Acer 2007 Annual Report Download

Download and view the complete annual report

Please find the complete 2007 Acer annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 117

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117

Table of contents

  • Page 1

  • Page 2
    ...1.2 2007 Operating Report ...5 1.3 2008 Business Plan...6 2.Company In General 2.1 Brief Account of the Company...8 3.Corporate Governance Principles 3.1 Organization of the Company ...12 3.2 Information Regarding Board of Directors, Supervisors and Key Managers ...14 3.3 Corporate Governance...

  • Page 3
    ...by CPAs of the Past Year ...55 7.5 Disclosure of the Impact on Company's Financial Status Due to Financial Difficulties ...107 7.6 Financial Prediction and Achievements ...107 8.Risk Management 8.1 Recent Annual Investment Policy and Main Reasons of Gain or Loss and Improvement Plan ...109...

  • Page 4
    Business Report to Shareholders J.T. Wang Chairman and Corporate CEO 

  • Page 5
    ...strong position According to the leading IT research company, Gartner, Acer also produced stellar results in the global PC market during 2007. The worldwide rankings and respective on-year growths were: No. 3 for Total PCs with 54% growth, No. 2 for notebooks with 60% growth, and No. 4 for desktops...

  • Page 6
    We deeply thank our shareholders for your unrelenting support and guidance, and will work aggressively toward our next target to become the No. 1 notebook vendor worldwide. Sincerely, J.T. Wang Chairman & Corporate CEO 

  • Page 7
    ...customer needs Delivering first-class products and services Being a good corporate citizen by playing a role in social growth Caring for the environment all across the business value chain Building on trust and honesty internally and externally by respecting people, diversities and cultures Creating...

  • Page 8
    Caring Innovative • • Fostering teamwork and collaboration Challenging the way of doing things and adopting new ideas Supporting continuous improvement in processes and products Creating impact through original thinking Putting speed in execution at the heart of our operations Being proactive...

  • Page 9
    ...the channel business model and enhance its efficiency. B. Explore and define new growth drivers for the global PC market., particularly in the mobility segment C. Special attention and actions toward corporate social responsibility. 1.3.5 Impact to the Company Due to Competition, Governmental...

  • Page 10
    Company in General Gianfranco Lanci President and CEO of IT Products 7

  • Page 11
    ...:Transformed from manufacturing to services 97 • Acer was founded under the name Multitech, focusing on trade and product design 9 • Acer was the first company to promote 16-bit PC products in Taiwan 97 • Acer established the Microprocessor Training Center, training 3,000 engineers...

  • Page 12
    ... NT 000 • As part of Acer's latest re-engineering, Acer split off its OEM business unit to create Wistron Corp., an independent design and IT manufacturing company 99 • Acer introduced the world's first dual Intel Pentium R PC R 00 • Acer adopted a new corporate identity to reflect the...

  • Page 13
    ... LCD monitors • Acer was voted Reader's Digest gold-medal Computer TrustedBrand in Asia for the ninth consecutive year • Acer set the trend in product design with new Aspire Gemstone-design consumer notebooks • Acer disclosed plans to sell partial Apacer shares to Powerchip Semiconductor Corp...

  • Page 14
    C orporate Governance Principles 

  • Page 15
    ... Services Business Information Technology Legal Marketing & Branding Customer Service Asia Pacific Operations Pan America Operations (2) Corporate Functions Auditor • Evaluation, planning and improvement of Acer's internal operations Corporate Strategy Office • Consolidation, management...

  • Page 16
    ... of Acer's IT products in Asia Pacific applications, software systems development, systems integration, system operation services, value-added business solutions, and Internet data center services Finance • Corporate finance, investment, treasury, credit and risk control and accounting services...

  • Page 17
    3.2 Information Regarding Board of Directors, Supervisors and Key Managers Shares Held When Elected Title Name Date of Election Term Number Percentage Number Percentage Shares Held at Present Chairman J.T. Wang Jun 14, 2005 3 5,212,666 0.25 10,806,070 0.45 Director Stan Shih Jun 14, 2005...

