pspc 17q_sept2017
DESCRIPTION
Phoenix Semiconductor Quarterly Report PSPCTRANSCRIPT
SEC Number: CS201000985
File Number: ____________
PHOENIX SEMICONDUCTOR
PHILIPPINES CORP. __________________________________
(Company‟s Full Name)
Panday Pira Avenue, corner Creekside Road,
Clark Freeport Zone, Pampanga, Philippines
__________________________________
(Company Address)
(045) 499-1741 / (045) 499-1742
__________________________________
(Telephone Numbers)
September 30, 2014
__________________________________
(Quarter Ending)
SEC Form 17-Q Quarterly Report
__________________________________
(Form Type)
__________________________________
(Amendments)
SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17-Q
QUARTERLY REPORT PURSUANT TO SECTION 17 OF THE SECURITIES
REGULATION CODE AND SRC RULE 17(2)(b) THEREUNDER
1. For the quarterly period ended September 30, 2014
2. Commission Identification Number CS201000985
3. BIR Tax Identification No. 007-582-936
4. Exact name of issuer as specified in its charter:
PHOENIX SEMICONDUCTOR PHILIPPINES CORP.
5. Province, country or other jurisdiction of incorporation or organization: Pampanga, Philippines
6. Industry Classification Code: (SEC Use Only)
7. Address of issuer's principal office and postal code
Panday Pira Avenue corner Creekside Road, Clark Freeport Zone, Pampanga 2009
8. Issuer's telephone number, including area code: (045) 499-1822
9. Former name, former address and former fiscal year, if changed since last report: n/a
10.Securities registered pursuant to Sections 8 and 12 of the Code, or Sections 4 and 8 of the RSA
Title of each Class Number of shares issued and outstanding
Common Shares 2,165,024,111*
*Number of shares issued and outstanding after December 1, 2014 listing date
11. Are any or all of the securities listed on a Stock Exchange?
Yes [ x ] No [ ]
Stock Exchange: Philippine Stock Exchange
Securities Listed: Common Shares
12. Indicate by check mark whether the registrant:
(a) has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17 thereunder or
Sections 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of the
Corporation Code of the Philippines, during the preceding twelve (12) months (or for such
shorter period the registrant was required to file such reports)
Yes [ x ] No [ ]
(b) has been subject to such filing requirements for the past ninety (90) days.
Yes [ x ] No [ ]
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Interim Statements of Financial Position as of September 30, 2014, with Comparative
Audited Figures as of December 31, 2013
Unaudited Interim Statements of Comprehensive Income for the Three Months Ended September 30,
2014 and September 30, 2013, and for the Nine Months Ended September 30, 2014 and September
30, 2013
Unaudited Interim Statements of Changes in Equity for the Nine Months Ended September 30, 2014
September 30, 2013
Unaudited Interim Statements of Cash Flows for the Nine Months Ended September 30, 2014 and
September 30, 2013
Notes to Unaudited Interim Financial Statements
Supplementary Schedules (please see attached schedules)
Schedule I: Reconciliation of Retained Earnings
Schedule II: Schedule of Effective Standards and Interpretations
Schedule III: Conglomerate Map
Schedule IV: Financial Soundness Indicators
Aging of Trade Accounts Receivables (please refer to attached “Annex A”)
Item 2. Management‟s Discussion and Analysis of Financial Position and Results of Operations
Material changes (+/- 5% or more) in the Company‟s financial statements
Key Performance Indicators
Other Disclosures
PART II - OTHER INFORMATION
SIGNATURES
COVER SHEET
C S 2 0 1 0 0 0 9 8 5
SEC Registration Number
P H O E N I X S E M I C O N D U C T O R P H I L I P P I N E S
C O R P .
(Company‟s Full Name)
P a n d a y P i r a A v e n u e , c o r n e r C r e e k s
S i d e R o a d , C l a r k F r e e p o r t Z o n e , P a
m p a n g a
(Business Address: No. Street City/Town/Province)
Mr. Kyuho Han (045) 499-1741 (Contact Person) (Company Telephone Number)
1 2 3 1 1 7 - Q
Month Day (Form Type) Month Day (Fiscal Year) (Annual Meeting)
(Secondary License Type, If Applicable)
Dept. Requiring this Doc. Amended Articles Number/Section
Total Amount of Borrowings
8
Total No. of Stockholders Domestic Foreign
To be accomplished by SEC Personnel concerned
File Number LCU
Document ID Cashier
S T A M P S
Remarks: Please use BLACK ink for scanning purposes.
Part I. Financial Information
Item 1. Financial Statements
Phoenix Semiconductor Philippines Corp. Unaudited Interim Condensed Financial Statements
As of September 30, 2014
(With Comparative Audited Figures as of December 31, 2013)
And for the nine-month periods ended September 30, 2014 and 2013
PHOENIX SEMICONDUCTOR PHILIPPINES CORP.
INTERIM STATEMENT OF FINANCIAL POSITION September 30, 2014
(With Comparative Audited Figures as of December 31, 2013)
(In U.S. Dollars)
September 30,
2014
(Unaudited)
December 31,
2013
(Audited)
ASSETS
Current Assets
Cash and cash equivalents (Notes 4 and 18) $27,454,367 $23,105,776
Trade and other receivables (Notes 5 and 18) 20,866,051 21,141,915
Inventories (Note 6) 13,474,328 11,587,418
Prepayments and other current assets (Note 7) 13,421,290 854,679
Derivative financial asset (Note 9) 47,900 130,804
Total Current Assets $75,263,936 56,820,592
Noncurrent Assets
Property, plant and equipment (Note 8) 108,931,244 114,954,193
Derivative financial asset (Note 9) 83,824 320,243
Other noncurrent assets (Note 7) 8,731,631 17,091,912
Total Noncurrent Assets 117,746,699 132,366,348
$193,010,635 $189,186,940
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued expenses (Notes 10, 12 and 18) $22,881,303 $16,016,239
Interest payable (Note 11) 761,210 901,566
Income tax payable 385,314 447,406
Current portion of loans payable (Notes 11 and 18) 20,750,000 20,750,000
Total Current Liabilities 44,777,827 38,115,211
Noncurrent Liabilities
Loans payable - net of current portion (Notes 11 and 18) 64,890,101 80,291,487
Retirement liability 142,622 106,014
Deferred income tax liability - net (Note 19) 91,735 39,523
Other noncurrent liability 119,630 −
Total Noncurrent Liabilities 65,244,088 80,437,024
Total Liabilities 110,021,915 118,552,235
Equity
Capital stock 44,999,980 44,999,980
Retained earnings 37,988,740 25,634,725
Total Equity 82,988,720 70,634,705
$193,010,635 $189,186,940
See accompanying Notes to Interim Condensed Financial Statements.
PHOENIX SEMICONDUCTOR PHILIPPINES CORP.
INTERIM STATEMENTS OF COMPREHENSIVE INCOME (In U.S. Dollars)
Three Months Ended
September 30
Nine Months Ended
September 30
2014
(Unaudited)
2013
(Unaudited)
2014
(Unaudited)
2013
(Unaudited)
REVENUE
Sales $60,988,335 $57,593,000 $170,312,778 $153,547,546
Warehousing 190,171 173,280 587,419 583,107
Others 111,586 26,854 242,388 172,156
61,290,092 57,793,134 171,142,585 154,302,809
COST OF GOODS SOLD
Raw materials used (Notes 6 and 12) 41,400,036 37,897,607 111,170,679 98,513,834
Depreciation (Note 8) 4,397,593 4,492,396 13,556,542 13,325,042
Direct labor 1,132,171 1,182,809 3,297,220 3,399,665
Changes in work-in-process and finished
goods inventories (Note 6) (798,844) 191,726 (831,955) 199,201
Other manufacturing costs (Note 13) 7,659,589 6,924,197 22,466,062 19,784,426
53,790,545 50,688,735 149,658,548 135,222,168
GROSS PROFIT 7,499,547 7,104,399 21,484,037 19,080,641
General and Administrative
Expenses (Note 14) 1,114,201 874,040 2,933,876 2,727,958
OPERATING INCOME 6,385,346 6,230,359 18,550,161 16,352,683
Finance Cost (Note 15) (1,374,734) (1,809,707) (4,096,616) (6,607,252)
Other Income (Note 15) 300,345 84,186 689,496 221,438
Other Expenses (Note 15) (586,643) (55,775) (628,108) (357,599)
INCOME BEFORE INCOME TAX 4,724,314 4,449,063 14,514,933 9,609,270
PROVISION FOR INCOME
TAX (Note 19) 536,876 418,046 1,160,918 1,342,073
NET INCOME 4,187,438 4,031,017 13,354,015 8,267,197
OTHER COMPREHENSIVE INCOME − − − −
TOTAL COMPREHENSIVE INCOME $4,187,438 $4,031,017 $13,354,015 $8,267,197
EARNINGS PER SHARE (Note 21)
Basic/diluted $0.0021 $0.0020 $0.0067 $0.0041
See accompanying Notes to Interim Condensed Financial Statements.
PHOENIX SEMICONDUCTOR PHILIPPINES CORP.
INTERIM STATEMENTS OF CHANGES IN EQUITY For the nine months ended September 30, 2014 and 2013
(In U.S. Dollars)
Capital Stock
Retained
Earnings Total
Shares Amount
Balances at January 1, 2014 2,002,644,109 $44,999,980 $25,634,725 $70,634,705
Issuance of shares 2
Net income/total
comprehensive income − − 13,354,015 13,354,015
Cash Dividends (1,000,000) (1,000,000)
Balances at
September 30, 2014
(Unaudited) 2,002,644,111 $44,999,980 $37,988,740 $82,988,720
Balances at January 1, 2013 2,002,644,109 $44,999,980 $12,041,310 $57,041,290
Net income/total comprehensive
income – – 8,267,197 8,267,197
Balances at
September 30, 2013
(Unaudited) 2,002,644,109 $44,999,980 $20,308,507 $65,308,487
See accompanying Notes to Interim Condensed Financial Statements.
