Annual Report 2012
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Stock Code 2317 HON HAI PRECISION INDUSTRY CO., LTD. Annual Report 2012 Annual Report Website Market Observation Post System: http://mops.twse.com.tw Company Website: http://www.foxconn.com.tw Printing Date: April 30, 2013 WorldReginfo - d3b3ceed-c3d8-4f51-b1ad-78d7192647d2 THIS IS A TRANSLATION OF THE 2012 ANNUAL REPORT (THE “ANNUAL REPORT”) OF HON HAI PRECISION INDUSTRY CO., LTD. (THE “COMPANY”). THIS TRANSLATION IS INTENDED FOR REFERENCE ONLY AND NOTHING ELSE, THE COMPANY HEREBY DISCLAIMS ANY AND ALL LIABILITIES WHATSOEVER FOR THE TRANSLATION. THE CHINESE TEXT OF THE ANNUAL REPORT SHALL GOVERN ANY AND ALL MATTERS RELATED TO THE INTERPRETATION OF THE SUBJECT MATTER STATED HEREIN. WorldReginfo - d3b3ceed-c3d8-4f51-b1ad-78d7192647d2 I. Spokesperson: Deputy Spokesperson: Name: Simon Hsing Name: Jack Hsiao Title: Spokesperson Title: Director of Public Relations Office Tel: (02)2268-3466#3629 Tel: (02)2268-3466#3628 E-mail: [email protected] II. Contact information of the head office, branch offices and factories Head office Add: No. 66, Zhongshan Road, Tucheng Industrial Zone, Tucheng District, New Taipei City Tel: (02)2268-3466 Hsinchu Science Park Branch Office Add: 5F-1, No. 5, Hsin-an Road, Hsinchu Science and Industrial Park, East Area, Hsinchu City Tel: (03)578-4975 Neihu Branch Office Add: 1F-11F, No. 32, Jihu Road, Neihu District, Taipei City Tel: (02)2799-6111 California (US) Branch Office Add: 288 S. Mayo Ave City of Industry, CA 91789 U.S.A. Tel: 1-714-680-2066 Huyue Factory Add: No. 2, Zihyou Street, Tucheng Industrial Zone, Tucheng District, New Taipei City Tel: (02)2268-3466 Minsheng Factory Add: No. 4-1, Minsheng Road, Tucheng Industrial Zone, Tucheng District, New Taipei City. Tel: (02)2267-6511 Dingpu No. 1 Factory Add: No. 53, Section 4, Zhongyang Road, Tucheng District, New Taipei City Tel: (02)2268-3466 Dingpu No. 2 Factory Add: 2F, No. 53, Section 4, Zhongyang Road, Tucheng District, New Taipei City Tel: (02)2268-3466 Dingpu No. 5 Factory Add: 4F, No. 53, Section 4, Zhongyang Road, Tucheng District, New Taipei City Tel: (02)2268-3466 WorldReginfo - d3b3ceed-c3d8-4f51-b1ad-78d7192647d2 III. Share Transfer Agency Name: Grand Fortune Securities Co., Ltd. Address: 3F, No. 51, Section 1, Minsheng East Road, Taipei City Tel: (02)2562-1658 Website: http://www.gfortune.com.tw IV. Contact information of the Certified Public Accountants for the Latest Financial Repot Name: Hsu, Yong-jian, Xue, Ming-ling CPA Firm: Pricewaterhouse Coopers (PwC) Taiwan Address: 27F, No. 333, Section 1, Keelong Road, Taipei City Tel: (02)2729-6666 Website: http://www.pwc.tw V. Overseas trade places for listed negotiable securities London Stock Exchange: http://www.londonstockexchange.com Singapore Stock Exchange: http://www.sgx.com/wps/portal/marketplace/mp-ch/home VI. Company Website: http://www.foxconn.com WorldReginfo - d3b3ceed-c3d8-4f51-b1ad-78d7192647d2 Table of Contents I. Letter to Shareholders .................................................................................................................. 1 II. Company Introduction ................................................................................................................. 3 A. Founding date: February 20, 1974 ............................................................................................... 3 B. Formation History ....................................................................................................................... 3 III. Corporate Governance Report ..................................................................................................... 9 A. Organization ................................................................................................................................ 9 B. Implementation of corporate governance .................................................................................. 31 C. Information on Accountants’ Fees ............................................................................................ 49 D. Alternation of CPA .................................................................................................................... 49 E. The Company’s chairman, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its CPA or at an affiliated enterprise: .......................................................... 49 F. Transfer & pledge of stock equity by directors, supervisors, managerial officers and holders of 10% or more of company shares: ............................................................................. 50 G. Information on relation among top ten shareholders ................................................................. 52 H. Combined shareholding percentage ........................................................................................... 53 IV. Company Shares and Fund Raising ........................................................................................... 54 A. Company capital and shares ...................................................................................................... 54 B. Section on Corporate Bonds ...................................................................................................... 63 C. Preferred Shares (with warrants): .............................................................................................. 67 D. Global Depository Receipts (GDR) ........................................................................................... 67 E. Subscription of warrants for employees: ................................................................................... 68 F. Name of managers holding warrants for employees and top ten employees in terms of subscription of warrants, and the acquisition status: ................................................................. 69 G. Subscription of new shares for employee restricted stocks: ...................................................... 69 H. Name of managers holding the new shares for employee restricted stocks and top ten employees in terms of subscription of the new share, and the acquisition status: ..................... 69 I. Issuance of new shares for merging and transferring the stocks of other companies: ............. 69 J. Implementation of fund usage plan: .......................................................................................... 69 V. Operational Highlights .............................................................................................................. 70 A. Business Activities .................................................................................................................... 70 B. Production and Sales Status ....................................................................................................... 72 C. Information on Environmental Protection Costs ....................................................................... 75 D. Labor Relations ......................................................................................................................... 76 VI. Financial Standing ..................................................................................................................... 81 A. Most Recent 5-Year Concise Financial Information ................................................................. 81 B. Most Recent 5-Year Financial Analysis .................................................................................... 85 C. Audit Report by Supervisors ..................................................................................................... 89 D. 2012 Financial Statements Consolidated With Subsidiaries Audited by CPA .......................... 91 VII. Financial Analysis ................................................................................................................... 237 A. 2012 vs. 2011 Financial Analysis ............................................................................................ 237 B. 2012 vs. 2011 Operating Result Analysis ............................................................................... 237 C. Cash Flow Analysis ................................................................................................................. 238 VIII. Special Notes ........................................................................................................................... 239 A. Consolidated Financial Statements of Affiliates ..................................................................... 239 B. Affiliated Companies Reports: ................................................................................................ 240 WorldReginfo - d3b3ceed-c3d8-4f51-b1ad-78d7192647d2 I. Letter to Shareholders Although the political and economic environments are so turbulent, the industrial aspects also have been through tremendous changes, our Company has gained better performance since last year, the consolidated revenue and profit once both hit record highs! On behalf of the Board of Directors of the Company, I want to thank all my colleagues for their hard working and dedicated contributions. Once again, I sincerely thank our strategic partners and customers for their continued trust and also thank all the shareholders of the Company for their long-term support. The international economic environment of 2012 was again precarious. From the very beginning of 2012, although the United States government extended the low interest rate policy to stimulate the economy,