Acer 2009 Annual Report Download

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Table of contents

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    ... This is a translation of the 2009 Annual Report of Acer Incorporated (the "Company"). The translation is intended for reference only and nothing else, the Company hereby disclaims any and all liabilities whatsoever for the translation. The Chinese text of the Annual Report shall govern any and all...

  • Page 3
    Acer Incorporated 2009 Annual Report INDEX 1. Business Report ...3 1.1 Acer's Core Values ...6 1.2 2009 Operating Report ...8 1.3 2010 Business Plan ...9 2. Company In General ...11 2.1 Brief Account of the Company ...12 3. 3.1 3.2 3.3 4. 4.1 4.2 4.3 4.4 4.5 4.6 5. 5.1 5.2 5.3 5.4 6. 6.1 6.2 6.3 7....

  • Page 4
    2. Acer Incorporated 2009 Annual Report 3. Acer Incorporated 2009 Annual Report 1. Business Report

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    ... world's No. 1 mobile PC company! The key to reaching this goal is our multi-brand strategy that pursues different customer segments globally with differentiated product designs from the four brands. At the same time, an effective and lean business model enables us to minimize operating costs as we...

  • Page 6
    ... Incorporated 2009 Annual Report 1.1 Acer's Core Values Core Value Value-creating Rational Meaning ． Generating profit for shareholders ． Growing the business by achieving the challenging financial and strategic objectives ． Leveraging our key assets: Brands, People, Customers and Channel...

  • Page 7
    ... mobile solution offering. E. Continue to minimize operating expenses. 1.3.2 Goals A. B. C. D. Expand worldwide mobile PC presence. Expand global market share. Increase operating margin. Seize opportunities arising from new mobile communication devices and emerging markets. 1.3.3 Partner Strategy...

  • Page 8
    10. Acer Incorporated 2009 Annual Report 11. Acer Incorporated 2009 Annual Report 2. Company In General

  • Page 9
    .... Acer Incorporated 2009 Annual Report 2.1 Brief Account of the Company 2.1.1 Founded: August 1, 1976 1976 - 1986 • Commercialized microprocessor technology 1987 - 2000 • Created the Acer brand name and went global 2001 - 2007 • Transformed from manufacturing to a marketing and sales company...

  • Page 10
    14. Acer Incorporated 2009 Annual Report 15. Acer Incorporated 2009 Annual Report 3. Corporate Governance Principles

  • Page 11
    ...applications, software systems development, systems integration, system operation services, value-added business solutions, and Internet data center services 3C Channel Business ． Channel distribution of 3C products in Taiwan Corporate Governance Principles 17. Acer Incorporated 2009 Annual Report...

  • Page 12
    ...Incorporated 2009 Annual Report 3.2 Information Regarding Board of Directors, Supervisors and Key Managers (1) Board of Directors and Supervisors (April 20, 2010) Shares Held by Spouse & Minors Number Percentage • Chairman of Hitrust.com Inc. • Others (Note) • Director of Dragon Investment Co...

  • Page 13
    ... of Acer Digital Service Co., • Director of Cross Century Investment Limited • Director of Acer Worldwide Inc. Name Relationship - Title Name Date of Accession 01/01/2005 09/29/2007 01/01/2009 11/01/2001 09/29/2007 11/01/2001 04/01/2009 05/01/2008 11/01/2001 Shares Held Directly Number...

  • Page 14
    ... main duties of the Financial Statement and Internal Control Review Committee The Company has established the appropriate communication channels with suppliers, buyers, banks, investors and other stakeholders. No discrepancy. No discrepancy No discrepancy 23. Acer Incorporated 2009 Annual Report...

  • Page 15
    ... Competent Authorities Numbers Name of Licenses Internal Auditor Certified Public Accountants (CPA) Certified Internal Auditor (CIA) BS7799/ISO 27001 Lead Auditor Certificated Business Valuator 0 1 1 0 Financial Officer 1 3 0 1 Chairman of the Board of Directors CEO of Acer Inc. & Corp. President

  • Page 16
    ... of Acer Inc. Acer's Statement of Internal Control System for 2008 To Decide the Effective Date of New Issued Shares for the Execution of E-ten Employee Stock Option VIII. To Remove Mr. T.Y. Lay from Acer Management Team IX. To Appoint Mr. Oliver Ahrens as the President of Acer China Operations, and...