PHOENIX SEMICONDUCTOR PHILIPPINES CORP.
INTERIM STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2014 and 2013
(In U.S. Dollars)
Nine Months Ended September 30
2014
(Unaudited)
2013
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax $14,514,933 $9,609,270
Adjustments for:
Depreciation (Note 8) 14,103,149 13,720,322
Interest expense (Note 15) 3,303,880 4,004,450
Unrealized foreign currency exchange loss - net 279,463 383,768
Amortization of intangible assets (Note 7) 91,850 87,863
Interest income (Note 15) (349,550) (115,104)
Fair value loss - derivative (Note 15) 319,323 1,865,734
Loss (gain) on disposal of property, plant and equipment (33,905) 3,200
Operating income before changes in operating assets and liabilities 32,229,143 29,559,503
Changes in operating assets and liabilities:
Decrease (increase) in:
Trade and other receivables 329,097 (1,290,326)
Inventories (1,886,910) (854,318)
Prepayments and other current assets 88,204 316,938
Increase (decrease) in:
Accounts payable and accrued expenses 2,614,101 (2,377,074)
Retirement liability 38,268 79,510
Other long-term liability 119,630 −
Net cash generated from operations 33,531,533 25,434,233
Interest paid (3,283,122) (3,770,670)
Interest received (Note 4) 102,695 115,104
Income taxes paid (1,167,652) (793,216)
Net cash provided by operating activities 29,183,454 20,985,451
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of property, plant and equipment (Notes 8 and 20) (4,373,350) (3,448,800)
Proceeds from disposal of property, plant and equipment (Note 8) 416,177 −
Increase in nontrade receivable from CDC and other noncurrent assets (4,329,631) (10,857,702)
Net cash used in investing activities (8,286,804) (14,306,502)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of bank loans (15,562,500) (34,187,500)
Dividends paid (1,000,000) −
Proceeds from bank loan − 28,525,074
Net cash used in financing activities (16,562,500) (5,662,426)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS 14,441 (32,895)
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,348,591 983,628
CASH AND CASH EQUIVALENTS AT JANUARY 1 23,105,776 25,736,114
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30 (Note
4) $27,454,367 $26,719,742
See accompanying Notes to Interim Condensed Financial Statements.
PHOENIX SEMICONDUCTOR PHILIPPINES CORP.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
1. Corporate Information
Phoenix Semiconductor Philippines Corp. (the Company), a subsidiary of STS Semiconductor &
Telecommunications Co., Ltd (the Parent Company), was incorporated in the Philippines on January 27,
2010.
The primary purpose of the Company is the construction, ownership and operation of a plant for the
manufacture, assembly, test and warehousing of semiconductor and memory devices and applications and
related products, as well as the performance of related or incidental activities thereto. The Company
started its commercial operation in February 2011.
The registered office address of the Company is Panday Pira Avenue, Corner Creekside, Clark Freeport
Zone, Pampanga.
The interim condensed financial statements were approved and authorized for issuance by the Board of
Directors on December 18, 2014.
2. Summary of Significant Accounting Policies
Basis of Preparation
The accompanying interim condensed financial statements of the Company have been prepared in
accordance with Philippine Accounting Standard (PAS) 34, Interim Financial Reporting. The interim
condensed financial statements do not include all of the information and disclosures required in the annual
financial statements, and should be read in conjunction with the Company‟s annual financial statements as
at December 31, 2013.
Changes in Accounting Policies and Disclosures
The accounting policies adopted in the preparation of interim condensed financial statements are
consistent with those followed in the preparation of the Company‟s annual financial statements for the
year ended December 31, 2013, except for the adoption of new standards and interpretations effective as of
January 1, 2014. Except as otherwise indicated, these new, revised and amended standards and
interpretations did not have any impact on the accounting policies, financial position or performance of the
Company.
PAS 36, Impairment of Assets - Recoverable Amount Disclosures for Non-Financial Assets (Amendments)
These amendments remove the unintended consequences of Philippine Financial Reporting Standards
(PFRS) 13 on the disclosures required under PAS 36. In addition, these amendments require disclosure of
the recoverable amounts for the assets or cash-generating units (CGUs) for which impairment loss has
been recognized or reversed during the period.
PAS 39, Financial Instruments: Recognition and Measurement - Novation of Derivatives and
Continuation of Hedge Accounting (Amendments)
These amendments provide relief from discontinuing hedge accounting when novation of a derivative
designated as a hedging instrument meets certain criteria. The Company has not novated its derivatives
during the current period. However, these amendments would be considered for future novations.
PAS 32, Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities
(Amendments)
The amendments clarify the meaning of “currently has a legally enforceable right to set-off” and also
clarify the application of the PAS 32 offsetting criteria to settlement systems (such as central clearing
house systems) which apply gross settlement mechanisms that are not simultaneous. The amendments
affect presentation only and have no impact on the Company‟s financial position or performance.
Investment Entities (Amendments to PFRS 10, PFRS 12 and PAS 27)
This provides an exception to the consolidation requirement for entities that meet the definition of an
investment entity under PFRS 10. The exception to consolidation requires investment entities to account
for subsidiaries at fair value through profit or loss. It is not expected that this amendment would be
relevant to the Company since none of the entities in the Company would qualify to be an investment
entity under PFRS 10.
Philippine Interpretation IFRIC 21, Levies (IFRIC 21)
IFRIC 21 clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, as
identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum
threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum
threshold is reached.
The Company has not early adopted any other standard, interpretation or amendment that has been issued
but is not yet effective.
3. Significant Accounting Judgments and Estimates
Judgments
In the process of applying the Company‟s accounting policies, management has made the following
judgments, apart from those involving estimations, which has the most significant effect on the amounts
recognized in the financial statements:
Recognition of receivable from Clark Development Corporation (CDC)
Pursuant to Executive Order No. 856 (Expanding the Coverage of Executive Order No. 666, Series of
2007, In Support of the Power Requirement of Clark Freeport Zone) dated January 2010 signed by the
then President of the Philippines Gloria Macapagal-Arroyo, the Philippine Government agreed to provide
electricity to the Company at a discounted or subsidized rate, in line with the Philippine Government‟s
thrust to support power-intensive industries with substantial investments in recognition of the
corresponding benefit of their investments to the economy. Subsequently, in March 2010, the Company
entered into a lease agreement with CDC that, among others, further embodied the grant of incentives to
the Company as a foreign locator in the Clark Freeport Zone, including the power subsidy.
The grant of the power subsidy to the Company has not been implemented yet, which resulted in the
accumulation of unpaid electricity charges. To address the then power disconnection threats against the
Company and its adverse impact on the business of the Company, the Company was constrained to pay for
its power consumptions from 2011 to date at commercial rate, inclusive of the amount corresponding to
the subsidized portion of the Company‟s electricity charges. The payments do not constitute waiver of the
Company‟s existing rights under the law and the March 2010 lease agreement with CDC and were made
on the understanding that the Company will be able to claim reimbursement of the advances/payments
covering the power subsidy.
In a letter dated December 2, 2013, CDC informed the Company that the National Government has
included in its 2014 National Budget an amount for the power subsidy of the Company. The amount will
prioritize the reimbursement of the Company‟s power subsidy advances for year 2014, while the remaining
amount will be for the reimbursement of advances made for previous years (i.e., 2011, 2012 and 2013).
The advances that will not be paid from the 2014 National Budget will be requested for inclusion in the
2015 and 2016 National Budgets. With these developments, the Company assessed that the Government
will fulfill its power subsidy commitment and has accordingly recognized the fair value of the receivable
from CDC corresponding to the amount of the power subsidy advances.
In another letter dated April 3, 2014, CDC advised the inclusion of the amount for the power subsidy in
the 2014 National Budget as part of the unprogrammed funds that will be released when the revenue
collections of the Government exceed the original revenue targets submitted by the President of the
Philippines to Congress.
Recently, the Supreme Court (SC) promulgated the Disbursement Acceleration Program (DAP) case (in
Araullo, et al., v. Aquino, et al., GR. Nos. 209287 /209135/ 209136/ 209155/ 209164/ 209260/ 209442/
209517/ 209569, July 1, 2014) which included a ruling and statements relating to the disbursement of the
unprogrammed funds. The SC declared void the use of the unprogrammed funds from the General
Appropriations Act (GAAs) of 2011, 2012 and 2013 for the DAP despite the absence of a certification by
the National Treasurer that the revenue collections exceeded the revenue targets for noncompliance with
the conditions provided in the GAAs. The Company and its legal counsel believe that the ruling in the
DAP case did not impose an additional legal requirement for the collectibility of the power subsidy
receivable and that it merely clarifies the condition for the release of unprogrammed funds and the effect
of noncompliance with that condition .
In July 2014, CDC advised that the Department of Budget and Management (DBM), through the
Philippine Economic Zone Authority (PEZA), requested for the documents supporting the Company‟s
claims on the power subsidy. The Company submitted these documents on July 21, 2014 through CDC.
Based on recent developments, management assessed that there are no changes in the recognition and
estimated timing of collection of receivable from CDC.
The carrying amount of receivable recognized under „Prepaid and other current assets‟ and „Other
noncurrent assets‟ amounted to $18.55 million and $14.28 million as of September 30, 2014 and
December 31, 2013, respectively (see Note 7).
