Asus 2010 Annual Report Download

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321
2357
ASUSTeK Computer Inc.
2010 ANNUAL REPORT
Taiwan Stock Exchange Market Observation Post System：http://newmops.twse.com.tw
ï‚—ASUS annual report is available at http://taiwan.asus.com.tw/investor.aspx
Printed on April 21, 2011

Table of contents

  • Page 1
    2357 ASUSTeK Computer Inc. 2010 ANNUAL REPORT ï,-Taiwan Stock Exchange Market Observation Post System：http://newmops.twse.com.tw ï,-ASUS annual report is available at http://taiwan.asus.com.tw/investor.aspx Printed on April 21, 2011 321

  • Page 2
    ..., Taiwan Address : 27F., No.333, Sec. 1, Keelung Rd., Xinyi Dist., Taipei City 110 Tel. : 886(2)2729-6666 E-mail : http://www.pwc.com/tw V. EXCHANGEABLE BOND EXCHANGE MARKETPLACE Marketable security: GDR London Stock Exchange: http://www.londonstockexchange.com VI. COMPANY WEBSITE http://www.asus...

  • Page 3
    ..., president, and financial or accounting manager of the company who had worked for the independent auditor or the related party in the most recent years ...7. Information on Net Change in Shareholding and Net Change in Shares Pledged by Directors, Supervisors, Department Heads, and Shareholders of...

  • Page 4
    ...Consolidated financial statements in the most recent years ...6. Impact of financial difficulties of the Company and related party on the Company's financial position ... 78 78 80 84 85 85 85 VII. Review of financial position, management performance and risk management ...184 1. Financial position...

  • Page 5
    ... eight CES product innovation awards that was record high in the field of personal electronics, computer hardware, home networking, and digital audio, evidencing the leading role of ASUS in digital life. The Review Committee composed of industrial designers, product engineers, and media reporters is...

  • Page 6
    ... to secure the best strategic position and walk towards the goal of "the most respected company in the new digital era" with our innovative products while facing the constant change in information industry. Based on the global economic outlook, industry conditions and forecast institutions, the goal...

  • Page 7
    ... with AWARD for software authorization. The business development of the company was reported in the electronic industry section of Economic Daily News. Sales had gone up dramatically in the year before and were ranked in the 372nd place of the Top 500 Industries in Taiwan by China Credit Information...

  • Page 8
    ... Invested to have SMT production line setup. China Credit Information Service Ltd. had the company's business performance ranked in the 7th place of the TOP-500 Manufacturers in 1992 and the company's sales revenue ranked in the 263rd place of the TOP-500 Manufacturers. Increased the paid-in capital...

  • Page 9
    ... 1st place of The TOP-500 Manufacturers in 1995. SEC had the company authorized as Class II stock listing company. Increased the paid-in capital to NT$1.2 billion with retained earnings. ASUS went public at Taiwan Stock Exchange Corporation officially. Sales revenue of the year amounted to NT$13.327...

  • Page 10
    ... best assets-management business of "1999 Taiwan TOP 500." China Credit Information Service Ltd. ranked the company in the fourth place as the most productive employees of "1999 Taiwan TOP 500." Increased the paid-in capital to NT$11.449 billion with retained earnings. Presented ASUS super thin NB...

  • Page 11
    ... Credit Information Service Ltd. ranked the company's business performance in the third place of Top-10 Manufacturers in 1990-1999. Commonwealth Magazine ranked the company in the first place of Taiwan Electronics and in the seventh place nationwide. Business Week (U.S.A.) had the company ranked...

  • Page 12
    ... with comprehensive system solution. ASUS W1 NB with built-in TV card and powerful multimedia software was market launched. The outstanding hair-like pattern design was awarded with multiple global awards. Presented the small and with big screen ASUS J101 phone. The industrial design team received...

  • Page 13
    ... the company to share and it did evidence the leading position of ASUS in computer world. Business Weekly awarded ASUS with InfoTech 100 for eight consecutive years. ASUS that was known for creating trust and sentiment was awarded with the "2005 Top-10 Taiwan Brand Value." ASUS ATEC was awarded with...

  • Page 14
    ...of 3C product this year. ASUS has Eee PC S101, the stat-of-the-art; market launched this month targeting on global business commuters and fashion Yapese. ASUS Eee Family promoted new products, all-in-one touch-panel screen computer Eee Top ET16 series with 15.6" touch big screen. The computer can be...

  • Page 15
    ...to-learn and easy-to-use Eee PC! According to the survey in November of the most creditable 3C survey company, Business Computer News (BCN), EeePC was the champion in sales of Notebook and the most popular product of the year by the Japanese lifestyle and fashion magazine DIME. ASUS Eee PC was named...

  • Page 16
    ...brand new standard of mobile computation. ASUSTeK was awarded for innovation in energy-saving effort. ASUS computer was the first one in the world to receive the validation of "Environmental Product Declaration (EPD)" and "carbon footprint." ASUSTeK was the first enterprise in Taiwan to receive gold...

  • Page 17
    ...personal electronics, computer hardware, home network, and digital audio evidencing ASUS's leading role in digital life. ASUS was awarded with eight awards at iF Product Design in Germany, the biggest winner of the year. The winning products included Rampage III Extreme motherboard, Eee Note, Eee PC...

  • Page 18
    ... Supervisor Board of Directors Audit Chairman Vice Chairman Corporate Sustainability Office Chairman's Office CEO CEO Office Lean Management HQ da Vinci Innovation Lab. Q‐Committee Management Headquarters Systems Business Group R&D Center ASUS Design Center Open Platform Business Gruop...

  • Page 19
    ... global networking linking and safety control mechanism. CSC Provide customers with comprehensive service and total solutions. R&D Center, ASUS Design Center and Firmware R&D Center Develop the common R&D technology need by each business unit. Handheld Business Handheld Business is responsible...

  • Page 20
    ... Kwong-Tien Hospital Jonney Shih, Jonathan Tsang 2nd consanguinity Note 1: Chairman of the following companies: Axus Microsystems Inc., Hua-Cheng Venture Capital Corp., Hua-Min Investment Co., Ltd.., Asustek Holdings, Asus INTL, Asus Holland B.V., Asus Computer Corporation, Central Tec, Deep...

  • Page 21
    ... Capital Corp. and Hua-Min Investment Co., Ltd. Note 4: Chairman of SHINEWAVE INTERNATIONAL INC Note 5: Chairman of the following companies: eCareme Technologies, Inc., ASUS IBERICA S.L., ASUS COMPUTER GmbH, ASUS COMPUTER Benelux B.V., ASUS POLSKA SP.z.o.o., ASUS Marketing Services Kft., ASUSTEK...

  • Page 22
    ...9 10 Name Jonney Shih Jonathan Tsang Jerry Shen H.C. Hung Eric Chen Tze-Kaing Yang Chung-Jen Cheng L.H. Yang 0 0 0 0 0 2 1 0 Note: Directors and supervisors who have qualified the following conditions two years before being elected and during the term are to tick the box ("") of...

  • Page 23
    ...Tung University Business Division's President of ACER Shareholding % Name Date Elected Shares Shares held by other persons in their name Shares % Current Executives who are spouses position or second consanguinity with other companies Title Name Relation Chief Branding Officer Jonney Shih 04...

  • Page 24
    ...2010. Note 11: The shareholdings stated in the table exclude trust shareholdings that are with the "rights to use" reserved. Note 12: The Company did not have stock option issued up to the date of the annual report issued; therefore, the company's management did not have stock option shares. Note...

  • Page 25
    ...0 0 1.23% 1.31% None Director Eric Chen Director Ivan Ho Director Tony Chen Remuneration Bracket Name of Directors A+B+C+D Companies in the consolidated financial statements (I) Ivan Ho, Tony Chen H.C. Hung Eric Chen Jonney Shih, Jonathan Tsang, Jerry Shen 21 Ivan Ho Tony Chen Eric Chen...

