1.Date of occurrence of the event:2012/05/08

2.Company name:Epistar Corporation

3.Relationship to the Company (please enter ”head office” or

  ”affiliate company”):head office

4.Reciprocal shareholding ratios:N/A

5.Cause of occurrence:

In response to Financial Supervisory Commission, Executive Yuan, R.O.C.

(FSC), Announcement No. 0990036471 issued on December 3, 2010

6.Countermeasures:

(1) Date of the board of directors resolution：2012/05/08

(2) The reporting period of IFRSs: 2012/01/01

(3) The key activity and implementation progress of adopting IFRSs: Except

the key activities and progress stated below are performed on target in

accordance with IFRSs adoption project, the others are all completed:

A. Preparation of IFRSs comparative financial information for 2012:

in progress.

B. Completion of relevant internal control (including financial reporting

process and relevant information system) adjustments: in progress.

(4) The major differences identified by the Company between accounting

policies under R.O.C. SFAS and the IFRSs published by Accounting Research

and Development Foundation (ARDF) are summarized as below:

A. In accordance with the amended “Rules Governing the Preparation of

Financial Statements by Securities Issuers”, dated July 7, 2011, unlisted

stocks and emerging stocks held by the Company should be measured at cost

and recognized in “Financial assets carried at cost”.  However, in

accordance with IAS 39, “Financial Instruments: Recognition and

Measurement”, investments in equity instruments without an active market

but with reliable fair value measurement should be measured at fair value.

Therefore, the Company designated “Financial assets carried at cost” to

“Available-for -sale financial assets” and decreased other comprehensive

 income of NT$80,743 thousand and increased deferred income tax

assets-non-current of NT$8,202 thousand for the difference between fair

value and book value at the date of transition to IFRSs.

B. Financial instruments: convertible bonds

(i)It was specified that the conversion price of the overseas convertible

bonds issued by the Company is denominated in New Taiwan dollars (NTD), and

upon conversion of the bonds, their amounts shall be translated into NTD at

a fixed exchange rate of foreign currency to NTD. In accordance with current

accounting standards in R.O.C., conversion options embedded in the bonds that

 meet the criterion of exchange of a fixed number of the bonds for a fixed

number of common shares are classified as equity.  However, in accordance

with IAS 32, “Financial Instruments: Presentation”, the conversion options

embedded in the overseas convertible bonds issued by the Company that do not

meet the definition of equity instruments shall be classified as liabilities.

(ii)According to the practices in R.O.C., the price resetting options, call

options and put options embedded in convertible bonds issued by the Company

before 2009, with conversion price adjusted based on market price, are

recognized as financial liabilities; the bonds are recognized as bonds

payable (including relevant discount and premium); conversion options

without price resetting provisions are recognized as equity; the reduction

in fair value caused by the resetting of conversion price shall be

reclassified as shareholders’ equity.  However, in accordance with IAS 32,

 “Financial Instruments: Presentation”, conversion options embedded

 in convertible bonds, with conversion price adjusted based on market price,

which do not meet the definition of equity instruments shall be recognized

as liabilities.  According to the differences stated above, the Company

increased financial liabilities designated at fair value through profit or

loss-current of NT$80,281 thousand and retained earnings of NT$1,210,539

thousand, decreased capital reserve of NT$1,257,767 thousand and bonds

payable of NT$159,914 thousand, increased deferred income tax

liabilities-non-current of NT$143,497 and deferred income tax

assets-non-current of NT$16,635 thousand at the date of transition to IFRSs.

C. In accordance with current accounting standards in R.O.C., if an investee

company issues new shares and original shareholders do not purchase or

acquire new shares proportionately, but the investor company does not lose

its significant influence over the investee company, the investment

percentage, and therefore the equity in net assets for the investment that

an investor company has invested, will be changed. Such difference shall be

used to adjust the “Additional paid-in capital” and the “Long-term equity

investments” accounts. However, in accordance with IAS 28, “Investments

in Associates”, increase in investment percentage is accounted for as an

acquisition of investment; while, the decrease in investment percentage is

accounted for as a disposal of investment and any related disposal gain or

loss is recognized. Therefore, the Company decreased capital reserve of

NT$57,550 thousand, and increased undistributed earnings of NT$57,550

thousand at the date of transition to IFRSs.

D. Pension

(a)The discount rate used to calculate pensions shall be determined with

 reference to the factors specified in R.O.C. SFAS 18, paragraph 23.

However, IAS 19, “Employee Benefits”, requires an entity to determine

the rate used to discount employee benefits with reference to market yields

on high quality corporate bonds that match the currency at the end day of

the reporting period and duration of its pension plan; when there is no deep

market in corporate bonds, an entity is required to use market yields on

government bonds (at the end day of the reporting period) instead.

(b)In accordance with current accounting standards in R.O.C., the

unrecognized transitional net benefit obligation should be amortized on a

straight-line basis over 15 to 24 years. However, in accordance with IAS 19,

“Employee Benefits”, the unrecognized transitional net benefit obligation

should not be recognized because the Company applied first-time adoption

of IFRSs.

(c)In accordance with current accounting standards in R.O.C., the excess

of the accumulated benefit obligation over the fair value of the pension

plan (fund) assets at the balance sheet date is the minimum amount of

pension liability that is required to be recognized on the balance sheet

 (“minimum pension liability”). However, IAS 19, “Employee Benefits”,

 has no regulation regarding the minimum pension liability.