4. Cash and Cash Equivalents
This account consists of:
September 30
2014
2014
(Unaudited)
2013
(Unaudited)
December 31,
2013
(Audited)
Cash on hand $9,267 $8,010 $22,822
Cash in banks 10,963,337 7,013,711 3,365,437
Time deposits 10,000,000 12,959,347 12,950,450
Debt service account 6,481,763 6,738,674 6,767,067
$27,454,367 $26,719,742 $23,105,776
Cash in banks earn interest at the prevailing bank deposit rates. For the nine months ended
September 30, 2014 and 2013, the Company earned 0.25% to 0.50% and 0.10% and 0.25% on Dollar
(USD) accounts, respectively. Time deposits are generally made on 30-day term and earned interest at
1.375% to 1.75% for PHP accounts and 0.875% to 1.50% for USD accounts for the nine months ended
September, 2014 and 2013, respectively.
Debt Service Account maintained with the BDO Unibank, Inc. - Trust and Investments Group (trustee) is
to be used solely for the next quarterly payment of interest, and principal due that is related to facility loan
granted by BDO Unibank, Inc. (BDO) to the Company.
Interest income from cash and cash equivalents recognized in profit or loss amounted to $28,105 and
$41,479 for the three months ended September 30, 2014 and 2013, respectively, and $102,695 and
$115,104 for the nine months ended September 30, 2014 and 2013, respectively.
5. Trade and Other Receivables
This account consists of:
September 30,
2014
(Unaudited)
December 31,
2013
(Audited)
Trade accounts receivables $20,432,220 $19,858,783
Others 433,831 1,283,132
$20,866,051 $21,141,915
Trade receivables are non-interest bearing and are generally on an average 30-day term.
Other receivables include advances to employees, receivable from lease of machines, receivable from
customers and certain suppliers.
The carrying amount of all trade accounts receivable as of September 30, 2014 and December 31, 2013 are
pledged, through execution of Assignment Agreement, for the loan with BDO.
6. Inventories
This account consists of:
September 30,
2014
(Unaudited)
December 31,
2013
(Audited)
At cost:
Raw materials $9,123,916 $8,489,808
Raw materials in transit 1,835,712 1,414,865
Work in process 2,125,586 1,510,329
Finished goods 389,114 172,416
$13,474,328 $11,587,418
The amount of inventories recognized as part of cost of goods sold during the period amounted to
$40,601,192 and $38,089,333 for the three months ended September 30, 2014 and 2013, and
$110,338,724 and $98,713,035 for the nine months ended September 30, 2014 and September 30, 2013,
respectively.
7. Prepayments and Other Current Assets/Other Noncurrent Assets
Prepayments and other current assets consist of:
September 30,
2014
(Unaudited)
December 31,
2013
(Audited)
Nontrade receivable from CDC $12,602,738 $−
Prepayments 323,344 167,824
Advances to suppliers 98,012 375,413
Refundable deposits 31,331 169,187
Advance rental − 78,789
Others 365,865 63,466
$13,421,290 $854,679
Other noncurrent assets consist of:
September 30,
2014
(Unaudited)
December 31,
2013
(Audited)
Nontrade receivable from CDC $5,946,751 $14,280,473
Refundable deposits 1,423,430 1,438,370
Other investment 990,877 969,662
Intangible assets 278,618 370,468
Loan receivable from employees 29,412 32,939
Others 62,543
$8,731,631 $17,091,912
Amortization of the intangible assets for the three months ended September 30, 2014 and 2013 amounted
to $29,110 and $33,632, while amortization for the nine months ended September 30, 2014 and 2013
amounted to $91,850 and $87,863 respectively.
8. Property, Plant and Equipment
The rollforward analysis of this account follows:
2014 (Nine Months)
(Unaudited)
Building and
Improvements Machinery
Transportation
Equipment
Production
Equipment
Furniture and
Other
Equipment
Construction
in Progress Total
Cost
Balances at January 1 $51,483,785 $77,664,851 $459,441 $10,378,871 $16,074,206 $2,436 $156,063,590
Acquisitions (Note 11) 70,838 2,627,652 − 583,285 5,285,505 − 8,567,280
Disposals − (630,545) (27,366) (66,306) (2,055) − (726,272)
Balances at September 30 51,554,623 79,661,958 432,075 10,895,850 21,357,656 2,436 163,904,598
Accumulated depreciation
Balances at January 1 3,730,537 23,583,843 260,684 4,864,879 8,669,454 − 41,109,397
Depreciation 966,163 8,372,994 66,176 1,593,008 3,104,808 − 14,103,149
Disposals − (217,474) (11,859) (8,470) (1,389) − (239,192)
Balances at September 30 4,696,700 31,739,363 315,001 6,449,417 11,772,873 − 54,973,354
Net book values $46,857,923 $47,922,595 $117,074 $4,446,433 $9,584,783 $2,436 $108,931,244
2013 (One Year)
(Audited)
Building and
Improvements Machinery
Transportation
Equipment
Production
Equipment
Furniture and
Other
Equipment
Construction
in Progress Total
Cost
Balances at January 1 $51,442,336 $75,790,512 $454,592 $9,877,079 $14,225,103 $88,741 $151,878,363
Acquisitions (Note 11) 41,449 1,874,350 4,849 503,493 1,967,267 – 4,391,408
Disposals – – – (1,697) (4,783) – (6,480)
Transfers – – – – – (86,305) (86,305)
Adjustments – (11) – (4) (113,381) – (113,396)
Balances at December 31 51,483,785 77,664,851 459,441 10,378,871 16,074,206 2,436 156,063,590
Accumulated depreciation
Balances at January 1 2,443,525 12,643,841 169,607 2,850,963 4,628,699 – 22,736,635
Depreciation 1,287,012 10,940,002 91,077 2,014,227 4,042,965 – 18,375,283
Disposals – – – (311) (2,210) – (2,521)
Balances at December 31 3,730,537 23,583,843 260,684 4,864,879 8,669,454 – 41,109,397
Net book values $47,753,248 $54,081,008 $198,757 $5,513,992 $7,404,752 $2,436 $114,954,193
The carrying amounts of all items of property, plant and equipment as of September 30, 2014 and
December 31, 2013 are subject to first ranking mortgage to secure the Company‟s loan with BDO.
9. Derivative Financial Asset
In 2011, the Company, as borrower, entered into a loan agreement with BDO with loan facility amounting
to $83,000,000. The Company made three (3) drawdowns and four (4) drawdowns totaling to
$30,000,000 and $53,000,000 in 2012 and 2011, respectively, fully utilizing the loan facility in 2012.
The Company may at its option prepay the loan with minimum amount of $5,000,000 anytime from the
date of drawdown. If the prepayment is made on interest payment date, no penalty shall be imposed.
Otherwise, the Company shall pay a penalty of one and a half per cent (1.50%) for each month and
fraction thereof.
The prepayment option derivative has been separated from loans payable and carried at fair value through
profit or loss.
The table below shows the movement in the fair value of derivative financial asset for the nine months
ended September 30, 2014 and for the year ended December 31, 2013:
September 30,
2014
(Nine Months)
(Unaudited)
December 31,
2013
(One Year)
(Audited)
Balance at beginning of period $451,047 $2,223,075
Fair value loss - derivative (see Note 14) (319,323) (1,772,028)
Balance at end of period $131,724 $451,047
The net fair value loss for the three months ended September 30, 2013 and for the nine months ended
September 30, 2013 amounted to $275,238 and $1,865,734, respectively (see Note 14).
The carrying value of the prepayment option derivative as of September 30, 2014 and December 31, 2013
is presented as follows:
September 30,
2014
(Unaudited)
December 31,
2013
(Audited)
Current portion $47,900 $130,804
Noncurrent portion 83,824 320,243
$131,724 $451,047
10. Accounts Payable and Accrued Expenses
This account consists of:
September 30,
2014
(Unaudited)
December 31,
2013
(Audited)
Trade accounts payable
Related parties (Note 12) $12,222,957 $8,841,147
Third parties 8,694,278 5,439,048
20,917,235 14,280,195
Accrued expenses 1,613,870 1,439,285
Payable to government agencies 252,711 236,173
Others 97,487 60,586
$22,881,303 $16,016,239
11. Loans Payable
The carrying value of loans payable to BDO as of September 30, 2014 and December 31, 2013:
September 30,
2014
(Unaudited)
December 31,
2013
(Audited)
Current portion $20,750,000 $20,750,000
Noncurrent portion 64,890,101 80,291,487
$85,640,101 $101,041,487
Interest expense charged to profit or loss amounted to $1,052,501 and $1,324,764for the three months
ended September 30, 2014 and 2013, respectively, and $3,303,881 and $4,004,450 for the nine months
ended September 30, 2014 and 2013, respectively (Note 14). Interest payable as of September 30, 2014
and December 31, 2013 amounted to $761,210 and $901,566, respectively.