  • Page 26
    ...Business expense (C) Ratio of A+B+C to Net income The company financial statements Companies in the consolidated financial statements Title The company Companies in the consolidated financial statements Name The company The company Companies in the consolidated financial statements...000 Total ＊...

  • Page 27
    ... statements Remuneration from the Companies invested Companies in in the company other the than the consolidat The consolidated company's ed company financial subsidiary financial statements Chief Branding Officer Jonney Shih Deputy Chief Branding Officer Jonathan Tsang President Jerry Shen...

  • Page 28
    ...of dividend Name Total Stock Dividend Cash Dividend (estimated amount) Ratio of total amount to net income (%) Title Chief Branding Officer Jonney Shih Deputy Chief Branding Officer Jonathan Tsang President Jerry Shen V.P. H.C. Hung V.P. Joe Hsieh Tony Chen V.P. S.Y. Shian Managers PC...

  • Page 29
    III. Corporate governance (I) Board of Directors Board of Directors The attendance of Directors for the 8 (A) Board Meeting in 2010: Title Chairman Vice Chairman Director Director Director Director Director Name Jonney Shih Jonathan Tsang Jerry Shen H.C. Hung Eric Chen Tony Chen Ivan Ho Attendance ...

  • Page 30
    ... in details: Time Term Subject Statement of supervisors Suggest to choose the trade party carefully for protecting the interest of Pegatron Corporation' shareholders and the Company's image Resolution of the board of directors Dec 09, 2010 22nd board meeting of the 8th year Discuss disposing...

  • Page 31
    ... a communication channel with the related party 4. Publication of information (1) The company has a website setup to disclose financial 1. The company has a website (http://www.asus.com) setup to disclose No deviation information and business management financial information and business management...

  • Page 32
    ... an agreement signed with each customer before providing services and products to them. 5. The company obeys law, maintains a good labor relation, provides job opportunity, builds up brand name, expands exporting business, and fulfills corporate social responsibility. 6. The company is to have other...

  • Page 33
    ...can be looked up at ASUS corporate sustainability report and ASUS CSR website at http://csr.asus.com. (2) Operation of corporate social responsibility full-time (part-time) unit (2) ASUS has corporate sustainability office setup to promote corporate social responsibility policy and meet regularly to...

  • Page 34
    ...(3) ASUS has setup consumer complaints procedures and methods by effective consumer complaints procedures provided for ASUS 0800-093-456 Technical Service Hotline / e-mail or Support products and services website at http://support.asus.com.tw (4) ASUS works with suppliers to upgrade corporate social...

  • Page 35
    ... Corporate Social Responsibility (CSR) is becoming one of the indexes used for assessing enterprise's perpetual development, ASUS's responsibility for social environment, in addition to the original environmental management including air, sewage, waste, hazard substance, noise, and energy-saving...

  • Page 36
    .... ASUS has taken part of social charity activity from time to time to fulfill corporate social responsibility in addition to providing basic protection. ASUS has based its long-term orientation and goal on "shortening digital gap," "upgrading innovative ability," "incubating science and technology...

  • Page 37
    ..., to upgrade students' digital learning ability. b. Donate ASUS notebook computers for the reconstruction of the flooded area due to the Morakot typhoon (August 8); also, help promote shortening digital care program in the disaster area. The donated objects include information marketing association...

  • Page 38
    ... financial aid to Tsing Hua University and Zhejiang University to help incubate science and technology talents for the nation. (2) Work with Public TV to host 2010 Campus Speech activities; also, upgrade and inspire young individual's creativity and potential. 5. Care for employees: Arrange Employee...

  • Page 39
    ... of China and Taiwan Association for Educational Communications and Technology. ASUS's fulfillment of corporate social responsibility: 1. Awarded by Taipei City Government with "Gold Award for Energy Saving" for the first place of Business Group A in 2010. 2. Rated as the "Energy Saving and Carbon...

  • Page 40
    ... was awarded with a "B+" of the "computer and computer peripherals" category in Oekom in 2007, which was the highest rank among the international brands in competition. Please visit the website of ASUS at http://csr.asus.com/english/ for the updated information of corporate social responsibility...

  • Page 41
    ...of the Board of Directors: Time 04.12.2010 04.22.2010 06.28.2010 08.27.2010 12.09.2010 03.18.2011 Subjects 1. Passed the business value adjustment of ASUS long-term equity investment split. 2. Passed ASUS long-term equity investment split and capital reduction split and capital reduction base...

  • Page 42
    ... settlement report and consolidated financial statements 4. Admitted ASUS 2010 earnings distribution proposal 5. Passed ASUS 2010 capitalization of earnings with new stock shares issued 6. Passed ASUS "Assets Acquisition and/or Disposition Procedure" amendment 7. Passed ASUS "Internal Control System...

  • Page 43
    ...period Others Total 1. To upgrade the professional ethics and comunication performance of CPA firms, ASUS has contracted Jan 1, PricewaterhouseCoopers for 1,371 2010~Jun 30, audtiing service. 2010 2. Non-audit fees; transfer pricing, administrative relief, and business tax filing and audit Note YEN...

  • Page 44
    ... 0 As of April 11 (Note 2) Net Change in Shareholding 0 90,000 Net Change in Share Pledged 0 0 0 0 - Chairman & Chief Branding Officer Vice Chairman & Deputy Chief Branding Officer Director & President Director & V.P. Director Director & V.P. Jonney Shih Jonathan Tsang Jerry Shen H.C. Hung Ivan Ho...

  • Page 45
    ... 0 0 0 Director Supervisor Supervisor Supervisor V.P. V.P. V.P. V.P. V.P. V.P. V.P V.P Finance & Accounting Officer Eric Chen Tze-Kaing Yang Chung-Jen Cheng L.H. Yang S.Y. Shian Joe Hsieh PC Wang Henry Yeh Samson Hu Benson Lin Alex Sun Chewei Lin David Chang Note 1: The parties involved in shares...

  • Page 46
    ... (Taiwan) Jonney Shih ChungHwa Post Co., Ltd. Standard Chartered managed Wayne Hsieh Chase Bank managed Saudi Arabia Central Bank investment account Jonney Shih's trust account with the First Bank Old labor pension fund Standard Chartered managed Van Gardner emerging market stock index fund account...

  • Page 47
    ... 500,000 43 Reinvestment Investments from Directors, Supervisors, Managers and directly or Indirectly Controlled Business Shares % Total Investment Shares % ASUS TECHNOLOGY INCORPORATION Askey Computer Corporation Enertronix, Inc. AGAiT Technology Corporation UNIMAX ELECTRONICS INC. Hua-Cheng...

  • Page 48
    ... Company Shares % Investments from Directors, Supervisors, Managers and directly or Indirectly Controlled Business Shares % 100.00 100.00 Total Investment Shares % - 100.00 - 100.00 ASUSTEK COMPUTER (SHANGHAI) CO. LTD. ASUS COMPUTER (SHANGHAI) CO., LTD. ASUS COMPUTER INTERNATIONAL Asus Holland...

  • Page 49
    Reinvestment Investment of the Company Shares % Investments from Directors, Supervisors, Managers and directly or Indirectly Controlled Business Shares % 50,000 20,050,000 91,030,000 50,000 50,000 50,000 522,530 1,000,000 100,000 2,120,000 11,270,551 ...

  • Page 50
    .... Stock Subscription I. Capital and shares (1) History of capitalization 1. Type of shares April 11, 2011 / Unit: Shares Type of Shares Order common stock Note: Listed stock 2. Stock capital Authorized shares Month / Year 1990.03 1990.11 1991.12 1993.04 1993.09 Par value (NT$) 10 10 10 10 10 Shares...

