equity

Operating Income to Capital Stock (%)

Income (Loss) before Income Tax to

Capital Stock (%)

Net Profit Ratio (%)Earning (Loss) Per Share (NTD)

(Note 1)

(Note 2)

Cash Flow Ratio

Appropriateness of Cash Flow

Ratio of Cash Reinvestment

Operation Leverage

Financial Leverage

Calculation Methods for Analyzed Items are as below:

i. Financial Structure (%):

(A) Debt Ratio = Total Liabilities / Total Assets.

(B) Long-Term Funds to Fixed Assets = (Net Shareholders' Equity + Long-Term Liabilities) / Net Fixed Assets.

ii. Solvency:

(A) Current Ratio (%) = Current Assets / Current Liabilities

(B) Quick Ratio (%) = (Current Assets - Inventory - Prepaid Expenses) / Current Liabilities.

(C) Number of Times of Interest Assurance (Times) = Net Profit before Income Tax and Interest Expenses / Interest Expenditures this Term

iii. Operation Ability :

(A) Turnover Rate of Receivable (Times) (Including Accounts Receivable and Notes Receivable Incurred By Business) Turnover Rate = Net

Sales / Receivables Averaged in Various Terms (Including Accounts Receivable and Notes Receivable Incurred by Business) Balance.

(B) Number of Cashing Days of Receivables on Average = 365 / Turnover Rate of Receivables.

(C) Turnover Rate of Inventory (Times) = Costs Of Goods Sold / Average Inventory Value.

(D) Turnover Rate Of Payables (Times)(Including Accounts Payable And Notes Payable Incurred By Business) Turnover Rate = Costs of

Goods Sold / Payables Averaged In Various Terms (Including Accounts Payable and Notes Payable Incurred by Business) Balance.

(E) Number of Days In Average Sales = 365 / Turnover Rate Inventory.

(F) Turnover Rate of Fixed Assets (Times) = Net Sales / Net Fixed Assets.

(G) Turnover Rate of Overall Assets (Times) = Net Sales / Total Fixed Assets.

iv. Profitability:

(A) Asset Return Ratio (%)= [ Net Income (Loss) Net Income + Interest Expense (1 - Tax Rate)] / Average Total Assets.

(B) Return Rate Of Shareholders' Equity = Profit (Loss) After Tax / Average Shareholders' Equity, Net

(C) Operating Income (Loss) to Capital Stock (%) = Operating Income (Loss) / Capital Stock.

(D) Income before Income Tax to Capital Stock = Income (Loss) / Capital Stock.

(E) Net Profit Ratio (%) = Income(Loss) / Net Sales

(F) Earning (Loss) per Share = [Net Income (Loss) Dividend of Preferred Shares] / Weighted Average of Outstanding Shares.

v. Cash Flow (%):

(A) Cash Flow Ratio = Net Cash Flow of Operating Activities / Current Liabilities.

(B) Appropriateness of Cash Flow = Net Cash Flow of Operating Activities in the Past Five Years / (Capital Expenditures + Increased

Inventory + Cash Dividend) of The Past Five Years.

(C) Ratio of Cash Reinvestment : (Net Cash Flow of Operating Activities - Cash Dividend) / (Gross Fixed Assets + Long-Term Investment +

Other Assets + Operating Funds).

vi. Leverage Degree:

(A) Operating Leverage = (Net Operating Revenues - Variable Operating Costs and Expenses) / Operating Profits.

(B) Financial Leverage = Operating Profit / (Operating Income Interest Expense)

67 94

The Board of Directors have prepared and submitted to us the Company’s 2003 Business Report, Financial

Statements, and proposal for earnings distribution. The CPAs of DELOITTE & TOUCHE were retained to audit the

Financial Statements and have submitted a report relating thereto. The above Business Report, Financial

Statements and proposal for earnings distribution have been further examined as being correct and accurate by

the undersigned, the supervisors of Lite-On Technology Corporation. According to Article 219 of the Company

Law, we hereby submit this report.

April 28th, 2004

1.3 Supervisor’s Report


Supervisor: Feng-Ing Soong

Supervisor: Da Song Investment Co., Ltd.

Representative: David Lee

- 1 -

English Translation of a Report Originally Issued in Chinese

INDEPENDENT AUDITORS’ REPORT

February 5, 2004 (Except for the event disclosed in Note 21 on February 11, 2004)