12. Related Party Transactions
The Company‟s transactions with the related parties follow:
As of and for the nine months ended September 30, 2014
(Unaudited)
Category Amount/volume
Outstanding
balance Nature, terms and conditions
Parent Company
Raw materials used $64,059,624 $− Purchases of raw materials
Property, plant and
equipment
6,273,240 − Purchases of property and
equipment
Direct labor 260,979 − Secondment fees for the salaries
and other charges
Other manufacturing costs 2,137,029 − Purchases of various
production-related items and
expenses
General and administrative
expenses
302,830 − Secondment fees for the salaries
and other charges
Finance cost 473,413 − Guarantee fee related to the
facility loan agreement
Other income 176,170 − Equipment lease rental
Accounts payable and
accrued expenses
− 12,225,957 Outstanding balance related to
above transactions; 20-day
non-interest bearing,
unsecured; to be settled in
cash
Prepaid and other current
assets
− 296,572 Returns of raw materials and
property and equipment and
50% of the IPO cost to be
shouldered by the Parent
Company; 30-day non-
interest bearing, unsecured
Trade and Other receivables − 239,419 Outstanding balance on
equipment lease rental
Bokwang Jeju Co., Ltd. -
affiliate
Other non-current assets
21,215 − Payment for transaction tax on
the purchase of membership
shares, fully paid by the
Company
Phoenix Semiconductor
Telecommunications
(Suzhou) Co., Ltd - affiliate
Other income − 38,580 Gain on sale of machinery
For the three months ended September 30, 2014
(Unaudited)
Category Amount/volume
Outstanding
balance Nature, terms and conditions
Parent Company
Raw materials used $22,552,779 $− Purchases of raw materials
Property, plant and
equipment
5,412,284 − Purchases of property and
equipment
Direct labor 107,322 − Secondment fees for the salaries
and other charges
Other manufacturing costs 682,861 − Purchases of various
production-related items
and expenses
General and administrative
expenses
121,658 − Secondment fees for the salaries
and other charges
Finance cost 146,529 − Guarantee fee related to the
facility loan agreement
Other income 110,365 − Equipment lease rental
Phoenix Semiconductor
Telecommunications
(Suzhou) Co., Ltd - affiliate
Other income 35,636 − Gain on sale of machinery
For the nine months ended September 30, 2013
(Unaudited)
Category Amount/volume
Outstanding
balance Nature, terms and conditions
Parent Company
Raw materials used $62,053,724 $− Purchases of raw materials
Property, plant and
equipment
3,376,208 − Purchases of property and
equipment
Direct labor 373,064 − Secondment fees for the salaries
and other charges
Other manufacturing costs 2,724,118 − Purchases of various
production-related items
and expenses
General and administrative
expenses
311,043 − Secondment fees for the salaries
and other charges
Finance cost 737,068 − Guarantee fee related to the
facility loan agreement
Other income 17,375 − Equipment lease rental
For the three months ended September 30, 2013
(Unaudited)
Category Amount/volume
Outstanding
balance Nature, terms and conditions
Parent Company
Raw materials used $28,845,001 $− Purchases of raw materials
Property, plant and
equipment
753,265 − Purchases of property and
Equipment
Direct labor 134,763 − Secondment fees for the salaries
and other charges
Other manufacturing costs 1,121,412 − Purchases of various
production-related items
and expenses
General and administrative
expenses
97,611 − Secondment fees for the salaries
and other charges
Finance cost 209,205 − Guarantee fee related to the
facility loan agreement
Other income 17,375 − Equipment lease rental
As of December 31, 2013
(Audited)
Category Amount/volume
Outstanding
balance Nature, terms and conditions
Parent Company
Accounts payable and
accrued expenses
$−
$8,841,147
Outstanding balance related to
above transactions; 20-day
non-interest bearing,
unsecured; to be settled in
cash
Prepaid and other
current assets
−
373,574
Returns of raw materials and
property and equipment;
30-day non-interest bearing,
unsecured
Remuneration of key management personnel
Total remunerations of key management personnel consist of short term employee benefits amounting to
$1,133,663 and $1,142,443 for the three months ended September 30, 2014 and 2013, and $2,471,332 and
$2,533,185 for the nine months ended September 30, 2014 and 2013, respectively.
There are no agreements between the Company and any of its directors and key officers providing for
benefits upon termination of employment.
13. Other Manufacturing Costs
Other manufacturing costs consist of:
Three Months Ended
September 30 Nine Months Ended
September 30
2014
(Unaudited)
2013
(Unaudited)
2014
(Unaudited)
2013
(Unaudited)
Utilities $2,049,731 $2,072,320 $5,963,576 $5,902,478
Production consumables 1,521,170 1,506,463 4,976,545 4,325,241
Service fee 1,163,529 1,161,049 3,431,120 3,590,259
Spare parts, tools and jigs 1,190,639 569,517 3,166,757 1,529,545
Indirect labor (Note 16) 661,584 687,044 1,900,785 1,937,187
Repairs and maintenance 405,069 304,574 1,134,687 840,984
Insurance 105,237 107,716 392,235 376,159
Production supplies 97,169 61,118 233,210 157,480
Rent 65,269 66,476 195,016 207,492
Jigs and tools 72,016 64,736 128,125 103,418
Taxes and dues 46,784 59,946 107,373 114,889
Communications 25,773 24,589 71,998 78,020
Miscellaneous 255,619 238,649 764,635 621,274
$7,659,589 6,924,197 $22,466,062 $19,784,426
14. General and Administrative Expenses
General and administrative expenses consists of:
Three Months Ended
September 30 Nine Months Ended
September 30
2014
(Unaudited)
2013
(Unaudited)
2014
(Unaudited)
2013
(Unaudited)
Salaries, wages and benefits (Note 16) $437,596 $378,203 $1,096,022 $1,105,099
Outside services 186,351 170,900 534,977 522,280
Depreciation (Note 8) 120,011 119,962 361,195 360,207
Professional fees 57,573 8,627 185,648 95,484
Taxes and licenses 125,337 16,944 154,292 47,172
Insurance 41,582 42,776 129,366 175,755
Repairs and maintenance 40,839 24,384 103,474 125,520
Entertainment, amusement and recreation 22,165 17,957 76,402 70,724
Supplies 14,792 20,906 55,955 73,291
Communications, light and water 16,458 14,987 50,110 46,507
Rent 21,860 10,930 46,033 25,533
Transportation and travel 7,620 7,745 22,139 23,606
Miscellaneous 22,017 39,719 118,263 56,780
$1,114,201 $874,040 $2,933,876 $2,727,958
15. Finance Cost/Other Income/Expense
Finance costs consist of:
Three Months Ended
September 30 Nine Months Ended
September 30
2014
(Unaudited)
2013
(Unaudited)
2014
(Unaudited)
2013
(Unaudited)
Interest expense $1,052,500 $1,324,764 $3,303,880 $4,004,450
Guarantee fee 175,705 275,738 473,413 737,068
Fair value loss 146,529 209,205 319,323 1,865,734
$1,374,734 $1,809,707 $4,096,616 $6,607,252
Other income consists of:
Three Months Ended
September 30 Nine Months Ended
September 30
2014
(Unaudited)
2013
(Unaudited)
2014
(Unaudited)
2013
(Unaudited)
Interest income $112,070 $41,479 $349,550 $115,104
Income from sale of scrap 36,113 17,015 100,908 55,628
Rental income 5,949 6,149 17,785 17,822
Miscellaneous 146,213 19,543 221,253 32,884
$300,345 $84,186 $689,496 $221,438
Other expense consists of:
Three Months Ended
September 30
Nine Months Ended
September 30
2014
(Unaudited)
2013
(Unaudited)
2014
(Unaudited)
2013
(Unaudited)
Foreign currency exchange loss - net $469,815 $30,099 $271,387 $250,807
Miscellaneous 116,828 25,676 356,721 106,792
$586,643 $55,775 $628,108 $357,599
16. Salaries and Employee Benefits
The details of salaries and employee benefits for the nine months ended September 30 follow:
Three Months Ended
September 30
Nine Months Ended
September 30
2014
(Unaudited)
2013
(Unaudited)
2014
(Unaudited)
2013
(Unaudited)
Salaries and wages $1,540,637 $1,535,097 $4,397,653 $4,443,157
Employee benefits 690,713 712,959 1,896,373 1,998,794
$2,231,350 $2,248,056 $6,294,026 $6,441,951
Salaries and wages and employee benefits included in cost of goods sold and general and administrative
expenses amounted to$1,793,754 and $437,596 for the three months ended September 30, 2014,
respectively, and $5,198,004 and $1,096,022, respectively, for the nine months ended September 30, 2014.
For the three months ended September 30, 2013, salaries and wages and employee benefits in cost of
goods sold and general and administrative expenses amounted to$1,869,853 and $378,203, respectively,
and $5,336,852 and $1,105,099, respectively, for the nine months ended September 30, 2013.
17. Fair Value Measurement
PFRS 13 requires disclosures relating to fair value measurements using a three-level fair value hierarchy.
The level within which the fair value measurement is categorized in its entirety is determined on the basis
of the lowest level input that is significant to the fair value measurement. Assessing the significance of a
particular input requires judgment, considering factors specific to the asset or liability.
The following table shows financial instruments recognized at fair value, categorized between those whose
fair value is based on:
Level 1: Quoted prices in active markets for identical assets or liabilities;
Level 2: Other techniques for which all inputs that have a significant effect on the recorded fair value
are observable, either directly or indirectly; and
Level 3: Techniques that use inputs that have a significant effect on the recorded fair value that are not
based on observable market data.
The Company‟s financial instruments comprise of cash and cash equivalents, trade and other receivables,
refundable deposits, accounts payable and accrued expenses. Due to the short term nature of these
accounts,
the carrying amount approximates fair value.
The „Derivative financial asset‟ amounting to $131,724 and $451,047 as of September 30, 2014 and
December 31, 2013, respectively, in the interim statements of financial position is the only financial
instrument carried at fair value and is classified under Level 3 in the fair value hierarchy. The fair value
of loans payable carried at amortized cost amounted to $86,202,812 and $98,193,447 as of
September 30, 2014 and December 31, 2013, respectively, is categorized under Level 3 in the fair value
hierarchy. There were no transfers between levels of the fair value hierarchy in 2014 and 2013.
The fair value of the Company‟s embedded derivative financial asset and loans payable which fair value is
disclosed, are measured using interest rate binomial tree method for valuing call, put and prepayment
options embedded in host debt contracts. The method incorporates various inputs such as the following:
a) USD yield curve
b) Volatility of USD interest rates based on historical data
c) Credit spread from most recent quotes from banks
Valuation is performed on a quarterly basis for internal reporting purposes and is performed by the
Company‟s own internal valuer. The Company decides whether the fair value can be determined reliably,
which valuation method should be applied and the assumptions made for unobservable inputs used in the
valuation methods. The Company further performs an analysis to determine if the change in fair value is
reasonable by comparing the change in fair value with relevant external resources.