  • Page 51
    Authorized shares Month / Year Par value (NT$) Shares (1,000) Amount ($1,000) Issued shares Shares (1,000) Amount ($1,000) Source of capital Remarks Approval date and approval no. of Non-monetary capitalization by the SEC, capital Ministry of Finance 2003.07.08 SFE Ruling － Tai-Tsai-Cheng (1) No...

  • Page 52
    ...% 2.81% 58.27% 100.00% 800,001-1,000,000 Over 1,000,001 Total 2. Preferred Stock Shares: None (4) Roster of Major Shareholders Roster of Major Shareholders As of April 11, 2011 Shareholding Shareholder's Name ASUS's Certificate of Depository with CitiBank Shareholding 23,038,085 Shareholding Ratio...

  • Page 53
    ...'s Name Jonney Shih Chunghwa Post Co., Ltd. Standard Chartered managed Wayne Hsieh Chase Bank managed Saudi Arabia Central Bank investment account Jonney Shih's trust account with the First Bank Old labor pension fund Standard Chartered managed Van Gardner emerging market stock index fund account...

  • Page 54
    ... price per share of the year Note 9: Subject to the approval of the annual shareholders meeting. Note 10: The data collected up to March 31, 2011 were included in the report printed on April 21, 2011 for data accuracy. (6) Execution of Dividend Policy 1. Dividend Policy The company is in a changing...

  • Page 55
    ... proposed stock dividend in shareholders meeting on business performances and EPS: None Note: The Company did not have financial forecast proposed up to the date of the annual report printed. (8) Bonus to employees and remuneration to directors and supervisors 1. Information of dividend to employee...

  • Page 56
    ... stock: Term of call Date of Board Resolution Purpose of call Call period Call price Type and volume of stock shares called Amount of call Stock shares written off and transferred Shareholdings Ratio of shareholdings to total shares issued 2nd time Jun 28, 2010 For protecting the company's credit...

  • Page 57
    Type of corporate bond Issuing price Total amount Interest rate Term Guarantee institute Trustee Underwriter Attorney CPA The 1st domestic convertible bond Issued at the face value 100% NT$12,000,000 thousand 0% Five-year term Due date: November 7, 2011 Trust Department of TAIPEIFUBON COMMERCIAL ...

  • Page 58
    ...convertible bonds are "called" at face value on the due date. Restrictive clauses Rating institute, rating date, corporate bond rating NT$7,000,000 (up to the date of the report printed) Converted (exchanged or subscribed) common Other rights stock, GDR, or marketable security up to the date of the...

  • Page 59
    ... and trade Total amount Unit Price Total issuance May 30, 1997 London US$235, 830,000 US$11.23 / GDR 21,000,000 GDRS One GDR stands for one common stock share of ASUS Note 1: The Company's stock exchange ratio has changed from one GDR for one common stock share to one GDR to five common stock shares...

  • Page 60
    ... and new stock shares issued in recent years and up to the date of the annual report printed: 1. The opinions of the security underwriter who is responsible for merger, accepting other company's stock share, and issuing new stock shares in the most recent quarter: None 2. If the business performance...

  • Page 61
    ...and new stock shares are issued in recent years and up to the date of the annual report printed, the information of the merger and the merged or acquired company must be disclosed: None VII. Fund implementation plan Up to the last quarter before the printing of the financial statements, outstanding...

  • Page 62
    ...TV transmission graphic card c. Intelligent phone GPS d. Ultra Mobile PC e. High-speed router / exchanger / firewall / VPN f. New-generation advanced server g. Professional LED display h. WiMAX broadband products i. Eee PC touch, long-lasting computer j. Eee Top PC, Eee Box PC k. Eee Note l. Eee Pad...

  • Page 63
    ... (LED, printed circuit board, connector, etc.). Mid-stream industry includes optoelectronic (monitor, LCD, etc.), electronic parts (motherboard, VGA, etc.), and computer peripherals (computer case, mouse, keyboard, etc.). Down-stream industry includes the business of table-top computer and notebook...

  • Page 64
    ... of marketing strategy is more than ever in order to create profit niche for each enterprise. At the same time, the development of notebook is moving towards upgrading product value by integrating it with new technology, for example, light-weighted, thin, portable, energy and power saving, and...

  • Page 65
    ... screen e. Hybrid phase design advanced energy-saving motherboard f. GPS smart phone g. EeeTop new generation All-in-one computer h. EeePC touch panel and long-lasting simple computer i. Eee Keyboard PC home computer j. New Eee series playstation 2. R&D planned in 2011: a. Digital control wireless...

  • Page 66
    ... in: Open platform products including motherboard, drawing card, play station, LCD, and network server; system products including notebook and Eee PCâ„¢ Eee series; and handheld products including smart navigation phone for consumer's innovative design. 2. Long-term development plan ASUS has become...

  • Page 67
    ... of Eee PCâ„¢ in 2007. ASUSTeK is a leading brand in cloud computing terminal installation and with the most comprehensive product solutions: notebook, nettop, e-books, super personal computer, home server, storage equipment, video and audio player, and state-of-the-art communication products that...

  • Page 68
    ...and energy saving since 2008 and with a low power-consumption and Super Hybrid Engine (SHE) technology developed alone as the best solution to the request for lightweight, think, and powerful. ASUS has mature technology ready for the market once the demand emerges. b. The output value of hardware in...

  • Page 69
    ... Cebit international exhibitions this year with the core green technology for the appreciation of the media from all over the world. ASUSTeK has innovative green energy applied to the R&D and production of notebook computer, Eee PCâ„¢, Eee Box, LED backlight screen, and motherboard that shall help...

  • Page 70
    ... in global market share. In terms of notebook computer, ASUSTeK is ranked number one in Taiwan, number three in Europe, number two in China, number one or two in Eastern Europe, and number three in Western Europe; also, is ranked world number six worldwide. In terms of global network service, forty...

  • Page 71
    ...; therefore, the head office must be able to control the said key elements effectively. (2) Application and production process of major products 1. Application of major products a. MB, VGA, and CD-ROM are important elements to desktop computer and server. ASUS is in a leading position with all the...

  • Page 72
    ...The 2011Q1 financial statements audited by the CPA were not yet available up to the print of annual report on April 21, 2011. Note 2: Causes of increase and decrease - for business operation (V) Production/Sales Quantities and Value over the Past Two Year: N/A (VI) Sales quantities and value of the...

  • Page 73
    ...to help clean up the beach and perform environmental protection community service in Beitou are. ASUS has striven to fulfill social responsibility and protect our environment as a green corporate should do. 7. Arrange environmental protection, recycling, and merciful donation activities from time to...

  • Page 74
    ...introduce energy management system forcefully to save energy and reduce green house gas emission. 3. ASUS will continue to invest in green design, green procurement, green production, and green marketing for fulfilling corporate social responsibility to the earth. (IV) The responsive actions of ASUS...

  • Page 75
    ... place among notebook computers. ASUS was the one and only brand ranked in the first place for both products. (4) ASUS Eee PC 1015PE received Green ICT Award at COMPUTEX in 2010 for its great environmental protection feature. (5) ASUS has setup free product recycling service in North America in 2006...

  • Page 76
    ... MOEA. Developed the first WEEE easy to dismounting and recycling Green Design system in Taiwan in order to comply with the 3R recycling ratio of European Community, construct green recycling IT platform, and monitor and control recycling information. ASUS has conducted Quality Business Review (QBR...

  • Page 77
    ..., caring for employees, and helping ASUS fellows reaching their potential;" moreover, ASUS has a profound operating model setup in education and training and with excellent internal tradition formed. The talents cultivation and development is illustrated as follows: 1. Personal learning & growth...

  • Page 78
    ... management courses is to help the management upgrade managing ability systematically and exercise management effectiveness. Plan core value training courses to help staff generate ASUS DNA and upgrade staff's work skills and performance. Individual received 7 hours of training in average in 2010...