The Board of Directors and Shareholders Lite-On Technology Corporation

We have audited the accompanying balance sheets of Lite-On Technology Corporation as of December 31, 2003 and 2002, and the related statements of income, changes in shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements as of and for the years ended December 31, 2003 and 2002 of Lite-On Technology (Malaysia) Sdn. Bhd., Lite-On Technology International Inc. (USA), Lite-On Technology (Europe) B.V., Lite-On Electronics (Thailand) Co., Ltd., Lite-On Inc. (USA), Lite-On Electronics (Europe) Ltd., Nport Investment Co., Ltd., Simport Investment Co., Ltd., Litegin Industry Co., Ltd. (Thailand), Innoveta Technologies, Inc., Maxi Switch Inc., Lite-On Peripherals (HK) Ltd., Lite-On Japan Ltd., Lite-On Peripherals Inc. (USA), Lite-On Peripherals Pte. Ltd. (Singapore), Lite-On Peripherals Ireland Inc., GVC Subic Corp., Gentek Marketing Inc., Lite-On Electronics Co., Ltd. (HK), Funbo Enterprises Ltd. (HK), G&W Technology (BVI) Ltd., GVC Corp., Ltd., Lite-On Technology Mexico, S.A. De C.V. We did not audit the financial statements as of and for the year ended December 31, 2003 of Lite-On Technology USA Co., Ltd. We also did not audit the financial statements as of and for the year ended December 31, 2002 of Lite-On Peripherals De Mexico S.A. De C.V., Lite-On Enclosure Inc., Lite-On (USA) International Ltd. and Silitech Technology (Europe) Ltd. All these companies, which are directly or indirectly owned by the Corporation are all accounted for by the equity method. The carrying values of these investments which are included in the accompanying balance sheets, amounted to NT$5,715,899 thousand and NT$5,831,558 thousand, or 7.07% and 8.52% of the Corporation’s total assets as of December 31, 2003 and 2002, respectively. Also, the equity in the net earnings and losses of these investees amounted to NT$387,800 thousand and NT$19,891 thousand, or 4.65% and 0.43% of the Corporation’s income before income tax for the years ended December 31, 2003 and 2002, respectively. The financial statements of these investees were audited by other auditors whose reports have been furnished to us and our opinion, insofar as it relates to the amounts included for these investees mentioned above, is based solely on the reports of other auditors.

68

- 2 -

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

In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Lite-On Technology Corporation as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended, in conformity with the Guidelines for Securities Issuers’ Financial Reporting for Public Corporation and accounting principles generally accepted in the Republic of China.

We have also audited the consolidated financial statements of Lite-On Technology Corporation for the years ended December 31, 2003 and 2002 (not presented herein), and have issued a modified unqualified report thereon dated February 5, 2004.

Deloitte & Touche (T N Soong & Co and Deloitte & Touche (Taiwan) Established Deloitte & Touche Effective June 1, 2003) Taipei, Taiwan Republic of China

Notice to Readers

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

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69 70

English Translation of Financial Statements Originally Issued in Chinese

- 4 -

LITE-ON TECHNOLOGY CORPORATION

STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

2003 2002 Amount % Amount % SALES (Notes 2 and 19) $ 100,915,059 101 $ 49,286,409 101 LESS: SALES RETURNS 868,580 1 429,973 1 SALES ALLOWANCES 378,631 - 145,733 - NET SALES 99,667,848 100 48,710,703 100 COST OF SALES (Notes 17 and 19) 90,165,411 91 44,575,146 91 GROSS PROFIT 9,502,437 9 4,135,557 9 REALIZED PROFITS ON INTERCOMPANY SALES (Note 2) 15,591 - 13,568 - ADJUSTED GROSS PROFIT 9,518,028 9 4,149,125 9 OPERATING EXPENSES (Notes 17 and 19)

Marketing 3,272,986 3 1,801,287 4General and administrative 2,170,493 2 836,646 2Research and development 1,873,467 2 818,646 1

Total operating expenses 7,316,946 7 3,456,579 7 OPERATING INCOME 2,201,082 2 692,546 2 NONOPERATING INCOME

Investment income recognized under the equity method— net (Notes 2 and 7) 3,445,405 3 3,961,957 8Gain on disposal of investments 2,825,987 3 3,275 -Foreign exchange gain—net (Notes 2 and 23) 58,958 - 33,476 -Interest income 19,660 - 75,866 -Dividends income 3,571 - 23,604 -Reversal of loss from decline in inventory value (Note 2) - - 21,730 -Other income 525,793 1 252,086 1

Total nonoperating income 6,879,374 7 4,371,994 9

(Continued)


- 5 -

2003 2002 Amount % Amount % NONOPERATING EXPENSES

Interest expense (Notes 8 and 23) $ 154,189 - $ 268,132 1Loss on disposal of inventories 42,585 - 35,380 -Loss from decline in inventory value (Note 2) 29,207 - - -Other expenses (Note 20) 506,612 1 164,278 -

Total nonoperating expenses 732,593 1 467,790 1 INCOME BEFORE INCOME TAX 8,347,863 8 4,596,750 10 INCOME TAX EXPENSE (BENEFIT) (Notes 2 and 16) 1,067,000 1 ( 530,000 ) ( 1 ) NET INCOME $ 7,280,863 7 $ 5,126,750 11

Pre-tax After-tax Pre-tax After-tax EARNINGS PER SHARE (Note 18)

Basic earnings per share $ 3.80 $ 3.32 $ 3.73 $ 4.16

Pro forma information on the assumption that shares of Lite-On Technology Corp. held by its direct and indirect subsidiaries were not treated as treasury stock.