As of September 30, 2014 and December 31, 2013, the Company used the volatility of 25.00% and credit
spread of 3.90% in the valuation which are considered as significant unobservable inputs. The 5.00%
increase in the volatility used in the valuation of derivative financial asset would result in increase in fair
value of $48,656 and $113,397; while the 5.00% decrease would result in decrease in fair value of $46,621
and $113,658 as of September 30, 2014 and December 31, 2013, respectively. The 1.00% increase in the
credit spread would result in increase in fair value of $6,699 and $91,662; while the decrease in credit
spread would decrease the fair value by $5,170 and $94,381 as of September 30, 2014 and
December 31, 2013, respectively.
18. Financial Risk Management Objectives and Policies
The Company has various financial assets such as cash and cash equivalents, trade and other receivables,
nontrade receivables and refundable deposits, which arise directly from normal operations.
The Company‟s principal financial liabilities consist of accounts payable and accrued expenses, interest
payable and loans payable. The main purpose of these financial liabilities, except loans payable, is to raise
working capital for the Company‟s operations. The main purpose of the loan payable is to finance the
construction of the Company‟s plant and administration office and purchase and installation of machinery
and equipment.
The main risks arising from the Company‟s financial instruments are market risk, credit risk and liquidity
risk. The management reviews the procedures and agrees policies for managing each of these risks as
summarized below:
Foreign currency risk
As of September 30, 2014 and December 31, 2013, the foreign-currency denominated financial assets and
financial liabilities in original currencies and their U.S. Dollar equivalents are as follows:
September 30, 2014
(Unaudited)
PHP JPY
Equivalents in
USD
Financial assets
Cash and cash equivalents P=11,340,155 JPY− $252,677
Loans and receivables:
Nontrade receivables from
CDC 832,501,127 − 18,549,489
Refundable deposits 63,142,881 − 1,406,927
Receivable from employees 1,320,000 − 29,412
Other receivables 2,532,313 − 56,424
P=910,836,476 JPY − $20,294,929
Financial liabilities
Accounts payable and
accrued expenses
Trade P=21,029,429 JPY22,789,500 $676,789
Accrued expenses 64,650,487 − 1,440,519
Others (nontrade) 3,640,042 − 81,106
89,319,958 22,789,500 2,198,414
P=821,516,518 (JPY22,789,500) $18,096,515
September 30, 2013
(Unaudited)
PHP JPY
Equivalents in
USD
Financial assets
Cash and cash equivalents P=40,190,383 JPY− $923,068
Loans and receivables:
Nontrade receivables from
CDC 395,819,655 − 9,090,943
Refundable deposits 63,598,401 − 1,460,689
Receivable from employees 2,722,500 − 62,529
Other receivables 5,724,499 − 131,477
508,055,438 − $11,668,706
Financial liabilities
Accounts payable and
accrued expenses
Trade 13,350,812 22,543,000 556,460
Accrued expenses 102,151,456 − 2,346,152
Others (nontrade) 2,303,889 − 52,914
117,806,157 22,543,000 2,955,526
P=390,249,281 (JPY22,543,000) $8,713,180
December 31, 2013
(Audited)
PHP JPY
Equivalents in
USD
Financial assets
Cash and cash equivalents P=30,333,187 JPY− $683,187
Loans and receivables:
Nontrade receivables from
CDC 634,052,985 − 14,280,473
Refundable deposits 63,502,881 − 1,430,245
Receivable from employees 1,462,500 − 32,939
Other receivables 6,496,169 − 146,310
735,847,722 − 16,573,154
Financial liabilities
Accounts payable and
accrued expenses
Trade 17,871,753 6,063,650 460,393
Accrued expenses 60,066,051 − 1,309,147
Others (nontrade) 2,494,064 − 56,173
80,431,868 6,063,650 1,825,713
P=655,415,854 (JPY6,063,650) $14,747,441
The following table demonstrates the sensitivity to a reasonably possible change in the U.S. Dollar-
Philippine Peso and U.S Dollar - Japan Yen exchange rates, with all variables held constant, of the
Company‟s income before income tax (due to changes in the fair value of monetary assets and liabilities)
for the nine months ended September 30, 2014 and 2013:
Increase/decreas
e in PHP rate
Effect on income
before income tax
2014 +1% ($183,047)
(Unaudited) -1% 183047
2013 +1% (89,630)
(Unaudited) -1% 89,630
Increase/decreas
e in JPY rate
Effect on income
before income tax
2014 +1% $2,082
(Unaudited) -1% (2,082)
2013 +1% 2,498
(Unaudited) -1% (2,498)
The sensitivity analysis has been prepared on the basis that the proportion of financial instruments in
foreign currencies is constant.
The exchange rate used to restate the Company‟s PHP-denominated assets and liabilities is P=44.88 to
$1.00 as of September 30, 2014 and P=44.40 to $1.00 as of December 31, 2013. For the Company‟s JPY-
denominated liabilities, the exchange rate used is JPY109.45 as of September 30, 2014 and JPY104.77 to
$1.00 as of December 31, 2013. There is no other impact on the Company‟s other comprehensive income
other than those already affecting the income before income tax.
Interest rate risk
The Company‟s exposure to the risk of changes in market interest rates relates primarily to the Company‟s
loans payable with BDO with floating interest rate.
The following table sets forth, for the period indicated, the sensitivity to reasonably changes in interest
rates with all other variables held constant for the nine months ended September 30, 2014 and 2013:
Changes in basis
points
Effect on income
before income tax
2014 +1% $589,440
(Unaudited) -1% (589,440)
2013 +1% 729,543
(Unaudited) -1% (729,543)
Credit Risk
Risk concentrations of the maximum exposure to credit risk
As of September 30, 2014 and December 31, 2013, receivables from Samsung, which specializes in digital
appliances and media, semiconductors, memory and system integration, amounted to $20,432,220 and
$19,858,783 respectively.
Credit quality per class of financial assets
The table below shows the credit quality of the Company‟s neither past due nor impaired loans and
receivables.
September 30, 2014
(Unaudited)
Neither past due nor impaired
High grade Standard grade Total
Cash in banks $27,454,100 $− $27,454,100
Loans and receivables:
Trade and other receivables 20,432,220 433,831 20,866,051
Refundable deposits 1,454,761 − 1,454,761
Nontrade receivables from CDC 18,549,490 − 18,549,490
$67,890,571 $433,831 $68,324,402
December 31, 2013
(Audited)
Neither past due nor impaired
High grade Standard grade Total
Cash in banks $23,082,954 $− $23,082,954
Loans and receivables:
Trade and other receivables 19,858,783 1,283,132 21,141,915
Refundable deposits 1,607,557 − 1,607,557
Nontrade receivables from CDC 14,280,473 − 14,280,473
$58,829,767 $1,283,132 $60,112,899
Liquidity Risk
The table below summarizes the maturity profile of the Company‟s financial assets and liabilities as of
September 30, 2014 and December 31, 2013 based on undiscounted cash flows:
September 30, 2014
(Unaudited)
On demand
Less than 3
months
3 to
12 months
More than
12 months Total
Financial assets
Cash and cash equivalents $10,972,604 $16,484,400 $− $− $27,457,004
Loans and receivables
Trade and other receivables − 20,432,220 433,831 − 20,866,051
Nontrade receivable from
CDC − − 12,821,030 6,068,531 18,889,561*
Refundable deposits − − 31,331 1,423,430 1,454,761
$10,972,604 $36,916,620 $13,286,192 $7,491,961 $68,667,377
Financial liabilities
Accounts payable and accrued
expenses**
Trade $− $20,917,235 $− $− $20,917,235
Accrued expenses − 1,358,840 255,030 − 1,613,870
Others − 93,106 4,381 − 97,487
Loans payable including interest − − 20,750,000 65,734,899 86,484,899
$− $22,369,181 $21,009,411 $65,734,899 $109,113,491
*Maturities are based on management’s assessment on the estimated timing of collection (see Note 3)
**Excluding statutory liabilities amounting to $252,711.
December 31, 2013
(Audited)
On demand
Less than 3
months
3 to
12 months
More than
12 months Total
Financial assets
Cash and cash equivalents $3,388,259 $19,786,407 $− $− $23,174,666
Loans and receivables
Trade and other receivables − 19,858,783 1,283,132 − 21,141,915
Nontrade receivable from
CDC − − − 14,862,542 14,862,542*
Refundable deposits − − 169,187 1,438,370 1,607,557
$3,388,259 $39,645,190 $1,452,319 $16,300,912 $60,786,680
Financial liabilities
Accounts payable and accrued
expenses**
Trade $− $14,280,195 $− $− $14,280,195
Accrued expenses − 1,431,094 8,191 − 1,439,285
Others − 56,171 4,415 − 60,586
Loans payable including interest − 6,523,836 19,278,243 89,311,554 115,113,633
$− $22,291,296 $19,290,849 $89,311,554 $130,893,699
*Maturities are based on management’s assessment on the estimated timing of collection (see Note 3)
**Excluding statutory liabilities amounting to $236,173
Capital management
There were no changes made in the objectives, policies or processes for managing capital for the nine
months ended September 30, 2014 and 2013.
The Company is not subject to externally imposed capital requirements.
