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321
2357
ASUSTeK Computer Inc.
2012 ANNUAL REPORT
yTaiwan Stock Exchange Market Observation Post SystemǺhttp://newmops.twse.com.tw
yASUS annual report is available at http://taiwan.asus.com.tw/investor.aspx
Printed on April 19, 2013

Table of contents

  • Page 1
    2357 ASUSTeK Computer Inc. 2012 ANNUAL REPORT yTaiwan Stock Exchange Market Observation Post SystemǺhttp://newmops.twse.com.tw yASUS annual report is available at http://taiwan.asus.com.tw/investor.aspx Printed on April 19, 2013 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 Luxeburg Stock Exchange: http://www.bourse.lu VI. COMPANY WEBSITE http://www.asus.com...

  • Page 3
    ... or stock shares transferred with new stock shares issued...8. Fund implementation plan ...V. Overview of business operation...1. Principal activities ...2. Market analysis and the condition of sale and production ...3. Status of employees ...4. Expenditure on environmental protection ...5. Employee...

  • Page 4
    ... in regard to investment plans in current year and the next year...6. Risk management ...7. Other important matters ...VIII Special disclosures ...1. Related party ...2. Subscription of marketable securities privately in the most recent years ...3. The stock shares of the company held or disposed by...

  • Page 5
    ..., ASUS cooperated with Google for the release of first Jelly Bean Tablet Nexus 7, the first tablet to be equipped with the latest Android 4.1 Jelly Bean operating system. Nexus 7 combines the strong hardware design power from ASUS and the latest software service from Google, taking the advantage of...

  • Page 6
    ... supply and demand from touch panel productivity and the slightly high price slows down the quantity of end-user products. Additionally, NPD market research suggested that the shipment for tablet pc in 2013 will surpass that of laptop computer while the market share will break 5% for the first time...

  • Page 7
    ...1990 while the 486-mother board technology was difficult and expensive. ASUS was in control of advanced product technology and marketing. The market demand for advanced motherboard was growing this year. The profit of 486 in this month exceeded the profit of 386 for the first time that meant the 486...

  • Page 8
    ...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 to NT$308...

  • Page 9
    ... of the Year Award" and "Enterprise of the Year Award." China Credit Information Service Ltd. had the company's business performance ranked in the 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...

  • Page 10
    ... the 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...

  • Page 11
    ..., and functional pocket PC. Increased the paid-in capital to NT$19.988 billion with retained earnings. Awarded as the excellent health and safe institute nationwide. Asia Week ranked ASUS in the Top-10 of Chinese Businessmen 500. The company had 17 million mother boards shipped this year; therefore...

  • 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
    ... stock exchange and strategic alliance; then, the company entered industrial computer field. ASUS entered CES exhibition for the first time to take advantage of the wave of digital family. W5A NB was awarded with CES Innovative Design & Technology Award. The consolidated income of the year amounted...

  • Page 14
    ...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 operated with...

  • 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 ASUS UL Series demonstrating Turbo 33 duo-core effect, 12-hour long-lasting power, 1" super-thin notebook, broke the myth of permanence and efficiency conflict, and setup a brand new standard of mobile computation. ASUSTeK was awarded for innovation in energy-saving effort. ASUS computer...

  • Page 17
    ... G51 3D notebook of ASUS was awarded with the 2010 Taipei International Computer "Product of the Year Award" and "Display & Digital Entertainment Award." Eee PCâ„¢ 1015PE was awarded with the RedDot Design Award in Germany and "Green ICT Award" of COMPUTEX 2010. AP-N53 Mini Dual Band Wireless Router...

  • Page 18
    ... "ASUS Private Clouding" to integrate clouding platform, enterprise application software and comprehensive solutions for server systems, so that enterprises can quickly build exclusive private clouds with convenience and safety all in one. ASUS officially released the worlds' first 4-core processor...

  • Page 19
    ... the latest Android 4.1 Helly Bean operating system. Nexux 7 combines the robust hardware design power of ASUS and th latest Google software service, ntegrating the most outstanding hardware/software with advantages that will shake up the mobile communication market. ASUS released the PadFoneš 2 in...

  • Page 20
    .... Customer Service Center III. Corporate governance report DivisionManagement HQ Power R&D Div. EM & Wireless Communication R&D Div. Firmware R&D Center ASUS Design Center R&D Center I. Corporate Organization (I) Organization Chart Open Platform Business Group Systems Business Group 16...

  • Page 21
    ... Business Group Open Platform Business Group is responsible for the R&D and operation of open platform business. R&D Center, ASUS Design Center, Firmware R&D Center, EM & Wireless Communication R&D Div. and Power R&D Div. Develop the common R&D technology need by each business unit. Management...

  • Page 22
    ... spouses or second consanguinity Relation 1. Directors and Supervisors Title % Name Term Date elected Note (appointed) 10 Date of first elected Shareholding when elected Shares Shares held by other persons in their name Shares % Chairman Jonny Shih 2.36 0.19 0.27 Manager of ACER 2011.06 30...

  • Page 23
    ... AGAITECH HOLDING LTD. Director of the following companies: ASKEY, Axus Microsystems Inc., ASUS TECHNOLOGY INCORPORATION, AAEON TECHNOLOGY INC., Hua-Cheng Venture Capital Corp., Hua-Min Investment Co., Ltd. and ASUS COMPUTER INTERNATIONAL. Note 4: Chairman of the following companies: ASUS CLOUD...

  • Page 24
    ...the first three categories; Ȑ5È'Not a Director, Supervisor, or employee of the legal shareholder that holds over 5% of total stock issued directly or indirectly; or on the top-five shareholdings list of the Company; Ȑ6È'Not a Director (executive), Supervisor, management, or a shareholder with over...

  • Page 25
    ... 1 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 President of Open Jonathan 2nd Platform Tsang consanguinity Business Group Chief Branding Officer Jonney...

  • Page 26
    ... transliteration of company's name or individual's name. Education and training of the management Sponsor Course \ Name Training Date Start End Chief Financial Officer Accounting Research and Development Foundation in Taiwan David Chang Sep 25, 2012 Sep 26, 2012 Continud Advanced Course...

  • Page 27
    ... Stock number of limit From Distributable Earnings (G) Option on employee new (Estimated amount) Certificates (H) bonus share (I) The company The company Cash dividend dividend dividend dividend Stock Cash Stock Remuneration (A) Pension (B) Ratio of A+B+C+D+E +F+G to Net income (%) Title Name...

  • Page 28
    ... from Business expense! retained earnings (C)! (B) Ratio of A+B+C to Net income! Remuneration from the invested company other than the company's Companies in subsidiary! the financial statements! Title! The company Companies in the financial statements! Name! The company Companies in the financial...

  • Page 29
    ... statements financial Cash statements dividend Companie s in the The company! Stock Cash Stock dividend dividend dividend Remuneration from the invested company other than the company's Companies subsidiary in the Chief Branding Officer Jonney Shih President of Open Platform Business Group...

  • Page 30
    ...Managers who received dividend and the distribution of dividend Stock Dividend Total Cash Dividend (estimated amount) Ratio of total amount to net income (%) Title Name Chief Branding Officer Jonney Shih President of Open Platform Business Jonathan Tsang Group Chief Executive Officer Jerry Shen...

  • Page 31
    ...since the company does not have directors who need to have themselves excluded from the meeting due to a conflict of interest. 3. The goal and the enforcement of reinforcing the function of the board of directors in the most recent years (for example, setup an Auditing Committee, upgrade information...