2003 2002 Pre-tax After-tax Pre-tax After-tax NET INCOME $ 8,378,202 $ 7,311,202 $ 4,843,128 $ 5,373,128 EARNINGS PER SHARE


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

(See Deloitte & Touche auditors’ report dated February 5, 2004) (Concluded)

71 72

Eng

lish

Tra

nsla

tion

of

Fin

anci

al S

tate

men

ts O

rigi

nally

Iss

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in C

hine

se

- 6

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IN S

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LD

ER

S’ E

QU

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F

OR

TH

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RS

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DE

D D

EC

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BE

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1, 2

003

AN

D 2

002

(In

Tho

usan

ds o

f N

ew T

aiw

an D

olla

rs)

Cap

ital

Sur

plus

(N

otes

2 a

nd 1

4)

L

ong-

term

Unr

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Los

s on

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stm

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g-te

rm

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Sto

ck

ca

pita

l in

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asur

y G

ain

on

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r th

e

Ret

aine

d E

arni

ngs

(Not

es 2

and

14)

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k

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nsla

tion

St

ock—

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otal

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es

ex

cess

of

par

Bon

d

stoc

k pr

oper

tyeq

uity

L

egal

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ecia

l U

napp

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iate

d

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stm

ents

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t (N

otes

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(t

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ands

)

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ount

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ote

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e 2)

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d 15

)

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quit

y

BA

LA

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AN

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RY

1, 2

002

748,

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$

7,48

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1

$ 2,

742,

248

$

195,

261

$

-

$ 26

,743

$

100,

412

$

149,

103

$

3,21

3,76

7

$ 36

1,99

3

$ 35

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$ 2

,676

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$ 3,

389,

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( $

198

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)

$ 45

7,27

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$ 30

8,92

1 )

$

14,0

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T

rans

fer

of s

peci

al r

eser

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una

ppro

pria

ted

earn

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-

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-

-

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35

1,39

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351,

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fer

of p

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net g

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-

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)

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24

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ppro

pria

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of p

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earn

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al r

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ve

-

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23

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(

235,

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Cas

h di

vide

nds—

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%

-

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-

-

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( 96

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5 )

(

962,

935

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(

962,

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)St

ock

divi

dend

s—12

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96

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96

2,93

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-

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(

962,

935

) (

96

2,93

5 )

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us to

em

ploy

ees—

cash

-

-

-

-

-

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(

113,

287

) (

11

3,28

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us to

em

ploy

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stoc

k

11,3

29

113,

287

-

-

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( 11

3,28

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(

113,

287

)

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onus

to d

irec

tors

and

sup

ervi

sors

-

-

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(

113,

286

) (

11

3,28

6 )

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-

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3,28

6 )

Con

vers

ion

of c

onve

rtib

le b

onds

into

com

mon

sto

ck

70,5

65

705,

648

-

2,

293,

635

-

-

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-

2,29

3,63

5

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-

-

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2,99

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3Is

suan

ce o

f sh

ares

for

the

mer

ger

on N

ovem

ber

4, 2

002

(Not

e 1)

1,0

66,5

08

10,6

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85

-

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12

,067

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67,6

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etir

emen

t of

shar

es f

or th

e m

erge

r on

Nov

embe

r 4,

200

2 (

84

,075

) (

84

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3 )

-

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-

-

-

-

-

-

-

(

840,

753

)T

reas

ury

stoc

k of

acq

uire

d in

vest

ees

for

tran

sfer

to e

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oyee

s—1,

846

thou

sand

sha

res

-

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-

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-

-

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(

53,8

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(

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ustm

ent a

risi

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rom

cha

nges

in e

quity

due

to s

ubsi

diar

ies’

retir

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t of

trea

sury

sto

ck

-

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-

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619

)

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(

619

)

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( 16

7,77

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167,

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(

168,

394

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hang

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sub

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( 12

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(

121,

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-

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-

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1,82

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1,82

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1,82

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et in

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e in

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5,12

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126,

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-

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ealiz

ed lo

ss o

n lo

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sto

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31

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(

316,

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just

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m s

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stm

ents

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-

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-

-

-

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-

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61

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61,0

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divi

dend

s re

ceiv

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y su

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djus

tmen

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net g

ain

on d

ispo

sal o

f Pa

rent

Com

pany

’s s

tock

reco

gniz

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y its

sub

sidi

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s

-

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241,

542

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-

-

24

1,54

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-

-

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-

-

-

-

241,

542

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hase

of

trea

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ousa

nd s

hare

s

-

-

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-

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lass

ific

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m in

vest

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t to

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su

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oldi

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e Pa

rent

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pany

’s s

hare

s—29

,605

thou

sand

shar

es

-

-

-

-

-

-

-

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-

-

-

-

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1,

219,

779

) (

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eiss

uanc

e of

trea

sury

sto

ck to

em

ploy

ees—

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ousa

nd s

hare

s

-

-

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( 17

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ecto

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rs

-

-

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( 22

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apita

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of c

apita

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plus

—10

%

189,

154

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3

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-

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(

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1,54

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(

1,89

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Cas

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28

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-

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djus

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fro

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hang

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ity in

inve

stee

s

-

-

-

-

-

-

-

-

-

-

-

( 1,

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1,

285

)

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(

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5 )

Adj

ustm

ent a

risi

ng f

rom

cha

nges

in e

quity

in s

ubsi

diar

ies

dist

ribu

ted

bonu

s to

em

ploy

ees

-

-

-

-

-

-

-

-

-

-

-

(

207,

580

) (

20

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0 )

-

-

- (

20

7,58

0 )

