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ASUSTeK Computer Inc.
2008 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 23rd 2009
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I. SPOKESPERSON & DEPUTY SPOKESPERSON Spokesperson Deputy Spokesperson Name: David Chang Name: Nick Wu Title: Chairman Office Title: Management Headquarters Chief Special Assistant Finance Division Deputy Director Tel.: 886(2)2894-3447 EXT: 2330 Tel.: 886(2)2894-3447 EXT: 2343 E-mail: investor@asus.com E-mail: [email protected]
II. HEADQUARTERS AND PLANTS Taipei Headquarters: 15, Li-Te Road, Beitou District, Taipei City Tel. 886(2) 2894-3447 Address: 4F, 150, Li-Te Road, Beitou District, Taipei City
III.SECURITIES DEALING INSTITUTE Name : Grand Cathy Securities Corporation, Registrar and Transfer Services Address : 5F, 2, Sec. 1, Chung-Chin S. Road, Taipei City Tel. :886(2)2389-2999 Website : http://www.toptrade.com.tw
IV. AUDITORS Name :CPA: MING-YU LEE & CHIH-HUEI YANG CPA Firm :ERNST & YOUNG Address : 9F, 333, Sec. 1, Keelung Road, Taipei City Tel. :886(2)2720-4000 E-mail : http://www.ey.com/tw
V. EXCHANGEABLE BOND EXCHANGE MARKETPLACE Marketable security: GDR London Stock Exchange: http://www.londonstockexchange.com Marketable security: ECB Luxembourg Stock Exchange: http://www.bloomberg.com
VI. COMPANY WEBSITE http://www.asus.com
WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ɡɡ CONTENTS ɡɡ Page I. Letter to shareholders ……………………………………………………………………… 1 II. Introduction of the company ……………………………………………………………… 4 1. Approval date …………………………………………………………………………….. 4 2. Development history ……………………………………………………………………… 4 III. Corporate governance report ……………………………………………………………... 14 1. Organization of company ………………………………………………………………… 14 2. Directors, Supervisors, President, Vice President, Assistant V.P., and department heads.... 16 3. Corporate gavernance …………………………………………………………………….. 26 4. CPAs fees …………...…..………………………………………………………………….. 35 5. CPA’s information …………………………………………………………………………. 35 6. 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 years ………… 35 7. Information on Net Change in Shareholding and Net Change in Shares Pledged by Directors, Supervisors, Department Heads, and Shareholders of 10% shareholding or more ……………………………………………………………………………………….. 35 8. The relation of the top ten shareholders as the definition of Finance Standard Article 6 …. 36 9. Investment from Directors, Supervisors, Managers, and directly or indirectly controlled businesses ………………………………………………………………………………… 36 IV. Stock subscription …………………………………………………………………………. 43 1. Capital and shares …………………………………………………………………………. 43 2. Corporate bonds …………………………………………………………………………… 50 3. Preferred stock ……………………………………………………………………………. 54 4. Issuance of global depository receipts …………………………………………………….. 54 5. Employees stock option certificates ………………………………………………………. 56 6. Merger and acquisition (including merger, acquisition, and split) ……………………….. 56 7. Fund implementation plan ………………………………………………………………… 56 V. Overview of business operation………………………………..…………………………… 57 1. Principal activities ………………………………………………………………………… 57 2. Market analysis and the condition of sale and production ………………………………… 59 3. Status of employees ……………………………………………………………………….. 65 4. Expenditure on environmental protection ………………………………………………… 65 5. Employee / employer relation …………………………………………………………….. 69 6. Important agreements ……………………………………………………………………… 72
! 323 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 VI. Financial information ………………………………………………………………. 73 1. Condensed balance sheet and income statement over the last five years …………………. 73
2. Financial analysis in the past five years …………………………………………………… 75
3. Supervisor’s report in the most recent years ………………………………………………. 79
4. Financial statements in the most recent years …………………………………………….. 82
5. Consolidated financial statements in the most recent years ………………………………. 82
6. Impact of financial difficulties of the Company and related party on the Company’s financial position ………………………………………………………………………….. 82
VII. Review of financial position, management performance and risk management ………. 210
1. Financial position ………………………………………………………………………….. 210
2. Management performance …………………………………………………………………. 210
3. Analysis of cash flows ……………………………………………………………………... 212
4. Impact of major capital expenditure on finance and business …………………………….. 213
5. Policies, reasons for gain or loss and action plan in regard to investment plans in current year and the next year…………………………………………………………………….. 213
6. Risk management …………………………………………………………………………. 213
7. Other important matters …………………………………………………………………… 217
VIII Special disclosures …………………………………………………………………………. 218
1. Related party ……………………………………………………………………………… 218
2. Subscription of marketable securities privately in the most recent years …………………. 218
3. The stock shares of the company held or disposed by the subsidiaries in the most recent years ……………………………………………………………………………………… 218
4. Supplementary disclosures ……………………………………………………………….. 218
5. Occurrence of events defined in Securities Transaction Law Article 36.2.2 that has great impact on shareholder’s equity or security price in the most recent years and up to the date of the report printed …………………………………………………………………. 218
! 324 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 I. Letter to Shareholders
Dear shareholders:
First of all, I would like to thank you for your continuing support to ASUS. Last year was the first year that the ASUS brand business was separated from the OEM business. For both our brand and OEM business, we will focus on two-way value streams, working to improve processes and developing lean organization operations. The global economy was shaken last year by the credit crisis originating in the United States. After spreading quickly worldwide to engulf the entire financial system, the global economy was hit by the crisis which in turn affected a wide range of industries. Even the information industry could not avoid its impact. In 2008, consolidated sales revenue for the ASUS Computer brand was NT$266.9 billion (self-assessed), rising 17% over 2007. Individual sales revenue for ASUS Computer’s parent company in 2008 was NT$249.351 billion. Earnings before tax were NT$20.557 billion and net income was NT$16.457 billion, decreasing 39.7% over 2007.
In 2008, ASUS Eee PC continued to shine in the information industry. The mini-computer quickly became an emerging trend once the Eee PC appeared on the market in October 2007. The Eee PC gave consumers an easy-to-use and user-friendly computer at an affordable price. Last year, the Eee PC trend swept the world which upturned perceptions around the world toward mobile communication. Quickly taking a leadership position in the minicomputer market, the Eee PC was crowned the year’s hottest 3C product by media around the globe. Besides being named the product of the year by Forbes and Stuff Magazine in the U.K., the Japanese lifestyle and fashion magazine Dime gave the Eee PC top product honors. Sweeping from the west side to the east side of the Atlantic, America’s benchmark on-line retailer Amazon also selected the Eee PC as the most popular Christmas gift and noted how consumers loved the high mobility of the Eee PC. Spanning Japan, Taiwan, Europe and the U.S., there is no place in the world that has not felt the effect of the Eee PC.
On the heels of the Eee PC and Eee Box, ASUS unveiled brand new product for the Eee family, the all-in-one touch-panel Eee Top ET16 series, in November of last year. Equipped with a 15.6 inch touch panel wide screen, the Eee Top ET16 can be operated with a simple touch of the finger which greatly enhances computer interaction and operability and marks a significant departure from the traditional desktop computer market.
With regard to the handheld business, ASUS Computer and the world leading GPS brand Garmin announced the establishment of a strategic alliance in February of this year to launch a joint Garmin – ASUS brand smart phone that combines leading smart phone and GPS technology.
Last year, ASUS received a total of 3,056 major domestic and international awards making an average of 8 awards per day. These honors were a product of the hard work and effort that ASUS employees put into their job daily. This is excellent testament to ASUS superior products and guaranteed quality. Last year, the Bureau of Foreign Trade hired a world renowned brand survey institute to make a ranking of the top 10 international brand values in Taiwan. ASUS Computers ranked first in the hardware category with a brand value of US$1.324 billion, which represented an increase of 10.70% over the previous year. Last year, ASUS Computer was the biggest winner at the 16th annual Symbol of Excellence Awards. With our exceptional technical and R&D capability, deep insight in human thinking and steady innovation, 51 ASUS products won Symbol of Excellence awards. Of these, the Eee PC and R700t GPS both won gold medal awards and six other ASUS products received silver medal awards. At this year’s 17th annual award ceremony, ASUS garnered even more awards, capturing 53 Symbol of Excellence Awards.
1 ! 1 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 Though ASUS innovation has shined internationally, profits at ASUS did not meet expectations due to the financial crisis, economic decline and poor business management. In 2008, profits at ASUS declined ending five years of consecutive growth. In addition, for the first time since the establishment of the company, ASUS failed to make a profit in the fourth quarter of last year. After conducting a detailed analysis and review, ASUS found there were many factors that contributed to this result but four major factors were involved:
1. The rapid downturn in the global economy caused a sharp contraction in computer demand which far exceeded the forecasts of our business divisions and seriously affected sales revenues and operating profit. 2. Because the decline in demand exceeded expectations, notebook computer and LCD monitor product and material inventories rose which indirectly affected product gross profit and result in the recognition of the inventory write-down. 3. Dramatic fluctuations in the Euro exchange rate affect the gross profit for some products. 4. After the company division, the business organization and procedures have not been adjusted and improved to an optimal status.
Following a thorough review conducted by the management team, we resolved to take the following actions to contain the crisis. 1. Reduce stocks and strictly control inventories 2. Control business expense and control personnel costs, streamline operations, improve personnel quality. 3. Thoroughly improve and streamline operation procedures 4. Further strengthen product differentiations, create new demand and raise gross profit 5. Hedge against price quote risk; reduce the effect of currency fluctuations on net profit.
The above measures have gradually been put into place and we have already seen some results, but it will take time to see the effects in other areas. For instance, it will take some time to work through the high inventories so first quarter profits will still be affected this year. Time is also needed to reduce operating costs but we will quickly get to work to get some results there.
From the above description, we can see that the weak economy was one of the factors behind the worse than expected profits, but another major reason was our business management wasn’t lean enough. A thirty percent salary reduction has been taken by ASUS vice president and above level executives until sales return to normal levels. At the same time, all directors have decided to reduce director remuneration for the previous year by 60%. We hope to learn from these setbacks and quickly reverse course at ASUS so we can live up to the expectations of investors and others.
Harry Potter author J.K. Rowling, the speaker at Harvard University’s graduation ceremony, said “failure is the most liberating experience in life” to the group of young magicians that were graduating from magic school and entering society. I am also willing to proclaim the benefits of failure my colleagues at ASUS. I am fully confident in future business and prospects because of ASUS culture and special characteristics of ASUS people. Crisis is always an opportunity for transformation. After we pass through this trial by fire, we will emerge stronger than before.
The global economy most likely will not recover in the coming year but this type of environment can still offer an excellent chance to hone our capabilities. We will draw upon our exceptional tradition present here at ASUS and extend our values of focus on fundamentals and results, innovation & aesthetics and lean thinking to every person’s work. Passing through these storms, we will become even more
2 ! ! 2 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 competitive and consolidate our leadership position in the industry. We hope that all the people at ASUS can work hand in hand to overcome all difficulties and achieve our lean improvement targets so we can soon become the most admired company in this new digital age.
According to the industrial status and the forecast of each business entity, the goal is to sell 12 million units of NB (included Eee PC). We would like to thank you for your support. ASUS will sure work hard to achieve the sales target for the benefit of shareholders.
Wish you a good health and good life!
Sincerely yours,
------Chairman
3 ! ! 3 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 II. Introduction of the Company
I. Establishment date: April 2, 1990
II. Development history
April 1990 ASUS was incorporated at 2F, 14-2, Sec. 2, Chung-Young S. Road, Beitou District, Taipei City and with a paid-in capital of NT$30 million collected. April 1990 Became a direct customer of Intel (U.S.A.) May 1990 Cache 386/33 and 486/25 personal computer motherboard was popular. 486/25 was market launched with IBM and ALR synchronously and it was the milestone of computer development in Taiwan. May 1990 Expanded the instrument and equipment of R&D department and recruited R&D talents progressively for the development of EISA 486 motherboard. July 1990 ASUS completed the registration of the manufacturing facility and with production initiated. The in-house made quality products were popular. October 1990 The head office and manufacturing facilities were relocated to 4F, 10, Alley 25, Lane 425, Sec. 4, Chung-Young N. Road (changed name to “Li-Te Road” by Taipei City Government in 1993) with an area of 602 pings due to business expansion. November 1990 EISA 486 motherboard was market launched officially and became a market-leading product while attending COMDEX exhibition in early November. December 1990 Increased the paid-in capital to NT$80 million by cash capitalization for an amount of NT$50 million. December 1990 Generated sales revenue of NT$230 million in the first year of the incorporation and 16.01% net income for an amount of NT$36.82 million.
January 1991 The 286 and 386SX were popular in 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. March 1991 The profit of 486 in this month exceeded the profit of 386 for the first time that meant the 486 advanced products had become the major product of the company. April 1991 Substantiated management team and reinforced marketing ability with multiple marketing and sales talents recruited by the company. August 1991 The sales of high unit price EISA 486 product were satisfactory and the said product had helped the company generate millions of dollars of profit. December 1991 INTEL (USA) provided the company with O/A credit quota for over five times. December 1991 Increased the paid-in capital to NT$150 million with retained earnings for an amount of NT$30 million and with cash for an amount of NT$40 million. December 1991 The sales revenue of this year amounted to NT$1.399 billion and net income amounted to NT$116 million.
January 1992 Monthly production exceeded 30,000 units. March 1992 Attended an exhibition in Hanover Germany to present the 32-bit SCSI interface EISA-SC100. The said product was popular with the IC developed in-house by 4 ! ! 4 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASIC, the self-developed software, and driver software. April 1992 Signed an agreement with AWARD for software authorization. April 1992 The business development of the company was reported in the electronic industry section of Economic Daily News. June 1992 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 Service Ltd., ranked in the 193rd place by manufacturing index, and ranked in the 92nd place of information electronics by Excellence Monthly. June 1992 Management Magazine had the company’s Return of Net Worth ranked in the 6th place, the company’s Return of Assets in the 2nd place, the Employee’s Average Earnings in the 19th place, and the Earnings per Dollar in the 10th place. December 1992 Monthly production of motherboard and interface card exceeded 75,000pcs representing 132% growth from the same month of the prior year. December 1992 Sales revenue of the year amounted to NT$2.18 billion representing 55.8% growth from the year before and the net income amounted to NT$205 million.
March 1993 Promoted PENTIUM (586) motherboard. ASIAN! SOURCES Magazine had the company recognized as one of the few manufacturers that was able to have this advanced mother board promoted. April 1993 Increased the paid-in capital to NT$199 million with cash for an amount of NT$49 million. May 1993 Invested to have SMT production line setup. May 1993 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. June 1993 Increased the paid-in capital to NT$308.45 million with retained earnings. Public offering was arranged accordingly. June 1993 Bureau of Foreign Trade MOEA ranked the company’s importing/exporting business in the 168th place in 1992. July 1993 The Ministry of Finance awarded the company as an honest taxpayer. October 1993 The mass production of PCI486 was initiated. PCI was the new generation bus structure standard and it was a high-speed and high-tech product. November 1993 The company and the head engineer, Mr. Ted Hsu, were awarded with the “32-bit personal computer milestone award” of “Taiwan personal computer ten-year milestone award” that was organized by Commonwealth Magazine, co-organized by the Institute for Information Industry, and sponsored by Intel for “having high-speed 486 advanced mother board developed successfully” and “the first Taiwanese information business to develop the fastest personal computer synchronized with the world that has helped Taiwan open up a path to the successes and helped define the competition of speed and flexibility in technology development.” November 1993 Mass production of PCI486 and Pentium motherboard was initiated. Pentium was the new generation of CPU and was the PC compatible with the highest speed. December 1993 The first SMT production line was completed with pilot run and put into service. Another set of SMT was acquired in response to the expansion of production. December 1993 Sales revenue of the year amounted to NT$2.303 billion representing 5.6% growth from the year before and the net income amounted to NT$220.7 million.
January 1994 ASIAN SOURCES Magazine had the company’s technological innovation ranked in the first place of The TOP-10 mother board manufacturers in Taiwan and the company’s quality ranked in the second place that was “second to ACER only” in 1993. February 1994 C.T.Mag. (Germany) had the company’s PCI rated and with the capacity and memory of PCI Pentium and 486 awarded with an honorary rating. March 1994 Attended Cebit Show in Hanover Germany and was the only motherboard 5 ! ! 5 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 manufacturer at the show having Dual Pentium manufactured successfully and recognized by the industry and Intel. May 1994 Bureau of Foreign Trade MOEA ranked the company’s importing/exporting business in the 161st place in 1993. July 1994 ASUS’s initial name was Hung-Shuo Computer Inc., in July gets up changes the name officially as ASUSTeK Computer Inc. August 1994 Increased the paid-in capital to NT$450.337 million with retained earnings. August 1994 Setup subsidiary in the United States and Germany for marketing, service, and repair and maintenance. October 1994 China Development Industrial Bank became the institute shareholder of the company. November 1994 PCI Pentium and Dual Pentium were popular in market and with monthly sales exceeding NT$300 million for the first time. December 1994 Taipei Factory was certified with ISO 9002. December 1994 Purchased Taoyuan Lu-Chu Plant with an area of 2,417 pings and a constructed area of 1,200 pings that was put into service in mid-1995. December 1994 Sales revenue of the year amounted to NT$3.36 billion representing 45.9% growth from the year before and the net income amounted to NT$756 million.
January 1995 ASIAN SOURCES Magazine had the company’s quality ranked in the first place and the company’s technological innovation in the first place of the Top-10 mother board manufacturers in 1994 ahead of First International Computer Inc. and Acer. May 1995 China Credit Information Service, Ltd. had the company’s business performance ranked in the 5th place of the TOP-500 Manufacturers in 1994. May 1995 Taoyuan Lu-Chu Plant was put into service for production officially. June 1995 Increased the paid-in capital to NT$600 million with retained earnings. September 1995 CitiSelect Asia Tilt Growth Portfolio became the institute shareholder of the company. October 1995 Monthly income exceeded NT$1 billion for the first time. November 1995 Presented Pentium Pro server, work station, and motherboard. December 1995 Sales revenue of the year amounted to NT$7.87 billion representing 134% growth from the year before and the net income amounted to NT$1.95 billion.
January 1996 Purchased the head office on Li-Te Road and the building that was rented for Taipei Plant with an area of 3,159 pings. April 1996 Chung-Hua Institution for Economic Research awarded the company with “Product of the Year Award” and “Enterprise of the Year Award.” June 1996 China Credit Information Service Ltd. had the company’s business performance ranked in the 1st place of The TOP-500 Manufacturers in 1995. August 1996 SEC had the company authorized as Class II stock listing company. August 1996 Increased the paid-in capital to NT$1.2 billion with retained earnings. November 1996 ASUS went public at Taiwan Stock Exchange Corporation officially.! December 1996 Sales revenue of the year amounted to NT$13.327 billion representing 69% growth from the year before and the net income amounted to NT$3.808 billion.
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January 1997 Taoyuan Lu-Chu Plant was certified with ISO-9002. February 1997 Leased Taoyuan Nan-Kan Plant with an area of 4,400 pings ready for production. February 1997 P/I-P65UP5 of the company was awarded with the “5th Symbol of Excellence” award. April 1997 Setup Nan-Kan Plant with an area of 4,400 pings right next to Lu-Chu Plant for a total monthly production of 800,000 motherboards. May 1997 Increased the paid-in capital to NT$3.23 billion with retained earnings and cash. May 1997 Collected funds for US$230 million with cash in the form of overseas depository receipt GDR. September 1997 Acquired automation SMT for expanding automatic production scale over three times. September 1997 Monthly income exceeded NT$2 billion for the first time. October 1997 Purchased Quay-Sun Plant with an area of 7,900 pings for the production of new NB and CD-ROM. November 1997 Held new product presentation including NB and CD-ROM. December 1997 Sales revenue of the year amounted to NT$21.371 billion representing 60.4% growth from the year before and the net income amounted to NT$7.038 billion.
February 1998 Asiamoney awarded the company as “Best Managed Companies in Taiwan.” April 1998 Finance Asia awarded the company as “Asia’s Strongest Companies.” June 1998 Increased the paid-in capital to NT$8.115 billion with retained earnings. June 1998 Monthly income exceeded NT$3 billion for the first time. October 1998 Increased the paid-in capital to NT$8.135 billion with cash for an amount NT$20 million and with NT$420 million collected. October 1998 Acquired automation SMT for expanding automatic production scale and with over one million motherboards manufactured monthly. October 1998 Presented the lightest all-in-one NB. November 1998 The company was certified with ISO-14000. November 1998 Asia Week had the company ranked in the first place of The International Chinese Enterprises 500 & Top-10 Manufacturer in 1998. November 1998 Asia Week had the company’s business performance in the first three quarters of 1998 ranked in the first place of The InfoTech 100. November 1998 Business Week (U.S.A.) had the company ranked in the 18th place worldwide and the first place in Asia of The InfoTech 100. December 1998 Completed the construction of Lu-Chu Plant with an area of 3,600 pings ready for use. December 1998 Sales revenue of the year amounted to NT$35.2 billion representing 64.7% growth from the year before and the net income amounted to NT$11.575 billion.
March 1999 Initiated the construction of Beitou II Plant for an area of 1,453 pings planned for use. May 1999 Ranked in the 21st place of Top-1000 Manufacturers in the special issue of Commonwealth Magazine. Ranked in the 2nd place of Top-50 Enterprises 50 for three consecutive years (2007~2009) in the special issue of Commonwealth Magazine. Ranked in the 6th place of Top-1000 Manufacturers as the most profitable 7 ! ! 7 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 operation in the special issue of Commonwealth Magazine (hit the mark of NT$10 billion and become the leader of information and telecommunication industry). Ranked as one of the National Top-20 Private Businesses in the special issue of Commonwealth Magazine. June 1999 China Credit Information Service Ltd. awarded the company with the honorary citation of “1999 Taiwan TOP 500.” China Credit Information Service Ltd. ranked the company in the fourth place as the most profitable business of “1999 Taiwan TOP 500.” China Credit Information Service Ltd. ranked the company in the third place as the highest earnings business of “1999 Taiwan TOP 500.” China Credit Information Service Ltd. ranked the company in the third place as 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. July 1999 Presented ASUS super thin NB. October 1999 Increased the paid-in capital to NT$11.464 billion with cash for an amount NT$15 million and with NT$300 million collected. December 1999 Sales revenue of the year amounted to NT$49 billion representing 39.2% growth from the year before.
January 2000 Purchased the eight pieces of land of the 4th lot, Fong-Nien Lot, Beitou District, Taipei where adjacent to the head office on Li-Te road for business expansion with an area of 7,186 pings. Asiamoney ranked the company in the second place of “Best Managed Companies in Taiwan.” February 2000 Presented new NB L8400. May 2000 Completed the construction of Beitou II Plant with an area of 1,453 pings for use. June 2000 Increased the paid-in capital to NT$15.671 billion with retained earnings. August 2000 Ranked in the first place of Tech 200 by Globalviews Magazine. September 2000 China Credit Information Service Ltd. ranked the company’s business performance in the third place of Top-10 Manufacturers in 1990-1999. October 2000 Commonwealth Magazine ranked the company in the first place of Taiwan Electronics and in the seventh place nationwide. November 2000 Business Week (U.S.A.) had the company ranked the 44th place worldwide of The InfoTech 100. December 2000 Sales revenue of the year amounted to NT$70.7 billion representing 44.38% growth from the year before.
March 2001 ODC (ODC is for the certification of environmental protection without using any material that is dangerous to Ozone layer) was awarded to ASUS. June 2001 Increased the paid-in capital to NT$19.769 billion with retained earnings. June 2001 Business Weekly ranked ASUS in the 26th place of World Business 100. November 2001 Business Week ranked ASUS in the 28th place of The InfoTech 100. November 2001 Completed the construction of Taipei Plant with an area of 9,073 pings for use. December 2001 Readers of PC Magazine had awarded ASUS with the “Product of the Year Award” for the motherboard, NB, CD-ROM, and VGA in 2001. December 2001 Far Eastern Economic Review ranked the quality service/product of ASUS in the fourth place. 8 ! ! 8 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 December 2001 Sales revenue of the year amounted to NT$77.9 billion representing 10.16% growth from the year before.
January 2002 Seventeen products of the company were awarded with the “Symbol of Excellence” this year; therefore, the company was the biggest winner of the 10th national “Symbol of Excellence” award. April 2002 Awarded as the excellent health and safe institute by Taipei City Government. April 2002 Ranked in the Top-10 of Manufacturers 1000 by Commonwealth Magazine, the Top-3 of computer and elements, and the Top-3 of most profitable business. June 2002 Launched MyPal A600 that was the first PDA supporting Intel’s 400MHz PXA250CPU; also, it was the most light weighted, thin, and functional pocket PC. July 2002 Increased the paid-in capital to NT$19.988 billion with retained earnings. October 2002 Awarded as the excellent health and safe institute nationwide. October 2002 Asia Week ranked ASUS in the Top-10 of Chinese Businessmen 500. December 2002 The company had 17 million mother boards shipped this year; therefore, one out of six computers was built with ASUS mother board. December 2002 The consolidated income of the year amounted to NT$114.7 billion representing a substantial growth in sales.
January 2003 Constructed Quay-Sun Plant with 16,976.8 pings available for use. February 2003 The design of super-thin portable dual CD-R & CD-REW SCB-2408-D was awarded with the Industrie Forum (iF) in Germany. March 2003 ASUS had based on the powerful R&D capability and the excellent cooperation with Intel to have Centrino NB market launched with attention drawn upon. May 2003 After receiving the award of “Symbol of Excellence” with 20 citations that was beyond the reach of competitors, ASUS was awarded with the “11th Branding Taiwan” with three citations that was beyond the reach of competitors. It evidenced the good quality and image of ASUS to compete in the world on behalf of Taiwan. June 2003 Purchased the assets of Elite Group in Chungli Plant including land, manufacturing facilities and equipment, and specific raw material through the subsidiary, ASUSALPHA COMPUTER INCORPORATION August 2003 Increased the paid-in capital to NT$22.817 billion with retained earnings. September 2003 Presented S200N Centrino NB that weighted 905g and was the most light-weighted NB in the world. October 2003 Presented the first 3G foldable color phone J100. November 2003 DiGiMatrix was awarded with “Taiwan Outstanding Design Award” in 2003. December 2003 The consolidated income of the year amounted to NT$195.889 billion representing a substantial growth in sales.
April 2004 Setup TPC product line (thermal conduction, power, and chassis) to provide consumers with comprehensive system solution. May 2004 ASUS W1 NB with built-in TV card and powerful multimedia software was market launched. The outstanding hair-like pattern design was awarded with 9 ! ! 9 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 multiple global awards. June 2004 Presented the small and with big screen ASUS J101 phone. June 2004 The industrial design team received eleven G-Mark in Japan, five iF awards in Germany and five Red Dot design awards. December 2004 Awarded with 1,048 global professional media and networking awards that were second to none. December 2004 ASUS was the largest motherboard and VGA manufacturer; therefore, one out of three computers was made with ASUS motherboard in the world. December 2004 The company had 42 million motherboards and 7.8 million VGA shipped in 2004. December 2004 ASUS became the Top-10 NB brands and the Top-5 NB manufacturers. December 2004 The consolidated income of the year amounted to NT$250.042 billion representing a substantial growth of 26% from the year of 2003.
January 2005 ASUS was the biggest winner of “Symbol of Excellence” award for two consecutive years and with all forty nominated products awarded. March 2005 ASUS W1 NB was awarded by iF (Germany) with industrial design award that was known as Oscar Award in computer business. This was the first Chinese design awarded with iF. Invested in AzureWave Technologies, Inc., the subsidiary, to manufacture office machine, electronic components, and computer and peripheral equipment; also, to conduct the wholesales and retails of precision instrument and camera equipment. October 2005 ASUS had the first environment-friendly mother board developed successfully in Taiwan. Invested in AMA PRECISION INC., the subsidiary, to conduct computer elements R&D. November 2005 ASUS was awarded with thirteen awards in 2005 “Channel Award” that was second to none. Invested in Enertronix, Inc., the subsidiary, to conduct R&D and manufacture radio receiver and wireline communication equipment. December 2005 The company issued 59,592,835 stock shares in exchange for 15% stock shares of Advantech Co., Ltd. to achieve the goal of 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 to NT$357.8 billion representing a substantial growth of 43.11% from the year of 2004.
January 2006 The company and Advantech Co., Ltd. each acquired 50% shareholding of Advansus Corp. on January 3, 2006 with cash capitalization. January 2006 The company’s R&D was trusted by the industry. ASUS AS-D770 was crowned as Top-50 Industrial Purchasers. March 2006 The company had stock exchanged with Askey Computer Corporation according to Merger Law and with 73,662,961 shares issued for merger. Askey Computer Corporation had become a subsidiary of the company. March 2006 The company had organizational structure adjusted in response to business development. Most of the BU was defined as the Business Division for the realization of process-oriented and customer-oriented service.
10 ! ! 10 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 April 2006 ASUS W3A, W5A, and V600V were awarded with Red Dot Award for the outstanding function and fashionable and elegant design. May 2006 ASUS NB W2, W3, and V6 were nominated for “iF China, Design award” Top-10. A great achievement of the company to share and it did evidence the leading position of ASUS in computer world. June 2006 Business Weekly awarded ASUS with InfoTech 100 for eight consecutive years. October 2006 ASUS that was known for creating trust and sentiment was awarded with the “2005 Top-10 Taiwan Brand Value.” December 2006 ASUS ATEC was awarded with the “7th Management of Technology Award” by Chinese Society for Management of Technology. December 2006 The consolidated income of the year amounted to NT$560.235 billion representing a substantial growth of 45.49% from the year of 2005.
January 2007 ASUS worked with Automobili Lamborghini to present ASUS Lamborghini VX series NB high-speed version. January 2007 ASUS AS-D770 and NB were crowned for Top-50 Industrial Purchasers in 2005. ASUS products were the first choice of industry, professionals, and networking users for consumption. February 2007 ASUS was awarded with three citations in MIS Best Choice by Institute for Information Industry: Barebones and server were ranked in the first place and advanced NB was ranked in the second place. March 2007 ASUS presented the first 3.5G NB in Taiwan that led consumers entering new mobile phone era. June 2007 ASUS were awarded with 39 citations in the 15th “Symbol of Excellence” award for its excellent quality and innovation that was second to none. June 2007 ASUS was recognized by Mercedes-Benz and with ASUS P526 “C-Class Mobile Phone” promoted. July 2007 AUSU announced to have brand name business and OEM/ODM business divided at the press conference of SEC in July 2007. ASUS was dividend into three divisions, in which, brand name business was the responsibility of ASUS while OEM/ODM was the responsibility of Pegatron Corporation and Unihan Corporation on the baseline date of January 1, 2008. July 2007 ASUS was crowned for the “2007 Top-10 Brands Taiwan” with a brand value of US$1.196 billion recognized representing a growth of 166% from the year of 2003. October 2007 ASUS Eee PC was market launched in Taiwan for the satisfaction of consumers. ASUS Eee PC was popular worldwide and was sold at the rate of one Eee PC per five-second. November 2007 Oekom, an international reputable institute for environmental protection valuation, ranked ASUS in the first place of “2007 Environmental Protection.” The environmental protection effort of ASUS was awarded for the first time; also, ASUS was the first Chinese IT industry received such honor in the last fifty years. December 2007 ASUS was ranked in the first place of “Sustainability Award” by the Executive Yuan and with the award presented to the Chairman of ASUS by the Minister. December 2007 President Republic of the Gambia, Dr. Jammeh, and his 32 officers visited the head office of ASUS and shown strong interest in Eee PC. December 2007 Chunghwa Telecom and ASUS announced a strategic alliance to integrate the resources for the construction of a perfect digital center and to get involved in charity activity with 1,000 Eee PC donated to schools in the remote area of north, center, south, and east Taiwan for narrowing down Taiwan’s digital divide. December 2007 ASUS entered optical field for the first time and with BrightCam AF-200 and
11 ! ! 11 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 MF-200 presented. December 2007 The consolidated income of the year amounted to NT$755.361 billion representing a substantial growth of 34.83% from the year of 2006.
January 2008 ASUS had brand name business and OEM/ODM business divided officially. The brand name business was the responsibility of ASUS while OEM/ODM was the responsibility of Pegatron Corporation and Unihan Corporation for value generation. March 2008 The “Dual Hundred-Million-Plan” of ASUS was to have one hundred million NTD budgeted to win over the heart of one hundred million customers. The goal was to provide professional repair and maintenance and consulting service to more customers of ASUS. April 2008 ASUS had the second-generation 8.9’ Eee PC 900 market launched. April 2008 Intel and ASUS held the “Recycling Computer, Project of Hope” press conference to demonstrate the collaboration between businesses and the determination and action of enterprises in saving energy and recycling for the good of the earth. April 2008 Setup ASUS Foundation to have resources integrated effectively to feedback society and to fulfill social responsibility. May 2008 ASUS Computer was awarded with the 16th “Symbol of Excellence” this year and ASUS was the biggest winner. The excellent technology R&D, humanity technology, and innovation of ASUS have helped have fifty-one products of the company been awarded with the “Product of the year award” at the “Symbol of Excellence” this year, in which, EeePC and R700t navigator were awarded with the “gold medal” award. Six products of ASUS were awarded with the “silver medal” awards. ASUS is second to none in the industry in the sense of quality and quantity. June 2008 10” Eee PC1000 was market launched officially with a great appreciation received from international and domestic media while attending Computex exhibition in Taipei. July 2008 Enforced “Reverse Recycling Green Marketing Business Plan” August 2008 ASUS was the designated hardware brand for Advanced Overlocking Championship (AOCC) in 2008 and with great response received to the products. The combination of ASUS P5Q3 Deluxe, Striker II Extreme, and ENGTX280 had broken the record successfully at the extreme temperature of 100ʚ below. October 2008 ASUS has Eee PC market launched for one year. The sales of Eee PC are growing worldwide that has overturned the imagination of the world about mobile communication and has lead the minicomputer market successfully. EeePC is elected as the best seller 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. November 2008 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 a screen touch for an effective interaction and operation with the computer that is different from convention table-top computer. November 2008 The tough Japanese market was conquered by the easy-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. December 2008 ASUS Eee PC was named the product of the year by Forbes and Stuff Magazine in the U.K., the Japanese lifestyle and fashion magazine Dime gave the Eee PC top product honors. Sweeping from the west side to the east side of the Atlantic, 12 ! ! 12 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 America’s benchmark on-line retailer Amazon also selected the Eee PC as the most popular Christmas gift and recommended by 13 medias as the best gifts to give noted how consumers loved the high mobility of the Eee PC. Spanning Japan, Taiwan, Europe and the U.S., there is no place in the world that has not felt the effect of the Eee PC.
January 2009 According to the 24th “ideal brand in the mind of consumers” survey of Management Magazine V. 451 and the “ideal brand in the mind of businessmen” of Today V. 626, February 2008 ASUS Computer and the world leading GPS brand Garmin announced the establishment of a strategic alliance to launch a joint Garmin – ASUS brand smart phone that combines leading smart phone and GPS technology. March 2008 The top-three best sellers of Amazon in the United States were ASUS Eee PC™ series. The 1000HE of Eee PC™ were the top-two best sellers with pre-order received. The effect of Eee PC is in the heart of consumers; also, ASUS Eee PC™ is in the heart of consumers in the United States. March 2008 Reddot Award in Germany was announced. ASUS had received industrial design award frequently in recent years. ASUS was awarded with “Product Design 2009 Winners” for the Eee PC S101, Eee Keyboard PC, S121 NB, P30 NB, and innovative design “chocolate keyboard” this year. April 2008 ASUS had business divisions (departments) integrated into three business groups including Systems, Open Platform, and Handheld.
13 ! ! 13 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 III. Corporate governance report
I. Corporate Organization (I) Organization Chart
14
14 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 (II) Department Function Description
CEO & President Plan and manage the company’s strategies, draft up operating objectives, direct and supervise the operation of business units. Lean Management Headquarters Establish and substantiate lean six-sigma management system. Management Headquarters Arrange the planning and enforcement of the company’s finance, accounting, regulatory, administration, and public works. Human Resources Human Resources are responsible for the development and management of the company’s manpower planning, recruitment, training, personnel administration, career development, salary welfare, and employee’s public relation. Audit Office Audit the company’s system and enforcement of internal regulations, procedures, and authorization with corrective actions offered. Investment Division Arrange planning and investment in accordance with the company’s vision and development. Corporate Quality Assurance Center Establish, improve, and maintain ISO9000, GreenASUS (green products) and SERASUS (responsibility for social environment) system, procedure, and document control system; also, study GreenASUS regulatory supervision and GreenASUS technology. MIS Take charge of information planning and integration of the company’s business, finance, bookkeeping, and raw materials; also, maintain and control global networking linking and safety control mechanism. R&D Center Develop the common R&D technology need by each business unit. Marketing Marketing is responsible for promoting, marketing, and managing products and brand name. Systems Business System Business is responsible for the R&D and operation of the Systems. Open Platform Business Open Platform Business is responsible for the R&D and operation of open platform business. Handheld Business Handheld Business is responsible for the R&D and operation of handheld business.
15 15! WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 2nd 2nd 2nd consanguinity consanguinity consanguinity Shih, Tsang Tsang, Jonney Jonathan Jonathan consanguinity L.H. Yang L.H. L.H. Yang L.H. JonneyShih
Title Title Name Relation Vice Vice None None None None None None None None None None None None None None None None None None None None None Executives who are spousesExecutives who are or second Chairman Chairman Chairman Chairman Supervisor Supervisor None None Note 3 Note 4 Note 7 Note 8 Note Note 5 Note 6 Note Note 2 Note Current position company withother
ʳ ʳ Experience (Education) Experience NCTU Electrophysics NCTU JuniorV.P. ofSales, Silicon Integrated Corp. Systems ElectronicsEngineering Graduate (USA) University Tufus Institute, ACER of V.P. Junior Tamkang OfMathematics, Department University SpecialistofShi-Chin Industry MBA of National ChiaoTungMBA University BusinessDivision’s President of ACER ofMBA Houston University 1 Note PresidentComputerof Co.,Ltd. Youngmen EngineeringInstitute, Graduate Electrical University Taiwan National of ACER Manager of Applied Department Mathematics, NationalChiaoTung University of Lycer Department of R&D JuniorVP Technology National Ph.Dof Business Management, ChiChengUniversity Presidentof Hui-Young VentureCapital Ph.DStanfordof Law, (U.S.A.) University ProfessorSchool, World ofThe Law Universityof Journalism ChinaMedical of Medicine, Department University DirectorMaternityof Shalu Kwong-Tien Hospital 0 0 0 0 0 0 0 0 0 0
0 0 their name theirname Sharesheld by otherpersons in 0.02 16 Shareholdingof spouseandminors 0.31 64,141 0.00 0 0.00 0 0 0 8,799 0.00 0 0 0 585,702 0.01 66,948 0.00 0 13,359,041 Currentshareholding 0.00 0.01 0.55 0 0.00 8,002 elected 657,117 0.02432,509 832,703 0.02 0 0 0 5,726,127 0.154,786,767 6,397,009 0.13 0.15 6,202,6851,712,599 963,402 0.05 0.15 836,659 2,010,3481,148,287 0.02 0.03 0.05 1,261,802 0 0.03 0 20,060,369 0.47 0 0 0 Shares % Shares % Shares % Shares % 87,948,617 2.34 96,816,910 2.28 0 0 0 20,647,919 Shareholdingwhen April 18, 2009 first elected elected Date of Date 1994.04 1999.04 2002.05 2002.05 2008.06 2008.06 2008.06 2005.06 2005.06 Term Term 2008.06 3 2008.06 3 2008.06 3 2008.06 3 2008.06 3 2008.06 3 2008.06 3 2008.06 3 2008.06 3 2008.06 3 2005.12 (appointed) Date elected elected Date 1. Directors and Supervisors Shih Yang Name Name Tsang Cheng Jonney Jonathan Tze-Kaing Chung-Jen (I) Directors and Supervisors Title Title Vice II. Directors, Supervisors, President, Vice Junior VP, and department heads (Note1) Director Shen Jerry Director Hung H.C. Director Ho Ivan Director Chen Tony Director Chen Eric Chairman Chairman Chairman Chairman Supervisor Supervisor Supervisor Yang L.H.
16 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 SINOCON SINOCON
None None Ming-Chun Computer(*), AsiaPacific Intellectual Property Association, Supervisor of CHANT SINCERE CO., LTD. and Director of LOTES CO., LTD. ofCO., Director LOTES and LTD. CO., ofSINCERE Supervisor CHANT ǹ Major Shareholders of Juridical Persons
17 TeYang Tech Inc., Major Shareholders of Institutional Shareholders
Major Shareholders of Institutional Shareholders None None Major Shareholders of the Major Shareholders that are Juridical Persons Name of Juridical Persons Name ASUS IBERICA S.L., eCareme Technologies, Inc., ASUS COMPUTER GmbH, ASUS COMPUTER Benelux B.V., ASUS POLSKA SP.z.o.o., ASUS Marketing Services Kft. and
Name of InstitutionalName Shareholders IndependentSupervisor of ASROCK Incorporation ofDirector TWSE. AUO, and ǹ RECYCLING CO., LTD., ASUS Foundation, Asustek Holdings, Asus INTL, Asus Holland B.V., Asus Computer Corporation, Central Tec, South Tec, East Tec, Deep Delight, ASUSCHANNEL, Channel Holdings Mobostar,and Unimax Pilot Limited, INCORPORATION, ASUS INVESTMENT INCORPORATION, SITI,, Youngmen Computer Co., Ltd., Industrial Standards Foundation ASUSTEK ITALY S.R.L. S.R.L. ITALY ASUSTEK TechnologyInc. LIMITED, ASUS Technology Holland B.V., ASUS Technology (Vietnam) Co., LTD., ASUS Middle East FZCO, ASUS KOREA Co., Ltd. and ASUS TECHNOLOGY PRIVATE LIMITED LIMITED PRIVATE ASUSand TECHNOLOGY Ltd. Co., KOREA ASUS FZCO, East Middle ASUS LTD., Co., (Vietnam) Technology ASUS B.V., Holland Technology ASUS LIMITED, Director of the following companies: Axus Microsystems Inc., Hua-Cheng Inc., AxusDirectorofthefollowing Microsystems Venture companies: Capital Ltd. Co., Corp. and Hua-Min Investment LIMITED CO., PRECISION Supervisorof thefollowing CORPORATION UNIHAN and CORPORATION PEGATRON companies: Director of the following companies: ASROCK Incorporation, KINSUS Interconnect Technology Corporation, Axus Microsystems Inc., ASUS TECHNOLOGY INCORPORATION, Advansus Corp., Hua-Cheng Venture Director of the following companies: ASKEY, SHINEWAVE INTERNATIONAL INC., ASUS TECHNOLOGY INCORPORATION, ACI, ASUSPOWER COMPUTER INC., ASUSPOWER INVESTMENT CapitalLtd Co., Corp. and Hua-Min Investment Note 7: Director of the following companies: Yangtze Associates, Huiyang Private Equity Fund Co., Ltd, RITEK CORPORATION, Bridgewell Incorporation, VIS, EZ Travel Co., Ltd, FAT Venture Capital, eTurboTouch Note 1: Chairman of the following companies: Axus Microsystems Inc., Assucom Network Inc., ASUSTEK INVESTMENT INCORPORATION, Hua-Cheng Venture Capital Corp., Hua-Min Investment Co., Ltd., GREENASUS Note 2: Chairman of the following companies: ASUS TECHNOLOGY INCORPORATION, UNIMAX ELECTRONICS INC., AMA CORPORATION, ASUS TECHNOLOGY PTE LTD., ASUS TECHNOLOGY (HONG KONG) INC INTERNATIONAL of SHINEWAVE Note4:Current position with thefollowing Chairman companies: ofCORPORATION Director KINSUS and CANADA ofSERVICE International,Director ASUS SERVICEINC, of TECHNOLOGY PEGATRON ofComputer Director Asus 5: Chairman Note Note 6: Chairman of the following companies: Note8:Independent Supervisor ofthe KINSUSfollowing Interconnect companies: Corporation, Technology Apacer, andWistron Note 9: (*) Standards for the English transliteration of company’s name or individual’s name. Note9:(*)Standards orindividual’s forthe English name. transliteration name ofcompany’s Note 3: Chairman of the following ASMEDIA TECHNOLOGY INC., companies: Enertronix, InternationalInc., United Technology Co., InternationalLtd., United, Enertronix Holding, Aslink Precision Co., Ltd. and ASLINK (H.K.)
17 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
2. Professional knowledge and independence of Directors and Supervisors
With over five years of job experience and the Also an Independence (Note) following business qualification independent Condition Teachers of Judge, prosecutor, With job director of public or attorney, experience in other public private colleges accountant, or commerce, company for the subject business law, finance, 1 2 3 4 5 6 7 8 9 10 of commerce, salespersons passed accounting, or Name law, finance, national exam & business accounting, or certified specialists business or technicians Jonney Shih 3 3 3 3 Jonathan Tsang 3 3 3 3 3 Jerry Shen 3 3 3 3 3 3 3 H.C. Hung 3 3 3 3 3 3 3 Ivan Ho 3 3 3 3 3 3 3 Tony Chen 3 3 3 3 3 3 3 Eric Chen 3 3 3 3 3 3 3 Tze-Kaing 3 3 3 3 3 3 3 3 3 3 3 3 3 2 Yang Chung-Jen 3 3 3 3 3 3 3 3 3 3 3 Cheng L.H. Yang 3 3 3 3 3 3 3 Note: Directors and supervisors who have qualified the following conditions two years before being elected and during the term are to tick the box (“9”) of the corresponding condition. Ȑ1ȑNot an employee of the company or any related party; Ȑ2ȑNot a director or supervisor of the company or any related party (except for being an independent director of the company or any related party, or, the subsidiary that is with over 50% shareholding with voting rights held directly or indirectly by the company); Ȑ3ȑDoes not hold more than 1% of total stock issued directly or indirectly nor a natural shareholder on the top-ten shareholdings list; Ȑ4ȑNot the spouse nor a relative within two degrees of lineal consanguinity of an individual falling in the first three categories; Ȑ5ȑNot 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; Ȑ6ȑNot a Director (executive), Supervisor, management, or a shareholder with over 5% shareholdings of a company or organization that is in business with the Company; Ȑ7ȑNot an owner, partner, Director, Supervisor, management of a partnership or institution and his/her spouse that provides commerce, law, finance, accounting and consulting service to the Company or related party; Ȑ8ȑʳNot the spouse nor a relative within two degrees of lineal consanguinity of an individual; Ȑ9ȑFree of any of the behaviors as defined in Article 30 of Company Act; Ȑ10ȑNot a governmental officer, juridical person or its representative as defined in Article 27 of Company Act.
18
18 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 2nd 2nd Relation consanguinity consanguinity Shih None None None None None None None None None None None None None None Tsang Jonney Jonathan or second consanguinity None None Chief Chief Title Name Officer Officer Deputy Executives who are spouses Branding Branding None None None None None None None None None None Note1 Note3 Note4 Note2 Current position with other companies
! Experience (Education) Electrical Engineering Graduate Institute, Graduate Engineering Electrical University Taiwan National ACER Managerof ofApplied Mathematics, Department NationalChiao UniversityTung ofLycer Department ofR&D JuniorV.P. Technology ElectronicsEngineering Graduate Institute, Tufus (USA) University JuniorofV.P. ACER of Electronic Engineering,Department Taiwanindustrial Institute College Engineerof Won-Chuan Co. Ltd. (USA) University Clarita Santa of MBA EngineerofASUS (USA) Institute, Graduate Engineering Electrical University Taiwan National V.P. of MiTAC ofElectricalEngineering, Department University Taiwan National V.P. of TwinHead !! MBA of National Chiao Tung University Business Division’s President of ACER MBA of Houston University President of Youngmen Computer Co., Ltd. ˄ˌʳ 0 0 by by other persons in their their name Shares held 0 minor minor Shareholding of spouse and 832,703 0.02688,556 0.02 0 49,895 0455,617 0.00 0.01 0 4,398411,842 0 0.01 0.00 0 0 645,280 0 0.02 0 0 18,620 0 0.00 0 0 0 0 Shares % Shares % Shares % 6,397,009 0.15 963,402 0.026,202,685 0.15 836,659 0 0.022,010,348 0 0.05 0 0 0 Shareholding 96,816,910 2.28 0 0 0 0 Date Date Elected Elected 04.30.1994 01.12.1999 Shih Tsang Jonney Name Jonathan V.P. Hung H.C. 04.12.2002 V.P. Chen Tony 03.10.2008 V.P. Shian S.Y. 03.10.2008 V.P. JoeHsieh V.P. 03.10.2008 PCWang 03.10.2008 V.P. Yeh Henry 03.10.2008 Chief Title Title Officer Officer President Shen Jerry 04.12.2002 Branding Branding (II) Information of the management DeputyChief
April 18, 2009
19 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 None None None None Note5 None Note6 None Ming-Chun Computer(*), AsiaPacific Intellectual ! !! Department of Finance, Drexel University (Philadelphia Pennsylvania) Staff of Ernst & Young Department of Computer Science, National Chiao Tung University Junior V.P. of Acer ˅˃ʳ
73,709 0.00 246 0.00 0 0 298,331 0.01 0 0 0 0 SINOCON Industrial Standards Foundation
07.07.2006 David Chang INVESTMENT INVESTMENT INCORPORATION, ASUS INVESTMENT INCORPORATION, SITI, Youngmen Computer Co., Ltd., TeYang Tech Inc., Property Association, Director of the following companies: ASKEY, SHINEWAVE INTERNATIONAL INC., ASUS TECHNOLOGY INCORPORATION, ACI, ASUSPOWER COMPUTER INC., ASUSPOWER TECHNOLOGY (HONG KONG) LIMITED, ASUS LIMITED PRIVATE TECHNOLOGY Technology Holland B.V., ASUS Technology (Vietnam) Co., LTD., ASUS Middle East FZCO, ASUS KOREA Co., Ltd. and ASUS Director of the following companies: Axus Microsystems Inc., Hua-Cheng Inc., AxusDirectorofthefollowing Microsystems Venture companies: Capital Ltd. Co., Corp. and Hua-Min Investment Ltd., Ltd., GREENASUS RECYCLING CO., LTD., ASUS Foundation, Asustek Holdings, Asus INTL, Asus Holland B.V., Holdings Mobostar, andUnimax Limited, Pilot Channel ASUSCHANNEL, Asus Computer Corporation, Central Tec, South Tec, East Tec, Deep Delight, Supervisorof thefollowing CORPORATION UNIHAN and CORPORATION PEGATRON companies: and ASLINK (H.K.) PRECISION CO., LIMITED LIMITED CO., PRECISION (H.K.) andASLINK Director of the following companies: ASROCK Incorporation, KINSUS Interconnect Technology Corporation, Axus Microsystems Inc., ASUS Hua-ChengTECHNOLOGY Venture Capital Ltd. Co., Corp. and Hua-Min Investment INCORPORATION, Advansus Corp., V.P. Hu Samson 03.10.2008 Officer Finance & Accounting
Note 2: Chairman of the following companies: ASUS TECHNOLOGY INCORPORATION, UNIMAX ELECTRONICS INC., AMA CORPORATION, ASUS TECHNOLOGY PTE Note 3: Chairman of the following ASMEDIA TECHNOLOGY INC., companies: Enertronix, Inc., International LTD., United Technology Co., Ltd., International United, Enertronix Holding, Aslink Precision Co., Ltd. ASUS Note 1: Chairman of the following companies: Axus Microsystems Inc., Assucom Network Inc., ASUSTEK INVESTMENT INCORPORATION, Hua-Cheng Venture Capital Corp., Hua-Min Investment Co., Note 4: Current position with the following companies: Chairman of SHINEWAVE INTERNATIONAL INC. INC. INTERNATIONAL of SHINEWAVE Note 4:Current position with thefollowing Chairman companies: Technologies, Inc. Note5:DirectorofeCareme Note6: Supervisor and Ltd. Hua-ChengCo., of the followingInvestment Venture Capital Hua-Mincompanies: Corp.
20 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 than the the than invested invested from the the from subsidiary subsidiary company’s company’s Remuneration Remuneration company other other company
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21 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
! IvanHo Tony Chen, Eric ChenTony Chen, Eric JonneyShenShih, Jerry JonathanTsang,Hung, H.C. financial statements (J) financial statements T.H. Tung, Ted Hsu,Tung,Ted Jason T.H. Cheng Companies in the consolidated Companies A+B+C+D+E+F+G
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22 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 !