  • Page 18
    ...E-life Mall Corp. z Director of TWP Corp. Bachelor z Chairman of Acer Cyber Center Services Inc. z Director of Minly Tech. Corp. z Director of Weblink International Inc. z Director of Acer Investment Inc. Main Curriculum Vitae Spouse or Immediate Family Holding Managerial Position RelationTitle Name...

  • Page 19
    ...Investment Corp. Smart Capital Corp. (2) Key Managers (April 15, 2008) Shares Held by Spouse & Minors Number 15,802 Title Name Date of Accession Shares Held Directly Number Percentage 0.02 0.15 0.10 Shares Held by the Other's Number...Schmidleit 09/29/2007 hner Steve Lin 11/01/2001 Steve Lin ...

  • Page 20
    ... Holding Position as President or Vice President Title Bachelor Master Bachelor z z z z z z z z z z z z z z z z z z z z z z z Chairman of Weblink International Inc. Director of TWP Corp. Director of Lottery Technology Services Corp. Director of Minly Technology Corp. Director of Acer Cyber Center...

  • Page 21
    ... Accession Shares Held Directly Number Percentage - Shares Held by Spouse & Minors Number - Shares Held by the Other's Number - Percentage - Percentage - Vice President Vice President Vice President Vice President Head of Branch Office Head of Branch Office Head of Branch Office Calvin Chang...

  • Page 22
    ...or Immediate Family Education Main Curriculum Vitae Holding Position as President or Vice President Title Bachelor Bachelor Bachelor Bachelor Name Relationship - Bachelor - - - - Bachelor - - - - Bachelor - - - - .. Operational Situation of the Audit Committee: Not applicable. 9

  • Page 23
    ... the Company's worldwide Eco strategy, and monitoring the results of the Eco management system. The Company has also set up an exclusive e-mail account ([email protected]), environmental web, and published a Corporate Environmental Report. z The Company has set up an exclusive web site for the new...

  • Page 24
    ... with regard to its internal control system during the period from January 1, 2007 to December 31, 2007: "Regulations Governing Establishment of Internal Control Systems by Public Companies" promulgated by the Securities and Futures Bureau of the Financial Supervisory Commission (hereinafter, the...

  • Page 25
    ... of the Company's Annual Report for the year 2006 and Prospectus, and will be publicly disclosed. Any false-hood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchanged Act. 7. This Statement has...

  • Page 26
    ...Financial Statements and Business Report The Proposal for Distribution of FY2006 Retained Earnings The New Issuance of Common Shares through Capital Increases The Amendments to AcerÈ·s Articles of Incorporation To Acquire Certain Assigned Patent Rights Currently Owned by NEC Corp. or Other Companies...

  • Page 27
    ... Board of Directors The Agenda and Logistics of 2008 General Shareholder's Meeting The Appointment of the Auditors of Acer Inc. VIII. Acer's Statement of Internal Control System for 2007 IX. To Endow Gianpiero Morbello, the Incumbent Head of Marketing and Branding Unit, with the Title of Corporate...

  • Page 28
    C apital and Shares 

  • Page 29
    ... Capital Date Price of Issuance Authorized Common stock Shares Value 28,000,000 Paid-in Common stock Shares Value 2,405,490,426 24,054,904 Unit: Share/ NT$ Thousand Notes Source of the Capital August, Share/ 2,800,000,000 2007 NT$10 Unit: Shares Shares Category Common shares Issued shares 2,405...

  • Page 30
    ...For Latest Two Years 4.1.5 Market Price Share, Net Value, Earning& Dividend For Latest Two Years Period Item Highest Market Price Per Share Lowest Average Net Value Per Share Before Distribution After Distribution Weighted Average Share Numbers Earning Per Share Earning Per Share Current Adjusted 82...

  • Page 31
    ...to the listed shareholders with their respective holdings at the ratio of 15 shares for every one thousand shares held. ..7 Analysis on Impact of Proposed Stock Dividends Appropriation in Terms of Operating Results, Earnings Per Share and Rate of Return of Shareholders' Investment: Year Estimates...

  • Page 32
    ...(1) The Dividend Distribution: 1. Cash Bonuses to Employees 2. Stock Bonuses to Employees (1) Number of Shares (2) Value (3) Circulation Rate of Shares in Stock Market on Ex-right Day 3. Remunerations to Directors, Supervisors (2) Earning Per Share (EPS): Original EPS Reset EPS Dividend Distribution...