Adj

ustm

ent a

risi

ng f

rom

cha

nges

in c

apita

l sur

plus

in s

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diar

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-

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-

-

-

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(

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0 )

- (

1,

020

)

-

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( 11

,263

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11

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(

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inco

me

in 2

003

-

-

-

-

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0,86

3

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0,86

3R

ever

sal o

f un

real

ized

loss

on

long

-ter

m s

tock

inve

stm

ents

-

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-

-

-

-

-

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-

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-

103,

298

-

-

103,

298

Cum

ulat

ive

tran

slat

ion

adju

stm

ent o

f fo

reig

n-cu

rren

cy lo

ng-t

erm

sto

ck

in

vest

men

ts

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(

628,

969

)

-

(

628,

969

)

B

AL

AN

CE

, DE

CE

MB

ER

31,

200

3

2,2

47,6

91

$

22,4

76,9

06

$

2,74

2,24

8

$ 2,

488,

896

$

273,

063

$

-

$ 10

0,59

7

$ 10

,325

,173

$

15,9

29,9

77

$ 1,

083,

382

$

-

$ 7

,515

,083

$ 8,

598,

465

( $

411

,775

) (

$ 1

10,6

07 )

( $

2,01

1,06

5 )

$

44,4

71,9

01

The

acc

ompa

nyin

g no

tes

are

an in

tegr

al p

art o

f th

e fi

nanc

ial s

tate

men

ts.

(See

Del

oitte

& T

ouch

e au

dito

rs’

repo

rt d

ated

Feb

ruar

y 5,

200

4)


- 7 -

LITE-ON TECHNOLOGY CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 (In Thousands of New Taiwan Dollars)

2003 2002

CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 7,280,863 $ 5,126,750Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 692,509 160,718Amortization 361,017 116,066Bad debts 111,061 74,302Loss from decline in inventory value (reversal of loss from decline in inventory value) 29,207 ( 21,730 )Loss on disposal of inventories 42,585 35,380Gain on disposal of investments ( 2,825,987 ) ( 3,275 )Loss on property disposal 12,754 10,724Investment income recognized under the equity method ( 3,445,405 ) ( 3,961,957 )Cash dividends from equity-accounted investees 1,657,840 1,712,610Exchange gain on redemption of foreign convertible bonds - ( 261,237 )Product warranty reserve 97,125 501,630Redemption premium on convertible bonds - ( 1,311,986 )Accrued pension costs 7,620 ( 90,132 )Deferred income taxes 825,082 ( 532,060 )Deferred income 4,813 ( 20,492 )Changes in operating assets and liabilities:

Decrease (increase) in: Notes receivable 19,989 ( 39,094 )Accounts receivable ( 2,112,280 ) ( 993,241 )Receivable from related parties ( 2,861,300 ) ( 896,829 )Inventories ( 4,190,185 ) 1,760,006Prepaid expenses and other current assets 78,415 1,335,183

Increase (decrease) in: Notes payable ( 1,912,029 ) 955,035Accounts payable 2,857,739 ( 2,228,656 )Payable to related parties 5,999,872 ( 564,459 )Income tax payable ( 71,062 ) ( 24,122 )Accrued expenses 641,345 ( 21,383 )Advance from customers and other current liabilities ( 61,000 ) ( 763,941 )

Net cash provided by operating activities 3,240,588 53,810

CASH FLOWS FROM INVESTING ACTIVITIES Decrease in short-term investments 94,020 23,847Proceeds from sale of long-term investments 3,995,086 51,807Acquisition of long-term investments ( 1,508,931 ) ( 127,293 )Acquisition of properties ( 1,121,508 ) ( 597,691 )Proceeds from property disposal 23,332 79,637Decrease (increase) in refundable deposits ( 14,245 ) 21,415

(Continued)

73 74


- 8 -

2003 2002

Increase in deferred charges ( $ 174,646 ) ( $ 13,875 )Net cash provided by mergers with Lite-On Electronics, Inc., Silitek Corp., and GVC Corp. - 6,562,631

Net cash provided by investing activities 1,293,108 6,000,478

CASH FLOWS FROM FINANCING ACTIVITIES Repayment of short-term bank loans ( 1,192,072 ) ( 1,016,186 )Repayment of commercial paper ( 99,745 ) ( 1,079,568 )Increase (decrease) in long-term debts 2,261,138 ( 1,871,681 )Increase (decrease) in guarantee deposits 1,993 ( 400 )Cash dividends paid ( 2,648,159 ) ( 962,935 )Bonuses to directors, supervisors and employees ( 311,548 ) ( 226,573 )Purchase of treasury stock - ( 487,318 )Proceeds on treasury stock reissued to employees - 58,625

Net cash used in financing activities ( 1,988,393 ) ( 5,586,036 )

NET INCREASE IN CASH 2,545,303 468,252

CASH, BEGINNING OF YEAR 8,294,860 7,826,608

CASH, END OF YEAR $10,840,163 $ 8,294,860

SUPPLEMENTARY INFORMATION Interest paid (excluding capitalized interests) $ 167,264 $ 194,666Income tax paid $ 312,980 $ 12,330Noncash investing and financing activities