  • Page 32
    ... stated in the board meeting, the date, term, the content of the case, the resolution reached, and the company's response to the supervisor's opinion must be stated in details: None. ! 2. Operation of audit committee: Not applicable since the Company did not have an audit committee setup. 28

  • Page 33
    ... by phone and e-mail. No deviation Under consideration No deviation No deviation 4. Publication of information (1) The company has a website setup to 1. The company has a website No deviation disclose financial information and (http://www.asus.com) setup to disclose business management financial...

  • Page 34
    ... 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 corporate...

  • Page 35
    ... the company. iv. The proportion of dividend payout to directors and senior managers in short-term performance and the payout time for some changing salary and remuneration should be determined with consideration of industry characteristics and the business nature. 2. Operations of ASUS Compensation...

  • Page 36
    ... total stock issued directly or indirectly; or on the top-five shareholdings list of the Company; (6) Not a Director (executive), Supervisor, management, or a shareholder with over 5% shareholdings of a company or organization that is in business with the Company; (7) Not an owner, partner, Director...

  • Page 37
    ... agenda shall indicate the date of Board Meeting, term, agenda content, outcome of board resolution, and the company actions to opinions brought by Remuneration Committee (For remuneration approved by the Board of Directors surpassing the recommendation brought by the Remuneration Committee, provide...

  • Page 38
    ...on the also, drafts up energy saving and carbon reduction and greenhouse gas reduction strategy corporate sustainability report and ASUS CSR website. ASUS products have undergone ecological design to enhance energy use efficiency for reduction in greenhouse gases. Compared with 2011, ASUS reduced by...

  • Page 39
    ... and (4) ASUS has setup consumer complaints procedures and methods by 0800-093-456 Technical Service Hotline / e-mail or Support effective consumer complaints procedures provided for ASUS website at http://support.asus.com.tw products and services (5) ASUS works with suppliers to upgrade corporate...

  • Page 40
    ... to the business sustainability report and website of ASUS at http://csr.asus.com/chinese/index.aspx#120 7. Please detail if ASUS products or corporate social responsibility report is certified by any institutions: The 2011 Corporate Sustainable Report announced in 2012 was certified by GRI (Global...

  • Page 41
    ... 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 measures and control includes labor safety and...

  • Page 42
    ...has based its long-term orientation and goal on "shortening digital gap," "upgrading innovative ability," "incubating science and technology talents," "promoting industry and academy collaboration," and "promoting environmental protection and energy saving." ASUS has ASUS Foundation setup in 2008 to...

  • Page 43
    ... to share the research report and learning experience, helping the children with successful learning of computer technology use. The finalist teams taking part in the award ceremony in Taipei also provides children from remote area with opportunity to expand horizon. The aboriginal students and...

  • Page 44
    ... operations, upgrade of old computers and computer need for disadvantaged families. ASUS provide donation for recycled computers for long-term support so that centers can establish multimedia rooms and hire professionals to help the foster children and youth as well as drop-out students with use...

  • Page 45
    ... secretary office in the past 4 years. The FB and ASUS websites have been used to share the digital learning centers of non-profit seeking organization in different countries to promote digital learning success tories for young students in remote or poverty area. - Cooperation with ASUS campus CEO...

  • Page 46
    ... in 2012 by donating 61 computers (40 computers are recycled) to the 3 schools for establishing ASUS Computer rooms to help local students with digital learning. - Overseas donation: ¾ International volunteer plan: cooperating with computer classroom and international volunteer serice, a total of...

  • Page 47
    ... Philippines and ASUS campus CEO. - The activites are planned and executed by advisors and students in divided work for international volunteer services, combined with non-profit seeking organization overseas receiving computers donated from ASUS (digital learning center) to use green technology and...

  • Page 48
    ... Protection and Energy Saving and Carbon Reduction Mark." 6. Participate in the CDP Supply Chain Program of the Carbon Disclosure Project (CDP) in 2010 and 2011; also, asked suppliers to fill out the questionnaires and disclose the responsive strategies of the ASUS suppliers to global change issues...

  • Page 49
    ...ASUS at http://csr.asus.com/english/ for the updated information of corporate social responsibility. Please refer to the following website for ASUS's business operation report (Chinese) (English) http://csr.asus.com/chinese/index.aspx#120 http://csr.asus.com/english/index.aspx#114 (VI) ASUS performs...

  • Page 50
    ... to the Board of Directors. 3. Establish reporting channel and Reporting channel : [email protected] No deviation punishment for violation of integral Punishment and complaint filing system: operation rules as well as the Handled in accordance with the "Work operations for complaint filing Rules " of...

  • Page 51
    ... or by the board of directors in the most recent years and up to the date of the annual report printed: 1. The important resolutions of the general shareholder meeting: Time June 12, 2012 Subjects Enforcement 1. The company's 2011 financial statements were resolved in the board meeting and audited...

  • Page 52
    ...Investment Management" 4. Adopted Poposition for "2013 Annual Audit Plan" 5. Adopted revision to "Board of Directors Agenda Specification" 6. Adopted contribution to "ASUS CULTURAL AND EDUCATIONAL FOUNDATION." Jan 30, 2013 Adopted change for listing and trade location for GDR. Mar 27, 2013 1. Report...

  • Page 53
    ... for the said change must be disclosed: None. V. CPA's information: None. VI. If the chairman, president, and financial or accounting manager of the company who had worked for the independent auditor or the related party in the most recent year, the name, title, and the term with the independent...

  • Page 54
    ...: (1) Information on Net Change in Shareholding 2012 Title Name Net Change in Shareholding 0 Net Change in Share Pledged 0 As of April 19 Net Change in Shareholding 0 Net Change in Share Pledged 0 Chairman & Chief Branding Officer Vice Chairman & President of Open Platform Business Group Director...

  • Page 55
    ... managed Infinite Growth Companies Standard Chartered managed Van Gardner emerging market stock index fund account New labor pension fund Governemnt of Singapore Investment Commissioned to Citibank (Taiwan) ChungHwa Post Co., Ltd. Old labor pension fund Public Service Pension Fund Management Board...

  • Page 56
    ... of Directors, Supervisors, Managers and directly or indirectly controlled business on the reinvested business and the total shareholding ratio: Total Shareholding Ratio Baseline date: 12.31.2012, Unit: Share; % Investment of the Company Shares ASUS TECHNOLOGY INCORPORATION Askey Computer...

  • Page 57
    Reinvestment Investment of the Company Shares % Investments from Directors, Supervisors, Managers and directly or Indirectly Controlled Business Shares % 2,120,000 11,422,000 30,033,000 44,419,424 5 500,000 5,300 50,000 358,433 20,002 1,000 20,134,400 375,...

  • Page 58
    ... of the Company Shares % Investments from Directors, Supervisors, Managers and directly or Indirectly Controlled Business Shares % 950,000 350,000 33,500,000 100.00 100.00 100.00 100.00 Total Investment Shares 950,000 350,000 33,500,000 - % 100.00 100.00 100.00 100.00 ASUS SERVICE AUSTRALIA PTY...

  • Page 59
    ... LIMITED AGAIT TECHNOLOGY (SHENZHEN) LIMITED AGAIT INTELLIGENT TECHNOLOGY (SHENZHEN) CO. LIMITED ASUS CLOUD SINGAPORE PTE. LTD. ENERTRONIX HOLDING LIMITED ENERTRONIX INTERNATIONAL LIMITED Enertronix (HuiZhou) Ltd. UNIMAX HOLDINGS LIMITED WAVEFACE HOLDING COMPANY LIMITED NEXT SYSTEM LIMITED...

  • Page 60
    ... Investment of the Company Shares % ! ! ! Investments from Directors, Supervisors, Managers and directly or Indirectly Controlled Business Shares % 465,840 10,000,000 100,000 100.00 100.00 100.00 100.00 21.81 17.80 7.74 100.00 100.00 51.11 53.76 100.00 Total Investment Shares 465,840 10...