  • Page 79
    ..., and community discussion of diverse topics. Build up colleague's active learning and personal capability and positive work attitude and sense of value. There were four mind forums held in 2010, library, MP talking book, and VCD/DVD or 1,217 items in total. (4) On-job training Directors have on-job...

  • Page 80
    ... helping the company's related party understand the moral standard of the employees in performing job responsibilities, the "Codes of Ethics" is stipulated for reference. The mail box at [email protected] is for the complaints filing of employees. Human Resources Office and Legal Center have the "Code...

  • Page 81
    ... occurring effectively, ASUS has procedures amended in accordance with the TOSHMS of the competent authority and the amendment of global chemicals control system completed. (V) Retirement plan In response to the company's having the business operation dividend into brand name business and OEM/ODM...

  • Page 82
    ...（435,027） （3,016） Summarized Balance sheets of fiscal year 2006~2010 (Note 2) 2007 2008 2009 (adjusted) ...Note 2: The financial information of the last five years is reviewed by CPA. Note 3: The Q1 2011 financial statements have not yet been audited by CPA up to the date of the report printed...

  • Page 83
    ...reviewed by CPA. Note 2: The Q1 2011 financial statements have not yet been audited by CPA up to the date of the report printed on April 21, 2011. Note 3: No capitalized interest expenses booked in the last five years. Note 4: ASUS has adopted the principles under Accounting Research and Development...

  • Page 84
    ... (times) Operating ability Account payable turnover (times) Average days in sales Fixed assts turnover (times) Total assets turnover (times) Ratio of return on total assets (%) Ratio of return on shareholders' equity (%) Profitability capital stock (%) Profit ratio (%) Earnings per share ($) Cash...

  • Page 85
    ... information is reviewed by CPA. Note 3: Accounts receivable includes the amount of long-term accounts receivable- related party that is in compliance with trade terms and conditions. Note 4: The Q1 2011 financial statements have not yet been audited by CPA up to the date of the report printed...

  • Page 86
    ... total assets (2) Return on shareholder's equity = Net income (loss) / Net average shareholders' equity (3) Ratio to issued capital stock = Net income before tax / Issued capital stock (4) Profit ratio = Net income (loss) / Net sales (5) Earnings per share = (Net income - preferred stock dividend...

  • Page 87
    ...classification of operating cost and operating expense involves estimation or discretional judgment, it must be made reasonably and consistently. Note 9: Some accounts and amounts in the financial statements of 2009 were adjusted in response to the presentation of 2010 financial statements. The said...

  • Page 88
    ... in the most recent years ASUSTek Computer Inc. SUPERVISORS' REPORT ASUS SUPERVISORS' REPORT We have examined the accompanying financial statements and consolidated financial statements as of 2010 that are composed by the Board of Directors, business report, and distribution of retained earnings...

  • Page 89
    ... for details. V. Consolidated financial statements of the parent company and subsidiary in the most recent years: Please refer to Page 124-183 for details. VI. Financial difficulties faced by the company and the related party in the most recent years and up to the date of the annual report printed...

  • Page 90
    ... accompanying balance sheet of ASUSTeK COMPUTER INC. as of December 31, 2010 and 2009, and the related statements of income, of changes in stockholders' equity and of cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility...

  • Page 91
    ... and business (ASUSTeK COMPUTER INC.'s long-term equity investment in PEGATRON CORPORATION) to PEGATRON INTERNATIONAL INVESTMENT CO. on June 1, 2010. PEGATRON INTERNATIONAL INVESTMENT CO. then issued new shares to the Company and its shareholders as consideration. Further, the Company had a capital...

  • Page 92
    ... notes are an integral part of these financial statements. See report of independent accountants dated March 12, 2011. Funds and Investments Available-for-sale financial assets - non-current (Note 4(3)) Financial assets carried at cost - non-current (Note 4(4)) Long-term investments accounted...

  • Page 93
    ASUSTek COMPUTER INC. STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA) For the years ended December 31 2010 2009 Amount % Amount Operating revenues (Note 5) Sales revenue $ 299,440,915 101 Sales ...

  • Page 94
    ASUSTek COMPUTER INC. STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) Common stock $ 42,460,513 ( ( ( Additional paid-in capital $ 29,696,393 Treasury stock $ - Retained earnings Legal Undistributed ...

  • Page 95
    ... activities that result in non-cash flows: Employee bonuses payable transferred to common stock and additional paid-in capital Bonds payable-- payable in one year Items affected by spin-off Long-term investment under the equity method Valuation accounts on long-term investment under the equity...

  • Page 96
    ... 1. HISTORY AND ORGANIZATION (1) ASUSTeK COMPUTER INC. (the Company) was established on April 2, 1990. The Company's common shares were listed on the Taiwan Stock Exchange (TSE). Its main activities are to produce, design and sell notebook PCs, main boards, CD-ROMs and add-on cards. (2) The Company...

  • Page 97
    ... profit or loss, or as financial liabilities at cost. B. The Company accounts for purchases and sales of financial assets on the trade date, or the date when the Company commits to purchase or sell the asset. At initial recognition, financial assets are recognized at fair value plus, in the case...

  • Page 98
    ... at fair value through profit or loss These financial assets are subsequently measured at fair value with changes in fair value recognized in profit and loss. Stocks of listed companies, convertible bonds and closed-end funds are measured at closing prices at the balance sheet date. Open-end funds...

  • Page 99
    ...method issues new shares and the Company does not purchase new shares proportionately, then the investment percentage, and therefore the equity in net assets of the investee, will be changed. The effect of such change is adjusted against the additional paid-in capital resulting from long-term equity...

  • Page 100
    ...~ 5 years. (10) Impairment of non-financial assets A. The Company assesses all applicable assets subject to R.O.C. Statement of Financial Accounting Standards ('SFAS') No. 35 for indication of impairment on the balance sheet date. If any indication of impairment exists, the Company then compares the...

  • Page 101
    ... with call/put options and conversion rights with a clause on price adjustment are recognized as "financial liabilities at fair value through profit or loss" and are subsequently measured at fair value. Movements in the fair value of the derivatives are recognized as "gain/(loss) on valuation...

  • Page 102
    ...Company calculates the number of shares of employees' stock bonus based on the closing price of the Company's common stock at the previous day of the stockholders' meeting held in the year following the financial reporting year, and after taking into account the effects of ex-rights and ex-dividends...

  • Page 103
    ... decreased by $868,183 and basic earnings per share decreased by $0.20 (in dollars) for the year ended December 31, 2009. 4. DETAILS OF SIGNIFICANT ACCOUNTS (1) Cash and cash equivalents Petty cash and cash on hand Checking and demand deposits Time deposits 2010/12/31 $ 264 4,632 25,409,994 $ 25...

  • Page 104
    (2) Financial instruments The financial instruments held by the Company are as follows: Items Current: Financial assets measured at fair value through profit or loss: Open-end funds Convertible bonds Foreign currency options Listed stocks Financial liabilities measured at fair value through profit ...

  • Page 105
    (3) Available-for-sale financial assets Items Current: Stock of listed company EDISON OPTO CORPORATION NUVOTON TECHNOLOGY CORP. D-LINK CORPORATION Non-current: Stock of listed company ADVANTECH CO., LTD. Others 2010/12/31 2009/12/31 $ $ 100,625 36,168 136,793 $ $ 408,338 408,338 $ $ 6,278,...

  • Page 106
    C. After evaluating and comparing the carrying value of financial assets carried at cost and the recoverable amount, no impairment loss was recognized for the years ended December 31, 2010 and 2009. (5) Notes and accounts receivable 2010/12/31 Notes receivable Accounts receivable Less: allowance ...

  • Page 107
    ... for the years ended December 31, 2010 and 2009, respectively. On June 1, 2010, the Company transferred further the OEM assets and business (the Company's long-term equity investment in PEGATRON) to PEGATRON INVESTMENT. PEGATRON INVESTMENT then issued new shares to the Company and its shareholders...