Current portion of long-term debts $ 896,702 $ 1,614,167Conversion of bonds into capital stock and capital surplus $ - $ 2,999,283Reclassification of the parent Corporation’s shares held by direct and indirect subsidiaries as treasury stock $ - $ 1,219,779

Cash paid for acquisition of properties Increase in properties $ 1,136,320 $ 628,139Increase in payable for properties ( 14,812 ) ( 30,448 )

$ 1,121,508 $ 597,691



- 1 -

English Translation of a Report Originally Issued in Chinese

INDEPENDENT AUDITORS’ REPORT

February 5, 2004 (Except for the event disclosed in Note 24 on February 11, 2004)

The Board of Directors and Stockholders Lite-On Technology Corporation

We have audited the accompanying consolidated balance sheets of Lite-On Technology Corporation (“Parent Company”) and subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for the years then ended (all expressed in thousands of New Taiwan dollars). These financial statements are the responsibility of the Parent Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements as of and for the year ended December 31, 2003 and 2002 of Lite-On Peripherals (HK) Ltd. and Lite-On Peripherals Pte. Ltd. (Singapore), and the financial statements as of and for the year ended December 31, 2003 of Great Adelphi International Ltd. and Lite-On Technology USA Co., Ltd. (Lite-On International Holding Co., Ltd.’s subsidiary) consolidated subsidiaries. The assets of these subsidiaries amounted to NT$18,438,354 thousand and NT$7,371,527 thousand, or 16.79% and 8.12% of the consolidated assets as of December 31, 2003 and 2002, respectively. Also, the sales of those subsidiaries amounted to NT$31,171,569 thousand and NT$13,381,177 thousand, or 21.54% and 12.83% of the consolidated sales for the years ended December 31, 2003 and 2002, respectively. We did not audit the financial statements as of and for the years ended December 31, 2003 and 2002 of Lite-On Technology (Malaysia) Sdn. Bhd., Lite-On Technology International Inc. (USA), Lite-On Technology (Europe) B.V., Lite-On Electronics (Thailand) Co., Ltd., Lite-On Inc. (USA), Lite-On Electronics (Europe) Ltd., Nport Investment Co., Ltd., Simport Investment Co., Ltd., Litegin Industry Co., Ltd. (Thailand), Innoveta Technologies, Inc., Maxi Switch Inc., Lite-On Japan Ltd., Lite-On Peripherals Inc. (USA), Lite-On Peripherals Ireland Inc., GVC Subic Corp., Gentek Marketing Inc., Lite-On Electronics Co., Ltd. (HK), Funbo Enterprises Ltd. (HK), G&W Technology (BVI) Ltd., GVC Corp., Ltd., Lite-On Technology Mexico, S.A. De C.V. We also did not audit the financial statements as of and for the year ended December 31, 2002 of Lite-On Peripherals De Mexico S.A. De C.V., Lite-On Enclosure Inc., Lite-On (USA) International Ltd. and Silitech Technology (Europe) Ltd. Stock investments in these companies, either directly or indirectly owned by the Corporation, are all accounted for by the equity method. The carrying values of these investments included in the accompanying balance sheets amounted to NT$3,241,072 thousand and NT$4,277,776 thousand, or 2.95% and 4.71% of the Corporation’s total assets as of December 31, 2003 and 2002, respectively. Also, the equity in the net earnings and loss of these investees amounted to NT$104,527 thousand and NT$62,905 thousand, or 1.00% and 0.96% of the Corporation’s income before income tax for the years ended December 31, 2003 and 2002, respectively. The financial statements of the foregoing consolidated subsidiaries and equity-accounted investees were audited by other auditors whose reports have been furnished to us and our opinion, insofar as it relates to the amounts pertaining to the above investees is based solely on the reports of other auditors.

75 76

- 2 -

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

In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Lite-On Technology Corporation and subsidiaries as of December 31, 2003 and 2002 and the results of their operations and their cash flows for the years then ended in conformity with Guidelines for Securities Issuers’ Financial Reporting and generally accepted accounting principles in the Republic of China.

Deloitte & Touche (T N Soong & Co and Deloitte & Touche (Taiwan) Established Deloitte & Touche Effective June 1, 2003) Taipei, Taiwan Republic of China

Notice to Readers

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

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200

4)

77 78


- 4 -

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

2003 2002 Amount % Amount % SALES (Notes 2 and 21) $ 147,566,533 102 $ 106,226,636 102 LESS: SALES RETURNS 1,450,938 1 1,757,720 2 SALES ALLOWANCES 1,386,363 1 145,739 - NET SALES 144,729,232 100 104,323,177 100 COST OF SALES (Note 21) 124,178,384 86 88,085,790 85 GROSS PROFIT 20,550,848 14 16,237,387 15 REALIZED (UNREALIZED) PROFITS ON INTERCOMPANY SALES (Note 2) ( 38,865 ) - 13,568 - ADJUSTED GROSS PROFIT 20,511,983 14 16,250,955 15 OPERATING EXPENSES (Note 19)

Marketing 7,779,541 5 6,816,639 6General and administrative 3,477,434 2 1,782,585 2Research and development 2,347,974 2 1,154,802 1

Total operating expenses 13,604,949 9 9,754,026 9 OPERATING INCOME 6,907,034 5 6,496,929 6 NONOPERATING INCOME