  • Page 17
    28. Acer Incorporated 2009 Annual Report 29. Acer Incorporated 2009 Annual Report 4. Capital and Shares

  • Page 18
    ... 2009 Annual Report 4.1 Sources of Capital 4.1.1 Sources of Capital (April 20, 2010) Unit: Share/NT$ Thousand Date April, 2010 Price of Issuance Share/NT$10 Authorized Common stock Shares 3,500,000,000 Value 35,000,000 Paid-in Common stock Shares 2,689,301,462 Value 26,893,015 Notes - 4.1.4 List...

  • Page 19
    ...' Bonuses and Remunerations to Directors, Supervisors 1. Where this Company has earnings at the end of the business operational year, after paying all relevant taxes, making up losses of previous year, setting aside a legal reserve of ten percent (10%) and a special reserve as required by laws...

  • Page 20
    ... term. Any key issue for the depository and custodian agreements Highest 2009 Market Price Per Share Lowest Average Highest Until Mar. 31th, 2010 Lowest Average None 4.6 Issuance of New Shares Due to Company's Mergers and Acquisitions: Capital and Shares 35. Acer Incorporated 2009 Annual Report...

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    36. Acer Incorporated 2009 Annual Report 37. Acer Incorporated 2009 Annual Report 5. Acer's Winning Formula

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    38. Acer Incorporated 2009 Annual Report 5.1 Acer's Winning Formula Acer dedicates its resources toward research and development, marketing, sales and after-services of IT and communications devices. Today, our product offering includes notebooks, desktop PCs, LCD monitors, projectors, servers and ...

  • Page 23
    ... restrictions on use of the confidential information during the employment period and employment termination. -By Job Function Date December 2008 Job Function General Management Sales & Product Marketing Customer Service Research & Development Sales Support Administration Total 157 1,857 2,710 510...

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    ... People in specialized functions advance their core profession by attending the core professionrelated training programs, for example, branding and marketing management, product management, research and development, supply chain management, sales management, and quality/service training. ． General...

  • Page 25
    44. Acer Incorporated 2009 Annual Report 6. Corporate Social Responsibility 45. Acer Incorporated 2009 Annual Report

  • Page 26
    ...-of-a-kind Channel Business Model. At present, Acer has a full grasp of branding, marketing, technology, and products, as well as a comprehensive control of our global operations and service capabilities to meet the demands of our customers. We are keen to share our profits with our partners and to...

  • Page 27
    ... departments and backgrounds, Acer volunteers bring new life experiences and personal growth through their activities. In the initial stage, volunteer activities mainly revolved around Acer's core business and involved setting up Internet service, computer repair, software design, and providing...

  • Page 28
    50. Acer Incorporated 2009 Annual Report 7. Financial Standing 51. Acer Incorporated 2009 Annual Report

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    52. Acer Incorporated 2009 Annual Report 7.1 Five-Year Consolidated Financial Information 7.1.1 Five-Year Balance Sheet As of March 31, 2010 Unit: NT$ Thousand Unit: NT$ Thousand 7.1.2 Five-Year Consolidated Income Statement Period Item Current Assets Fund and Long-term Equity Investments Net ...

  • Page 30
    ...term investment + other assets + working capital) 6. Leverage (1) Operating leverage = (Net revenue âˆ' variable cost of goods sold and operating expense) / operating income (2) Financial leverage = Operating income / (Operating income âˆ' interest expenses) 55. Acer Incorporated 2009 Annual Report...

  • Page 31
    56. Acer Incorporated 2009 Annual Report 7.3 Supervisors' Review Report 7.4 Financial Statements Consolidated Subsidiaries Audited by CPAs of the Past Year To: The 2010 General Shareholders' Meeting The Board of Directors of the Company has prepared the 2009 financial report, including balance ...

  • Page 32
    ... accounted for using equity method (note 4(9)) Available-for-sale financial assets â€' noncurrent (notes 4(10) and 4(24)) Financial assets carried at cost (notes 4(8) and 4(24)) Total long-term investments Property, plant and equipment (notes 4(11) and 6): Land Buildings and improvements Computer...

  • Page 33
    ...Consolidated Statements of Income Years ended December 31, 2008 and 2009 (Expressed in thousands of New Taiwan dollars and US dollars, except for per share data) Liabilities and Stockholders' Equity 2008 NT$ 2009 NT$ US$ Revenues (note 5) Cost of revenues (notes 4(7) and 5) Gross profit Operating...