  • Page 33
    ... Corporate Bonds: Not applicable. 4.3 Special Shares: Not applicable. 4.4 Global Depository Receipts (GDRs) Issuance Date: March 31, 2008 Date of issuance November 1, 1995 Description Date of issuance Location of issuance and transaction Total amount of issuance Unit price of issuance Total number...

  • Page 34
    Acer's Winning Formula 

  • Page 35
    ... acquisitions of Gateway and Packard Bell, the Company is positioned amid a new level of increased competition in the PC arena. Central to the Company's business strategy is the Channel Business Model that draws on the strengths of our world-class partners to form mutually winning collaborations...

  • Page 36
    ... PC Desktop Notebook Server Monitor AP Countries Australia Form Factor PC Desktop Notebook Server Monitor Denmark PC Desktop Notebook Rank 3 3 3 5 2 5 Thailand PC Desktop Notebook Server Monitor projector Czech PC Desktop Notebook Projector Saudi Arabia South Africa Projector China PC...

  • Page 37
    ... technology innovations; the resulting business success has reinforced Acer's position in the global PC market. For example, the Aspire Gemstone Blue design notebook brings to fruition the goal to develop a high-definition mobile PC, equipped with industry-leading features-Blu-Ray Discâ„¢ drive and...

  • Page 38
    ..., wireless communication, without sacrificing on essential PC features. We also see demand for intensive gaming machines, home theaters and multimedia content sharing via a media gateway. Acer saw the opportunity to own high-value brands through the acquisitions of Gateway and Packard Bell, which...

  • Page 39
    ... from 10.7% in 2007, to 19.3% in 2011; although Symbian's operating system will still dominate the market through to Additionally, Acer is targeting key emerging markets that are generating rapid PC growth momentum. These markets include Asia Pacific, 2011 by more than 50% share. 5.4 The Four...

  • Page 40
    ... that can create a US$20 billion multibranded PC company, and ship in excess of 25 million PC units per year. - Following the acquisitions of Gateway and Packard Bell, Acer has defined a clear path for its multi-brand strategy. From identifying the consumer segmentation to positioning the brand by...

  • Page 41
    ... Positioning BRAND POSITIONING VALUE "Simplify my life - Feel in Control" Performance Time to market seamless technology "Social recognition" Cutting edge design END USER VALUE Trusted value offering Cutting edge IDs, premium appeal Acer Group Brands By Region • • Competitive Products...

  • Page 42
    ... balance of compact size and performance Jan • 2006 : Acer is first-to-market with full line of Intel® Centrino® Duo mobile technology notebooks Appendix . Key Buyers and Suppliers Accounting Over 0% of Total Net Sales and Purchase: (1) Key Buyers for Acer Inc. (Parent Company) Item 1 2 Year...

  • Page 43
    ... Acer's Workforce (excludes 787 employees from Gateway): -By Manpower, Age and Years of Service Category Manpower Average Age Average Years of Employment -By Job Function Job Function General Management Sales & Product Marketing Customer Service Research & Development Sales Support Administrations...

  • Page 44
    ... to each country's labor laws and customs, and aims to provide a comfortable working environment along with competitive fringe benefits to enhance employee's performances. Taking Taiwan for example, in addition to the fixed monthly salary and festival bonuses, Acer offers incentives that reward new...

  • Page 45
    ...to maintaining a harmonious relation between managers and their team members. In the y past two years, Acer has not suffered any financial loss from employee conflict. Taking Taiwan for example, Acer offers multiple channels for interaction in order to improve two- 5.6 Important Contracts Nature of...

  • Page 46
    Corporate Social Responsibility 

  • Page 47
    ... non-financial information, Acer established environmental communication channels in 2005, which include an email ([email protected]), environmental homepage, and corporate environmental reports. These channels enable the company to disclose information on its environmental management and performance...

  • Page 48
    ... and Health Management .. ISO Management System Acer makes use of ISO standards as tools to improve internal procedures. The ISO 9001 Quality Management System ensures and enhances quality of goods and services, while ISO 14001 works to evaluate potential environmental impacts of products. The...