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Name of Supervisors in in the financial financial statements Companies Companies consolidated consolidated ! ! (D) 0 0 The Business expense company ˅ˆʳ
in in the ! 2,671 financial financial statements Companies Companies Thousand consolidated consolidated The Company (C) The retained earnings 2,401 Remuneration from from Remuneration company Thousand Tze-Kaing Yang, Chung-Jen Cheng, L.H. Yang Tze-Kaing Yang, Chung-Jen Cheng, L.H. Yang
0 in in the financial financial statements Companies Companies consolidated consolidated Remuneration of SupervisorsRemuneration Pension (B) 0 The company in in the financial financial statements Companies Companies consolidated consolidated ! 0 0 Remuneration to supervisors The ɴ 5,000,000 Remuneration (A) Remuneration company ! of tax levy. ! ! Below 2,000,000 2,000,000 5,000,000 ɴ 10,000,000 10,000,000 ɴ 15,000,000 15,000,000 ɴ 30,000,000 30,000,000 ɴ 50,000,000 50,000,000 ɴ 100,000,000 Over 100,000,000 ɀ The content of remuneration disclosed in this table is different from the income defined by Income Tax Law; therefore, this table is used for the purpose of disclosure instead Remuneration Bracket Remuneration Yang Cheng Name L.H. Yang L.H. Tze-Kaing Chung-Jen
! 2. Remuneration of Supervisors Title Supervisor Supervisor Supervisor
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None thanthe invested from the from subsidiary company’s company’s Remuneration Remuneration company other company
the None financial statements consolidated Companies in Companies Certificates
The None Employee Stock Option Employee company
! ! ! the financial statements Jerry Shen Jerry consolidated Companies in Companies income (%) income Henry Yeh, Samson Hu Yeh,Henry Samson The 0.54% 0.47% company Ratio of A+B+C+D to Net to A+B+C+D of Ratio JonneyShih, Jonathan Tsang,Hung, H.C. Tony Chen, Shian,Tony S.Y. Joe Hsieh, PC Wang,
Companies in the consolidated financial statements (D) intheconsolidated Companies financial statements Stock 52,845 dividend thousand (D) ) Name of President andV.P. Name 0 financialstatements
Cashdividend Companies intheconsolidated Companies estimated shares estimated (
Stock 52,845 dividend thousand ˅ˇʳ Remuneration from retained earnings from Remuneration Thecompany 0
Cash ! ! ! dividend Jerry Shen Jerry The Company TheCompany the the (C) financial financial 10,246 statements consolidated consolidated thousand Companies in Companies Henry Yeh, Samson Hu Yeh,Henry Samson Bonusand JonneyShih, Jonathan Tsang,Hung, H.C. compensation 10,246 Tony Chen, Shian,Tony S.Y. Joe Hsieh, PC Wang, thousand Thecompany
the the financial financial statements consolidated consolidated Companies in Companies 0 0 The company the the financial financial 25,645 statements statements consolidated consolidated thousand Companies in Companies The 25,645 company company Remuneration (A) Pension (B) thousand
PC Wang PC JoeHsieh Jerry Shen Jerry S.Y. Shian S.Y. H.C.Hung Henry Yeh Henry Tony Chen Tony Samson Hu Samson JonneyShih Remuneration of President Remuneration and V.P. JonathanTsang
15,000,000 30,000,000 50,000,000 100,000,000 5,000,000 10,000,000
ɴ ɴ ɴ ɴ ɴ ɴ
ɀ The content of remuneration disclosed tablein this is different from the income definedby Income Tax Law; therefore, isthis usedtable for the purpose of insteaddisclosure of tax levy. 3. Remuneration of President and V.P. Remuneration Bracket Remuneration V.P. V.P. V.P. V.P. V.P. V.P. V.P. Title Name President Chief DeputyChief Below2,000,000 2,000,000 5,000,000 10,000,000 15,000,000 30,000,000 50,000,000 Over100,000,000 BrandingOfficer BrandingOfficer
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0.34%
Total Total Ratio of total amount to net income (%) 55,421 thousand
s Directors,s Supervisors, President, 0 (Note 1)
2.89 0.86 Cash Dividend (estimated amount) Cash Dividend (estimated and V.P. in the last two years to net income to income net years two last the in V.P. and amount) amount) (Note 1) 55,421 thousand Stock Dividend (estimated Stock Dividend (estimated
Name Name PC Wang PC Wang Joe Hsieh Hsieh Joe Jerry Shen Jerry S.Y. S.Y. Shian H.C. Hung Yeh Henry Tony Chen Tony Samson Hu Samson Jonney Shih Jonney David Chang Jonathan Tsang
2007 2008 Year (Note 1) paid Ratio totalof the to remuneration company’ the V.P. V.P. V.P. V.P. V.P. V.P. V.P. V.P. Title Title Officer Officer Officer Officer President President Note 1: It meant for the year of the income generated. generated. the of income Note the 1:for year It meant contribution of each employee. B. B. In terms of the company’s remuneration policy, a reasonable remuneration is based on the salary level of the industry and the responsibility and A. Analyze the ratio of the total remuneration paid to the company’s Directors, Supervisors, President, and V.P. inA. the last to years two net income: Directors, Supervisors,V.P. President, the ratio ofand Analyze the total remuneration paid to the company’s in the consolidated financial statements to net income in the last two years; also, describe standard, the and policy, combination of remuneration paid; the procedure of defining remuneration and its relation to businessmoreover, performance: Finance & Accounting & Finance Chief Branding Officer Deputy Chief BrandingDeputy
earnings earnings in recent years, if the proposed dividend amount cannot be estimated, it is based on the distribution ratio in the year before. The listed/OTC company is to have the stock dividend amount calculated according to the fair value (the closing price the for netin income year. recent meant the Securities most income Net Issuers. on the Balance Sheet date) in accordance with the Regulations Governing the Preparation of Financial Statements by (IV) Compare and state the ratio of total remuneration paid to the company’s Directors, Supervisors, President, and V.P. by theand company the (IV) and Compare statecompanies the ratio of total Directors,remuneration paid Supervisors, to President,the company’s and V.P. 4. Name of4. Name Managers who received the dividenddistribution and of dividend
Managers Note 1: For the dividend (including stock dividend and cash dividend) amount to managers that was proposed by the Board of Directors before the Shareholders Meeting for the distribution of
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III. Corporate governance
(I) Board of Directors
Board of Directors
The attendance of Directors for the 9 (A) Board Meeting in 2008 (three meetings before the re-election and 6 times after the re-election):! Frequency of Attendance Title Name Proxy attendance (%) Remarks (B) (B/A) 06.11.2008 Chairman Jonney Shih 88.89 8 1 Re-elected Vice Jonathan 06.11.2008 100.00 Chairman Tsang 9 0 Re-elected 06.11.2008 Director Jerry Shen 88.89 8 0 Re-elected 06.11.2008 Director H.C. Hung 77.78 7 1 Re-elected 06.11.2008 Director Ivan Ho 66.67 4 2 ˡ˸̊˿̌ʳ˸˿˸˶̇˸˷ 06.11.2008 Director Tony Chen 100.00 6 0 ˡ˸̊˿̌ʳ˸˿˸˶̇˸˷ 06.11.2008 Director Eric Chen 1 3 16.67 Newly elected 06.11.2008 Discharged at ˗˼̅˸˶̇̂̅ T.H. Tung 2 0 66.67 the end of the term 06.11.2008 Discharged at Director Ted Hsu 2 0 66.67 the end of the term 06.11.2008 Director Jason Cheng 3 0 100.00 ˗˼̆˶˻˴̅˺˸˷ʳ˴̇ʳ̇˻˸ʳ ˸́˷ʳ̂˹ʳ̇˻˸ʳ̇˸̅̀ Remarks: 1. For the events stated in SEC Article 14.3 and other opposing or qualified opinion of independent directors that are recorded or declared in writing: None 2. Directors who have excused themselves from the meeting due to a conflict of interest: None 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 transparency, etc.): None
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(II) The operation of the Auditing Committee or the attendance of supervisors at the board meeting: ! ! 1. Attendance of supervisors at the board meeting ! Attendance of supervisors at the board meeting The attendance of Supervisors for the 9 (A) Board Meeting in 2008 (three meetings before the re-election and 6 times after the re-election):
Frequency of Attendance Title Name attendance (%) Remark (Times) (B) Ȑ˾/˽ȑ Tze-Kaing Reelected on Supervisor 7 77.78 Yang 06.11.2008 Chung-Jen Reelected on Supervisor 6 66.67 Cheng 06.11.2008 Reelected on Supervisor 2 22.22 L.H. Yang 06.11.2008 Remarks: I. Composition and responsibility of Supervisors: (I) Communication between the company’s supervisors and employees and shareholders: Supervisors may contact and communicate with employees and shareholders if it is necessary. (II) Communication between the company’s supervisors and internal chief director and CPA: 1. Chief auditor is to have the auditing report submitted to the supervisors in the following month upon the completion of the audit; also, the chief auditor is to report the audit at the board meeting. 2. Supervisors may communicate with the CPA if it is necessary. II. For the opinions of the supervisors 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 ! !
27 ˅ˊʳ WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 Deviation from the Rules Governing Listed & OTC corporate governance and the causes No deviation No deviation No deviation No deviation No deviation No deviation No deviation No deviation Under consideration ! Operation ˅ˋʳ of the main shareholders is company to have are a good relation kept with them. in the shareholders’ roster and the accordance with the “Corporate Governance “Loans and Law Endorsement of and Subsidiary,” Guarantee Procedures,” Acquisition and/or Disposition Procedure.” and “Assets company’s Board company’s of Directors contracted. has the CPAs and business management (relationship with investors) and to explain the corporate governance of the and public shareholders offering meeting meeting. company to the investors in the company; also, to the public. communicate substantiate the spokespersons system to is designated. 1.The Stock spokesman agent is to process stock affairs. 2.The main shareholders of the company and the responsible personnel 3.The company has established risk control mechanism and firewall in 1. Not yet setup 2.The CPA’s independence must be evaluated periodically. The e-mail. 1.The company has a website setup to disclose financial information 2.Designate personnel to collect and disclose information of the organized. Item (III) Corporate the governanceRules Governing and the deviation from Listed & OTC corporate governance and the causes
mechanism and firewall with the related party mechanism periodically disputes of shareholders information and business management and business management information methods methods (for example, setup website in English, designate personnel to collect company, substantiate the and spokesman system, and publish disclose information the on public the offering website) meeting of the personnel of the main shareholders personnel of the main (3) (3) The company establishes the business risk control (1) (1) The way the company processes the suggestion and (2) The main shareholders of the company and the responsible (2) The company has adopted other information disclosure
1. Equity structure and shareholders’ equity and 2. the The responsibilityformation of the board of directors (1) The independent directors of the company (2) Evaluate the independence of the independent auditor channel with the related 3. partyEstablish a communication There are proper communication 4. Publication of information channels available by phone and (1) The company has a website setup to disclose financial of the company committee or 5. remuneration The nomination committee The has company not or had remuneration a nomination
28 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 Deviation from the Rules Governing Listed & OTC corporate governance and the causes Operation ˅ˌʳ Item ! according to the “Rules Governing The the resolutions Conduct of of the Board Board Meetings.” of Directors are Market disclosed Observation in Post bythe System law. “Regulations Governing the Conduct of Board Meetings” reference authority.of the competent stipulated in accordance with “Rules Governing the Conduct of Board Meeting by Public Company” for the with each customer with each customer before providing services and products to them. responsibility. 6. The is substantiated company to graduallyhave other and corporate in governances accordance promoted and with regulations. the current condition 1. Directors and supervisors usually attend the board meeting for discussion unless there is a reason not to. Directors must be excused from a case2. involving conflict of interest Liability insurance is acquired 3.for directors and according supervisors to the Articles of Incorporation. In order to improve the governance of the Board of Directors, substantiate the function of supervision, and reinforce the mechanism of governance, the company has the 4. The company has repair and maintenance stations and consumer’s hot line setup nationwide for protecting the interest of consumers. The company has an agreement signed 5. The company obeys law, maintains a good labor relation, provides job opportunity, builds up brand name, expands exporting business, and fulfills corporate social The company’s corporate governance rules are in planning; however, directors and supervisors have exercised spirit and regulation of the “Rules their governing Listed/OTC corporate governance.” obligations and internal control system in accordance with the meeting, meeting, enforcement of risk management policy and risk measurement standards, protection for consumers and customers, director’s excusing himself/herself from a case involving conflict of interest, liability insurance acquired for directors and supervisors, and corporate social responsibilities): from the rules: from with the nonconformities (or and with suggestions) corrective the actions nonconformities detailed: N/A 6. If the company has corporate governance rules stipulated according to the “Rules governing Listed/OTC corporate governance,” please state the variation of the business operation 7. Other information that helps understand the corporate governance (for example, advanced study of directors and supervisors, attendance of directors and supervisors for board 8. If there is an internal evaluation report or an independent appraisal report furnished on corporate governance, the internal (external) performance evaluation report must be furnished
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(IV) Fulfillment of social responsibility Since 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 measures and control includes labor safety and health risk evaluation and measures, labor’s interest promotion, balanced work and leisure, free of discrimination, free of sexual harassment and abuse, occupational safety and employee’s mental and physical health, obedience of business morale, intellectual property right, the protection of business secrets, and community watch. ASUS had SERASUS organized in July 2006 to promote corporate social responsibility with the international certification of ISO14001 Environmental Management System and OHSAS 18001 Occupational Safety and Health Management System. ! The scope of SERASUS is based on the spirit of EICC to integrate the standard requirements of environment, safety, and health, labor and business moral as the structure of management system and is in conformity with the company’s social responsibility policy: 1. Obeying environmental protection and labor safety and health regulations 2. Cherishing natural resources and enforcing pollution prevention aggressively 3. Minimizing environmental impact and safety and health risk 4. Satisfying customer’s demand and realizing green enterprises 5. Promote corporate social responsibility comprehensively 6. Full participation and continuing improvement The company’s promoting corporate social responsibility: (1) Establish SERASUS organization and promote corporate social responsibility (2) Complete SERASUS regulations and enforce internal audit (3) Conduct supplier’s promotion, investigation, and consultation (4) Continuing improvement and perpetual operation ! In terms of human right, ASUS has strong belief in humanity and care for employees. ASUS has honored the requirement of age, local regulations, and EIC in recruitment and without discrimination of race, sex, age, political party, religion, and handicap. ASUS takes good care of and protect the work and living conditions of employees and with comprehensive training and self-development provided to employees. ASUS has declared the human right policy in accordance with the Declaration of Human Right of the United Nations: 1.No child labor: In conformity with the low and requirement of minimum age; therefore, no child labor. 2.In conformity with the minimum wage: Provide employees with the minimum wage or better than local minimum wage and welfare. 3.Working hours: Provide employees with the benefit of leave with pay periodically. Labor will not be forced to work over the maximum working hours regulated by local law. In conformity with the requirement of overtime wages or necessary compensation.
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4.No discrimination: No discrimination of race, skin color, age, sex, sexual orientation, race, religion, disability, union, or political preference. All men and women are equal and are entitled to protection and free of discrimination. 5.Free of inhuman treatment: Harassment and/or physical abuse is prohibited. 6.No forced labor: ASUS products or service will not be provided by forced, restrained, or involuntary prison workers. All employed workers for ASUS products and service work at their own free will. 7.Health and safety: Provide employees with a trustworthy, respectful, healthy, and safe working environment. 8.Employee’s training and self-development: Provide facility, training program, time, and grants to support employee’s occupational development.
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 talents,” “promoting industry and academy collaboration,” and “promoting environmental protection and energy saving.” ASUS has ASUS Foundation setup in 2008 to have resources integrated effectively and to feedback the society with substantiated action for the fulfillment of corporate social responsibility. The action plan includes: 1.ASUS is the first one to join Taipei Environmental Protection Volunteers Squad in the name of the company to help with the community environmental protection, to fulfill the social responsibility of green enterprises, and to share the task of environmental protection. 2.Staffs of ASUS headquarters station at CareUs Bakery in arcade to provide few jobs to minority and to feedback the society. 3.ASUS arranges corporate recycling and mercy donation annually in special occasions including 422 Earth Day. Donate books that are purchased with the income from recycling to the schools in remote areas including Hualian and provide scholarship to junior high students with financial difficulty; also, donate rice to families and homes with financial difficulty in the community. 4.Work with Forestry Bureau to plant trees for green environment in the Arbor Day. 5.ASUS worked with Microsoft in March 2008 to activate the ȸDigital Phoenix Projectȹ with ASUS Windows EeePC donated to help women build up ability and confidence in using computers and to help women enjoy the fun and convenience of science and technology. 6.ASUS and ASUS Foundation sponsor the art and literature activity continuously to care for the locality, eye on the world, and fulfill social responsibility. The sponsored art and cultural activity includes: Taipei Stampede Festival, the 3rd Taipei Digital Art Festival “super-interface-Trans-,“ and Taiwan Treasure MaZu carnival donated by ChangHua County Government with an intention to support culture and art business as a corporate citizen in order to recover traditional local art and upgrade citizen’s spiritual life. 7.ASUS helps rebuild Cloud Gate Dance Foundation and donation for earthquake in Szechuan. ASUS’s employees have also made donation voluntarily to help charity and rescue activity.
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8.ASUS Foundation and public TV worked together in November 2008 on “Environmental Protection 99 for Long-lasting Beauty of the Earth” activity.
ASUS has activated the “Reversal Logistics Recycling Green Marketing Development Project” since July 2008 to provide general consumers (B2C) and public institutes and groups (B2B) in Taiwan with diversified computer recycling service. The recycled computers are repaired and tested and then donated to junior high students, elementary school students, and minority in remote area in order to upgrade the information competency in remote area and to shorten digital gap. ASUS has promoted the “recycling computer – hope” to have environmental protection and social charity combined together; also, to fulfill corporate social responsibility. Please refer to the website of the “recycling computer – hope” (http://recycling.asus.com) for details. ! ASUS’s fulfillment of corporate social responsibility: 1.ASUS attended the contest of “CSR Corporate Social Responsibility” of Global Views in 2008 for the first time and was awarded with Science & Technology CSR Excellence Award; also, attended the “Corporate Citizen” contest of Common Wealth for the first time and was awarded with Common Wealth Corporate Citizen TOP 50. 2.ASUS announced the 2007 corporate perpetual business operation report in accordance with Global Reporting Initiative G3, GRI G3 standard in 2008 for the first time and with online questionnaires distributed to have the concerning parties involved. 3.ASUS was invited to take part of Carbon Disclosure Project (CDP) in 2008 and with CDP questionnaires replied for the first time to disclose ASUS’s responsive strategy to global climate shift issue. 4.ASUS was awarded with the “Corporate on Going Concern 1st Prize” by the Executive Yuan on December 3, 2007. The said award helps to boost up the confidence of consumers in ASUS that evidences ASUS’s product quality is like a rock and is in conformity with environmental protection standard; also, it evidences the promise of ASUS to consumers. 5.ASUS was awarded with “Computer and computer peripheral products” B+ grade at Oekom in Germany in 2007 representing the top place in the category of computer and computer peripheral product. Please visit the website of ASUS at heep://ser.asus.com/ for the updated information of corporate social responsibility. Please refer to the following website for ASUS’s 2007 business operation report (Chinese) (English) http://green.asus.com/english/download/ASUS_CSR-Report_2007_CN.pdf http://green.asus.com/english/download/ASUS_CSR-Report_2007_EN.pdf
(V) The company does not have corporate governance rules and regulations defined; therefore, it is not applicable.
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(VI) Other important information that helps understand corporate governance: None
(VII) Enforcement of internal control 1. Declaration of Internal Control: Please refer to Page 246. 2. If the company is requested by the SEC to retain CPA’s service for examining internal control system, the Independent Auditor’s Report must be disclosed: None
(VIII) The punishment delivered to the company and the staff of the company, or, the punishment delivered by the company to the staff for a violation of internal control system, the major nonconformity, and the corrective action in the most recent years and up to the date of the annual report printed: None
(IX) Resolutions reached in the Shareholders’ Meeting 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’s meeting: Time Subjects 06.11.2008 1.The 2007 financial statements were resolved by the Board of Directors and audited by the supervisors and CPAs; also, proposed in the shareholder’s meeting for acceptance and it was accepted unanimously. 2.The 2007 distribution of retained earnings was proposed in the shareholders meeting for acceptance and it was accepted. 3. The stock issuance for the paid-in capital with employee’s dividend in 2007 was proposed for acceptance. The company planned to increase paid-in capital with retained earnings and employee’s dividend replenishing working capital for an amount of NT$4,940,651,720 with 494,065,172 shares issued at NT$10 par. It was proposed in the shareholders meeting for acceptance and was accepted unanimously. 4. The company planned to have some clauses of the Articles of Incorporation amended in response to the paid-in capital with retained earnings and business operation. It was proposed in the shareholders meeting for acceptance and it was accepted unanimously. 5. The company planned to amend some clauses of the “Endorsement & Guarantee Procedure” in response to the regulation amendment by the competent authority. It was proposed in the shareholders meeting for acceptance and it was accepted unanimously except for Clause 3 with amendment made in accordance with the suggestion of shareholders. 6. In order to collect the fund needed for the company’s development and realize the internationalization and diversification of fund raising, the company planned to increase paid-in capital with cash and issue common stock for participating the issuance of GDR. It was proposed in the shareholders meeting for acceptance and it was accepted unanimously. 7. Seven seats of directors and three seats of supervisors were reelected for the term from June 11, 2008 to June 10, 2011 as follows: Directors: Jonney Shih, Jonathan Tsang, Jerry Shen, H.C. Hung, Tony Chen, and Eric Chen Supervisors: Tze-Kaing Yang, Chung-Jen Cheng, and L.H. Yang 8. Propose to release directors from the restriction of non-competition clause. It was proposed in the shareholders meeting for acceptance and it was accepted unanimously.
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2. The important resolutions of the Board of Directors:! Time Subjects 06.11.2008 Resolved to employ Mr. Jerry Shen as the President of the company and Mr. Jonathan Tsang as the Vice Chairman of the company. 08.01.2008 Resolved to set the baseline date for the stock issuance for paid-in capital with retained earnings in 2008 and the baseline date for the distribution of cash dividend on September 6, 2008. 08.13.2008 1. Resolved to have stock dividend distributed for paid-in capital with retained earnings in 2008 at the ratio of 99.697910 shares for the shareholding of 1,000 shares and cash dividend distributed at the ratio of $2.492448 per share. 2. Resolved to adjust the price of domestic convertible bond to $82.8 and GDR to $65.7. 08.29.2008 Resolved to accept the financial statements and consolidated financial statements for the first half of 2008. 10.03.2008 Resolved to set the baseline date for the exchange of convertible bond for stock share and paid-in capital on October 3, 2008. 12.03.2008 1.Resolved to approve the “Loans and Endorsement and Guarantee Procedure” amendment of the subsidiaries, Pegatron Corp. and Unihan Corp. 2. Resolved to approve the “2009 Auditing Plan” proposal. 02.18.2009 Resolved the purchase of Treasury stock from stock market. 03.24.2009 1. Resolved to approve the “Loans and Endorsement and Guarantee Procedure” amendment of the company. 2. Resolved the company’s 2009 general shareholder’s meeting date and agenda. 3. Resolved shareholder’s right to propose in the company’s 2009 general shareholder’s meeting. 4. Resolved stopping the conversion of the company’s 1st convertible bond. 04.22.2009 1. Reporting the purchase of Treasury 2. Reporting shareholder’s right to propose 3. The acceptance of the 2008 financial statements and consolidated financial statements 4. The acceptance of the 2008 Distribution of Retained Earnings 5. Discussed the paid-in capital with retained earnings and employee’s dividend and the issuance of stock shares 6. The company’s 2008 “Declaration of Internal Control System” 7. Resolved to modify the reasons for the company’s 2009 general shareholder’s meeting
(X) The directors or supervisors who have objected to the resolutions reached by the board of directors and the objections are recorded or declared in writing in the most recent years and up to the date of the annual report printed: None
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(XI) The resignation or discharge of personnel who are responsible for financial statements in the most recent years and up to the date of the annual report printed.
April 23, 2009 Date Reasons for resignation or Title Name Date Elected Discharged discharge Manager Jonney Shih 01.01.1994 01.01.2008 Internal position adjustment Chief Lisa Wu 07.07.2006 01.01.2008 Internal position adjustment Accountant
IV. CPAs fees (I) The non-auditing fees paid to CPAs, CPA firm, and the CPA firm’s related party accounted for over a quarter of the total auditing fees, the auditing amount and non-auditing amount; also, the non-auditing service must be disclosed: N/A (II) Contract a new CPA Firm and uhe auditing fee paid to the CPA firm this year is less than the fee paid to the former CPA firm in the year before: N/A, the company did not contract a new CPA Firm in 2008. (III)The auditing fee paid this year is less than the fee paid in the year before for over 15%: N/A, the company paid more auditing fee in 2008 than it did in 2007.
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 auditor or the related party must be disclosed: None
VII. Information on Net Change in Shareholding and Net Change in Shares Pledged by Directors, Supervisors, Department Heads and Shareholders of 10% Shareholding or More:
(1) Information on Net Change in Shareholding 2008 As of April 18 (Note 2) Title Name Net Change in Net Change in Net Change in Net Change in Shareholding Share Pledged Shareholding Share Pledged Chairman & Chief Jonney Shih 8,868,293 0 0 Branding Officer 0 Vice Chairman & Deputy Chief Jonathan Tsang 670,882 0 0 0 Branding Officer Director & President Jerry Shen 1,415,918 0 0 0
Director & V.P. H.C. Hung 297,749 0 0 0 Director Ivan Ho 223,515 0 0 0
Director & V.P. Tony Chen 175,586 0 0 0
Director Eric Chen 153,193 0 0 0
Supervisor Tze-Kaing Yang 0 0 0 0 Chung-Jen Supervisor 797 0 0 0 Cheng
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(7,288,878) Supervisor L.H. Yang 0 0 0 (Note3)
V.P. S.Y. Shian 129,781 0 0 0
V.P. Joe Hsieh 110,601 0 0 0
V.P. PC Wang 115,915 0 0 0
V.P. Henry Yeh 153,204 0 0 0
V.P. Samson Hu 110,201 0 0 0 Finance & David Chang (59,421) 0 0 0 Accounting Officer Note 1: The parties involved in shares transfer or equity pledge are known as the related party and they must have the following forms filled out. Note 2: The data collected up to April 18, 2009 were included in the report that was printed on April 23, 2009 for data accuracy. Note 3: Supervisor, L/H. Yang, filed the transfer of trusted 8,500,000 shares on August 14, 2008.
(2) Information of shares transferred: There is no party involved in shares transfer known as the related party.
(3) Information of equity pledged: There is no party involved in equity pledge knows as the related party.
VIII. The relation of the top ten shareholders as defined in the Finance Standard Article 6: None
IX. Investments of Directors, Supervisors, Managers and directly or indirectly controlled business on the reinvested business and the total shareholding ratio:
Total Shareholding Ratio Baseline date: 12.31.2008, Unit: Share; % Investments from Directors, Supervisors, Investment of the Managers and directly Total Investment Reinvestment Company or Indirectly Controlled Business Shares % Shares % Shares % PEGATRON CORPORATION 1,884,628,141 100.00 1,884,628,141 100.00 Askey Computer Corporation 815,640,733 100.00 815,640,733 100.00 ASUS TECHNOLOGY 19,000,000 100.00 19,000,000 100.00 INCORPORATION ASMEDIA TECHNOLOGY INC. 27,370,600 91.24 27,370,600 91.24 AXUS MICROSYSTEMS INC. 10,046,980 85.00 10,046,980 85.00 ASUSCOM NETWORK INC. 765,000 51.00 735,000 49.00 1,500,000 100.00 Hua-Cheng Venture Capital Corp. 50,000,000 100.00 50,000,000 100.00 Hua-Min Investment Co., Ltd. 20,000,000 100.00 20,000,000 100.00 ADVANTECH Co., Ltd. 75,730,415 14.81 75,730,415 14.81 SHINEWAVE INTERNATIONAL INC. 5,469,750 51.00 5,469,750 51.00
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Investments from Directors, Supervisors, Investment of the Managers and directly Total Investment Reinvestment Company or Indirectly Controlled Business Shares % Shares % Shares % International United Technology Co., Ltd. 14,181,707 56.73 14,181,707 56.73 UNIMAX ELECTRONICS INC. 21,300,000 100.00 21,300,000 100.00 GREENASUS RECYCLING CO., LTD. 100,000 100.00 100,000 100.00 eCareme Technologies, Inc. 7,700,000 77.00 7,700,000 77.00 Jie-Li Technology Co., Ltd. 2,000,000 10.00 4,000,000 20.00 6,000,000 30.00 Yu-Lian Technology Co., Ltd. 5,000,000 25.00 5,000,000 25.00 United Microelectronics Corporation 4,142,260 0.03 4,142,260 0.03 ENE Technology Inc. 1,577,625 2.23 1,051,750 1.48 2,629,375 3.71 Alcor Micro Corp 1,099,879 1.46 1,099,879 1.46 2,199,758 2.92 Kwong-Yuan Investment Co., Ltd. 10,000,000 7.81 10,000,000 7.81 D-LINK CORPORATION 11,006,000 1.95 11,006,000 1.95 Pu-Chi Technology Co., Ltd. - 100.00 - 100.00 ASUS COMPUTER INTERNATIONAL 50,000 100.00 50,000 100.00 Asus Holland B. V. 3,000,000 100.00 3,000,000 100.00 ASUS INTERNATIONAL LTD 244,730,042 100.00 244,730,042 100.00 Asustek Holdings Limited 53,452,104 100.00 53,452,104 100.00 ASUSCHANNEL Corp. 50,000 100.00 50,000 100.00 AMA CORPORATION 6,000,000 100.00 6,000,000 100.00 CHANNEL PILOT LIMITED 30,033,000 100.00 30,033,000 100.00 ASUS TECHNOLOGY PTE. LIMITED 30,002,500 100.00 30,002,500 100.00 Asus Middle East FZCO 5 100.00 5 100.00 ASUS COMPUTER GmbH - 100.00 - 100.00 ASUS COMPUTER Benelux B.V. - 100.00 - 100.00 ASUS FRANCE SARL - 100.00 - 100.00 ASUSTEK (UK) LIMITED - 100.00 - 100.00 ASUS TECHNOLOGY (HONG KONG) 500,000 100.00 500,000 100.00 LIMITED ASUS KOREA Co., Ltd. 358,433 100.00 358,433 100.00 ASUSTEK COMPUTER (SINGAPORE) 20,002 100.00 20,002 100.00 PTE, LTD. ASUS Polska Sp. z o.o. 1,000 100.00 1,000 100.00 ASUS New Zealand Limited 118,000 100.00 118,000 100.00 ASUS Technology Private Limited 7,500,000 100.00 7,500,000 100.00 ASUS Technology Holland B.V. 200,000 100.00 200,000 100.00 ASUS Technology (Vietnam) Co., LTD. - 100.00 - 100.00 ASUSTEK ITALY S.R.L. - 100.00 - 100.00
37ˆˊʳ WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
Investments from Directors, Supervisors, Investment of the Managers and directly Total Investment Reinvestment Company or Indirectly Controlled Business Shares % Shares % Shares % ASUS IBERICA S.L. 3,000 100.00 3,000 100.00 ASUS Technology (Suzhou) Co. Ltd. - 100.00 - 100.00 Asus Japan Incorporation 500 100.00 500 100.00 ASUS COMPUTER Czech Republic s.r.o. - 100.00 - 100.00 ASUS United Technology (Shanghai) Co., Ltd. - 100.00 - 100.00 ASUS Hungary Services Limited Liability 50,000 100.00 50,000 100.00 Company ASUS PORTUGAL, SOCIEDADE 30,000 100.00 30,000 100.00 UNIPESSOAL LDA Askey International Corp. 3,700,000 100.00 3,700,000 100.00 Dynalink International Corp. 32,160,172 100.00 32,160,172 100.00 Magic International Co., Ltd. 72,525,738 100.00 72,525,738 100.00 Askey (Vietnam) Company Limited 2,883,359 100.00 2,883,359 100.00 Double Tech Ltd. 50,000 100.00 50,000 100.00 Big Profit Limited 50,000 100.00 50,000 100.00 Famous Star Investments Limited 13,050,000 100.00 13,050,000 100.00 Magicom International Corp. 61,030,000 100.00 61,030,000 100.00 Askey Technology (Shanghai) Limited - 100.00 - 100.00 Openbase Limited 50,000 100.00 50,000 100.00 Goodsmart International Ltd. 50,000 100.00 50,000 100.00 Leading Profit Co., Ltd. 50,000 100.00 50,000 100.00 UNI Leader International Ltd. 50,000 100.00 50,000 100.00 Askey Technology (Jiangsu) Limited - 100.00 - 100.00 ASON TECHNOLOGY (SUZHOU) LTD - 100.00 - 100.00 ASHINE TECHNOLOGY (SUZHOU) - 100.00 - 100.00 LTD. WUJIANG WILL - 100.00 - 100.00 STAR INVESTMENTS LIMITED TOPTEK PRECISION INDUSTRY CO., - 100.00 - 100.00 LIMITED eMES (SHUZHOU) CO., LTD. - 100.00 - 100.00 GREAT EXTEND INVESTMENT CORP. 150,000 100.00 150,000 100.00 International United Technology Co., Ltd. - 100.00 - 100.00 SOUTH TEC ASIA LIMITED 5,660,000 100.00 5,660,000 100.00 CENTRAL TEC ASIA LIMITED 2,020,000 100.00 2,020,000 100.00 POWTEK HOLDINGS LIMITED 8,050,000 100.00 8,050,000 100.00 ENERTRONIX HOLDING LIMITED 12,835,000 100.00 12,835,000 100.00 UNITED NEW LIMITED 17,396,100 51.00 17,396,100 51.00
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Investments from Directors, Supervisors, Investment of the Managers and directly Total Investment Reinvestment Company or Indirectly Controlled Business Shares % Shares % Shares % ASUS COMPUTER (SHANGHAI) CO., LTD. - 100.00 - 100.00 Powtek (Shanghai) Co., Ltd. - 100.00 - 100.00 Shandong Enertronix Electronic Co., Ltd. - 100.00 - 100.00 Enertronix (HuiZhou) Co., Ltd. - 100.00 - 100.00 AVY PRECISION ELECTROPLATING - 100.00 - 100.00 (SUZHOU) CO., LTD. DEEP DELIGHT LIMITED 151,422,000 100.00 151,422,000 100.00 UNIMAX HOLDINGS LIMITED 6,500,000 100.00 6,500,000 100.00 Potix Corporation (Cayman) 5,000,000 22.22 5,000,000 22.22 ASUS COMPUTER CORPORATION 3,000,000 100.00 3,000,000 100.00 MOBOSTAR TECHNOLOGY LIMITED 50,000 100.00 50,000 100.00 Investar Burgeon Venture Capital Inc. 379 10.84 379 10.84 UNIHAN CORPORATION 800,100,000 100.00 800,100,000 100.00 Enertronix, Inc. 40,238,437 100.00 40,238,437 100.00 AMA PRECISION INC. 40,000,000 100.00 40,000,000 100.00 Advansus Corp. 30,000,000 50.00 30,000,000 50.00 ASROCK Incorporation 64,248,117 58.41 64,248,117 58.41 KINSUS Interconnect Technology 173,917,729 39.00 173,917,729 39.00 Corporation ABILITY ENTERPRISE CO., LTD. 53,637,887 12.99 53,637,887 12.99 STARLINK ELECTRONICS CORP. 69,000,000 100.00 69,000,000 100.00 ASUSPOWER INVESTMENT 841,900,000 100.00 841,900,000 100.00 INCORPORATION ASUS INVESTMENT 908,600,000 100.00 908,600,000 100.00 INCORPORATION ASUSTEK INVESTMENT 872,700,000 100.00 872,700,000 100.00 INCORPORATION ASFLY TRAVEL SERVICE LIMITED - 100.00 - 100.00 HUA-YUAN Investment Limited - 100.00 - 100.00 AzureWave Technologies, Inc. 56,656,238 96.03 56,656,238 96.03 EzWAVE Technology Inc. 500,000 100.00 500,000 100.00 Yo-Far Technologies Co., Ltd. 900,000 33.33 900,000 33.33 AVY Precision Technology INC. 12,385,766 19.60 12,385,766 19.60 ASHINE PRECISION CO., LTD 10,000,000 40.00 10,000,000 40.00 Ability International Investment Co., Ltd. 57,313,286 100.00 57,313,286 100.00 Wai-Gin Industry Co. 3,000,000 7.50 3,000,000 7.50 Lumens Digital Optics Inc. 7,867,600 19.01 7,867,600 19.01 The Infopro Group 446,805 4.60 446,805 4.60
39ˆˌʳ WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
Investments from Directors, Supervisors, Investment of the Managers and directly Total Investment Reinvestment Company or Indirectly Controlled Business Shares % Shares % Shares % Terax Communication Technologies Inc. 29,582 0.08 29,582 0.08 Hua-Wei Investment Co., Ltd. - 48.78 - 48.78 PEGA INTERNATIONAL LIMITED - 100.00 - 100.00 Zowie Technology Co., Ltd. 472,000 1.72 472,000 1.72 Ralink Technology Corp. 5,250,018 4.35 5,250,018 4.35 Mobitek Communication Corp. 5,662,500 14.01 5,662,500 14.01 LOTES Co., Ltd. 2,683,485 3.52 2,683,485 3.52 TrendChip Technologies Corp. 2,962,451 9.44 2,962,451 9.44 YOUNG FAST OPTOELECTRONICS 837,226 0.80 837,226 0.80 CO., LTD WIN Semiconductors Corp. 7,500,000 1.26 7,500,000 1.26
PEGATRON HOLDING LIMITED 569,666,472 100.00 569,666,472 100.00
UNIHAN HOLDING LIMITED 158,480,341 100.00 158,480,341 100.00 PEGATRON USA 50,000 100.00 50,000 100.00 Asuspower Corp. 349,000,000 100.00 349,000,000 100.00 Pegatron Japan Inc. - 100.00 - 100.00 MAGNIFICENT BRIGHTNESS 129,011,090 100.00 129,011,090 100.00 LIMITED STRONG CHOICE GROUP LIMITED 12,110,000 100.00 12,110,000 100.00 BOARDTEK HOLDINGS LIMITED 52,060,000 100.00 52,060,000 100.00 PROTEK GLOBAL HOLDINGS 233,050,000 100.00 233,050,000 100.00 LIMITED ASLINK PRECISION CO., LTD. 19,093,263 100.00 19,093,263 100.00 NORTH TEC ASIA LIMITED 35,050,000 100.00 35,050,000 100.00 DIGITEK GLOBAL HOLDINGS 50,000 100.00 50,000 100.00 LIMITED WEST TEC ASIA LIMITED 2,840,000 100.00 2,840,000 100.00 CASETEK HOLDINGS LIMITED 84,980,000 100.00 84,980,000 100.00 MAINTEK COMPUTER (SUZHOU) - 100.00 - 100.00 CO., LTD. BOARDTEK COMPUTER (SUZHOU) - 100.00 - 100.00 CO., LTD. CASETEK COMPUTER (SUZHOU) - 100.00 - 100.00 CO., LTD. SLITEK HOLDINGS LIMITED 1,210,000 100.00 1,210,000 100.00 PROTEK (SHANGHAI) LIMITED - 100.00 - 100.00 NORTH TEC ASIA (SHANGHAI) - 100.00 - 100.00 LIMITED LINKTEK PRECISION (SUZHOU) CO., - 100.00 - 100.00 LIMITED AMA Technology Corporation 300,000 100.00 300,000 100.00
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Investments from Directors, Supervisors, Investment of the Managers and directly Total Investment Reinvestment Company or Indirectly Controlled Business Shares % Shares % Shares % AMA Holdings Limited 3,214,000 100.00 3,214,000 100.00 EXTECH LTD. 1,604,000 88.91 1,604,000 88.91 METAL TRADINGS LTD. 1,604,000 100.00 1,604,000 100.00 FENGSHUO TRADING (TONGZHOU) - 100.00 - 100.00 CO., LTD. Grandtech Precision Ltd. - 100.00 - 100.00 KINSUS CORP. (USA) 500,000 100.00 500,000 100.00 KINSUS HOLDING (SAMOA) 15,000,000 100.00 15,000,000 100.00 LIMITED KINSUS HOLDING (CAYMAN) 15,000,000 100.00 15,000,000 100.00 LIMITED KINSUS INTERCONNECT TECH. - 100.00 - 100.00 (SUZHOU) CORP. PEGATRON TECHNOLOGY SERVICE INC. 2,800 100.00 2,800 100.00 Asus Service Canada 500 100.00 500 100.00 STRATEGY Technology Co., Ltd. 4,000,001 100.00 4,000,001 100.00 COTEK HOLDINGS LIMITED 12,260,000 100.00 12,260,000 100.00 COTEK ELECTRONICS (SUZHOU) - 100.00 - 100.00 CO., LTD. PEGATRON Mexico, S.A. DE C.V - 100.00 - 100.00 ASUS HOLLAND HOLDING B.V. - 100.00 - 100.00 Pegatron Czech s.r.o. - 100.00 - 100.00 Azurewave (Cayman) Holding Inc. 12,098,722 60.49 12,098,722 60.49 Azwave Holding (Samoa) Inc. 2,000,000 100.00 2,000,000 100.00 AzureWave Technologies (Shanghai) Inc. - 100.00 - 100.00 Eminent Star Company Limited 387,923 100.0 387,923 100.0 Jade Technologies Limited 44,781 100.00 44,781 100.00 Hannex International Limited 178,235 100.00 178,235 100.00 AzureWave Technologies (ShenZhen) - 100.00 - 100.00 Inc. YEH-HUA Technologies (Nanjing) Inc. - 100.00 - 100.00 ASLINK (H.K.) PRECISION CO., LTD. 4,785,010 100.00 4,785,010 100.00 ASIAROCK TECHNOLOGY LIMITED 40,000,000 100.00 40,000,000 100.00 Leader Insight Holdings Ltd. 2,100,000 100.00 2,100,000 100.00 ASROCK EUROPE B.V. 200,000 100.00 200,000 100.00 CalRock Holdings, LLC. 2,000,000 100.00 2,000,000 100.00 Firstplace International Ltd. 2,050,000 100.00 2,050,000 100.00 ASRock America, Inc. 2,000,000 100.00 2,000,000 100.00 Enertronix International Limited 10,000 100.00 10,000 100.00
41ˇ˄ʳ WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
Investments from Directors, Supervisors, Investment of the Managers and directly Total Investment Reinvestment Company or Indirectly Controlled Business Shares % Shares % Shares % ABILITY ENTERPRISE (BVI) CO., LTD - 100.00 - 100.00 ASSOCIATION - 100.00 - 100.00 INTERNATIONAL LTD. VIEWQUEST TECHNOLOGIES - 100.00 - 100.00 INTERNATIONAL INC. VIEWQUEST TECHNOLOGIES (BVI) INC. - 100.00 - 100.00 ACTION PIONEER INTERNATIONAL LTD. - 100.00 - 100.00 Ability Technology (Dongguan) Co., Ltd. - 100.00 - 100.00 EVER PINE INTERNATIONAL - 34.65 - 34.65 LTD.(BVI) SHIN-EI YORKEY INTERNATIONAL - 50.00 - 50.00 LTD.(BVI) YORKEY OPTICAL - 20.69 - 20.69 INTERNATIONAL(CAYMAN) PENTAX VQ CO., LTD. - 40.00 - 40.00 ASAP INTERNATIONAL CO., 6,375,000 51.00 6,375,000 51.00 LIMITED ASAP TECHNOLOGY (JIANGXI) CO., - 100.00 - 100.00 LIMITED. KAEDAR TRADING LTD. 5,000,000 100.00 5,000,000 100.00 KAEDAR HOLDINGS LIMITED 25,000,000 100.00 25,000,000 100.00 KAEDER ELECTRONICS (KUNSHAN) - 100.00 - 100.00 CO., LTD Core-Tek (Shanghai) Limited - 100.00 - 100.00 GHING HONG PRECISE MOULD - 100.00 - 100.00 INDUSTRY (SUZHOU) HONG HUA TECHNOLOGY - 100.00 - 100.00 (SUZHOU) CO., LTD Bao-Yi Enterprise Co., Ltd. 200,000 100.00 200,000 100.00 SHANGHAI INDEED TECHNOLOGY - 100.00 - 100.00 CORPORATION Zhangjiagang E. Kao-Shin Metal Products - 20.00 - 20.00 Co., Ltd. Atheros Communications Inc. 643,741 1.07 643,741 1.07 WILSON HOLDINGS LIMITED 4,000,000 49.00 4,000,000 49.00 INDEED HOLDINGS LIMITED 14,700,000 49.00 14,700,000 49.00 Asia Cement Corporation 397,500 0.01 397,500 0.01 China Steel Corporation 409,000 0.00 409,000 0.00 CHROMA ATE INC. 181,241 0.05 181,241 0.05 CHUNG HUNG STEEL CO.,LTD. 700,000 0.05 700,000 0.05 Tripod Technology Corporation 100,000 0.02 100,000 0.02
42ˇ˅ʳ WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
IV. Stock Subscription
I. Capital and shares (1) History of capitalization 1. Type of shares April 18, 2009 / Unit: Shares Authorized Shares Type of Shares Listed Remarks (Available for trading on the Unissued shares Total TSE) (Note) Order common 4,246,051,269 503,948,731 4,750,000,000 stock Note: The stock is listed including 26,125,000 shares of Treasury Stock yet to be cancelled.
2. Stock capital
Authorized shares Issued shares Remarks Month / Par value Approval date and Shares Amount Shares Amount Non-monetary approval no. of Year (NT$) Source of capital (1,000) ($1,000) (1,000) ($1,000) capital capitalization by the SEC, Ministry of Finance 1990.03 10 3,000 30,000 3,000 30,000 Incorporation ɡ ɡ 1990.11 10 8,000 80,000 8,000 80,000 Cash $50 million ɡ ɡ 1991.12 10 15,000 150,000 15,000 150,000 Cash $40 million ɡ ɡ Retained earnings $30 million 1993.04 10 19,900 199,000 19,900 199,000 Cash $49 million ɡ ɡ 1993.09 10 30,845 308,450 30,845 308,450 Retained earnings ɡ 1993.08.27 SFE Ruling $109.45 million (82) Tai-Tsai-Cheng (1) No. 30832 1994.08 10 45,033.7 450,337 45,033.7 450,337 Retained earnings ɡ 1994.07.21 SFE Ruling $141.887 million (83) Tai-Tsai-Cheng (1) No. 32675 1995.06 10 60,000 600,000 60,000 600,000 Retained earnings ɡ 1995.06.15 SFE Ruling $149.663 million (84) Tai-Tsai-Cheng (1) No. 35196 1996.09 10 200,000 2,000,000 120,000 1,200,000 Cash $12 million ɡ 1996.06.28 SFE Ruling Retained earnings $588 (85) Tai-Tsai-Cheng (1) million No. 40947 1997.05 10 650,000 6,500,000 323,000 3,230,000 Cash (GDR) $210 ɡ 1997.05.05 SFE Ruling million (86) Tai-Tsai-Cheng (1) Retained earning $1.82 No. 30903 billion 1997.04.17 SFE Ruling (86) Tai-Tsai-Cheng (1) No. 30279 1998.06 10 1,400,000 14,000,000 811,500 8,115,000 Retained earning $4.885 ɡ 1998.05.21 SFE Ruling billion (87) Tai-Tsai-Cheng (1) No. 44748 1998.10 10 1,400,000 14,000,000 813,500 8,135,000 Cash $20 million ɡ 1998.08.30 SFE Ruling (87) Tai-Tsai-Cheng (1) No. 35007 1999.06 10 1,400,000 14,000,000 1,144,900 11,449,000 Retained earning $3.314 ɡ 1999.05.20 SFE Ruling billion (88) Tai-Tsai-Cheng (1) No. 47786 1999.08 10 1,400,000 14,000,000 1,146,400 11,464,000 Cash $15 million ɡ 1999.06.16 SFE Ruling (88) Tai-Tsai-Cheng (1) No. 53605 2000.06 10 2,000,000 20,000,000 1,567,104 15,671,040 Retained earnings ɡ 2000.05.26 SFE Ruling $4.20704 billion (89) Tai-Tsai-Cheng (1) No. 45450 2001.06 10 2,100,000 21,000,000 1,976,880 19,768,800 Retained earnings ɡ 2001.06.06 SFE Ruling $4.09776 billion (90) Tai-Tsai-Cheng (1) No. 135654 2002.07 10 2,100,000 21,000,000 1,998,880 19,988,800 Retained earnings $220 ɡ 2002.06.26 SFE Ruling million (91) Tai-Tsai-Cheng (1) No. 0910134921
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2003.07 10 2,450,000 24,500,000 2,281,740 22,817,400 Retained earnings ɡ 2003.07.08 SFE Ruling $2.8286 billion Tai-Tsai-Cheng (1) No. 0920130466 2004.08 10 2,872,000 28,720,000 2,552,914 25,529,140 Retained earnings ɡ 2004.07.12 FSC Ruling $2.71174 billion Jin-Kwong-Cheng (1) No. 0930130836 2005.06.23 FSC Ruling Retained earnings 2005.07 10 3,380,000 33,800,000 2,861,205 28,612,054 ɡ Jin-Kwong-Cheng (1) No. $3.082914 billion 0940125161 2005.12.22 FSC Ruling Stock shares 2005.12 10 3,380,000 33,800,000 2,920,798 29,207,982 ɡ Jin-Kwong-Cheng (1) No. $595,928,350 0940157381 Convertible bond for 2006.02.03 Jin-So-Son-Tzi 2006.01 10 3,380,000 33,800,000 2,924,521 29,245,209 ɡ stock $37,226,200 No. 09501019910 2006.01.13 FSC Ruling Jin-Kwong-Cheng (1) No. Stock shares 0940161197 2006.03 10 3,380,000 33,800,000 2,998,184 29,981,838 ɡ $736,629,610 2006.02.27 FSC Ruling Jin-Kwong-Cheng (1) No. 0950106726 Convertible bond for 2006.04.21 Jin-So-Son-Tzi 2006.04 10 3,380,000 33,800,000 3,040,064 30,400,638 ɡ stock $418,799,510 No. 09501073310 2006.06.27 FSC Ruling Retained earnings 2006.08 10 3,860,000 38,600,000 3,407,070 34,070,701 ɡ Jin-Kwong-Cheng (1) No. $3.67006377 billion 0950126632 Convertible bond for 2007.04.26 Jin-So-Son-Tzi 2007.04 10 3,860,000 38,600,000 3,412,083 34,120,829 ɡ stock $50,127,660 No. 09601090540 2007.06.29 FSC Ruling Retained earnings 2007.09 10 4,250,000 42,500,000 3,652,687 36,526,871 ɡ Jin-Kwong-Cheng (1) No. $2.40604146 billion 0960033204 2007.08.27 FSC Ruling Stock share 2007.09 10 4,250,000 42,500,000 3,682,512 36,825,116 ɡ Jin-Kwong-Cheng (1) No. $298,245,610 0960044647 Convertible bond for 2007.10.22 Jin-So-Son-Tzi 2007.10 10 4,250,000 42,500,000 3,708,507 37,085,068 ɡ stock $259,951,830 No. 09601256950 Convertible bond for 2008.01.17 Jin-So-Son-Tzi 2008.01 10 4,250,000 42,500,000 3,728,359 37,283,589 ɡ stock $198,521,460 No. 09701012350 Convertible bond for 2008.05.13 Jin-So-Son-Tzi 2008.04 10 4,250,000 42,500,000 3,740,652 37,406,517 ɡ stock $122,927,710 No. 09701109460 Convertible bond for 2008.08.19 Jin-So-Son-Tzi 2008.08 10 4,250,000 42,500,000 3,751,832 37,518,315 ɡ stock $111,798,020 No. 09701207890 Retained earnings 2008.07.17 Jin-So-Son-Tzi 2008.09 10 4,750,000 47,500,000 4,245,897 42,458,967 ɡ $4.94065172 billion No. 0970036193 Convertible bond for 2008.10.22 Jin-So-Son-Tzi 2008.10 10 4,750,000 47,500,000 4,246,051 42,460,513 ɡ stock $1,545,780 No. 09701269640
3. Self-registration system: None
(2) Status of shareholders
Status of Shareholders April 18, 2009 Status of Domestic shareholders Government Financial Other Juridical Foreign Natural Total Agencies Institutions Persons Institutions & Persons QTY Natural Persons Number of 9 36 661 251,072 938 252,716 Shareholders
Shareholding 47,283,288 121,054,584 779,710,890 2,203,259,706 1,094,742,801 4,246,051,269
Shareholding ratio (%) 1.11 2.85 18.36 51.90 25.78 100.00
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(III) Status of Shareholding Distributed
1.Status of Shareholding Distributed
(The par value of each share is NT$10) April 18, 2009 Number of Shareholding Classification Shareholding Shareholder Ratio
1- 999 66,836 16,380,375 0.39ʘ
1,000- 5,000 131,380 294,790,029 6.94ʘ
5,001- 10,000 28,229 209,355,625 4.93ʘ
10,001- 15,000 9,549 116,821,755 2.75ʘ
15,001- 20,000 5,040 91,000,728 2.14ʘ
20,001- 30,000 4,652 115,231,066 2.71ʘ
30,001- 50,000 3,234 127,695,584 3.01ʘ
50,001- 100,000 2,078 147,348,878 3.47ʘ
100,001- 200,000 762 106,351,116 2.50ʘ
200,001- 400,000 372 106,460,315 2.51ʘ
400,001- 600,000 146 72,337,906 1.70ʘ
600,001- 800,000 77 54,267,690 1.28ʘ
800,001-1,000,000 59 53,436,050 1.26ʘ
Over 1,000,001 302 2,734,574,152 64.40ʘ
Total 252,716 4,246,051,269 100.00ʘ
2. Preferred Stock Shares: None
(IV) Roster of Major Shareholders
Roster of Major Shareholders
As of April 18, 2009
Shareholding Shareholding Shareholding Ratio (%) Shareholder’s Name
ASUS’s Certificate of Depository with CitiBank 157,570,402 3.71
Ted Hsu 130,089,014 3.06
Wayne Hsieh 100,927,412 2.38
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Jonney Shih 96,816,910 2.28
T.H. Tung 84,135,667 1.98
Chunghwa Post Co., Ltd. 77,491,200 1.83
Civil Servants Pension Fund Commission 61,858,224 1.46
Jonney Shih’s trust account with the First Bank 60,000,000 1.41 Singapore Treasury Fund Account trusted to 54,428,248 1.28 CitiBank S.C. Jiang 52,705,530 1.24
(V) Market Price, Net Worth, Earnings & Dividend per Share of the Last Two Years Market Price, Net Worth, Earnings & Dividend per Share Unit: NT$/Share
Fiscal year 2007 As of March 31, 2008 Item (Adjusted) 2009 (Note 9)
Max. 116.00 101.00 39.40 Market price per Min. 75.40 32.05 29.50 share (Note 1) Average 90.92 73.60 33.45
Net worth per Before appropriation 42.73 39.40 - share (Note 2) After appropriation 39.92 (Note 8) 3,673,028 4,237,061 Weighted average shares thousand thousand - Earnings per share shares shares Earnings per Before adjustment 7.43 3.88 - shares (Note 3) After adjustment 6.56 (Note 8)
Cash dividends 2.5 (Note 8) - Stock dividends from Retained 1 (Note 8) - Dividends per Stock earnings share dividends Stock dividends from Additional 0 (Note 8) - paid-in capital Accumulated unpaid dividends - - - (Note 4) Price/Earning Ratio (Note 5) 12.24 18.97 - Analysis of return Price/Dividend Ratio (Note 6) 36.37 (Note 8) - on investment Cash dividends yield rate (Note 7) 2.75% (Note 8) -
ɀFor the stock distribution from the capitalization with retained earnings or additional pain-in capital, the information of market price and cash dividend adjusted retroactively in accordance with the stock shares issued must be disclosed. Note 1: List the highest and 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
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shareholders meeting. Note 3: If the stock dividend is to be adjusted retroactively, please list the earnings per share before and after the adjustment. Note 4: According to the regulations of security issuance, if the dividend that is not distributed can be accumulated till the year with retained earnings, the accumulated unpaid dividend of the year must be disclosed. Note 5: Profit ratio = Closing price per share of the year / Earning per share Note 6: Earning ratio = Closing price per share of the year / Cash dividend per share Note 7: Cash dividend yield rate = Cash dividend per share / Closing price per share of the year Note 8: Subject to the approval of the annual shareholders meeting. Note 9: The data collected up to March 31, 2009 were included in the report printed on April 23, 2009 for data accuracy.