  • Page 108
    ...used for operations; therefore, the Company recognized the net fair value as the recoverable amount. After evaluating and comparing the carrying value of idle assets and the recoverable amount, the Company recognized loss on impairment of $7,842 and $301,617 for the years ended December 31, 2010 and...

  • Page 109
    .... (11) Bonds payable A. The Company issued the first Euro unsecured convertible bonds (ECB 1) on the Luxembourg Stock Exchange on January 15, 2004, with a zero-coupon rate, a duration of five years and a face value of US$320,000,000. The details of ECB 1 are as follows: 2010/12/31 Aggregate...

  • Page 110
    ...occurrence of an increase in the number of common shares. On June 24, 2010, the Company adjusted further the conversion price to $345.8 (in dollars), considering the effect of capital reduction. f. Call option: The Company could redeem the convertible bonds at par value at any time during the period...

  • Page 111
    ... 31, 2010, the Company issued Global Depositary Receipts (GDRs), of which 4,617,000 units of the GDRs are now listed on the London Stock Exchange. Per unit of GDR represents 5 shares of the Company's common stock and total GDRs represent 23,085,000 shares of the Company's common stock. The terms of...

  • Page 112
    ... "Market Observation Post System" at the website of the Taiwan Stock Exchange. E. The Company estimates the amount of employees' bonuses and directors' and supervisors' remuneration according to the Company Law and the Company's articles of incorporation for the financial statements. The employees...

  • Page 113
    ... of the Company's OEM business. However, the Company subsequently disposed those shares in the open market after they were purchased during the year ended December 31, 2010. Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as treasury stock should not exceed...

  • Page 114
    income tax expense of the Company for the years ended December 31, 2010 and 2009 are as follows: Current income tax 10% additional income tax on unappropriated earnings Investment tax credits 2010/1/1~12/31 $ 1,727,447 ( 137,299) 1,590,148 15,188) 241,628) 84,452 955,740 21,060) 63,683 4,366 830,365...

  • Page 115
    ... by investees Difference between prior years income tax estimation and assessed results Tax effect resulting from change in income tax rate Tax-exempt cash dividend Unrealized valuation gain or loss Effect of change in exchange rate Others Income tax expense 2010/1/1~12/31 $ 3,214,508 ( ( 137...

  • Page 116
    ... of $870,587 for the years 1996, 1998 and 2008. The Company disagreed with the assessment and filed formal tax appeals. The additional income tax liability for these assessments was recognized in the financial statements. Imputation credit account and creditable ratio ICA balance 2010/12/31 $ 12,282...

  • Page 117
    ...stock equivalents: Convertible bonds Employee bonus Net income attributable to common stockholders plus dilutive effect of common stock equivalents Amount After tax $ 12,479,066 2009/1/1~12/31 Weightedaverage outstanding Earnings per share common shares...: 2010/1/1~12/31 Operating Operating cost...

  • Page 118
    ... MOS CORPORATION ASUS COMPUTER INTERNATIONAL ASUS HOLLAND B.V. ASUS TECHNOLOGY PTE. LIMITED (ASTP) ASUS COMPUTER GMBH ASUS IBERICA S.L. ASUSTEK ITALY S.R.L. ASUSTEK (UK) LIMITED ASUSTEK COMPUTER (S) PTE. LTD. ASUS TECHNOLOGY (SUZHOU) CO., LTD. UNIMAX ELECTRONICS INCORPORATION ASUS COMPUTER (SHANGHAI...

  • Page 119
    ... SERVICE LIMITED PEGATRON MEXICO, S.A. DE C.V. ASUSPOWER CORPORATION PIOTEK COMPUTER (SUZHOU) CO., LTD. (PIOTEK COMPUTER) MAINTEK COMPUTER (SUZHOU) CO., LTD. KINSUS INTERCONNECT TECHNOLOGY CORP. PROTEK (SHANGHAI) LIMITED NORTH TEC ASIA (SHANGHAI) LIMITED POWTEK (SHANGHAI) CO., LTD. DIGITEK GLOBAL...

  • Page 120
    ... the Company Non related party (Note 1) (Note 3) Directors, supervisors and key management Related parties under the definition of R.O.C. SFAS No. 6 Note 1: Subsidiary of the Company before May 31, 2010. Note 2: Investee accounted for under the equity method before May 31, 2010. Note 3: Subsidiary...

  • Page 121
    ...98 ASTP ASUS TECHNOLOGY Others $ $ $ $ The Company reclassified accounts receivable from related parties which were overdue for three months to other receivables - related parties amounting to $198 and $4,218 as of December 31, 2010 and 2009, respectively. E. Notes and accounts payable 2010/12...

  • Page 122
    ...$ 265,661 Salaries Bonuses Service execution fees Directors' and supervisors' remuneration and employees' bonuses Note:Please refer to the Company's annual report for the related information. 6. PLEDGED ASSETS Pledged asset Guarantee deposits Item Pledged time deposit Book Value 2010/12/31 2009/12...

  • Page 123
    ... financial reporting date, all the shares above had been bought back in the amount of $2,609,422. 10.OTHERS (1) Financial statement presentation Certain accounts in the financial statements as of and for the year ended December 31, 2009 were reclassified to conform with the 2010 financial statements...

  • Page 124
    ... financial instruments Assets Financial assets at fair value through profit or loss Available-for-sale financial assets - current Available-for-sale financial assets - non-current Financial assets carried at cost - current Financial assets carried at cost - non-current Liabilities Bonds payable...

  • Page 125
    ... that cannot estimate its fair value in practice. (3) Procedure of financial risk control The Company adopted a comprehensive risk management and control system to identify all market risks. Therefore, the management can effectively control significant market risks after appropriately taking...

  • Page 126
    ... risk of foreign currency exchange rate changes does not have material impact on the Company. (B) The open-end funds and stocks of listed companies held by the Company are classified as financial assets measured at fair value through profit or loss and available-for-sale financial assets. As these...

  • Page 127
    ... the shares and the acquisition price is $57.5 (in dollars) per share. 11. Segment Information A. Industrial information The Company is engaged in a single industry and is mainly engaged in the design, production and sale of main boards. B. Geographic information The Company has no foreign operation...

  • Page 128
    ... balance sheet of ASUSTek COMPUTER INC. and its subsidiaries as of December 31, 2010, and the related consolidated statements of income, of changes in stockholders' equity and of cash flows for the year then ended. These financial statements are the responsibility of the Company's management...

  • Page 129
    ... the reports of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ASUSTek COMPUTER INC. and its subsidiaries as of December 31, 2010, and the results of their operations and their cash flows for the years...

  • Page 130
    ... Short-term debt and short-term notes and bills payable (Note 4(14)) Financial liabilities at fair value through profit or loss - current (Notes 4(2) and( 15)) Derivative financial liabilities for hedging-current (Note 4(5)) Notes and accounts payable (Note 5) Income tax payable (Note 4(22...

  • Page 131
    ASUSTek COMPUTER INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA) Net sales revenue (Note 5) Cost of goods sold (Notes 4(7), (24) and 5) Gross profit Operating ...

  • Page 132
    ...paid to employees Changes in unrealized gain or loss on financial assets Purchase of treasury stock Treasury stock retirement ( Consolidated net income for the year ended December 31, 2009 128 The accompanying notes are an integral part of these consolidated financial statements. See report of...

  • Page 133
    ... information Cash paid during the year for interest Cash paid during the year for income tax Investing and financing activities that result in non-cash flows: Employee bonuses payable transferred to common stock and additional paid-in capital Bonds payable - payable in one year Long-term liabilities...