Gain on disposal of investments 2,881,621 2 144,410 -Investment income recognized under the equity method—net (Notes 2 and 9) 488,930 1 - -Foreign exchange gain—net (Note 2) 466,413 - 139,087 -Interest income 84,103 - 195,566 -Reversal of loss from decline in inventory value (Note 2) 12,963 - - -Dividends income 8,057 - 44,941 -Other income 409,603 - 492,253 1

Total nonoperating income 4,351,690 3 1,016,257 1

(Continued)


- 5 -

2003 2002 Amount % Amount % NONOPERATING EXPENSES

Interest expense (Notes 10 and 26) $ 205,042 - $ 303,389 -Investment loss recognized under the equity method—net (Notes 2 and 9) - - 69,859 -Loss on disposal of inventories 42,585 - 42,812 -Unrealized loss on reduction of short-term investments to market 40,764 - 37,126 -Loss from decline in inventory value (Note 2) - - 117,788 -Other expenses (Note 23) 541,335 1 422,441 1

Total nonoperating expenses 829,726 1 993,415 1 INCOME BEFORE INCOME TAX 10,428,998 7 6,519,771 6 INCOME TAX EXPENSE (BENEFIT) (Notes 2 and 18) 1,784,165 1 ( 600,182 ) ( 1 ) COMPREHENSIVE INCOME 8,644,833 6 7,119,953 7 MINORITY INTEREST INCOME ( 1,363,970 ) ( 1 ) ( 1,890,540 ) ( 2 ) NET INCOME BEFORE ACQUIRING MAJORITY - - ( 102,663 ) - CONSOLIDATED NET INCOME $ 7,280,863 5 $ 5,126,750 5

Pre-tax After-tax Pre-tax After-taxEARNINGS PER SHARE (Note 20)


Pro forma information on the assumption that shares of Lite-On Technology Corp. held by its direct and indirect subsidiaries were not treated as treasury stock (Note 20):

2003 2002 Pre-tax After-tax Pre-tax After-tax

CONSOLIDATED NET INCOME $ 9,095,367 $ 7,311,202 $ 4,772,946 $ 5,373,128 EARNINGS PER SHARE




79 80

Eng

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Tra

nsla

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-

-

- (

11

3,28

6 )

Con

vers

ion

of c

onve

rtib

le b

onds

into

com

mon

sto

ck

70,5

65

705,

648

-

2,

293,

635

-

-

-

-

2,29

3,63

5

-

-

-

-

-

-

-

2,99

9,28

3Is

suan

ce o

f sh

ares

for

the

mer

ger

on N

ovem

ber

4, 2

002

(Not

e 1)

1,0

66,5

08

10,6

65,0

85

-

-

-

-

-

12

,067

,613

12,0

67,6

13

-

-

-

-

-

-

-

22,7

32,6

98R

etir

emen

t of

shar

es f

or th

e m

erge

r on

Nov

embe

r 4,

200

2 (

84

,075

) (

84

0,75

3 )

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(

840,

753

)T

reas

ury

stoc

k of

acq

uire

d in

vest

ees

for

tran

sfer

to e

mpl

oyee

s—1,

846

th

ousa

nd s

hare

s

-

-

-

-

-

-

-

-

-

-

-

-

-

-

- (

53

,847

) (

53

,847

)A

djus

tmen

t ari

sing

fro

m c

hang

es in

equ

ity d

ue to

sub

sidi

arie

s’

re

tirem

ent o

f tr

easu

ry s

tock

-

-

-

-

-

- (

61

9 )

- (

61

9 )

-

-

(

167,

775

) (

16

7,77

5 )

-

-

- (

16

8,39

4 )

Adj

ustm

ent a

risi

ng f

rom

cha

nges

in e

quity

in s

ubsi

diar

ies

dist

ribu

ted

bonu

s to

em

ploy

ees

-

-

-

-

-

-

-

-

-

-

-

(

121,

158

) (

12

1,15

8 )

-

-

- (

12

1,15

8 )

Adj

ustm

ent a

risi

ng f

rom

cha

nges

in e

quity

in in

vest

ees

-

-

-

-

-

-

1,

824

-

1,

824

-

-

-

-

-

-

-

1,

824

Net

inco

me

in 2

002

-

-

-

-

-

-

-

-

-

-

-

5,

126,

750

5,12

6,75

0

-

-

-

5,12

6,75

0U

nrea

lized

loss

on

long

-ter

m s

tock

inve

stm

ents

-

-

-

-

-

-

-

-

-

-

-

-

-

(

316,

088

)

-

- (

31

6,08

8 )

Cum

ulat

ive

tran

slat

ion

adju

stm

ent o

f fo

reig

n-cu

rren

cy lo

ng-t

erm

sto

ck

in

vest

men

ts

-

-

-

-

-

-

-

-

-

-

-

-

-

-

61,0

89

-

61

,089

Cas

h di

vide

nds

rece

ived

by

subs

idia

ries

-

-

-

-

3,

480

-

-

-

3,

480

-

-

-

-

-

-

-

3,

480

Adj

ustm

ent o

f ne

t gai

n on

dis

posa

l of

Pare

nt C

ompa

ny’s

sto

ck

re

cogn

ized

by

its s

ubsi

diar

ies

-

-

-

-

24

1,54

2

-

-

-

241,

542

-

-

-

-

-

-

-

24

1,54

2Pu

rcha

se o

f tr

easu

ry s

tock

—8,

925

thou

sand

sha

res

-

-

-

-

-

-

-

-

-

-

-

-

-

-

- (

48

7,31

8 )