19. Income Taxes
The Company‟s provision for income tax consists of:
Three Months Ended September
30
Nine Months Ended
September 30
2014
(Unaudited)
2013
(Unaudited)
2014
(Unaudited)
2013
(Unaudited)
RCIT at 30% $− $− $− $−
MCIT at 2% 702 − 3,507 −
Gross income tax at 5% 391,264 369,948 1,105,199 973,881
Current tax 391,966 369,948 1,108,706 973,881
Deferred tax 144,910 48,098 52,212 368,192
Provision for income tax $536,876 $418,046 $1,160,918 $1,342,073
The components of the Company‟s net deferred income tax assets and liabilities are as follows:
September 30,
2014
(Unaudited)
December 31,
2013
(Audited)
Deferred income tax assets:
Provision for interest expense $38,061 $45,078 Unamortized accretion of interest on nontrade
receivable from CDC
18,378
30,720
Provision for bonuses and other benefits 8,412 10,730
MCIT 3,507 −
Deferred income tax liability:
Effect of changes in foreign exchange rates on
nonmonetary assets
(160,093)
(126,051)
($91,735) ($39,523)
The table below shows the reconciliation between the provision for income tax at statutory tax rate to the
provision for income tax in the interim statements of comprehensive income:
Three Months Ended
September 30
Nine Months Ended
September 30
2014
(Unaudited)
2013
(Unaudited)
2014
(Unaudited)
2013
(Unaudited)
Income tax at statutory income tax
rate $1,417,294 $1,334,719 $4,354,480 $2,882,781
Additions to (reductions in) income
taxes resulting from:
Effect of income from CFZ
registered activities (1,071,727) (1,070,761) (3,144,798) (2,097,905)
Nontaxable income (43,397) (77,247) (92,582) (133,616)
Income subjected to final tax (8,432) (12,443) (30,809) (34,531)
Nondeductible expenses 102,830 198,456 40,585 357,562
Functional currency differences 140,308 45,322 34,042 367,782
Provision for income tax $536,876 $418,046 $1,160,918 $1,342,073
20. Notes to Cash Flow Statements
For the nine months ended September 30, 2014 and 2013, the Company acquired certain property and
equipment that remained unpaid as of balance sheet date amounting to $4,193,930 and $112,331
respectively.
21. Earnings per Share (EPS)
Basic and diluted EPS for the nine months ended September 30 were computed as follows:
Three Months Ended
September 30
Nine Months Ended
September 30
2014
(Unaudited)
2013
(Unaudited)
2014
(Unaudited)
2013
(Unaudited)
Net income for basic and diluted
EPS
$4,187,438
$4,034,097 $13,354,015 $8,267,197
Weighted average number of
shares outstanding for basic
and diluted EPS
2,002,644,111
2,002,644,109 2,002,644,110
2,002,644,10
9
Basic/diluted earnings per share $0.0021 $0.0020 $0.0067 $0.0041
As of September 30, 2014 and December 31, 2013, there were no outstanding dilutive potential shares.
22. Operating Segment
For management purposes, the Company is organized and managed as one business segment. The
Company‟s business is the manufacture, assembly, test and warehousing of semiconductor and memory
devices and applications and related products which accounted for the majority of the Company‟s total
revenue. Accordingly, the Company operates mainly in one reportable business and geographical
segment which is the Philippines.
23. Events After Reporting Period
On December 1, 2014, the Company listed its shares on the Philippine Stock Exchange. The Company
sold 162,380,000 primary common shares at an offer price of P= 3.15 per share while the selling
shareholders sold 162,380,000 secondary common shares at the offer price of P=3.15 per share.
Item 2. Management's Discussion and Analysis of Financial Position and Results of
Operations.
Business Overview
Phoenix Semiconductor Philippines Corp. (PSPC) was incorporated on January 27, 2010. It is engaged in the
construction, ownership and operation of a plant for the manufacture, assembly, test and warehousing of
semiconductor and memory devices and applications and related products, as well as the performance of
related or incidental activities thereto. PSPC provides turnkey solutions that include wafer back grinding,
assembly and packaging, final testing of semiconductor devices, and delivery and shipment to its customer.
PSPC is a technology-oriented enterprise whose vision is to strive to become the world‟s best semiconductor
company. It aims to achieve this vision through constant innovation in technology for manufacturing its
products and continuous improvement of its processes with focus on quality control, customer satisfaction and
cost competitiveness.
PSPC started its commercial operations in February 2011 and has since been awarded as one of the top
exporters within the Clark Freeport Zone
Financial Position
Phoenix Semiconductor Philippines Corp. balance sheet continues to be solid with total assets of US$193.01
million as of September 30, 2014. The Company remains liquid with current assets amounting to US$75.26
million as against its current obligations of US$44.78 million, resulting in current ratio of 1.68:1 as of
September 30, 2014.
Total receivable for the amount corresponding to the power subsidy amounting to US$18.55 million as of
September 30, 2014 represents the Company's advances to the electricity service provider covering the
Government's subsidy for its electricity charges. Out of the US$18.55 million, the Company expects to receive
collection from the receivable for the amount corresponding to the power subsidy amounting to US$12.60
million by the end of the first quarter of 2015, on the basis of CDC confirmation of the approval by the
Congress of the 2014 National Budget which includes the amount which, according to CDC, was intended for
payment of the power subsidy advanced by the Company.
The Company‟s total liabilities amounted to US$110.02 million as of September 30, 2014 from US$118.55
million as of December 31, 2013, resulting to a Debt-to-Equity Ratio of 1.33:1.
Non-current liabilities amounting to US$65.24 million as of September 30, 2014 is composed significantly of
loans payable to BDO Unibank, Inc. totaling US$64.89 million. These loans refer to the loan agreements
executed by the Company with BDO on March 23, 2011 and May 24, 2013.
Return on equity was at 16% for the nine months ended September 30, 2014.
Results of Operations for the Nine Months Ended September 30, 2014
Phoenix Semiconductor Philippines Corp. continued to deliver steady growth in the first nine months of 2014
as net income grew by 61.53% from US$8.27 million to US$13.35 million in the same period in 2013.
Revenues for the first nine months of 2014 reached US$171.14 million, 10.91% higher than the total revenue
earned during the same period in 2013. Revenues from sales increased by 10.92% from US$153.55 million for
the nine months ended September 30, 2013 to US$170.31 million for the same period in 2014 driven by the
increase in demand for memory modules.
Cost of sales which includes raw materials used, depreciation, direct labor and other manufacturing costs,
increased by 10.68% due to the 12.85% increase in raw materials used and 13.55% increase in other
manufacturing cost as a result in increase in demand for memory module.
General and administrative expenses, which consist of salaries, wages and benefits, outside services,
depreciation, professional fees, representation fees, communication and other admin-related expenses,
increased by 7.55%.
Finance cost for the nine months ended September 30, 2014 decreased by 38% from US$6.61 million in 2013
to US$4.10 million in 2014. Finance costs include interest expense, guarantee fee and fair value loss on
derivatives related to BDO Loan.
Other income for the period, which is composed of interest income, income from scrap, rental income and
miscellaneous income, increased by 211.37% from US$221K for the nine months ended September 30, 2013 to
US$689K for the same period in 2013. Other expenses, on the other hand, which included exchange rate loss
and other miscellaneous expenses, increased by 75.65% from US$358K in 2013 to US$628K in 2014.
Income before income tax improved by 51.05%, from US$9.61 million for the nine months ended September
30, 2013 to US$14.51 million for the same period in 2014.
Material Changes (+/- 5% or more) in the Company’s Financial Statements
Financial Position as at September 30, 2014 versus December 31, 2013
19% increase in cash and cash equivalents
Increase in cash and cash equivalents is attributable to the following: (a) cash flows from operating activities
amounting to US$29.18 million; (b) net cash used in investing activities amounting to US$4.33 million as a
result of the Company‟s advances to electricity provider covering the government subsidy for electricity
charges and US$4.37 million acquisition of property and equipment; and (c) US$16.56 million used for the
payment of bank loan and dividends.
16% increase in inventories
Increase in inventories was attributable to the increase in raw material and sub-material purchases for memory
module products and component products, respectively.
1470% increase in prepayments and other current assets
The significant increase in the account is significantly attributable to the reclassification from the non-current
to the current portion of the nontrade receivable from CDC representing the government power subsidy and the
additional advances made by the Company to electricity provider for the government subsidy portion in 2014,
which the Company expects to collect within the next twelve months.
71% decrease in derivative financial asset (current and noncurrent)
The decrease is due to lower valuation of embedded derivative asset on the BDO loan.
5% decrease in property, plant and equipment, net
Decrease in property, plant and equipment was mainly attributed to the 34% increase in accumulated
depreciation.
49% decrease in other non-current assets
Decrease in other non-current assets was attributed by the reclassification of the current portion of the nontrade
receivable from CDC representing the government power subsidy which the Company expects to collect by
first quarter of 2015.
43% increase in accounts payable and accrued expenses
Increase in accounts payable and accrued expenses was due to the increase of raw material purchases and
additional machinery and equipment purchased during the period.
16% decrease in interest payable
Decrease in interest payable was directly attributed to the decrease in principal loan balance resulting from
payments during the period.
14% decrease in income tax payable
The decrease in income tax payable was due to lower provision for income tax.
15% decrease in loans payable (current and noncurrent)
Decrease in loans payable was directly attributable to the principal repayments made during the period. Total
payments on loans for the nine months ended September 30, 2014 amounted to $15.56 million.
35% increase in retirement liability
Increase in retirement liability resulted from additional accrual recorded for the nine months ended September
30, 2014.
100% increase in other noncurrent liabilities
The increase was due to the recognition of rent payable in relation to the non-cancellable operating lease
agreement entered into with CDC covering the land for its plant and administration offices.
132% increase in deferred income tax liability - net
Increase in deferred income tax liability was due to the increase in foreign exchange differences on non-
monetary assets.
48% increase in retained earnings
Increase of retained earnings was due to the net income earned for the nine months ended September 30, 2014,
offset by the dividends paid during the period amounting to US$1.0 million.
Results of Operations for the Nine Months Ended September 30, 2014 Compared to the Nine Months Ended
September 30, 2013
11% increase in sales revenue
Increase in sales revenue was attributed to the increase in sales of higher density products such as servers and
modules.
41% increase in other revenue
Increase in other revenue was attributed to the increase in high value scrap sales.
11% increase in cost of sales
The increase is due to the increase in raw materials used in production and other manufacturing costs such as
production consumables and spare parts used in the production of higher density products in view of the
increase in sales.
13% increase in gross profit
Increase in gross profit resulted from the increase of sales revenue (product sales).