(VI) 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 distribution of cash dividend may not be for an amount below 10% of cash dividend and stock dividend together. 2. Proposed Distribution of Dividends: (1)The earnings after tax is NT$16,456,567,092. After being allocated with 10% legal reserve for NT$ 1,645,656,709, the retained earnings available for distribution in 2008 is NT$14,810,910,383.The proposed profit distribution will be implemented according to “Article of Incorporation” in the following way: (Please refer to the Distribution of Retained Earnings): i. shareholder dividend: NT$ 4,219,926,269, distributed in cash. ii. Shareholder cash dividends: NT$ 4,219,926,269. iii. Shareholder stock dividends: NT$ 84,398,530. (2) If shareholder’s cash dividend is less than NT$ 1, the distribution will be made in the form of cash rounded and adjusted by a specific represent arranged by the Chairman of the Board of Directors. (3) The Board of Directors is authorized to adjust the stock dividend per share when the amount of stock dividend to each share is affected due to the fact that convertible bondholders exercise their rights to convert bonds into shares, which results in changes in the numbers of total shares outstanding. (4) After being resolved in the Shareholder’s meeting, the proposal of dividend allocation will be executed on the record date which was determined by the Board of Directors.
Distribution of Retained Earnings 2008 /Unit: NT$ Account Name Amount Capitalization Cash Remarks
Unappropriated Earning, Beginning 59,950,057,949 (Before adjusted)
(-)The retrospective adjustments 601,019,446 for convertible bonds payable Unappropriated Earning, Beginning 59,349,038,503 (Adjusted) (-)Effect of Changes of The 66,913,426 Investee Companies' Equity Unappropriated Earning 59,282,125,077 FY2008 Profit After Tax 16,456,567,092 (-)10% Legal Reserve 1,645,656,709 FY2008 Distributable Profit 14,810,910,383 FY2008 Distributable Earnings 74,093,035,460
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Appropriation Items: Dividend Interest (Annual 4,219,926,269 4,219,926,269 NTD$1/share Interest Rate 10%) Cash Dividend 4,219,926,269 4,219,926,269 NTD$1/share Stock Dividend 84,398,530 84,398,530 NTD$0.02/share FY2008 Undistributed Profit 6,286,659,315 FY2008 Unappropriated Earnings, 65,568,784,392 Ending Cash: NTD$2/share Total 84,398,530 8,439,852,538 Stock: NTD$0.02/share Notes: Employee’s Bonus 950,837,320 Remuneration for Directors and 52,824,296 Supervisors Note: The proposed profit distribution is allocated from 2008 retained earnings available for distribution.
(VII) Impact of the proposed stock dividend in shareholders meeting on business performances and EPS: Not Applicable Note: The Company did not have financial forecast proposed up to the date of the annual report printed.
(VIII) Bonus to employees and remuneration to directors and supervisors 1. Information of dividend to employee and remuneration to directors and supervisors was prescribed in the Articles of Incorporation. The Company's net income before tax must be used to pay tax and make up accumulated loss first, then with 10% legal reserve and 10% special reserve appropriated; also, 10% dividend interest paid thereafter; also, an amount not less than 1% of the balance thereafter is appropriated for the distribution of dividend to employees, an amount not over 1% of the balance thereafter is appropriated for the distribution of remuneration to directors and supervisors. The subsidiary’s employees are entitled to the distribution of stock dividend of the parent company. The board of directors is then proposed the distribution of the net balance in shareholders meeting for approval.
2. The distribution of dividend to employee proposed by the board of directors: Ȑ1ȑʳ The distribution of dividend to employee: NT$ 950,837,320, in which, $700,000,000 is for paid-in capital with stock issued, the stock shares issued are computed in accordance with the closing price one day before the shareholder’s meeting and the impact of ex-dividend. The dividend for employee’s shareholding with less than one share is paid with cash. Cash dividend is distributed for an amount of NT$ 250,837,320. Ȑ2ȑʳ Proposed remuneration to directors and supervisors NT$ 52,824,296. Ȑ3ȑʳ The ratio of proposed stock dividend to employees to paid-in capital with retained earnings: Yet to be computed up to the printed of the annual report.! Ȑ4ȑʳ Recounted EPS after recommended distribution of dividend to employees and remuneration to directors and superiors: N/A, the dividend to employees and remuneration to directors and supervisors are expensed.!
3. The actual distributions of dividend to employees and remuneration to directors and supervisors with retained in 2007: The board of directors proposed the distribution of 2007 retained earnings in shareholders meeting for resolution, in which, remuneration to directors and superiors is for $211,203 thousand, dividend to employees is for $2,112,030 thousand (in which, $1,200,000 thousand for stock and $912,030 thousand for cash), dividend to shareholders is for $13,092,281 thousand (in which, $3,740,652 thousand for stock and $9,351,629 thousand for cash), and unappropriated retained earnings is for $9,445,438 thousand.
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Proposed Distribution of Retained Earnings in 2007: Unit: thousandǹNT$ 2007 distribution of retained earnings Resolved in Resolved by shareholders board of directors Cause of Item Difference meeting on on April 24, 2008 difference June 11, 2008 Remuneration to directors and supervisors 211,203 211,203 - - Cash dividend to employees 912,030 912,030 - - Stock dividend to employees ! Amount 1,200,000 1,200,000 - - Shares (NT$10 par) 120,000,000 120,000,000 - -
Ratio to the outstanding shares at the end 3.22ʘ 3.22ʘ - - of 2007 Cash dividend to shareholders ($2.5 per 9,351,630 9,351,630 - - share) Stock dividend to shareholders Amount ($1 per share) 3,740,652 3,740,652 - - Shares (NT$10 par) 374,065,172 374,065,172 - - ! Ratio to the outstanding shares at the end 10.03ʘ 10.03ʘ - - of 2007 Estimated EPS after the distribution of $6.89 $6.89 - - dividend to employees and remuneration to directors and supervisors (note) Note:
Net income of 2007 for distributionɡCash dividend to employees – Stock dividend to employees ɡ Remuneration to directors and supervisors Issued shares in 2007
(IX) Purchase of Treasury stock:
April 18, 2009
Term of call 1st time in 2009
For protecting the company’s credit and Purpose of call shareholder’s interest Call period February 19-April 18, 2009 Call price NT$23-48 Type and volume of stock shares called Common stock 26,125,000 shares Amount of call NT$873,459,789 Stock shares written off and transferred None Shareholdings 26,125,000 shares Ratio of shareholdings to total shares issued 0.62 ʘ
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II. Arrangement of corporate bond:
(I) Arrangement of corporate bond:
1. ECB
Type of corporate bond The 1st convertible bond Date of issuance (process) January 15, 2004 Face value US$1,000 or the multiples Europe, Asia Location of issuance and trade Luxembourg Stock Exchange Corporate Issuing price Stock with premium issued at 100.5% of face value Total amount The principal of corporate bond is US$320 million Interest rate 0% Five-year term Term Due date: January 15, 2009 Guarantee institute - Trustee New York Bank Underwriter Merrill Lynch International (Taiwan) Attorney - Ernst & Young CPA CPA Ming-Yu Lee and Mushen Chen Except for the corporate bond redeemed, called, cancelled, or converted, the issuing company will have Solvency the corporate bond redeemed for an amount equivalent to 95.5745% of the face value. Outstanding Principals US$0 (up to the date of the report printed)(Note) (a) Once the corporate bonds are issued for over two years, if the closing price of the company’s common stock at SEC is equivalent to 120% of the conversion price in U.S. Dollar (according to the fixed exchange rate on the negotiation day) for twenty working days consecutively according to the exchange rate of the day, the company may have the corporate bonds Redeemed or liquidated before redeemed at the face value partly or totally. maturity date (b) Once over 95% of the company’s corporate bonds are redeemed, called, and/or converted, the company may have corporate bonds redeemed at face value entirely. (c) If the issuing company has to pay extra interest expense due to the change of tax law in R.O.C., the company may have corporate bonds redeemed at the face value entirely. The corporate bonds may not be collected, sold, or Restrictive clauses delivered in R.O.C. Rating institute, rating date, corporate - bond rating
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Converted (exchanged US$273,711,000 (up to the date of the report printed) or subscribed) common stock, GDR, or marketable security up to the date of the report printed Except for the corporate bonds redeemed, called, and cancelled; also, in the no-conversion period regulated by Other rights law, the creditors may have the corporate bonds converted from the 31st day of the issuance to ten days before the due date. For the conversion of corporate Issuance & conversion bonds, it can be converted to common stock as follows: (exchange or Derived the numerator by having the principal of the subscription) Act bond multiples by the exchange rate on the pricing date (NT$33.82=US$1) and the conversion price at the time of request made as denominator for calculating the conversion to common stock shares. The company will not pay cash or others for the amount of odd shares. (a) The corporate bond is with 0% interest rate; therefore, it is possible to acquire long-term fund at low cost and interest expense. The conversion price of this convertible bond is based on the issuance of common stock with premium; therefore, no negative impact on Issuance and conversion, exchange or the shareholder’s equity. Moreover, if investors subscription measures; the influence of exercise “put” or the corporate bond is due and issuance conditions on the dilution of equity liquidated, the company will have the corporate bond and shareholder’s equity “redeemed” at a price below the principal; therefore, it is with a positive effect on the shareholder’s equity. (b) Based on the conversion price of NT$100.86, the dilution of shareholder’s equity caused by the convertible corporate bond is 4.7%; therefore, the dilution effect is insignificant. Depository institute - Note: 1st ECB was liquidated on January 15, 2009.
2. CB
Type of corporate bond The 1st domestic convertible bond Date of issuance (process) November 7, 2006 Face value NT$100 thousand Location of issuance and trade Taiwan, GreTai securities market Issuing price Issued at the face value 100% Total amount NT$12,000,000 thousand Interest rate 0% Five-year term Term Due date: November 7, 2011 Guarantee institute - Trustee Trust Department of FuBon Bank Underwriter FuBon Securities Co.
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Attorney - CPA - Unless the bondholders have the corporate bonds converted to the company’s common stock in accordance with Article 11 of Corporate Bond Issuance & Conversion Act, or, the corporate bonds are “put” in accordance with Article 20 of Solvency Corporate Bond Issuance & Conversion Act, or, the company has the corporate bonds “called” in accordance with Article 11 of Corporate Bond Issuance & Conversion Act, the corporate bonds are liquidated at the face value on the due date. Outstanding Principal NT$4,979,700,000 (up to the date of the report printed) ȐaȑThe company may have the convertible bonds “called” from the 31st day of the issuance date to forty days before the due date. If the closing price of the company’s common stock at SEC exceeds the conversion price for over 50% for thirty working days consecutively, the company may send a “bond call notice” (the said period starts from the date of notice sent by the company; also, the baseline date for “call” is on the last day of the period; moreover, the baseline date for “call” may not fall in the no-conversion period of this convertible bond) in thirty working days to creditors (based on the roster on the fifth working day before sending the “Bond Call Notice; however, a notice is published for the knowledge of investors who have acquired the convertible bond by trade or other means) by certified mail. Inform GreTai in Redeemed or liquidated before maturity writing to have it published; also, the convertible date bonds are “called” at face value on the due date. ȐbȑFrom the 31st day of the bond issuance to forty days before the due date, if the convertible bond in circulation is for an amount less than 10% of total issuance, the company may send a “bond call notice” (the said period starts from the date of notice sent by the company; also, the baseline date for “call” is on the last day of the period; moreover, the baseline date for “call” may not fall in the no-conversion period of this convertible bond) to creditors (based on the roster on the fifth working day before sending the “Bond Call Notice;” however, a notice is published for the knowledge of investors who have acquired the convertible bond by trade or other means) by certified mail. Inform GreTai in writing to have it published; also, the convertible bonds are “called” at face value on the due date. Restrictive clauses - Rating institute, rating date, corporate - bond rating
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Converted NT$7,000,000 (up to the date of the report printed) (exchanged or subscribed) common stock, GDR, or marketable security up to the date of the report printed Except for periods of (1) the no-conversion period defined by law (2) from three working days prior to ex-right date for stock dividend registered with SEC by the company to the Other rights baseline date of equity distribution; from three working days prior to ex-dividend date for cash capitalization to the baseline date of stock distribution; three working days prior Issuance & to cut-off date for cash capitalization to the baseline date of conversion (exchange equity distribution; and three working days prior to the or subscription) Act baseline day for merger or stock split to the baseline date, creditors may request the company to have convertible bonds converted to the company’s common stock in accordance with Article 11, Article 12, and Article 17 of this Act at any time from the 31st day of the issuance date to ten days before the due date. ȐaȑThe convertible bond helps avoid profit erosion and minimize the dilution of shareholder’s equity and ERP Issuance and conversion, exchange or resulted from the substantial increase of stock shares; subscription measures; the influence of therefore, it is to the best interest of shareholders. issuance conditions on the dilution of ȐbȑBased on the conversion price of NT$105.4, the dilution equity and shareholder’s equity of shareholder’s equity caused by the convertible corporate bond is 3.23%; therefore, the dilution effect is insignificant. Depository institute -
(II) Convertible Bonds
1. 1st overseas convertible bond Type of Corporate Bond 1st overseas convertible bond Year As of April 14, 2009
Item 2008 (Note)
Max. US$1,525.010 US$936.250 Market price of convertible bond Min. US$875.025 US$935.000 Average US$1,208.263 US$935.625 Conversion price NT$65.7 Issuing (processing) date & conversion price January 15, 2004 NT$100.86 Obligation of Conversion New stock issuance Note: 1st ECB was liquidated on January 15, 2009.
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2. 1st domestic convertible bond Type of Corporate Bond 1st domestic convertible bond
Year 2008 As of April 23, 2009 Item
Max. NT$113.200 NT$100.00 Market price of convertible bond Min. NT$94.900 NT$98.050 Average NT$103.391 NT$99.578 Conversion price NT$78.3 Issuing (processing) date & conversion price November 7, 2006 NT$105.4 Obligation of Conversion New stock issuance
(III) Information of CB: None
(IV) Self registration of CB: None
(V) Bond with stock option: None
III. Preferred stock (with stock option): None
IV. Issuance of global depository receipts:
GDR
Date of issuance (process) May 30, 1997 Item Date of issuance (process) May 30, 1997 Location of issuance and trade London Total amount US$235, 830,000 Unit Price US$11.23 / GDR Total issuance 21,000,000 GDRS One GDR stands for one common stock share of ASUS Source of common stock recognition (The Company’s stock exchange ratio has changed from one GDR for one common stock share to one GDR to five common stock shares since January 2, 2008.) Total marketable security shares recognized Stands for 21,000,000 common stock shares of ASUS Rights and obligations of GDR holders Please refer to Attachment A Trustee None GDR institute CITIBANK, NA Depository institute CITIBANK, Taiwan Outstanding GDR 32,822,461 GDRS (December 31, 2008) Issuance and expense amortization throughout the It is to be amortized in three years on average after issuance issuance period according to Article 243 of Company Law GDR agreement and depository agreement Please refer to Attachment B
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Max. US$16.43
2008 Min. US$4.82 Market price Average US$11.87 per unit (US$) Max. US$6.66 Min. US$4.00 As of April 23, 2009 Average US$5.11
Attachment A
1. Voting rights: May not exercise voting rights directly but instructing the GDR institute to exercise voting rights according to the GDR agreement. 2. Dividend distribution, stock option, and other rights: (1) Entitled to distribution of dividend and stock shares just like the common shareholders of ASUS. GDR institute may have GDR issued proportionally to shareholdings or increase the common stock shares recognized with each GDR or have stock dividend sold on behalf of GDR holders and with the income distributed to GDR holders proportionally. (2) GDR institute may have the said rights provided to GDR holders within the scope defined by the law of R.O.C. or international law, or, GDR institute may have the said rights sold on behalf of GDR holder and with the income distributed to GDR holders proportionally.
Attachment B
1. GDR agreement: (1) Transfer/split: The ownership of GDR is evidenced by EUROCLEAR and CEDEL book transaction and split system. (2) Dividend and others: c Cash dividend in US$ net of GDR institute fees and tax withholding is distributed to GDR holders proportionally to their holdings. d For the distribution of stock dividend, GDR holders are to have the total GDR adjusted proportionally to the shareholding ratio recognized with GDR holdings; also, adjusted the GDR of GDR holders accordingly. GDR institute may have the income distributed to GDR holders proportionally. e While having new stock shares issued for cash capitalization or arranging stock option, GDR institute may (I) arrange stock subscription or (II) entrust the said right to GDR holders; however, the new stock shares for cash capitalization are limited to the exemption registered with SFC. f GDR institute must strive to have cash dividend and stock dividend distributed to GDR holders. (3) Voting rights: Unless otherwise agreed upon, GDR institute must base on the GDR agreement, law of R.O.C., and the instruction of GDR holders to exercise the voting rights of the marketable security recognized with GDR. 2. Depository agreement: (1) Submit marketable security for the issuance of GDR. (2) Inform GDR institute to have GDR issued. (3) Deliver marketable security for the exchange of GDR (4) Confirm the volume of GDR monthly (5) Confirm the volume of GDR on the registration date
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V. Employee stock option certificates: None
VI. Merger and acquisition (including merger, acquisition, and split): (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 stock shares in the most recent quarter: None 2. If the business performance of the last quarter does not meet the expectation, please state the impact on shareholder’s equity and the corrective action proposed: None (2) If the merger is completed, stock shares is transferred, 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 equity issuance or marketable security subscription or the completed equity issuance or subscribed marketable security without success: Not Applicable
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V. Overview of Business Operation
I. Principal activities (I) Operating Scope
The company’s 3C integrated products are awarded with many honors for the excellent quality and advanced technology this year. ASUS received 3,056 awards worldwide from media and professional rating institutes in 2008. ASUS has been selected by Business Week as the Top-100 science and technology companies for eleven years straight from 1998. ASUS was crowned as the Interbrand in Taiwan in 2008 for a brand value of NT$42.368 billion representing 10.7% growth from the year before.
In 2008, ASUS had sold MB for 23 million pieces, NB for 5.8 million units, and Eee PC for around 5 million pieces. The shipments of MB and VGA products are world number one in volume while NB is on the top-five list. ASUS will strive to perform well this year for the best interest of shareholders who have given ASUS long-term support and encouragement for refinement and development.
1. Product lines of the company!! a. Desktop / server b. 3D AutoCAD c. Advanced sound blaster d. NB e. Advanced server f. Intelligent PDA phone g. LED display h. Big screen high resolution plasma TV i. Broadband & communication products j. CD-ROM, DVD, and CD-ROM writer k. EeePC computer and Eee series
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. 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. EeePC touch, long-lasting computer j. Eee Top PCǵEee Box PCǵEee Keyboard PC
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(II) Industry Overview MB, VGA, and CD-ROM are computer elements industry that has a supply chain formed with CPU, module, PCB, and Connector. ASUS has kept a profound and excellent relationship with the aforementioned businesses currently. ASUS has setup subsidiaries to manufacture the aforementioned components for refining product development technology and securing stable supply of components. Therefore, ASUS has a comprehensive deployment of vertical integration substantiated. In terms of global distribution structure, ASUS has worked with over 300 agents and over twenty thousand distributors closely worldwide. ASUS is the world number one brand in Europe, Asia, and America; in other words, ASUS is a dominant 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 and to develop 4C (computer, communication, consumer electronics, and automobile electronics) integrated products. ASUS has ATEC setup in 2003 and with three R&D divisions setup including broadband wireless communication, wireline / wireless exchanger, and VCD / DVD key technology. For ASUS, R&D Division and R&D Center work together reciprocally. R&D Center focuses on technology study and commercialization of creativity. R&D Center is entrusted with the responsibility to conduct preliminary study and assessment on the software and hardware key technology, module, and applied program development platform in depth for the reference of R&D director in judging technology movement and selecting partners. R&D Division focuses on system integration and product introduction and commercialization. Technology is transformed into income eventually; also, part of the income is contributed to the creativity or technology supplier reasonably. R&D Center will be operated permanently under such a positive cycle. The attention of and incentives provided by the company’s management will allow ASUS to recruit R&D talents for technology R&D continuously. In the constantly changing computer world, the company has key technologies and leading products to compete in market and to create product value. ASUS was with a R&D expense of $5,486,036 thousand booked in 2008.
ASUS is known for fast product R&D and Time to Volume. ASUS leads the industry to develop advanced products successfully and with the following new products to show for:
1. Product R&D in 2008: a. Eee PC 8.9” computer b. Eee PC 10” computer c. Eee desktop computer d. 5G multimedia phone e. Advanced LED display with built-in Networking camera f. New-generation modules MB g. Mobile theater advanced dual core NB
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2. R&D planned in 2009: a. Eee PC touch computer b. Eee PC long-lasting computer c. Eee PC - New Generation Simple Series for home use d. Intelligent phone GPS e. LED TV with built-in Set-up box f. Advanced energy-saving MB g. Ultra Mobile PC
(IV) Long-term and short-term development plan ASUS has become a 100% brand name company since 2008. For long-term planning, the development of Digital Home and Media Center will be a new stage for ASUS. ASUS is moving toward the integration of 4C communication, information, consumer electronics, and automobile electronics. ASUS will stay competing in the second-generation information war since Digital Home, Digital Office, and Digital Person are the future.
II. Market analysis and the conditions of sales and production (1) Market analysis 1. Sales regions Unit: NT$ thousands Year 2007 2008 Item Subtotal Total Subtotal Total Domestic operating income 27,755,922 18,795,920
Internal operating income 562,149,910 230,555,031 America / Canada 105,139,237 15,042,211 Asia Pacific 425,254,253 209,371,978 Europe 31,620,991 5,835,153 Africa 135,429 305,689 Net operating income 589,905,832 249,350,951
2. Market share and market demand and supply and market growth (1) Market demand and supply of computer components The MB of ASUS took up the largest market share worldwide in 2008 with the strength of excellent R&D capability, scale of mass production, comprehensive supply chain of upper-stream and down-stream components, product quality, and competitive production cost. ASUS has new and good manufacturing facilities constructed between the strait this year to have production capacity increased substantially that is beneficial to earn business over. ASUS sold 23 million MB in 2008. If MB is the soul of a computer, VGA and CD-ROM is the spine of a computer. ASUS had managed to outperform competitors substantially in MB market in 2007 with the “lion king” strategy; moreover, had led VGA and CD-ROM into a new territory and be the king of the kingdom, in other words, ASUS is to build up a lion kingdom by multiple powers.
(2) Market demand and supply of NB: Taiwan’s NB has demonstrated significant growth in recent years. The Top-10 NB in
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the worlds is collaborating with Taiwanese manufacturers entirely or partially; therefore, Taiwan is the largest production base for NB. The prevailing rate of NB is high worldwide. NB had outperformed desktop computer in sales 2008Q3 and becomes the main-stream product of personal computer. ASUS has been in NB business for over eleven years and with great accomplishment in product quality, R&D technology, and sales to show for. According to the survey of IDC, the NB of ASUS is on the Top-5 list worldwide in the Q4 of 2008. ASUS is targeting on hitting the mark of 118.6% growth for NB this year and realizing the high market share and “33 Plan,” and making it to the Top-3 list in three years.
(3) Short-term development of IT industry; The trend of industrial change can be observed from the report of IDC or DataQuest, international data analysis services, that is, rapid annual growth of consumer electronics in both consumption volume and amount. For IT businesses, entering the market of consumer electronics is not that difficult and does not take much effort technologically. The broad applications of digital signals are beneficial to IT industry. At the Computex in June 2007, the viewpoint on Low Cost PC was mentioned in Intel Forum; also, Mr. Jonney Shih, the Chairman of ASUS, was invited to demonstrate Eee PC to welcome the era of the “Low Cost PC” and the arrival of Low Cost PC, UMPC, and MID that are with 7” screen. A great impact on IT industry is expected. Mr. Sean Maloney, the Executive V.P. and Marketing & Sales Director of Intel, said “Low Cost PC market is with great potential since it can be exported to the under-developed nations and it can be the second computer of each user in the developed nations.”
ASUS has Eee PC 700 market launched in October 2007 and it has become the first economy computer in the world and has attracted a great attention in market. Media called it “Eee Wave” for one Eee was sold every five seconds. Eee PC is with good price, cosmetic design, quality industrial design, light weight, shock prove, and easy interface. ASUS has managed to have 8.9”-screen and power-recharge-free-for-a-day Eee PC 901 market launched in April 2008. ASUS had the thinnest Eee PC S101 market launched in October 2008 to develop a new market segment for Eee PC. It is the intention of ASUS to bring consumers more Eee series with the concepts of Easy, Exciting, and Economic.
3. Business goals ASUS’s strategic planning and the trend of market development has been a good match in recent years. ASUS’s consolidated operating income of over US$8.1 billion in 2008 representing 17% growth from the year of 2007. The said operating income did evidence the correct brand strategies. ASUS will continue to focus on the core business this year and will also develop diversified operation carefully. The sales of ASUS’s new products are growing by multiples. ASUS will base on the stable operating principle of profundity and practicality to provide customers with the first-class technological innovation and fine products. !
4. Competitiveness, advantages and disadvantages of development, and responsive strategies
Industrial development and vision
(1) Advantages
a. Intel’s promoting the energy-saving platform of CULV and Microsoft introduces the Windows 7 processing system has helped bring IT industry new business
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opportunities. The business that controls the most advanced key technology, rapid R&D, and flexibility will be the market leader. ASUS is confident in becoming the leader in market. b. The production value of hardware is expected to grow in 2009. NB and MB are two indexes for the development of global information industry. The said two products are expected with positive development; therefore, they are the focus of ASUS in business. The combination of product and market is one of the advantages of ASUS.
(2) Disadvantages and responsive strategies
Global warming is becoming a serious issue. The awakening of environmental protection has activated the wave of power saving. European Community has hardened the environmental regulations of electronic products; therefore, it is important for enterprises to respond to global environmental protection policy. Being a global citizen, ASUS has started green MB R&D lead-free and cadmium-free since the year of 2002; also, has introduced the concept of environmental protection to other product lines and with the first energy-saving and power-saving MB including “intelligent power-saving engine EPU” market launched in 2007 that helped save up to 80.23% energy
consumption, that is, reducing CO2 emission by 80,000 tons a year that is equivalent to having 6,900,000 trees planted a year11. ASUS has become the benchmark of green industry and has fulfilled the social responsibility of an industry.!
In addition to being crowned with “2007 Sustainable Development of Business Award” in Taiwan. In 2008, ASUS was the first science and technology enterprise in the world to receive EuP energy-consumption environmental protection directives certification. While the wave of green production is on, green technology is the driving force of economy to solve green house effect and environmental protection issue; therefore, products in conformity with EuP directives are “green product with environment-friendly design” that can be distributed freely in European Community; also, it is the green competition advantage of ASUS. ! Moreover, in response to global financial tsunami, ASUS is to grow stably in the competition with more flexible and effective organizational structure. The organization is operated with three business group setup including systems, open-platform, and handheld business in order to have recourses integrated and to respond to market change and development promptly. Each business group is able to have procedure improved, optimal strategy made, and strategy enforced totally. ! ASUS will continue to have recourses used for the products with economic scale and competition advantage; also, to support the three business groups with the most competitive product lines and sales channels. ASUS is dedicating itself to provide consumers with better products and services; also, to upgrade the brand value in the mind of consumers, finally, to turn consumer’s brand recognition into market share.
Operating environment
(1) Advantages
1 Turn on one EP MB for one year continuously helps save 33,000w power; in other words, it helps reduce CO2 emissions by 20.7423kgs a year. ASUS shipped four million MB with EPU; therefore, it helps reduce CO2 emissions by 82,972,000kgs. Last but not the least, assume one tree absorbs 12kgs CO2 emissions, ASUS helps plant 6,914,333 trees.
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a. ASUS has Eee PC promoted successfully worldwide and with the sales of seven million units expected that will allow ASUS to stay ahead in market.! b. The components industry of MB and NB is comprehensive; therefore, in addition to break free from the technological limitation of Japanese and Korean manufacturers, the production capability is sufficient in supporting the rapid growth of MB and NB.
(2) Disadvantages The significant fluctuation of exchange rate in both directions has affected exporting business negatively.
(3) Responsive strategies Monitor exchange rate closely and adjust the position of foreign exchange to the optimal level.
Internal conditions
(1) Advantages a. Profound finance and sufficient funds b. Profound inventory control and healthy turnover rate c. The R&D technologies and talents of ASUS are world class; also, the technology of ASUS dominants the industry. d. The strategic planning of ASUS is with profound and moderate vision; also, market trend matches up industrial development. e. Talents are assets of ASUS. ASUS has improved employee’s welfare and salary and welfare facilities constantly to keep employee’s morale high and employee’s performance outstanding.
(2) Disadvantages ASUS grows significantly in both business operation and organizational structure; therefore, it is crucial 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, VGA, CD-ROM, NB, server, desktop computer, smart phone, wireless broadband mobile device, and Eee series. The excellent R&D talents of ASUS are known in the industry and with many patents received and many products in development constantly.! b. The department heads and the management of ASUS are mostly with technological background; moreover, they understand industrial trend and product development technology well; therefore, they are able to take advantage of the development, to plan product lines in depth, to apply recourses effectively, and to generate added value. c. ASUS has contributed significant R&D and marketing resources to promote the star product Eee PC and Eee series in order to develop products with the merits of good price, cosmetic design, industrial design, light weight, and easy interface.
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(2) Disadvantages The sales channel of mobile device is different from the one for information products; therefore, it is necessary to have the sales channel for mobile device developed.
Sales and marketability
(1) Advantages a. Under a profound sales management plan, ASUS has products distributed to all areas evenly; therefore, negative economic development in any area will not cause critical loss to ASUS. The said balanced market development does provide ASUS with the best risk management. b. Chinese and Russian market are with significant growth in recent years; therefore, ASUS has deployment arranged progressively and does expect to perform well this year with the emerging business opportunities in the said areas. c. French market, Italian market, German market, and Russian market are highly developed in Europe. ASUS has deployment arranged in the said markets for years and with a great success made in 2008. The MB of ASUS is with the highest market share in Europe. In terms of NB, ASUS is the first in Taiwan, the third in Europe, the third in Italy, and the fourth in Mainland China. ASUS is ranked in the fifth place worldwide. In terms of global Networking service, ASUS has forty-nine official websites established in over twenty-six languages for the realization of localized operating strategy and for the development of local market worldwide.
(2) Disadvantages The availability of resources and the control of cost are crucial to the business performance of the subsidiaries overseas; 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 aforementioned products worldwide. b. NB and PDA are with potential to grow in commercial market (governmental offices and business) and home market (personal consumption and use). NB and PDA of ASUS are with bright future along with the prevailing concept of mobile office. c. For the development of information products, wireless broadband 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 is moving towards the said direction.
2. Production Process of Major Products a. MB and VGA: Automatic SMT ĺPick and placeĺsoldering potĺburningĺtest. b. NB and other products: Automatic SMTĺpick and placeĺsoldering pot ĺburningĺPCB testĺassemblyingĺsystem testǶ
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(III) Supply of major raw materials Major raw materials Suppliers Chips Intel, SiS, nVIDIA, Viatech, AMD Logic IC Winbond, Newland, RT PCB NPC, HSB, Boardtek, TEAMPRO, TEAN Connectors HON HAI, LOTES, TycoǵKORTAK DRAM HYNIX, NPC, Samsung LCD AUO, CMO, LGD, Hannstar
Most of the aforementioned manufacturers are domestic and international with good quality and reputation built; moreover, they have been in business with ASUS for years in a good term with raw materials supplied to ASUS that help the company to stay competitive.
(IV) Major Customers with over 10% net sales and Suppliers with over 10% total purchases of the last two fiscal years 1. Major Suppliers of the last two fiscal years Unit: NT$ thousands 2007 2008 Supplier Purchase % Supplier Purchase % amount amount B 146,666,283 25.50 P 81,188,608 25.03
2. Major Customers of the last two fiscal years Unit: NT$ thousands 2007 2008 Customer Sales amount % Customer Sales amount % A 169,342,250 28.71 A 203,543,087 81.63 B 224,768,479 38.10 B -(Note) - C 63,322,534 10.73 C -(Note) - Note: The customers and suppliers of the company, the amount and ratio of sales and purchases do change due to the change of product combination and market environment.
(V) Production/Sales Quantities and Value over the Past Two Year Unit: Piece (unit); NT$ thousands Year 2007 2008 QTY & Amount Production Production Production Production Product Capacity Capacity Quantity Value Quantity Value Computer 15,000,000 14,127,092 103,828,635 6,000,000 5,334,336 52,330,192 system 3C products 222,000,000 221,318,658 352,483,458 10,000,000 9,783,850 12,223,467 Total - 235,445,750 456,312,093 - 15,118,186 64,553,659
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(VI) Sales quantities and value of the last two fiscal years:
Unit: Piece (unit); NT$ thousands Year 2007 2008
QTY Domestic Sales Export Sales Domestic Sales Export Sales & Amount Items QTY Amount QTY Amount QTY Amount QTY Amount
Computer 1,560,507 19,254,193 16,353,867 188,270,633 753,088 11,417,890 12,937,840 161,222,785 system 3C products 20,538,929 6,695,145 129,343,054 364,052,418 1,713,058 2,453,463 38,444,080 65,182,573 Others - 1,806,584 - 9,826,859 - 4,924,567 - 4,149,673 Total - 27,755,922 - 562,149,910 - 18,795,920 - 230,555,031
III. Employees Status of employees over the past two years and up to the date of the report printed April 23, 2009 As of April 23, Year 2007 2008 2009 Direct Labor 1,379 0 0 Employee Indirect labor 7,506 3,933 3,782 Total 8,885 3,933 3,782 Average age 30.919 30.61 30.96 Average years of service 3.5 3.13 3.47 Ph. D. 0.41% 0.71% 0.69% Masters 30% 44.95% 44.97% Education College /University 47.72% 47.39% 47.62% �%� Senior High School 14.66% 5.42% 5.13% Junior High School 7.21% 1.53% 1.59% and below Note: ASUS had brand name business and OEM/ODM business divided officially on January 1, 2008. The brand name business was the responsibility of ASUS while OEM/ODM was the responsibility of Pegatron Corporation and Unihan Corporation.
IV. Expenditure on environmental protection 1. ASUS is certified with ISO14001; also, bases on the spirit of reserving natural resources moving towards the direction of preventing and improving pollution. 2. ASUS is certified with OHSAS18001; also, has safety and health risk in control and goes for the on going concern of the company with zero disaster. 3. ASUS fellows will join environmental protection organizations and get involved in environmental protection activities. 4. ASUS has promoted green product and recycling mechanism in compliance with the environmental requirement of RoHS and WEEE. 5. ASUS has joined Taipei Environmental Protection Volunteers Squad 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.
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corporate should do. 6. ASUS has promoted “computer recycling – hope” to recycle information products for repair and then donate to schools in remote area in order to help reduce waste and to help narrow down the gap between urban and suburban. 7. ASUS has arranged recycling and merciful donation activity; also, use the income generated to buy books for schools in remote area including Hualian, to offer scholarship to junior high students with financial difficulty, to donate rice to less fortunate families and homes in the community. 8. Work with Forestry Bureau to plant trees for green environment in the Arbor Day.
(I) The total amount of loss and fine paid for environmental pollution in recent years and up to the date of the report printed: None
(II) Estimated environmental protection expenses: 1. ASUS activates ISO14064 Green House Gas Emission Validation Process. 2. ASUS will 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.
(III) The responsive actions of ASUS to environmental regulations:! ASUS cares about environmental protection, perpetual application of resources, and ecosystem issues; also, bases on the company’s environmental and occupational safety and health policy to establish environmental protection and health management system in order to substantiate ASUS’s on going concern with continuing improvement. ASUS does not take the importance of “green design, green procurement, green production, and green marketing” lightly and ASUS has initiated many tasks that are new in Taiwan and leads to and activates the industry for on going concern. In addition to promoting GreenASUS internally, the SERASUS is promoted to work with suppliers promoting green supply chain, reinforcing green design, developing green products, encouraging green products recycling mechanism and power-saving products design in compliance with the global environmental protection equipments of WEEE, RoHS, and EuP; also, ASUS has received international environmental protection citation 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, EuP, battery and packing material application and waste management in order to comply with the requirements for products shipped to the world directly and indirectly. ASUS has RoHS test equipment available to have the components, work-in-process goods, and by-product tested; also, to ensure the finished goods shipped complying with international environmental protection standard.
2. The certification of environmental protection system: In fulfilling the quality assurance of environmental protection system, ASUS’s Quality Management System is stipulated in accordance with ISO and HSPM of IECQ QC 080000. ASUS has received the certification of IECQ QC080000 and IECQ hazard substances procedure management system.
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3. International environmental protection citation and award: ASUS has promoted green products forcefully in 2008 and was awarded with international environmental protection citation with the newly launched N series NB and Bamboo Series including EPEAT “Gold Medal” EU Flower environmental protection citation, Czech Republic environmental protection citation, and Energy Start of the United States, in which, N series is the first computer in the world to receive EuP certification. Moreover, N20A NB receives the honor of 1st Microsoft WinHEC Award “Green Environmental Award.” On the “Green Design 100” of the “Times” magazine for high-tech products, ASUS’s U6V NB is with bamboo uses instead of the PVC or alloy top-cover that is environment-friendly; therefore, the energy-saving and power-saving of U6V NB is recognized by “Times” magazine for it helps reduce green house gas emission. ASUS’s outstanding green design is not only on NB but also on EeePC, LED display… that is awarded with environmental protection citation by EPEAT and Energy Star of the United States. Please visit ASUS’s website for more products awarded with environmental protection citations: http://green.asus.com/default.aspx?page=post&IDno=65&mode=20
ASUS’s green achievements: (1) The green design and recycling system plan of ASUS is to establish “green design and green recycling management platform” including establishing international environmental protection regulations information control system, green product easy-dismounting and easy recycling/reusing design and validation system, and green recycling and processing control system. Moreover, ASUS had submitted the green design and recycling system plan to attend international environmental protection contest and was ranked by Oekom, a reputable European institute, in the first place in the category of computer and peripheral products in 2007. Integrate the achievements in promoting environmental protection and add it with the image of brand name and outstanding performance in environmental protection to demonstrate how the visibility and value of brand name can be improved by taking advantage of international green environment. The said project was awarded with the award of demonstrative plan by MOEA. (2) Developed the first lead-free and halogen-free MB in Taiwan (attended the directive product development plan of Industrial Development Bureau MOEA and was awarded in 2006). In assessing and selecting environmental material for MB, testing and analyzing assembly features, establishing process technology standard, and inspecting product function and validating quality, ASUS has R&D, experiment, test, and application validated. ASUS has cherished natural resources, fulfilled social responsibility and environmental protection, and substantiated safety and health policy; also, has mass produced the first MB that is compliance with the strict requirement of European Community on electrical engineering and electronic materials. (3) Constructed the first Green Product Management System (GPMS) in Taiwan and it was the first management platform used for the prohibited substances to shorten product development cycle, upgrade product quality, speed up Time to Market effect, and activate consulting suppliers in the supply chain to comply
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with RoHS and packaging directives of European Community. ASUS has consulted over one thousand suppliers to supply green components and encourage the application of green components as a good role model to the industry. (4) Established the first e-Material system and acceptance procedure to shorten the time in accepting the banned material and component and product development process. (5) Constructed green supply chain e-platform and it was awarded with “IT Award” by the MOEA. (6) ASUS has conducted Quality Business Review (QBR) periodically and annually to ensure suppliers, contractors, and new suppliers in conformity with ASUS’s standards including writing review and annual audit. QBR suppliers and contractors will receive further audit from ASUS including QC080000 and ISO 9001, ASUS’s technical standard, and three-in-one management including QSA (Quality System Audit), QPA (Quality Process Audit), and GA (ASUS’s HSF green components acceptance, Hazardous Substance Free) in order to have the pursuit of perfect quality realized on ASUS’s green supply chain management. (7) Constructed green information website (http://green.asus.com/) and green information platform to share international environmental protection regulation and information with Taiwanese industry and to lead the industry responding to international environmental protection regulations. (8) Joined the RoHS (Restriction of Hazardous Substances Directive, restriction on hazardous substances directive) service of the MOEA to consult Taiwanese manufacturers in green supply chain by sharing the experience in green design and green supply chain management by speeches/seminars/media interview. (9) Constructed recycling system in Europe and became the first Taiwanese manufacturer in the United States providing consumers with free-of-charge recycling service to have the recycled computers processed properly and environment-friendly in order to minimize the impact of recycled products on environment. (10) 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. (11) Conducted life cycle investigation (LCI) and environmental impact assessment and analysis to demonstrate and share mechanicals life cycle evaluation form and experience with Taiwanese industry; also, to construct product life cycle database in Taiwan with TEEMA. (12) For the purposes of caring for environment, reducing garbage volume, disposing waste effectively, and minimizing the burden of environmental pollution, ASUS has focused on choosing environment-friendly material, environment-friendly design, power-saving, longer life cycle, waste management, and product packaging management to reduce environmental pollution and to apply for environmental protection labels, for example, EPEAT, EU Flower, Czech Republic, Energy Star of the United States, Taiwan Environmental Protection Labels, J-MOSS of Japan, and Power-saving of China for promoting the concept of environmental protection.
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V. Employee/employer relations The realization of business goals relies on the commitment, deduction, and effort of employees; however, employees cannot exercise their talents without the support of the employer; therefore, a harmonious employer-employee relation is what ASUS after. ASUS has treated employees with an honest and open attitude; also, has working regulations and rules defined in the company’s Work Code for the reference of employees. In terms of salary, benefit, and training policy, it is designed to help employees realize their objectives; therefore, they are able to have themselves heard and to have their working safety secured; also, their work satisfaction and profound economic interest fulfilled without the need of organizing an union. Employer and employees are unified and share the same concept to work for the future of the organization.
(I) Employee’s welfare package ASUS has made the “respecting humanity and caring for employees” one of the operating concepts. For the purpose of taking care of employees sufficiently and protecting their living security in order to work for the company worry-free, ASUS provides basic protection to employees; also, provides or sponsors welfare projects specially. Employee’s Welfare Committee is formed by the employees to plan and enforce welfare activities as follows: 1. ASUS has the following benefits provided in accordance with Company Law:! Health insurance, labor insurance, group insurance, pension reserve, accrual pension reserve according to old contribution plan deposited in Bank of Taiwan, arrearage reserve, and appropriating welfare fund with a percentage of sales revenue and paid-in capital.! 2. ASUS has the following benefits provided specially: Season-greeting bonus and performance bonus, appropriating bonus to employees with retained earnings, annual physical check up, libraries, EAP, and indoor warm water swimming pool and gym; also, encouraging employees to propose their advanced study plan for financial aid. 3. “Employee Welfare Committee” Season-greeting bonus, wedding/funeral/celebration and emergency financial aid, group activities, birthday, scholarship and financial aid to employee’s children, tours and functions, and language classes.
(II) Education and training ASUS has years of experience in cultivating talents in accordance with operating concepts of “cultivation, cherishment, 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. Substantiate talents development mechanism: Learning process The “cultivation, cherishment, and caring for employees” is illustrated in the company’s operating concept. Therefore, the company’s talents development mechanism is planned to help directors and talents build up the most needed ability in fulfilling personal work objectives with a personal learning program drafted up. Directors and employees are to discuss and plan personal learning program in accordance with the concept of “job-oriented learning,” the company’s core value and
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the occupational ability needed for job performance by each employee in order to carry out learning systematically and effectively. 2. Construct diversified learning resources (1) Management and core vocational training ASUS has learning blueprint planned for all employees in order to build up their competency for career planning and development. ASUS has seminars arranged annually for newly promoted managers, managerial talents development training, and junior manager’s courses to help improve their management ability systematically in order to exercise the best management effect. Various core occupational courses are arranged to help employees build up their ASUS DNA and to help upgrade their working skills and performance. (2) Professional occupational training ASUS has new recruits trained with various professional and practical courses to help them adapt to working culture and accumulate professional skills in depth and width. (3) Self-development resources and seminars ASUS has e-learning system and resources to help staffs worldwide learn freely without the limitation of time and space. ASUS has also arranged business English language courses, physical library, and art and literature seminars to help employees improve their ability and build up right working attitude and value. (4) On-job training Directors are to help staff reinforce personal knowledge and skill by project training, job substitute, occupational coaching, and work follow me program.
(III) Code of employee’s conducts and ethics The “sincerity, thrift, profundity, and practicality” is one of the company’s operating concepts. For the common understanding of ASUS fellows, the company has the Chinese traditions “modesty, sincerity, theft, swiftness, courage” made to be the code of employee’s conduct socially and personally. The importance of industry’s moral and social responsibility cannot be stressed enough internationally; therefore, industry with the continuous trust and respect of consumers, business partners, and the public will be able to operate permanently. For regulating employee’s conducts in compliance with the company’s moral code and helping the company’s related party understand the moral standard of the employees in performing job responsibilities, ASUS has the “Code of Business Conducts” regulated to reinforce the moral and professionalism of the company and the employees. The employees of ASUS are expected to demonstrate work ethics and to help make ASUS a respectable company. The company’s “Code of Business Conducts” is structured in accordance with EICC and “Reference for the Code of Conducts by Listed/OTC Companies” as follows: Chapter 1 General rules Chapter 2 Business integrity principle Chapter 3 Preventing conflict of interest Chapter 4 Gifts, business entertainment, and social standard Chapter 5 Public information Chapter 6 Fair trade, advertisement, and competition
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Chapter 7 Community watch Chapter 8 Punishment
(IV) Working environment and worker’s safety protection: 1. Establishment of Labor Health & Safety Committee: The company has labor safety and health department setup according to the regulations and with the responsible personnel designated to protect the working environment and the safety and health of employees; also, to carry out labor safety and health tasks in accordance with the regulations and governmental rules. 2. Arrange labor safety and health education and training and employee’s health check-up periodically In addition to having labor safety and health department organized, the company must have labor safety and health education and training arranged for the new recruits. The designated area for special working process (lead, organic solvent, noise, radiation…) is with directors assigned to monitor the related activities. The company has arranged special education and training and physical check up for the workers who are responsible for special working process annually for their own protection and safety.! 3. Establishment of medical units The company has medical unit setup within the manufacturing facilities. In addition to having caretakers stationed to care for the health of employees, the company has also had special physicians stationed in the manufacturing facility to care for the health of employees. 4. Conduct fire drill and emergency evacuation training and hydrant equipment inspection periodically Draft up firefighting plan, organize firefighting team and rehearse firefighting equipment application. ASUS will arrange in-house firefighters training, notice, evacuation drill, rescue training, firefighting seminars and firefighting training in accordance with regulations to substantiate firefighting tasks and protect the safety of employees. 5. Conduct working environment inspection periodically, define safety and health goals, and ensure employee’s safety and health ASUS conducts working environment inspection (lead, organic solvent, noise, CO2, illumination…) periodically in accordance with domestic regulations and arrange special workers education and training and health inspection to ensure the health of workers responsible for special working process. 6. Establish TOSHMS management and complete global chemicals control system amendment For the safety and health of the company’s employees and subcontractors; also, for preventing accidents and environmental pollution from occurring effectively, ASUS has procedures amended in accordance with the TOSHMS of the competent authority and the amendment of global chemicals control system completed. 7. Define greenhouse gas inspection and gas emissions reduction plan The production line flow of ASUS is mostly assembly process and office process that is with less greenhouse gas emissions comparing to other industries that are with worse air-pollution. However, for the protection of earth and climate change, ASUS had greenhouse gas emissions standard defined in 2006 and with the greenhouse gas inspection and gas emissions reduction arranged in each stage of the process.
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Origin of greenhouse gas emissions inspection: ASUS has initiated the greenhouse gas emissions inspection and control plan under the consultation of Taiwan Green Production Foundation (TGPF) since January 2008. The goal of the plan is to clarify the potential sources of greenhouse gas emissions within ASUS and classify the sources of gas emissions and the statistics of gas emissions, and establish greenhouse gas emissions inspection log for the reference of drafting up gas emissions reduction plan and setting up gas emissions reduction goal in order to reduce the impact of sales, production, and employee’s daily activity on the environment and to protect the earth. 8. Charity events ASUS has social charity activities arranged from time to time to fulfill the social responsibility of an industry. (1) Joined Taipei City Environmental Protection Volunteers Squad in the name of the business. (2) ASUS Foundation and Taiwan Public Television Service sponsored the “Environmental Protection 99 for Long-lasting Beauty of the Earth” documentary film contest to awaken the consciousness of the public for environmental protection. (3) Careus Restaurant stationed in the company’s cafeteria.! (4) Promoted environmental protection activity on a monthly basis to fulfill the responsibility of a green industry. (5) ASUS arranges corporate recycling and mercy donation annually in special occasions including 422 Earth Day. ASUS fellows who have supported the electronics recycling event will receive one green pot plant in return. Donate books that are purchased with the income from recycling to the schools in remote areas including Hualian and provide scholarship to junior high students with financial difficulty; also, donate rice to families and homes with financial difficulty in the community.
(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 nationality was settled and with the pension paid on the end of January 2008. Workers with ROC nationality who have been employed in 2008 are entitled to the Defined Contribution Pension Plan. White-collar workers without ROC nationality are entitled to the prior-existing pension plan. Blue-collar workers are contracted for three years without the concern of pension.
(VI) Other agreements The company’s loss from employee-employer dispute in recent years and up to the date of the report printed: None
VI. Major agreements: None
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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 Summarized Balance sheets of Year fiscal year 2004~2008 (Note 2) As of April 23, 2009 Item 2004 2005 2006 2007 2008 (Note3) (adjusted) (adjusted) (adjusted) Current Assets 50,357,809 117,694,105 191,989,157 184,002,080 95,725,535 -
Funds & 63,341,205 76,808,799 96,622,084 105,954,737 121,141,147 - investments Fixed assets 9,047,880 8,720,196 8,958,559 8,582,153 3,703,815 - Intangible Assets - - - 233,383 223,647 - Other Assets 1,204,496 1,646,016 1,560,487 1,703,097 1,314,386 - Total Assets 110,744,321 204,869,116 299,130,287 300,475,450 222,108,530 - Before Current allocation 16,798,888 84,294,984 153,025,476 122,013,748 52,327,421 - Liabilities After allocation 21,038,517 88,080,862 158,971,183 132,488,611 (Note1) - Long-term 10,131,233 10,091,538 12,276,580 15,823,297 - - Liabilities Other Liabilities 743,731 1,147,750 2,643,109 3,309,838 2,494,491 - Before 27,673,852 95,534,272 167,945,165 141,146,883 54,821,912 - Total allocation Liabilities After 31,913,481 99,320,150 173,890,872 151,621,746 (Note1) - allocation Capital Stock 25,529,140 29,970,082 34,070,702 37,283,589 42,460,513 - Additional paid-in 6,946,025 18,495,574 21,730,753 28,380,731 29,696,393 - capital Before Retained allocation 53,124,994 61,593,204 73,097,529 92,029,109 93,003,248 - earnings After allocation 45,802,451 54,137,262 64,745,781 76,613,594 (Note1) - Unrealized gain from - the financial assets for - (86,977) 2,724,181 511,248 (1,568,528) sales Cumulative translation (2,529,690) Ȑ637,039ȑ Ȑ435,027ȑ 1,124,179 3,696,120 - adjustments Net loss not recognized as - - Ȑ3,016ȑ Ȑ289ȑ (1,128) - pension cost Before - Total allocation 83,070,469 109,334,844 131,185,122 159,328,567 167,286,618 Shareholder’s Equity After - allocation 78,830,840 105,548,966 125,239,415 148,853,704 (Note1) Note 1: General shareholders meeting has not yet been summoned up to April 23, 2009; therefore, the amount after adjustment is not disclosed. Note 2: The financial information of the last five years is reviewed by CPA. Note 3: The Q1 2009 financial statements have not yet been audited by CPA up to the date of the report printed on April 23, 2009.