(

487,

318

)R

ecla

ssif

icat

ion

of lo

ng-t

erm

inve

stm

ent t

o tr

easu

ry s

tock

for

subs

idia

ries

hol

ding

the

Pare

nt C

ompa

ny’s

sha

res—

29,6

05 th

ousa

nd

sh

ares

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(

1,21

9,77

9 )

(

1,21

9,77

9 )

Rei

ssua

nce

of tr

easu

ry s

tock

to e

mpl

oyee

s—1,

675

thou

sand

sha

res

-

-

-

-

-

-

-

-

-

-

-

(

175

) (

17

5 )

-

-

58,8

00

58

,625

BA

LA

NC

E, D

EC

EM

BE

R 3

1, 2

002

1

,909

,438

19

,094

,383

2,

742,

248

2,48

8,89

6

24

5,02

2

-

101,

617

12,2

16,7

16

17

,794

,499

599,

618

-

5,

388,

799

5,98

8,41

7 (

51

5,07

3 )

518,

362

(

2,01

1,06

5 )

40,8

69,5

23

A

ppro

pria

tion

of p

rior

yea

r’s

earn

ings

Leg

al r

eser

ve

-

-

-

-

-

-

-

-

-

48

3,76

4

-

(

483,

764

)

-

-

-

-

-

Cas

h di

vide

nds—

14%

-

-

-

-

-

-

-

-

-

-

-

(

2,64

8,15

9 )

(

2,64

8,15

9 )

-

-

- (

2,

648,

159

)St

ock

divi

dend

s—6%

11

3,49

3

1,

134,

925

-

-

-

-

-

-

-

-

-

( 1,

134,

925

) (

1,

134,

925

)

-

-

-

-B

onus

to e

mpl

oyee

s—ca

sh

-

-

-

-

-

-

-

-

-

-

-

( 89

,014

) (

89

,014

)

-

-

-

(

89,0

14 )

Bon

us to

em

ploy

ees—

stoc

k

35,6

06

356,

055

-

-

-

-

-

-

-

-

-

( 35

6,05

5 )

(

356,

055

)

-

-

-

-B

onus

to d

irec

tors

and

sup

ervi

sors

-

-

-

-

-

-

-

-

-

-

-

(

222,

534

) (

22

2,53

4 )

-

-

- (

22

2,53

4 )

Cap

italiz

atio

n of

cap

ital s

urpl

us—

10%

18

9,15

4

1,

891,

543

-

-

-

-

- (

1,

891,

543

) (

1,

891,

543

)

-

-

-

-

-

-

-

-C

ash

divi

dend

s re

ceiv

ed b

y su

bsid

iari

es

-

-

-

-

28,0

41

-

-

-

28

,041

-

-

-

-

-

-

-

28

,041

Adj

ustm

ent a

risi

ng f

rom

cha

nges

in e

quity

in in

vest

ees

-

-

-

-

-

-

-

-

-

-

-

(

1,28

5 )

(

1,28

5 )

-

-

- (

1,

285

)A

djus

tmen

t ari

sing

fro

m c

hang

es in

equ

ity in

sub

sidi

arie

s di

stri

bute

d

bo

nus

to e

mpl

oyee

s

-

-

-

-

-

-

-

-

-

-

-

( 20

7,58

0 )

(

207,

580

)

-

-

-

(

207,

580

)A

djus

tmen

t for

cap

ital s

urpl

us f

rom

long

-ter

m s

tock

inve

stm

ents

acco

unte

d fo

r by

the

equi

ty m

etho

d

-

-

-

-

-

-

(

1,02

0 )

- (

1,

020

)

-

-

( 11

,263

) (

11

,263

)

-

-

-

(

12,2

83 )

Net

inco

me

in 2

003

-

-

-

-

-

-

-

-

-

-

-

7,

280,

863

7,28

0,86

3

-

-

-

7,28

0,86

3R

ever

sal o

f un

real

ized

loss

on

long

-ter

m s

tock

inve

stm

ents

-

-

-

-

-

-

-

-

-

-

-

-

-

103,

298

-

-

103,

298

Cum

ulat

ive

tran

slat

ion

adju

stm

ent o

f fo

reig

n-cu

rren

cy lo

ng-t

erm

sto

ck

in

vest

men

ts

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(

628,

969

)

-

(

628,

969

)

B

AL

AN

CE

, DE

CE

MB

ER

31,

200

3

2,2

47,6

91

$

22,4

76,9

06

$

2,74

2,24

8

$ 2,

488,

896

$

273,

063

$

-

$ 10

0,59

7

$ 10

,325

,173

$

15,9

29,9

77

$ 1,

083,

382

$

-

$ 7

,515

,083

$ 8,

598,

465

( $

411

,775

) (

$ 1

10,6

07 )

( $

2,01

1,06

5 )

$

44,4

71,9

01

The

acc

ompa

nyin

g no

tes

are

an in

tegr

al p

art o

f th

e fi

nanc

ial s

tate

men

ts.