8% increase in general and administrative expenses
Increase in general and administrative expenses was directly attributable to professional fees and other fees
incurred in relation to the Company‟s initial public offering.
38% decrease in finance cost
The decrease in finance cost was due to the decrease interest expense on loans payable to BDO Unibank, Inc.
as well as the related guarantee fee consistent with the decrease in loans payable.
211% increase in other income
Increase was attributed to the increase in interest income from the accretion on nontrade receivable from CDC.
76% increase in other expense
The significant increase in other expense is directly attributable to the accounted depreciation of the leased
assets to STS.
14% decrease in provision for income tax
Decrease in the account resulted from the decrease in deferred tax on foreign exchange differences on
nonmonetary asset
62% increase in net income
Increase in income before income tax is mainly due to the increase in gross profit and other income, as well as
the decrease in finance costs.
Other Disclosures
A. Any known trends or any known demands,
commitments, events or uncertainties that will result
to or that are reasonably likely to result in the
registrant‟s liquidity increasing or decreasing in any
material way
None.
B. Any events that will trigger direct or contingent
financial obligation that is material to the company,
including any default or acceleration of an obligation
None.
C. Material off-balance sheet transactions,
arrangements, obligations (including contingent
obligations), and other relationships of the company
with unconsolidated entities or other persons created
during the reporting period
None.
D. Any material commitments for capital expenditures,
the general purpose of such commitments, and the
expected sources of funds for such expenditures
should be described
None.
E. Any known trends, events or uncertainties that have
had or that are reasonably expected to have a material
favorable or unfavorable impact on net sales or
revenues or income from continuing operations
should be described
None.
F. Any significant elements of income or loss that did
not arise from the registrant's continuing operations
None.
G. Any seasonal aspects that had a material effect on the
financial condition or results of operations
None.
H. Material events subsequent to the end of the interim
period that have not been reflected in the financial
statements for the interim period
Listing of 162,380,000 primary common
shares and 162,380,000 secondary
common shares in the Philippine Stock
Exchange on December 1, 2014. Shares
are sold to the public at Php3.15 per
share. The Company raised gross
proceeds of Php 511.50 million from the
primary offer.
Key Performance Indicators
The Company‟s top five (5) key performance indicators are listed below:
Amounts in thousand US$, except ratios, and
where indicated
September 30,
2014
September 30, 2013 December 31, 2013
Debt to Equity Ratio¹ 1.33x 1.96x 1.68x
EBITDA² 32,807 30,025 -
EBITDA Margin³ 19.17% 19.46% -
Earnings per share⁴ 0.0067 0.0041 -
Return on Assets (ROA)⁵ 6.99% 4.29% -
Notes:
1. It is a measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity.
2. Earnings before interest, tax, depreciation and amortization
3. It shows earnings before interest, tax, depreciation and amortization (EBITDA) as a percentage of revenue.
4. It is computed by dividing net income of the Company by the weighted average number of common shares issued and
outstanding during the year, adjusted for any subsequent stock dividends declared.
5. It is the ratio of annual net income to average total assets of a business as of reporting date.
Supporting Computations: September 30, 2014 September 30, 2013
December 31,
2013
Debt to Equity Ratio
Total Liabilities 110,021,915 127,765,892 118,552,235
Total Equity 82,988,720 65,308,486 70,634,705
Debt to Equity Ratio 1.33 1.96 1.68
EBITDA (Net Income + finance cost + Income tax + Depreciation + Amortization)
Net Income After Tax 13,354,015 8,267,197
Finance Cost 4,096,616 6,607,252
Provision for income tax 1,160,918 1,342,073
Depreciation 14,103,149 13,720,322
Amortization of Intangibles 91,850 87,863
EBITDA 32,806,548 30,024,707
EBITDA Margin
(EBITDA/Sales)
EBITDA 32,806,548 30,024,707
Sales 171,142,585 154,302,809
EBITDA Margin 19.17% 19.46%
Earnings per share (Net Income/Weighted Average. Number of Shares)
Net Income 13,354,015 8,267,197
Wtd. Ave Outstanding Shares 2,002,644,110 2,002,644,109
EPS 0.0067 0.0041
Return on Assets (ROA) (Net Income/Average Total Assets)
Net Income 13,354,015 8,267,197
Total Assets, beg 189,186,940 192,410,125
Total Assets, end 193,010,635 193,074,377
Average Total Assets 191,098,788 192,742,251
Return on Assets (ROA) 6.99% 4.29%
PART II - OTHER INFORMATION
A. New project or investments in another line of
business or corporation
None.
B. Composition of Board of Directors
(as of September 30, 2014)
Mr. Byeongchun Lee - Chairman, President & CEO
Mr. Dongjoo Kim - Vice President & CFO
Mr. Kyuho Han - Director
Mr. Sanghoon Ha - Director
Mr. Seung Ug Lim - Director
Mr. Carlos R. Alindada - Director
Ms. Mary Delia Tomacruz - Director
C. Performance of the corporation or
result/progress of operations
Please see financial statements and management’s
discussion on results of operations.
D. Declaration of dividends None.
E. Contracts of merger, consolidation or joint
venture; contract of management, licensing,
marketing, distributorship, technical assistance or
similar agreements
None.
F. Offering of rights, granting of Stock Options and
corresponding plans therefore
None.
G. Acquisition of additional mining claims or other
capital assets or patents, formula, real estate
None.
H. Other information, material events or
happenings that may have affected or may affect
market price of security
None.
I. Transferring of assets, except in normal course of
business
None.
J. Other information not previously disclosed As disclosed in the Company’s prospectus, gross and
net proceeds from the primary offer were estimated at
Php511.50 million and Php466.91 million, respectively.
The Company received actual gross proceeds
amounting to Php511.50 million from the primary
offering of 162,380,000 shares on December 1, 2014,
and incurred Php43.83 million IPO-related expenses,
resulting to actual net proceeds of Php467.67 million.
Schedule I: Reconciliation of Retained Earnings
PHOENIX SEMICONDUCTOR PHILIPPINES CORP.
RECONCILIATION OF RETAINED EARNINGS AVAILABLE FOR DIVIDEND
DECLARATION (ANNEX 68-C)
September 30, 2014
Unappropriated Retained Earnings, as adjusted to available for
dividend distribution, beginning $ 25,634,725
Net Income during the period closed to Retained Earnings 13,354,015
Less:
Dividend declarations during the period (1,000,000)
TOTAL RETAINED EARNINGS AVAILABLE FOR DIVIDEND, END $ 37,988,740
Schedule II: Schedule of Effective Standards and Interpretations
PHOENIX SEMICONDUCTOR PHILIPPINES CORP.
SUPPLE MENTARY SCHEDULE OF ALL PHILIPPINE FINANCIAL REPORTING
STANDARDS (PFRSs) [which consist of PFRSs, Philippine Accounting Standards (PAS) and
Philippine Interpretations] effective as at
September 30, 2014
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of September 30,2014
Adopted Not
Adopted
Not
Applicable
Framework for the Preparation and Presentation of Financial
Statements
Conceptual Framework Phase A: Objectives and qualitative
characteristics
PFRSs Practice Statement Management Commentary
Philippine Financial Reporting Standards
PFRS 1
(Revised)
First-time Adoption of Philippine Financial Reporting
Standards
Amendments to PFRS 1 and PAS 27: Cost of an
Investment in a Subsidiary, Jointly Controlled Entity or
Associate
Amendments to PFRS 1: Additional Exemptions for First-
time Adopters
Amendment to PFRS 1: Limited Exemption from
Comparative PFRS 7 Disclosures for First-time Adopters
Amendments to PFRS 1: Severe Hyperinflation and
Removal of Fixed Date for First-time Adopters
Amendments to PFRS 1: Government Loans
Amendments to PFRS 1: Borrowing Costs
Amendments to PFRS 1: Meaning of Effective PFRS
PFRS 2 Share-based Payment
Amendments to PFRS 2: Vesting Conditions and
Cancellations
Amendments to PFRS 2: Group Cash-settled Share-based
Payment Transactions
Amendments to PFRS 2: Definition of Vesting Condition
PFRS 3
(Revised)
Business Combinations
Amendment to PFRS 3: Accounting for Contingent
Considerations in a Business Combination
Amendment to PFRS 3: Scope Exceptions for Joint
Arrangements
PFRS 4 Insurance Contracts
Amendments to PAS 39 and PFRS 4: Financial Guarantee
Contracts
PFRS 5 Non-current Assets Held for Sale and Discontinued
Operations
PFRS 6 Exploration for and Evaluation of Mineral Resources
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of September 30,2014
Adopted Not
Adopted
Not
Applicable
PFRS 7 Financial Instruments: Disclosures
Amendments to PAS 39 and PFRS 7: Reclassification of
Financial Assets
Amendments to PAS 39 and PFRS 7: Reclassification of
Financial Assets - Effective Date and Transition
Amendments to PFRS 7: Improving Disclosures about
Financial Instruments
Amendments to PFRS 7: Disclosures - Transfers of
Financial Assets
Amendments to PFRS 7: Disclosures - Offsetting