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Note 4: ASUS has adopted the principles under Accounting Research and Development Foundation in Taiwan (97) Kee.mi.tzi No. 331 Letter and (98) Kee.mi.tzi No. 046 Letter to have the convertible bond adjusted retroactively. Therefore, the 2006 and 007 financial information were adjusted retroactively.
(II) Summarized Income Statements Unit: NT$ thousands
Year Summarized Income Statements of fiscal year 2004~2008 (Note 1) As of April 2004 2005 2006 2007 2008 23, 2009 Item (adjusted) (adjusted) (adjusted) (Note 2) Net sales - 78,053,128 179,764,037 386,039,184 589,905,832 249,350,951 Gross Profit - 13,631,284 23,000,841 27,462,425 41,209,222 26,355,384 Operating Income - 5,043,818 11,079,873 9,376,688 16,032,957 5,065,563 Non-operating Income - 11,251,350 7,396,713 14,800,872 18,436,763 16,320,939 - Non-operating Expenses 291,622 1,120,977 499,665 1,418,726 829,954 Income from Continuing - 16,003,546 17,355,609 23,677,895 33,050,994 20,556,548 Operations before Tax Income from Continuing - 15,098,926 15,277,112 18,951,364 27,283,328 16,456,567 Operations Income from ------Discontinued Operations Extraordinary Gain and ------Loss Cumulative effect of - Change in Accounting - - 8,903 - - Principle Net Income - 15,098,926 15,277,112 18,960,267 27,283,328 16,456,567 Earnings per share - 5.91 4.64 5.57 7.43 3.88 (non-retroactive) Note 1: The financial information of the last five years is reviewed by CPA. Note 2: The Q1 2009 financial statements have not yet been audited by CPA up to the date of the report printed on April 23, 2009. Note 3: No capitalized interest expenses booked in the last five years. Note4:!ASUS has adopted the principles under Accounting Research and Development Foundation in Taiwan (97) Kee.mi.tzi No. 331 Letter and (98) Kee.mi.tzi No. 046 Letter to have the convertible bond adjusted retroactively. Therefore, the 2006 and 007 financial information were adjusted retroactively.
(III) Auditing by CPAs CPAs and their auditing opinions in the past five years Auditing Year CPAs Opinions 2004 Mushen Chen, Chih-Huei Yang Unqualified 2005 Ming-Yu Lee, Mushen Chen Modified unqualified 2006 Ming-Yu Lee, Mushen Chen Modified unqualified 2007 Ming-Yu Lee, Chih-Huei Yang Modified unqualified 2008 Ming-Yu Lee, Chih-Huei Yang Modified unqualified
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II. Financial analysis in the past five years
Financial analysis in the past five years Year As of April 23, 2009 2004 2005 2006 2007 2008 Item (Note 2) (adjusted) (adjusted) (adjusted) (Note 5)
Financial Ratio of liabilities to assets 24.99 46.63 56.14 46.97 24.68 - structure Ratio of long-term capital to fixed ΰиα 1030.09 1369.54 1601.39 2040.88 4516.60 - assets Current ratio (%) 299.77 139.62 125.46 150.80 182.94 - Solvency (%) Quick ratio (%) 242.51 83.73 77.60 105.90 126.43 - Times interest earned ratio 3456.00 10707.73 584.33 62.11 66.82 - Account receivable turnover (times) 7.67 6.23 5.11 5.56 3.38 - Days sales in accounts receivable 47.58 58.58 71.42 65.64 107.98 - Inventory turnover (times) 6.40 5.51 5.92 8.47 5.20 - Operating Account payable turnover (times) 6.74 3.79 3.76 5.50 4.16 - ability Average days in sales 57.03 66.24 61.65 43.09 70.19 - Fixed assts turnover (times) 8.63 20.61 43.09 68.74 67.32 - Total assets turnover (times) 0.70 0.88 1.29 1.96 1.12 - Ratio of return on total assets (%) 15.08 9.68 7.54 9.24 6.39 - Ratio of return on shareholders’ 19.16 15.88 15.77 18.78 10.08 - equity (%)
Profitability Ratio to issued Operating income 19.76 36.97 27.52 43.00 11.93 - capital stock (%) Income before tax 62.69 57.91 69.50 88.65 48.41 -
Profit ratio (%) 19.34 8.50 4.91 4.62 6.60 - Earnings per share ($) 5.91 4.64 5.57 7.43 3.88 - Cash flow ratio (%) (23.49) 11.32 1.97 9.44 33.92 - Cash flow
(и) Cash flow adequacy ratio (%) 57.22 30.00 18.66 26.37 36.87 - Cash reinvestment ratio (%) (7.69) 4.65 (0.02) 3.54 4.92 - Degree of operating leverage 1.82 1.52 1.88 1.62 1.79 - Balance Degree of financial leverage 1.00 1.00 1.00 1.03 1.07 -
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The root causes of the financial ratio change in the last two years: Ratio of liabilities to assets: The account payable for the procurement of raw materials is decreased in response to the OEM business spilt to the subsidiary. Ratio of long-term capital to fixed assets: The ratio of long-term capital to fixed assets is increased due to the decrease of fixed assets as a result of the stock split. Current ratio: The account payable for inventory and the procurement of raw materials is decreased in response to the OEM business spilt to the subsidiary. Quick ratio: The account payable for the procurement of raw materials is decreased in response to the OEM business spilt to the subsidiary. Times interest earned ratio: Times interest earned ratio is increased due to the decrease of CD amortization (No interest is paid for the CB and ECB issued by the company. The amortization expense of corporate bond discount is booked as interest expense without actual cash expensed in compliance with the new requirements).! Account receivable turnover (times): The sales income decreases due to the OEM business split to the subsidiary. Moreover, beginning accounts receivable includes OEM business; therefore, account receivable turnover (times) decreases. Inventory turnover (times): The cost of goods sold decreases due to the OEM business split to the subsidiary. Moreover, beginning inventory includes OEM business; therefore, inventory turnover (times) decreases. Account payable turnover (times): The cost of goods sold decreases due to the OEM business split to the subsidiary. Moreover, beginning accounts payable includes OEM business; therefore, accounts payable turnover (times) decreases. Fixed assets turnover (times): The sales income decreases due to the OEM business split to the subsidiary. Moreover, beginning fixed assets include OEM business; therefore, fixed assets turnover (times) decreases. Total assets turnover (times): The sales income decreases due to the OEM business split to the subsidiary. Moreover, beginning total assets include OEM business; therefore, total assets turnover (times) decreases. Ratio of return on total assets:!The net income is decreased substantially due to the financial tsunami occurred in the second half of the year. Ratio of return on shareholders’ equity: The net income is decreased substantially due to the financial tsunami occurred in the second half of the year. Ratio of operating income to issued capital stock:!The sales income decreases due to the financial tsunami occurred and OEM business split to the subsidiary in the second half of the year; therefore, operating income decreases too. Profit ratio:!The gross profit increases and income decreases due to the OEM business split to the subsidiary that is with lower gross profit; therefore, net profit rate increases. Cash flow ratio: The cash flow ratio increases due to the decrease of current liability and accounts receivable as a result of OEM business split to the subsidiary. Cash flow adequacy ratio: The cash flow adequacy ratio is increased due to the increase of net cash inflow from operating activity as a result of a decrease of current liability and accounts receivable; also, the OEM business split to the subsidiary. Cash reinvestment ratio: The cash reinvestment ratio is increased due to the increase of net cash inflow from operating activity as a result of a decrease of current liability and accounts receivable; also, the OEM business split to the subsidiary.
Note 1: ASUS has adopted the principles under Accounting Research and Development Foundation in Taiwan (97) Kee.mi.tzi No. 331 Letter and (98) Kee.mi.tzi No. 046 Letter to have the convertible bond adjusted retroactively. Therefore, the 2006 and 007 financial information were adjusted retroactively. Note 2: The financial 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.
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Note 4: ASUS had acquired Askey by stock exchange under Equity Method; therefore, the 2005 financial statements were adjusted. The 2004 financial statements were published without any adjustment made retroactively. Note 5: The Q1 2009 financial statements have not yet been audited by CPA up to the date of the report printed on April 23, 2009. Note 6: Equations: 1. Financial structure (1) Ratio of liabilities to assets = Total liability/Total assets (2) Ratio of long-Term capital to fixed assets = (Net shareholders’ equity + Long-term liability) / Net fixed assets 2. Solvency (1) Current ratio = Current assets / current liability (2) Quick ratio = (Current assets – Inventory – Prepaid expense) / Current liability (3) Times interest earned ratio = Net income before tax and interest expense / Interest expense of the year 3. Operating ability (1) Account receivable turnover (including accounts receivable and notes receivable derived from business operation) = Net sales / Average accounts receivable (including accounts receivable and notes receivable derived from business operation) (2) Days sales in accounts receivable = 365 / Account receivable turnover (3) Inventory turnover = Cost of goods sold / Average inventory amount (4) Account payable turnover (including accounts payable and notes payable derived from business operation) = Cost of goods sold/ Average accounts payable (including accounts payable and notes payable derived from business operation) (5) Average days in sales = 365 / Inventory turnover (6) Fixed assts turnover = Net sales / Net fixed assets (7) Total assets turnover = Net sales / Total assets 4. Profitability (1) Return on assets = [Net income (loss) + interest expense x (1-tax rate)] / Average 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) / Weighted average stock shares issued 5. Cash flow (1) Cash flow ratio = Net cash flow from operating activity / Current liability (2) Cash flow adequacy ratio = Net cash flow from operating activity in the past five years / (Capital expenditure + Inventory increase + Cash dividend) in the past five years (3) Cash reinvestment ratio = (Net cash flow from operating activity – Cash dividend) / (Fixed assets + Long-term investment + Other assets + Working capital) 6. Balance: (1) Degree of operating leverage = (Net operating income – Variable operating cost and expense) / Operating income (2) Degree of financial leverage = Operating income / (Operating income – interest expense) Note 7: The following factors are to be included for consideration for the calculation of earnings per share: 1. It is based on the weighted average common stock shares instead of the outstanding stock shares at yearend. 2. For capitalization with cash or Treasury stock trade, the stock circulation must be included for consideration to calculate weighted average stock shares.
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3. For capitalization with retained earnings and additional paid-in capital, the earnings per share calculated semi-annually and annually must be adjusted retroactively and proportionally to the capitalization but without considering the issuance 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 deducted from net income if there is any but it needs not be added to net loss if there is any. Note 8: The following factors are to be included for consideration for the analysis of cash flow: 1. Net cash flow from operating activity meant for the net cash inflow from operating activity on the Statement of Cash Flow. 2. Capital expenditure meant for the cash outflow of capita investment annually. 3. Increase of inventory is counted only when ending inventory exceeds beginning inventory. If the ending inventory is decreased, it is booked as zero value. 4. Cash dividend includes the amount for common stock and preferred stock. 5. Gross fixed assets meant for the total fixed assets before deducting the cumulative depreciation. Note 9: Issuers are to have operating cost and operating expenses classified into the category of fixed and variable. If the classification of operating cost and operating expense involves estimation or discretional judgment, it must be made reasonably and consistently.
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III. Supervisors’ report 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 2008 that are composed by the Board of Directors, business report, and distribution of retained earnings. In our opinion, it is in compliance with Company Law; therefore, the Supervisor’s Report is hereby issued in accordance with Article 219 of Company Law.
Sincerely yours,
2009 General Shareholders’ Meeting of ASUS
Supervisors: Tze-Kaing Yang
April 23, 2009
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ASUSTek Computer Inc. SUPERVISORS’ REPORT
ASUS SUPERVISORS’ REPORT
We have examined the accompanying financial statements and consolidated financial statements as of 2008 that are composed by the Board of Directors, business report, and distribution of retained earnings. In our opinion, it is in compliance with Company Law; therefore, the Supervisor’s Report is hereby issued in accordance with Article 219 of Company Law.
Sincerely yours,
2009 General Shareholders’ Meeting of ASUS
Supervisors: Chung-Jen Cheng
April 23, 2009
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ASUSTek Computer Inc. SUPERVISORS’ REPORT
ASUS SUPERVISORS’ REPORT
We have examined the accompanying financial statements and consolidated financial statements as of 2008 that are composed by the Board of Directors, business report, and distribution of retained earnings. In our opinion, it is in compliance with Company Law; therefore, the Supervisor’s Report is hereby issued in accordance with Article 219 of Company Law.
Sincerely yours,
2009 General Shareholders’ Meeting of ASUS
Supervisors: L.H. Yang
April 23, 2009
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IV. Financial statements of the most recent years: Please refer to Page 83-138 for details.
V. Consolidated financial statements of the parent company and subsidiary in the most recent years: Please refer to Page 139-209 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: None
82ˋ˅ʳ WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 83 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 - - 748 567 898 109 669 563 248 472 198 179 138 873 883 450 969 297 589 812 731 229 880 328 504 631 838 719 583 075 289) 703 617
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013 , 328 , 771 , 029 , 837 , 771 , 511 , 795 , 412 , 124 , 635 , 146 , 475 , 985 , 823 , 283 , 213 , 380 , 502 , 526 , 837 , 494 , 798 , 309 , 112 , 053 , 372 , 5, 2, 1, 1, 2007 1, 1, 1, 3, 6, 2,
31 , 92 , 13 , 15 , 37 , 20 , 28 , 14 , 77 , 80 , 122 , 159 , 141 , 300 , $ (Adjuste $
- - - 618 421 248 464 504 103 912 513 035 393 557 691 530 528) 931 724 350 222 131 449 114 159 491 596 145 120 243 128) 617 982
4,
(1, 87 , 286 , 327 , 003 , 126 , 898 , 210 , 821 , 460 , 500 , 696 , 264 , 738 , 108 , 568 , 859 , 956 , 455 , 108 , 760 , 300 , 146 , 034 , 494 , 360 , 835 , 696 , 2, 2008 3, 7, 1, 2, 2, 7, 1, 3, (1, 52 , 93 , 10 , 12 , 54 , 42 , 20 , 29 , 17 , 75 , 15 , 167 , 222 , $ $
s 13 13 13 15 16 17 18 21 21
V V V V V V IV .8 IV. IV. IV. IV. IV. IV. IV. Note IV. IV. nt rr e nt rr e non cu ss -cu ss - qu it y ss et s ent rr ent qu it y lders' e kho lders' st gh profit or lo or profit ou gh lo or profit ou gh IT Y EQU KHO LDERS' IT Y EQU KHO LDERS' non cu s toc e e bond s es omp ani pital ca pital k s qu it y s s lders' e kho lders' s d) on po rti s ac ti on s s toc iliated c ff iliated ITIE S T pital ca pital e e co on pensi ss on at fair value thr value fair s at thr value fair s at ) ent rr ent s s s )/profit of financial a financial of ss )/profit d of of on onv ersi ITIE S S AND STOC AND ITIE S s toc ca pital lders' E kho lders' e e ued in Chines in ss ued s S AND STOC AND ITIE S dv anc e tax liabilities- tax om e on c on EET S k al paid-in paid-in dd iti on al ent Liabilitie rr ent tock trans s tock e e acc oun t s payabl xp ense g-term Debt Debt on g-term riated earning op riated . ent liabilitie rr ent s nd pp r RM DEB TE RM LIABIL s a s credit rr ed inc rr ed IT Y EQU KHO LDERS' Total a Total earning retained Total s of adjustment other Total Stoc Total s adjustment on translati umu lative e e payabl tax om e s receive po sit Total Cu Total L Total Liabilitie Other Total Liabilitie Total um Premi um Premi Treasury Other reserv Legal Una C lo d ze Unrecogni (lo d ze Unreali al paid-in paid-in dd iti on al ond s payable-cu e ond s payabl Note Acc oun t s payable-a Inc e Acc rued liabilitie Financial payable Other a s in Receipt B cu Other liabilitie Financial B De Defe Defe s toc Capital A earning Retained s of adjustment Other RR ENTLIABIL CU LONG- LIABIL OTHER STOC LIABIL TOTAL 2 (Retrospectively Adjuste (Retrospectively 2007 - - n Dollars wan Tai New nd s of D BALANCE SH BALANCE TE D 080 404 737 375 178 371 309 176 037 340 155 133 167 393 153 777 097 239 303 945 460 244 118 865 450 398) 788 863 383 169 634 180 219 998 d) 6, 4, 28 , 36 , 16 , hou sa R INC TE R COMPU TE K 002 , 028 , 954 , 606 , 243 , 909 , 582 , 221 , 193 , 254 , 683 , 238 , 332 , 473 , 582 , 233 , 703 , 863 , 747 , 643 , 475 , 245 , 121 , 101 , 233 , 257 , 069 , 023 , 174 , 5, 3, 4, 1, 8, 1, 1, 7, 5, 1, 2007 (2, s. s tatement financial the of part integral an s are 10 , 61 , 45 , 53 , $9, 184 , 100 , 105 , 300 , (Adjuste $ ASUS AND AND 31 , 2008
no te
ed in T in ss ed - -
NON-CONSOLIDA (E xp re 147 535 970 815 386 820 530 768 938 187) 588 660 270 781 082 430 032 647 309 195 731 295 117 424 897 046 210 043 518 528 048 866 579 895 BER EM BER 79 , 18 , 16 , 17 , 13 , 41 , 94 , 13 , 141 , 725 , 613 , 703 , 314 , 352 , 108 , 327 , 384 , 042 , 252 , 417 , 912 , 161 , 848 , 251 , 132 , 223 , 778 , 355 , 864 , 270 , 709 , 019 , 429 , 164 , DEC 2008 4, 3, 1, anying acc omp anying 8, 7, 1, 3, 1, 2, 1, (1, 95 , 38 , 27 , 10 , 121 , 117 , 222 , $ $ The The
Originally I s Originally Statement Financial on s of Translati English s 1 , V , V , V , V 5 6 , V 21 10 12
V 11 , V V V IV .2 IV .3 IV .4 IV. IV. IV. IV. IV. V , VI IV. Note IV.4 IV.7 IV.8 IV.9 IV. IV.4 nt rr e ss -cu es omp ani ent rr ent nt ent rr ent rr e ent qu i pm ent hod met qu ity non cu ME N T iliated c ff iliated anies-Net omp anies-Net gh profit or lo or profit ou gh non cu SS ET S ent rr ent S ss ets-cu ss ets- A e du e ent-Net qu i pm ent-Net ss ets-cu rchase of e of pu rchase iliated c ff iliated ov er s nv estment TME NT e e E nd s ss et s ent qu i pm ent ss et s ent qu i pm ent ent qu i pm ent s s qu ivalent ent qu i pm ent ss et s ent qu i pm ent SS ETS s po sit ent qu i pm ent e tax a tax om e sale financial a financial r- sale a financial r- sale e nd ent A rr ent e nd SS ET S acc oun t s receivable-a ou s e Plant a , Plant at fair value thr value fair ss et s at cost- at ss et s ca rr ied receivable-Net acc oun t s receivable-Net g-term I on g-term wa re s oft sh e ca sh -f o -f o s a ent a rr ent ent qu i pm ent SS ET S SS ET S nd nd on depreciati Acc umu lated s e on po rtati sing e hou sing s a ed inc rr ed charge rr ed op erty RM INVES TE RM ent e um ent able de und able ss : Total Cu Total L Total s Cost Total Pr A Other Total nd hinery a ac hinery ice e ff ice s on Prepayment dd : leas for ss et s held ompu ter er the e the s und er i nv estment on g-term on g-term entories-Net nv entories-Net Cash a Cash a Financial Available Note Acc oun t s receivable-a receivables-Net Other I s Prepayment cu Other Defe Available a Financial L La Building M Ware Instr Trans O Miscellane Le A C A Ref Defe Acc oun t s receivable- L Other RR ENTA CU LONG- EQUIP AND , PLANT PROPERTY A INTANGIBLE A OTHER A TOTAL
84 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 English Translations of Financial Statements Originally Issued in Chinese ASUSTEK COMPUTER INC. NON-CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 (Retrospectively Adjusted) (Expressed in Thousands of New Taiwan Dollars except for Earnings Per Share) 2007 Notes 2008 (Adjusted) NET SALES IV.19, V $249,350,951 $589,905,832 COST OF SALES IV.20, V (222,995,567) (548,696,610) GROSS PROFIT 26,355,384 41,209,222 LESS: UNREALIZED GROSS PROFIT IV.8 (298,337) (1,308,371) ADD: REALIZED GROSS PROFIT 1,308,371 890,117 REALIZED GROSS PROFIT 27,365,418 40,790,968 OPERATING EXPENSES IV.20, V Selling expenses (15,386,133) (16,176,427) General anda administr tive expenses (1,427,686) (1,864,330) Research and development expenses (5,486,036) (6,717,254) Total (22,299,855) (24,758,011) OPERATING INCOME 5,065,563 16,032,957
NON-OPERATING INCOMES AND GAINS Interest income V 300,394 802,212 Investment income under the equity method IV.8 9,039,978 13,457,553 Dividend income 310,233 279,097 Gain on disposal of assets V 4,526 7,040 Gain on disposal of investments 148,011 115,904 Gain on physical inventory 10,000 - Gain on foreign exchange 732,351 923,148 Gain on reversal of bad debts 1,329,486 - Gain on valuation of financial assets IV.2 12,256 - Gain on valuation of financial liabilities IV.13 942,440 - Others V 3,491,264 2,851,809 Total 16,320,939 18,436,763
NON-OPERATING EXPENSES AND LOSSES Interest expense IV.13 312,301 540,801 Loss on disposal of assets V 6,351 144,675 Loss on physical inventory - 46,205 Impairment loss IV.7 37,141 37,500 Loss on valuation of financial assets IV.2 - 1,635 Loss on valuation of financial liabilities IV.13 - 250,921 Others V 474,161 396,989 Total 829,954 1,418,726
INCOME BEFORE INCOME TAX 20,556,548 33,050,994 INCOME TAX EXPENSE IV.21 (4,099,981) (5,767,666) NETO INC ME $16,456,567 $27,283,328
PRIMARY EARNINGS PER SHARE (in dollars) IV.22 INCOME BEFORE INCOME TAX $4.85 $7.95 NET INCOME $3.88 $6.56
DILUTED EARNINGS PER SHARE (in dollars) INCOME BEFORE INCOME TAX $4.46 $7.64 NET INCOME $3.54 $6.33
The accompanying notes are an integral part of the financial statements.
385 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ------286,223 (211,203) (138,871) (688,712) (912,030) 3,510,592 1,484,149 1,559,206 2,698,526 2,571,941 To tal (1,620,651) (5,118,124) (9,351,630) (1,281,773) 16,456,567 27,283,328 $132,466,895
Ass et s 415,756 1,666,189 511,248 159,328,567 ss ) t/ (Lo (1,952,781) (1,952,781) (2,628,689) (2,628,689) of Financial of Financial
ze d Unr ea li ze d (289) (839) (126,995) (413,185) 2,727 $(289) $511,248 $160,949,218 $(289) $511,248 $159,328,567 Pension Co st Pension Unr ec ogni ve at i at ionss Lo on Profi tme n ts 1,559,206 2,571,941 Transl Cumul Adjus TY te d) QU I ated se s. (66,913) (601,020) (211,203) (138,871) (700,000) (261,068) (688,712) (912,030) (2,762,328) (5,118,124) (1,706,041) (1,922,134) (9,351,630) (3,740,652) (1,200,000) 16,456,567 27,283,328 gs Ea rnin Unappropri tateme nt - 77,526,880 1,124,179 ued in Chine ss ued in $- $75,738,691 $3,696,120 $(1,128) ($1,568,528) $167,286,618 $- $78,127,900 $1,124,179 $- $77,526,880 $1,124,179 l y I ll y gs Ea rnin (614,571) 614,571 Sp ec ia ve Reser ively Adjus ect ively ND 2007 (R et rosp ES IN NG ES STOCIN KHO LDERS' E ined R eta ined 4 nts Origina tateme nts OF CHA al 2,762,328 1,922,134 ve Reser SUS TEK C OMPU TER INC. A S Financial of New Taiwan Dos) ll ar Taiwan of New Thousands ss ed in tal at ions ND ED DECEMBER 31 , 2008 A 286,223 (Expre (218,438) 1,247,706 (1,019,631) (1,020,705) alAddition Le g gral part of the financial s of part financial the te gral an are in no te s acc ompanying Paid-in Capi Paid-in sh Transl li sh
The Eng 508,601 3,001,991 236,272 1,247,877 298,245 2,400,281 700,000 l Sto ck ta l FO R THEE YEARS 1,706,041 3,740,652 1,200,000 LIDATED STATEMENTSNON -C ONSO LIDATED 37,283,589 28,380,731 14,502,229 34,070,702 21,730,753 12,580,095 614,571 59,902,863 (435,027) (3,016) 2,724,181 131,185,122 $42,460,513 $29,696,393 $17,264,557 $37,283,589 $29,400,362 $14,502,229 $37,283,589 $28,380,731 $14,502,229 $34,070,702 $22,751,458 $12,580,095 $614,571 $60,163,931 $(435,027) $(3,016) $2,724,181 Capi
y y tee s: s: ea rning ea rning tal tal ees tal tal te d) te d) ca pi ca pi te d) ca pi ca pi em ploy companies' equit tee companies' companies' equit tee companies' te d) te d) ss et s s te d) tme n ts tme n ts s et bonus to bonus ' le payab bonds for tme nts convertible le payab bonds for tme nts convertible s' bonus to bonus ee s' ee s ion adjus at ion ion adjus at ion em ploy em ploy bonus s' bonus ee s' ee s' ions and distributions of 2007 and distributions at ions ions and distributions of 2006 and distributions at ions ber ecem ber 31 , 2008 ber ecem ber 31 , 2007 (Adjus ive transl at ive ive transl at ive ve reser ec ial of sp eversal ve reser Le gal Cash dividends Cash ve reser Le gal Transfer of stock dividends to dividends of Transfer stock ors and ect ors supervisors to dir paid Bonus ors and ect ors supervisors to dir paid Bonus Cash dividends Cash Transfer of Transfer R Em ploy Em ploy of Transfer to dividends of Transfer stock me for 2008 et inco me for 2007 et (Adjus inco of shares in exchange of shares of inves of shares exchange in ce ss uan of shares of financial a ss Unrof ea li ze d financial lo le of payab bonds Conversion of financial a ss Unrof ea li ze d financial lo Appropri N of changes of inves the ect Eff of changes le of payab bonds Conversion Cumul Shares trust dividends paid to paid dividends trust Shares I ive adjus Theect ive r et rosp of changes of inves the ect Eff of changes Cumul Appropri N ive adjus Theect ive r et rosp ce , D Balan January , 2008 1 (Adjus ce , January Balan January , 2008 1 adjus (Before ce , January Balan ce , D Balan January 1 , 2007 (Adjus ce , January Balan January 1 , 2007 adjus (Before ce , January Balan
86 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 - - - - - $- $- $-
te d)
17,218 $2,007 127,484 110,354 2007 $447,410 $9,174,219 $3,816,255 $3,510,592 $2,698,526
- $-
3,050 63,192 8,742 18,574 1,194 14,245 (61,803) 25,299 (11,721) 1,335 $42,787 $47,623 159,761 13,011 (483,807) (119,330) (172,372) (853,566) (767,628) (396,749) (766,005) (231,307) 2008 (Adjus 9,174,219 10,791,836 1,604,090 (1,617,617) (1,220,106) (380,173) (5,014,479) (7,661,837) (9,351,630) (5,118,124) (1,617,899) (6,288,285) (2,000,000) $6,530,673 $1,484,149 (82,000,000) (11,067,264) (5,496,962) (31,851,499) $(2,000,000) $10,778,309 $12,210,103 $111,851,499
WS
WS SH FLO NG CA es SH FLO ON: TS LE N tme n ts AR FF ECTI NG CA ets ss IVA QU RMATINFO AR Y A LL Y FF ECTI OF THE YE es SH E S: tee S: NG TNO A PARTIA es S ND CA OF THE YE I NN SH FLOWS I et s-current ss es nts from subsidiari spun-off tme nts es ND es ed SH A te d) BEGI E me nt and equip plant rm te rm inves of long- at ion quid , , , , , , li ors and ect ors supervisors dir OF CA , , ck sto ta l tme n ts NG ACTIVITIE NG ACTIVITIE ee s es and ts es ees se s. ca pi LE NTS LE NTS NG ACTIVITIE NG ACTIVITIES es nt ets me nt and equip plant RES OSU ss act iviti em ploy act iviti , , em ploy WS ESTINV ea r for: ets tateme ets in-off of subsidiari in-off ss IVA QU IVA QU l ct ion redu ta l ss tme n ts sp able-for-sale financial a financial able-for-sale il ued in Chine ued in s) ar s transferred to subsidiari spun-off transferred et s ate d to sh dividends ca sh ively Adjus ect ively (R et rosp ss SH E SH E ca pi SH FLO ss (DECREASE) IN CA IN E/ (DECREASE) ND FINANCI ND FINANCI y I y ll ties transferred to subsidiari spun-off transferred ties tax NG A NG A OF CA ND CA ND CA st nts for to me nts bonus nts for me nts ND 2007 se in deposits r ece iv deposits in ea se ec r ea se)/Incr of shares in exchange of shares of inves of shares exchange in ce uan of shares se in other a other in ec r ea se sh Non-a ca sh Cash transferred to subsidiari spun-off transferred Cash se in refundable deposi refundable in ec r ea se sh used in financing financing in used ca sh sh used in investing investing in used ca sh SH FLOWS FR OM FINANCI SH A SH A d by ecte d aff tem s by ss SH FLOWS FR OM I Cash transferred to subsidiari spun-off transferred Cash Pay (D se in other a other in ea se Incr ds from disposal of inves Profrom cee ds disposal Refund from of property Profrom cee ds disposal of charg deferred Purchase te re In me Inco I te d to conver payable Bonds appropri Bonus I portion payable-current Bonds nts Origina nts et et ESTINV ESTINV s of changes in exchange r ate exchange in of ect s Eff changes CA I I CA MENTAL SUPP LE MENTAL DISCL 2008 A tateme 5 - - 24
te d) (2,533) 14,105 (25,299) (37,454) 418,254 (145,500) 2007 (3,442,527) 11,515,883 SUS TEK TERC OMPU INC.
A ed in Thousands of New Taiwan Doll of Taiwan Thousands New ed in ss - - ions of Financial S of Financial at ions 82 (68,057) 336 14,609 D ,440) 250,921 Pay ED ND DECEMBER 31 , (Expre 3,044 8,140 6,314 6,465 a ta ngible of in Purchase 6,351 144,675 a tangible and in of charges deferred Profrom cee ds disposal 4,998 2,428 5,898 of property Acquisition (4,526) (7,040) 37,141 37,500 N 61,803 34,370 (15,226) (74,038) (9,573) CA (59,918) (101,863) y the during paid Cash (19,475) (54,913) 267,507 264,646le of payab bonds em ption Red 112,124 471,424 211,524 623,247 of ava Purchase 685,728 703,927 D 235,528 279,879 (942 (791,396) 40,594 (604,772) (565,160) 2008 (Adjus 3,822,301 13,561,534 7,419,350 (24,594,218) CA (1,098,026) (3,038,450) (9,039,978) (13,457,553) N (2,795,097) (1,010,034) (1,455,474) (90,534) (5,937,618) 18,984,096 (2,035,341) 2,236,692 gral part of the financial s of part financial the te gral an are in no te s acc ompanying sh Transl sh 10,060,835 (8,169,448)ili Liab 61,445,584 19,086,988 NET INCREAS 17,747,636 LIDATED STATEMENTSLIDATED -C ONSO NON (13,428,276) 10,218,477 inves term equity of long- Acquisition (44,286,068) (28,857,994) li $16,456,567 $27,283,328 of inves Purchase
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87 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements December 31, 2008 and 2007 (Retrospectively Adjusted) (In thousands of New Taiwan dollars unless otherwise stated)
I. ORGANIZATION AND OPERATIONS
ASUSTeK Computer Inc. was established on April 2, 1990. Its main activities are to produce, design and sell “Notebook PC, main board, CD-ROM and add-on cards”.
The Company resolved to spin-off its OEM businesses on January 1, 2008. According to the Company’s resolution, the Company transferred its computer and non-computer related OEM businesses to its spun-off subsidiaries PEGATRON CORPORATION and UNIHAN CORPORATION, respectively.
The Compa ny’s headcounts amounted to 3,933 and 8,885, respectively, on December 31, 2008 and 2007.
II. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements were prepared in accordance with “Business Accounting Law” and “Criteria for Handling Business Accounting” with respect to financial accounting standards, “Criteria Governing the Preparation of Financial Reports by Securities Issuers” and generally accepted accounting principles in the Republic of China on Taiwan (“R.O.C.”). The significant accounting policies are as follows:
1. Foreign currency transactions and translation of financial statements in foreign currencies
Transactions of non-derivative financial instruments denominated in foreign currencies are recorded in New Taiwan Dollars at the rates of exchange rates in effect when the transactions occurred. Translation gains or losses arising from the settlements of the monetary assets and liabilities denominated in foreign currencies are included in profit or loss in the year of actual settlement.
Monetary assets and liabilities denominated in foreign currencies are remeasured on the balance sheet date using the exchange rates in effect as on that date, with related exchange gains and losses included in the statements of income.
88 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
6 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value with changes in fair value charged to stockholders’ equity are remeasured at the exchange rate prevailing on the balance sheet date, with related exchange gains or losses recorded as cumulative translation adjustment in stockholders’ equity. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value with changes in fair value recognized in profit or loss, are remeasured at the exchange rate prevailing on the balance sheet date, with related exchange gains or losses recorded in the statements of income. Non-monetary assets and liabilities denominated in foreign currencies that are measured at cost are remeasured at historical exchange rate.
Long-term investments in foreign investees, which are accounted for under the equity method, are stated on the basis of stockholders’ equity in the financial statements of investees in foreign currencies. Translation gains or losses from long-term investments are recognized as cumulative transition adjustment in the stockholders’ equity.
2. Cash and cash equivalents
The Company considers all short-term, highly liquid investments that are readily convertible to known amounts of cash, and so near their maturity date that they are subject to an insignificant risk of changes in value resulting from fluctuations in interest rates , to be cash equivalents. Upon disposal, the cost of cash equivalents is determined on an individual basis.
3. Financial assets and financial liabilities
In accordance with the R.O.C. Statement of Financial Accounting Standard (‘SFAS’) No. 34 “Accounting for Financial Instruments” and the “Criteria Governing the Preparation of Financial Reports by Securities Issuers”, financial assets are classified as financial assets at fair value through profit or loss, financial assets carried at cost, or available-for-sale financial assets, as appropriate. Financial liabilities are classified either as financial liabilities at fair value through profit or loss, or financial liabilities at amortized cost.
The Company accounts for purchases and sales of financial assets and liabilities on the trade date, or the date on which the Company commits to purchase or sell the asset or liability. When financial assets and financial liabilities are recognized initially, they are measured at fair value, plus, in the case of investments that are not at fair value through profit or loss, directly attributable transaction costs.
89 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 7 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(1) Financial assets 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 close-end funds are measured at closing prices on the balance sheet date. Open-end funds are measured at the unit price of the net assets on the balance sheet date.
(2) Financial assets carried at cost
Equity investments without reliable market prices, including emerging and other unlisted stocks, are measured at cost. If objective evidence of impairment exists, the Company recognizes impairment loss, which shall not be reversed in subsequent periods.
(3) Available-for-sale financial assets
Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or not classified as financial assets at fair value through profit or loss, held-to-maturity financial assets, or loans and receivables. Subsequent measurement is measured at fair value. The gain or loss arising from the change in fair value, excluding impairment loss and exchange gain or loss from the translation of monetary financial assets denominated in foreign currencies, is recognized in a separate component of stockholders’ equity until such investment is reclassified or disposed of, upon which the cumulative gains or losses previously charged to stockholders’ equity will be transferred to current period’s profit or loss.
After initial recognition, the Company measures all financial liabilities at amortized cost, except for financial liabilities at fair value through profit or loss which shall be measured at fair value.
4. Allowance for doubtful accounts
Allowance for doubtful accounts is accrued based on estimated collectibility of notes receivable, accounts receivable, other receivables, and accounts receivable-overdue.
5. Inventories
Inventories are valued at the lower of cost or market value under the gross method. Cost is determined on a weighted-average basis. The market values of raw materials and supplies are determined on the basis of replacement cost while the market values of work in process and finished goods are determined by net realizable value.
90 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 8 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
6. Long-term investments under the equity method
(1) The difference between the acquisition cost and the Company’s share of net assets of the investee is analyzed and accounted for in the manner similar to acquisition cost allocation as provided in the R.O.C. SFAS No. 25 “Business Combinations-Accounting Treatment under Purchase Method” under which goodwill is no longer amortized.
(2) When the Company has control or significant influence over an investee company, the Company shall acc ount for such investment under the equity method.
(3) If certain long-term equity investments have incurred existing or extremely probable losses, the Company shall recognize investment loss in proportion to the percentage of ownership. The investment loss recognized shall first bring down the specific investment and receivables accounts to zero, then the remaining loss, if any, will be recorded as “Other liabilities-credit to long-term investments”.
(4) Unrealized intercompany gains or losses arising from transactions between affiliated companies shall be eliminated. Unrealized gross profits from downstream sales shall be debited to “unrealized gross profits” and credited to “deferred credits”, whereas unrealized gross profits from upstream and side-stream sales shall be debited to “investment loss” and credited to “long-term investments”.
(5) When the Company issues new shares to acquire another company’s shares, the carrying amount of the investment shall be either the fair market value of the Company’s shares or the fair market value of the investee’s shares, whichever is more objective and determinable. If the carrying amount will be over or under the par value of the Company’s shares, the difference shall be credited to additional paid-in capital or debited to additional paid-in capital (then debited to retained earnings when additional paid-in capital is insufficient). The fair market value of the listed shares of investee companies in which the Company has now obtained control shall be based on the quoted prices over a reasonable period before or after the announcement of the acquisition is made.
7. Property, plant and equipment and assets held for lease
(1) Property, plant and equipment and assets held for lease are carried at cost. Expenditures for regular repairs and maintenance are charged against operating income. However, improvements that materially extend the useful lives of the assets are capitalized.
91
9 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(2) Depreciation is provided on the straight-line basis over the following useful lives:
Categories Estimated Useful Lives Buildings and equipment 3 - 50 years Machinery and equipment 5 - 6 years Warehousing equipment 8 years Instrument equipment 3 - 8 years Transportation equipment 5 years Office equipment 5 years Miscellaneous equipment 3 - 15 years
(3) Fully depreciated property, plant and equipment which are still in use shall be depreciated based on the remaining salvage value over the remaining estimated economic lives.
(4) Gain on disposal of assets is credited to current income as non-operating income, while loss on disposal of assets is charged against current income as non-operating expense.
8. Intangible assets
Intangible assets represent computer softwares which are amortized using the straight-line method over 3 years.
9. Deferred charges
Deferred charges represent small tools and office decorations, which are amortized using the straight-line method over 2 to 5 years.
10. Convertible bonds payable
(1) For bonds issued prior to December 31, 2005, the policy consists of the following:
The issuance costs are recorded as deferred charges and amortized from its issued date to maturity date.
If the redemption price of the bond is lower than the face value of the bond, the difference shall be amortized as a debit of bonds payable between the issued date and the last day of redemption period in a reasonable and systematic manner.
92 10 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
As the bondholder exercises the right to convert the bonds, the book value of the bonds and the related assets and liabilities are transferred to capital stock and paid-in capital; no gain or loss is recognized on bond conversion under the par value method.
(2) For bonds issued after January 1, 2006, the policy conforming with the R.O.C. SFAS No. 36 and Interpretation No. 95-290, 97-331, 98-046 by Accounting Research and Development Foundation consists of the following:
The issuance costs are allocated to the related liability and equity components based on the proportion of the initially recognized amounts.
Convertible bonds with the clause of adjusting price based on market price do not include the equity component. In the aspect of the liability component, the fair value of conversion right with clause of adjusting price and call/put options shall be measured first; then the book value of main liability is assigned with the residual amount after deducting the fair value of conversion right with clause of adjusting price and call/put options from issue price.
Convertible bonds are subsequently measured at amortized cost. Derivatives with call/put options and conversion right with clause of adjusting price are recognized as “financial liabilities at fair value through profit or loss” and are subsequently measured at the fair value. The movements in the fair value of the derivatives would be recognized as “gain/(loss) on valuation of financial liabilities”.
As the bondholder exercises the right to convert the bonds ahead of the due date of the bonds, the Company shall adjust the book value of the liability components to the value on the conversion date, which would be the recording basis of common stocks to be issued without recognizing conversion gain and loss.
If the bondholder could exercise the put option within one year, the bonds payable should be reclassified as current liability. Those bonds payable could be reclassified as long-term liability when the put option expires and the liability meets the definition of long-term liability.
11. Accrued pension liability
The Company makes monthly contributions to the pension fund at 2% of the total monthly salaries and wages as required by the Labor Standards Laws. The fund is administrated by the Employees Retirement Fund Committee. The pension fund mentioned above is considered absolutely separate from the Company after contribution; therefore, it is not included in the accompanying financial statements.
93 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 11 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Effective from 1995, the Company adopts, on a prospective basis, the R.O.C. SFAS No. 18 “Accounting for Pensions”. This Statement requires that the accumulated pension obligation and the pension expense be determined on an actuarial basis.
The funding status of the pension plan as of December 31, 1995 was measured on an actuarial basis. Because the accrued pension liability is equal to the funding status of pension plan, no unrecognized transitional net assets or net obligations shall be amortized in the future. According to the R.O.C. SFAS No. 18, net pension cost was recognized from January 1, 1996. However, except for few foreign employees, the Company has closed out all seniority of employees as of December 31, 2007.
For employees subject to the Labor Pension Act of the R.O.C. (“the Labor Pension Act”), which prescribes a defined contribution scheme, the Company makes monthly contributions to the employees’ individual pension accounts on a basis no less than 6% of the employees’ monthly wages.
12. Derivative financial instruments
The Company has entered into derivative financial instruments, such as forward exchange contracts and foreign currency option contracts. These financial instruments are initially recognized and remeasured at fair value. When the fair value is positive, the financial instrument is classified as a financial asset; when the fair value is negative, the financial instrument is classified as a financial liability. The change in fair value of derivatives shall be recognized as current profit or loss.
Once the derivative meets the criteria for hedge accounting, the Company adopts hedge accounting to account for the derivative.
13. Income tax
The Company adopts the R.O.C. SFAS No. 22 “Accounting for Income Taxes”, which requires inter-period as well as intra-period income tax allocation. Under the Statement, the tax effects of taxable temporary differences are recognized as deferred income tax liabilities while those of deductible temporary differences, net operating losses, and investment tax credits are recognized as deferred income tax assets. A valuation allowance on the deferred tax assets is provided based on the realizability of the deferred tax assets.
94 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 12 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
The Company adopts the R.O.C. SFAS No. 12 “Accounting for Income Tax Credits”. This Statement requires all income tax credits resulting from the acquisition of equipment or technology, research and development, and employee trainings to be recognized in the current period.
On the date of earnings distribution approved by the shareholders’ meeting, an additional 10% income tax levied on the undistributed earnings shall be rec ognized immediately.
The R.O.C. government enacted the Alternative Minimum Tax (“AMT”) Act which became effective on January 1, 2006. The Company has taken into consideration the impact of the AMT in the determination of its current income tax expense and its future impact when estimating the realizable value of the deferred tax assets.
14. Revenue and cost
The Company recognizes revenue when the revenue earning process has been significantly completed, which means the revenue has been realized or readily realizable and earned. Cost is recognized when the related revenue is accrued; expenses are recognized as current expenses when incurred in accordance with accrual basis.
15. Asset impairment
The Company assesses indication for impairment for all applicable assets subject to the R.O.C. SFAS No.35 on the balance sheet date. If impairment indication exists, the Company then compares the carrying amount with the recoverable amount of the assets or the cash-generating unit (“CGU”) and writes down the carrying amount to the recoverable amount where applicable. Recoverable amount is defined as the higher of net fair value and usable value. In contrast, if there is evidence that the impairment loss may no longer exist or may have decreased, the Company shall reassess the recoverable amount on the balance sheet date. When the recoverable amount of the asset increases due to the increase in its estimated service potential, the Company shall reverse the impairment loss to the extent that the carrying amount after the reversal would not exceed the amou nt (net of amortization or depreciation) that would otherwise result had no impairment loss been recognized in prior years.
95 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 13 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
In addition, a goodwill-allocated CGU or group of CGUs is tested for impairment each year, regardless of whether indicator for impairment exists. If an impairment test reveals that the carrying amount, including goodwill, of CGU or group of CGUs is greater than its recoverable amount, then an impairment loss is recognized. The loss is first recorded against the goodwill allocated to the CGU, with any remaining loss allocated to other assets on a pro rata basis proportionate to their carrying amounts. The write-down of goodwill cannot be reversed in subsequent periods under any circumstances.
Impairment losses and reversals are classified as non-operating loss or income, respectively.
16. Employees’ bonuses, directors’ and supervisors’ remuneration and share-based payment
The Company adopts Interpretation No. 96-052 by Accounting Research and Development Foundation to account for its employees’ bonuses and directors’ and supervisors’ remuneration as expenses rather than as distribution of retained earnings. The Company adopts the R.O.C. SFAS No. 39 to account for the transfer of equity instruments from shareholders to the Company’s or affiliated companies’ employees.
17. Earnings per share (EPS)
Primary EPS is calculated by dividing net income by the weight-average number of shares outstanding during the period. In the event of capitalization of retained earnings or capital surplus, the share number is retrospectively adjusted for additional shares issued.
Diluted EPS is calculated by dividing net income by the weighted-average number of common shares used in the calculation for Primary EPS plus the number of common shares that would be issued assuming conversion of all potentially dilutive common shares outstanding.
When the potential common shares are anti-dilutive or the continuing operation of the Company incurs a loss, the effect of potential common shares shall not affect the calculation of EPS.
18. Preparation of consolidated financial statements and acquisition of shares
The Company adopts the R.O.C. SFAS No. 7 “Consolidated Financial Statements” for the preparation of its consolidated financial statements and adopts the R.O.C. SFAS No. 25 “Business Combinations-Accounting Treatment under Purchase Method” to account for its transactions of acquiring other companies’ shares.
96 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 14 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
19. Spin-off transactions
The Company adopts the Interpretation No. 91-128 by Accounting Research and Development Foundation to account for its spin-off transactions. If a transferor company and a transferee company are affiliated and the nature of the transfer is group reorganization, then the transferee company shall recognize the assets and liabilities based on the book value (if the transferor has any impairment loss, the transferee shall recognize theo bo k value based on impairment loss recognized) of the assets and liabilities of the transferor company without any transfer gain/(loss).
III. REASONS AND EFFECTS OF CHANGES IN ACCOUNTING PRINCIPLES
The Company adopted Interpretation No. 96-052 by Accounting Research and Development Foundation to account for its employees’ bonuses and directors’ and supervisors’ remuneration after January 1, 2008. Such a change in accounting principles decreased the Company’s net income by $903,295 thousand, and, thereby, also decreased earnings per share by $0.21 for 2008. The Company adopted the R.O.C. SFAS No. 39 “Accounting for share-based payment ” to account for the transfer of equity instruments from shareholders to the Company’s or affiliated companies’ employees. Such a change in accounting principles decreased the Company’s net income by $286,224 thousand, and, thereby, also decreased earnings per share by $0.07 for 2008.
IV. DETAILS OF SIGNIFICANT ACCOUNTS
1. CASH AND CASH EQUIVALENTS
(1) Cash and cash equivalents consist of the following:
2008/12/31 2007/12/31 Cash on hand $264 $839 Demand deposit accounts 11,326 2,421 Checking accounts 333,519 2,626 Foreign currency accounts 14,910 19,504 Time deposits 10,418,290 9,148,829 Total $10,778,309 $9,174,219
(2) The time deposits pledged were reclassified to refundable deposits. Please refer to Note VI for details.
9715 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
2. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS-CURRENT
(1) Financial assets at fair value through profit or loss-current consist of the following:
2008/12/31 2007/12/31 Beneficiary certificates $8,344,301 $7,257,169 Forward exchange contracts 10,894 - Total $8,355,195 $7,257,169
(2) Please refer to Note X.3.(2) for the transaction of derivative financial instruments.
(3) Financial assets at fair value through profit or loss-current are not pledged as collateral.
3. AVAILABLE-FOR-SALE FINANCIAL ASSETS-CURRENT
(1) Available-for-sale financial assets-current consist of the following:
Stock: 2008/12/31 2007/12/31 D-Link Corporation $252,588 $-
(2) The Company recognized the net movements in fair value of available-for-sale financial assets-current as unrealized profit of financial assets in the amounts of $21,281 thousand for the year ended December 31, 2008. The Company had no available-for-sale financial assets-current in 2007.
(3) Available-for-sale financial assets-current are not pledged as collateral.
4. NOTES AND ACCOUNTS RECEIVABLE-NET, AND ACCOUNTS RECEIVABLE -AFFILIATED COMPANIES-NET
(1) Notes and accounts receivable-net consist of the following:
2008/12/31 2007/12/31 Notes receivable $644 $37,009 Less: Allowance for doubtful accounts (6) (452) Notes receivable-net 638 36,557 Accounts receivable 430,977 62,492,236 Less: Allowance for doubtful accounts (13,955) (665,549) Accounts receivable-net 417,022 61,826,687 Notes and accounts receivable-net $417,660 $61,863,244
9816 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(2) Accounts receivable-affiliated companies-net consist of the following:
2008/12/31 2007/12/31 Accounts receivable-affiliated companies $38,327,768 $46,426,708 Less: Allowance for doubtful accounts - (679,590) Accounts receivable-affiliated companies-net 38,327,768 45,747,118 Long-term receivables-affiliated companies - 4,998 Total $38,327,768 $45,752,116
(3) As of December 31, 2007 and 2008, those receivables under legal proceedings have been reclassified as accounts receivable-overdue. Please refer to Note IV.12 for details.
5. INVENTORIES-NET
Inventories-net consist of the following: 2008/12/31 2007/12/31 Raw materials $5,142,401 $31,863,080 Work in process 945,185 4,233,527 Finished goods 1,705,279 18,300,982 Merchandise 22,136,644 1,162,396 Inventories in transit 253,283 27,943 Subtotal 30,182,792 55,587,928 Less: Allowance for loss on decline in market (2,797,854) (1,944,063) value and obsolescence Total $27,384,938 $53,643,865
6. AVAILABLE-FOR-SALE FINANCIAL ASSETS-NONCURRENT
(1) Available-for-sale financial assets-noncurrent consist of the following:
Stocks: 2008/12/31 2007/12/31 Advantech Co., Ltd. $3,597,195 $5,330,033 ENE Technology Inc. 46,224 165,750 United Microelectronics Corp. 30,777 79,872 Alcor Micro Corp. 34,921 107,500 Total $3,709,117 $5,683,155
(2) The Company recognized the net movements in fair value of available-for-sale financial assets-noncurrent as unrealized losses in the amounts of $1,974,062 thousand and $2,628,689 thousand for the years ended December 31, 2008 and 2007, respectively.
(3) Available-for-sale financial assets-noncurrent are not pledged as collateral.
99 17 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
7. FINANCIAL ASSETS CARRIED AT COST-NONCURRENT
(1) Financial assets carried at cost-noncurrent consist of the following:
Stocks: 2008/12/31 2007/12/31 AmTrust Capital I Corp. $62,859 $100,000 ASUSCOM Network Inc. 16,350 16,350 INVESTAR BURGEON VENTURE 1 1 CAPITAL, INC. ASUSPOWER Computer Inc. - 14,327 Wai-Gin Industrial Co., Ltd. - 112,500 Total $79,210 $243,178
(2) The Company owned 100% of ASUSPOWER Computer Inc.’s shares and 51% of ASUSCOM Network Inc.’s shares. ASUSPOWER Computer Inc. and ASUSCOM Network Inc. were in the process of liquidation since March 30, 2007 and September 1, 2007, respectively. Thus, the Company changed the basis of measurement for its investment in ASUSPOWER Computer Inc. and ASUSCOM Network Inc. from the equity method to the cost method since the liquidation dates. Furthermore, ASUSPOWER Computer Inc. had completed its liquidation in 2008.
(3) After evaluating and comparing the carring value of financial assets carried at cost-noncurrent and the expected recoverable amount, the Company recognized losses on impairment of assets amounted to $37,141 thousand and $37,500 thousand for the years ended December 31, 2008 and 2007, respectively.
(4) Financial assets carried at cost-noncurrent are not pledged asl col ateral.