(See

Del

oitte

& T

ouch

e au

dito

rs’

repo

rt d

ated

Feb

ruar

y 5,

200

4)


- 7 -

LITE-ON TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 (In Thousands of New Taiwan Dollars)

2003 2002 CASH FLOWS FROM OPERATING ACTIVITIES

Consolidated net income $ 7,280,863 $ 5,126,750Adjustments to reconcile consolidated net income to net cash provided by operating activities:

Minority interest income 1,363,970 1,890,540Net income before acquiring majority - 102,663 8,644,833 7,119,953Depreciation 1,546,010 1,002,331Amortization 540,483 175,887Bad debts 78,148 84,486Unrealized loss on reduction of short-term investments to market 40,764 37,126Loss from decline in inventory value (reversal of loss from decline in inventory value) ( 12,963 ) 117,788Gain on disposal of investments ( 2,881,621 ) ( 144,410 )Net loss on property disposal 29,650 16,409Investment loss (income) recognized under the equity method ( 488,930 ) 69,859Cash dividends from equity-accounted investees 328,356 621,410Exchange gain on redemption of foreign convertible bonds - ( 261,237 )Product warranty reserve 164,828 368,779Redemption premium on convertible bonds - ( 1,311,986 )Accrued pension costs 22,043 ( 83,367 )Deferred income taxes 330,970 ( 883,863 )Deferred income 59,269 ( 20,492 )Changes in operating assets and liabilities:

Decrease (increase) in: Notes receivable 26,045 ( 41,798 )Accounts receivable ( 12,153,491 ) ( 2,028,060 )Receivable from related parties 1,213,756 ( 3,711,122 )Inventories ( 5,674,590 ) 814,107Prepaid expenses and other current assets 1,382,747 130,040

Increase (decrease) in: Notes payable ( 2,281,800 ) 1,324,541Accounts payable 14,632,608 2,821,159Payable to related parties ( 233,009 ) ( 1,549,998 )Income tax payable 724,680 ( 131,727 )Accrued expenses 763,775 1,433,035Advance from customers and other current liabilities 12,737 ( 58,016 )

Net cash provided by operating activities 6,815,298 5,910,834 CASH FLOWS FROM INVESTING ACTIVITIES

Decrease (increase) in short-term investments 162,515 ( 311,721 )Proceeds from sale of long-term investments 4,005,304 51,807Acquisition of long-term investments ( 997,822 ) ( 43,242 )Acquisition of properties ( 3,514,023 ) ( 1,050,603 )

(Continued)

81 82

84


Raymond Soong, Chairman

This annual report contains excerpts from the Chinese version of Lite-On Technology

Corporation's 2003 annual report, which was printed on April 30th, 2004 and

published in accordance with "the Regulations of the Criteria Governing Information

to be published in Annual Company Reports in the Republic of China." For more

information, please refer to the Chinese version of the Company's annual report.


- 8 -

2003 2002

Proceeds from property disposal $ 833,237 $ 77,263Decrease (increase) in refundable deposits 21,253 ( 5,490 )Increase in deferred charges ( 335,630 ) ( 21,910 )Increase in land use right - ( 48,257 )Net cash provided by mergers with Lite-On Electronics, Inc., Silitek Corp., and GVC Corp. - 6,562,631

Net cash provided by investing activities 174,834 5,210,478 CASH FLOWS FROM FINANCING ACTIVITIES

Increase (decrease) in short-term bank loans ( 1,657,361 ) 208,591Repayment of commercial paper ( 99,745 ) ( 1,079,568 )Increase (decrease) in bonds payable 1,761,460 ( 1,537,600 )Decrease in guarantee deposits ( 6,173 ) ( 16,428 )Decrease in minority equity - ( 249,423 )Payment on treasury stock - ( 382,887 )Cash dividends paid ( 3,222,080 ) ( 962,935 )Bonuses to directors, supervisors and employees ( 311,548 ) ( 226,573 )Proceeds on treasury stock reissued to employees - 58,625

Net cash used in financing activities ( 3,535,447 ) ( 4,188,198 ) TRANSLATION ADJUSTMENTS ( 194,032 ) 97,613 NET INCREASE IN CASH 3,260,653 7,030,727 CASH, BEGINNING OF YEAR 21,711,495 14,680,768 CASH, END OF YEAR $ 24,972,148 $ 21,711,495 SUPPLEMENTARY INFORMATION

Interest paid (excluding capitalized interests) $ 217,242 $ 269,015Income tax paid $ 708,729 $ 401,612Noncash investing and financing activities

Current portion of long-term debts $ 896,702 $ 1,614,167Conversion of bonds into capital stock and capital surplus $ - $ 2,999,283Reclassification of the Parent Company’s shares held by direct and indirect subsidiaries as treasury stock $ - $ 1,219,779

Cash paid for acquisition of properties Total acquisition $ 3,583,649 $ 1,092,708Increase in payable for properties ( 69,626 ) ( 42,105 )

$ 3,514,023 $ 1,050,603



83

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