Financial Assets and Financial Liabilities
Amendments to PFRS 7: Mandatory Effective Date of
PFRS 9 and Transition Disclosures
PFRS 8 Operating Segments
Amendments to PFRS 8: Aggregation of Operating
Segments and Reconciliation of the Total of the Reportable
Segments Assets to the Entity‟s Assets
PFRS 9** Financial Instruments
Amendments to PFRS 9: Mandatory Effective Date of
PFRS 9 and Transition Disclosures
PFRS 10 Consolidated Financial Statements
Amendments to PFRS 10: Investment Entities
PFRS 11 Joint Arrangements
Amendments to PFRS 11: Investment Entities
PFRS 12 Disclosure of Interests in Other Entities
Amendments to PFRS 12: Investment Entities
PFRS 13 Fair Value Measurement (2013 Version)
Amendment to PFRS 13: Short-term Receivables and
Payables
Amendment to PFRS 13: Portfolio Exception
Philippine Accounting Standards
PAS 1
(Revised)
Presentation of Financial Statements
Amendment to PAS 1: Capital Disclosures
Amendments to PAS 32 and PAS 1: Puttable Financial
Instruments and Obligations Arising on Liquidation
Amendments to PAS 1: Presentation of Items of Other
Comprehensive Income
Amendments to PAS 1: Clarification of the Requirements
for Comparative Presentation
PAS 2 Inventories
PAS 7 Statement of Cash Flows
PAS 8 Accounting Policies, Changes in Accounting Estimates
and Errors
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of September 30,2014
Adopted Not
Adopted
Not
Applicable
PAS 10 Events after the Reporting Period
PAS 11 Construction Contracts
PAS 12 Income Taxes
Amendment to PAS 12 - Deferred Tax: Recovery of
Underlying Assets
PAS 16 Property, Plant and Equipment
Amendment to PAS 16: Classification of Servicing
Equipment
Amendment to PAS 16: Revaluation Method –
Proportionate Restatement of Accumulated Depreciation
PAS 17 Leases
PAS 18 Revenue
PAS 19
(Amended)
Employee Benefits
Amendments to PAS 19: Defined Benefit Plans: Employee
Contributions
PAS 20 Accounting for Government Grants and Disclosure of
Government Assistance
PAS 21 The Effects of Changes in Foreign Exchange Rates
Amendment: Net Investment in a Foreign Operation
PAS 23
(Revised)
Borrowing Costs
PAS 24
(Revised)
Related Party Disclosures
Amendments to PAS 24: Key Management Personnel
PAS 26 Accounting and Reporting by Retirement Benefit Plans
PAS 27
(Amended)
Separate Financial Statements
Amendments to PAS 27: Investment Entities
PAS 28
(Amended)
Investments in Associates and Joint Ventures
PAS 29 Financial Reporting in Hyperinflationary Economies
PAS 32 Financial Instruments: Disclosure and Presentation
Amendments to PAS 32 and PAS 1: Puttable Financial
Instruments and Obligations Arising on Liquidation
Amendment to PAS 32: Classification of Rights Issues
Amendments to PAS 32: Offsetting Financial Assets and
Financial Liabilities
PAS 33 Earnings per Share
PAS 34 Interim Financial Reporting
Amendment to PAS 34: Interim Financial Reporting and
Segment Information for Total Assets and Liabilities
PAS 36 Impairment of Assets
Amendments to PAS 36: Recoverable Amount Disclosures
for Non-Financial Assets
PAS 37 Provisions, Contingent Liabilities and Contingent Assets
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of September 30,2014
Adopted Not
Adopted
Not
Applicable
PAS 38 Intangible Assets
Amendments to PAS 38: Revaluation Method –
Proportionate Restatement of Accumulated Amortization
PAS 39 Financial Instruments: Recognition and Measurement
Amendments to PAS 39: Transition and Initial
Recognition of Financial Assets and Financial Liabilities
Amendments to PAS 39: Cash Flow Hedge Accounting of
Forecast Intragroup Transactions
Amendments to PAS 39: The Fair Value Option
Amendments to PAS 39 and PFRS 4: Financial Guarantee
Contracts
Amendments to PAS 39 and PFRS 7: Reclassification of
Financial Assets
Amendments to PAS 39 and PFRS 7: Reclassification of
Financial Assets – Effective Date and Transition
Amendments to Philippine Interpretation IFRIC–9 and
PAS 39: Embedded Derivatives
Amendment to PAS 39: Eligible Hedged Items
Amendment to PAS 39: Novation of Derivatives and
Continuation of Hedge Accounting
PAS 40 Investment Property
Amendment to PAS 40: Investment Property
PAS 41 Agriculture
Philippine Interpretations
IFRIC 1 Changes in Existing Decommissioning, Restoration and
Similar Liabilities
IFRIC 2 Members' Share in Co-operative Entities and Similar
Instruments
IFRIC 4 Determining Whether an Arrangement Contains a Lease
IFRIC 5 Rights to Interests arising from Decommissioning,
Restoration and Environmental Rehabilitation Funds
IFRIC 6 Liabilities arising from Participating in a Specific Market
- Waste Electrical and Electronic Equipment
IFRIC 7 Applying the Restatement Approach under PAS 29
Financial Reporting in Hyperinflationary Economies
IFRIC 8 Scope of PFRS 2
IFRIC 9 Reassessment of Embedded Derivatives
Amendments to Philippine Interpretation IFRIC–9 and
PAS 39: Embedded Derivatives
IFRIC 10 Interim Financial Reporting and Impairment
IFRIC 11 PFRS 2- Group and Treasury Share Transactions
IFRIC 12 Service Concession Arrangements
IFRIC 13 Customer Loyalty Programmes
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of September 30,2014
Adopted Not
Adopted
Not
Applicable
IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction
Amendments to Philippine Interpretations IFRIC- 14,
Prepayments of a Minimum Funding Requirement
IFRIC 15 Agreements for the Construction of Real Estate
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
IFRIC 17 Distributions of Non-cash Assets to Owners
IFRIC 18 Transfers of Assets from Customers
IFRIC 19 Extinguishing Financial Liabilities with Equity
Instruments
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
IFRIC 21 Levies
SIC-7 Introduction of the Euro
SIC-10 Government Assistance - No Specific Relation to
Operating Activities
SIC-12 Consolidation - Special Purpose Entities
SIC-13 Amendment to SIC - 12: Scope of SIC 12
Jointly Controlled Entities - Non-Monetary Contributions
by Venturers
SIC-15 Operating Leases - Incentives
SIC-25 Income Taxes - Changes in the Tax Status of an Entity or
its Shareholders
SIC-27 Evaluating the Substance of Transactions Involving the
Legal Form of a Lease
SIC-29 Service Concession Arrangements: Disclosures.
SIC-31 Revenue - Barter Transactions Involving Advertising
Services
SIC-32 Intangible Assets - Web Site Costs
Schedule III: Conglomerate Map
Schedule IV: Financial Soundness Indicators
September
30, 2014
September 30,
2013
December 31,
2013
1. Current/Liquidity Ratios
a. Current Ratio 1.68 2.69 1.49
b. Quick Ratio 1.08 2.08 1.16
2. Debt Equity Ratio 1.33 1.96 1.68
3. Asset to Equity Ratio 2.33 2.96 2.68
4. Interest Rate Coverage Ratio 8.69 6.33
5. Profitability ratios
a. Net Income Margin 7.80% 5.36%
b. Return on Assets 6.99% 4.29%
c. Return on Equity 17.39% 13.51%
Computations:
092014 092013 122013
1. Current/Liquidity Ratios
a. Current Ratio (Current Assets/Current liabilities)
Current Assets 75,263,936 71,978,180 56,820,592
Current Liabilities 44,777,827 26,713,385 38,115,211
Current Ratio 1.68 2.69 1.49
b. Quick Ratio (CCE + Trade and Other Receivables)/Current Liabilities)
Cash and Cash Equivalents 27,454,367 26,719,742 23,105,776
Trade and Other Receivables 20,866,051 28,898,985 21,141,915
Total 48,320,418 55,618,727 44,247,691
Current Liabilities 44,777,827 26,713,385 38,115,211
Quick Ratio 1.08 2.08 1.16
2. Debt Equity Ratio (Total liabilities/SHE)
Total liabilities 110,021,915 127,765,892 118,552,235
Stockholder's Equity 82,988,720 65,308,486 70,634,705
Debt Equity Ratio 1.33 1.96 1.68
3. Asset to Equity Ratio (Total Assets/SHE)
Total Assets 193,010,635 193,074,377 189,186,940
Stockholder's Equity 82,988,720 65,308,486 70,634,705
Asset to Equity Ratio 2.33 2.96 2.68
4. Interest Rate Coverage Ratio (EBITDA/Interest Expense)
September
30, 2014
September 30,
2013
Net Income After Tax 13,354,015 8,267,197
Finance Cost 4,096,616 6,607,252
Provision for income tax 1,160,918 1,342,073
Depreciation 14,103,149 13,720,322
Amortization of Intangibles 91,850 87,863
EBITDA 32,806,548 30,024,707
Interest Expense* 3,777,293 4,741,518
Interest Rate Coverage Ratio 8.69 6.33
*This includes interest expense and guarantee fee (see Note 15)
5. Profitability ratios
a. Net Income Margin (Net Income/Revenue)
Net Income 13,354,015 8,267,197
Revenue 171,142,585 154,302,809
Net Income Margin 7.80% 5.36%
b. Return on Assets (Net Income/Total Assets)
Net Income 13,354,015 8,267,197
Total Assets, beg 189,186,940 192,410,125
Total Assets, end 193,010,635 193,074,377
Average Total Assets 191,098,788 192,742,251
Return on Assets 6.99% 4.29%
c. Return on Equity (Net Income/Ave Shareholder's Equity)
Net Income 13,354,015 8,267,197
Shareholders Equity, beginning 70,634,705 57,041,290
Shareholders Equity, end 82,988,720 65,308,486
Average Shareholder's Equity 76,811,713 61,174,888
Return on Equity 17.39% 13.51%
“ANNEX A”
PHOENIX SEMICONDUCTOR PHILIPPINES CORP.
Aging of Trade Accounts Receivables
AS OF SEPTEMBER 30, 2014
Date Customer Currency Source Functional 0 to 30 days
31 to
60
days
61 to 90
days
Over 90
days
9/30/2014 Samsung Electronics Co., Ltd. USD 20,432,220 20,432,220 20,432,220 − − −
Total Trade Accounts Receivable (see Notes to FS Item 5) 20,432,220 20,432,220 20,432,220 − − −