  • Page 134
    ... HISTORY AND ORGANIZATION 1) ASUSTeK COMPUTER INC. (the Company) was established on April 2, 1990. The Company's common shares were listed on the Taiwan Stock Exchange (TSE). Its main activities are to produce, design and sell notebook PCs, main boards, CD-ROMs and add-on cards. The Company resolved...

  • Page 135
    ... financial statements and the Company's direct and indirect percentages of ownership are as follows: Ownership (%) Subsidiary ASUS COMPUTER INTERNATIONAL ASUS TECHNOLOGY INCORPORATION Main activities Sales and repair service center in North America Trading electronic appliances, communication...

  • Page 136
    ... communication equipment Manufacturing office machinery, electronic parts, and computer peripherals, and selling precision equipment and digital cameras Computer security systems, messenger management systems, and automation systems R&D; providing related technology and after-sales service Providing...

  • Page 137
    ... products 100% 100% 100% 100% Main activities Developing and selling communication products Merchandise trading Merchandise trading Merchandise trading 100% 100% 100% 100% 100% 2010/12/31 100% 2009/12/31 100% AGAITECH HOLDING LTD. Investing and trading activities AGAIT TECHNOLOGY (H.K.) CORPORATION...

  • Page 138
    ... TECHNOLOGY HOLLAND B.V. ASUS TECHNOLOGY (VIETNAM) CO., LTD. ASUSTEK ITALY S.R.L. ASUS IBERICA S.L. ASUS TECHNOLOGY (SUZHOU) CO., LTD. Sales and service center in Italy Sales and service center in Spain Researching and developing LCDs, computers, main boards and the peripherals of related multimedia...

  • Page 139
    ... Main activities and network communication products, and providing aftersales service ASUS JAPAN INCORPORATION ASUS COMPUTER CZECH REPUBLIC S.R.O. ASUSTEK COMPUTER (SHANGHAI) CO., LTD. Sales and repair service center in Japan Sales and service center in Czech Republic Selling notebooks, main boards...

  • Page 140
    ... 1 Note 1 Note 1 Note 1 Sales and repair service center in North America ASUS HOLLAND HOLDING B.V. AMA PRECISION INC. ABILITY ENTERPRISE CO., LTD. (ABILITY ENTERPRISE) UNIHAN HOLDING LTD. STARLINK ELECTRONICS CORPORATION Designing and developing computer parts Selling computer peripherals, office...

  • Page 141
    ... (SUZHOU) CO., LTD. FENGSHUO TRADING (TONGZHOU) CO., LTD. GRANDTECH PRECISION (TONGZHOU) CO., LTD. KINSUS INVESTMENT CO., LTD. KINSUS CORP. (USA) Developing and designing new technology and products, analyzing marketing strategy and developing new customers KINSUS HOLDING (SAMOA) LIMITED KINSUS...

  • Page 142
    ... Main activities Investing activities Database service and trading of electronic components Office building leasing Investing activities Database service and trading of electronic components Selling computer communication products and peripherals Investing activities 2010/12/31 Note 1 Note 1 Note...

  • Page 143
    ... CO., LTD. Main activities Developing, manufacturing and selling new electronic components, circuit boards and related products, and after-sales service Trading activities Manufacturing, developing and selling power supply units, computer cases, computer systems, notebooks, main boards, and computer...

  • Page 144
    ...KAEDAR TRADING LTD. CORE-TEK (SHANGHAI) LIMITED Investing and trading activities Researching and producing notebook parts, designing nonmetal tooling, electronic specific equipment and related products, repairing and producing precision equipment, and providing after-sales service UNITED NEW LIMITED...

  • Page 145
    ... mobile phones, computers, routers, DTV and electronic components, and providing after-sales service Manufacturing and selling earphone parts Sales and repair service center in New Zealand Investing and trading activities Investing and trading activities Note 3 100% Manufacturing and selling digital...

  • Page 146
    ... of the parent company. 2) Foreign currency transactions and translation of financial statements in foreign currencies (1) Transactions involving non-derivative financial instruments denominated in foreign currencies are recorded in New Taiwan dollars at the rates of exchange in effect when the...

  • Page 147
    ... translated into New Taiwan dollars using the exchange rates at the balance sheet date except for profit and loss accounts, which are translated at weighted-average rates of the year. Dividends are translated at the rates prevailing at the date of declaration. Profit and loss accounts are translated...

  • Page 148
    ... at fair value through profit or loss These financial assets are subsequently measured at fair value with changes in fair value recognized in profit and loss. Stocks of listed companies, convertible bonds and closed-end funds are measured at closing prices at the balance sheet date. Open-end funds...

  • Page 149
    ... cost except for financial liabilities at fair value through profit or loss, which are measured at fair value. 5) Notes and accounts receivable Notes and accounts receivable are claims resulting from the sale of goods or services. The fair value of notes and accounts receivable is calculated...

  • Page 150
    ...method issues new shares and the Company does not purchase new shares proportionately, then the investment percentage, and therefore the equity in net assets of the investee, will be changed. The effect of such change is adjusted against the additional paid-in capital resulting from long-term equity...

  • Page 151
    ... 1 ~ 5 years. 12) Impairment of non-financial assets (1) The Group assesses all applicable assets subject to R.O.C. Statement of Financial Accounting Standards ('SFAS') No. 35 for indication of impairment on the balance sheet date. If any indication of impairment exists, the Group then compares the...

  • Page 152
    ... of long-term liability. 14) Accrued product warranty liability When the sales of the products attached with a warranty clause are recognized, warranty liabilities are accrued and current expense are recorded according to historical return rates and repair costs, failure rates and warranty periods...

  • Page 153
    ...treasury stock over its carrying value should be credited to additional paid-in capital from the same class of treasury stock transactions. (3) The cost of treasury stock is accounted for on a weighted-average basis. 18) Employees' bonuses and directors' and supervisors' remuneration and share-based...

  • Page 154
    ...Company calculates the number of shares of employees' stock bonus based on the closing price of the Company's common stock at the previous day of the stockholders' meeting held in the year following the financial reporting year, and after taking into account the effects of ex-rights and ex-dividends...

  • Page 155
    ... are as follows: Items Current: Financial assets measured at fair value through profit or loss - current: Open-end funds Corporate bonds Forward exchange contracts Repurchase bonds Stocks of listed companies Depositary receipts Currency swap contracts Currency option contracts 2010/12/31 2009/12/31...

  • Page 156
    ... Group did not meet the criteria for hedge accounting. (3) Please refer to Note 4(15) on Convertible Bonds Payable. 3) Available-for-sale financial assets Items Current: Stocks of listed companies Non-current: Stocks of listed companies Government bonds $ $ $ 152 2010/12/31 136,793 6,366,348 6,366...

  • Page 157
    ... and compared the book value and collectible amount of available-for-sale financial assets and recorded impairment loss amounting to $64,616 and $61,662 for the years ended December 31, 2010 and 2009, respectively. 4) Financial assets carried at cost Items Current: Stocks of unlisted companies Non...

  • Page 158
    ... is as follows: Financial instrument was designated Hedged Item Forecasted transactions for hedging instrument Forward exchange contracts Period for Period of gain (loss) recognized in Fair value anticipated cash flow income statement $ 306,361 2009.10~2010.03 2009.10~2010.03 (4) The unexpired...

  • Page 159
    ...,806 were recognized as a deduction to cost of sales due to a reversal of inventory cost to its net realizable value, for the years ended December 31, 2010 and 2009, respectively. 8) Long-term equity investments (1) Details of long-term equity investments accounted for under the equity method are as...

  • Page 160
    ...,908 and $21,444 for the years then ended, respectively. (4) On June 1, 2010, the Company transferred further the OEM assets and business (the Company's long-term equity investment in PEGATRON) to PEGATRON INVESTMENT. PEGATRON INVESTMENT then issued new shares to the Company and its shareholders as...