8. LONG-TERM INVESTMENTS UNDER THE EQUITY METHOD
(1) Long-term investments under the equity method consist of the following:
2008/12/31 2007/12/31 Interest Interest Investee Companies Amount Owned Amount Owned ASUS TECHNOLOGY $334,164 100% $344,088 100% INCORPORATION AXUS Microsystems Inc. 140,051 85% 140,091 85% Shinewave International Inc. 64,368 51% 53,420 51% ASUS HOLLAND B.V. 86,570 100% 79,809 100% ASUS INTERNATIONAL 14,914,064 100% 15,006,676 100% LIMITED (Continued)
100 18 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
2008/12/31 2007/12/31 Interest Interest Investee Companies Amount Owned Amount Owned ASUSTEK HOLDINGS 1,821,172 100% 1,149,556 100% LIMITED Asint Technology Corporation 48,950 25% 49,881 28.57% ASUSCHANNEL CORPORATION 1,094 100% 1,232 100% AMA CORPORATION 36,177 100% 102,616 100% ASMEDIA TECHNOLOGY 150,732 91.24% 177,075 82.13% INC. Askey Computer Corp. 9,285,216 100% 8,896,469 100% PEGATRON CORPORATION 89,528,482 100% 211,670 100% eCareme Technologies, Inc. 71,883 77% - - International United Technology 120,877 56.73% - - Co., Ltd. (Taiwan) Excelliance MOS Corporation 16,723 10% - - Hua-Cheng Venture Capital Corp. 533,794 100% - - Hua-Min Investment Co., Ltd. 197,614 100% - - GREENASUS RECYCLING 889 100% - - CO., LTD. ASUS COMPUTER - 100% - 100% INTERNATIONAL UNIHAN CORPORATION - - 950 100% Ability Enterprise Co., Ltd. - - 2,669,779 13.03% PEGATRON HOLDING LTD. - - 21,037,383 100% UNIHAN HOLDING LTD. - - 3,869,536 100% ASUSPOWER INVESTMENT - - 11,433,429 100% CO., LTD. ASUS INVESTMENT CO., LTD. - - 14,184,982 100% ASUSTEK INVESTMENT CO., - - 12,993,543 100% LTD. ASUSALPHA Computer Inc. - - 5,477,818 100% Enertronix, Inc. - - 100,142 100% ADVANSUS CORP. - - 486,364 50% ASUS HOLLAND HOLDING - - 1,153,501 92.44% B.V. AMA PRECISION INC. - - 408,394 100% Total $117,352,820 $100,028,404
101 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 19 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(2) The Company issued 29,824,561 new shares to acquire 51,000,000 common shares of Ability Enterprise Co., Ltd. The date for the share swap was September 13, 2007. Please refer to Note IV.15.(4) for details. After the share swap, the Company had control over Ability Enterprise Co., Ltd. and accounted for this investment under the equity method.
(3) The Company swapped a portion of its holding in ASUSTEK HOLDINGS LIMITED with ASUSTEK HOLDINGS LIMITED to acquire the entire shares of PEGATRON HOLDING LTD. and UNIHAN HOLDING LTD. on September 29, 2007. Please refer to Note V.2.(13) for details.
(4) For the spin-off plan to restructure the Company’s businesses into own-brand and OEM, the Company transferred certain of its long-term investments accounted for under the equity method to its related parties on January 1, 2008. Please refer to Note V.2.(15) for details.
(5) The Company recognized its investment income, including the adjustment for gain or loss on the redemption of bonds acquired by the subsidiaries, in accordance with its equity investees’ current financial statements. The investment income for the years ended December 31, 2008 and 2007 amounted to $9,039,978 thousand and $13,457,553 thousand, respectively.
(6) On December 31, 2008, the Company had deferred credits of $455,350 thousand, including the unreali zed gross profit of $298,337 thousand and long-term investment credit-ASUS COMPUTER INTERNATIONAL of $157,013 thousand.
On December 31, 2007, the Company had deferred credits of $1,494,504 thousand, including the unrealized gross profit of $1,308,371 thousand and long-term investment credit-ASUS COMPUTER INTERNATIONAL of $186,133 thousand.
(7) According to the R.O.C. SFAS No. 7 “Consolidated Financial Statements”, those investees over which the Company has control have been included in the consolidated financial statements for 2008 and 2007, respectively.
(8) Long-term investments under the equity method are not pledged as collateral.
102 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 20 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
9. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
2008/12/31 Accumulated
Items Cost Depreciation Book Value Land $1,019,424 $- $1,019,424 Buildings and equipment 2,429,897 341,933 2,087,964 Machinery and equipment 18,043 12,190 5,853 Warehousing equipment 16,518 15,936 582 Instrument equipment 848,082 522,174 325,908 Transportation equipment 17,528 8,056 9,472 Office equipment 13,048 3,457 9,591 Miscellaneous equipment 251,430 138,441 112,989 Prepayments on purchase of equipment 132,032 - 132,032 Total $4,746,002 $1,042,187 $3,703,815
2007/12/31 Accumulated
Items Cost Depreciation Book Value Land $3,238,133 $- $3,238,133 Buildings and equipment 4,332,167 561,529 3,770,638 Machinery and equipment 909,371 487,952 421,419 Warehousing equipment 28,239 25,753 2,486 Instrument equipment 1,473,393 887,453 585,940 Transportation equipment 36,303 16,813 19,490 Office equipment 6,460 3,856 2,604 Miscellaneous equipment 582,309 262,042 320,267 Prepayments on purchase of equipment 221,176 - 221,176 Total $10,827,551 $2,245,398 $8,582,153
10. INTANGIBLE ASSETS
Intangible assets consist of the following:
2008/12/31 Item Beginning Increase Decrease End Computer software $233,383 $119,330 $129,066 $223,647
10321 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
2007/12/31 Item Beginning Increase Decrease End Computer software $155,950 $172,372 $94,939 $233,383
11. ASSETS HELD FOR LEASE
(1) Assets held for lease consist of the following:
2008/12/31 Accumulated Items Cost Depreciation Book Value Buildings and equipment $75,331 $33,465 $41,866
2007/12/31 Accumulated Items Cost Depreciation Book Value Land $14,323 $- $14,323 Buildings and equipment 231,308 52,594 178,714 Total $245,631 $52,594 $193,037
(2) Assets held for lease are those assets recognized as property, plant and equipment originally, but have since been leased to related parties and therefore reclassified to other assets-assets held for lease.
12. ACCOUNTS RECEIVABLE-OVERDUE
Accounts receivable-overdue consist of the following:
2008/12/31 2007/12/31 Accounts receivable-overdue $96,527 $96,527 Less: Allowance for doubtful accounts (96,527) (96,527) Accounts receivable-overdue-net $- $-
104 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 22 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
13. BONDS PAYABLE
(1) Bonds payable consist of the following: 2007/12/31 2008/12/31 (Adjusted) Euro convertible bonds due 2009 (ECB I) $1,518,279 $3,136,921 Add: Premium on bonds payable 63 3,268 Less: Compensatory interest receivable (66,577) (107,120) Subtotal 1,451,765 3,033,069 Domestic convertible bonds 11,496,400 11,993,000 Less: Discount on bonds payable (738,062) (1,040,100) Subtotal 10,758,338 10,952,900 Less: Bonds payable-current portion (12,210,103) - Corporate bonds payable-net $- $13,985,969
(2) The Company issued the first Euro non-collateral convertible bonds (ECB I) on the Luxembourg Stock Exchange on January 15, 2004 with a zero-coupon rate. The main issuance terms of ECB I are as follows:
A. Principal amount: USD 320,000,000; Issue price: USD 321,600,000
B. Duration of Issuance: 2004/1/15-2009/1/15
C. Main redemption clauses:
(a) The Company has the right to redeem the ECB I in whole or in part at any time on or after Janua ry 15, 2006 at a price equal to 100% of the unpaid principal amount thereof if the Closing Price of the Common Shares (translated into US dollars at the Prevailing Rate) on each of 20 consecutive Trading Days reach at least 120% of the Conversion Price.
(b) The Company has the right to redeem the ECB I at any time at a price equal to 100% of the unpaid principal amount thereof if at least 95% in principal amount of the ECB I has been redeemed, repurchased and cancelled, or converted.
(c) If, as a result of certain changes relating to the tax laws in the R.O.C. or such other jurisdiction in which the Company has to pay extra interest expenditure, the Company has the right to redeem the ECB I at any time at a price equal to 100% of the unpaid principal amount thereof.
23105 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(d) Each Holder has the right to require the Company to repurchase all or a portion of the bondholder’s ECB I on January 15, 2006 and January 15, 2007 at a price equal to 98.5001% and 97.5150%, respectively, of the unpaid principal amount thereof.
(e) If the Common Shares cease to be listed or admitted to trading on the Taiwan Stock Exchange for a period of at least five consecutive Trading Days, then each Holder will have the right to requ ire the Company to repurchase all of such Holder’s ECB I at a price equal to 100% of the unpaid principal amount thereof.
D. Main terms of conversion:
(a) Each Holder has the right to convert all or from time to time any portion of the bondholder’s ECB I into Common Shares during the Conversion Period (up to 31 days after the Original issued date to 10 days before the Maturity date).
(b) The Conversion Price will initially be $100.86 per Common Share, and the Fixed Rate will apply to the conversion of the ECB I. The Conversion Price will be adjusted upon the occurrence of certain events set out in the indenture, including but not confined to (1)dividends distributed in Common Shares (2) subdivision, reclassification or combination of Common Shares (3) granting the shareholders with rights of subscribing for Common Shares with price lower than the market price defined in the indenture (4) the value of cash dividend per share is greater than 5% of the market price in the indenture (5) purchase price of the Company’s (including subsidiaries’) shares is higher than the market price (6) issuance of the Company’s (including subsidiaries’) convertible (exchangeable) securities with the Conversion Price lower than 95% of the market price and (7) the value of newly issued Common Shares is lower than 95% of the market price (other than (1), (2), (3) or (6)). Such events will not include, among other things, the issue of the Common Shares to the Company’s employees as employees’ bonuses.
In consideration of the capitalization from increasing from retained earnings, which excluded the issuance of common shares to employees as employees’ bonuses, the conversion price was adjusted to $65.7 per common share.
106 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 24 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(c) Conversion Price Reset:
The Company may, within 30 days prior to each of the Holders’ Put Dates and the Maturity Date, by giving notice thereof to the holders of the ECB I, offer such holders the option to convert their ECB I for a period of seven Trading Days, which period shall start on a day determined by the Company, at the “Special Conversion Price Reset” specified in the indenture. The “Special Conversion Price Res et” equals 92.30%, 93.23% or 95.12% of market price which is determined by using the lowest average Closing Prices of the Common Shares of the Company for 10, 15 and 20 Trading Days immediately preceding special reset day.
(3) ECB I that has been redeemed or converted into the Company’s capital stocks from the issued date to December 31, 2008 and 2007, respectively, are as follows:
2008 2007 Converted shares Converted amount Converted shares Converted amount Before 1/1 96,390,052 shares USD 223,271,000 45,602,571 shares USD 112,456,000 1/1~12/31 23,627,151 shares 50,440,000 50,787,481 shares 110,815,000 Total 120,017,203 shares USD 273,711,000 96,390,052 shares USD 223,271,000
(4) On November 7, 2006, the Company issued zero-coupon rate domestic non-collateral convertible bonds with a total face value of $12,000,000 thousand. According to the R.O.C. SFAS No. 36 “Disclosure and Presentation of Financial Instruments”, the Company recognized the embedded derivatives and non-derivative liabilities separately. The embedded derivatives were measured at fair value totaling $859,931 thousand and $1,837,328 thousand on Dece mber 31, 2008 and 2007 (adjusted), respectively. The non-derivative liabilities recognized as “Bonds payable” were measured at amortized cost, totaling $10,758,338 thousand and $10,952,900 thousand on December 31, 2008 and 2007 (adjusted), respectively.
The main issuance terms of the domestic non-collateral convertible bonds are as follows:
A. Duration of issuance: from November 7, 2006 to November 7, 2011.
107 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 25 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
B. Conversion period: Each bondholder has the right to convert all or from time to time any portion of its convertible bonds into common shares during the conversion period (up to 31 days after the original issued date to 10 days before the maturity date).
C. Conversion price and adjustment: The conversion price is $105.4 per common share initially. The conversion price will be adjusted upon the occurrence of increasing number of common shares. Also, the conversion price will be reset in accordance with certain conversion terms. The conversion price was subsequently adjusted to $78.3 per common share.
D. Call option: The Company could redeem the convertible bonds at its par value at any time during the period from December 8, 2006 to September 28, 2011 under the following conditions: (i) the closing price of the common shares on each of 30 consecutive trading days reaches or exceeds 50% of the conversion price, or (ii) the outstanding balance of the bonds is less than 10% of the original issuance.
E. Put option: Each bondholder has the right to put the convertible bonds at par value ahead of time when the convertible bonds have been issued after 3 or 4 years.
(5) The Company adopted the R.O.C. SFAS No. 34 “Accounting for Financial Instruments” and No. 36 “Disclosure and Presentation of Financial Instruments” to account for its convertible bonds issued after January 1, 2006. Such an adoption resulted in recognition of interest expense of $269,514 thousand and $270,300 thousand due to amortization of discount on bonds payable, and gain/(loss) on valuation of financial liabilities of $942,440 thousand and $(250,921) thousand for the years ended December 31, 2008 and 2007 (adjusted), respectively.
(6) Domestic non-collateralized convertible bonds that have been redeemed or converted into the Company’s capital stock from the issuance date to December 31, 2008 and 2007, respectively, are as follows: 2008 2007 Converted Converted and Converted Converted and shares redeemed amount shares redeemed amount Before 1/1 72,614 shares $7,000 - shares $- Conversion - shares - 72,614 shares 7,000 Redemption - shares 496,600 - shares - Total 72,614 shares $503,600 72,614 shares $7,000
108 26 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
The Company redeemed the domestic convertible bonds and, thus, recognized other income – gain on redemption of bonds payable of $15,226 thousand in 2008. The Company had no such circumstance in 2007.
(7) According to Interpretation No. 97-331 and No. 98-046 by Accounting Research and Development Foundation, the Company retrospectively adjusted the financial statements for 2007. Please refer to Note II.10.(2) for the relevant accounting policies.
14. PENSION PLAN
(1) Because of the spin-off, except for few foreign employees, the Company has closed out all the seniority of employees as of December 31, 2007. From thereon, the Company is subject to the Labor Pension Act of the R.O.C.. The pension plan costs recognized for the years ended December 31, 2008 and 2007 were $111,453 thousand and $195,141 thousand, respectively.
(2) The Company already had the permission from the Labor Affairs Bureau, Taipei, for suspension of appropriating pension fund since 2008 for those few foreign employees subject to Labor Standards Laws.
(3) Based on the actuarial report which measures the pension assets and liabilities on December 31, 2007, the reconciliation between the funding status of pension plan and accrued pension liability as of December 31, 2007 is as follows:
2007/12/31 Benefit Obligations: Vested Benefit Obligation $(1,407,286) Non-vested Benefit Obligation - Accumulated Benefit Obligation (1,407,286) Effect of Projected Future Salary Increase - Projected Benefit Obligation (1,407,286) Fair Value of Plan Assets 492,464 Status of Pension Plan (914,822) Unamortized Actuarial Loss / (Benefit) - Accrued Pension Liability -Defined Benefit Pension Plan (914,822) -Defined Contribution Pension Plan (30,246) Accrued Pension Liability (Classified as accrued expense) $(945,068)
109 27 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
15. CAPITAL STOCK
(1) On April 10, 1997, the Company’s stockholders resolved to increase capital for 182,000 thousand shares by transferring from retained earnings. The meeting also resolved to increase capital for cash for $210,000 thousand, divided into 21,000 thousand shares at $10 per share, to facilitate the issuance of 21,000 thousand units of Global Depositary Receipts (GDRs) . The above increase in capital has been approved by the Ministry of Economic A ffairs. The GDRs were offered on May 30, 1997, and now listed on the London Stock Exchange. Commencing three months after completion of the offering, a holder of the GDRs may withdraw and hold the shares represented by such GDRs or request depositary to sell or cause to be sold on behalf of such holder of the shares represented by such GDRs.
(2) On January 1, 2007, the Company’s outstanding capital amounted to $34,070,702 thousand , divided into 3,407,070,144 shares at $10 par value.
(3) On June 13, 2007, the stockholders resolved to increase capital for 240,604,146 shares by transferring from retained earnings and employees’ bonuses for $2,406,041 thousand. The record date of the above increase in capital has been set on August 22, 2007.
(4) The Company’s board resolved, on July 24, 2007, to acquire shares of Ability Enterprise Co., Ltd. by issuing new shares of the Company to Ability Investment Co., Ltd. The share swap date was on September 13, 2007 with a swap ratio of 1.71 shares of Ability Enterprise Co., Ltd. for one share of the Company’s. Because of the above transaction, new shares of the Company issued for the share swap were 29,824,561 shares. In addition, the Company’s capital and premium on capital stock increased by $298,245 thousand and $2,400,281 thousand, respectively.
(5) In 2007, the holders of ECB I and domestic convertible bonds had converted the bonds to 50,787,481 and 72,614 common shares, and increased the issued and outstanding capital by $507,875 thousand and $726 thousand, respectively.
(6) On June 11, 2008, the stockholders resolved to increase capital for 494,065,172 shares by transferring from retained earnings and employees’ bonuses for $4,940,652 thousand. The record date of the above increase in capital has been set on September 6, 2008.
(7) During 2008, the holders of ECB I had converted the bonds to 23,627,151 common shares, and increased the issued and outstanding capital by $236,272 thousand.
110 28 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(8) As of December 31, 2008, the authorized capital of the Company was $47,500,000 thousand ($500,000 thousand were reserved for employee stock options) of which $42,460,513 thousand were issued and outstanding, divided into 4,246,051,269 shares at $10 par value.
16. ADDITIONAL PAID-IN CAPITAL
(1) Additional paid-in capital consists of the following: 2007/12/31 2008/12/31 (Adjusted) Premium on capital stock $20,500,035 $20,213,812 Premium on conversion of bonds 7,360,596 6,112,719 Treasury stock transactions 617 617 Effect of changes of the investee companies’ equity 1,835,145 2,053,583 Total $29,696,393 $28,380,731
(2) The R.O.C. Company Law stipulates that additional paid-in capital, other than premium on capital stock and donated capital, shall not be used to increase capital, nor shall cash dividends be declared from such additional paid-in capital.
17. LEGAL RESERVE
The R.O.C. Company Law stipulates that, after paying all taxes, companies must retain at least 10% of their annual earnings, as defined in the Law, until such retention equals the amount of capital stock. This retention can be used to make up prior years’ losses. Once the legal reserve equals one-half of capital stock, 50% of the reserve may be transferred to common stock.
18. DISTRIBUTION OF EARNINGS
(1) As provided by the Company’s Articles of Incorporation resolved by the stockholders’ meeting on June 11, 2008, annual net income after making up prior years' losses, if any, should be distributed as follows: (1) To appropriate 10% as legal reserve, with its remainder, (2) To appropriate the proper amount as special reserve according to relevant regulation or as required by the government, with its remainder, (3) To app ropriate 10% of capital stock as capital interest, with its remainder, (4) To appropriate no less than 1% as employees’ bonuses, and (5) To appropriate no more than 1% as directors’ and supervisors’ bonuses. (Prior to the revision, 10% was set as employees’ bonuses and 1%
111
29 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
as directors’ and supervisors’ bonuses.) When the employees’ bonuses are distributed with stocks, the recipients must include the employees of subsidiaries. (6) After the distribution of earnings, the remained earnings, if any, may be appropriated according to a resolution adopted in a stockholders’ meeting.
(2) The Company is facing a rapidly-changing industrial environment, with the life cycle of the industry in the growth 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 no less than 10% of the aggregate of all dividends.
(3) The distribution of annual net income of 2007: (in thousands of dollars/shares)
Distribution of 2007 annual net income Resolved by the Resolved by the stockholders’ Board of Reasons meeting on Directors on for the Items June 11, 2008 April 24, 2008 Deviation deviation Directors’ and supervisors’ bonuses $211,203 $211,203 - - Employees’ bonuses-cash 912,030 912,030 - - Employees’ bonuses-stock Amounts 1,200,000 1,200,000 - - Shares ($10 per share) 120,000 120,000 - - Percentage to total shares issued 3.22% 3.22% - - and outstanding Stockholders’ bonuses Cash dividends ($2.5 per share) 9,351,630 9,351,630 - - Stock dividends Amounts ($1 per share) 3,740,652 3,740,652 - - Shares ($10 per share) 374,065 374,065 - - Percentage to total shares issued 10.03% 10.03% - - and outstanding EPS (in NT dollars) after considering $6.89 $6.89 - - effects of employees’, directors’ and supervisors’ bonuses (Note)
112 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 30 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Note: (Without considering the retrospective adjustments for bonds)
Net income of 2007 – Employees’ cash bonuses – Employees’ stock bonuses – Directors’ and supervisors’ bonuses Average weighted number of shares of 2007
The distribution of annual net income of 2006: (in thousands of dollars/shares)
Distribution of 2006 annual net income Resolved by the stockholders’ Resolved by the Reasons meeting on Board of Directors for the Items June 13, 2007 on April 24, 2007 Deviation deviation Directors’ and supervisors’ bonuses $138,871 $138,871 - - Employees’ bonuses-cash 688,712 688,712 - - Employees’ bonuses-stock Amounts 700,000 700,000 - - Shares ($10 per share) 70,000 70,000 - - Percentage to total shares issued 2.05% 2.05% - - and outstanding Stockholders’ bonuses Cash dividends ($1.5 per share) 5,118,124 5,118,124 - - Stock dividends Amounts ($0.5 per share) 1,706,041 1,706,041 - - Shares ($10 per share) 170,604 170,604 - - Percentage to total shares issued 5.01% 5.01% - - and outstanding EPS (in NT dollars) after considering $5.20 $5.20 - - effects of employees’, directors’ and supervisors’ bonuses (Note)
Note: (Without considering the retrospective adjustments for bonds)
Net income of 2006 – Employees’ cash bonuses – Employees’ stock bonuses – Directors’ and supervisors’ bonuses Average weighted number of shares of 2006
113 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 31 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(4) As required by the government, if the Company’s stockholders’ equity has any debit balances such as unrealized loss for financial instruments and cumulative translation adjustments, an equal amount of such debit balances shall be appropriated as a special reserve before any distribution of earnings. The appropriation shall comply with the following rules:
(A) For debit balances incurred during the year, the amount of the special reserve shall not exceed the summation of current income after tax and beginning accumulated earnings.
(B) For debit balances incurred in prior years, the amount of the special reserve set aside shall not exceed beginning accumulated earnings minus the appropriated special reserve as per (1) above.
If there is any reversal of the debit balances subsequently, the amount of the reversal shall be eligible for earnings distribu tions.
(5) The Company estimated the employees’ bonuses and directors’ and supervisors’ remuneration for 2008 to be $950,837 thousand and $52,824 thousand, respectively, which would be recognized as operating expenses in this year. The difference of distribution between the estimation and the resolution of stockholders’ meeting will be recognized as profit or loss of the year.
19. NET SALES
2008 2007 Computer system products $172,640,675 $207,524,826 Computer, Consumer and Communication products 67,636,036 370,747,563 Others 9,074,240 11,633,443 Total $249,350,951 $589,905,832
114 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 32 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
20. OPERATING COST/EXPENSES
The Company’s personnel, depreciation and amortization expenses for the years ended December 31, 2008 and 2007 were as follows:
2008 2007 Nature Cost Expense Total Cost Expense Total Personnel: Salary - 3,763,341 3,763,341 1,128,689 3,872,172 5,000,861 Labor and health insurance - 162,570 162,570 76,653 267,144 343,797 Pension - 114,953 114,953 343,212 749,067 1,092,279 Other personnel expenses - 130,520 130,520 93,815 206,790 300,605 Depreciation - 211,524 211,524 225,283 397,964 623,247 Amortization - 685,728 685,728 20,038 683,889 703,927
21. INCOME TAX
(1) Deferred income tax liabilities and assets as of December 31, 2008 and 2007 were as follows:
2008/12/31 2007/12/31 Total deferred income tax liabilities $(2,039,488) $(1,957,107) Total deferred income tax assets $1,275,624 $1,181,656 Temporary differences of deferred income tax assets
or (liabilities): Unrealized gross profit $74,584 $327,093 Unrealized exchange loss/(gain) $19,181 $(147,436) Allowance for doubtful accounts $2,744 $88,872 Employee welfare $10,331 $16,925 Unrealized loss on inventory valuation $699,464 $486,016 Depreciation and amortization $- $(34) Foreign investment income under the equity method $(2,039,488) $(1,809,637) Unrealized accrued expense $468,645 $261,712 Deferred bond issuance costs $675 $1,038
115 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 33 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
2008/12/31 2007/12/31 (2) Deferred income tax assets-current $1,270,295 $1,170,650 Valuation allowance for deferred income tax - -
assets-current Deferred income tax assets-current (net) 1,270,295 1,170,650 Deferred income tax liabilities-current - (147,470) Total net deferred income tax assets/(liabilities)-current $1,270,295 $1,023,180
2008/12/31 2007/12/31 (3) Deferred income tax assets-noncurrent $5,329 $11,006 Valuation allowance for deferred income tax - - assets-noncurrent Deferred income tax assets-noncurrent (net) 5,329 11,006 Deferred income tax liabilities-noncurrent (2,039,488) (1,809,637) Total net deferred income tax assets/(liabilities)-noncurrent $(2,034,159) $(1,798,631)
2008 2007 (4) Current income tax expense $4,469,225 $6,052,947 Deferred income tax (benefit) (369,244) (285,281) Income tax expense $4,099,981 $5,767,666
(5) The reconciliation of income tax and income tax payable are as follows: 2007 2008 (Adjusted) Income before income tax $20,556,548 $33,050,994 Taxation adjustments (7,603,625) (11,191,556) Taxable income 12,952,923 21,859,438 Less: Tax exemption - (366,312) Estimated taxable income $12,952,923 $21,493,126
116 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 34 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
2007 2008 (Adjusted) Estimated income tax payable $3,238,221 $5,373,271 Add/(Deduct):Additional 10% income tax levied 915,311 1,000,943 on the undistributed earnings of 2007 and 2006 Tax payable under AMT act 1,001,819 - Deferred income tax (benefit) (369,244) (285,281) Investment tax credits and others (686,126) (321,267) Estimated income tax 4,099,981 5,767,666 Add/(Deduct): Prepaid income tax (2,697,445) (1,617,092) Deferred income tax benefit 369,244 285,281 Income separately taxed - (1) Others 1,988,351 1,359,618 Income tax payable $3,760,131 $5,795,472
(6) The Company’s income tax returns for the years prior to 2005 have been assessed by the Tax Bureau. The 2005 and all subsequent years’ income tax returns are being examined by the Tax Bureau.
(7) The Tax Bureau had assessed the Company’s income tax returns from 1996 to 2002, and the total assessed amount exceeded the total amount filed by $2,927,620 thousand. The Company has accrued the difference of the assessed amount out of prudence but has petitioned for re-assessment.
(8) Information for integrated income tax system: 2008/12/31 2007/12/31 Imputation income tax credit account balance $11,130,265 $6,329,495
2008 (Expected) 2007 (Actual) Creditable ratio for earnings distribution to the R.O.C. resident shareholders 17.82% 15.01%
(9) Information for unappropriated retained earnings: 2007/12/31 2008/12/31 (Adjusted) 1997 and prior $3,298,939 $3,298,939 1998 and beyond 72,439,752 74,227,941 Total $75,738,691 $77,526,880
117 35 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
22. EARNINGS PER SHARE
Weighted average number of shares (in thousands of shares):
2008 2007 Outstanding share, beginning of the year 3,728,359 3,407,070 Add: Increase in capital through 2007 retained - 239,914 earnings Increase in capital through 2008 retained 493,019 483,668 earnings Weighted average number of shares- 15,683 17,137 Convertible bonds Stock issued in 2007 for exchanging stock - 8,907 with other companies Weighted average number of shares-Primary earnings 4,237,061 4,156,696 per share Fully diluted shares on euro convertible bonds 32,818 90,149 Fully diluted shares on domestic convertible bonds 146,825 140,863 Fully diluted shares on transfer of employees’ 25,838 - bonuses to capital Weighted average number of shares-Fully diluted earnings per share 4,442,542 4,387,708
2007 2008 (Adjusted) Calculation of Primary EPS Income before income tax $20,556,548 $33,050,994 Income tax expense (4,099,981) (5,767,666) Net income $16,456,567 $27,283,328
Primary earnings per share: (in dollars) Income before income tax $4.85 $7.95 Income tax expense (0.97) (1.39) Net income $3.88 $6.56
118 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 36 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
2007 2008 (Adjusted) Calculation of Fully Diluted EPS Income before income tax $19,821,725 $33,510,214 Income tax expense (4,076,863) (5,752,166) Net income $15,744,862 $27,758,048
Fully diluted earnings per share: (in dollars) Income before income tax $4.46 $7.64 Income tax expense (0.92) (1.31) Net income $3.54 $6.33
V. RELATED PARTY TRANSACTIONS
1. Names and relationships of related parties:
Related Parties Relationships ASUS COMPUTER INTERNATIONAL Investee evaluated under the equity method ASUS HOLLAND B.V. Investee evaluated under the equity method Shinewave International Inc. Investee evaluated under the equity method ASMEDIA TECHNOLOGY INC. Investee evaluated under the equity method PEGATRON CORPORATION Investee evaluated under the equity method ASUS TECHNOLOGY Investee evaluated under the equity method INCORPORATION International United Technology Co., Ltd. Investee evaluated under the equity method (Taiwan) Asint Technology Corporation Investee evaluated under the equity method Askey Computer Corp. Investee evaluated under the equity method AMA PRECISION INC. Investee evaluated under the equity method UNIHAN CORPORATION Investee evaluated under the equity method ADVANSUS CORP. Investee evaluated under the equity method Asmobile Communication Inc. Investee evaluated under the equity method (Under liquidation in 2008) ASUSPOWER INVESTMENT CO., LTD. Investee evaluated under the equity method ASUS INVESTMENT CO., LTD. Investee evaluated under the equity method
119 37 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Related Parties Relationships ASUSTEK INVESTMENT CO., LTD. Investee evaluated under the equity method Enertronix, Inc. Investee evaluated under the equity method AzureWave Technologies, Inc. Investee evaluated under the equity method KINSUS INTERCONNECT Investee evaluated under the equity method TECHNOLOGY CORP. STARLINK ELECTRONICS Investee evaluated under the equity method CORPORATION ASFLY TRAVEL SERVICE LIMITED Investee evaluated under the equity method ASROCK Incorporation Investee evaluated under the equity method PEGA INTERNATIONAL LIMITED Investee evaluated under the equity method UNIMAX ELECTRONICS Investee evaluated under the equity method INCORPORATION ASUSALPHA Computer Inc. Investee evaluated under the equity method (Merged by PEGATRON CORPORATION on April 1, 2008) eCareme Technologies, Inc. Investee evaluated under the equity method SHANGHAI INDEED TECHNOLOGY Investee evaluated under the equity method CO., LTD. Excelliance MOS Corporation Investee evaluated under the equity method ASKEY TECHNOLOGY (JIANGSU) Investee evaluated under the equity method LTD. MAINTEK COMPUTER (SUZHOU) CO., Investee evaluated under the equity method LTD. Protek (ShangHai) Limited Investee evaluated under the equity method NORTH TEC ASIA (SHANGHAI) Investee evaluated under the equity method LIMITED Powtek (Shanghai) Co., Ltd. Investee evaluated under the equity method ASUS Computer (Shanghai) CO., LTD. Investee evaluated under the equity method HONG HUA TECHNOLOGY (SUZHOU) Investee evaluated under the equity method CO., LTD. ASUS UNITED TECHNOLOGY Investee evaluated under the equity method (SHANGHAI) CO., LTD. ASUS Technology (Suzhou) Co., Ltd. Investee evaluated under the equity method ASIAROCK TECHNOLOGY LIMITED Investee evaluated under the equity method ASUSTEK HOLDINGS LIMITED Investee evaluated under the equity method
120
38 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Related Parties Relationships ASLINK PRECISION CO., LTD. Investee evaluated under the equity method ASLINK (H.K.) PRECISION CO., Investee evaluated under the equity method LIMITED ASUS COMPUTER GmbH Investee evaluated under the equity method PEGATRON Czech s.r.o. Investee evaluated under the equity method ASUS FRANCE SARL Investee evaluated under the equity method ASUS IBERICA S.L. Investee evaluated under the equity method PEGATRON JAPAN Inc. Investee evaluated under the equity method PEGATRON Mexico, S.A. DE C.V. Investee evaluated under the equity method ASUSTEK Italy S.R.L. Investee evaluated under the equity method ASUS TECHNOLOGY PTE. LIMITED Investee evaluated under the equity method PEGATRON TECHNOLOGY SERVICE Investee evaluated under the equity method INC. ASUS UK Limited Investee evaluated under the equity method (Under liquidation in 2008) ASUSPOWER CORPORATION Investee evaluated under the equity method DIGITEK GLOBAL HOLDINGS Investee evaluated under the equity method LIMITED Double Tech Ltd. Investee evaluated under the equity method International United Technology Co., Ltd. Investee evaluated under the equity method NxNet Systems, Inc. Investee evaluated under the equity method (Disposed on July, 2008) Openbase Limited Investee evaluated under the equity method STRATEGY Technology Co., Ltd. Investee evaluated under the equity method Mr. Eric Chang One of the Company’s senior managers in 2007 Mr. Johnson Teng One of the Company’s senior managers in 2007 The Company’s directors, supervisors and The Company’s directors, supervisors and major major management management
121 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 39 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
2. Significant related party transactions:
(1) Purchases
Related parties 2008 2007 PEGATRON CORPORATION $81,188,608 $- UNIHAN CORPORATION 2,796,491 - AzureWave Technologies, Inc. 1,492,002 300,807 PEGATRON Czech s.r.o. 464,545 204,323 Enertronix, Inc. 368,569 121,714 Protek (ShangHai) Limited 364,280 15,378,062 Asint Technology Corporation 328,159 - ASIAROCK TECHNOLOGY LIMITED 259,415 70,528 ASLINK (H.K.) PRECISION CO., LIMITED 253,287 864,737 SHANGHAI INDEED TECHNOLOGY CO., LTD. 237,633 - AMA PRECISION INC. 177,243 1,291,693 Openbase Limited 120,427 10,766 Askey Computer Corp. 7,777 303,911 STRATEGY Technology Co., Ltd. 37,429 298,639 ASMEDIA TECHNOLOGY INC. 25,965 212,721 HONG HUA TECHNOLOGY (SUZHOU) CO., - 113,316 LTD. ASUSALPHA Computer Inc. 10,955 107,122 Others 14,124 62,330 Total $88,146,909 $19,340,669
The terms of the above transactions are not different from those of third-parties. The terms of the transactions with third-parties are O/A 90 days or Open Account 30-90 days during 2008 and 2007.
122 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 40 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(2) Sales revenues
Related parties 2008 2007 ASUS TECHNOLOGY PTE. LIMITED $203,543,087 $169,342,250 ASUS TECHNOLOGY INCORPORATION 13,753,504 19,104,071 PEGATRON CORPORATION 3,181,876 - UNIHAN CORPORATION 859,437 - ASIAROCK TECHNOLOGY LIMITED 625,352 637,778 Double Tech Ltd. 480,743 232,707 PEGATRON Czech s.r.o. 349,820 1,476,165 ASUSALPHA Computer Inc. 10,075 625,870 Powtek (Shanghai) Co., Ltd. - 2,487,819 Others 41,921 165,046 Total $222,845,815 $194,071,706
The terms of the above transactions are not different from those of third-parties. The terms of the transactions with third-parties are L/C at sight, T/T, or within 7-120 days of goods acceptance during 2008 and 2007. In addition, the terms of transactions derived from the sales between wholly-owned subsidiaries could be rescheduled and reclassified to “long-term receivables” if the collection terms are to be extended.
During 2008, $97,434 ,737 thousand of raw materials sold to related parties to manufacture products was eliminated. In addition, the relevant assets and liabilities were set off against each other on the balance sheet.
(3) Receivables from affiliated companies
Related parties 2008/12/31 2007/12/31 ASUS TECHNOLOGY PTE. LIMITED $35,213,105 $28,546,834 ASUS TECHNOLOGY INCORPORATION 2,809,554 4,725,130 ASIAROCK TECHNOLOGY LIMITED 210,490 1,761 Double Tech Ltd. 5,455 861,491 PEGATRON Czech s.r.o. 3,753 1,585,553 Protek (ShangHai) Limited - 9,788,930 Powtek (Shanghai) Co., Ltd. - 615,433 ASUSALPHA Computer Inc. - 256,102 Others 85,411 50,472 Total $38,327,768 $46,431,706
41 123 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(4) Other receivables from affiliated companies (Non-financing)
Related parties 2008/12/31 2007/12/31 PEGATRON CORPORATION $1,142,696 $- Double Tech Ltd. 315,401 - Others 12,793 160,349 Total $1,470,890 $160,349
(5) Payables to affiliated companies
Related parties 2008/12/31 2007/12/31 PEGATRON CORPORATION $10,108,884 $- UNIHAN CORPORATION 267,057 - AzureWave Technologies, Inc. 110,408 96,036 AMA PRECISION INC. 72,471 231,438 ASLINK (H.K.) PRECISION CO., LIMITED 66,407 206,275 Others 273,277 303,920 Total $10,898,504 $837,669
(6) Accrued expenses
Related parties 2008/12/31 2007/12/31 PEGATRON CORPORATION $251,610 $- ASUSPOWER CORPORATION 2,128 22,932,086 PEGATRON Mexico, S.A. DE C.V. - 112,429 Others 53,180 270,244 Total $306,918 $23,314,759
(7) Gain/(loss) on disposal of property and equipment
2008 Disposal
Related parties Sales price Book value gain/(loss) PEGATRON CORPORATION $7,765 $3,958 $3,807 ASUS TECHNOLOGY 882 197 685 INCORPORATION Others 57 278 (221) Total $8,704 $4,433 $4,271
124
42 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
2007 Disposal
Related parties Sales price Book value gain/(loss) ASUSPOWER CORPORATION $18,500 $16,913 $1,587 ADVANSUS CORP. 13,000 11,045 1,955 Others 5,864 3,012 2,852 Total $37,364 $30,970 $6,394
(8) Manufacturing processing charge
Related parties 2008 2007 DIGITEK GLOBAL HOLDINGS LIMITED $1,430,579 $65,759 PEGATRON Mexico, S.A. DE C.V. 616 977,726 ASUSPOWER CORPORATION - 19,810,646 Total $1,431,195 $20,854,131
(9) The total compensations (the portion of stock payment is calculated on a basis of year-end market price) of the Company’s directors, supervisors and major management amounted to $141,560 thousand (temporarily determined) and $286,870 thousand (actual) for the years ended December 31, 2008 and 2007, respectively. The information mentioned above for 2008 has not been resolved by the board of the Company. Please refer to the annual report of shareholders’ meeting for subsequent updated information.
(10) The Company incurred other related party transactions recorded as expenses such as rental expense, royalties, service charges, inspection fee, miscellaneous expense and etc. for the years ended December 31, 2008 and 2007, which amounted to $484,575 thousand and $788,243 thousand, respectively.
The Company incurred other related party transactions recorded as non-operating incomes/(expenses) and gains/(losses) such as rental income, interest income, other income and other losses during 2008 and 2007, which amounted to $79,707 thousand and $254,595 thousand, respectively.
As of December 31, 2008, the related party transactions recorded as other assets and liabilities such as other payables and receipts in advance amounted to $548,752 thousand, $3,029 thousand, respectively.
As of December 31, 2007, the related party transactions recorded as other assets and liabilities such as prepayments, refundable deposits, other payables, receipts in advance and deposits received amounted to $6,465 thousand, $990 thousand, $77,328 thousand, $86,100 thousand and $1,075 thousand, respectively.
125 43 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(11) On April 24, 2008, the board of the Company resolved to acquire the newly issued stocks for 279,628,141 shares of PEGATRON CORPORATION, a wholly-owned subsidiary, by transferring all of its stocks of UNIHAN CORPORATION, another wholly-owned subsidiary, for 800,100,000 shares to PEGATRON CORPORATION.
(12) On May 12, 2008, the Company acquired the stocks of International United Technology Co., Ltd. (Taiwan) for 6,459,929 shares, 6,371,778 shares, and 1,250,000 shares amounted to $56,072 thousand, $55,307 thousand and $10,850 thousand from ASUSPOWER INVESTMENT CO., LTD., ASUS INVESTMENT CO., LTD., and ASUSTEK INVESTMENT CO., LTD., respectively. After acquiring the stock, the Company owned 56.73% stocks of International United Technology Co., Ltd. (Taiwan).
(13) The Company swapped 532,239,081 shares of ASUSTEK HOLDINGS LIMITED (amounted to USD 672,838,469) to ASUSTEK HOLDINGS LIMITED to acquire 561,666,472 shares of PEGATRON HOLDING LTD. and 111,171,997 shares of UNIHAN HOLDING LTD. at USD 1 per share on September 29, 2007. There was no gain or loss incurred.
(14) The Company purchased the ownership interest of AXUS Microsystems Inc., Shinewave International Inc., ASUS TECHNOLOGY INCORPORATION and ASMEDIA TECHNOLOGY INC., for 1,772,996 shares, 9,652,500 shares, 19,000,000 shares and 24,487,850 shares, respectively, amounted to $24,444 thousand, $48,745 thousand, $204,244 thousand and $161,233 thousand, respectively, from ASUSPOWER INVESTMENT CO., LTD., ASUS INVESTMENT CO., LTD. and ASUSTEK INVESTMENT CO., LTD.
(15) In order to enhance competitiveness and boost productivity, the Company’s shareholders resolved, on October 30, 2007, to restructure the Company’s businesses into own-brand and OEM. The date for the spin-off was set to commence on January 1, 2008. According to the resolution, the Company transferred its computer OEM business, with estimated value of $70,000,000 thousand to its newly established subsidiary, PEGATRON CORPORATION, by subscribing 1,600,000,000 newly issued shares at $43.75 per share of PEGATRON CORPORATION. In addition, the Company transferred its non-computer OEM business and machine hull and molding tool R&D business with estimated value of $12,000,000 thousand to its newly established subsidiary, UNIHAN CORPORATION, by subscribing 800,000,000 newly issued shares at $15 per share of UNIHAN CORPORATION. The plan has been approved by the relevant authorities. The registration of changes was completed in January 2008. The following is a list of assets and liabilities for the spin-off:
12644 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
PEGATRON UNIHAN CORPORATION CORPORATION Total Assets Current assets $21,999,830 $12,555,287 $34,555,117 Long-term investments 66,867,161 7,060,209 73,927,370 Property, plant and 4,761,981 127,143 4,889,124 equipment Other assets 353,066 126,822 479,888 Total 93,982,038 19,869,461 113,851,499 Liabilities Current liabilities (23,982,038) (7,869,461) (31,851,499) Total (23,982,038) (7,869,461) (31,851,499) Net Assets $70,000,000 $12,000,000 $82,000,000
(16) In response to foreign currency risk resulted from changing in net-assets and inventory denominated in foreign currencies, the Company signed the agreement with PEGATRON CORPORATION and UNIHAN CORPORATION requiring whoever benefits from foreign currency translation arising from the spin-off transaction shall compensate the other, where appropriate, for loss due to exchange rate fluctuation, from December 28, 2007 to March . 31, 2008 As of March 31, 2008, the Company was compensated by PEGATRON CORPORATION and UNIHAN CORPORATION with $1,602,711 thousand and $255,748 thousand, respectively, and the compensation was recognized as “credit to foreign exchange loss”. However, the Company also compensated PEGATRON CORPORATION and UNIHAN CORPORATION with $365,523 thousand and $109,050 thousand, respectively, for valuation loss of inventory, and the compensation made was recog nized as adjustment to “cost of sales”. The agreement shall be valid until March 31, 2008.
(17) The Company provided guarantee to its related parties during 2008 and 2007. The outstanding guarantee amounts as of December 31, 2008 and 2007 were as follows:
Related parties 2008/12/31 2007/12/31 PEGATRON CORPORATION; UNIHAN $629,760 $3,000,000 CORPORATION PEGATRON CORPORATION 13,218,400 - UNIHAN CORPORATION 1,640,000 - ASUSTEK INVESTMENT CO., LTD.; ASUS - 6,000,000 INVESTMENT CO., LTD.; ASUSPOWER INVESTMENT CO., LTD. ASUSPOWER CORPORATION - 972,900 AzureWave Technologies, Inc. - 194,580 Total $15,488,160 $10,167,480
12745 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
VI. ASSETS PLEDGED OR MORTGAGED
As of December 31, 2008 and 2007, the following assets were pledged as collateral:
Assets Items 2008/12/31 2007/12/31 Other assets Refundable deposits $87,825 $249,223
VII. COMMITMENTS AND CONTINGENT LIABILITIES
1. As of December 31, 2008, the Company had the following unused L/Cs (in dollars):
Names of the Banks Currencies Total Amounts Mega International Commercial Bank USD $28,600
2. The Company’s income tax returns assessed by the Tax Bureau from 1996 to 2002 exceeded the total amount filed by $2,927,620 thousand. The Company has petitioned for re-assessment.
3. Guarantees the Company provided to its related parties during 2008 were as follows: Outstanding guarantee as of December 31, Name of the related parties Relationship with the Company 2008 PEGATRON CORPORATION; Investee evaluated under the $629,760 UNIHAN CORPORATION equity method PEGATRON CORPORATION Investee evaluated under the 13,218,400 equity method UNIHAN CORPORATION Investee evaluated under the 1,640,000 equity method
4. A Cayman company filed a suit against the Company seeking injunction prohibiting the Company from using certain specific materials from certain specific supplier. Taiwan Supreme Court has declared that the legal action would be effective if this Cayman company provides $46,000 thousand as collateral. Nevertheless, the Company had ceased to use the certain specific materials; therefore, the decision will not damage the Comp any. In addition, this Cayman company also filed a suit against the Company in Taipei District Court, for $10,000 thousand as compensation for damage. The suit is currently under investigation in Taipei District Court.
128 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 46 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
5. In Aug., 2006, a Japanese company filed a suit against the Company alleging that the Company was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US.
6. In Jan., 2007, an Australian organization filed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US.
7. In Jan., 2007, a Japanese company filed a suit against the Company and its US subsidiary for infringement of intellectual property rights. In May and Sep., 2007, another plaintiff, an US company, also filed a suit against the Company and its US subsidiary for patent infringement and violation of trade secrets. These suits are currently under investigation in Utah Court in the US.
8. In Sep., 2007, an US companyl fi ed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US.
9. In Mar., 2008, an US patentee filed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US.
10. In Sep., 2008, an US patentee filed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US.
11. In Oct., 2008, an US patentee filed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in North California Court in the US.
12. In Dec., 2008, an US company filed a suit against the Company alleging that the Company was engaged in patent infringement. The suit is currently under investigation in United States International Trade Commission.
13. In Nov., 2008, an US company filed a suit against the Company alleging that the Company was engaged in patent infringement. The suit is currently under investigation in United States International Trad e Commission.
14. In Nov., 2008, an US company filed a suit against the Company alleging that the Company was engaged in patent infringement. The suit is currently under investigation in United States International Trade Commission.
47 129 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
VIII SIGNIFICANT DISASTER LOSS
None.
IX. SUBSEQUENT EVENTS
On February 18, 2009, the board of the Company resolved to buy back its 60,000 thousand shares. The buyback period would be from February 19 to April 18, 2009.
X. OTHER SIGNIFICANT MATTERS
1. RISKS MANAGEMENT OBJECTIVE AND POLICIES
Derivative financial instruments held by the Company are forward exchange contracts and foreign currency options. The Company’s principal financial instruments, other than derivatives, comprise of cash and cash equivalents, financial assets at fair value through profit or loss, available-for-sale financial asset-current and available-for-sale financial asset-noncurrent. The main purpose of these financial instruments is to manag e the financing for the Company’s operations. The Company also holds various other financial assets and liabilities such as accounts receivable and accounts payable, which arose directly from its operations.
The main risks arising from the Company’s financial instruments are foreign currency risk, commodity price risk, credit risk, liquidity risk and cash flow risk from fluctuations in interest rate.
(1) Foreign currencyk ris
The Company exposes to foreign currency risks arising from purchases or sales denominated in foreign currencies. The Company uses the principle of natural hedge to mitigate the risk and utilizes spot or forward contracts to hedge foreign currency risk. The notional amounts of the foreign currency contracts are the same as the amounts of the hedged items. In principle, the Company does not enter into any forward contracts for commitments of uncertain nature. The Company enters into forward currency contracts to hedge the exchange rate risk of assets, liabilities and commitments denominated in foreign currencies. The Company’s hedging strategy is to avoid most market price risks. The Company uses the derivatives that have highest negative correlation with the hedged items as hedging instruments and evaluate the hedge effectiveness periodically.
(2) Commodity price risk
The Company's exposure to price risk is minimal.
48130 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(3) Credit risk
The Company trades only with established and creditworthy third parties. It is the Company's policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis, which consequently minimizes the Company's exposure to bad debts.
With respect to credit risk arising from the other financial assets of the Company, which comprise of cash and cash equivalents, available-for-sale financial assets and certain derivative instruments, the maximum exposure to credit risk arising from the default of counter-parties is limited to the carrying amount of these instruments.
Although the Company trades only with established third parties, it will nevertheless request collateral to be provided by third parties with less favorable financial positions.
(4) Liquidity risk
The Company's objective is to maintain a balance of funding continuity and flexibility through the use of financial instruments such as cash and cash equivalents, bank loans and bonds.
2. FINANCIAL INSTRUMENTS
(1) Financial instruments consist of the following:
December 31, 2008 Financial instruments Book value Fair value Non-derivative financial instruments Assets Cash and cash equivalents $10,778,309 $10,778,309 Financial assets at fair value through profit 8,344,301 8,344,301 or loss-current Available-for-sale financial assets-current 252,588 252,588 Receivables-net 46,610,159 46,610,159 Available-for-sale financial assets 3,709,117 3,709,117 -noncurrent Financial assets carried at cost-noncurrent 79,210 (Note) Refundable deposit 94,579 94,579
131 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 49 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
December 31, 2008 Financial instruments Book value Fair value Liabilities Payables 38,213,420 38,213,420 Bonds payable (including current portion) 12,210,103 12,274,476 Deposits received 4,982 4,982
Derivative financial instruments Assets Financial assets at fair value through profit or $10,894 $10,894 loss-current Liabilities Financial liabilities at fair value through 859,931 859,931 profit or loss-current
December 31, 2007 (Adjusted) Financial instruments Book value Fair value Non-derivative financial instruments Assets Cash and cash equivalents $9,174,219 $9,174,219 Financial assets at fair value through profit 7,257,169 7,257,169 or loss-current Receivables-net 112,679,996 112,679,996 Available-for-sale financial assets-noncurrent 5,683,155 5,683,155 Financial assets carried at cost-noncurrent 243,178 (Note) Refundable deposits 254,340 254,340 Long-term accounts receivable 4,998 4,998 Liabilities Payables 119,548,677 119,548,677 Bonds payable 13,985,969 13,836,363 Deposits received 16,703 16,703
Derivative financial instruments Liabilities Financial liabilities at fair value through $1,837,328 $1,837,328 profit or loss-noncurrent
Note: Due to cost and the limitations of access to information, the estimation of the market value of the financial instruments is not feasible.
50 132 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(2) The following methods and assumptions were used for determining the fair value of financial instruments:
The fair value of short-term financial instruments was estimated to approximate their book value due to their short maturity. This method is used to determine the fair value for cash and cash equivalents, receivables, and payables.
The fair value of financial assets at fair value through profit or loss-current, available-for-sale financial assets-current and available-for-sale financial assets-noncurrent was based on their quoted market price.
The fair value of refundable deposits and deposits received was based on their book value because the amount the Company expected to receive or refund is equal to their book value.
The fair value of financial liabilities at fair value through profit or loss was measured on a basis of the value of call/put option and conversion right with clause of adjusting price. The fair value of bonds payable was determined using valuation models.
The fair value of derivative financial instruments is the amount the Company will receive or pay if the Company terminates the contracts. Generally, such amount includes the unrealized gain or loss. The fair value of most derivative financial instruments of the Company is determined based on the quotations from financial institutions. If there are no quotations for the instruments, they shall be estimated by other valuation models.
(3) Fair value of financial instruments based on the quoted market price and other valuation models are as follows: Determined by the Estimated by other quoted market price valuation models 2008/12/31 2007/12/31 2008/12/31 2007/12/31 Financial Assets Cash and cash equivalents $10,778,309 $9,174,219 $- $- Financial assets at fair value 8,344,301 7,257,169 10,894 -
through profit or loss-current Available-for-sale financial assets 252,588 - - -
-current Receivables-net - - 46,610,159 112,679,996 Available-for-sale financial assets 3,709,117 5,683,155 - -
-noncurrent Refundable deposits - - 94,579 254,340 Long-term accounts receivable - - - 4,998
133 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 51 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Determined by the Estimated by other quoted market price valuation models 2008/12/31 2007/12/31 2008/12/31 2007/12/31 Financial Liabilities Payables $- $- $38,213,420 $119,548,677 Financial liabilities at fair value - - 859,931 -
through profit or loss-current Bonds payable (including current - - 12,274,476 13,836,363
portion) Financial liabilities at fair value - - - 1,837,328 through profit or loss-noncurrent Deposits received - - 4,982 16,703
3. DERIVATIVE FINANCIAL INSTRUMENTS
(1) Information regarding embedded derivatives arising from non-collateral convertible bonds issued by the Company is detailed in Note IV.13.(4) and (5).