  • Page 34
    62. Acer Incorporated 2009 Annual Report ACER INCORPORATED AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity Years ended December 31, 2008 and 2009 (Expressed in thousands of New Taiwan dollars and US dollars) Retained earnings Common Stock NT$ Balance at January 1, 2008 ...

  • Page 35
    ... Acer Incorporated 2009 Annual Report ACER INCORPORATED AND SUBSIDIARIES ACER INCORPORATED AND SUBSIDIARIES Consolidated Statements of Cash Flows Years ended December 31, 2008 and 2009 (Expressed in thousands of New Taiwan dollars and US dollars) Consolidated Statements of Cash Flows Years ended...

  • Page 36
    ... Report ACER INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements As of and for the years ended December 31, 2008 and 2009 (amounts expressed in thousands of New Taiwan dollars and US dollars, except for earnings per share information and unless otherwise noted) ．Acer Computer...

  • Page 37
    ...Aurion", Mexico) ．Gateway, Inc. ("GWI", U.S.A.) ．Acer America Corporation. ("AAC", U.S.A.) ．Acer Service Corporation ("ASC", U.S.A.) ．Gateway US Retail, Inc. ("GRA", U.S.A.) ．Gateway Diect, Inc. ("GDA", U.S.A.) ．Gateway Manufacturing LLC ("GMA", U.S.A.) ．Gateway International Holdings...

  • Page 38
    70. Acer Incorporated 2009 Annual Report (4) Research, design, and sale of smart handheld products: Percentage of Ownership At December 31, Investor (a) E-ten Information System Co., Ltd. ("ETEN", Taiwan) (b) Eten China Information System Co., Ltd. ("CETEN", China) (c) AGP Technology AG ("AGP", ...

  • Page 39
    ...for the Acer brand information technology business group were stated at the lower of weighted-average cost or market value. Market value represents net realizable value. Any write-down was made based on the aggregate amount of inventories. (8) Financial instruments The Consolidated Companies adopted...

  • Page 40
    ... the SFAS No. 25 "Accounting for Business Combinations", goodwill is no longer amortized but is tested for impairment annually. Other intangible assets, including patents, trademarks and trade names, customer relationships, developed technology and purchased software, are initially stated at cost...

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    ... model, taking into account management's best estimate of the exercise price, expected term, underlying share price, expected volatility, expected dividends, risk-free interest rate, and any other inputs to the model. (21) Administrative expenses The Company's administrative expenses include direct...

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    78. Acer Incorporated 2009 Annual Report during the year. The Company's employee stock options and employee stock bonuses to be issued after January 1, 2010 are potential common stock. In computing diluted EPS, net income and the weighted-average number of common shares outstanding during the year ...

  • Page 43
    ... at fair value through profit or loss consisted of the following: (b) Foreign exchange swaps December 31, 2008 Contract amount (in thousands) Maturity date Swap-in USD / Swap-out NTD USD 160,000 / NTD 5,243,200 2009/01/15 81. Acer Incorporated 2009 Annual Report 2010/01/15 Financial Standing

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    ... The Consolidated Companies entered into derivative contracts to hedge foreign currency exchange risk associated with a recognized asset or liability or with a highly probable forecast transaction. 83. Acer Incorporated 2009 Annual Report Hedging purpose derivative financial assets - current...

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    ... 85. Acer Incorporated 2009 Annual Report (a) Inventories (net of provision for obsolescence and slow-moving inventories) as of December 31, 2008 and 2009, were as follows: December 31, 2008 NT$ NT$ December 31, 2009 US$ Raw materials Work in process Finished goods and merchandise Spare parts...

  • Page 46
    ... 2009 Annual Report (b) The details of inventories write downs for the years ended December 31, 2008 and 2009 were as follows: December 31, 2008 NT$ NT$ December 31, 2009 US$ For the year ended December 31, 2009, the Consolidated Companies recognized impairment losses on the investments in New...

  • Page 47
    ... from business combination Disposals Reclassification Effect of exchange rate changes 89. Acer Incorporated 2009 Annual Report (13) Intangible assets Financial Standing Damaged office premises are office premises damaged by fire. As of December 31, 2008 the Consolidated Companies concluded...

  • Page 48
    ... of Gateway, Inc., a personal computer company in the U.S., through its indirectly wholly owned subsidiary Acer American Holding, at a price of US$1.90 (dollars) per share. The total purchase price amounted to US$711,420, which was inclusive of direct transaction costs. The acquisition was accounted...