  • Page 49
    ... and Health, Employee Care and Benefits, Educational Training and Diversity and Equity. For the details, please refer to Acer's website: www.acer.com demands for quality. The quality policy of Acer is to "deliver zero-defect, competitive products and services on time." Acer works early on in the...

  • Page 50
    ...around Acer's core business and involve setting up Internet service, computer repair, software design, and providing assistance Acer upholds the concept that "embracing technology allows us to widen our horizons." Acer Foundation believes the key to working together toward an international alliance...

  • Page 51
    ... and installing computer classrooms for the local aboriginal children there, setting up free computer maintenance clinics at annual community gatherings, promoting child sponsorship programs, donating resources to related charitable organizations (such as the Hualien Society for Early Intervention...

  • Page 52
    F inancial Standing 9

  • Page 53
    ... Five-Year Balance Sheet As of March 31, 2008 Unit: NT$ Thousand Period Item Current assets Fund and Long-term Equity Investments Net Property, Plant and Equipment Intangible Assets Other Assets Total Assets Before Distribution 2003 Five-Year Financial Information 2004 2005 2006 2007 Current year...

  • Page 54
    ... Income and Gain Non-operating Expense and Loss Income Before Income Taxes Income (Loss) from Discontinued Segment Extraordinary Items Cumulative Effect of Changes in Accounting Principle Income After Income Taxes Earning Per Share 2003 2004 2005 2006 2007 Current year as of Mar 31, 2008 157,655...

  • Page 55
    ...Cash Flow Cash Flow Adequacy Ratio (%) Cash Reinvestment Ratio Leverage Operating Leverage Financial Leverage 2003 NT$ 45.00 522.03 156.62 130.72 15 6.58 55 16.82 22 6.77 11.18 1.34 6.85 11.06 8.91 40.73 4.64 2.93 16.54 15.69 4.63 8.00 1.5 Five-Year Financial Information Current year as of Mar. 2004...

  • Page 56
    ... (2) Return on equity＝PAT／the average of net equity (3) Net income ratio＝PAT／Net sales (4) EPS ＝（PAT－Dividend from prefer stock） ／weighted average outstanding shares . Ability to Pay off Debt (1) Current ratio＝Current Assets／Current liability (2) Quick ratio＝（Current...

  • Page 57
    ... The Board of Directors of the Company has prepared the 2007 financial report, including balance sheet, statement of income, statements of changes in stockholders' equity, and statement of cash flows. Sonia Chang and Winston Yu at KPMG have been retained by the Board of Directors of the Company to...

  • Page 58
    7.4 Financial Statements Consolidated With Subsidiaries Audited by CPAs of the Recent Year Independent Auditors' Report The Board of Directors Acer Incorporated: We have audited the consolidated balance sheets of Acer Incorporated (the "Company") and subsidiaries as of December 31, 2006 and 2007, ...

  • Page 59
    ... as of and for the year ended December 31, 2007, have been translated into United States dollars solely for the convenience of the readers. We have audited the translation, and in our opinion, the consolidated financial statements expressed in New Taiwan dollars have been translated into United...

  • Page 60
    ACER INCORPORATED AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2006 and 2007 (Expressed in thousands of New Taiwan dollars and US dollars) Assets 2006 NT$ 2007 NT$ US$ Current assets: Cash and cash equivalents (note 4(l)) Notes and accounts receivable, net of allowance for doubtful ...

  • Page 61
    ACER INCORPORATED AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2006 and 2007 (Expressed in thousands of New Taiwan dollars and US dollars) Liabilities and Stockholders' Equity Current liabilities: Short-term borrowings (notes 4(14) and 6) Current installments of long-term debt (notes ...

  • Page 62
    ACER INCORPORATED AND SUBSIDIARIES Consolidated Statements of Income Years ended December 31, 2006 and 2007 (Expressed in thousands of New Taiwan dollars and US dollars, except for per share data) 2006 NT$ Revenues (note 5) Cost of revenues (note 5) Gross profit Operating expenses (notes 5 and 10):...