  • Page 161
    ... for the years ended December 31, 2010 and 2009, respectively. (2) Please refer to Note 6 for details of property, plant and equipment pledged as collateral. 11) Leased assets 2010/12/31 Initial cost Land Buildings Less: accumulated depreciation accumulated impairment Add: fair value adjustment for...

  • Page 162
    ...collateral. 15) Bonds payable (1) The Company issued the first Euro unsecured convertible bonds (ECB 1) on the Luxembourg Stock Exchange on January 15, 2004, with a zero-coupon rate, a duration of five years and a par value of US$320,000,000. The details of ECB 1 are as follows: 2010/12/31 Aggregate...

  • Page 163
    ... occurrence of an increase in the number of common shares. On June 24, 2010, the Company adjusted further the conversion price to $345.8 in dollars, considering the effect of capital reduction. (F) Call option: The Company could redeem the convertible bonds at par value at any time during the period...

  • Page 164
    ... maturity date (2012.06.08~2013.04.06) 2009.06.23~2014.06.23, interest is payable monthly and principal is payable in quarterly installments from the thirteenth month, commencing the date of borrowing. $ 2010/12/31 -(Note 1 ) $ 2009/12/31 10,720 Mega International Commercial Bank - (Note 1 ) 348...

  • Page 165
    ... six months based on the consolidated semi-annual and annual financial statements, and anytime the bank considers necessary. ASKEY met the aforementioned commitments for the years ended December 31, 2010 and 2009, respectively. (2) ASKEY was the guarantor for the loan payable of LEADING PROFIT CO...

  • Page 166
    ...actuarial reports, the funded status was reconciled with prepaid pension cost as follows: 2010/1/1~12/31 Benefit obligation: Vested benefit obligation Non-vested benefit obligation Accumulated benefit obligation Projected future employee compensation increases Projected benefit obligation Fair value...

  • Page 167
    ... 31, 2010, the Company issued Global Depositary Receipts (GDRs), of which 4,617,000 units of the GDRs are now listed on the London Stock Exchange. Per unit of GDR represents 5 shares of the Company's common stock and total GDRs represent 23,085,000 shares of the Company's common stock. The terms of...

  • Page 168
    ...phase. In light of the long-term financial plan of the Company and the demand for cash by the stockholders, the Company should distribute cash dividends of no less than 10% of the total dividends declared. (3) Except for covering accumulated deficit or increasing capital, the legal reserve shall not...

  • Page 169
    ...incorporation. The Company recognized employees' bonuses of $710,625 and $698,438, and directors' and supervisors' remuneration of $142,125 and $69,844 for the years ended December 31, 2010 and 2009, respectively. The number of shares of the dividend distribution is based on the closing price of the...

  • Page 170
    ... transfer of the Company's OEM business. However, the Company subsequently disposed those shares in the open market after they were purchased during the year ended December 31, 2010. (3) Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as treasury stock should not...

  • Page 171
    ...Increase (decrease) in investment tax credits Decrease in inventory valuation loss Deferred tax effect resulting from change in income tax rate (Increase) decrease in unrealized accrued expense Others Income tax expense 2010...tax computed on pre-tax financial income at the statutory rate was reconciled with...

  • Page 172
    ...and 2008. The Company disagreed with the assessment and filed formal tax appeals. The additional income tax liability for these assessments was recognized in the financial statements. (6) Imputation credit account and creditable ratio ICA balance Creditable ratio for earnings distribution 2010/12/31...

  • Page 173
    ...the R.O.C. can be carried forward over a period of three years. The unused investment tax credits are as follows: Name of Company Askey and its subsidiaries Other consolidated subsidiaries Unused tax credits $ 409,330 157,906 $ 567,236 Expiry year 2011~2013 2011~2013 (9) According to the ROC Income...

  • Page 174
    ...share: Net income Dilutive effect of common stock equivalents: Convertible bonds Employee bonus Net income attributable to common stockholders plus dilutive effect of common stock...follows: 2010/1/1~12/31 Operating cost... Total $ 18,177,739 1,118,622 713,463 657,405 4,447,445 1,150,028 Operating cost...

  • Page 175
    ... TECHNOLOGY (SAMOA) TAISHIBA INTERNATIONAL CO., LTD. ASAP INTERNATIONAL CO., LIMITED Relationship with the Company Investee accounted for under the equity method Investee accounted for under the equity method Non related party of the Company (Note 1) Non related party of the Company (Note 1) Non...

  • Page 176
    ... TECHNOLOGIES, INC. Subsidiary of investee evaluated under the equity method (Note 3) ABILITY ENTERPRISE CO., LTD. Subsidiary of investee evaluated under the equity method (Note 3) Directors, Supervisors and key management Directors, Supervisors and key management Others (related parties with non...

  • Page 177
    ... the Company before May 31, 2010. Intercompany transactions from January 1 to May 31, 2010 and the year ended December 31, 2009 have been eliminated. Note 4: Subsidiary of investee accounted for under the equity method from June 1 to December 30, 2010. Note 5: BOARDTEK (H.K.) TRADING LIMITED changed...

  • Page 178
    ...PEGATRON Others (7) Assets transactions A. Sale of long-term Investment 2009/1/1~12/31 Item Related party AVY Long-term investment PRECISION under the equity method - ASHINE PRECISION Sales price $ 177,466 Disposal Book value gain (Note) $ 143,812 $ 33,654 Note: Disposal gain included realized and...

  • Page 179
    ...Salaries Incentives Distribution of earnings Employees' bonuses Note: Please refer to the Company's annual report for the related information. 6. PLEDGED ASSETS Pledged assets Other current assets and other assets-others－pledged time deposit and inventory Notes receivable Refundable deposits and...

  • Page 180
    ... of flash memory chips. In July 2009, B company also filed an investigation with the United Sates International Trade Commission (ITC) against the Company's suppliers and its customers. In 2010, B Company and Supplier S have reached a settlement. (5) In May 2010, as US G Company filed a lawsuit...

  • Page 181
    ... as follows: Year 2011 2012 2013 2014 2015 and after 8. SIGNIFICANT DISASTER LOSS: None. 9. SUBSEQUENT EVENTS: 1) The Board of Directors of the Company in December, 2010 adopted a resolution to buy back 10,000,000 shares of the Company's issued and outstanding stocks as treasury stocks from December...

  • Page 182
    ...instruments Book value Non-derivative financial instruments Assets Financial assets at fair value through profit or loss Available-for-sale financial instruments Financial assets held to maturity Financial assets carried at cost Liabilities Bonds payable (including current portion) Long-term loans...

  • Page 183
    ... on the interest rate of long-term loans with similar conditions. Based on the results of the evaluation, the fair value is close to book value. 3) Procedure of financial risk control The Group adopted a comprehensive risk management and control system to identify all market risks. Therefore, the...

  • Page 184
    ... risk of foreign currency exchange rate changes does not have material impact on the Group. B. The open-end funds and stocks of listed companies held by the Group are classified as financial assets measured at fair value through profit or loss and available-for-sale financial assets. As these assets...

  • Page 185
    ... dedicate the OEM business, the Company resolved to decrease its authorized capital and transfer its OEM business (the Company's long-term equity investment in PEGATRON) to the Company's another investee, Pegatron Investment, on June 1, 2010. The consolidated subsidiaries had been changed due to the...

  • Page 186
    ... and the acquisition price is $57.5 (in dollars) per share. 11. Segment Information 1) Industrial information The Group is engaged in a single industry and is mainly engaged in the design, production and sale of main boards. 2) Geographic information 2010 Asia Pacific Taiwan (except Taiwan) $108,541...

  • Page 187
    ... income of subsidiaries Identifiable assets Long-term investments under equity method Goodwill Total assets $308,904,848 $189,996,503 $195,361,663 ($ 327,364,564) 366,898,450 2,145,776 962,876 $ 370,007,102 3) Export sales Export sales to geographic areas in 2010 and 2009 are as follows: Asia...