(d)The Company recognized the all cumulative actuarial gains and losses

related to employee benefits directly to retained earnings at transition

date.

According to the differences stated above, the Company increased accrued

pension liabilities of NT$78,139 thousand, decreased deferred pension costs

 of NT$79 thousand and unrecognized pension cost of NT$25,047, decreased

retained earnings of NT$85,710 thousand, and increased deferred income tax

assets-non-current of NT$17,555 at the date of transition to IFRSs.

E.Leases

In accordance with current accounting standards in R.O.C., when the legal

 form of outsourcing processing machines contracts signed by the Company

does not belong to a lease, the Company does not need to determine whether

it is a lease.  However, in accordance with IFRIC 4, “Determining Whether

an Arrangement Contains a Lease”, the Company has assessed outsourcing

processing machines contracts and determined that fulfillment of its

arrangement depends on the use of the underlying asset and the arrangement

conveys a right to control the use of the underlying asset to the Company.

Accordingly, outsourcing processing machines contracts should be accounted

for in accordance with IAS 17, “Leases”. Therefore, the Company increased

accounts receivable-current of NT$23,941 thousand and accounts

receivable-non-current of NT$53,003 thousand, and decreased property, plant

and equipment, net of NT$76,944 thousand at the date of transition to IFRSs.

F.Pursuant to current accounting standards in R.O.C., the determination of

a foreign operation’s functional currency is based on the comprehensive

judgment on various indicators, without priority to any consideration.

However, in accordance with IAS 21, “The Effects of Changes in Foreign

Exchange Rates”, certain foreign operations of the Company have the same

functional currency as the Company. Therefore, the Company increased

cumulative translation adjustments of NT$176,622 thousand, deferred income

tax liabilities-non-current of NT$37,931 thousand, and available-for-sale

financial assets-non-current of NT$2,165 thousand, decreased prepayments

for equipment of NT$7,562 thousand and intangible assets of NT$1,186

thousand, and decreased retained earnings of NT$194,459 thousand and

increased related deferred income tax assets-non-current of NT$37,675

thousand at the date of transition to IFRSs.

G.The Company and its subsidiaries shall recognize the differences of the

associates which the Company and its subsidiaries invested in due to

first-time adoption over its ownership. Therefore, the Company decreased

long-term equity investments accounted for under equity method of NT$22,681

thousand, capital reserve of NT$14,910 thousand, the proportionate interest

in the associates under equity method of NT$5,330 and retained earnings of

NT$2,210 thousand, and increased deferred income tax assets-non-current

of NT$1,270 thousand at the date of transition to IFRSs.

H. In accordance with current accounting standards in R.O.C., the land use

 rights are presented in “Intangible assets”. However, in accordance with

 IAS 17, “Leases”, the long term operation lease shall be presented in

“Long-term prepayment for rental”. Therefore, the Company reclassified

 other intangible assets of NT$295,789 thousand to long-term prepayment for

 rental to at the date of transition to IFRSs.

I. In accordance with current accounting standards in R.O.C., a deferred tax

 asset or liability should, according to the classification of its related

asset or liability, be classified as current or noncurrent. However, a

deferred tax asset or liability that is not related to an asset or liability

 for financial reporting should be classified as current or noncurrent

according to the expected period to realize or settle a deferred tax asset

or liability. However, under IAS 1, “Presentation of Financial Statements”

, an entity should not classify a deferred tax asset or liability as

current. Therefore, the Group reclassified deferred income tax assets –

current of NT$508,111 thousand to deferred income tax assets – non-current

at the date of transition to IFRSs.

J. The Company’s prepayments for the acquisition of property, plant and

equipment classified in “property, plant and equipment” in accordance with

 the “Rules Governing the Preparation of Financial Statements by Securities

 Issuers”. However, under IFRSs, it should be classified as other assets.

Therefore, the Company reclassified property, plant and equipment, net of

NT$521,148 thousand to prepayment for equipments at the date of transition

to IFRSs.

(5) Preliminary impacts of IFRSs adoption on key items of financial

statements: see the descriptions in (4).

(6) The evaluation method and the content of CPA review opinion:

A. The evaluation method: For employee pension liability, it is according

to the actuarial report. For the conversion right of convertible bonds

payable, it is according to fair value model. The other accounts are

evaluated by the Company.

B. CPA review opinion: The Company has consulted WEN, FANG-YU CPA of

PricewaterhouseCoopers, Taiwan to issue a review opinion, the quoted wording

 from the CPA review opinion is：We have reviewed such impact amount

prepared by the Consolidated Companies in accordance with the Order

0990036471 announced by Taiwan Stock Exchange dated December 3, 2010.

Based on our review, we are not aware of any material modifications that

should be made to such impact amount.

(7) Statement related to the potential adjustments to financial information

 if information is based on evaluation of information or test data:

Such impact amount was prepared in accordance with the accounting polices

currently adopted by the Consolidated Companies based on the “Guidelines

Governing the Preparation of Financial Reports by Securities Issuers”

announced by Financial Supervisory Commission (the “FSC”) under the

Executive Yuan dated December 22, 2011, International Financial Reporting

Standards (IFRS), International Accounting Standards (IAS), Interpretations

developed by the International Financial Reporting Interpretations Committee

(IFRIC) or the former Standing Interpretations Committee (SIC), and the

transitional requirements and exemptions based on IFRS 1 “First-time

Adoption of International Financial Reporting Standards”. Such impact

amount might be changed subject to changes of economic conditions and events.

7.Any other matters that need to be specified:None