  • Page 63
    ... of New Taiwan dollars and US dollars) Retained earnings Common stock NT$ 22,545,187 Capital surplus NT$ 30,552,133 Legal reserve NT$ 5,621,115 Special reserve NT$ 2,017,819 Unappropriated earnings NT$ 8,484,278 - Balance at January 1, 2006 Effect of adoption of Statement of Financial Accounting...

  • Page 64
    ... loss on long-term equity investments NT$ (454) Minimum pension liability adjustment NT$ Unrealized gain on available-for-sale financial assets NT$ 4,503,791 Total stockholders' equity NT$ 67,249,451 4,503,791 Unappropriated earnings NT$ 8,484,278 - Hedging reserve NT$ 66,062 - Treasury stock...

  • Page 65
    ...-sale financial assetsЁcurrent, net Proceeds from disposal of long-term investments Proceeds from disposal of discontinued operations Purchase of long-term investments Proceeds from long-term investments returned Proceeds from disposal of businesses and operations Proceeds from disposal of property...

  • Page 66
    ... of New Taiwan dollars and US dollars, except for earnings per share information and unless otherwise noted) 1. Reporting Entities of the Consolidated Financial Statements and Their Business Scopes Acer Sertek Inc. (the "Company") was incorporated on August 1, 1976, as a company limited by shares...

  • Page 67
    ... y Acer Africa (Proprietary) Limited ("AAF", AEH South Africa) (4) Boardwalk Capital Holding Limited The Company ("Boardwalk", British Virgin Islands) and its subsidiaries y Acer America Corporation ("AAC", U.S.A.) Boardwalk y Acer Service Corporation ("ASC", U.S.A.) Boardwalk y Acer Computer Mexico...

  • Page 68
    ... International, Incorporated The Company ("AHI", British Virgin Islands) and its subsidiaries y Acer Computer Co., Ltd. ("ATH", Thailand) AHI y Acer Japan Corp. ("AJC", Japan) AHI y Acer Computer Australia Pty. Limited AHI ("ACA", Australia) y Acer Sales and Service Sdn. Bhd. ("ASSB", AHI Malaysia...

  • Page 69
    ... Computer System Co., Ltd. ("DCS", The Company Taiwan) (4) Weblink (H.K.) International Ltd. ("WHI", WII Hong Kong) (5) Weblink Shanghai International Limited WII ("WSHI", China) (6) Sertek Limited ("STKL, Hong Kong) SNX (7) Sertek (Shanghai) Limited ("STKS", China) SNX (8) Servex (Malaysia) Sdn Bhd...

  • Page 70
    ...", Taiwan) (11) Acer Digital Services (B.V.I.) Holding Corp. ("ADSBH", British Virgin Islands) (12) Acer Digital Services (Cayman Islands) Corp. ("ADSCC", Cayman Islands) (13) Nicholas Insurance Company Ltd.("NIC", Bermuda) (e) Property development: The Company The Company The Company The Company...

  • Page 71
    ...Cyber Center Services Ltd. ("ACCSI", Taiwan) (4) Lottery Technology Service Corp. ("LTS", Taiwan) (5) Minly Corp. ("MINLY", Taiwan) (6) Taiwan ETC Service Corporation ("TESC", Taiwan) ADSCC AGES The Company The Company The Company The Company (g) Software research, development, design, trading and...

  • Page 72
    ... recorded at the exchange rates prevailing at the transaction date. At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are translated into New Taiwan dollars using The consolidated financial statements include the accounts of the Company and subsidiaries in...

  • Page 73
    ..., aging and quality analysis of notes and accounts receivable. ( g ) I nventories; land held f or sale and development Inventories are stated at the lower of cost or market value. Costs of inventory are determined using the weighted-average method. For channel business, costs of inventory...

  • Page 74
    ... for hedge accounting. (3) Available-for-sale financial assets Available-for-sale financial assets are measured at fair value, and any changes are recognized directly in equity. The fair value of publicly traded stocks is the closing price at the balance sheet date. The fair value of open-end mutual...

  • Page 75
    ... their book value or fair value less costs to sell. Noncurrent assets or disposal groups classified as held for sale are not depreciated, amortized or depleted. Total assets and total liabilities are each shown separately and excluded from the individual line items of the consolidated balance sheets...