  • Page 61
    .... Stock Subscription I. Capital and shares (1) History of capitalization 1. Type of shares April 19, 2013 / 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 62
    ...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... 2,998,184 29,981,838 Stock shares $736,629,610 2006.04 2006...system: None 58

  • Page 63
    ...% 2.39% 60.06% 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 19, 2013 Shareholding Shareholder's Name ASUS's Certificate of Depository with CitiBank Shareholding 30,881,357 Shareholding Ratio...

  • Page 64
    ... lowest market price per share; also, calculate the average market price per share in accordance with the trade amount and shares. Note 2: Please base the information on the shares issued at yearned and the resolution for stock distribution in shareholders meeting. Note 3: If the stock dividend is...

  • Page 65
    ... the report printed on April 19, 2013 for data accuracy. (6) Execution of Dividend Policy 1. Dividend Policy The company is in a changing industrial environment and a growing industrial life cycle. For the company's long-term financial planning and the shareholder's need for cash inflow, the annual...

  • Page 66
    ... 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 67
    ... Note 1: Location for issuance and trade changed from London to Luxemburg starting March 28, 2013. US$235, 830,000 US$11.23 / GDR 21,000,000 GDRS One GDR stands for one common stock share of ASUS Note 2: The Company's stock exchange ratio has changed from one GDR for one common stock share to one...

  • Page 68
    ...Citibank Taiwan Limited 6,279,676 GDRS (December 31, 2012) It is to be amortized in three years on average after issuance according to Article 243 of Company Law Please refer to Attachment B US$ 58.00 US$ 39.00 US$ 49.02 US$ 62.50 US$ 51.50 US$ 58.41 Total marketable security shares recognized Price...

  • Page 69
    ... other rights: (1) Entitled to distribution of dividend and stock shares just like the common shareholders of ASUS. GDR institute may have GDR issued proportionally to shareholdings or increase the common stock shares recognized with each GDR or have stock dividend sold on behalf of GDR holders and...

  • Page 70
    ... new stock shares issued: (1) The merger completed, stock shares transferred, 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...

  • Page 71
    ... d. NB e. Eee Pad f. PadFone g. LED display h. Broadband & communication products i. Advanced server 2. Product development projects a. Digital control wireless transmission technology dual core CPU MB b. Advanced 3D image display and wireless TV transmission graphic card c. Multi-function, three-in...

  • Page 72
    ...to use, connection, and service in depth reinforced in order to provide the more comprehensive products and solutions: notebook, nettop, e-books, Tablet PC, super personal computer, home server, storage equipment, and communication products that allow users enjoying the convenience provided by Cloud...

  • Page 73
    ... brand name in market. (III) Research and Development ASUS has striven in R&D since the day of incorporation to control self-developed technology for the R&D, production, and marketing of advanced MB, Graphics Cards, Notebook, Eee PC, Server, mobile phone!and to develop 4C (computer, communication...

  • Page 74
    ...Pad j. Touch Windows Notebook & Tablet (IV) Long-term and short-term development plan 1. Short-term development plan ASUSTeK will continue to exercise the brand spirit of "Search Incredible" to develop products with the quality of green technology, multimedia video and audio entertainment, and Cloud...

  • Page 75
    ... open mind, building a versatile solution for the new generation of cloud computing. II. Market analysis and the conditions of sales and production (1) Market analysis 1. Sales regions Unit: NT$ thousands Year 2011 2012 Item Subtotal Total Subtotal Total Domestic operating income Internal operating...

  • Page 76
    ... year before. ASUSTeK had done well with this product in market. (3) Short-term development of IT industry; On the arrival of Cloud Computing era, ASUSTeK plans to introduce a series of Cloud Computing related services and products with a specific solution designed for the cloud computing of mobile...

  • Page 77
    ... in power saving and environmental protection. Moreover, ASUSTeK expects have a more flexible and efficient organizational operation with two business groups formed including: System business group and open platform business in order to collect recourses and respond to market changes with responsive...

  • Page 78
    ...to improve the management effectively. Product and technological development (1) Advantages a. ASUS is with a strong R&D team for the development of MB, Graphics Cards, CD-ROM, NB, server, desktop computer, Intelligent Navigation phone, wireless broadband mobile device, and Eee series. The excellent...

  • Page 79
    ... mobile device should be linked to personal life; therefore, the most important communication interface is wireless broadband communication technology. For the development of the professional and star product, it is necessary to control the key technology for developing marketable products and ASUS...

  • Page 80
    ... Net sales amount Note 1: The 2013Q1 financial statements audited by the CPA were not yet available up to the print of annual report on April 19, 2013. Note 2: Causes of increase and decrease - for business operation (V) Production/Sales Quantities and Value over the Past Two Year: Not Applicable...

  • Page 81
    ... carbon credit trading. The company was awarded with the Implementation of Neutrality Certificate in compliance with PAS 2060 from DNV. 5. ASUS fellows will join environmental protection organizations and get involved in environmental protection activities. 6. ASUS has promoted green product and...

  • Page 82
    ...and awards as a leading green high-tech enterprise should be.! 1. ASUS has complied with global environmental regulations: ASUS has GreenASUS setup to monitor and to respond to global environmental protection regulations including RoHs, WEEE, ErP, REACH, product energy efficiency and applicable laws...

  • Page 83
    ... Management) from IECQ in 2012 to become the world's first computer company that has been awarded with such special prestige. Again, ASUS's commitment in environmental protection and green mobility are highly recognized. (2) After achieving the first Taiwan laptop computer to comply with EPEAT Gold...

  • Page 84
    ... Product Design from the 2011 Energy Star Awards held by US Environmental Protection Agency. (5) ASUS won the Green ICT Award from the Best Choice Award in 2012 Taipei Computex. (6) Asus halogen free monitor, VW247H-HF and Bamboo notebook series, U43SD, have concurrently been awarded Green ICT Award...

  • Page 85
    ... 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 plan ASUS has promoted the "Learning & Growth Plan" forcefully to help the management assist employees...

  • Page 86
    .... ASUS has a series of training courses and learning resources planned for the staffs taking as a whole. The training course includes orientation, newly promoted directors training, core value training, management functions training, and professional competence training. In addition to the internal...

  • Page 87
    ...code and 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 also re...

  • Page 88
    ... who are responsible for special working process annually for their own protection and safety.! 3. Establishment of medical units There are nurses at the ASUS Medical Units to care for the staff; also, physicians are there to provide outpatient and advisory service to the staff. 4. ASUS setup EAP...

  • Page 89
    ...workers education and training and health inspection to ensure the health of workers responsible for special working process. (V) Retirement plan In response to the company's having the business operation dividend into brand name business and OEM/ODM since 2008, the seniority of the workers with ROC...

  • Page 90
    VI. Financial Information I. Condensed balance sheet, income statement, and auditor's opinions over the last five years (I) Summarized Balance Sheets Unit: NT$ thousands Year Item Current Assets Funds & investments Fixed assets Intangible Assets Other Assets Total Assets Before allocation Current ...

  • Page 91
    ...Note 3: The 2013Q1 financial statements have not yet been audited by CPA up to the date of the report printed on April 19, 2013. (II) Summarized Income Statements Unit: NT$ thousands Year Item Net sales Gross Profit Operating Income Non-operating Income Non-operating Expenses Income from Continuing...

  • Page 92
    ... 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 (%) Ratio to issued Operating income...

  • Page 93
    ... 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 94
    ... period of the capitalization. 4. If preferred stock shares are nonconvertible and cumulative, the dividend of the year (whether it is distributed or not) should be deducted from net income or added to the net loss. If preferred stock shares are not cumulative, preferred stock dividend should be...