(2) The Company engaged in the following derivative financial instruments:
2008/12/31 Notional amounts Derivative Financial Instruments (in thousand dollars) Period Financial assets for trading purpose Forward exchange contracts USD 20,000 2008/12/3~2009/1/22
The Company engaged in forward exchange contracts and forward option contracts, and incurred the related losses recognized as “non-operating expenses and losses” amounted to $79,604 thousand for 2008. As of December 31, 2008, “Financial assets at fair value through profit or loss-current” and “gain on valuation of financial assets” were both recorded at $10,894 thousand.
The Company had no such item during 2007.
134 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 52 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(3) The Company’s subsidiaries engaged in the following derivative financial instruments:
Ability Enterprise Co., Ltd. 2008/12/31 Notional amounts Derivative Financial Instruments (in thousand dollars) Period Financial assets for trading purpose Forward swap contracts USD 31,740 2008/12~2009/1 Financial liabilities for trading purpose Forward exchange contracts EUR 2,509 2008/12~2009/1
2007/12/31 Notional amounts Derivative Financial Instruments (in thousand dollars) Period Financial liabilities for trading purpose Forward exchange contracts USD 1,472 2007/12~2008/1 Forward exchange contracts EUR 1,000 2007/12~2008/1 Forward exchange contracts EUR 720 2007/12~2008/1
Presented as follows: 2008/12/31 Book value Fair value Assets Financial assets at fair value through $4,264 $4,264 profit or loss-current (forward swap contracts) Liabilities Financial liabilities at fair value through 409 409 profit or loss-current (forward exchange contracts)
2007/12/31 Book value Fair value Liabilities Financial liabilities at fair value through $2 $2 profit or loss-current (forward exchange contracts)
135 53 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Askey Computer Corp. and its subsidiaries
Askey Computer Corp. and its subsidiaries had no undue forward exchange contract in 2008. The derivative financial instruments of Askey Computer Corp. and its subsidiaries in 2007 were as follows:
2007/12/31 Notional amounts Derivative Financial Instruments (in thousand dollars) Period Financial assets for trading purpose Forward exchange contracts USD 10,573 2007/11/26~2008/11/26
Presented as follows: 2007/12/31 Book value Fair value Assets Financial assets at fair value through $6,553 $6,553 profit or loss-current (forward exchange contracts)
Askey Computer Corp. and its subsidiaries incurred net (loss)/gain on valuation of financial assets of $(23,338) thousand and $6,349 thousand for the years ended December 31, 2008 and 2007, respectively.
ASUS TECHNOLOGY PTE. LIMITED 2008/12/31 Notional amounts Derivative Financial Instruments (in thousand dollars) Period Financial liabilities for trading purpose Forward exchange contracts EUR 446,600 2008/11/25~2009/3/10 Forward exchange contracts GBP 23,000 2008/11/24~2009/2/23 Forward exchange contracts CHF 4,085 2008/12/22~2009/2/23 Forward exchange contracts SEK 49,000 2008/12/22~2009/2/23
Presented as follows (in thousand dollars): 2008/12/31 Book value Fair value Liabilities Financial liabilities at fair value through USD 26,781 USD 26,781 profit or loss-current (forward exchange contracts)
136 54 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
ASUS TECHNOLOGY PTE. LIMITED incurred net loss on valuation of financial liabilities of USD 26,781 thousand in 2008.
ASUS TECHNOLOGY PTE. LIMITED had no such item during 2007.
4. OTHERS
(1) The Company’s significant agreement as of December 31, 2008 was as follows:
Name of Contract Party Content Marketing Agreement Microsoft Corporation Project planning
(2) The relevant reason for retrospectively adjusting the financial statement for 2007 was as follows:
For the convertible bonds issued in 2006, the call/put options were previously recognized as financial liabilities for trading purpose, the main liability was previously recognized as bonds payable (including the related discounts), and the conversion right with clause of adjusting price was previously recognized as equity. According to Interpretation No. 97-331 and No. 98-046 by Accounting Research and Development Foundation, the liability and equity components were recalculated and retrospectively adjusted for the financial statement for 2007. Please refer to Note II.10.(2) for the relevant accounting policies. Such adjustment decreased the Company’s net income for 2007 by $339,952 thousand and, thereby, also decreased the primary EPS for 2007 by $0.08.
(3) Certain reclassifications have been made to non-consolidated financial statements for 2007 to conform with current year’s presentation.
XI. SEGMENTAL INFORMATION
1. Industry information: the Company engaged mainly in the design, production and selling of main boards and related products within a single industry.
2. Geographical information: the Company has no overseas branches.
137 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 55 ASUSTEK COMPUTER INC. Notes to Non-Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
3. Export information: the export amounts for the years ended December 31, 2008 and 2007 were as follows:
Geographical area 2008 2007 Asia Pacific $209,371,978 $425,254,253 US & Canada 15,042,211 105,139,237 Europe 5,835,153 31,620,991 Africa 305,689 135,429 Total $230,555,031 $562,149,910
4. Significant customer information: the sales of significant customers that have exceeded 10% of the Company’s net sales for 2008 and 2007 were as follows:
Names of customers 2008 2007 Company A $203,543,087 $169,342,250 Company B - (Note) 224,768,479 Company C - (Note) 63,322,534 Total $203,543,087 $457,433,263
Note: The sales of the customer did not exceed 10% of the Company’s net sales in 2008.
138 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 56 139 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 2 - - 617
(289) 49,896 75,971 46,257
511,248 672,655 227,264 1,635,138 7,409,602 4,532,125 4,957,629 3,878,490 1,837,328 2,277,520 1,616,416 1,965,908 6,112,719 2,053,583 1,124,179
2007 $7,165,936 15,763,014 13,985,969 18,100,817 37,283,589 20,213,812 28,380,731 14,502,229 77,526,880 92,029,109 20,352,462
179,681,029 141,564,939 185,994,288 206,061,013 (Adjusted) $385,742,042
- - -
617 (1,128) 16,617 85,766 317,792 2,126,464 1,721,005 5,504,329 8,117,163 7,076,090 2,219,239 4,350,633 9,750,388 9,750,388 1,801,949 2,222,124 7,360,596 1,835,145 3,696,120
2008 (1,568,528) 93,003,248 86,426,483 18,807,435 11,988,037 42,460,513 20,500,035 29,696,393 17,264,557 75,738,691 20,895,797
160,784,258 188,182,415 $14,573,844 172,756,770 $360,939,185
s
V V IV.8 IV.19 IV.28 IV.20 IV.21 IV.20 IV.20 IV.21 IV.22 IV.28 IV.23 IV.24 IV.25 IV.26 Note IV.18, VI IV.18, le Y Y rr ent loss -cu it or rr ent loss -noncu it or s ets held for sa for held ss ets ss et e s s. l OLDERS' EQUIT KH OLDERS' OLDERS' EQUIT KH OLDERS' p it a ti on e ti on s s Y s l ti on s of financial a financial it of ent a rr ent it h noncu s ND STOC s S ND STOC ac ued in Chines ss ued p it a ti on adjustment rning rning S ES e T ) y I ll y s s s al stock stock p it al st st d lo co ss on pension e s e S ze ociated w ss ociated rning ived ived ece ve transla ti ve vely Adjusted) ti vely EE T ogni ss )/prof li ze d (lo s LIABILITIES A LIABILITIES sury stock trans stock sury it s r y intere it y ec ea rs t rr en iliti es-noncu li ab tax income rr ed OLDERS' EQUIT KH OLDERS' ea onal paid-in ca paid-in iti onal add Total ea retained Total it y equ stockholders' of adjustments other Total it y Equ Stockholders' Total rued expense rued iliti es li ab pension rued iliti e Cu Liab rr ent Total t Deb Long-term Total iliti e Liab Other Total iliti e Liab Total on ca Premium bond s of on conversion Premium Tr Other reserv Legal ea Unappropriated Cumula Unr Unr cc ce iptsece in advan cc ENT LIABILITIE RR ENT ND SUBSIDIARI Short-term loans Short-term prof through value fair at iliti es li ab Financial ounts acc payabl and Notes payabl tax Income A payable Other R por rr ent Bonds payable-cu por rr ent loans-cu Long-term a iliti es Liab iliti e li ab rr ent cu Other prof through value fair at iliti es li ab Financial Bonds payabl loans Long-term A Depos Defe Othe stock it al Cap ca paid-in iti onal Add ea Retained it y equ stockholders' of adjustments Other Minor G-TERM DEB ON G-TERM CU L LIABILITIE OTHER STOC A LIABILITIES TOTAL 2 - - - ec ND 2007 (Retrosp 17,761 47,000 60,204 16,425 74,127 11,162 198,283 221,366 780,368 368,092 (444,135) 1,076,651 7,037,168 1,727,822 1,736,024 1,478,952 7,432,090 1,726,652 3,023,831 4,826,677 3,972,488 1,638,500 4,114,309 7,176,013 2,263,325 3,351,138 1,017,310 3,115,256 5,281,026 2007 13,286,950 12,198,998 20,630,901 41,247,375 76,725,743 63,176,655 (20,280,966) $43,585,783 129,134,523 103,423,755 301,734,225 (Adjusted) $385,742,042 ll ars Do Taiwan New of in Thousands ss ed SOLIDATED BALANCE SH BALANCE ON SOLIDATED C - - - (Expre ASUSTEK COMPUTER INC. A INC. COMPUTER ASUSTEK dated Financial Statements Origina Statements Financial Consoti ons of li dated 8,029 16,425 80,549 DECEMBER 31, 2008 A 102,823 270,411 890,146 858,767 820,806 151,470 516,306 182,876 (617,339) 9,823,802 4,725,655 3,983,349 1,767,079 5,544,991 5,521,463 4,324,090 4,592,589 6,504,181 2,444,605 2,206,672 2,812,846 4,556,392 2,477,410 2,773,575 3,425,915 2008 27,110,509 49,959,330 93,464,147 70,010,954 13,295,479 91,485,639 10,156,198 97,457,070 (28,357,317) 270,276,158 $49,718,467 $360,939,185
li sh Transla dated financial statement financial li dated conso the of part integral an are notes ompanying acc The Eng s V V VI VI IV.1 IV.2 IV.3 IV.4 IV.5 IV.7 IV.8 IV.9 V, VI V, IV.28 IV.10 IV.11 IV.12 IV.16 Note IV.6, V IV.6, IV.14, VI IV.14, VI IV.15, VI IV.17, IV.13, V, VI V, IV.13, rr ent loss -cu it or T S t t SS ET e A s S t rr en ss ets-cu t rr en ss ets-noncu ti on t rr en ss ets-cu t rr en ss ets-noncu ia s ec ts ND EQUIPMEN t rr en ss ets-cu s ts ts t ivable-Ne ece ss e s e TS s t rr en cost-noncu at rr ied s t rr en market-cu it h no ac ti ve ss e it s S ss et ea s ss et ss et SS E t S S y financial a financial it y a financial it y NV ESTMENT ets held for sal for held ss ets s sh equivalent SS ET s ets at fair value through prof through value fair at ss ets ca ss ets e ivable-overdu ece t ti on equipmen it ti on deb umulated depr umulated umulated impairment umulated sale financial a financial -f o r- sale a financial -f o r- sale SS ET ts SS ET cc cc ivables-Ne ece t equipmen t equipmen ll aneous s ss e ed income tax a tax income rr ed cos pension rr ed charge rr ed t equipmen and hinery ce ce il able il able ounts r t equipmen rehousing ss : A ac Total Cu A rr ent Total Investment Long-term Total Cost Total Plant Equipment-Ne and Property, A Intangible Total A Other Total ff i ets held for l for held ss ets cc ENT A RR ENT Cash and ca Cash and a Financial Ava Held-to-matur li os w Bond portfo ounts acc r and Notes r Other Inventories-Ne Prepayment a rr ent Noncu a rr ent cu Other Defe Ava Held-to-matur a Financial method it y equ the under investments Long-term Land t equipmen and Bu il dings M Wa t equipmen Instrument Transporta O Mis Le A t equipmen of on purchase Prepayments Add: Conso li da Defe a intangible Other A a Idle depos Refundable Defe A Other G-TERM I ON G-TERM CU L A PLANT PROPERTY, A INTANGIBLE A OTHER A TOTAL
140 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 English Translations of Financial Statements Originally Issued in Chinese ASUSTEK COMPUTER INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007 (Retrospectively Adjusted) (Expressed in Thousands of New Taiwan Dollars except for Earnings Per Share)
2007 Notes 2008 (Adjusted) NET SALES V $667,619,683 $755,360,724 COST OF SALES IV.27, V (585,056,493) (680,591,763) GROSS PROFIT 82,563,190 74,768,961 OPERATING EXPENSES IV.27, V Selling expenses 40,304,745 29,707,675 General and administrative expenses 9,483,838 7,288,109 Research and development expenses 14,393,936 9,102,235 Total 64,182,519 46,098,019 OPERATING INCOME 18,380,671 28,670,942
NON-OPERATING INCOMES AND GAINS Interest income 1,078,816 1,636,038 Investment income under the equity method IV.12 52,249 113,340 Dividend income 404,200 309,547 Gain on disposal of assets V 77,342 80,678 Gain on disposal of investments 304,264 280,693 Gain on foreign exchange 1,366,308 4,359,381 Gain on reversal of bad debts 1,360,968 14,671 Gain on valuation of financial liabilities IV.20 68,979 - Others V 5,525,376 5,885,285 Total 10,238,502 12,679,633
NON-OPERATING EXPENSES AND LOSSES Interest expense IV.20 784,603 836,763 Loss on disposal of assets V 215,111 288,303 Loss on physical inventory 12,653 145,324 Impairment loss IV.9, IV.11, IV.12, 952,215 361,755 IV.13, IV.14, IV.15 Loss on valuation of financial assets 190,992 32,550 Loss on valuation of financial liabsilitie - 250,921 Others 1,926,760 1,190,857 Total 4,082,334 3,106,473
INCOME BEFORE INCOME TAX 24,536,839 38,244,102 INCOME TAX EXPENSE IV.28 (5,611,908) (7,828,405) CONSOLIDATED NET INCOME $18,924,931 $30,415,697
Represented by: Available for common shareholders $16,456,567 $27,283,328 Available for minority shareholders 2,468,364 3,132,369 CONSOLIDATED NET INCOME $18,924,931 $30,415,697
EARNINGS PER SHARE (in New Taiwan Dollars) IV.29 Primary Earnings Per Share Consolidated net income $4.47 $7.32 Available for minority shareholders (0.59) (0.76) Available for common shareholders $3.88 $6.56
Fully Diluted Earnings Per Share Consolidated net income $4.10 $7.04 Available for minority shareholders (0.56) (0.71) Available for common shareholders $3.54 $6.33
The accompanying notes are an integral part of the consolidated financial statements.
1413 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ------
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on $ $ $ Originally I Originally 571 571) 614 , 571 59 AND AND ve AND SUBSIDIAR . AND 614 , 614 , NGES INSTOC NGES wa Tai New ( $ of , 2008 Special Special Una Reser HA s 4 31 nd R INC R Retained Earnin Retained BER BER hou sa NTS OF C OF NTS EM 095 557 229 134 095 614 , 328 229 229 ve al s Statement Financial of ed in T in ed are an integral part of the c the of part integral an are 580 , 264 , 502 , 922 , 580 , 762 , 502 , 502 , s , , , , , , TE COMPU K ss s 1, 2, TEME Leg 12 17 14 14 te re Reser $ $ $ $ TE no xp (E D STA D ASUS TE 458 706 631) 393 731 14 991 705) 223 438) 753 12 877 731 281 362 al anying omp anying 751 , 247 , 0 696 , 380 , 001 , 020 , 286 , 218 , 730 , 247 , 380 , 400 , 400 , on Translati English , , 19, , , , , , iti on acc ( 1, 3, 1, 2, (1, (1 22 29 28 29 dd $ $ $ $ A The The CONSOLIDA al Capit Paid-in
FOR THE YEARS ENDED DEC YEARS THE FOR ck 702 652 000 513 589 28 601 702 21 272 589 000 041 245 589 070 , 740 , 200 , 460 , 283 , 508 , 070 , 236 , 283 , 700 , 706 , 298 , 283 , , , , , , , 3, 1, 1, 34 42 37 34 37 37 $ $ $ $ Capital Sto Capital
payable payable s: it y s: it y ee est bond s bond s qu qu of i nv of rs rs s ees d) d) al pit al pit earning 2006 earning 2007 ertible onv ertible ertible onv ertible al pit al pit ca ca d) o anies' e omp anies' erviso erviso s hare ca ca of of of of to to to to s s mp loy et s et s for c for d) d) for c for to to to to c ee e mp anies' d) s up s up ss ss s s c ee est est ti on ti on nd nd ve st st nd nd a a bonu s bonu s (Adjuste ' s s adjustments adjustments paid to e to paid s ee s' s' ee (Before adjuste (Before (Adjuste (Adjuste (Before adjuste (Before payable payable s , 2008 , 2007 bu distri bu distri in exchange of exchange in nd of the i nv the of of the i nv the of s 3 rity intere rity rity intere rity 31 nd nd s s of financial a financial of of financial a financial of (Adjuste 2007 2008 a a mp loy mp loy , 2007 , 2008 , 2007 , 2008 bond s bond s bonus bonus nds nds er er 1
s s pecial reser s pecial ve ss tock divide s tock ss ve tock divide s tock of of of of s hare er mb er mb e for for e e for for e s' ee s' s' ee ary 1 ary ary 1 ary ary 1 ary ary 1 ary paid to director to paid paid to director to paid no mi in no mi in nu nu nu nu on riati on riati s s om om trust divide trust s op op , J a , J a , J a , Dece , Dece , J a r onu s r onu s mp loy mp loy ect of change of ect ect of change of ect uance of uance E e of Transfer of Transfer Cash divide Cash Legal reser Legal B Reversal of Reversal Legal reser Legal E Transfer of e of Transfer B Transfer of Transfer divide Cash pp pp on onv ersi on translati umu lative on onv ersi on translati umu lative ff ff ss A C C s adjustment retrospective The E d lo d ze Unreali Net inc Net Share C A Change d lo d ze Unreali Net inc Net Change I C E s adjustment retrospective The Balance Balance Balance Balance Balance Balance
142 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 - - - - $- 494
te d) 18,581 51,116 (56,262) 876,872 533,778 496,102 338,643 972,900 $19,686
(360,731) (380,173) (150,956) (161,794) $316,897 $672,655 $447,410 2007 1,163,778 3,049,293 8,894,370
(1,819,211) (2,436,416) (6,244,458) (1,538,500) 34,691,413 $7,020,098 $3,509,518 $2,698,526 (15,402,237) (17,810,387) (Adjus $43,585,783
$- $-
(7,862) 71,674 60,089 90,528
(40,307) (49,076) 166,146 463,405 216,622 785,322 $47,623
(712,499) (439,928) (375,400) $501,023 2008 1,500,079 7,332,433 2,635,256 6,132,684 (2,540,579) (4,643,036) (1,220,106) (9,351,630) (1,097,852) (2,752,496)
10,001,484 43,585,783 $8,908,524 $1,484,149 $2,219,239
(12,689,532) (17,492,377) $49,718,467 $11,988,037
WS SH FLO es ON: AR tme n ts NG CA RMATINFO ets AR TS ss FF ECTI ets OF THE YE es ss LE N S: S: tee NG TNO A es es OF THE YE I NN SH FLOWS I IVA QU ND act iviti BEGI E te d) me nt and equip plant rm te rm inves of long- at ion quid SH E , , , ngible a ta ngible and et s in OF CA s. , , li ors and ect ors supervisors dir es , , ss nt NG ACTIVITIE ck sto ta l tme n ts NG ACTIVITIE ee s es ees ts se ND CA ts l from minority shareholders from minority ta l LE NTS LE NTS ca pi ACTIVITIES NG ACTIVITIES tateme ed RES OSU me nt and equip plant ca pi act iviti em ploy , , in subsidiari in cost-noncurrent transferred to r ece ivabl other transferred at cost-noncurrent ESTINV SH A em ploy quisition of subsidiari ac quisition ea r for: et s-others ets IVA QU IVA QU WS ES ss ion it deb d at ion ss ce r ta ion and ct ion redu ta l tme n ts ued in Chine ued in s) ar rried ca rried ate d to ss SH E SH E sh dividends ca sh ca pi ND FINANCI s et s y I y sh from ca sh SH FLO d financial s d ate financial ll ss tax NG A ND CA ND CA SU BSIDIARI st ively Adjus ND ect ively 2007 (R et rosp nts for to me nts bonus for me nts OF CA of shares in exchange of shares of inves of shares exchange in ce uan of shares se in other a other in ec r ea se sh used in investing investing in used ca sh financing in) by/(used provided ca sh ND SH FLOWS FR OM I SH FLOWS FR OM FINANCI SH A SH A ss se in other a other in ea se Incr nts Origina nts Purchase of inves Purchase of inves Profrom cee ds disposal Refund from deposi refundable in ea se Incr of property Acquisition of property Profrom cee ds disposal a ta ngible and in other of charges deferred Purchase of a other Profrom cee ds disposal D li conso in ea se Incr teres in of minority Purchase in ea se Incr Pay Pay le of payab bonds em ption Red te rm loans short- in ea se Incr r ece iv deposits in ea se Incr te rm loans of long- em ption Red te rm loans long- in ea se Incr subsidiari by purchased stocks ea sury tr Subsidiaries' shareholders te d to minority distribu dividends Cash subsidiaries' in ea se Incr y the during paid Cash te re In me Inco te d to conver payable Bonds portion payable-current Bonds portion te rm loans-current Long- appropri Bonus I a Financial A et et ESTINV CA N CA N of ect Eff of changes CA NETIN INCREASE CA CA SUPP LE MENTAL DISCL I 2008 A
5 tateme 2 - - - 24
8,588 7,152 8,140 1,364 te d) 41,100 99,143 22,801 14,216 46,004 13,796
(80,678) (20,429) (27,575) (54,913) (34,294) 361,755 288,303 264,646 250,921 137,517 200,683 311,693 334,093 (316,057) (113,340) (153,674) (113,040) (597,531) 2007 6,417,385 1,683,107 8,522,689 9,308,279 2,507,265 3,862,324 (3,887,669) (1,721,681) 28,405,051 (29,602,755) (Adjus $30,415,697 ed in Thousands of New Taiwan Do ll of Taiwan Thousands New ed in
ss ions of Financial S of Financial at ions - - ED ND DECEMBER 31 , (Expre
407
SUS TEK TERC OMPU . INC 5,433 5,608 3,044 3,133 A (8,529) 30,349 32,337 10,665 34,070
LIDATED STATEMENTSLIDATED C ONSO
(75,872) (52,249) (87,321) (77,342) (74,038) (26,350) (68,979) (19,475) (56,149) 215,686 952,215 165,994 215,111 267,507 286,223 470,916 189,745
(705,599) (502,270) sh Transl sh 2008 7,983,423 2,264,757 6,131,153 2,900,671 3,478,979 2,116,671 li (3,056,369) (1,333,274) (1,905,273) 38,295,786 21,365,205 (55,570,520) $18,924,931 Eng
li of part conso the te gral an are in no te s acc ompanying The FO R THEE YEARS
s: -current -current es act ivitie acc ounts
ets ss met hod acc oun ts d ate subsidiari
es ac quisition ties-noncurrent se and idle a and idle ea se S: es et s-current ti ili ab es ss li es ts ti ti ss or lo profit through value at fair ili ab ing at ing oper by provided ca sh x ta x ment and equip plant li x a ta x et s ili ab , , es ili ab ss or lo profit through value at fair ees s: ties ties li ss li met hod s held for l held et s s under the equity under equity tee s the es tie me nt and equip plant s et s ties-others ss es , , ili ab le payab acc ounts et r ece ivable-n acc ounts ss li le r ece ivab te rest in at ing ili ab s le payab ta x NG ACTIVITIE em ploy ili ab li me n ts li uing cost of bonds cost uing act iviti ss tme nt ets stock option for subsidiari option ee stock ets rued acc rued expens acc rued pension ounts r ece ivable-overdue acc ounts s and et s ium arising from arising tme nt em ium pr ss ss me to n et e n et inco ss ERATI OP il ce n of property em ploy ion of financial of financial at ion on valu se in financial a financial in ec r ea se and no te s in ec r ea se et r ece ivables-n other in ec r ea se et inventories-n in ec r ea se prepay in ec r ea se a current other in ec r ea se me inco deferred in ec r ea se cos pension deferred in ec r ea se in ec r ea se compens in ec r ea se se) in financial financial in ec r ea se) and no te s in ec r ea se) me inco in ec r ea se) in ec r ea se) payabl other in ec r ea se) ce advan in r ece ipts in ec r ea se) current other in ec r ea se) in ec r ea se) me inco deferred in ec r ea se) other in ec r ea se) ss and lo to expense other me nt transferred and equip plant , , at ion of a at ion and devalu at ion zat ion of inves zat ion of i deferred zat ion on bonds and pr em ium of discount zat ion e/ (D e/ (D e/ (D e/ (D e/ (D e/ (D e/ (D e/ (D e/ (D e/ (D ounts transferred to property transferred acc ounts under the equity me under equity the tme nt inco cost of ce cost me d ate n et inco on disposal of a on disposal on obsoles nts to r ec onc tme nts ived from inves r ece ived dividends Cash Depr ec i Amorti Depr ec i ss me nt lo Impair Inves Amorti of inves on disposal Gain of a on disposal Gain ss Lo ss Lo Property Other ss and lo to expense other transferred charges Deferred Amorti le of payab bonds exchange on foreign Gain Amorti /L o ss (Gain) ea s Incr ea s Incr ea s Incr ea s Incr ea s Incr ea s Incr ea s Incr ea s Incr ea s Incr ea s Incr ing at ing oper by provided ca sh li conso r ate from foreign exchange in ect Eff of change Servi le of payab bonds on em ption red Gain to paid dividends trust Shares ea se)/D (Incr ea se)/D (Incr ea se)/D (Incr ea se)/D (Incr ea se)/D (Incr ea se)/D (Incr ea se)/D (Incr ea se)/D (Incr ea se)/D (Incr ea se)/D (Incr SH FLOWS FR OM li Conso Adjus a at ing oper in Changes et CA N
143 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
English Translation of Consolidated Financial Statements Originally Issued in Chinese ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2008 and 2007 (Retrospectively Adjusted) (In thousands of New Taiwan dollars unless otherwise stated)
I. ORGANIZATION AND OPERATIONS
ASUSTeK Computer Inc. was established on April 2, 1990. Its main activities are to produce, design and sell “Notebook PC, main board, CD-ROM and add-on cards”.
The Company resolved to spin-off its OEM businesses on January 1, 2008. According to the Company’s resolution, the Company transferred its computer and non-computer related OEM businesses to its spun-off subsidiaries PEGATRON CORPORATION and UNIHAN CORPORATION, respectively.
The headcounts of the Company and subsidiaries amounted to 104,294 and 121,199 on December 31, 2008 and 2007, respectively.
II. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements were prepared in accordance with “Criteria Governing the Preparation of Financial Reports by Securities Issuers” and generally accepted accounting principles in the Republic of China on Taiwan (“R.O.C.”). The significant accounting policies are as follows:
1. Overview of consolidated financial statements
In accordance with the R.O.C. Statement of Financial Accounting Standard (“SFAS”) No. 7 “Accounting for Consolidated Financial Statements”, the consolidated entities include the subsidiaries in which the Company has controlling power by sufficient voting rights or actual controlling power without obtaining sufficient votes.
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6 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Subsidiaries included in the consolidated financial statements during 2008 and 2007, respectively, consisted of the following:
Percentage of ownership Name of subsidiaries Nature of business 2008/12/31 2007/12/31 ASUS TECHNOLOGY Trading electronic appliances, 100% 100% INCORPORATION communication appliances, data software, electronic material and office equipment AXUS Microsystems Inc. Designing, manufacturing, processing 85% 85% and selling storage products Shinewave International Inc. Software R&D 51% 51% ASUS HOLLAND B.V. Sales and repair service center in 100% 100% Europe ASUS INTERNATIONAL LIMITED Investing activities 100% 100% ASUSTEK HOLDINGS LIMITED Investing activities 100% 100% ASUSCHANNEL CORPORATION Investing and trading activities 100% 100% AMA CORPORATION Investing activities 100% 100% ASMEDIA TECHNOLOGY INC. Designing products and data software, 91.24% 82.13% information processing and supply Askey Computer Corp. Designing, manufacturing and selling 100% 100% modems, peripheral equipment, transportable equipment and related spare parts PEGATRON CORPORATION Designing, manufacturing, 100% 100% maintaining and selling computer peripherals and audio-video product eCareme Technologies, Inc. Network service 77% (Note 2) International United Technology Co., Database service, wired 56.73% 56.33% Ltd. (Taiwan) communication, manufacturing mechanical equipment, and manufacturing, selling and developing ink-jet printing technology Hua-Cheng Venture Capital Corp. Venture capital investing activities 100% (Note 2) Hua-Min Investment Co., Ltd. Investing activities 100% (Note 2) GREENASUS RECYCLING CO., Selling resource recycled and repairing 100% (Note 2) LTD. the electrical appliance and product ASUS COMPUTER Sales and repair service center in North 100% 100% INTERNATIONAL America (Continued)
1457 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Percentage of ownership Name of subsidiaries Nature of business 2008/12/31 2007/12/31 Toptek Precision Industry (Suzhou) Manufacturing and selling new 100% 100% Co., Ltd. electronic parts and premium hardware eMES (SUZHOU) CO., LTD. Computer security systems, messenger 51% 51% management systems, and automation systems R&D; providing related technology and after-sales service GREAT EXTEND INVESTMENT Providing management consultant 91.24% (Note 2) CORP. service Askey International Corp. Merchandise trading 100% 100% Dynalink International Corp. Investment in overseas companies 100% 100% Magic International Co., Ltd. Investment in overseas companies 100% 100% Askey (Vietnam) Company Limited Manufacturing and selling 100% 100% communication products Double Tech Ltd. Merchandise trading 100% 100% Big Profit Limited Merchandise trading 100% 100% Famous Star Investments Limited Investment in overseas companies 100% 100% Magicom International Corp. Investment in overseas companies 100% 100% ASKEY TECHNOLOGY Developing and selling communication 100% 100% (SHANGHAI) LTD. products Openbase Limited Merchandise trading 100% 100% Goodsmart International Ltd. Merchandise trading 100% 100% Leading Profit Co., Ltd. Merchandise trading 100% 100% UNI Leader International Ltd. Merchandise trading 100% 100% ASKEY TECHNOLOGY (JIANGSU) Manufacturing and selling 100% 100% LTD. communication products ASON TECHNOLOGY (SUZHOU) Manufacturing and selling 100% 100% LTD. communication products ASHINE TECHNOLOGY (SUZHOU) Manufacturing and selling 100% 100% LTD. communication products WUJIANG WILL STAR Developing, constructing and selling 100% 100% INVESTMENTS LIMITED real estate International United Technology Co., Trading activities 56.73% 56.33% Ltd. SOUTH TEC ASIA LIMITED Investing and trading activities 100% 100% CENTRAL TEC ASIA LIMITED Investing and trading activities 100% 100% POWTEK HOLDINGS LIMITED Investing and trading activities 100% 100% Enertronix Holding Limited Investing and trading activities 100% 100% UNITED NEW LIMITED Investing and trading activities 51% (Note 2) (Continued)
8 146 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Percentage of ownership Name of subsidiaries Nature of business 2008/12/31 2007/12/31 ASUS Computer (Shanghai) CO., Repairing computers, electronic 100% 100% LTD. components and relevant products, and after-sales service Powtek (Shanghai) Co., Ltd. Selling main boards, computer 100% 100% peripherals, notebooks, servers and software, and after-sales service Shandong Enertronix Co., Ltd. Manufacturing and selling new 100% 100% electronic parts Huizhou Enertronix Co., Ltd. Manufacturing and selling electronic 100% 100% parts AVY PRECISION Manufacturing and selling electronic 51% (Note 2) ELECTROPLATING (SUZHOU) parts, camera parts and accessories CO., LTD. DEEP DELIGHT LIMITED Investing and trading activities 100% 100% CHANNEL PILOT LIMITED Investing and trading activities 100% 100% UNIMAX HOLDINGS LIMITED Investing and trading activities 100% 100% ASUS COMPUTER CORPORATION Investing and trading activities 100% 100% MOBOSTAR TECHNOLOGY Investing and trading activities 100% 100% LIMITED ASUS TECHNOLOGY PTE. Trading of IT products 100% 100% LIMITED ASUS Middle East FZCO Trading computers and relevant parts, 100% 100% and after-sales service ASUS COMPUTER GmbH Sales and repair service center in 100% 100% Germany ASUS COMPUTER Benelux B.V. Sales and service center in Netherlands 100% 100% ASUS FRANCE SARL Sales and service center in France 100% 100% ASUSTEK (UK) LIMITED Sales and service center in UK 100% 100% ASUS TECHNOLOGY (HONG Sales and repair service center in Hong 100% 100% KONG) LIMITED Kong ASUS KOREA Co., Ltd. Sales and repair service center in 100% 100% Korea ASUSTEK COMPUTER Sales and repair service center in 100% 100% (SINGAPORE) PTE, LTD. Singapore ASUS Polska Sp. z o.o. Sales and service center in Polska 100% 100% ASUS New Zealand Limited Sales and repair service center in New 100% 100% Zealand ASUS Technology Private Limited Sales and repair repair service center 100% 100% in India ASUS Technology Holland B.V. Investing and trading activities 100% 100% (Continued)
9 147 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Percentage of ownership Name of subsidiaries Nature of business 2008/12/31 2007/12/31 ASUS Technology (Vietnam) Co., Sales and repair service center in 100% 100% LTD. Vietnam ASUSTEK ITALY S.R.L. Sales and service center in Italy 100% 100% ASUS IBERICA S.L. Sales and service center in Spain 100% 100% ASUS Technology (Suzhou) Co., Ltd. Providing computer software and 100% (Note 2) system service ASUS Japan Incorporation Sales and repair service center in Japan 100% (Note 2) ASUS COMPUTER Czech Republic Sales and service center in Czech 100% 100% s.r.o. ASUS UNITED TECHNOLOGY Selling main boards, notebooks, 100% 100% (SHANGHAI) CO., LTD. servers and computer peripherals ASUS Hungary Services Limited Sales and repair center in Hungary 100% 100% Liability Company ASUS PORTUGAL, SOCIEDADE Sales and service center in Portugal 100% (Note 2) UNIPESSOAL LDA. UNIMAX ELECTRONICS Manufacturing and selling electronic 100% 100% INCORPORATION appliances and telecommunication products UNIHAN CORPORATION Designing, manufacturing, 100% 100% maintaining and selling computer peripherals and audio-video product ASUSPOWER INVESTMENT CO., Investing activities 100% 100% LTD. ASUS INVESTMENT CO., LTD. Investing activities 100% 100% ASUSTEK INVESTMENT CO., LTD. Investing activities 100% 100% ADVANSUS CORP. Manufacturing computer peripherals 50%(Note 1) 50%(Note 1) Enertronix, Inc. Wireless and wired communication 100% 100% equipment PEGATRON HOLDING LTD. Investing activities 100% 100% Pegatron USA Sales and repair service center in North 100% (Note 2) America ASUS HOLLAND HOLDING B.V. Investing activities 100% 100% AMA PRECISION INC. Designing and developing computer 100% 100% parts Ability Enterprise Co., Ltd. Selling computer peripherals, office 12.99% 13.03% automation equipment, digital cameras and food products retail and wholesale UNIHAN HOLDING LTD. Investing activities 100% 100% (Continued)
148 10 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Percentage of ownership Name of subsidiaries Nature of business 2008/12/31 2007/12/31 STARLINK ELECTRONICS Manufacturing electronic parts and 100% 80.64% CORPORATION plastic products, manufacturing and wholesaling electronic components KINSUS INTERCONNECT Manufacturing electronic parts, 39.00% 39.75% TECHNOLOGY CORP. wholesaling and retailing electronic components and providing business management consultant service ASROCK Incorporation Data storage and processing 58.41% 59.84% equipment, manufacturing wired and wireless communication equipment, computer equipment and electronic components wholesale ASUSPOWER CORPORATION Investing and trading activities 100% 100% PEGATRON TECHNOLOGY Sales and repair service center in North 100% 100% SERVICE INC. America PEGATRON JAPAN INC. Sales and repair service center in Japan 100% 97.55% PEGATRON MEXICO, S.A. DE C.V. Sales and repair service center in 100% 100% Mexico ASFLY TRAVEL SERVICE Travel agency 100% 100% LIMITED HUA-YUAN INVESTMENT Investing activities 100% 100% LIMITED Enertronix International Limited Investing and trading activities 100% 100% PEGATRON Czech s.r.o. Installing, repairing and selling 100% 100% electronic products AMA Technology Corporation Trading computer peripherals 100% 100% AMA Holdings Limited Investing activities 100% 100% METAL TRADINGS LTD. Trading activities 100% 100% EXTECH LTD. Trading electronic parts 88.91% 88.91% FENGSHUO TRADING Trading activities 100% 100% (TONGZHOU) CO., LTD. GRANDTECH PRECISION Manufacturing, developing and selling 88.91% 88.91% (TONGZHOU) CO., LTD. electronic parts STRATEGY Technology Co., Ltd. Investing and trading activities 100% 80.64% COTEK HOLDINGS LIMITED Investing and trading activities 100% 80.64% COTEK ELECTRONICS (SUZHOU) R&D, manufacturing and selling new 100% 80.64% CO., LTD. electronic components, providing mold technology, and after-sales service (Continued)
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11 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Percentage of ownership Name of subsidiaries Nature of business 2008/12/31 2007/12/31 KINSUS CORP. (USA) Developing and designing new 39% 39.75% technology and products; analyzing marketing strategy and developing new customers KINSUS HOLDING (SAMOA) Investing activities 39% 39.75% LIMITED KINSUS HOLDING (CAYMAN) Investing activities 39% 39.75% LIMITED KINSUS INTERCONNECT Manufacturing and selling circuit 39% 39.75% TECHNOLOGY (SUZHOU) CORP. board ASIAROCK TECHNOLOGY Manufacturing and selling database 58.41% 59.84% LIMITED storage and processing equipments Leader Insight Holdings Ltd. Investing activities 58.41% 59.84% ASROCK EUROPE B.V. Database service and trading electronic 58.41% 59.84% components CalRock Holdings, LLC. Office building leasing 58.41% 59.84% Firstplace International Ltd. Investing activities 58.41% 59.84% ASRock America, Inc. Database service and trading electronic 58.41% 59.84% components Asus Service Canada, Inc. Maintenance service 100% 100% BOARDTEK HOLDINGS LIMITED Investing and trading activities 100% 100% MAGNIFICENT BRIGHTNESS Investing and trading activities 100% 100% LIMITED STRONG CHOICE GROUP Investing and trading activities 100% 100% LIMITED WEST TEC ASIA LIMITED Investing and trading activities 100% 100% PROTEK GLOBAL HOLDINGS Investing and trading activities 100% 100% LTD. NORTH TEC ASIA LIMITED Investing and trading activities 100% 100% ASLINK PRECISION CO., LTD. Investing and trading activities 100% 100% DIGITEK GLOBAL HOLDINGS Investing and trading activities 100% 100% LIMITED BOARDTEK COMPUTER Developing, manufacturing and selling 100% 100% (SUZHOU) CO., LTD. new electronic components, circuit boards and relevant products, and after-sales service MAINTEK COMPUTER (SUZHOU) Manufacturing, developing and selling 100% 100% CO., LTD. power supply units, computer cases, computer systems, notebooks, main boards, computer peripherals and maintenance service (Continued)
12150 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Percentage of ownership Name of subsidiaries Nature of business 2008/12/31 2007/12/31 Protek (ShangHai) Limited Manufacturing, developing and selling 100% 100% computers, printers and electronic components, and after-sales service NORTH TEC ASIA (SHANGHAI) Manufacturing, developing and selling 100% 100% LIMITED mobile phones, computers, routers, DTV and electronic components, and after-sales service ASLINK (H.K.) PRECISION CO., Investing and trading activities 100% 100% LIMITED
LINKTEK PRECISION (SUZHOU) Manufacturing and selling earphone 100% 100% CO., LIMITED parts ASAP INTERNATIONAL CO., Investing activities 51% (Note 2) LIMITED ASAP TECHNOLOGY (JIANGXI) Selling the wire and cable 51% (Note 2) CO., LIMITED CASETEK HOLDINGS LIMITED Investing and trading activities 100% 100% AZUREWAVE (Cayman) Holding Investing and trading activities 60.49% 60.49% Inc. CASETEK COMPUTER (SUZHOU) Manufacturing, developing and selling 100% 100% CO., LTD. computers, computer parts, application systems, and after-sales service SLITEK HOLDINGS LIMITED Investing and trading activities 100% 100% KAEDAR HOLDINGS LIMITED Investing and trading activities 100% (Note 2) KAEDAR TRADING LTD. Investing and trading activities 100% (Note 2) CORE-TEK (SHANGHAI) LIMITED Researching and producing the parts of 100% (Note 2) notebooks, designing nonmetal tooling, electronic specific equipment and related products, repairing and producing precise equipment and providing after-sales service KAEDAR ELECTRONICS Tooling module of stainless steel 100% (Note 2) (KUNSHAN) CO., LTD. computer cases AzureWave Technologies, Inc. Manufacturing office machinery, 58.09% 60.49% electronic parts and computer peripherals and selling precise equipment,and digital cameras EZWAVE TECHNOLOGIES, INC. Selling computer peripherals 58.09% 60.49% Azwave Holding (Samoa) Inc. Investing activities 58.09% 60.49% (Continued)
151 13 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Percentage of ownership Name of subsidiaries Nature of business 2008/12/31 2007/12/31 Eminent Star Company Limited Investing activities 58.09% 56.38% AzureWave Technologies (Shanghai) Manufacturing electronic parts 58.09% 60.49% Inc. Jade Technologies Limited Investing activities 58.09% 56.38% Hannex International Limited Investing activities 58.09% 56.38% Azurewave Technology (Shenzhen) Designing, researching and selling 58.09% 56.38% Co., Ltd. computer products Scientek Nanjing Co., Ltd. Designing, researching and selling 58.09% 56.38% computer products ABILITY ENTERPRISE (BVI) CO., Investing activities 12.99% 13.03% LTD.
ACTION PIONEER Trading activities 12.99% 13.03% INTERNATIONAL LTD. VIEWQUEST TECHNOLOGIES Selling computer peripherals, digital 12.99% 13.03% INTERNATIONAL INC. cameras and electronic components VIEWQUEST TECHNOLOGIES Manufacturing and selling computer 12.99% 13.03% (BVI) INC. peripherals, digital cameras and electronic components ASSOCIATION INTERNATIONAL Investing activities 12.99% 13.03% LTD. Ability International Investment Co., Investing activities 12.99% 13.03% Ltd. Ability Technology (Dongguan) Co., Producing and selling digital cameras 12.99% 13.03% Ltd. Asmobile Communication Inc. Manufacturing, importing and selling (Note 3) 100% telecommunication equipment Wei Chun Investment Corp. Investing activities (Note 3) 100% ASUSPOWER Computer (HK) Ltd. Trading activities (Note 3) 100% ASUS (UK) LIMITED Sales and repair service center in UK (Note 3) 100% ASUS UNITED TECHNOLOGY Selling main boards, servers, (Note 3) 100% (GUANG ZHOU) CO., LTD. computer peripherals and software EAST TEC ASIA LIMITED Investing and trading activities (Note 3) 100% ASUSPRO (SUZHOU) CO., LTD. Trading computer peripherals, PDA’s, (Note 3) 100% and media players, commission agent, and after-sales service NxNet Systems, Inc. Designing and selling communication (Note 4) 85.97% and computer equipment and providing the consultant service NxNet Systems Holdings Corporation Investing and trading activities (Note 4) 85.97% (Continued)
14152 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Percentage of ownership Name of subsidiaries Nature of business 2008/12/31 2007/12/31 NxNet Systems, Inc. (China) Manufacturing and selling software, (Note 4) 85.97% integrated circuits, and network technology NxNet Systems, Inc. (Taiwan) Manufacturing and selling wired and (Note 4) 85.97% wireless communication equipment ASUSALPHA Computer Inc. Manufacturing and selling computer (Note 5) 100% peripherals and electronic information supply service AXIS PRECISION INC. Manufacturing and selling electronic (Note 6) 98% parts TWINHAN TECHNOLOGY CO., Designing, manufacturing and selling (Note 7) 56.38% LTD. computer products
Note 1: ADVANSUS Corp. is a joint-venture. The consolidated financial statements recognize only the proportion of joint venture owned by the Company. Note 2: These companies were established or acquired in 2008; therefore, they were not included in the consolidated financial statements for the year ended December 31, 2007. Note 3: These companies were liquidated in 2008; therefore, their profit or loss was no longer consolidated after the liquidation date. Note 4: These companies were sold in 2008; therefore, their profit or loss was no longer consolidated after the date of disposal. Note 5: ASUSALPHA Computer Inc. was merged by PEGATRON CORPORATION in 2008. Note 6: AXIS PRECISION INC. was merged by AMA PRECISION INC. in 2008. Note 7: TWINHAN TECHNOLOGY CO., LTD. was merged by AzureWave Technologies, Inc. in 2008.
2. Policy of preparing consolidated financial statemens t
(1) The consolidated financial statements are prepared in accordance with the R.O.C. SFAS No. 7 “Accounting for Consolidated Financial Statements”. Transactions between consolidated entities are eliminated when the consolidated financial statements are prepared.
(2) When the Company and subsidiaries hold more than 50% of voting rights of investees (including the exercisable and convertible potential voting rights owned by the consolidated companies with the exception that any evidence indicates that the Company and subsidiaries have no controlling power from their percentage of ownership), or when any one of the criteria listed below is met, the investees are deemed as controlled by the Company and subsidiaries. In other words, the Company and subsidiaries are deemed as having the parent-subsidiary relationship with the investees. The Company and subsidiaries not only adopt the equity method to evaluate such investments but prepare the consolidated financial statements including these investees.
15315 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
A. Ability to have more than half of investee’s voting rights with agreement of other investors.
B. Ability to control the financial, operating and human resources functions of investee according to regulations or agreements.
C. Authority to appoint more than half of the directors of the board (or its equivalent) to control the board (or its equivalent). D. Authority to dominate more than half of the voting right of the b oard (or its equivalent) to control the board (or its equivalent).
E. Other circumstances that prove the controlling power.
3. Foreign currency transactions and translation of financial statements in foreign currencies
Transactions of non-derivative financial instruments denominated in foreign currencies are recorded in New Taiwan Dollars at the rates of exchange rates in effect when the transactions occurred. Translation gains or losses arising from the settlements of the monetary assets and liabilities denominated in foreign currencies are included in profit or loss in the year of actual settlement.
Monetary assets and liabilities denominated in foreign currencies are remeasured on the balance sheet date using the exchange rates in effect as on that date, with related exchange gains and losses included in the statements of income.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value with changes in fair value charged to stockholders’ equity are remeasured at the exchange rate prevailing on the balance sheet date, with related exchange gains or losses recorded as cumulative translation adjustment in stockholders’ equity. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value with changes in fair value recognized in profit or loss, are remeasured at the exchange rate prevailing on the balance sheet date, with related exchange gains or losses recorded in the statements of income. Non-monetary assets and liabilities denominated in foreign currencies that are measured at cost are remeasured at historical exchange rate.
Long-term investments in foreign investees, which are accounted for under the equity method, are stated on the basis of stockholders’ equity in the financial statements of investees in foreign currencies. Translation gains or losses from long-term investments are recognized as cumulative transition adjustment in the stockholders’ equity.
154 16 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
4. Cash and cash equivalents
The Company and subsidiaries consider all short-term, highly liquid investments that are readily convertible to known amounts of cash, and so near their maturity date that they are subject to an insignificant risk of changes in value resulting from fluctuations in interest rates , to be cash equivalents. Upon disposal, the cost of cash equivalents is determined on an individual basis.
5. Financial assets and financial liabilities
In accordance with the R.O.C. SFAS No. 34 “Accounting for Financial Instruments” and the “Criteria Governing the Preparation of Financial Reports by Securities Issuers”, financial assets are classified as financial assets at fair value through profit or loss, available-for-sale financial assets, held-to-maturity financial assets, bond portfolios with no active market or financial assets carried at cost, as appropriate. Financial liabilities are classified as financial liabilities at fair value through profit or loss or financial liabilities carried at cost.
The Company and subsidiaries account for purchases and sales of financial assets and liabilities on the trade date, or the date on which the Company and subsidiaries commit to purchase or sell the asset or liability. When financial assets and financial liabilities are recognized initially, they are measured at fair value, plus, in the case of investments that are not at fair value through profit or loss, directly attributable transaction costs.
(1) Financial assets 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 close-end funds are measured at closing prices on the balance sheet date. Open-end funds are measured at the unit price of the net assets on the balance sheet date.
(2) Available-for-sale financial assets
Available-for-sale financial assets are those non-derivative financial assets that are designated as available-for-sale or not classified as financial assets at fair value through profit or loss, held-to-maturity financial assets, or loans and receivables. Subsequent measurement is measured at fair value. The gain or loss arising from the change in fair value, excluding impairment loss and exchange gain or loss from the translation of monetary financial assets denominated in foreign currencies, is recognized in a separate component of stockholders’ equity until such investment is reclassified or disposed of, upon which the cumulative gains or losses previously charged to stockholders’ equity will be transferred to current period’s profit or loss.
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(3) Held-to-maturity financial assets
Debt securities for which the Company and subsidiaries have a positive intention and ability to hold to maturity are categorized as held-to-maturity financial assets and are carried at amortized cost under the effective interest method.
If objective evidence of impairment exists, the Company and subsidiaries recognize impairment loss. If, in a subsequent period, the impairment loss decreases and the decrease is clearly attribu table to an event which occurred after the impairment loss was recognized, the Company and subsidiaries shall reverse the impairment loss to the extent that the carrying amount after the reversal would not exceed the amount (net of amortization or depreciation) that would otherwise result had no impairment loss been recognized in prior years.
(4) Bond portfolios with no active market
Bond portfolios with fixed or determinable payments that are not quoted in an active market are carried at amortized cost using the effective interest method. Profit or loss from changes in fair value is recognized at the time of write-off, impairment or amortization.
(5) Financial assets carried at cost
Equity investments without reliable market prices, including emerging and other unlisted stocks, are measured at cost. If objective evidence of impairment exists, the Company and subsidiaries recognize impairment loss, which shall not be reversed in subsequent periods.
After initial recognition, the Company and subsidiaries measure all financial liabilities at amortized cost, except for financial liabilities at fair value throug h profit or loss which shall be measured at fair value.
6. Allowance for doubtful accounts
Allowance for doubtful accounts is accrued based on estimated collectibility of notes receivable, accounts receivable, other receivables, and accounts receivable-overdue.
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7. Inventories
Inventories are valued at the lower of cost or market value under the gross method. Cost is determined on a weighted-average basis. The market values of raw materials and supplies are determined on the basis of replacement cost while the market values of work in process and finished goods are determined by net realizable value.
8. Noncurrent assets held for sale
The carrying value of noncurrent assets (disposal group) held for sale rather than held for ongoing operation to recover the carrying value is valued at the either lower of carrying amount or fair values less costs to sell.
9. Long-term investments under the equity method
(1) The difference between the acquisition cost and the Company’s and subsidiaries’ share of net assets of the investee is analyzed and accounted for in the manner similar to acquisition cost allocation as provided in the R.O.C. SFAS No. 25 “Business Combinations-Accounting Treatment under Purchase Method” under which goodwill is no longer amortized.
(2) When the Company and subsidiaries have control or significant influence over an investee company, the Company and subsidiaries shall account for such investment under the equity method.
(3) If certain long-term equity investments have incurred existing or extremely probable losses, the Company and subsidiaries shall recognize investment loss in proportion to the percentage of ownership. The investment loss recognized shall first bring down the specific investment and receivables accounts to zero, then the remaining loss, if any, will be recorded as “Other liabilities-credit to long-term investments”.
(4) Unrealized intercompany gains or losses arising from transactions between affiliated companies shall be eliminated. Unrealized gross profits from downstream sales shall be debited to “unrealized gross profits” and credited to “deferred credits”, whereas unrealized gross profits from upstream and side-stream sales shall be debited to “investment loss” and cred ited to “long-term investments”.
157 19 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(5) When the Company and subsidiaries issue new shares to acquire another company’s shares, the carrying amount of the investment shall be either the fair market value of the Company’s and subsidiaries’ shares or the fair market value of the investee’s shares, whichever is more objective and determinable. If the carrying amount will be over or under the par value of the Company’s and subsidiaries’ shares, the difference shall be credited to additional paid-in capital or debited to additional paid-in capital (then debited to retained earnings when additional paid-in capital is insufficient). The fair market value of the listed shares of investee companies in which the Company and subsidiaries have now obtained control shall be based on the quoted prices over a reasonable period before or after the announcement of the acquisition is made.
10. Property, plant and equipment and assets held for lease
(1) Property, plant and equipment and assets held for lease are carried at cost. Expenditures for regular repairs and maintenance are charged against operating income. However, improvements that materially extend the useful lives of the assets are capitalized.
(2) Depreciation is provided on the straight-line basis over the following useful lives:
Categories Estimated Useful Lives Buildings and equipment 3 - 60 years Machinery and equipment 5 - 10 years Warehousing equipment 8 years Instrument equipment 3 - 20 years Transportation equipment 3 - 20 years Office equipment 3 - 20 years Miscellaneous equipment 3 - 20 years
(3) Fully depreciated property, plant and equipment which are still in use shall be depreciated based on the remaining salvage value over the remaining estimated economic lives.
(4) Gain on disposal of assets is credited to current income as non-operating income, while loss on disposal of assets is charged against current income as non-operating expense.