  • Page 49
    ... on historical operating performance, future financial budgets approved by management covering a 5-year period. (ii) Discounted rates used to determine the value in use by each CGUs were as follows: Acer Pan-America business group Packard Bell brand business group E-Ten Information System group The...

  • Page 50
    ...under which, the loan is repayable in 4 semi-annual installments starting from April 2011. One-time repayment in full in October 2010. NT$ 12,200,000 December 31, 2009 NT$ 12,200,000 Revolving tranche of NT$3.3 billion; three-year limit 24,101 554 24,655 Less: current installment - - Refundable...

  • Page 51
    ... as follows: 2008 NT$ NT$ 2009 US$ Expected income tax Effect of different tax rates applied to the Company's subsidiaries Tax-exempt investment income from domestic investees 1,612 841 (190) 225 1,640 4,128 Prior-year adjustments Gain on disposal of marketable securities not subject to income tax...

  • Page 52
    ...,938 11,438,696 13,867,681 26 25,159 32,543 18,106 357,125 432,959 99. Acer Incorporated 2009 Annual Report (e) The tax effects of net operating loss carryforwards available to the Consolidated Companies as of December 31, 2009, were as follows: Financial Standing December 31, 2008 December 31...

  • Page 53
    ... the common stock held by the Company's subsidiaries namely CCI and E-Ten were as follows (expressed in thousands of shares and New Taiwan dollars): December 31, 2008 Number of Shares Book Value NT$ Market Price NT$ Number of Shares December 31, 2009 Book Value NT$ Market Price NT$ Unappropriated...

  • Page 54
    ... After the resolutions, related information can be obtained from the public information website. 103. Acer Incorporated 2009 Annual Report Financial Standing The 2008 employee bonus in stock of 16,234 thousand common shares was determined by the closing price of the Company's common shares (after...

  • Page 55
    ... (890) (3,083) 5,120 1,541 41.90 - Exercise price (NT$) Expected remaining contractual life (in years) Fair market value for underlying securities - Acer shares (NT$) Fair value of options granted (NT$) Expected volatility Expected dividend yield Risk-free interest rate 25.28 3 45.95 25.124 45.01...

  • Page 56
    .... Acer Incorporated 2009 Annual Report (23) Earnings per common share ("EPS") 2008 Weightedaverage number of outstanding shares of common stock (in thousands) Carrying amount NT$ 2008 Fair value Public quoted price NT$ 2009 Fair value Carrying amount NT$ Valuation amount NT$ Public quoted price...

  • Page 57
    ...,738 77,605 1,536,722 23,989 21,566 2,423 47,978 The sales prices and payment terms to related parties were not significantly different from those of sales to non-related parties. 109. Acer Incorporated 2009 Annual Report Financial Standing Investee of the Company accounted for by equity method

  • Page 58
    ...are not comparable to the trading terms with third parties as the specifications of products are different. The Consolidated Companies sold raw material to Wistron and its subsidiaries and purchased back the finished goods after being manufactured. To avoid double-counting, the revenues and sales of...

  • Page 59
    ... cross license agreement with International Business Machines Corporation (IBM). Under this agreement, 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...

  • Page 60
    ...of the consolidated revenues in 2008 and 2009. Financial Standing 115. Acer Incorporated 2009 Annual Report 7.5 Disclosure of the Impact on Company's Financial Status Due to Financial Difficulties Not applicable. 2009 Taiwan NT$ Area income: Customers Inter-company Area profit (loss) before income...

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    116. Acer Incorporated 2009 Annual Report 8. Risk Management 117. Acer Incorporated 2009 Annual Report

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    ... Investment Limited Acer CyberCenter Services Ltd. Acer Greater China (B.V.I.) Corp. 7,688,493 PDA manufacturing and sale Recognized other investment loss and (309,852) impairement loss of fixed-assets (411,935) 56,577 Recognized disposal stock loss Gain on operating activity Great China market...

  • Page 63
    ... by any company or companies controlled by Acer. 8.2.2 How Change Corporate Image Change Affects Company's Risk Management Mechanism The Company 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 potential...

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    ..., 7, Sec.5, Xinyi Road, Taipei, 11049, Taiwan +886-2-8101-6666 www.kpmg.com.tw 5. Listed Market for GDRs: London Stock Exchange Market For further information, please refer to Website: www.Londonstockexchange.com 6. Acer Group Website: www.acer-group.com 123. Acer Incorporated 2009 Annual Report

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