  • Page 95
    ... in the most recent years ASUSTek Computer Inc. SUPERVISORS' REPORT The Board of Director has prepared the Company's 2011 business report, financial statements and distribution of profits. All of the above have been reviewed and determined to be correct and accurate by the undersigned. According...

  • Page 96
    ...assets: An increase from sale of financial assets and investment accounted for using Equity Method. 3. Current liabilities: Due to the rise in revenue growth, accounts payable and accrued expenses from relevant stock preparation. ! 4. Long-term liabilities and other liabilities: Increase in deferred...

  • Page 97
    ...loss on valuation of financial liability compared with last year. 4. Estimated income tax expense: The result was an increase in income tax payable. (II) Analysis of gross profit Unit: NT$ Thousands Change amount Gross profit Remark 3,487,994 Root cause Difference of sales combination Difference of...

  • Page 98
    ...47.61ʘ (5.36)ʘ 897.62ʘ 2011 Financial ratio change Cash reinvestment ratio 4.19ʘ Analysis of financial ratio change: 1. Decrease of cash flow ratio this year: The increase of cash inflow for this year's operating activities is greater than the accounts payable and expenses for inbound material...

  • Page 99
    ... it with market movement to have unique and innovative information products developed. 1. Products development planned in 2012: (1) Digital control wireless transmission technology dual core CPU MB (2) Advanced 3D image display and wireless TV transmission graphic card (3) Multi-functional, three-in...

  • Page 100
    ... not any massive stock transfer or change by directors, supervisors, and shareholders with over 10% shareholding in 2012 and up to the date of the annual report printed. (XI) The impact of right to operation change on the company, the risk, and the responsive measures: Not Applicable (XII) Legal and...

  • Page 101
    e-mail, location service, digital image processor, AIO PC, Eee slate, Eee PC, PowerDirector, interactive video system, communication switch technique, and Tablet PC with user-selectable log in and unlock function against the Company. These lawsuits or investigations are currently under investigation...

  • Page 102
    ... The management of the Risk Control & Contingency Commission is responsible for risk control and procedure improvement. (6) Follow up the outcomes of risk control. The enforcement of the aforementioned stable procedure helps secure the company's brand image, enterprise reputation, and value creation...

  • Page 103
    ...) Consolidated financial statements of the related party: Please refer to Page 158-216. (III) Related Party Report: Not Applicable II. Subscription of marketable securities privately in the most recent years and up to the date of the report printed: None III. The stock shares of the company held or...

  • Page 104
    ... Organization Chart (2012.12.31) - (1) Asustek Computer Inc. 81.82% ASUS SHINEWAVE INTERNATIONAL 100% Hua-Cheng ASUS ASUST EK International ASMEDIA 84.99% ASUS INTERNATIONAL 100% AGAiT T echnology Corp. Venture Capital 100% Holland TECHNOLOGY 100% HOLDINGS LIMIT ED Technology Co., Ltd. 50...

  • Page 105
    ... Computer Inc. 100% ASUS INTERNATIONAL 37.65% UPI Semiconductor LIMIT ED Corp. 100% DEEP DELIGHT LIMIT ED LIMITED P ILOT CHANNEL 100% UNIMAX HOLDINGS LIMIT ED 100% 51% UPI Korea Corp. (Shenzhen) 100% UBIQ Semiconductor 100% UPI Corp. Ltd. ! Co., Ltd. 101 0.07% ASUS EGYPT TECHNOLOGY...

  • Page 106
    ASUS Organization Chart (2012.12.31) - (3) Asustek Computer Inc. 100% Askey Computer TECHNOLOGY 47% AAEON INC. Corp. 100% MAGIC INTERNATIONAL 100% Askey International ELECTRONICS, DEVELOPMENT TECHNOLOGY 100% 100% AAEON TECHNOLOGY 85% ONYX INVESTMENT HEALTHCARE Dynalink CO., LT D. Corp INC. ...

  • Page 107
    ... 107,250 Software R&D Computer security systems, messenger management systems, and automation systems 10,896 R&D; providing related technology and after-sales service Designing products and data software, information 563,879 processing and supply 20,091 Providing management consultant service GREAT...

  • Page 108
    ... products 88,416 Manufacturing and selling communication products Database service, wired communication, manufacturing mechanical equipment, and 201,000 manufacturing, selling and developing ink-jet printing technology -(Note 1) International trading 300,000 Designing and selling computer...

  • Page 109
    ... Computer (Shanghai) Co., Ltd. 619,278 Investing activities 63,346 Investing and trading activities Repairing computers, electronic components and 76,266 related products, and providing after-sales service 519 Investing and trading activities 160,060 Software R&D WAVEFACE HOLDING COMPANY LIMITED...

  • Page 110
    ...609,355 multimedia and network communication products, and providing after-sales service 69,057 Sales and repair service center in Japan 306 Sales and service center in Czech Republic Selling notebooks, main boards, medium-sized 309,549 computers, high-class personal computers, servers, and computer...

  • Page 111
    ...researching notebooks, main boards, medium-sized computers, highend personal computers, servers, and computer peripherals; 1,482,282 importing/exporting, wholesaling and integrating mobile communication equipment; and providing technology consulting and after-sales services 724,683 Sales and service...

  • Page 112
    ...99% É¡ É¡ 0.01% 3.33% 81.82% É¡ É¡ 11.86% 2.14% É¡ Askey Computer Corporation Enteronix, Inc. AGAiT Technology Corporation Hua-Cheng Venture Capital Corp. Hua-Min Investment Co., Ltd. AXUS MICROSYSTEMS INC. ASUS CLOUD CORPORATION ASMEDIA TECHNOLOGY INC. 24,748,727 43.89 518,400 0.92 5,424...

  • Page 113
    .... Director & President Supervisor Director Director ASUS COMPUTER INTERNATIONAL Director President Asus Holland B. V. Chairman ASUS INTERNATIONAL LTD Chairman Asustek Holdings Limited Chairman Central Tec Asia Ltd. Chairman DEEP DELIGHT LTD CHANNEL PILOT LTD. ASUS TECHNOLOGY PTE. LIMITED ASUS EGYPT...

  • Page 114
    ...ǺChang-Chu OuÈ' ASUS TECHNOLOGY PTE LTD. ȐRepresentativeǺChi-Yu TuÈ' ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺHideki SatoÈ' ASUS TECHNOLOGY PTE LTD. ȐRepresentativeǺHsiao-Min HsiehÈ' Director ASUS COMPUTER Czech Republic Director s.r.o. Director ASUS CZECH SERVICE S. R. O. Director Director...

  • Page 115
    ... Company Limited Magicom International Corporation Director Director Director Director Director Director Director ASMEDIA TECHNOLOGY INC. (RepresentativeǺCheWei Lin) ASUS CLOUD CORPORATION. ȐRepresentativeǺWu-Han ChangÈ' ASUS CLOUD CORPORATION ȐRepresentative Ǻ Darwin WuÈ' Askey Computer...

  • Page 116
    ... Company Limited UNI Leader International Limited Openbase Limited TITLE Director Director Director NAME OF PERPRESENTATIVE Magic International Company Limited(RepresentativeǺCheng-Kuei Lin*) Magic International Company Limited(RepresentativeǺCheng-Kuei Lin*) Magic International Company Limited...

  • Page 117
    ... OF CORPORATION TITLE Director Director Supervisor NAME OF PERPRESENTATIVE AAEON TECHNOLOGY INC. (RepresentativeǺDill Ha) AAEON TECHNOLOGY INC. (RepresentativeǺSteve Hsu) AAEON TECHNOLOGY INC. (RepresentativeǺJuno Tu) SHAREHOLDING SHARES AAEON TECHNOLOGY SINGAPORE PTE. LTD. Chairman AAEON...