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11. Intangible assets
Intangible assets represent trademark, technological know-how, computer softwares, and land use right, which are amortized using the straight-line method over their estimated economic lives. The goodwill arising from the consolidation is tested periodically for impairment in accordance with the R.O.C. SFAS No. 35 each year.
12. Deferred charges
Deferred charges represent small tools and office decorations, which are amortized using the straight-line method over 2 to 5 years.
13. Convertible bonds payable
(1) For bonds issued prior to December 31, 2005, the policy consists of the following:
The issuance costs are recorded as deferred charges and amortized from its issued date to maturity date.
If the redemption price of the bond is lower than the face value of the bond, the difference shall be amortized as a debit of bonds payable between the issued date and the last day of redemption period in a reasonable and systematic manner.
As the bondholder exercises the right to convert the bonds, the book value of the bonds and the related assets and liabilities are transferred to capital stock and paid-in capital; no gain or loss is recognized on bond conversion under the par value method.
(2) For bonds issued after January 1, 2006, the policy conforming with the R.O.C. SFAS No. 36 and Interpretation No. 95-290, 97-331, 98-046 by Accounting Research and Develop ment Foundation consists of the following:
The issuance costs are allocated to the related liability and equity components based on the proportion of the initially recognized amounts.
Convertible bonds with the clause of adjusting price based on market price do not include the equity component. In the aspect of the liability component, the fair value of conversion right with clause of adjusting price and call/put optionsl shal be measured first; then the book value of main liability is assigned with the residual amount after deducting the fair value of conversion right with clause of adjusting price and call/put options from issue price.
159
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Convertible bonds are subsequently measured at amortized cost. Derivatives with call/put options and conversion right with clause of adjusting price are recognized as “financial liabilities at fair value through profit or loss” and are subsequently measured at the fair value. The movements in the fair value of the derivatives would be recognized as “gain/(loss) on valuation of financial liabilities”.
As the bondholder exercises the right to convert the bonds ahead of the due date of the bonds, the Company shall adjust the book value of the liability components to the value on the conversion date, which would be the recording basis of common stocks to be issued without recognizing conversion gain and loss.
If the bondholder could exercise the put option within one year, the bonds payable should be reclassified as current liability. Those bond s payable could be reclassified as long-term liability when the put option expires and the liability meets the definition of long-term liability.
14. Accrued pension liability
The Company and domestic subsidiaries make monthly contributions to the pension fund at 2% of the total monthly salaries and wages as required by the Labor Standards Laws. The fund is administrated by the Employees Retirement Fund Committee. The pension fund mentioned above is considered absolutely separate from the Company and domestic subsidiaries after contributed; therefore, it is not included in the accomp anying financial statements.
The Company and domestic subsidiaries adopt, on a prospective basis, the R.O.C. SFAS No. 18 “Accounting for Pensions”. This Statement requires that the accumulated pension obligation and the pension expense be determined on an actuarial basis. However, except for few foreign employees, the Company has closed out all seniority of employees as of December 31, 2007.
For employees subject to the Labor Pension Act of the R.O.C. (“the Labor Pension Act”), which prescribes a defined contribution scheme, the Company and domestic subsidiaries make monthly contributions to the employees’ individual pension accounts on a basis no less than 6% of the employees’ monthly salaries.
160 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 22 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
15. Derivative financial instruments
The Company and subsidiaries have entered into derivative financial instruments, such as forward exchange contracts, foreign currency option and swap contracts. These financial instruments are initially recognized and remeasured at fair value. When the fair value is positive, the financial instrument is classified as a financial asset; when the fair value is negative, the financial instrument is classified as a financial liability. The change in fair value of derivatives shall be recognized as current profit or loss.
Once the derivative meets the criteria for hedge accounting, the Company and subsidiaries adopt hedge accounting to account for the derivative.
16. Income tax
The Company and domestic subsidiaries adopt the R.O.C. SFAS No. 22 “Accounting for Income Taxes”, which requires inter-period as well as intra-period income tax allocation. Under the Statement, the tax effects of taxable temporary differences are recognized as deferred income tax liabilities while those of deductible temporary differences, net operating losses, and investment tax credits are recognized as deferred income tax ass ets. A valuation allowance on the deferred tax assets is provided based on the realizability of the deferred tax assets.
The Company and domestic subsidiaries adopt the R.O.C. SFAS No. 12 “Accounting for Income Tax Credits”. This Statement requires all income tax credits resulting from the acquisition of equipment or technology, research and development, and employee trainings to be recognized in the current period.
On the date of earnings distribution approved by the shareholders’ meeting, an additional 10% income tax levied on the undistributed earnings shall be recognized immediately.
The R.O.C. government enacted the Alternative Minimum Tax (“AMT”) Act which became effective on January 1, 2006. The Company and domestic subsidiaries have taken into consideration the impact of the AMT in the determination of its current income tax expense and its futu re impact when estimating the realizable value of the deferred tax assets.
The income tax for each consolidated entities shall be filed to each individual country and shall not be reported on a consolidated basis. The consolidated income tax expense is the total of income tax expenses for all consolidated entities.
23161 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
17. Revenue and cost
The Company and subsidiaries recognize revenue when the revenue earning process has been significantly completed, which means the revenue has been realized or readily realizable and earned. Cost is recognized when the related revenue is accrued; expenses are recognized as current expenses when incurred in accordance with accrual basis.
18. Asset impairment
The Company and subsidiaries assess indication for impairment for all applicable assets subject to the R.O.C. SFAS No.35 on the balance sheet date. If impairment indication exists, the Company and subsidiaries then compare the carrying amount with the recoverable amount of the assets or the cash-generating unit (“CGU”) and write down the carrying amount to the recoverable amount where applicable. Recoverable amount is defined as the higher of net fair value and usable value. In contrast, if there is evidence that the impairment loss may no longer exist or may have decreased, the Company and subsidiaries shall reassess the recoverable amount on the balance sheet date. When the recoverable amount of the asset increases due to the increase in its estimated service potential, the Company and subsidiaries shall reverse the impairment loss to the extent that the carrying amount after the reversal would not exceed the amount (net of amortization or depreciation) that would otherwise result had no impairment loss been recognized in prior years.
In addition, a goodwill-allocated CGU or group of CGUs is tested for impairment each year, regardless of whether indicator for impairment exists. If an impairment test reveals that the carrying amount, including goodwill, of CGU or group of CGUs isr g eater than its recoverable amount, then an impairment loss is recognized. The loss is first recorded against the goodwill allocated to the CGU, with any remaining loss allocated to other assets on a pro rata basis proportionate to their carrying amounts. The write-down of goodwill cannot be reversed in subsequent periods under any circumstances.
Impairment losses and reversals are classified as non-operating loss or income, respectively.
19. Employees’ bonuses, directors’ and supervisors’ remuneration and share-based payment
The Company and subsidiaries adopt Interpretation No. 96-052 by Accounting Research and Development Foundation to account for its employees’ bonuses and directors’ and supervisors’ remuneration as expenses rather than as distribution of retained earnings. The Company and subsidiaries adopt the R.O.C. SFAS No. 39 to account for the transfer of equity instruments from the Company and subsidiaries as well as their sharehold ers to their employees.
162 24 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
20. Earnings per share (EPS)
Primary EPS is calculated by dividing net income by the weight-average number of shares outstanding during the period. In the event of capitalization of retained earnings or capital surplus, the share number is retrospectively adjusted for additional shares issued.
Diluted EPS is calculated by dividing net income by the weighted-average number of common shares used in the calculation for Primary EPS plus the number ofm com on shares that would be issued assuming conversion of all potentially dilutive common shares outstanding.
When the potential common shares are anti-dilutive or the continuing operation of the Company and subsidiaries incur a loss, the effect of potential common shares shall not affect the calculation of EPS.
III. REASONS AND EFFECTS OF CHANGES IN ACCOUNTING PRINCIPLES
The Company and subsidiaries adopted Interpretation No. 96-052 by Accounting Research and Development Foundation to account for its employees’ bonuses and directors’ and supervisors’ remuneration after January 1, 2008. Such a change in accounting principles decreased the Company and subsidiaries’ net income by $2,033,489 thousand, and, thereby, also decreased earnings per share by $0.48 for 2008. The Company and subsidiaries adopted the R.O.C. SFAS No. 39 “Accounting for share-based payment” to account for the transfer of their equity instruments from the Company and subsidiaries as well as their shareholders to their employees. Such a change in accounting principles decreased the Company and subsidiaries’ net income by $290,298 thousand, and, thereby, also decreased earnings per share by $0.07 for 2008.
IV. DETAILS OF SIGNIFICANT ACCOUNTS
1. CASH AND CASH EQUIVALENTS
(1) Cash and cash equivalents consist of the following:
2008/12/31 2007/12/31 Cash on hand $157,215 $33,306 Bank deposits 12,277,493 11,324,027 Time deposits 37,188,791 32,228,450 Cash equivalents 94,968 - Total $49,718,467 $43,585,783
16325 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(2) Cash equivalents are mainly short-term re-purchase bonds undertaken by ASUS TECHNOLOGY INCORPORATION.
(3) The time deposits pledged have been reclassified to other current assets and other assets. Please refer to Note VI for details.
2. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS-CURRENT
(1) Financial assets at fair value through profit or loss-current consist of the following:
2008/12/31 2007/12/31 Financial assets for trading purpose Beneficiary certificates $12,432,694 $13,077,002 Stocks of listed companies 34,873 - Forward exchange contracts 10,894 6,553 Currency swap contracts 4,264 - Re-purchase bonds 289,167 - Depositary receipts 16,171 46,839 Corporate bonds 466,678 15,485 Subtotal 13,254,741 13,145,879 Appointed financial assets at fair value through profit or loss Credit-linked notes 40,738 141,071 Total $13,295,479 $13,286,950
(2) Please refer to Note X.3.(2) for the transaction of derivative financial instruments.
(3) The Company and subsidiaries entered into the foreign currency swap contracts for hedging the foreign exchange risk of export trade. However, the foreign currency swap contracts did not meet all the criteria for hedge accounting. Therefore, they were not applied to hedge accounting.
(4) Financial assets at fair value through sprofit or los -current are not pledged as collateral.
16426 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
3. AVAILABLE-FOR-SALE FINANCIAL ASSETS-CURRENT
(1) Available-for-sale financial assets-current consist of the following:
2008/12/31 2007/12/31 Stocks of listed companies $516,306 $17,761
(2) Available-for-sale financial assets-current are not pledged as collateral.
4. HELD-TO-MATURITY FINANCIAL ASSETS-CURRENT
(1) Held-to-maturity financial assets-current consist of the following:
2008/12/31 2007/12/31 Credit Lyonnais Taiwan Branch collateralized loan obligation $- $47,000
(2) Held-to-maturity financial assets-current are not pledged as collateral.
5. BOND PORTFOLIOS WITH NO ACTIVE MARKET-CURRENT
(1) Bond portfolios with no active market-current consist of the following:
2008/12/31 2007/12/31 Ageia Technology Inc.-Convertible Note $- $60,204
(2) Bond portfolios with no active market-current are not pledged as collateral.
6. NOTES AND ACCOUNTS RECEIVABLE-NET
(1) Notes and accounts receivable-net consist of the following:
2008/12/31 2007/12/31 Notes receivable $1,066,216 $1,693,016 Less: Allowance for doubtful accounts (390) (464) Notes receivable-net 1,065,826 1,692,552 Accounts receivable 91,505,638 129,209,715 Less: Allowance for doubtful accounts (1,085,825) (1,767,744) Accounts receivable-net 90,419,813 127,441,971 Notes and accounts receivable-net $91,485,639 $129,134,523
16527 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(2) As of December 31, 2008 and 2007, KINSUS INTERCONNECT TECHNOLOGY CORP. sold the account receivables as follows:
Write-off of account receivables Receipt in advance Collateral Credit Purchaser 2008/12/31 2007/12/31 2008/12/31 2007/12/31 Mega International Commercial Bank $233,717 $399,051 $- $- None (Note)
Note: As of December 31, 2008 and 2007, the credits were both USD 30,000 thousand.
(3) Those receivables under legal proceedings have been reclassified as accounts receivable-overdue. Please refer to Note IV.16 for details.
7. INVENTORIES-NET
Inventories-net consist of the following: 2008/12/31 2007/12/31 Raw materials $31,116,894 $51,815,511 Work in process 5,515,001 7,574,344 Finished goods 21,724,425 27,257,517 Merchandise 40,899,482 18,300,387 Inventories in transit 5,538,744 1,588,644 Subtotal 104,794,546 106,536,403 Less: Allowance for loss on decline in market (7,337,476) (3,112,648) value and obsolescence Total $97,457,070 $103,423,755
8. NONCURRENT ASSETS HELD FOR SALE
(1) Noncurrent assets held for sale consist of the following:
2008/12/31 Accumulated Book Items Cost Depreciation Value Land $110,115 $- $110,115 Buildings 58,203 18,064 40,139 Subtotal $168,318 $18,064 150,254 Add: Fair value adjustment for 32,622 identifiable assets Total $182,876
16628 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(2) The Company gained control over Ability Enterprise Co., Ltd. from a share swap and adjusted the difference between acquisition cost and fair value of the assets held for sale based on the Company’s percentage of ownership. As of December 31, 2008, the adjusted consolidated debit amounted to $32,622 thousand.
(3) For the integration of group resources and enhancement of management performances, the board of Ability Enterprise Co., Ltd. resolved, on December 21, 2007, to dispose of DongGuan Avy Precision Metal Components Co., Ltd., a wholly owned subsidary. The R.O.C. SFAS No. 38 “Noncurrent Assets Held for Sale and Discontinued Operations” was adopted to account for the transaction and the relevant assets and liabilities were reclassified to noncurrent assets held for sale and liabilities associated with noncurrent assets held for sale as follows:
Carrying Assets and liabilities held for sale Amounts 2007/12/31 Assets: Cash and bank deposits $92,876 Property, plant and equipment 103,472 Others 1,935 Total $198,283 Liabilities: Equipment payable $43,983 Others 5,913 Total $49,896
9. AVAILABLE-FOR-SALE FINANCIAL ASSETS-NONCURRENT
(1) Available-for-sale financial assets-noncurrent consist of the following:
2008/12/31 2007/12/31 Stocks of listed companies $4,556,392 $7,234,719 Beneficiary certificates - 197,371 Total $4,556,392 $7,432,090
16729 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(2) After evaluating and comparing the carrying value of available-for-sale financial assets-noncurrent and the expected recoverable amount, the Company and subsidiaries recognized losses on impairment of assets amounted to $132,143 thousand for the year ended December 31, 2008.
(3) Available-for-sale financial assets-noncurrent are not pledged as collateral.
10. HELD-TO-MATURITY FINANCIAL ASSETS-NONCURRENT
(1) Held-to-maturity financial assets-noncurrent consist of the following:
2008/12/31 2007/12/31 Principal guaranteed notes $16,425 $16,425
(2) International United Technology Co., Ltd. (Taiwan) subscribed principal guaranteed notes of USD 500,000 issued by bank on April 19, 2004. The maturity date is April 19, 2010.
(3) Held-to-maturity financial assets-noncurrent are not pledged as collateral.
11. FINANCIAL ASSETS CARRIED AT COST-NONCURRENT
(1) Financial assets carried at cost-noncurrent consist of the following:
2008/12/31 2007/12/31 Stocks of non-listed companies $2,182,210 $1,305,062 Fund 295,200 421,590 Total $2,477,410 $1,726,652
(2) After evaluating and comparing the carrying value of financial assets carried at cost-noncurrent and the expected recoverable amount, the Company and subsidiaries recognized losses on impairment of assets amounted to $327,047 thousand and $253,148 thousand for the years ended December 31, 2008 and 2007, respectively.
(3) Financial assets carried at cost-noncurrent are not pledged as collateral.
16830 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
12. LONG-TERM INVESTMENTS UNDER THE EQUITY METHOD
(1) Long-term investments under the equity method consist of the following:
2008/12/31 2007/12/31 Interest Interest Investee Companies Amount Owned Amount Owned WISE INVESTMENT LIMITED $35,758 48.78% $192,329 48.78% YOFREE TECHNOLOGY CO., LTD. 4,282 33.33% - 33.33% WILSON HOLDINGS LIMITED 153,279 49.00% 155,583 49.00% Potix Corporation (Cayman) 8,462 22.22% 31,279 22.22% INDEED HOLDINGS LIMITED 471,971 49.00% 487,486 49.00% ZhangJiaGang Dongbu High Technology 29,723 20.00% 38,342 20.00% Metal Products Co., Ltd. Asint Technology Corporation 48,950 25.00% 49,881 28.57% EVER PINE INTERNATIONAL LTD. 136,963 34.65% 176,072 34.65% (BVI) SHIN-EI YORKEY 29,971 50.00% 35,725 50.00% INTERNATIONAL LTD. (BVI) YORKEY OPTICAL 1,169,211 20.69% 1,155,617 20.69% INTERNATIONAL (CAYMAN) LTD. PENTAX VQ CO., LTD. 62,164 40.00% 108,930 40.00% Avy Precision Technology Inc. 359,343 19.60% 295,648 20.13% ASHINE PRECISION CO., LTD. 141,989 40.00% 59,609 44.16% Excelliance MOS Corporation 50,169 30.00% - - Subtotal 2,702,235 2,786,501 Add: Fair value adjustment for identifiable 71,340 237,330 assets Total $2,773,575 $3,023,831
(2) The Company gained control over Ability Enterprise Co., Ltd. from a share swap and adjusted the difference between the acquisition cost and the fair value of long-term investment-Avy Precision Technology Inc. based on the Company’s percentage of ownership. As of December 31, 2008 and 2007, the adjustments amounted to $71,340 thousand and $237,330 thousand, respectively.
(3) When compiling the consolidated financial statements, the Comp any and subsidiaries recognized their investment income on a basis of their equity investees’ current financial statements and the percentages of their voting rights. The investment income based on the investees’ audited financial statements for the years ended December 31, 2008 and 2007 amounted to $52,249 thousand and $113,340 thousand, respectively.
16931 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(4) Long-term investments under the equity method are not pledged as collateral.
(5) The Company and subsidiaries conducted the test for impairment on the goodwill arising from the acquisition of long-term investment-Ability Enterprise Co., Ltd. under the purchase method, which resulted in the impairment loss of $240,000 thousand for the year ended December 31, 2008.
13. PROPERTY, PLANT AND EQUIPMENT
(1) Property, plant and equipment consist of the following:
2008/12/31 Accumulated
Items Cost Depreciation Book Value Land $4,725,655 $- $4,725,655 Buildings and equipment 27,110,509 3,564,527 23,545,982 Machinery and equipment 49,959,330 18,972,209 30,987,121 Warehousing equipment 102,823 42,872 59,951 Instrument equipment 3,983,349 2,003,773 1,979,576 Transportation equipment 270,411 120,220 150,191 Office equipment 1,767,079 966,939 800,140 Miscellaneous equipment 5,544,991 2,686,777 2,858,214 Prepayments on purchase of equipment 5,521,463 - 5,521,463 Total $98,985,610 $28,357,317 70,628,293 Less: Accumulated impairment (617,339) Property, plant and equipment-net $70,010,954
2007/12/31 Accumulated
Items Cost Depreciation Book Value Land $4,826,677 $- $4,826,677 Buildings and equipment 20,630,901 2,338,130 18,292,771 Machinery and equipment 41,247,375 14,874,396 26,372,979 Warehousing equipment 74,127 31,925 42,202 Instrument equipment 3,972,488 1,609,978 2,362,510 Transportation equipment 221,366 100,092 121,274 Office equipment 1,638,500 754,628 883,872 Miscellaneous equipment 4,114,309 571,817 3,542,492 Prepayments on purchase of equipment 7,176,013 - 7,176,013 Total $83,901,756 $20,280,966 63,620,790 Less: Accumulated impairment (444,135) Property, plant and equipment-net $63,176,655
17032 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(2) After evaluating and comparing the carrying value of property, plant, and equipment and the expected recoverable amount, the Company and subsidiaries recognized losses on impairment of assets amounted to $136,565 thousand and $45,640 thousand for the years ended December 31, 2008 and 2007, respectively.
(3) Please refer to Note VI for details regarding the property, plant and equipment pledged as collateral.
14. ASSETS HELD FOR LEASE
(1) Assets held for lease consist of the following:
2008/12/31 2007/12/31 Assets held for lease $956,675 $1,197,524 Less: Accumulated depreciation (97,908) (111,153) Accumulated impairment - (69,061) Assets held for lease-net $858,767 $1,017,310
(2) After evaluating and comparing the carrying value of assets held for lease and the expected recoverable amount, the Company and subsidiaries recognized losses on impairment of assets amounted to $60,003 thousand for the year ended December 31, 2007.
(3) Please refer to Note VI for details of the assets held for lease pledged as collateral.
15. IDLE ASSETS
(1) Idle assets consist of the following: 2008/12/31 2007/12/31 Idle assets $701,196 $118,082 Less: Accumulated depreciation (416,803) (87,399) Accumulated impairment (203,844) (30,683) Idle assets-net $80,549 $-
(2) The idle assets are not used in operation, indicating no cash flow will be generated in future years; therefore, the Company and subsidiaries recognized the net fair value as the recoverable amount. The Company and subsidiaries determined the carrying value of these assets was in excess of the expected recoverable amount, and, thus, recognized losses on impairment of assets amounted to $116,460 thousand and $2,964 thousand for the years ended December 31, 2008 and 2007, respectively.
(3) Please refer to Note VI for details of the idle assets pledged as collateral.
171 33 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
16. ACCOUNTS RECEIVABLE-OVERDUE
Accounts receivable-overdue consist of the following:
2008/12/31 2007/12/31 Accounts receivable-overdue $96,527 $97,388 Less: Allowance for doubtful accounts (96,527) (97,388) Accounts receivable-overdue-net $- $-
17. OTHER ASSETS
Due to restriction imposed by local government, KINSUS INTERCONNECT TECHNOLOGY CORP. (“KINSUS”) purchased farmland in the name of KINSUS’ chairman instead of KINSUS. Before KINSUS may take over the title of farmland, as well as completing registration procedures, the land is temporarily recorded as other assets. As of December 31, 2008 and 2007, the book value of the farmland is $30,784 thousand.
18. SHORT-TERM LOANS
(1) Short-term loans consist of the following: 2008/12/31 2007/12/31 Letter of credit $1,437 $124,881 Unsecured loans 14,224,407 6,981,055 Secured loans 348,000 60,000 Total $14,573,844 $7,165,936 Interest rate range 1.16%~4.34% 1.55%~6.57%
(2) Please refer to Note VI for details regarding assets pledged as collateral for short-term loans.
19. FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS-CURRENT
(1) Financial liabilities at fair value through profit or loss-current consist of the following:
Derivatives 2008/12/31 2007/12/31 Forward exchange contracts $878,824 $2 Embedded derivatives arising from domestic 842,181 - convertible bonds Total $1,721,005 $2
(2) Please refer to Note X.3 for the transaction of derivative financial instruments.
172 34 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
20. BONDS PAYABLE
(1) Bonds payable consist of the following: 2007/12/31 2008/12/31 (Adjusted) Euro convertible bonds due 2009 (ECB I) $1,518,279 $3,136,921 Add: Premium on bonds payable 63 3,268 Less: Compensatory interest receivable (66,577) (107,120) Subtotal 1,451,765 3,033,069 Domestic convertible bonds 11,496,400 11,993,000 Less: Discount on bonds payable (738,062) (1,040,100) Portion held by a subsidiary deemed (222,066) - redemption Subtotal 10,536,272 10,952,900 Less: Bonds payable-current portion (11,988,037) - Corporate bonds payable-net $- $13,985,969
(2) The Company issued the first Euro non-collateral convertible bonds (ECB I) on the Luxembourg Stock Exchange on January 15, 2004 with a zero-coupon rate. The main issuance terms of ECB I are as follows:
A. Principal amount: USD 320,000,000; Issue price: USD 321,600,000
B. Duration of Issuance: 2004/1/15~2009/1/15
C. Main redemption clauses:
(a) The Company has the right to redeem the ECB I in whole or in part at any time on or after January 15, 2006 at a price equal to 100% of the unpaid principal amount thereof if the Closing Price of the Common Shares (translated into US dollars at the Prevailing Rate) on each of 20 consecutive Trading Days reach at least 120% of the Conversion Price.
(b) The Company has the right to redeem the ECB I at any time at a price equal to 100% of the unpaid principal amount thereof if at least 95% in principal amount of the ECB I has been redeemed, repurchased and cancelled, or converted.
(c) If, as a result of certain changes relating to the tax laws in the R.O.C. or such other jurisdiction in which the Company has to pay extra interest expenditure, the Company has the right to redeem the ECB I at any time at a price equal to 100% of the unpaid principal amount thereof.
173 35 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(d) Each Holder has the right to require the Company to repurchase all or a portion of the bondholder’s ECB I on January 15, 2006 and January 15, 2007 at a price equal to 98.5001% and 97.5150%, respectively, of the unpaid principal amount thereof.
(e) If the Common Shares cease to be listed or admitted to trading on the Taiwan Stock Exchange for a period of at least five consecutive Trading Days, then each Holder will have the right to requ ire the Company to repurchase all of such Holder’s ECB I at a price equal to 100% of the unpaid principal amount thereof.
D. Main terms of conversion:
(a) Each Holder has the right to convert all or from time to time any portion of the bondholder’s ECB I into Common Shares during the Conversion Period (up to 31 days after the Original issued date to 10 days before the Maturity date).
(b) The Conversion Price will initially be $100.86 per Common Share, and the Fixed Rate will apply to the conversion of the ECB I. The Conversion Price will be adjusted upon the occurrence of certain events set out in the indenture, including but not confined to (1) dividends distributed in Common Shares (2) subdivision, reclassification or combination of Common Shares (3) granting the shareholders with rights of subscribing for Common Shares with price lower than the marke t price defined in the indenture (4) the value of cash dividend per share is greater than 5% of the market price in the indenture (5) purchase price of the Company’s (including subsidiaries’) shares is higher than the market price (6) issuance of the Company’s (including subsidiaries’) convertible (exchangeable) securities with the Conversion Price lower than 95% of the market price and (7) the value of newly issued Common Shares is lower than 95% of the market price (other than (1), (2), (3) or (6)). Such events will not include, among other things, the issue of the Common Shares to the Company’s employees as employees’ bonuses.
In consideration of the capitalization from increasing from retained earnings, which excluded the issuance of common shares to employees as employees’ bonuses, the conversion price was adjusted to $65.7 per common share.
174 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 36 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(c) Conversion Price Reset:
The Company may, within 30 days prior to each of the Holders’ Put Dates and the Maturity Date, by giving notice thereof to the holders of the ECB I, offer such holders the option to convert their ECB I for a period of seven Trading Days, which period shall start on a day determined by the Company, at the “Special Conversion Price Reset” specified in the indenture. The “Special Conversion Price Res et” equals 92.30%, 93.23% or 95.12% of market price which is determined by using the lowest average Closing Prices of the Common Shares of the Company for 10, 15 and 20 Trading Days immediately preceding special reset day.
(3) ECB I that has been redeemed or converted into the Company’s capital stocks from the issued date to December 31, 2008 and 2007, respectively, are as follows:
2008 2007 Converted shares Converted amount Converted shares Converted amount Before 1/1 96,390,052 shares USD 223,271,000 45,602,571 shares USD 112,456,000 1/1~12/31 23,627,151 shares 50,440,000 50,787,481 shares 110,815,000 Total 120,017,203 shares USD 273,711,000 96,390,052 shares USD 223,271,000
(4) On November 7, 2006, the Company issued zero-coupon rate domestic non-collateral convertible bonds with a total face value of $12,000,000 thousand. According to the R.O.C. SFAS No. 36 “Disclosure and Presentation of Financial Instruments”, the Company and subsidiaries recognized the embedded derivatives and non-derivative liabilities separately. The embedded derivatives were measured at fair value totaling $842,181 thousand and $1,837,328 thousand on December 31, 2008 and 2007 (adjusted), respectively. The non-derivative liabilities recognized as “Bonds payable” were measured at amortized cost, totaling $10,536,272 thousand and $10,952,900 thousand on December 31, 2008 and 2007 (adjusted), respectively.
The main issuance terms of the domestic non-collateral convertible bonds are as follows:
A. Duration of issuance: from November 7, 2006 to November 7, 2011.
B. Conversion period: Each bondhold er has the right to convert all or from time to time any portion of its convertible bonds into common shares during the conversion period (up to 31 days after the original issued date to 10 days before the maturity date).
175 37 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
C. Conversion price and adjustment: The conversion price is $105.4 per common share initially. The conversion price will be adjusted upon the occurrence of increasing number of common shares. Also, the conversion price will be reset in accordance with certain conversion terms. The conversion price was subsequently adjusted to $78.3 per common share.
D. Call option: The Company could redeem the convertible bonds at its par value at any time during the period from December 8, 2006 to September 28, 2011 under the following conditions: (i) the closing price of the common shares on each of 30 consecutive trading days reaches or exceeds 50% of the conversion price, or (ii) the outstanding balance of the bonds is less than 10% of the original issuance. E. Put option: Each bondholder has the right to put the convertible bonds at par value ahead of time when the convertible bonds have been issued after 3 or 4 years.
(5) The Company adopted the R.O.C. SFAS No. 34 “Accounting for Financial Instruments” and No. 36 “Disclosure and Presentation of Financial Instruments” to account for its convertible bonds issued after January 1, 2006. Such an adoption resulted in the recognition of interest expense of $269,514 thousand and $270,300 thousand due to amortization of discount on bonds payable, and gain/(loss) on valu ation of financial liabilities of $942,440 thousand and $(250,921) thousand for the years ended December 31, 2008 and 2007 (adjusted), respectively.
(6) Domestic non-collateralized convertible bonds that have been redeemed or converted into the Company’s capital stock from the issuance date to December 31, 2008 and 2007, respectively, are as follows:
2008 2007 Deemed Converted and redemption Converted and Converted shares redeemed amount amount Converted shares redeemed amount Before 1/1 72,614 shares $7,000 $- - shares $- Conversion - shares - - 72,614 shares 7,000 Redemption - shares 496,600 237,300 - shares - Total 72,614 shares $503,600 $237,300 72,614 shares $7,000
The Company and subsidiaries redeemed the domestic convertible bonds and, thus, recognized other income – gain on redemption of bonds payable of $26,350 thousand (including deemed gain on redemption) in 2008. The Company and subsidiaries had no such circumstance in 2007.
17638 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Convertible bonds issued by the Company and held by ASROCK Incorporation is deemed as the redemption of bonds and a reduction of the Company and subsidiaries’ carrying value of bonds amounted to $222,066 thousand. The circumstance is as follows: 2008 Unit Cost Market price Total (aggregation) 2,373,000 $228,692 $232,673
(7) According to Interpretation No. 97-331 and No. 98-046 by Accounting Research and Development Foundation, the Company retrospectively adjusted the financial statements for 2007. Please refer to Note II.13.(2) for the relevant accounting policies.
21. LONG-TERM LOANS
(1) Long-term loans are summarized as follows:
Creditor 2008/12/31 2007/12/31 Repayment Schedule Credit Agricole Indosuez $- $500,000 2003.09.29~2008.09.29, repay outstanding amount on the maturity date. Taiwan Business Bank 15,000 35,000 2006.10.15~2009.07.15, payable in quarterly installments, commencing in October 2007. Taipei Fubon Bank 328,000 324,300 2006.11.01~2009.11.01, repay total -syndicated loan outstanding amount on the maturity date. Taipei Fubon Bank 328,000 324,300 2006.11.14~2009.11.01, repay total -syndicated loan outstanding amount on the maturity date. Taipei Fubon 328,000 324,300 2007.04.02~2009.11.01, repay USD Bank-syndicated loan 5,000 thousand each on 2009.05.01 and on the maturity date. Taipei Fubon 393,600 376,188 2008.11.13~2009.11.01, repay total Bank-syndicated loan outstanding amount on the maturity date. Taipei Fubon 262,400 272,412 2007.12.05~2009.11.01, repay total Bank-syndicated loan outstanding amount on the maturity date. (Continued)
39177 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Creditor 2008/12/31 2007/12/31 Repayment Schedule Industrial and 959,821 310,777 2007.11.23~2011.11.22, demand Commercial Bank of loan, repay total outstanding China amount on the maturity date. Mega International 984,000 - 2008.04.07~2011.04.07, payable in Commercial Bank 3 semi-annual installments, commencing in April 2010. Mega International 26,750 87,750 2004.03.31~2009.07.30, payable in Commercial Bank 20 quarterly installments, commencing in July 2002. Mega International 248,221 327,698 2004.12.31~2012.01.31, payable in Commercial Bank 20 quarterly installments, commencing in March 2007. The Shanghai 29,167 35,000 2006.12.08~2013.10.15, repay Commercial & Savings interest monthly and quarterly Bank, Ltd. installments from the thirteenth month, commencing in December 2006. The Shanghai 27,308 32,450 2006.12.08~2013.10.15, repay Commercial & Savings interest monthly and quarterly Bank, Ltd. installments from the thirteenth month, commencing in December 2006. ABN AMRO-syndicated 8,000,000 - 2008.10.30~2011.10.30, repay $1.5 loan billion in the 3 semi-annual installments, from the eighteenth months, commencing on April 30, 2010 and the remaining amount on the maturity date. AVY CO., LTD. (BVI) 39,360 - 2007.10.22~2010.04.02, repay on the maturity date.
Subtotal 11,969,627 2,950,175 Less: Current portion (2,219,239) (672,655) Total $9,750,388 $2,277,520 Annual interest rate 1%~6.56% 1%~6.89%
178 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 40 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(2) Since Askey Computer Corp. was the guarantor for the USD 50,000 thousand syndicated loan of Double Tech Ltd. and Leading Profit Co., Ltd. for the years ended December 31, 2008 and 2007, Askey Computer Corp. must comply with the following financial covenants throughout the terms of the above syndicated loan agreement managed by Taipei Fubon Bank (2006/11/1~2009/11/1):
Debt ratio ((total liabilities+contingent liabilities)/tangible net assets): should not be higher than 300%; Interest coverage ratio (EBITDA/interest expenses): should be no less than 150%; Tangible net assets: should not be less than $5 billion.
The above financial covenants are examined every six-month based on the consolidated semi-annual and annual financial statements of Askey Computer Corp..
(3) Since Askey Computer Corp. was the guarantor for the USD 30,000 thousand loan of ASKEY TECHNOLOGY (JIANGSU) LTD., Askey Computer Corp. must comply with the following financial covenants throughout the terms of the above loan agreement managed by Mega International Commercial Bank (2008/4/7~2011/4/7):
Debt ratio ((total liabilities+contingent liabilities)/tangible net assets): should not be higher than 300%; Interest coverage ratio (EBITDA/interest expenses): should be no less than 150%; Tangible net assets: should not be less than $5 billion; Accounts receivable: should entrust no less than USD 30,000 thousand to the bank to collect; Percentage of the direct and indirect ownership in the debtor: should be 100%; Total percentage of the direct and indirect ownership in the Askey Computer Corp. of ASUSTeK Computer Inc., PEGATRON CORPORATION and UNIHAN CORPORATION: should be no less than 67%.
The above financial covenants are examined every six-month based on the consolidated semi-annual and annual financial statements of Askey Computer Corp. and anytime the bank considers necessary.
179 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 41 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(4) For the long-term financial plan and fulfillment of mid-term working capital, PEGATRON CORPORATION received syndicated loan of $12,000,000 thousand from ABN AMRO, Mega International Commercial Bank and the other fourteen banks on October 30, 2008. Until the whole loan is paid off, PEGATRON CORPORATION must comply with the following financial covenants throughout the terms of the above syndicated loan agreement. The calculations should be based on audited annual consolidated financial statements and reviewed semi-annual consolidated financial statements of PEGATRON CORPORATION:
Current ratio (current assets/current liabilities): should be no less than 100%; Debt ratio ((total liabilities+contingent liabilities)/tangible net assets): should not be higher than 50%; Interest coverage ratio (EBITDA/interest expenses): should be no less than 400%; Tangibles net as ets (stockholders’ equity (including minority shareholders)-intangible assets): should not be less than $90 billion.
(5) Please refer to Note VI for details regarding the assets pledged as collaterals.
22. PENSION PLAN
(1) Because of the spin-off, except for few foreign employees, the Company has closed out all the seniority of employees as of December 31, 2007. From thereon, the Company is subject to the Labor Pension Act of the R.O.C..
(2) The Company already had the permission from the Labor Affairs Bureau, Taipei, for suspension of appropriating pension fund since 2008 for those few foreign employees subject to Labor Standards Laws.
(3) The domestic subsidiaries have adopted the R.O.C. SFAS No. 18 "Accounting for Pensions".
The net pension costs of domestic subsidiaries for the years ended December 31, 2008 and 2007 are as follows: 2008 2007 Service cost $5,926 $7,332 Interest cost 7,312 7,183 Expected return on plan assets (6,277) (5,340) Net amortization and deferral 4,598 5,173 Gain on curtailment or settlement (36,763) (21,489) Total $(25,204) $(7,141)
18042 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(4) Based on the actuarial report which measures the pension assets and liabilities on December 31, 2008 and 2007, the reconciliation between the funding status of pension plan and accrued pension liability as of December 31, 2008 and 2007 are as follows:
2008/12/31 2007/12/31 Benefit Obligations: Vested Benefit Obligation $(2,784) $(1,412,975) Non-vested Benefits Obligation (144,854) (160,838) Accumulated Benefit Obligation (147,638) (1,573,813) Effect of Projected Future Salary Increase (103,581) (90,473) Projected Benefit Obligation (251,219) (1,664,286) Fair Value of Plan Assets 260,142 722,307 Status of Pension Plan 8,923 (941,979) Unrecognized net transition obligation 44,358 17,737 Unamortized Actuarial Benefit (67,313) (40,247) Additional minimum pension liability (3,057) (26,417) Accrued Pension Liability $(17,089) $(990,906)
Accrued Pension Liability-Defined Benefit $(17,089) $(990,906) Pension Plan Prepaid pension cost - - Accrued Pension Liability-Current (Classified 472 914,935 as accrued expense) Accrued Pension Liability-Noncurrent $(16,617) $(75,971)
(5) As of December 31, 2008 and 2007, vested benefits of the Company and domestic subsidiaries pension plan were $3,831 thousand and $1,413,066 thousand, respectively.
(6) The main actuarial assumptions are as follows:
2008/12/31 2007/12/31 Discount rate 2.50%~2.75% 2.75%~3.00% Rate of increase in future compensation level 2.00%~3.00% 2.50%~3.00% Expected long-term rate of return on plan assets 2.50%~2.75% 2.75%~3.00%
18143 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
23. CAPITAL STOCK
(1) On April 10, 1997, the Company’s stockholders resolved to increase capital for 182,000 thousand shares by transferring from retained earnings. The meeting also resolved to increase capital for cash for $210,000 thousand, divided into 21,000 thousand shares at $10 per share, to facilitate the issuance of 21,000 thousand units of Global Depositary Receipts (GDRs). The above increase in capital has been approved by the Ministry of Economic Aff airs. The GDRs were offered on May 30, 1997, and now listed on the London Stock Exchange. Commencing three months after completion of the offering, a holder of the GDRs may withdraw and hold the shares represented by such GDRs or request depositary to sell or cause to be sold on behalf of such holder of the shares represented by such GDRs.
(2) On January 1, 2007, the Company’s outstanding capital amounted to $34,070,702 thousand, divided into 3,407,070,144 shares at $10 par value.
(3) On June 13, 2007, the stockholders resolved to increase capital for 240,604,146 shares by transferring from retained earnings and employees’ bonuses for $2,406,041 thousand. The record date of the above increase in capital has been set on August 22, 2007.
(4) The Company’s board resolved, on July 24, 2007, to acquire shares of Ability Enterprise Co., Ltd. by issuing new shares of the Company to Ability Investment Co., Ltd. The share swap date was on September 13, 2007 with a swap ratio of 1.71 shares of Ability Enterprise Co., Ltd. for one share of the Company’s. Because of the above transaction, new shares of the Company issued for the share swap were 29,824,561 shares. In addition, the Company’s capital and premium on capital stock increased by $298,245 thousand and $2,400,281 thousand, respectively.
(5) In 2007, the holders of ECB I and domestic convertible bonds had converted the bonds to 50,787,481 and 72,614 common shares, and increased the issued and outstanding capital by $507,875 thousand and $726 thousand, respectively.
(6) On June 11, 2008, the stockholders resolved to increase capital for 494,065,172 shares by transferring from retained earnings and employees’ bonuses for $4,940,652 thousand. The record date of the above increase in capital has been set on September 6, 2008.
(7) During 2008, the holders of ECB I had converted the bonds to 23,627,151 common shares, and increased the issued and outstanding capital by $236,272 thousand.
44182 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(8) As of December 31, 2008, the authorized capital of the Company was $47,500,000 thousand ($500,000 thousand were reserved for employee stock options) of which $42,460,513 thousand were issued and outstanding, divided into 4,246,051,269 shares at $10 par value.
24. ADDITIONAL PAID-IN CAPITAL
(1) Additional paid-in capital consists of the following:
2007/12/31 2008/12/31 (Adjusted) Premium on capital stock $20,500,035 $20,213,812 Premium on conversion of bonds 7,360,596 6,112,719 Treasury stock transactions 617 617 Effect of changes of the investee companies’ equity 1,835,145 2,053,583 Total $29,696,393 $28,380,731
(2) The R.O.C. Company Law stipulates that additional paid-in capital, other than premium on capital stock and donated capital, shall not be used to increase capital, nor shall cash dividends be declared from such additional paid-in capital.
25. LEGAL RESERVE
The R.O.C. Company Law stipulates that, after paying all taxes, companies must retain at least 10% of their annual earnings, as defined in the Law, until such retention equals the amount of capital stock. This retention can be used to make up prior years’ losses. Once the legal reserve equals one-half of capital stock, 50% of the reserve may be transferred to common stock.
26. DISTRIBUTION OF EARNINGS
(1) As provided by the Company’s Articles of Incorporation resolved by the stockholders’ meeting on June 11, 2008, annual net income after making up prior years' losses, if any, should be distributed as follows: (1) To appropriate 10% as legal reserve, with its remainder, (2) To appropriate the proper amount as special reserve according to relevant regulation or as required by the government, with its remainder, (3) To app ropriate 10% of capital stock as capital interest, with its remainder, (4) To appropriate no less than 1%
45183 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
as employees’ bonuses, and (5) To appropriate no more than 1% as directors’ and supervisors’ bonuses. (Prior to the revision, 10% was set as employees’ bonuses and 1% as directors’ and supervisors’ bonuses.) When the employees’ bonuses are distributed with stocks, the recipients must include the employees of subsidiaries. (6) After the distribution of earnings, the remained earnings, if any, may be appropriated according to a resolu tion adopted in a stockholders’ meeting.
(2) The Company is facing a rapidly-changing industrial environment, with the life cycle of the industry in the growth 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 no less than 10% of the aggregate of all dividends.
(3) The distribution of annual net income of 2007: (in thousands of dollars/shares)
Distribution of 2007 annual net income Resolved by the Resolved by the stockholders’ Board of Reasons meeting on Directors on for the Items June 11, 2008 April 24, 2008 Deviation deviation Directors’ and supervisors’ bonuses $211,203 $211,203 - - Employees’ bonuses-cash 912,030 912,030 - - Employees’ bonuses-stock Amounts 1,200,000 1,200,000 - - Shares ($10 per share) 120,000 120,000 - - Percentage to total shares issued 3.22% 3.22% - - and outstanding Stockholders’ bonuses Cash dividends ($2.5 per share) 9,351,630 9,351,630 - - Stock dividends Amounts ($1 per share) 3,740,652 3,740,652 - - Shares ($10 per share) 374,065 374,065 - - Percentage to total shares issued 10.03% 10.03% - - and outstanding EPS (in NT dollars) after considering $6.89 $6.89 - - effects of employees’, directors’ and supervisors’ bonuses (Note)
184 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 46 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Note: (Without considering the retrospective adjustments for bonds)
Net income of 2007 – Employees’ cash bonuses – Employees’ stock bonuses – Directors’ and supervisors’ bonuses Average weighted number of shares of 2007
The distribution of annual net income of 2006: (in thousands of dollars/shares)
Distribution of 2006 annual net income Resolved by the stockholders’ Resolved by the Reasons meeting on Board of Directors for the Items June 13, 2007 on April 24, 2007 Deviation deviation Directors’ and supervisors’ bonuses $138,871 $138,871 - - Employees’ bonuses-cash 688,712 688,712 - - Employees’ bonuses-stock Amounts 700,000 700,000 - - Shares ($10 per share) 70,000 70,000 - - Percentage to total shares issued 2.05% 2.05% - - and outstanding Stockholders’ bonuses Cash dividends ($1.5 per share) 5,118,124 5,118,124 - - Stock dividends Amounts ($0.5 per share) 1,706,041 1,706,041 - - Shares ($10 per share) 170,604 170,604 - - Percentage to total shares issued 5.01% 5.01% - - and outstanding EPS (in NT dollars) after considering $5.20 $5.20 - - effects of employees’, directors’ and supervisors’ bonuses (Note)
Note: (Without considering the retrospective adjustments for bonds)
Net income of 2006 – Employees’ cash bonuses – Employees’ stock bonuses – Directors’ and supervisors’ bonuses Average weighted number of shares of 2006
185 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 47 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(4) As required by the government, if the Company’s stockholders’ equity has any debit balances such as unrealized loss for financial instruments and cumulative translation adjustments, an equal amount of such debit balances shall be appropriated as a special reserve before any distribution of earnings. The appropriation shall comply with the following rules:
(A) For debit balances incurred during the year, the amount of the special reserve shall not exceed the summation of current income after tax and beginning accumulated earnings.
(B) For debit balances incurred in prior years, the amount of the special reserve set aside shall not exceed beginning accumulated earnings minus the appropriated special reserve as per (1) above.
If there is any reversal of the debit balances subsequently, the amount of the reversal shall be eligible for earnings distribu tions.
(5) The Company estimated the employees’ bonuses and directors’ and supervisors’ remuneration for 2008 to be $950,837 thousand and $52,824 thousand, respectively, which would be recognized as operating expenses in this year. The difference of distribution between the estimation and the resolution of stockholders’ meeting will be recognized as profit or loss of the year.
27. OPERATING COST/EXPENSES
The personnel, depreciation and amortization expenses for the years ended December 31, 2008 and 2007 were as follows:
2008 2007 Nature Cost Expense Total Cost Expense Total Personnel: Salary 14,846,394 13,965,530 28,811,924 13,706,781 8,983,434 22,690,215 Labor and health insurance 653,489 822,690 1,476,179 444,117 727,756 1,171,873 Pension 197,342 384,480 581,822 432,691 888,763 1,321,454 Other personnel expenses 301,014 466,681 767,695 314,951 337,367 652,318 Depreciation 6,228,215 1,755,208 7,983,423 4,483,288 1,934,097 6,417,385 Amortization 839,936 1,424,821 2,264,757 553,987 1,129,120 1,683,107
186 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 48 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
28. INCOME TAX
2008/12/31 2007/12/31 (1) Deferred income tax assets-current $2,812,896 $1,487,411 Valuation allowance for deferred income tax - -
assets-current Deferred income tax assets-current (net) 2,812,896 1,487,411 Deferred income tax liabilities-current (50) (8,459) Total net deferred income tax assets/(liabilities)-current $2,812,846 $1,478,952
2008/12/31 2007/12/31 (2) Deferred income tax assets-noncurrent $394,303 $377,150 Valuation allowance for deferred income tax - - assets-noncurrent Deferred income tax assets-noncurrent (net) 394,303 377,150 Deferred income tax liabilities-noncurrent (2,196,252) (1,993,566) Total net deferred income tax assets/(liabilities)-noncurrent $(1,801,949) $(1,616,416)
(3) The reconciliation of income tax and income tax payable of the Company and subsidiaries are as follows: 2008 2007 Income tax expense $5,611,908 $7,828,405 Add/(Deduct):Income separately taxed 2,315 1,634 Investment tax credits and others (109,894) (420,437) Income tax payable $5,504,329 $7,409,602
(4) The Company’s income tax returns for the years prior to 2005 have been assessed by the Tax Bureau. The 2005 and all subsequent years’ income tax returns are being examined by the Tax Bureau.
(5) The Tax Bureau had assessed the Company’s income tax returns from 1996 to 2002, and the total assessed amount exceeded the total amount filed by $2,927,620 thousand. The Company has accrued the difference of the assessed amount out of prudence but has petitioned for re-assessment.
187 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 49 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(6) Information for integrated income tax system of the Company:
2008/12/31 2007/12/31 Imputation income tax credit account balance $11,130,265 $6,329,495
2008 (Expected) 2007 (Actual) Creditable ratio for earnings distribution to the R.O.C. resident shareholders 17.82% 15.01%
(7) Information for unappropriated retained earnings of the Company:
2007/12/31 2008/12/31 (Adjusted) 1997 and prior $3,298,939 $3,298,939 1998 and beyond 72,439,752 74,227,941 Total $75,738,691 $77,526,880
29. EARNINGS PER SHARE
Weighted average number of shares (in thousands of shares):
2008 2007 Outstanding share, beginning of the year 3,728,359 3,407,070 Add: Increase in capital through 2007 retained - 239,914 earnings Increase in capital through 2008 retained 493,019 483,668 earnings Weighted average number of shares- 15,683 17,137 Convertible bonds Stock issued in 2007 for exchanging stock - 8,907 with other companies Weighted average number of shares-Primary earnings 4,237,061 4,156,696 per share Fully diluted shares on euro convertible bonds 32,818 90,149 Fully diluted shares on domestic convertible bonds 146,825 140,863 Fully diluted shares on transfer of employees’ 25,838 - bonuses to capital Weighted average number of shares-Fully diluted earnings per share 4,442,542 4,387,708
188 50 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
2007 2008 (Adjusted) Calculation of Primary EPS Consolidated net income $18,924,931 $30,415,697 Represented by: Available for common shareholders $16,456,567 $27,283,328 Available for minority shareholders 2,468,364 3,132,369 Consolidated net income $18,924,931 $30,415,697 Primary earnings per share: (in dollars) Consolidated net income $4.47 $7.32 Represented by: (in dollars) Available for common shareholders $3.88 $6.56 Available for minority shareholders 0.59 0.76 Consolidated net income $4.47 $7.32
Calculation of Fully Diluted EPS Consolidated net income $18,213,226 $30,890,417 Represented by: Available for common shareholders $15,744,862 $27,758,048 Available for minority shareholders 2,468,364 3,132,369 Consolidated net income $18,213,226 $30,890,417 Fully diluted earnings per share: (in dollars) Consolidated net income $4.10 $7.04 Represented by: (in dollars) Available for common shareholders $3.54 $6.33 Available for minority shareholders 0.56 0.71 Consolidated net income $4.10 $7.04
189 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 51 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
V. RELATED PARTY TRANSACTIONS
1. Names and relationships of related parties:
Related Parties Relationships Asint Technology Corporation Investee evaluated under the equity method Excelliance MOS Corporation Investee evaluated under the equity method SHANGHAI INDEED Investee indirectly evaluated under the equity method TECHNOLOGY CO., LTD. PEGA INTERNATIONAL Investee indirectly evaluated under the equity method LIMITED HONG HUA TECHNOLOGY Investee indirectly evaluated under the equity method (SUZHOU) CO., LTD. Avy Precision Technology Inc. Investee indirectly evaluated under the equity method Avy Co., Ltd. Investee indirectly evaluated under the equity method ASHINE PRECISION CO., LTD. Investee indirectly evaluated under the equity method DongGuan Avy Precision Metal Investee indirectly evaluated under the equity method Components Co., Ltd.
GHING HONG PRECISE Investee indirectly evaluated under the equity method MOULD INDUSTRY (SUZHOU) CO., LTD. DongGuan ChengGuang Precision Investee indirectly evaluated under the equity method Hardware Co., Ltd. SHINE TRADE Investee indirectly evaluated under the equity method INTERNATIONAL LTD. PENTAX VQ CO., LTD. Investee indirectly evaluated under the equity method AVY HIGH TECH LIMITED Investee indirectly evaluated under the equity method YORKEY OPTICAL De facto related party of Ability Enterprise Co., Ltd. TECHNOLOGY LTD. (SAMOA) Taishiba International Co., Ltd. De facto related party of Ability Enterprise Co., Ltd. Mr. Eric Chang One of the Company’s senior managers in 2007 Mr. Johnson Teng One of the Company’s senior managers in 2007 The Company’s and subsidiaries’ The Company’s and subsidiaries’ directors, supervisors directors, supervisors and major and major management who are significantly management who are influencial on operation and decision of the Company significantly influencial on and subsidiaries operation and decision of the Company and subsidiaries
190 52 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
2. Significant related party transactions:
(1) Purchases
Related parties 2008 2007 PENTAX VQ CO., LTD. $1,941,266 $646,966 SHANGHAI INDEED TECHNOLOGY 642,505 - CO., LTD. Avy Precision Technology Inc. 594,699 43,984 Asint Technology Corporation 328,159 - ASHINE PRECISION CO., LTD. 277,278 66,033 Avy Co., Ltd. 265,834 - HONG HUA TECHNOLOGY (SUZHOU) 55,228 113,316 CO., LTD. Others 49,199 - Total $4,154,168 $870,299
(2) Sales revenues
Related parties 2008 2007 PENTAX VQ CO., LTD. $284,833 $82,538 Others 11,890 - Total $296,723 $82,538
(3) Payables to affiliated companies
Related parties 2008 2007 SHANGHAI INDEED TECHNOLOGY $481,706 $- CO., LTD. Avy Precision Technology Inc. 259,776 67,918 Avy Co., Ltd. 122,583 - PENTAX VQ CO., LTD. 120,370 159,710 Others 118,303 62,058 Total $1,102,738 $289,686
191 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 53 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(4) Other receivable-affiliated company (loan to affiliated company)
Information for the Ability Enterprise Co., Ltd. and its subsidiaries’ loan to affiliated company is as follows: 2007 Maximum Ending Interest Related party Amount Balance Income Interest Rate Pledged ASHINE PRECISION CO., LTD. $30,000 $- $111 3.4%~4.4% -
(5) Gain/(loss) on disposal of assets
The Company and subsidiaries had no such item during 2008.