  • Page 76
    ...term investment, the difference is charged as a reduction to retained earnings. Unrealized gains and losses resulting from t r a nsact ions bet ween t he Consolid a t ed Companies and investees accounted for under Land held for the purpose of development and future sale are recorded under "property...

  • Page 77
    ...the lower of cost or market value. The market value of land is determined by independent appraisers. 1. Patents: 10~16 years 2. Purchased software: 3~7 years 3. Customer relationships: 10 years 4. Trademarks and trade names: 20 years Property leased to others and property not in use are classified...

  • Page 78
    ... that hold the treasury stock are accounted for as capital surplus－treasury stock. (r) Revenue recognition Revenue from sales of products is recognized at the time products are delivered and the significant risks and rewards of ownership are transferred to customers. Revenue generated from service...

  • Page 79
    ... commenced working after July 1, 2005, are subject to a defined contribution plan under the New System. For the defined contribution plan, the Company and its domestic subsidiaries contribute monthly an amount equal to 6% of each employee's monthly salary to an individual labor pension fund account...

  • Page 80
    ...translation into U.S. dollars The consolidated financial statements are stated in New Taiwan dollars. Translation of the 2007 New Taiwan dollar amounts into U.S. dollar amounts, using the spot rate on December 31, 2007, of NT$32.435 to US$1, is included solely for the convenience of the readers. The...

  • Page 81
    ...at fair value and reclassified; therefore, an unrealized gain of NT$4,503,791 on available-for-sale financial assets was recognized in stockholders' equity as of January 1, 2006, and there was no impact on net income and earnings per common share in 2006. 4. Significant Account Disclosures (1) Cash...

  • Page 82
    ... (3) Available-for-sale financial assetsЁcurrent December 31, 2006 NT$ Publicly traded equity securities Mutual funds Others December 31, 2007 NT$ US$ 5,301,377 662,096 20,413 8,504,383 2,112,196 65,121 77,769 2,398 13,805,760 2,852,061 87,932 Ё In 2006 and 2007, the Consolidated Companies...

  • Page 83
    ... date 01/31/2007~02/28/2007 December 31, 2007 Notional amount Fair value (in thousands) (in thousands) GBP CALL/EUR PUT EUR 3,835 NT$ (593) Maturity date 02/27/2008 (b) Foreign currency forward contracts: December 31, 2006 Notional amount (in thousands) Financial assets: Buy Sell USD / JPY USD...

  • Page 84
    ... for under the following accounts: December 31, 2006 December 31, 2007 NT$ NT$ US$ Financial assets at fair value through profit or lossЁcurrent: Foreign currency forward contracts Foreign currency options Financial liabilities at fair value through profit or lossЁcurrent: Foreign currency forward...

  • Page 85
    ...15 2007/03/30 2007/04/17 2007/03/16 December 31, 2007 Hedging instruments Fair value of hedging Notional amount instruments (in thousands) Hedged item Settlement date Accounts receivable/ Foreign currency payable denominated forward contracts: in foreign currencies -financial assets Buy Sell EUR...

  • Page 86
    ... in earnings Hedged item Hedging instruments Accounts receivable/ Foreign currency payable denominated forward contracts: in foreign currencies -financial assets Buy Sell USD / EUR -financial liabilities Buy Sell USD / NZD USD / EUR EUR 205,225 NT$ 52,868 2007/03~05 2007/03~05 USD 800 EUR...

  • Page 87
    ...balance sheets. (8) Financial assets carried at costЁnoncurrent December 31, 2006 NT$ Privately held stock: National Securities Corp. Prosperity Venture Capital Corp. Sheng-Hua Venture Capital Corp. Legend Technology Taiwan Fixed Network Co., Ltd. ("TFNC") W.I. Harper International Corp. Megic Corp...

  • Page 88
    ... of NT$545,868 for the year ended December 31, 2006, was recorded as "other investment losses" in the accompanying consolidated statements of income. (9) Equity-method investments December 31, 2006 Percentage of ownership Book value % NT$ Wistron Corporation Qisda Corporation (formerly known as BenQ...