  • Page 118
    ...107,250 10,896 563,879 20,091 114 ASUS COMPUTER INTERNATIONAL ASUS TECHNOLOGY INC. ASUS MICROSYSTEMS INC. ASUS HOLLAND B.V. Hua-Cheng Venture Capital Corp. Hua-Min Investment Co., Ltd. SHINEWAVE INTERNATIONAL INC. eMES (SHUZHOU) CO., LTD. ASMEDIA TECHNOLOGY INC. GREAT EXTEND INVESTMENT CORP. Askey...

  • Page 119
    ...Co., Ltd.(Samoa) AGAiT Technology Corporation AGAiTech Holding Ltd. AGAIT TECHNOLOGY (H.K.) CORPORATION LIMITED AGAIT TECHNOLOGY (SHENZHEN) LIMITED AGAIT INTELLIGENT TECHNOLOGY (SHENZHEN) CO. LIMITED Enertronix, Inc. Enertronix International Limited Enertronix Holding Limited Enertronix (HuiZhou) Co...

  • Page 120
    ... UPI Korea Co., Ltd. UPI Semiconductor Corporation Noveltek Semiconductor Corp. UPI-Semiconductor Corporation (Shenzhen) Ltd. ASUS CLOUD CORPORATION ASUS CLOUD SINGAPORE PTE. LTD. ASUSTEK HOLDINGS LIMITED CENTRAL TEC ASIA LIMITED ASUS COMPUTER (SHANGHAI) CO., LTD. WAVEFACE HOLDING COMPANY LIMITED

  • Page 121
    ... ASUS INTERNATIONAL LIMITED DEEP DELIGHT LIMITED CHANNEL PILOT LIMITED UNIMAX HOLDINGS LIMITED UNIMAX ELECTRONICS INC. ASUS TECHNOLOGY PTE. LIMITED ASUS Middle East FZCO ASUS COMPUTER GmbH ASUS COMPUTER Benelux B.V. ASUS FRANCE SARL ASUSTEK (UK) LIMITED ASUS TECHNOLOGY (HONG KONG) LIMITED ASUS KOREA...

  • Page 122
    ...SHANGHAI) CO. LTD. ASUS EGYPT L. L. C. ASUS CZECH SERVICE S. R. O. ASUS SERVICE AUSTRALIA PTY LIMITED ASUS AUSTRALIA PTY LIMITED ASUSTEK Computer (Chongqing) CO., LTD. ACBZ IMPORTACAO E COMERCIO LTDA. ASUS INDIA PRIVATE LIMITED ASUS Hungary Services Limited Liability Company ASUS PORTUGAL, SOCIEDADE...

  • Page 123
    ...operating effect and efficiency (including profits, performance, and assets safety), the reliability of financial report, and the obedience of relevant regulations. 2. Internal control system is designed with limitations; therefore, no matter how perfect it is designed, an effective internal control...

  • Page 124
    ... balance sheets of ASUSTEK COMPUTER INC. as of December 31, 2012 and 2011, and the related statements of income, of changes in stockholders' equity and of cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility...

  • Page 125
    ...position of ASUSTEK COMPUTER INC. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended, in conformity with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" and generally accepted accounting principles in...

  • Page 126
    ASUSTEK COMPUTER INC. BALANCE SHEETS DECEMBER 31, 2012 AND 2011 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) ASSETS Current Assets Cash and cash equivalents Financial assets at fair value through profit or loss current Available-for-sale financial assets - current Financial assets carried at cost ...

  • Page 127
    ASUSTEK COMPUTER INC. BALANCE SHEETS DECEMBER 31, 2012 AND 2011 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Financial liabilities at fair value through profit or loss - current Notes and accounts payable Notes and accounts payable - related...

  • Page 128
    ... COMPUTER INC. STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA) FOR THE YEARS ENDED DECEMBER 31, 2012 2011 AMOUNT % AMOUNT Items Operating revenues Sales revenue Sales returns and allowances Net sales...

  • Page 129
    ...these financial statements. See report of independent accountants dated March 27, 2013. 2011 Balance at January 1, 2011 Appropriations of 2010 earnings (Note 4(15)) Legal reserve Dividends transferred to common stock Cash dividends Effect of changes in ownership percentage of investee companies and...

  • Page 130
    ... Depreciation, amortization and impairment Cash dividends received from long-term equity investments accounted for under the equity method Investment income accounted for under the equity method Changes in assets and liabilities Financial assets at fair value through profit or loss - current Notes...

  • Page 131
    ...1. HISTORY AND ORGANIZATION (1) ASUSTEK COMPUTER INC. (ASUS or the Company) was established on April 2, 1990. The Company's common shares were listed on the Taiwan Stock Exchange (TWSE) on November 14, 1996. Its main activities are to produce, design and sell notebook PCs, main boards, software, add...

  • Page 132
    ... at fair value through profit or loss These financial assets are subsequently measured at fair value with changes in fair value recognized in profit or loss. Stocks of listed and OTC companies, convertible bonds and closed-end funds are measured at closing prices at the balance sheet date. Open-end...

  • Page 133
    ... for sale or not classified as financial assets at fair value through profit or loss, held-to-maturity financial assets, or loans and receivables. These assets are then measured at fair value. The difference adjustments arising from change in fair value, excluding impairment loss and exchange gain...

  • Page 134
    ...and deferred until realized. E. The investees over which the Company has control are accounted for under the equity method. The Company prepares consolidated financial statements on a quarterly basis. (7) Property, plant and equipment, leased assets and idle assets A. Property, plant and equipment...

  • Page 135
    ... computer software, which are amortized using the straight-line method over 3 years. Deferred expenses represent office renovations and decorations, which are amortized using the straight-line method over 2~5 years. (9) Impairment of non-financial assets A. The Company assesses all applicable...

  • Page 136
    ... pension plan, net periodic pension costs are recognized as incurred. (12) Income tax A. Income tax is calculated on the basis of accounting income. The differences between the tax bases and the book values of assets and liabilities are recorded as deferred tax using the enacted tax rates for...

  • Page 137
    ... financial reporting year, and after taking into account the effects of ex-rights and ex-dividends. The Company adopts SFAS No. 39 to account for the transfer of equity instruments from shareholders to the Group's employees. (15) Earnings per share A. Earnings per share of common stock is computed...

  • Page 138
    ... are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. 3. CHANGES IN ACCOUNTING PRINCIPLES (1) Notes and accounts receivable and other receivables Effective January 1, 2011, the Company adopted the amended SFAS No. 34, "Financial Instruments...

  • Page 139
    ... Period The main purpose of the Company's trading of derivatives was to hedge foreign currency risk from operating activities. As of December 31, 2012 and 2011, the Company did not meet the criteria for hedge accounting, so these derivatives were recognized at fair value as financial instruments...

  • Page 140
    ... the years ended December 31, 2012 and 2011, respectively. In 2012, an impaired stock investment was reclassified to long-term investments accounted for under the equity method as the Group gained control after acquisition of additional shares. Please refer to Note 4(7) for the detailed information...

  • Page 141
    ... provided with allowance for decline in value had been sold during the year ended December 31, 2011. (7) Long-term equity investments A. Details of long-term equity investments accounted for under the equity method are as follows: 2012/12/31 Carrying Investee company amount PEGA $ 23,099,053 AIL...