  • Page 188
    ... and accounts receivable for the sales of products went up. 2. Long-term investment, intangible assets, and other assets: The long-term investment was decreased due to the split this year with Pegatron Corporation, OEM business group. 3. Current liabilities: It was due to the economic recovery of...

  • Page 189
    ... profit Operating expense Operating income Non-operating income and gain Interest income Investment income (Equity Method) Dividend income Gain from exchange Gain from financial asset valuation Gain from financial liability valuation Other income Total non-operating income and gain Non-operating...

  • Page 190
    ... of sales combination 2,002,027 Difference of quantity 1,978,627 Difference of price 1,545,414 The increase of gross profit of the year is from the favorable difference of quantity, price, and combination. III. Analysis of cash flow (I) Liquidity analysis of the last two years Year 2010 Item...

  • Page 191
    ..., ASUS TECHNOLOGY INCORPORATION, ASUS COMPUTER INTERNATIONAL, ASUSTEK COMPUTER (SHANGHAI) CO. LTD. and ASUS COMPUTER GmbH. VI. Risk analysis and evaluation in recent years and up to the date of the annual report printed: (I) The impact of interest rate, exchange rate, and inflation on the company...

  • Page 192
    ...graphic card (3) Intelligent phone GPS (4) Ultra Mobile PC (5) High-speed router / exchanger / firewall / VPN (6) New-generation advanced server (7) Professional LED display (8) WiMAX broadband products (9) Eee PC touch, long-lasting computer (10) Eee Top PC and Eee Box PC (11) Eee Note (12) Eee Pad...

  • Page 193
    ... significant risks and responsive measures: N/A (XIV) Risk management policy, structure and function 1. Risk management policy ASUSTeK has the Risk Control & Contingency Policy stipulated to secure the ongoing concern of the enterprise and to fulfill corporate social responsibility to stakeholders...

  • Page 194
    ...management Board of Directors Chairman Corporate Sustainability Office Corporate Sustainability Officer Risk Management Center Chief Executive Officer Human Resources manager Supply Management manager ADM manager Financial Management manager Customer Service manager Handheld Business manager...

  • Page 195
    ... 25% of the brand value of ASUSTeK. The core members for strategic planning and enforcement of risk management include [Ongoing Concern Office] Director, Deputy Director, and [Risk Management Center] Chief Officer. 4. Action procedure of risk management (1) Consider internal and external environment...

  • Page 196
    ...of ASUS and the related party includes computer-related product design, production, processing, and sales. Some related parties are in the business of investment. In general, the collaboration within the organization is to generate the best result through reciprocal support in technology, production...

  • Page 197
    ... Chart (2010.12.31) - (1) Asustek Computer Inc. 77% ASUS SHINEWAVE International INTERNATIONAL 100% ASUS ASUST EK 85% ASUS ASUS INTERNATIONAL 100% ASMEDIA TECHNOLOGY 100% ASUSchannel 51.00% SHOU-YANG TECHNOLOGY 100% Holland TECHNOLOGY 100% HOLDINGS LIMIT ED United Technology Co., Ltd...

  • Page 198
    ...% 100% Openbase Limited 100% UNI Leader International Ltd. 100% Magicom International Corp 100% AGAIT TECHNOLOGY (SHENZHEN) LIMITED 100% Enertronix (HuiZhou) Ltd Famous Star BIG Profit Investments Limited Limited 100% 100% ASHINE TECHNOLOGY (SUZHOU) LTD. 100% Askey T echnology (Jiangsu...

  • Page 199
    ... INC. eCareme Technologies, Inc. ASUS HOLLAND B.V. ASUSchannel CORPORATION ASUS INTERNATIONAL LTD. ASUS COMPUTER CORPORATION UNIMAX HOLDINGS LIMITED 195 Unimax Electronics Inc. 14,565 Sales and repair service center in North America Trading electronic appliances, communication 190,000 appliances...

  • Page 200
    ... Spain Researching and developing LCDs, computers, main boards and the peripherals of related 577,923 multimedia and network communication products, and providing after-sales service 73,431 Sales and repair service center in Japan ASUSTEK COMPUTER (SHANGHAI) CO. LTD. 89.06.09 Shanghai, China ASUS...

  • Page 201
    ... Islands (Note 1) International trading Repairing computers, electronic components and related products, and providing after-sales service Database service, wired communication, manufacturing mechanical equipment, and 201,000 manufacturing, selling and developing ink-jet printing technology 402...

  • Page 202
    NAME OF CORPORATION 93.03.31 97.01.03 2010.12.01 Taipei City Samoa Islands 15,221 Providing management consultant service Taipei City 400,000 DATE OF ESTABLISHMENT ADDRESS CAPITAL MAJOR BUSINESS / PRODUCTION ITEMS Designing products and data software, information processing and supply ASMedia ...

  • Page 203
    ... Affiliated Enterprises As of 12/31/2010 NAME OF CORPORATION TITLE NAME OF PERPRESENTATIVE Asustek Computer Inc.（Representative：Jonathan Tsang） Asustek Computer Inc.（Representative：Jonney Shih） Asustek Computer Inc.（Representative：Jerry Shen） Asustek Computer Inc.（Representative...

  • Page 204
    ... Director Director Supervisor Supervisor NAME OF PERPRESENTATIVE RUI HAI INVESTMENT CO., LTD. （Representative：Ing-Jen Lee） Asustek Computer Inc.（Representative：Jonney Shih） Asustek Computer Inc.（Representative：Jonathan Tsang） Asustek Computer Inc.（Representative：Jerry Shen...

  • Page 205
    ... LTD. AGAiT Technology Corporation（Representative：Jerry Shen） AGAiT Holding Ltd.（Representative：T.C. Chen） Hua-Min Investment Co., Ltd.（Representative：Jonney Shih） International United Technology Co., Ltd. (Representative：Jerry Shen) Director International United Technology Co...

  • Page 206
    2. Summarized Operation Results of Affiliated Enterprises In thousand NTD / as of 12/31/2010 CAPITAL NET WORTH TOTAL ASSETS TOTAL LIABILITIES NET OPERATING REVENUES OPERATING INCOME (LOSS) NET INCOME (LOSS) EARNING (LOSS) PER SHARE(NTD) NAME OF CORPORATION 14,565 (692,724) 11,274,226 2,593,995 ...

  • Page 207
    ... ASUS COMPUTER Czech Republic s.r.o. ASUSTEK COMPUTER (SHANGHAI) CO. LTD. ASUS CZECH SERVICE S. R. O. ASUS Hungary Services Limited Liability Company ASUS PORTUGAL, SOCIEDADE UNIPESSOAL LDA. ASUS SWITZERLAND GmbH SHINEWAVE INTERNATIONAL INC. eMES (SHUZHOU) CO., LTD. AGAiT Technology Corporation...

  • Page 208
    ...-Min Investment Co., Ltd. MOBOSTAR TECHNOLOGY Ltd. Askey Computer Corporation Askey International Corp. Dynalink International Corp. Magic International Co., Ltd. Askey (Vietnam) Company Limited Big Profit Limited Famous Star Investments Limited Magicom International Corp. Askey Technology (Shanghai...

  • Page 209
    ...,915 - (86) (5,360) Note 1 (1.96) - WUJIANG WILL STAR INVESTMENTS LIMITED ASMEDIA TECHNOLOGY INC. GREAT EXTEND INVESTMENT CORP. Shuo Yang Technology Co. Ltd. Note 1: It's not applied to company limited. Note 2: The Company had lost of control over Pegatron Corporation since June 1, 2010. 205

  • Page 210
    ..., and the design and enforcement of internal control system is free of material misstatement and is able to ensure the realization of the aforementioned objectives. 6. The Declaration of Internal Control is the content of our annual report and prospectus for the information of the public. For any...

  • Page 211
    ASUSTek Computer Inc. Chairman 207