  • Page 89
    ... is investees' equity accounts or disposal of equity-method investments. (10) Available-for-sale financial assetsЁnoncurrent December 31, 2006 NT$ Qisda Corporation (formerly known as BenQ) Silicon Storage Technology Inc. Yosun Industrial Corp. International Semiconductor Technology Ltd. (IST...

  • Page 90
    ... 2007. The price included cash consideration and stock consideration amounting to 27,000,000 shares of Yosun Industrial Corp. In 2006, the Consolidated Companies sold portions of their investments in RDC and other investees, and an aggregate gain of NT$98,124 was recognized from these sales. In 2007...

  • Page 91
    ... Gateway, Inc., a personal computer company in the U.S., through its indirectly wholly owned subsidiary AAH at a price of US$1.90 (dollars) per share. The total purchase price amounted to US$711,420 thousand. The acquisition was accounted for in accordance with ROC SFAS No. 25 "Business Combinations...

  • Page 92
    ... loan agreement, the Company is required to maintain certain financial ratios based on annual and semi-annual audited financial statements. If the Company fails to meet any of the financial ratios, the managing bank will request in writing that the Company take action to improve within 30 days. No...

  • Page 93
    ... consolidated balance sheets. The components of the net periodic pension cost for 2006 and 2007 were as follows: 2006 2007 NT$ NT$ US$ Service cost 34,779 32,894 Interest cost 30,799 20,671 Actual return on plan assets (11,650) (12,147) Amortization and deferral 1,173 17,133 Curtailment loss 102...

  • Page 94
    ... follows: 2006 2007 NT$ NT$ US$ Expected income tax expense 3,387,077 Effect of different tax rates applied to the Company's subsidiaries 1,631,667 Tax-exempt investment income from (865,980) domestic investees Prior year adjustments (98,688) Gain on disposal of marketable securities not subject to...

  • Page 95
    ... Companies were granted investment tax credits for investment in certain high-tech industries, for the purchase of automatic machinery and equipment, for research and development expenditures, and for employee training expenditures. These credits may be applied over a period of five years...

  • Page 96
    ... amount of investment tax credits. (18) Stockholders' equity (a) Common stock As of December 31, 2006 and 2007, the Company's authorized common stock consisted of 2,800,000,000 shares, of which shares 2,337,063,681 and 2,405,490,426 shares, respectively, were issued and outstanding. The par value of...

  • Page 97
    ... employees' stock option plan) owned by AWI and the common stock owned by the Company's subsidiaries CCI and TWP were as follows (expressed in thousands of shares and New Taiwan dollars): December 31, 2006 December 31, 2007 Number of Book Market Number of Book Market Shares Value Price Shares Value...

  • Page 98
    ... differ from the resolutions approved by the Company's directors. Assuming the above employee bonus and directors' and supervisors' remuneration are paid in cash and expensed in the year when the earnings are recognized, the earnings per share, not computed retroactively, for 2005 and 2006 would be...

  • Page 99
    ... of 2007 earnings has not been proposed by the board of directors and is still subject to approval at the stockholders' meeting. After the resolutions, related information can be obtained from the public information website. (19) Net income from discontinued operations On July 1, 2007, the Company...

  • Page 100
    ... the fair value of each class of financial instruments: (i) Available-for-sale financial assets－current and noncurrent Publicly quoted market prices are used as fair value. (ii) Financial assets carried at cost Financial assets carried at cost were privately held stock. The fair value of privately...

  • Page 101
    ... financial risks (i) Market risk Mutual funds and publicly traded stocks were recorded by the Consolidated Companies as "available-for-sale financial assets" and were evaluated by fair value. Therefore, the Consolidated Companies were exposed to the risk of price fluctuation in the securities market...

  • Page 102
    ... exposure to liquidity risk. The available-for-sale financial assets held by the Consolidated Companies are equity securities and mutual funds, which are publicly traded and can be liquidated quickly at a price close to the fair market value. In contrast, the financial assets carried at cost are not...

  • Page 103
    ...(refer to the above statement on Qisda) Its chairman is one of the Company's supervisors (a) Significant transactions with related parties as of and for the years ended December 31, 2006 and 2007, are summarized below: (1) Net sales, and related notes and accounts receivable 1. Net Netsales salesto...