  • Page 142
    ... change its name to AAEON. (C) On April 23, 2012, the Group pooled $438,128 to acquire 49.5% shares of UPI SEMICONDUCTOR CORP. (UPI). From that date, the Group has control over UPI which was then accounted for under the equity method. F. After evaluating and comparing the carrying value of long-term...

  • Page 143
    ...067) - After evaluating and comparing the carrying value of idle assets and its recoverable amount, the Company recognized impairment loss amounting to $0 and $82,608 for the years ended December 31, 2012 and 2011, respectively. (11) Bonds payable The details of domestic unsecured convertible bonds...

  • Page 144
    ... of an increase in the number of common shares. On July 14, 2011, the Company adjusted further the conversion price to $269.2 (in dollars), considering the effect of capitalization from retained earnings. (F) Call option: The Company could redeem the convertible bonds at par value at any time during...

  • Page 145
    ... GDRs holding ratios. C. The Board of Directors authorized to transfer its GDRs from the London Stock Exchange to the Bourse de Luxembourg on January 30, 2013, and the change will take effect in late March 2013. (14) Additional paid-in capital The Company Act requires that capital reserve arising...

  • Page 146
    ...-term financial plan of the Company and the demand for cash by the stockholders, the Company should distribute cash dividends of not less than 10% of the total dividends declared. C. Except for covering accumulated deficit, increasing capital or payment of cash, the legal reserve shall not be used...

  • Page 147
    ...distribution. Information on the appropriation of the Company's employees' bonus and directors' and supervisors' remuneration as proposed by the Board of Directors and approved by the stockholders will be posted in the "Market Observation Post System" at the website of the Taiwan Stock Exchange. (16...

  • Page 148
    ... to the Securities and Exchange Act, the number of shares bought back as treasury stock should not exceed 10% of the number of the Company's issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realized...

  • Page 149
    ... change in exchange rate Tax-exempt cash dividends Others Income tax expense ( ( ( ( ( ( $ ( $ C. The components of deferred income tax assets (liabilities) are as follows: 2012/12/31 Deferred income tax assets: Unrealized gross profit Unrealized purchase discounts Allowance for decline in value...

  • Page 150
    ...was recognized as an adjustment to current income tax expense. E. Imputation credit account and creditable ratio ICA balance Creditable ratio for earnings distribution F. Unappropriated retained earnings Earnings generated in and after 1998 $ 2012/12/31 12,345,070 2011 (Actual) 17.43% $ 2011/12...

  • Page 151
    .../1/1~12/31 Weighted average Amount Before tax Net income for calculating basic earnings per share Dilutive effect of common stock equivalents: Convertible bonds Employees' bonus Net income for calculating diluted earnings per share ( $ 57,434) ( 19,738,031 $ 57,434) 16,520,725 7,994 4,694 766,464...

  • Page 152
    ... CLOUD CORPORATION (ASUSCLOUD) (Note 2) INTERNATIONAL UNITED TECHNOLOGY CO., LTD. (TAIWAN) (IUT) HUA-CHENG VENTURE CAPITAL CORP. (HCVC) HUA-MIN INVESTMENT CO., LTD. (HMI) AGAIT TECHNOLOGY CORPORATION (AGA) ENERTRONIX, INC. (EN) CHANNEL PILOT LIMITED (CHANNEL) ASUS TECHNOLOGY PTE. LIMITED (ASTP) ASUS...

  • Page 153
    ... TEC ASIA LIMITED (CTEC) ASUS COMPUTER (SHANGHAI) CO., LTD. (ACS) ASUS HUNGARY SERVICES LIMITED LIABILITY COMPANY (ACHU) ASUS PORTUGAL, SOCIEDADE UNIPESSOAL LDA. (ACPT) ASUS SWITZERLAND GMBH (ACCH) EMES (SUZHOU) CO., LTD. (EMES) GREAT EXTEND INVESTMENT CORP. (GEI) INTERNATIONAL UNITED TECHNOLOGY CO...

  • Page 154
    ... Company (ASKEYMWJ) ASUS CLOUD SINGAPORE PTE. LTD. (ASUSCLOUDSG) Subsidiary of the Company PEGATRON CORPORATION (PEGA) PIOTEK COMPUTER (SUZHOU) CO., LTD. (PIOTEK) PIOTEK (H.K.) TRADING LIMITED (PIOTEKHK) ASIAROCK TECHNOLOGY LIMITED (ASIAROCK) AZUREWAVE TECHNOLOGIES, INC. (AZURE) ABILITY ENTERPRISE...

  • Page 155
    ...(ASUSCH) ASUS COMPUTER CORPORATION (ACBVI) BIG PROFIT LIMITED (BP) MOBOSTAR TECHNOLOGY LIMITED (MOBO) Directors, supervisors, and key management of the Company Others (related parties with non-significant transactions) Relationship with the Company Subsidiary of investee company accounted for under...

  • Page 156
    ...control of the entity after February 2012. Subsidiaries that changed their names or merged with another entity are as follows: ECAREME TECHNOLOGIES, INC. changed its name to ASUS CLOUD CORPORATION on November 18, 2011. FULLTEK GLOBAL HOLDINGS LTD. changed its name to WAVEFACE HOLDING COMPANY LIMITED...

  • Page 157
    ... Compensation of key management 2012/1/1~12/31 2011/1/1~12/31 (Estimated) (Actual) Salaries $ 103,498 $ 105,072 Bonuses and service execution fees 186,958 172,882 Directors' and supervisors' remuneration and 292,480 225,660 employees' bonuses $ 582,936 $ 503,614 Note: The other information will be...

  • Page 158
    ... products with the image resizing and scanning format conversion, e-mail, location service, digital image processor, AIO PC, Eee slate, Eee PC, PowerDirector, interactive video system, communication switch technique, and Tablet PC with user-selectable log in and unlock function against the Company...

  • Page 159
    ...-for-sale financial assets are based on quoted market prices in an active market. If the market for a financial instrument is not active, an entity establishes fair value by using a valuation technique. The Company uses estimates and assumptions that are consistent with information that market...

  • Page 160
    ...value, the Company has risk exposure related to changes in fair value in an equity securities market. (C) Information on significant foreign currency denominated assets and liabilities: 2012/12/31 Foreign Currency (in dollars) Financial assets Monetary item USD Long-term equity investments accounted...

  • Page 161
    ... OTC stocks, which are traded in active markets and are expected to be readily converted into certain amount of cash approximate to their fair values in the market. The Company has lower funding risk for forward exchange contracts and currency option contracts because sufficient working capital is...

  • Page 162
    ... Auditors' Report To the Board of Directors and Shareholders of ASUSTEK COMPUTER INC.: We have audited the accompanying consolidated balance sheets of ASUSTEK COMPUTER INC. and its subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of income, of changes in...

  • Page 163
    ... time of transition; therefore, the impact of IFRSs adoption on ASUSTEK COMPUTER INC. and its subsidiaries may also change. PricewaterhouseCoopers, Taiwan March 27, 2013 The accompanying consolidated financial statements are not intended to present the financial position, and results of operations...

  • Page 164
    ASUSTEK COMPUTER INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2012 AND 2011 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) ASSETS Current Assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Available-for-sale financial assets - current ...

  • Page 165
    ... COMPUTER INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2012 AND 2011 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Short-term loans Financial liabilities at fair value through profit or loss current Derivative financial...

  • Page 166
    ...administrative Research and development Total operating expenses Operating income Non-operating income and gains Interest income Investment income accounted for under the equity method Dividends Gain on disposal of investments Foreign currency exchange gain, net Gain on valuation of financial assets...

  • Page 167
    ... paid to employees Dividends on shares held in trust transferred for increasing long-term equity investments accounted for under the equity method Foreign currency translation adjustments Effect of changes in valuation of available-for-sale financial assets Purchase of treasury stock Retirement of...