  • Page 104
    ... and accounts payable to: December 31, 2006 December 31, 2007 NT$ NT$ US$ Wistron Others 787,654 36,634 824,288 4,510,376 73,239 4,583,615 139,059 2,258 141,317 (3) Spin-off of assets On February 28, 2002, AI spun off its design, manufacturing and services business from its Acer-brand business and...

  • Page 105
    ... The license period is 5 years. The agreement mainly states that both parties have the right to make use of either party's global technological patents to manufacture and sell personal computer products. The Company agrees to make fixed payments periodically to IBM, and the Company will not have any...

  • Page 106
    (b) In March, 2007, Hewlett-Packard Development Company (HP) filed a complaint against the Company and the U.S. subsidiary, Acer America Corporation (AAC), in the United States District Court for the Eastern District of Texas and the U.S. International Trade Commission over alleged patent ...

  • Page 107
    ... Packard Bell B.V. (b) Acquisition of Packard Bell B.V. The Company planned to acquire European PC Company Packard Bell B.V. by cash payment through Gateway, Inc. and the Company's subsidiary Acer Europe B.V. As of December 31, 2007, the escrow account deposited for the purpose of the Packard Bell...

  • Page 108
    ... Property, plant and equipment Other assets Accounts payable Accrued expenses and other current liabilities 85,562 21,767 4,271 11,818 2,935 (818) (88,417) 37,118 11. Segment Information (a) Industry segment The main business of the Consolidated Companies is to sell "Acer" brand-name desktop PCs...

  • Page 109
    ...32,112 59,128 11,239 140,593 10,879 185,338 - (c) Export sales Export sales of the Company and its domestic subsidiaries for the years ended December 31, 2006 and 2007, were as follows: 2006 2007 Sales to: NT$ NT$ US$ North America Europe Other 297,386 9,541 2,456,462 2,763,389 1,102,022 970,968...

  • Page 110
    7.5 Disclosure of the Impact on Company's Financial Status Due to Financial Difficulties Not applicable. 7.6 Financial Prediction and Achievements 7.6.1 Financial Forecast of Year 2007 : Not applicable. 07

  • Page 111
    ...Risk Management Description Item ! Amount (Note)! Business Type! Acer Digital Service Co. 2,017,456 Investment and holding company Acer European Holdings N.V. 23,822,007 Sales and service of "Acer" brand-name IT products Acer Holdings International, Inc. 5,647,088 Sales and service of "Acer...

  • Page 112
    8.1 Annual Investment Policy: Reasons of Gain or Loss and Improvement Plan Year 2007 P&L! Main Reason of Gain or Loss! Investment The Plan for Plan for Next Improvement Year ! 673,975 Recognized disposal gain for land 6,230,682 Stable growth in Europe ! 1,245,183 Stable growth in Asia Pacific...

  • Page 113
    ... a cost increase, Acer shall act accordingly to avoid loss. .. How Corpor ate Image Change Affects the Company's Risk Management Mechanism The Company had split off its manufacturing division at the end of year 2000 in order to focus on the design and marketing of IT products and services. The...

  • Page 114
    ... actions. (2)During March-April 2007, HewlettPackard Development Company (HP) filed patent infringement lawsuits against Acer Inc. and its U.S. .. Impac t and Po t ential Risk s t o Company Management Team Change Not applicable. subsidiary, Acer America Corporation, which is pending before the...

  • Page 115
    ... adverse eff ect toward Acer's business operations. .2. In year 2007 and as of the date of printing of this annual report, any Acer director, supervisor, the general m a n a g e r, a n y p e r s o n w i t h a c t u a l responsibility for the firm, any major shareholder holding a stake of greater...

  • Page 116
    ... R.O.C. Warehouse Management Center) 3. Address and Contact Details of Acer Shareholders' Services Address: 7F, No.137, Sec.2, Chien Kuo N. Road, Taipei, Taiwan, R.O.C. Tel: +886-2-2509-2368 e-mail: [email protected] 4. Address and Contact Details of Auditing CPAs in the Most Recent Year Name...

  • Page 117