  • Page 168
    ...decrease) in short-term loans Redemption of bonds payable Increase in long-term loans Redemption of long-term loans Redemption of treasury stock Payment of cash dividends Changes in minority interests Others Net cash used in financing activities Effects due to changes in exchange rate Effects due to...

  • Page 169
    ...-term loans - payable in one year Dividends transferred to common stock Cash acquired from acquisition of subsidiaries Cash paid for acquisition Decrease in financial assets carried at cost Non-cash assets acquired Liabilities assumed Goodwill Minority interests Other losses Effects due to changes...

  • Page 170
    ...1. HISTORY AND ORGANIZATION (1) ASUSTEK COMPUTER INC. (ASUS or the Company) was established on April 2, 1990. The Company's common shares were listed on the Taiwan Stock Exchange (TSE) on November 14, 1996. Its main activities are to produce, design and sell notebook PCs, main boards, software, add...

  • Page 171
    ... financial statements and the Company's direct and indirect percentages of ownership are as follows: Ownership (%) Investor ASUS ASUS Subsidiary ASUS COMPUTER INTERNATIONAL (ACI) ASUS TECHNOLOGY INCORPORATION (ASUTC) Main activities Sales and repair service center in North America Trading...

  • Page 172
    ...AAEON) computer peripherals, electronic parts, precision equipment, wireless communication equipment and data software EMES (SUZHOU) CO., LTD. Computer security systems, (EMES) messenger management systems, and automation systems R&D; providing related technology and after-sales service GREAT EXTEND...

  • Page 173
    ...0.01 - HMI GROUP AGA GROUP Designing and developing integrated circuits Designing products and data software, information processing and supply AAEON TECHNOLOGY Manufacturing and selling INC. (AAEON) computer peripherals, electronic parts, precision equipment, wireless communication equipment and...

  • Page 174
    ... TECHNOLOGY (SHENZHEN) LIMITED (AGASZ) AGAIT INTELLIGENT TECHNOLOGY (SHENZHEN) CO., LIMITED (AGAISZ) ENERTRONIX INTERNATIONAL LIMITED (ENIL) ENERTRONIX HOLDING LIMITED (ENHL) ENERTRONIX (HUIZHOU) LTD. (ENHZ) AAEON TECHNOLOGY INC. (AAEON) Main activities Investing and trading activities 2012/12...

  • Page 175
    ...IT products Sales and repair service center in Middle East Sales and service center in Egypt Sales and repair service center in Germany 77.78 Note 1 Note 1 DEEP DELIGHT LIMITED (DDL) CHANNEL PILOT LIMITED (CHANNEL) UNIMAX HOLDINGS LIMITED (UHL) ASUS COMPUTER CORPORATION (ACBVI) ASUS TECHNOLOGY PTE...

  • Page 176
    ... AIL GROUP Researching and developing LCDs, computers, main boards and the peripherals of related multimedia and network communication products, and providing after-sales service ASUS JAPAN Sales and repair service center in INCORPORATION (ACJP) Japan ASUS COMPUTER CZECH Sales and service center in...

  • Page 177
    ... GROUP ACH GROUP Selling and researching notebooks, main boards, medium-sized computers, highend personal computers, servers, and computer peripherals; importing/exporting, wholesaling and integrating mobile communication equipment; and providing technology consulting and after-sales services ASUS...

  • Page 178
    ... New Taiwan dollars using the exchange rates at the balance sheet date. Equity accounts are translated at historical rates except for beginning retained earnings, which are carried forward from prior year's balance. Profit and loss accounts are translated at weighted-average rates of the year. The...

  • Page 179
    ... changes in fair value recognized in profit or loss. Stocks of listed and OTC companies, convertible bonds and closed-end funds are measured at closing prices at the balance sheet date. Open-end funds are measured at the unit price of the net assets at the balance sheet date. (B) Available-for-sale...

  • Page 180
    ...for hedging The Group recognizes the offsetting effects on profit or loss of changes in the fair values of the hedging instrument and the hedged item when hedging relationships meet the criteria for hedge accounting which is accounted for as follows: a. Fair value hedge: Changes in the fair value of...

  • Page 181
    ... influence on the investee's operations. If an investee company accounted for under the equity method issues new shares and the Group does not purchase new shares proportionately, then the investment percentage, and the equity in net assets of the investee, will be changed. The effect of such...

  • Page 182
    ...are amortized using the straight-line method over 1~5 years. (11) Impairment of non-financial assets A. The Group assesses all applicable assets subject to SFAS No. 35 for indication of impairment at the balance sheet date. If any indication of impairment exists, the Group then compares the carrying...

  • Page 183
    ... to the sale of a product, a warranty liability is accrued based on historical return rates and repair costs, failure rates and warranty periods. Service warranty expense is included in the current year 's operating expenses. (14) Pension A. Under the defined benefit pension plan, net periodic...

  • Page 184
    ... 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. The Group adopts...

  • Page 185
    ... are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. 3. CHANGES IN ACCOUNTING PRINCIPLES (1) Notes and accounts receivable and other receivables Effective January 1, 2011, the Group adopted the amended SFAS No. 34, "Financial Instruments...

  • Page 186
    ...through profit or loss: Open-end funds Listed and OTC stocks Convertible bonds Forward exchange contracts Currency option contracts Currency swap contracts Financial liabilities at fair value through profit or loss: Forward exchange contracts Currency option contracts Currency swap contracts 2012/12...

  • Page 187
    .../07-2012/01 2012/10-2013/03 RUB USD The main purpose of the Group's trading of derivatives was to hedge foreign currency risk from operating activities. As of December 31, 2012 and 2011, the Group did not meet the criteria for hedge accounting, so these derivatives were recognized at fair value as...

  • Page 188
    ... were measured at cost since there are no public quotes in active markets and their fair value cannot be measured reliably. After evaluating and comparing the carrying value of financial assets carried at cost and its recoverable amount, the Group recognized impairment loss amounting to $95,938 and...

  • Page 189
    ... expected transactions due to changes in market rate for the years ended December 31, 2012 and 2011. The risk was evaluated to be significant, and the Group entered into forward exchange contracts for hedging. As of December 31, 2012, the fair value of the derivative financial instruments for cash...

  • Page 190
    ... the derecognition criteria for financial assets, AAEON derecognized the accounts receivable sold to Taishin International Bank, net of the losses estimated for possible business disputes. As of December 31, 2012, the outstanding accounts receivable sold to Taishin International Bank were as follows...

  • Page 191
    ...' audited financial statements. As of December 31, 2012 and 2011, the related long-term equity investments amounted to $23,522,037 and $22,745,490, respectively. C. After evaluating and comparing the carrying value of long-term equity investments and its recoverable amount, the Group recognized...

  • Page 192
    ...509,523 A. After evaluating and comparing the carrying value of property, plant, and equipment and its recoverable amount, the Group recognized gain on reversal of impairment...buildings with book value totaling $132,402 for a total consideration of $222,616, resulting to a disposal gain of $90,214....

  • Page 193
    ... and (99) 112 issued by the ARDF, SYT did not recognize goodwill for the acquisition. However, the excess of the acquisition cost over the acquired identifiable net asset value has been adjusted as additional paid-in capital - common stock share premium. The Group collectively holds 65% ownership of...

  • Page 194
    ... of an increase in the number of common shares. On July 14, 2011, the Company adjusted further the conversion price to $269.2 (in dollars), considering the effect of capitalization from retained earnings. (F) Call option: The Company could redeem the convertible bonds at par value at any time during...

  • Page 195
    ... date of borrowing The Shanghai Commercial 2010.04.06~2015.11.08, payable & Savings Bank in 3 semi-annual installments, commencing two years after the initial date of borrowing 2011.05~2019.05 Others Less: Current portion Interest rates 2012/12/31 $ 871,200 2011/12/31 $ 908,250 871,200 908...

  • Page 196
    ... benefit obligation Additional benefits based on future salary increases Projected benefit obligation Fair value of plan assets Funded status Unrecognized transition obligation Unrecognized net pension gain Unrecognized prior service cost Prepaid pension cost Accrued pension liability ($ ( ( ( ( 13...

  • Page 197
    ... GDRs holding ratios. C. The Board of Directors authorized to transfer its GDRs from the London Stock Exchange to the Bourse de Luxembourg on January 30, 2013, and the change will take effect in late March 2013. (18) Additional paid-in capital The Company Act requires that capital reserve arising...

  • Page 198
    ...-term financial plan of the Company and the demand for cash by the stockholders, the Company should distribute cash dividends of not less than 10% of the total dividends declared. C. Except for covering accumulated deficit, increasing capital or payment of cash, the legal reserve shall not be used...

  • Page 199
    ... - $ Beginning of the year Addition Retirement and transfer End of the year - B. Pursuant to the Securities and Exchange Act, the number of shares bought back as treasury stock should not exceed 10% of the number of the Company's issued and outstanding shares and the amount bought back should not...

  • Page 200
    ...financial income 10% additional income tax on unappropriated earnings Investment tax credits incurred and used Tax effect of tax exemption on investment income Difference between prior year's income tax estimation and assessed results Tax effect of correction of AMT Effect of change in exchange rate...

  • Page 201
    ...) are as follows: 2012/12/31 Deferred income tax assets: Unrealized gross profit Unrealized purchase discounts Unrealized sales discounts Allowance for decline in value of inventories Unrealized accrued expenses Tax benefit of unused loss carryforwards Unused investment tax credits Others Valuation...

  • Page 202
    ...G. As of December 31, 2012, the details of the unused investment tax credits are as follows: Unused tax credits $ 156,731 70,442 $ 227,173 Year of expiration 2013 2013 H. As of December 31, 2012, the details of the tax benefit of unused loss carryforwards are as follows: Company name ASKEY and its...

  • Page 203
    ...,436 2011/1/1~12/31 Operating expenses $ 11,761,031 605,100 367,569 234,794 625,361 259,430 Total $ 14,380,084 762,446 519,909 273,970 1,867,481 289,866 5. RELATED PARTY TRANSACTIONS (1) Names and relationship of the related parties Related Party ASINT TECHNOLOGY CORPORATION (ASINT) EXCELLIANCE MOS...

  • Page 204
    ... LIMITED (ASIAROCK) AZUREWAVE TECHNOLOGIES, INC. (AZURE) ABILITY ENTERPRISE CO., LTD. (ABILITY) RI TENG COMPUTER ACCESSORY (SHANGHAI) CO., LTD. (RITENG) Directors, supervisors and key management of the Group Others (related parties with non-significant transactions) Relationship with the Company...

  • Page 205
    (2) Significant transactions and balances with related parties A. Sales 2012/1/1~12/31 Amount 1,567,220 82,367 1,649,587 % - $ - $ 2011/1/1~12/31 Amount 2,500,651 256,242 2,756,893 % 1 1 PEGA Others $ $ The terms of the above transactions are 30 to 90 days from sales, open account 60 days or ...

  • Page 206
    ...-Express switch, WiFi function, the patent of Blu-ray, DCDi technique, Dynamic voltage scaling function for solid state disk, server of Wireless AV streaming, DDR, FLASH memory, LCD, Bluetooth, BIOS, Image chip, thermal management method and device, Display, Bluetooth HS technique, notebooks, Eee PC...

  • Page 207
    ... products with the image resizing and scanning format conversion, e-mail, location service, digital image processor, AIO PC, Eee slate, Eee PC, PowerDirector, interactive video system, communication switch technique, and Tablet PC with user-selectable log in and unlock function against the Company...

  • Page 208
    ... are as follows: Year 2013 2014 2015 2016 2017 and afterwards 8. SIGNIFICANT DISASTER LOSS: NONE. 9. SUBSEQUENT EVENTS: NONE. 10. OTHERS Amount (in thousands) USD 1,598 1,562 1,609 1,665 2,452 (1) Financial statement presentation Certain accounts in the 2011 consolidated financial statements were...

  • Page 209
    ... fair values of financial assets at fair value through profit or loss and available-for-sale financial assets are based on quoted market prices in an active market. If the market for a financial instrument is not active, an entity establishes fair value by using a valuation technique. The Group uses...

  • Page 210
    ... OTC stocks held by the Group are classified as financial assets at fair value through profit or loss and available-for-sale financial assets. As these assets are measured at fair value, the Group has risk exposure related to changes in fair value in an equity securities market. (C) Information on...

  • Page 211
    ... The businesses of the Group are mainly divided into two parts: 3C brand business, and others. 3C brand business focuses on the sales of 3C products, and others focus on strategic investments in businesses other than 3C brand business. (2) Measurement basis The Group uses the operating profit as...

  • Page 212
    ... profit or loss Reportable operating segments' profit (5) Information by geographic area 2012/1/1~12/31 2011/1/1~12/31 $ 21,926,031 $ 18,186,071 ( $ 87,275) 21,838,756 $ 43,430 18,229,501 The Group allocates the revenues and non-current assets on the basis of the location of the single country...

  • Page 213
    ... January 1, 2013, a public company whose stock is listed on the Taiwan Stock Exchange Corporation or traded in the GreTai Securities Market should prepare financial statements in accordance with the International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs...

  • Page 214
    ... of needed information system adjustments g. Evaluation of needed internal control adjustments h. Establish IFRSs accounting policies i. Selection of exemptions and options available under IFRS 1 - First-time Adoption of International Financial Reporting Standards j. Preparation of balance sheet on...

  • Page 215
    ... be used in the preparation of financial statements in the future, and the effects of exemptions selected by the Company under IFRS 1 - First-time Adoption of International Financial Reporting Standards (refer to Note 12(3)) are set forth below: 1. Reconciliation of consolidated balance sheet with...

  • Page 216
    ... IFRSs and "Rules Governing the Preparation of Financial Statements by Securities Issuers" that will be used in the future. These reclassifications increased notes and accounts receivable by $5,513,037, decreased accrued expenses by $12,214,778 and increased provision by $17,727,815. D. The current...

  • Page 217
    ... of the Financial Supervisory Commission, dated April 6, 2012. H. In accordance with the IFRSs Frequently Asked Questions (FAQ) issued by the Taiwan Stock Exchange dated April 9, 2012, the capital surplus recognized from a change in the holding percentage of an investee company accounted for under...

  • Page 218
    ...balance sheet with material differences as of December 31, 2012: R.O.C. GAAP Deferred income tax assets - current $ Available-for-sale financial assets Financial assets carried at cost Long-term equity investments accounted...276) 6,852) 73,526) 928) 6,648 Total stockholders' equity $ 4,637) 63,539) $...

  • Page 219
    ...to available-for-sale financial instruments measured at fair value, etc. The above adjustments decreased consolidated net income by $93,643 for the year ended December 31, 2012. (3) In accordance with IFRS 1, "First-time Adoption of International Financial Reporting Standards", the Group adopted the...

  • Page 220
    ... of transition to IFRSs in accordance with IAS 21, "The Effects of Changes in Foreign Exchange Rates". Compound financial instruments As the liability component is no longer outstanding at the date of transition to IFRSs, the Group elected not to separate liability and equity components for compound...

  • Page 221
    ASUSTek Computer Inc. Chairman !