2007 Disposal
Related parties Sales price Book value gain/(loss) Total (Aggregation) $1,133 $1,430 $(297)
(6) Sale of long-term investment 2008 Related party Item Sales price Book value Disposal gain AVY HIGH TECH Noncurrent assets held USD 5,276 USD 4,514 USD 762 LIMITED for sale-DongGuan Avy
(7) Ability Enterprise Co., Ltd. and its subsidiaries purchased property, plant and equipment from related parties amounted to $88,147 thousand and $9,708 thousand in 2008 and 2007, respectively.
(8) As of December 31, 2008, the related party transactions recorded as accounts receivable, other receivables, refundable deposits, prepayments, accrued expenses and other payables amounted to $96,872 thousand, $9,213 thousand, $3,660 thousand, $19,211 thousand, $842 thousand and $201 thousand, respectively.
As of December 31, 2007, the related party transactions recorded as accounts receivable and accrued expenses amounted to $17,792 thousand and $296 thousand, respectively.
192 54 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(9) As of December 31, 2008 and 2007, the amount of related party transactions recorded as related expenses, such as tooling charges, rental expenses, miscellaneous expenses, etc. amounted to $25,932 thousand and $3,845 thousand, respectively.
(10) As of December 31, 2008, the amount of related party transactions recorded as non-operating incomes and gains, such as rental income and other income, amounted to $22,430 thousand.
(11) The total compensations (the portion of stock payment is calculated on a basis of year-end market price or net value) of directors, supervisors and major management who are significantly influential on operation and decision of the Company and subsidiaries amounted to $ 221,228 thousand (resolved) and $803,021 thousand (actual) for the years ended December 31, 2008 and 2007, respectively.
VI. ASSETS PLEDGED OR MORTGAGED
As of December 31, 2008 and 2007, the following assets were pledged as collateral:
Carrying Value Assets Items 2008/12/31 2007/12/31 Purposes Other current assets and Time deposits $393,868 $449,199 Customs duty other assets guarantee, bank loans, rent deposits, credit contracts, letter of credit, travel agency guarantee, contract security deposit, etc. Property, plant and Land and 466,522 1,127,447 Bank loans equipment and assets buildings held for lease Property, plant and Machinery and 309,984 730,266 Bank loans equipment equipment Idle assets (Note) Machinery and - - Bank loans equipment Other intangible assets Land use rights 84,341 51,819 Bank loans
Other assets Refundable 32,272 373,980 Customs deposits deposits Total $1,286,987 $2,732,711
Note: As of December 31, 2008 and 2007, the book value of idle assets amounted to $100 thousand and $141 thousand, respectively. After recognizing the impairment losses, the net book value became $0.
193 55 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
VII. COMMITMENTS AND CONTINGENT LIABILITIES
1. As of December 31, 2008, the Company and subsidiaries had the following unused letters of credit (foreign currencies are in thousand dollars):
Currencies Total Amounts USD $10,114 EUR $210 JPY $1,525,135
2. The Company’s income tax returns assessed by the Tax Bureau from 1996 to 2002 exceeded the total amount filed by $2,927,620 thousand. The Company has petitioned for re-assessment.
3. TWINHAN TECHNOLOGY CO., LTD.’s income tax returns assessed by the Tax Bureau from 2002 to 2004 exceeded the total amount filed. TWINHAN TECHNOLOGY CO., LTD. has accrued the difference of the assessed amount out of prudence but has petitioned for re-assessment.
4. A Cayman company filed a suit against the Company seeking injunction prohibiting the Company from using certain specific materials from certain specific supplier. Taiwan Supreme Court has declared that the legal action would be effective if this Cayman company provides $46,000 thousand as collateral. Nevertheless, the Company had ceased to use the certain specific materials; therefore, the decision will not damage the Company. In addition, this Cayman company also filed a suit against the Company in Taipei District Court, for $10,000 thousand as compensation for damage. The suit is currently under investigation in Taipei District Court.
5. In Aug., 2006, a Japanese company filed a suit against the Company alleging that the Company was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US.
6. In Jan., 2007, an Australian organization filed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US.
194 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 56 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
7. In Jan., 2007, a Japanese company filed a suit against the Company and its US subsidiary for infringement of intellectual property rights. In May and Sep., 2007, another plaintiff, an US company, also filed a suit against the Company and its US subsidiary for patent infringement and violation of trade secrets. These suits are currently under investigation in Utah Court in the US.
8. In Sep., 2007, an US company filed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US.
9. In Mar., 2008, an US patentee filed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US.
10. In Sep., 2008, an US patentee filed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US.
11. In Oct., 2008, an US patentee filed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in North California Court in the US.
12. In Dec., 2008, an US company filed a suit against the Company alleging that the Company was engaged in patent infringement. The suit is currently under investigation in United States International Trade Commission.
13. In Nov., 2008, an US company filed a suit against the Company alleging that the Company was engaged in patent infringement. The suit is currently under investigation in United States International Trade Commission.
14. In Nov., 2008, an US company filed a suit against the Company alleging that the Company was engaged in patent infringement. The suit is currently under investigation in United States International Trade Commission.
15. As of December 31, 2008, the details of operating lease over the significant property used by ASUS COMPUTER INTERNATIONAL are as follows:
Lessor Leased Asset Period Refundable Deposits Sobrato Interest, LP The office and warehouse 2008/6/1~2018/5/31 USD 1,500 thousand in Fremont, California
195 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 57 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Rental expenses for each year are as follows:
Year Amount (USD in thousand dollars) 2009 $992 2010 1,365 2011 1,419 2012 1,476 2013 1,535 2014 and after 7,490
16. PEGATRON CORPORATION and its subsidiaries entered into irrevocable contracts as follows:
Contracts Contract Amounts Paid Bill Unpaid Bill Land and Buildings Construction $1,737,486 $1,279,070 $458,416 Electric Air Conditioner Construction 755,449 610,569 144,879 Total $2,492,935 $1,889,639 $603,295
VIII. SIGNIFICANT DISASTER LOSS
None.
IX. SUBSEQUENT EVENTS
1. On February 18, 2009, the board of the Company resolved to buy back its 60,000 thousand shares. The buyback period would be from February 19 to April 18, 2009.
2. On February 6, 2009, the Company resolved to invest USD 40,000 thousand in NORTH TEC ASIA (SHANGHAI) LIMITED indirectly through its subsidiary, PEGATRON CORPORATION. The resolution has been approved by Investment Commission, MOEA.
3. On February 13, 2009, the Company resolved to invest USD 24,000 thousand in CASETEK COMPUTER (SUZHOU) CO., LTD. indirectly through its subsidiary, UNIHAN CORPORATION. The resolution has been approved by Investment Commission, MOEA.
4. On February 12, 2009, AzureWave Technologies, Inc. resolved to invest USD 8,000 thousand in AzureWave Technologies (Shanghai) Inc. indirectly through its subsidiary, Azwave Holding (Samoa) Inc. The resolution has been approved by Investment Commission, MOEA.
196
58 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
5. In Feb., 2009, Ability Enterprise Co., Ltd. acquired the shares of the long-term investment under the equity method-Avy Precision Technology Inc. for $178,000 thousand.
6. In Feb. and Mar., 2009, Ability Enterprise Co., Ltd. sold the shares of the long-term investment under the equity method-ASHINE PRECISION CO., LTD. for $178,000 thousand and noncurrent assets held for sale for $360,000 thousand.
X. OTHER SIGNIFICANT MATTERS
1. RISKS MANAGEMENT OBJECTIVE AND POLICIES
Derivative financial instruments held by the Company and subsidiaries are forward exchange contracts, foreign currency options and currency swap contracts. The Company’s and subsidiaries’ principal financial instruments, other than derivatives, comprise of cash and cash equivalents, financial assets at fair value through profit or loss, available-for-sale financial asset and bank loans. The main purpose of these financial instruments is to manage the financing for the Company’s and subsidiaries’ operations. The Company and subsidiaries also hold various other financial assets and liabilities such as accounts receivable and accounts payable, which arose directly from its operations.
The main risks arising from the Company’s and subsidiaries' financial instruments are foreign currency risk, commodity price risk, credit risk, liquidity risk and cash flow risk from fluctuations in interest rate.
(1) Foreign currency risk
The Company and subsidiaries expose to foreign currency risks arising from purchases or sales denominated in foreign currencies. The Company and subsidiaries use the principle of natural hedge to mitigate the risk and utilize spot or forward contracts to hedge foreign currency risk. The notional amounts of the foreign currency contracts are the same as the amounts of the hedged items. In principle, The Company and subsidiaries do not enter into any forward contracts for commitments of uncertain nature. The Company and subsidiaries enter into forward currency contracts to hedge the exchange rate risk of assets, liabilities and commitments denominated in foreign currencies. The Company’s and subsidiaries’ hedging strategy is to avoid most market price risks. The Company and subsidiaries use the derivatives that have highest negative correlation with the hedged items as hedging instruments and evaluate the hedge effectiveness periodically.
197 59 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(2) Commodity price risk
The Company’s and subsidiaries' exposure to price risk is minimal.
(3) Credit risk
The Company and subsidiaries trade only with established and creditworthy third parties. It is the Company’s and subsidiaries' policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis, which consequently minimizes the Company’s and subsidiaries' exposure to bad debts.
With respect to credit risk arising from the other financial assets of the Company and subsidiaries, which comprise of cash and cash equivalents, available-for-sale financial assets and certain derivative instruments, the maximum exposure to credit risk arising from the default of counter-parties is limited to the carrying amount of these instruments.
Although the Company and subsidiaries trade only with established third parties, it will nevertheless request collateral to be provided by third parties with less favorable financial positions.
(4) Liquidity risk
The Company’s and subsidiaries' objective is to maintain a balance of funding continuity and flexibility through the use of financial instruments such as cash and cash equivalents, bank loans and bonds.
(5) Cash flow risk from fluctuations in interest rate
There is no significant risk involved because the Company’s and subsidiaries' short-term bank loans are maturing within one year and the fluctuation of the floating rate is low.
198 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 60 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
2. FINANCIAL INSTRUMENTS
(1) Financial instruments consist of the following:
2008/12/31 Financial instruments Book value Fair value Non-derivative financial instruments Assets Cash and cash equivalents $49,718,467 $49,718,467 Financial assets at fair value through profit 13,280,321 13,280,321 or loss-current Available-for-sale financial assets-current 516,306 516,306 Receivables-net 101,641,837 101,641,837 Available-for-sale financial assets-noncurrent 4,556,392 4,556,392 Held-to-maturity financial assets-noncurrent 16,425 (Note) Financial assets carried at cost-noncurrent 2,477,410 (Note) Refundable deposits 820,806 820,806 Liabilities Short-term loans 14,573,844 14,573,844 Payables 118,855,410 118,855,410 Bonds payable (including current portion) 11,988,037 12,051,082 Long-term loans (including current portion) 11,969,627 11,969,627 Deposits received 317,792 317,792
Derivative financial instruments Assets Financial assets at fair value through profit 15,158 15,158 or loss-current Liabilities Financial liabilities at fair value through 1,721,005 1,721,005 profit or loss-current
199 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 61 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
2007/12/31 (Adjusted) Financial instruments Book value Fair value Non-derivative financial instruments Assets Cash and cash equivalents $43,585,783 $43,585,783 Financial assets at fair value through profit 13,280,397 13,280,397 or loss-current Available-for-sale financial assets-current 17,761 17,761 Held-to-maturity financial assets-current 47,000 (Note) Bond portfolios with no active market-current 60,204 (Note) Receivables-net 136,171,691 136,171,691 Available-for-sale financial assets-noncurrent 7,432,090 7,432,090 Held-to-maturity financial assets-noncurrent 16,425 (Note) Financial assets carried at cost-noncurrent 1,726,652 (Note) Refundable deposits 780,368 780,368 Liabilities Short-term loans 7,165,936 7,165,936 Payables 169,269,680 169,269,680 Bonds payable 13,985,969 13,836,363 Long-term loans (including current portion) 2,950,175 2,950,175 Deposits received 227,264 227,264
Derivative financial instruments Assets Financial assets at fair value through profit 6,553 6,553 or loss-current Liabilities Financial liabilities at fair value through 2 2 profit or loss-current Financial liabilities at fair value through 1,837,328 1,837,328 profit or loss-noncurrent
Note: Due to cost and the limitations of access to information, the estimation of the market value of the financial instruments is not feasible.
200 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 62 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(2) The following methods and assumptions were used for determining the fair value of financial instruments:
The fair value of short-term financial instruments was estimated to approximate their book value due to their short maturity. This method is used to determine the fair value for cash and cash equivalents, receivables, payables, and short-term loans.
The fair value of financial assets at fair value through profit or loss-current, available-for-sale financial assets-current and available-for-sale financial assets-noncurrent was based on their quoted market price.
The fair value of refundable deposits and deposits received was based on their book value because the amount the Company and subsidiaries expected to receive or refund is equal to their book value.
The fair value of financial liabilities at fair value through profit or loss was measured on a basis of the value of call/put option and conversion right with clause of adjusting price. The fair value of bonds payable was determined using valuation models.
The fair value of long-term loans was estimated by the discounted value of expected cash flows. The discount rate used was based on the interest rate of long-term loans with similar maturity profile and conditions.
The fair value of derivative financial instruments is the amount the Company and subsidiaries will receive or pay if the Company and subsidiaries terminate the contracts. Generally, such amount includes the unrealized gain or loss. The fair value of most derivative financial instruments of the Company and subsidiaries are determined based on the quotations from financial institutions. If there are no quotations for the instruments, they shall be estimated by other valuation models.
201 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 63 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
(3) Fair value of financial instruments based on the quoted market price and other valuation models are as follows: Determined by the Estimated by other quoted market price valuation models 2008/12/31 2007/12/31 2008/12/31 2007/12/31 Financial Assets Cash and cash equivalents $49,718,467 $43,585,783 $- $- Financial assets at fair value 13,280,321 13,280,397 15,158 6,553
through profit or loss-current Available-for-sale financial 513,306 17,761 - -
assets-current Receivables-net - - 101,641,837 136,171,691 Available-for-sale financial 4,556,392 7,432,090 - -
assets-noncurrent Refundable deposits - - 820,806 780,368
Financial Liabilities Short-term loans - - 14,573,844 7,165,936 Financial liabilities at fair value - - 1,721,005 2 through profit or loss-current Payables - - 118,855,410 169,269,680 Financial liabilities at fair value - - - 1,837,328 through profit or loss-noncurrent Bonds payable - - 12,051,082 13,836,363
(including current portion) Long-term loans - - 11,969,627 2,950,175
(including current portion) Deposits received - - 317,792 227,264
3. DERIVATIVE FINANCIAL INSTRUMENTS
(1) Information regarding embedded derivatives arising from non-collateral convertible bonds issued by the Company is detailed in Note IV.20.(4) and (5).
(2) The Company engaged in the following derivative financial instruments:
2008/12/31 Notional amounts Derivative Financial Instruments (in thousand dollars) Period Financial assets for trading purpose Forward exchange contracts USD 20,000 2008/12/3~2009/1/22
20264 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
The Company engaged in forward exchange contracts and forward option contracts, and incurred the related losses recognized as “non-operating expenses and losses” amounted to $79,604 thousand for 2008. As of December 31, 2008, “Financial assets at fair value through profit or loss-current” and “gain on valuation of financial assets” were both recorded at $10,894 thousand.
The Company had no such item during 2007.
(3) The Company’s subsidiaries engaged in the following derivative financial instruments:
Ability Enterprise Co., Ltd. 2008/12/31 Notional amounts Derivative Financial Instruments (in thousand dollars) Period Financial assets for trading purpose Currency swap contracts USD 31,740 2008/12~2009/1 Financial liabilities for trading purpose Forward exchange contracts EUR 2,509 2008/12~2009/1
2007/12/31 Notional amounts Derivative Financial Instruments (in thousand dollars) Period Financial liabilities for trading purpose Forward exchange contracts USD 1,472 2007/12~2008/1 Forward exchange contracts EUR 1,000 2007/12~2008/1 Forward exchange contracts EUR 720 2007/12~2008/1
Presented as follows: 2008/12/31 Book value Fair value Assets Financial assets at fair value through $4,264 $4,264 profit or loss-current (currency swap contracts) Liabilities Financial liabilities at fair value through 409 409 profit or loss-current (forward exchange contracts) 203 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 65 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
2007/12/31 Book value Fair value Liabilities Financial liabilities at fair value through $2 $2 profit or loss-current (forward exchange contracts)
Askey Computer Corp. and its subsidiaries
Askey Computer Corp. and its subsidiaries had no undue forward exchange contract in 2008. The derivative financial instruments of Askey Computer Corp. and its subsidiaries in 2007 were as follows:
2007/12/31 Notional amounts Derivative Financial Instruments (in thousand dollars) Period Financial assets for trading purpose Forward exchange contracts USD 10,573 2007/11/26~2008/11/26
Presented as follows: 2007/12/31 Book value Fair value Assets Financial assets at fair value through $6,553 $6,553 profit or loss-current (forward exchange contracts)
Askey Computer Corp. and its subsidiaries incurred net (loss)/gain on valuation of financial assets of $(23,338) thousand and $6,349 thousand for the years ended December 31, 2008 and 2007, respectively.
ASUS TECHNOLOGY PTE. LIMITED 2008/12/31 Notional amounts Derivative Financial Instruments (in thousand dollars) Period Financial liabilities for trading purpose Forward exchange contracts EUR 446,600 2008/11/25~2009/3/10 Forward exchange contracts GBP 23,000 2008/11/24~2009/2/23 Forward exchange contracts CHF 4,085 2008/12/22~2009/2/23 Forward exchange contracts SEK 49,000 2008/12/22~2009/2/23
204
66 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
Presented as follows (in thousand dollars): 2008/12/31 Book value Fair value Liabilities Financial liabilities at fair value through USD 26,781 USD 26,781 profit or loss-current (forward exchange contracts)
ASUS TECHNOLOGY PTE. LIMITED incurred net loss on valuation of financial liabilities of USD 26,781 thousand in 2008.
ASUS TECHNOLOGY PTE. LIMITED had no such item during 2007.
4. OTHERS
(1) The Company’s significant agreement as of December 31, 2008 was as follows:
Name of Contract Party Content Marketing Agreement Microsoft Corporation Project planning
(2) In order to enhance competitiveness and boost productivity, the Company’s shareholders resolved, on October 30, 2007, to restructure the Company’s business into own-brand and OEM. The date for the spin-off was set to commence on January 1, 2008. According to the resolution, the Company transferred its computer OEM business, with estimated value of $70,000,000 thousand to its newly established subsidiary, PEGATRON CORPORATION, by subscribing 1,600,000,000 newly issued shares at $43.75 per share of PEGATRON CORPORATION. In addition, the Company transferred its non-computer OEM business and machine hull and molding tool R&D business with estimated value of $12,000,000 thousand to its newly established subsidiary, UNIHAN CORPORATION, by subscribing 800,000,000 newly issued shares at $15 per share of UNIHAN CORPORATION. The plan has been approved by the relevant authorities. The registration of changes was completed in January 2008.
205 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 67 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
The following is a list of assets and liabilities for the spin-off:
PEGATRON UNIHAN CORPORATION CORPORATION Total Assets Current assets $21,999,830 $12,555,287 $34,555,117 Long-term investments 66,867,161 7,060,209 73,927,370 Property, plant and 4,761,981 127,143 4,889,124 equipment Other assets 353,066 126,822 479,888 Total 93,982,038 19,869,461 113,851,499
Liabilities Current liabilities (23,982,038) (7,869,461) (31,851,499) Total (23,982,038) (7,869,461) (31,851,499) Net Assets $70,000,000 $12,000,000 $82,000,000
(3) The relevant reason for retrospectively adjusting the financial statement for 2007 was as follows:
For the convertible bonds issued in 2006, the call/put options were previously recognized as financial liabilities for trading purpose, the main liability was previously recognized as bonds payable (including the related discounts), and the conversion right with clause of adjusting price was previously recognized as equity. According to Interpretation No. 97-331 and No. 98-046 by Accounting Research and Development Foundation, the liability and equity components were recalculated and retrospectively adjusted for the financial statement for 2007. Please refer to Note II.13.(2) for the relevant accounting policies. Such adjustment decreased the Company’s net income for 2007 by $339,952 thousand and, thereby, also decreased the primary EPS for 2007 by $0.08.
(4) Certain reclassifications have been made to consolidated financial statements for 2007 to conform with current year’s presentation.
206 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 68 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
XI. SEGMENTAL INFORMATION
1. Industry information: the Company and subsidiaries engaged mainly in the design, production and selling of main boards and related products within a single industry.
2. Geographical information:
The geographical information of the Company and subsidiaries is as follows:
2008 Asia Pacific (excluding Main land China and Adjustment and Domestics Taiwan) Others Elimination Consolidation Sales to unaffiliated $367,134,583 $189,319,458 $111,165,642 $- $667,619,683 customers Intersegmental sales 424,542,606 61,395,728 14,171,320 (500,109,654) - Total segmental sales $791,677,189 $250,715,186 $125,336,962 $(500,109,654) $667,619,683
Segmental profit and loss $19,232,028 $5,018,332 $16,766,863 $(15,748,030) $25,269,193
Investment income under 52,249 the equity method Interest expense (784,603) Net income of continuing $24,536,839 operation before income
tax
Identifiable assets $254,111,971 $59,230,683 $343,963,103 $(300,030,293) $357,275,464 Long-term investments 2,773,575 under the equity method Consolidated debits 890,146 Total assets $360,939,185
207 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 69 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
2007 Asia Pacific (excluding Main land China and Adjustment and Domestics Taiwan) Others Elimination Consolidation Sales to unaffiliated $471,959,679 $144,146,717 $139,254,328 $- $755,360,724 customers Intersegmental sales 199,613,170 48,743,580 115,891,524 (364,248,274) - Total segmental sales $671,572,849 $192,890,297 $255,145,852 $(364,248,274) $755,360,724
Segmental profit and loss $27,175,789 $7,449,504 $18,375,644 $(14,033,412) $38,967,525 Investment income under 113,340 the equity method Interest expense (836,763) Net income of continuing $38,244,102 operation before income tax
Identifiable assets $251,195,513 $46,531,842 $301,512,841 $(217,598,636) $381,641,560 Long-term investments 3,023,831 under the equity method Consolidated debits 1,076,651 Total assets $385,742,042
3. Export information:
The export amounts for the years ended December 31, 2008 and 2007 were as follows:
Geographical area 2008 2007 US & Canada $114,328,941 $145,064,306 Asia Pacific 209,372,659 357,289,897 Europe 240,580,425 227,262,277 Africa 905,658 1,370,232 Total $565,187,683 $730,986,712
208 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 70 ASUSTEK COMPUTER INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (In thousands of New Taiwan dollars unless otherwise stated)
4. Significant customer information: the sales of significant customers that have exceeded 10% of the Company’s and subsidiaries’ net sales for 2008 and 2007 were as follows:
Name of customer 2008 2007 Company B $92,658,082 $224,790,281
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VII. Review of financial position, management performance and risk management
I. Analysis of financial position Comparison of Financial Position
Unit: NT$ thousands Year Difference 2008 2007 Item (adjusted) Amount %
Current assets 95,725,535 184,002,080 (88,276,545) (47.98) Fixed assets 3,703,815 8,582,153 (4,878,338) (56.84) Long-term investment and 122,679,180 107,891,217 14,787,963 13.71 other assets Total assets 222,108,530 300,475,450 (78,366,920) (26.08) Current liabilities 52,327,421 122,013,748 (69,686,327) (57.11) Long-term liabilities and 2,494,491 19,133,135 (16,638,644) (86.96) other liabilities Total liabilities 54,821,912 141,146,883 (86,324,971) (61.16) Capital stock 42,460,513 37,283,589 5,176,924 13.89 Additional paid-in capital 29,696,393 28,380,731 1,315,662 4.64 Retained earnings 93,003,248 92,029,109 974,139 1.06 Adjustments 2,126,464 1,635,138 491,326 30.05 Total Shareholders’ Equity 167,286,618 159,328,567 7,958,051 4.99 Analysis of financial ratio change: 1. Current assets: The accounts receivable from sales and the ending inventory of raw material are decreased due to the OEM business split to the subsidiary. 2. Fixed assets: Fixed assets are decreased dramatically due to stock split. 3. Long-term investment, intangible assets, and other assets: Increase long-term investment under Equity Method this year due to the profit generated from transfer investment. 4. Current liabilities: The accounts payable for the procurement of raw material is decreased in response to the OEM business split to the subsidiary. 5. Long-term liabilities and other liabilities: The corporate bond payable is transferred to the corporate bond due in one year.
II. Business performance (I) Comparison of business performance Unit: NT$ thousands 2007 Ratio change Item 2008 Amount change (adjusted) (%) Total operating income $258,609,575 $592,454,957 (333,845,382) (56.35) Minus: Sales return and discount (9,258,624) (2,549,125) (6,709,499) 263.21 Net operating income 249,350,951 589,905,832 (340,554,881) (57.73)
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Operating cost (222,995,567) (548,696,610) 325,701,043 (59.36) Gross profit 26,355,384 41,209,222 (14,853,838) (36.04) (Minus) add: Realized (unrealized) gross profit of the 1,010,034 (418,254) 1,428,288 (341.49) affiliates Realized gross profit 27,365,418 40,790,968 (13,425,550) (32.91) Operating expense (22,299,855) (24,758,011) 2,458,156 (9.93) Operating income 5,065,563 16,032,957 (10,967,394) (68.41) Non-operating income and gain Interest income 300,394 802,212 (501,818) (62.55) Investment income (Equity (4,417,575) 9,039,978 13,457,553 (32.83) Method) Dividend income 310,233 279,097 31,136 11.16 Gain from assets disposed 4,526 7,040 (2,514) (35.71) Gain from investment 148,011 115,904 32,107 27.70 disposed Inventory gain in valuation 10,000 - 10,000 - Gain from exchange 732,351 923,148 (190,797) (20.67) Gain from reversal of bad 1,329,486 - 1,329,486 - debts Gain from financial asset 12,256 - 12,256 - valuation Gain from financial liability 942,440 - 942,440 - valuation Other income 3,491,264 2,851,809 639,455 22.42 Total non-operating income 16,320,939 18,436,763 (2,115,824) (11.48) and gain Non-operating expense and loss Interest expense 312,301 540,801 (228,500) (42.25) Loss from assets disposed 6,351 144,675 (138,324) (95.61) Loss from inventory count - 46,205 (46,205) (100.00) Impairment loss 37,141 37,500 (359) (0.96) Loss from financial assets - 1,635 (1,635) (100.00) valuation Loss from financial - 250,921 (250,921) (100.00) liabilities valuation Other loss 474,161 396,989 77,172 19.44 Total Non-operating 829,954 1,418,726 (588,772) (41.50) expense and loss Net income before tax 20,556,548 33,050,994 (12,494,446) (37.80) Minus: Estimated income tax (4,099,981) (5,767,666) 1,667,685 (28.91) Net income $16,456,567 $27,283,328 (10,826,761) (39.68)
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Analysis of financial ratio change: 1. Operating income and operating cost:ǶThe decrease of operating income and operating cost decreased from the year before due to the OEM business split to the subsidiary. 2. Operating expense: The operating expense is decreased from the year before due to decrease of the marketing expense and R&D expense as a result of the OEM business split to the subsidiary. 3. Non-operating income and gain: The non-operating income and gain is decreased from the year before due to the decrease of investment gain under Equity Method and the increase of gain from bad debt reversed. 4. Non-operating expense and loss: The non-operating expense and loss is decreased from the year before due to the decrease of amortized interest expense for corporate bond discount and the loss of financial debt in valuation. 5. Estimated income tax expense:The Estimated income tax expense is decreased from the year before due to the decrease of taxable income.
(II) Analysis of gross profit
Unit: NT$ Thousands Root cause Change amount Difference of Difference of Difference of Difference of sales price cost quantity combination Gross profit (14,853,838) (17,655,164) 21,393,097 Ȑ1,000,724ȑ (17,591,047) Remark The decrease of gross profit in 2008 was due to the effect of unfavorable change in sales volume exceeding the favorable change in gross profit.
III. Analysis of cash flow
(I) Liquidity analysis of the last two years
year 2008 2007 Financial ratio change item
Current ratio 33.92ʘ 9.44ʘ 24.48ʘ Cash adequacy ratio 36.87ʘ 26.37ʘ 10.50ʘ Cash reinvestment ratio 4.92ʘ 3.54ʘ 1.38ʘ Analysis of financial ratio change: Current ratio, Cash adequacy ratio, and Cash reinvestment ratio were increased in 2008 from 2007. Root cause: The net cash inflow from operating activity was increased due to the decrease of current liability and accounts receivable as a result of the OEM business split to the subsidiary.!
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(II) Analysis of cash liquidity in one year Unit: NT$100 million
Beginning cash Expected net Expected Expected cash Remedial measures for balancec cash flow from cash outflow surplus (deficit) the expected insufficient operating activity of the yeare cɠdɡe cash of the yeard Investing Financing activity activity 107.8 110.24 95 123.04 - - 1. Analysis of cash flow change: (1)Operating activity: Net cash inflow from operating activity for an amount of NT$11.024 billion (2)Investing activity: Net cash outflow from investing activity including long-term investment for an amount of NT$1 billion (3)Financing activity: Net cash outflow from financing activity including dividend distribution for an amount of NT$8.5 billion 2. Remedial measures for the expected insufficient cash and liquidity analysis: N/A
IV. The impact of significant capital expenditure on finance in recent years: Significant capital expenditure and the source of fund: N/A
V. Reinvestment in recent years: Unit: NT$ thousands Item Amount (NT$1,000) Policy Root cause of profit or Corrective Investment (Note 1) loss action Plans Pegatron Corp. 82,098,279 Divide business into Profit: NT$5,080,715 - - own brand business thousand (Note 2) and OEM business for Domestic and competition and international investment business performance. Note 1: The investment amount of the year exceeds 5% of the capital collected, that is, NT$2.123 billion ($42.461 billion x 5%). Note 2: It does not include shareholder’s stock shares trusted with interest accrual to the subsidiary’s employees.
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’s income and expense and the responsive measures: 1. The impact of interest rate on the company’s income and expense and the responsive measures: The interest income in 2008 amounted to less than 0.12% of total operating income; therefore, the impact of interest rate on the company was insignificant. 2. The impact of exchange rate on the company’s income and expense and the responsive measures: The exchange gain recognized in 2008 amounted to 0.29% of total operating income; therefore, the impact of exchange rate on the company was insignificant. 3. The impact of inflation on the company’s income and expense and the responsive measures: 213 ! 213 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
There was no inflation issued in 2008. (II) Conducting high-risk and high-leverage investment, granting loans to others, endorsement & guarantee and directives policy, root cause of profit and loss, and the responsive measures: The company has granted loans to others, endorsement & guarantee, and directives trade processed in accordance with the “Assets Acquisition and/or Disposition Procedure” and “Loans and Endorsement & Guarantee Procedure” of the company and the responsive measures. The endorsement and guarantee of the company in 2008 was made for business transactions in accordance with the “Loans and Endorsement & Guarantee Procedure.” The company’s Endorsement & Guarantee is with a limit of NT$117,100,633 thousand. The subsidiaries that are guaranteed by the company operate profoundly with low risk expected. (III) R&D plans and budgeted R&D expense: ASUS cannot stress enough the importance of R&D team cultivation and training since the incorporation. ASUS is able to have the key technology of products controlled to secure the timing of mass production. ASUS will base on the said fine tradition to reinforce the R&D capability of the company and add it with market movement to have unique and innovative information products developed. 1. Products development planned in 2008: (1) Digital control wireless transmission technology dual core CPU MB (2) Advanced 3D image display and wireless TV transmission 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) EeePC touch, long-lasting computer (10) Eee Top PCǵEee Box PCǵEee Keyboard PC 2. R&D budget in 2008: NT$5.3 billion (IV) The impact of domestic and international policies and law change on the company’s finance and the responsive measures: None. (V) The impact of technology change and industrial change on the company’s finance and the responsive measures: ASUS constantly strives to be an integrated 3C solution provider (Computer, Communications, Consumer electronics). Technology change provides the company with business opportunity for new products. The company was with 5.20 times of inventory turnover in 2008; apparently, there was not any significant negative impact on finance. (VI) The impact of industrial image change on business risk management and the responsive measures: ASUS has maintained a fine industrial image and there is not any negative report on the company’s image. (VII) The expected effect, potential risk, and responsive measures of merger: The company’s did not have any merger conducted in 2008 and up to the date of the annual report printed: N/A (VIII) The expected effect, potential risk, and responsive measures of plant expansion: N/A (IX) The risk faced by procurements and sales hub and the responsive measures:
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The company’s procurements and sales are not centralized and with a good customer relationship established; therefore, no risk of procurements and sales centralization. (X) The impact of massive stock transfer or change by directors, supervisors, and shareholders with over 10% shareholding, the risk, and the responsive measures: There was not any massive stock transfer or change by directors, supervisors, and shareholders with over 10% shareholding in 2008 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: N/A (XII) Legal and non-legal events: 1. The company’s major legal issues, non-legal issues, or administrative lawsuits settled or in pending: (1) A Cayman company filed a suit against the Company seeking injunction prohibiting the Company from using certain specific materials from certain specific supplier. Taiwan Supreme Court has declared that the legal action would be effective if this Cayman Company provides $46,000 thousand as collateral. Nevertheless, the Company had ceased to use the certain specific materials; therefore, the decision will not damage the Company. In addition, this Cayman Company also filed a suit against the Company in Taipei District Court, for $10,000 thousand as compensation for damage. The suit is currently under investigation in Taipei District Court. (2) In Aug., 2006, a Japanese company filed a suit against the Company alleging that the Company was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US. (3) In Jan., 2007, an Australian organization filed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US. (4) In Jan., 2007, a Japanese company filed a suit against the Company and its US subsidiary for infringement of intellectual property rights. In May and Sep., 2007, another plaintiff, an US company, also filed a suit against the Company and its US subsidiary for patent infringement and violation of trade secrets. These suits are currently under investigation in Utah Court in the US. (5) In Sep., 2007, an US company filed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US. (6) In Mar., 2008, an US patentee filed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US. (7) In Sep., 2008, an US patentee filed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in East Texas Court in the US. (8) In Oct., 2008, an US patentee filed a suit against the Company’s US subsidiary alleging that the subsidiary was engaged in patent infringement. The suit is currently under investigation in North California Court in the US. (9) In Dec., 2008, an US company filed a suit against the Company alleging that the Company was engaged in patent infringement. The suit is currently under investigation in United States International Trade Commission. (10) In Nov., 2008, an US company filed a suit against the Company alleging that the Company was engaged in patent infringement. The suit is currently under investigation in United States International Trade Commission.
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(11) In Nov., 2008, an US company filed a suit against the Company alleging that the Company was engaged in patent infringement. The suit is currently under investigation in United States International Trade Commission. 2. The related party’s major legal issues, non-legal issues, or administrative lawsuits settled or in pending: N/A (XIII) Other significant risks and responsive measures: N/A
(XIV) Risk management structure and function 1. Structure Risk Management and Contingency Commission – organizational chart
Committee Chairman
Chairman
CEO President
Committee
Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Committee Directorate member member member member member member member member member member member -General of Corporate Procurement & Legal Human Audit Admin Quality Material Finance secretary MIS Marketing Sales CSC Affairs Resources Office Center Assurance Management Division Center Division Center Center �
2. Organizational objectives The mission of Risk Management and Contingency Commission is to minimize the impact and loss and damage of an enterprise. Although the profit of an enterprise cannot be increased in a short run; it is important in maintaining an enterprise’s on going concern. The Risk Management and Contingency Commission is to follow the operating concept and corporate altruism for establishing excellent independent risk control mechanism in order to make and enforce a decision that helps minimize the impact of accident on the enterprise; also, to provide employees with a safe and harmless working environment. 3. Organizational functions The Risk Management and Contingency Commission must respond to the excellent internal audit and internal control system and be responsible in coordinating the organizer and supporting units for material risk control task. The responsibility of the Risk Management and Contingency Commission is as follows: (1) Define substantiated and profound action plan and guideline in accordance with the visions and objective strategy of The Risk Management and
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Contingency Commission; also, it must be discussed and revised periodically in accordance with the actual practice. (2) The Risk Management and Contingency Commission are to have a decision made for the material risk and crisis reported from each department. (3) Assess material risk and emergency periodically and review the responsible units and SOP process. (4) Assess and amend regulations and measures periodically; also, adjust risk management subjects and the organizer and supporting units in accordance with the actual practice. (5) Supervise and review the risk management task conducted by each department in accordance with the principle of location and practice.
VII. Other material events: None
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VIII. Special disclosures
I. Related party (II) Consolidated financial statements of the related party 1. Related party (1) Organizational structure of related party: Please refer to Page 219-223. (2) Company profile of related party: Please refer to Page 224-232. (3) A controlling and hierarchical relationship according to Article 369.3 of Company Law: None (4) Business scope of ASUS Group: The business scope 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, marketing, and sales. (5) Directors, supervisors, and president of the related party: Please refer to Page 233-239. 2. Business operation of the related party: Please refer to Page 240-245.
(II) Consolidated financial statements of the related party: Please refer to Page 139-209.
(III) Related Party Report: N/A
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 disposed by the subsidiaries in the most recent years and up to the date of the report printed: None
IV. Supplementary disclosures: None
V. Occurrence of events defined in Securities Transaction Law Article 36.2.2 that has great impact on shareholder’s equity or security price in the most recent years and up to the date of the report printed: None
218218 ! WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 JAPAN 100% Technology (Shanghai) Co., Ltd (Shanghai) ASUS UnitedASUS INCORPORATION INC. LIMITED UNIMAX UNIMAX UNIMAX Technology HOLDINGS (Suzhou) Co. Ltd. Co. (Suzhou) ELECTRONICS ASUS PILOT CORP. LIMITED CHANNEL Technology TECHNOLOGY S.L. IBERICA PEGATRON (HONG KONG) Co. Ltd. Co. KONG) (HONG PTE.LIMITED 80% 100% 100% 100% GmbH ASUS ASUS ASUS ASUS ASUS Middle ASUS EastFZC LIMITED INTERNATIONAL Ltd. EastFZC Corp. DEEP Asus ASUS ASUS ASUS 100% 20% 100% 100% Mobostar ASUS DELIGHT Computer Technology Middle ASUSchannel Benelux B.V. Benelux COMPUTER COMPUTER CORP. LIMITED Corp. 100% 100% 100% 100% 100% LIMITED INVESTMENT TECHNOLOGY ASUSTEK (UK) ASUSTEK GREAT EXTEND GREAT Corp. INC. Askey ASMEDIA Computer INC. S.R.L. SARL ASUS TECHNOLOGY
˅˄ˌʳ KOREA ITALY FRANCE ASUS UNITED ASUS CO., LTD. (GUANGZHOU) TECHNOLOGY CORPORATION AsustekInc.Computer LTD LTD LTD ASUS Holland HOLDINGS CENTRAL SOUTH EAST COMPUTER ZEALAND NEW (SHANGHAI) CO., LTD. CO., (SHANGHAI)
INC. B.V. LIMITED 85% 100% 100% 100% 100% 91.24% 100% 100% 100% Polska AXUS ASUS ASUSTEK ELECTROPLATING (SUZHOU) CO., LTD (SUZHOU) MICROSYSTEMS UNITED UNITED NEW AVY PRECISION AVY Powtek Co., Ltd. POWTEK PTE. PTE. LTD. Sp.z.o.o. LIMITED COMPUTER(S) ASUS Co.,Ltd HOLDING HOLDINGS LIMITED TEC ASIAASIA TEC ASIA TEC COMPUTER Private Limited Private INTERNATIONAL ENERTRONIX eMes INC. ASUS 100% 100% 100%100% 51% 100% 100% 100% 100% 100% 100% 100% 100% Hungary Shandong Enertronix Enertronix (HuiZhou) (Shanghai) CO.,LTD. LTD LTD INTERNATIONAL SHINEWAVE Holland B.V. Holland (SHUZHOU) ServicesLLC Fmfduspojd!Dp/-!Mue/ Inc. 77% 51.00% 100% ASUS ASUS ASUS ASUS ASUS ASUS ASUS ASUSTEK ASUS 100% 100% eCareme (Vietnam) Co., Ltd Co., (Vietnam) Technologies, SOCIEDADE UNIPESSOAL LDA UNIPESSOAL ASUS PORTUGAL, ASUS Czech Technology Technology Technology 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Republic s.r.o. Republic ASUS Organization Chart Organization ASUS (2008.12.31)(1) - ASUS COMPUTER ASUS
219 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 United Co., Co., Ltd Technology Co., Ltd. Co., Technology AMA International 100% 100% 100% 56.73% TOPTEK United Int'l PRECISION Technology CORPORATION CO., LIMITED INDUSTRY TECHNOLOGY (SUZHOU) LTD (SUZHOU) Corp Askey 100% Technology International Ltd. Corp 100% 100% 100% ASHINE Askey ASON TECHNOLOGY (SUZHOU) (SUZHOU) LTD. (Jiangsu) Limited
k Inc. Corp. Askey Magic 100% 100% Co.,Ltd. Asuste Computer Computer International (Shanghai) Limited (Shanghai)
˅˅˃ʳ Hua-Min Investment Co., Co., Ltd Ltd. Co., Ltd. GREENASUS RECYCLING Corp. CO.,LTD. Co., Ltd. Corp 100% 100% 100% 100% Dynalink Hua-Cheng International VentureCapital 100% 100% 100%100% 100% 100% 100% 100% 100% 100% 100% Limited WUJIANG Famous Star Famous Profit BIG Tech Double Askey Goodsmart Leading Askey Openbase Leader UNI Magicom Investments Investments Limited Limited(Vietnam) International Profit Technology Limited International International WILL STAR WILL INVESTMENTS LIMITED INVESTMENTS ASUS Organization Chart (2008.12.31) - (2) - (2008.12.31) Chart Organization ASUS
220 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
USA 100% PEGATRON HOLDINGS LTD HOLDINGS LTD 100% 100% NORTH NORTH DIGITEK LIMITED TEC ASIA TEC GLOBAL NORTH NORTH TEC (SHANGHAI) ASIA 50% ASAP CO., LTD CO., ADVANSUS COMPUTER TECHNOLOGY CO.,LIMITED (JIANGGXI) INTERNATIONAL 100% 100% CO., LTD CO., LINKTEK ASAP PRECISION PRECISION (SUZHOU) CO., LIMITED CO., (SUZHOU) ASLINK(H.K.) CO., LIMITED CO., LIMITED LIMITED HOLDINGS LTD HOLDINGS (SHANGHAI) LTD BOARDTEK PROTEK COMPUTER (SUZHOU) CO., LTD. (SUZHOU)
LTD. CORP. 100% CHOICE HOLDINGS GLOBAL PRECISION STRONG BOARDTEK PROTEK ASLINK HOLDING GROUP GROUP LTD PEGATRON PEGATRON
MAINTEK BRIGHTNESS MAGNIFICENT COMPUTER CO., LTD. (SUZHOU)
LTD LTD CORP. 100% UNIHAN ASUS WEST S.R.O. 100% 1.97% 89.57% 8.46% 100% 100% 100% 51% 100% CZECH HOLLANDASIA TEC PEGATRON HOLDING B.V. HOLDING 7.55% 92.45% 100% 100% 100% 100% 100% 100% ASUSTEK ASUS INVESTMENT INVESTMENT CO., LTD.CO., CO., LTD.LTD CO., ASUSPOWER INVESTMENT Inc. LTD 100% 100% 100% 100% 100% Enertronix, ASUS Organization Chart (2008.12.31) - (3) - (2008.12.31) Chart Organization ASUS ENERTRONIX INTERNATIONAL
221 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
- - Communication - - TRAVEL SERVICE TRAVEL Limited LIMITED Inc. Asuspower HUA-YUAN ASFLY Asmobile - 39.26% - 100% 100.00% 100% 100% 100% 59.49% 29.51% 100% 100% 100% 40.51% 31.23% - MEXICO, Corp. Investment S.A. S.A. DE C.V. PEGATRON CO., LTD. (iii) CO.,LTD.
- - CORP. 100% 100% ASUSTEK ASUS PEGATRON JAPAN INC. JAPAN PEGATRON CO., LTD. (ii) CO., LTD.
˅˅˅ʳ 100% 100% 100% 100% 100% HOLDING HOLDING KINSUS KINSUS CO., LTD. (i) CO., LTD. ASUSPOWER INVESTMENT INVESTMENT INVESTMENT (CAYMAN)LTD INTERCONNECT TECH. (SUZHOU) CORP. (SUZHOU) (SAMOA)LTD CORP. Interconnect Technology Corp. Cotek CORP. Limited COTEK Holdings 31.41% 13.48% 16.75% 13.06% 51.84% 12.46% CO., CO., LTD 100.00% 39.00% STARLINK KINSUS TECHNOLOGY STRATEGY KINSUS KINSUS ELECTRONICS ELECTRONICS (SUZHOU) CO., LTD. CO., (SUZHOU) INC. 100% 100% INSIGHT ASROCK AMERICA, FIRSTPLACE HOLDINGS LTD HOLDINGS INTERNATIONAL LLC LIMITED INC. LIMITED ASROCK ASIAROCK LEADER TECHNOLOGY -- 6.45% 49.54% B.V. Europe HOLDINGS, ASUS 100% 2.42% 100% 100% 100%100% 100% 100% 100% 100% 100% 100% 100% 58.41% ASROCK CALROCK SERVICE CANADA PEGATRON SERVICE INC. SERVICE TECHNOLOGY ) ) ) i ii iii ( ( ( ASUS Organization Chart (2008.12.31) - (4) - (2008.12.31) Chart Organization ASUS
222 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
Ability International Investment Co., Ltd. VIEWQUEST TECHNOLOGIES INTERNATIONAL INC. ACTION PIONEER ACTION 12.99% ABILITY LIMITED LTD. CO., LTD. ENTERPRISE ASSOCIATION INTERNATIONAL INTERNATIONAL Ability 100% Technology (Dongguan) Co., Ltd. Co., (Dongguan) ENTERPRISE (BVI)CO.,LTD (BVI) INC. (BVI) VIEWQUEST ABILITY (Shanghai) Inc. (Shanghai) Technologies (SAMOA) INC. (SAMOA) TECHNOLOGIES Inc. Inc. Jade AzureWave 100% 100% Limited 96.03% 60.49% 100% 100% 100% 100% 100% 100% AzureWave AzureWave (CAYMAN) Technologies, Technologies Technologies AZUREWAVE HOLDING INC. (ShenZhen)Inc. 100% 100% 100% Co., Ltd Technology Holding Eminent Star EzWAVE AZWAVE
˅˅ˆʳ 100% 100% 66.67% 33.33% Hannex Limited Limited Scientek Nanjiang Co., Ltd. (Shanghai) International LTD LTD. CORP. 100% 100% 100% UNIHAN UNIHAN HOLDING CASETEK HOLDINGS COMPUTER CO., LTD. (SUZHOU) LTD LTD LTD 100% 100% 100% 100% 100% 100% KAEDER KAEDAR KAEDAR SLITEK CASETEK Core-Tek HOLDINGS TRADINGS HOLDINGS (KUNSHAN) CO., LTD (KUNSHAN) ELECTRONICS INC. LTD. AMA 100% LIMITED HOLDINGS PRECISION (TONGZHOU) CO.LTD (TONGZHOU)
Ltd. LTD TRADINGS AMA AMA 100% 100% 100% 100% Precision TRADING 88.91% 100% EXTECH METAL Grandtech FENGSHOU TECHNOLOGY CORPORATION ASUS Organization Chart (2008.12.31) - (5) ASUS Organization
223 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 ! In thousand NTD / As of 12/31/2008 eripheral equipment, transportable equipment and computer peripheralscomputer and audio-video product Network service andequipment, ink-jet printing technology p appliances, data software, electronic material and office equipment storage products processing and supply electronic appliance and product related spare parts 1,000 resource Selling recycled and repairing the 1,640 Investing and trading activities 62,948 Sales and service center in Europe 16,400 Sales and service center in North America 500,000 Venture capital investing activities 118,200 Designing, manufacturing, processing and selling 100,000 300,000 Designing products and data software, information 107,250 Software R&D 250,000 Database service, wired communication 200,000 Investing activities 196,800 Investing activities 190,000 Trading electronic appliances, communication 8,027,145 Investing activities 8,156,520 Designing, manufacturing and selling modems, 1,753,229 Investing activities 18,846,281 Designing, and maintaining selling manufacturing, CAPITAL MAJOR BUSINESS / PRODUCTION ITEMS
˅˅ˇʳ ADDRESS ! ! 89.03.24 Taipei City 84.12.29 Taipei County 96.02.27 Taipei City 97.05.27 Taipei City 86.08.06 Taipei City 93.03.31 Taipei City 93.11.24 Islands Cayman 89.03.29 Netherlands Emmen, 78.11.10 Taipei County 87.06.16 Hsinchu Science Park 83.06.21 CA,USA 88.04.20 Taipei City 97.05.27 Taipei City 91.03.08 Islands Cayman 88.09.20 Islands Cayman 92.08.27 Virgin British Islands DATE OF OF DATE ESTABLISHMENT NAME OF CORPORATION ASUS Technology Inc. AXUS MICROSYSTEMS INC. Shinewave Inc. International ASUS HOLLAND B.V. ASUS INTERNATIONAL LTD. ASUSTEK HOLDINGS LIMITED ASUSchannel CORPORATION AMA CORPORATION ASMedia Technology Inc. Askey Corp. Computer Pegatron Corporation Technologies, Inc.eCareme International United Technology Co., Ltd. Hua-Cheng Venture Capital Corp. Co., Ltd. Hua-Min Investment GREENASUS RECYCLING CO., LTD. ASUS COMPUTER 97.05.26 INTERNATIONAL Taipei City (2)Basic Data Affiliated of Enterprises
224 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 premium hardware premium products products management management systems, and R&D; providing related automation technology and after-sales systems service setsmicroprocessor products 1,640 Merchandise trading 1,640 Merchandise trading 1,640 Merchandise trading 1,640 Merchandise trading 1,640 Merchandise trading 4,920 consultant service Providing management 1,640 Merchandise trading 8,342 Computer security systems, messenger 36,548 Manufacturing and selling communication 119,162 Developing andproducts selling communication 426,625 Manufacturing and selling 464,969 Developing, constructing and selling real estate communication 121,360 Merchandise trading 210,789 Manufacturing and selling new electronic parts and 428,040 in overseas companies Investment 1,054,854 in overseas companies Investment 2,340,605 Manufacturing and selling communication 2,001,784 in overseas Investment companies 2,378,844 in overseas Investment companies CAPITAL MAJOR BUSINESS / PRODUCTION ITEMS
˅˅ˈʳ ADDRESS 88.05.13 British Virgin Islands 85.10.01 British Virgin Islands 90.10.04 British Islands Virgin 88.06.23 British West Indies 85.11.01 HO CHI MINH CITY, VIETNAM 69,163 Manufacturing and exporting modem 94.01.07 BritishVirgin Islands 85.06.28 CA, USA 94.01.10 Virgin British Islands 92.07.01 Shanghai, China 96.04.27 Suzhou, China 96.12.26 Suzhou, China 93.03.12 Port Louis Malritius 94.09.29 Suzhou, China 97.01.03 Islands Samoa 95.06.07 Apia, Samoa 90.08.30 Jiangsu, China 95.12.12 Apia, Samoa 91.03.22 Suzhou, China 93.09.02 Port Louis Malritius DATE OF OF DATE ESTABLISHMENT NAME OF CORPORATION Toptek Precision Industry (Suzhou) Co., Ltd. eMES (Suzhou) Co., Ltd. GREAT EXTEND INVESTMENT CORP. Askey International Corp. Dynalink International Corp. Magic International Co., Ltd. Co.,Askey Ltd. (Vietnam) Double Tech Limited Profit Big Limited Limited Star Investment Famous InternationalMagicom Corp. Askey Technology (Shanghai) Ltd. Openbase Limited InternationalGoodsmart Ltd. Leading Profit Co., Ltd. UNI Leader International Ltd. Askey Technology (Jiangsu) Ltd. Ason Technology (Suzhou) Ltd. Ashine Technology (Suzhou) Ltd. Wujiang Limited Will Star Investments 95.12.26 Wujiang, China
225 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 notebooks, servers and software, and service after-sales parts and accessories relevant products,relevant after-sales service after-sales service 4,465 and Tradingparts,relevant andcomputers 1,640 Investing and trading activities 2,312 Sales and service center in Netherlands 4,901 Sales and service center in France 2,376 Sales and service center in UK 2,117 Sales and service center in Hong Kong 78,524 Repairing computers, electronic components and 98,400 Investing and trading activities 66,256 Investing and trading activities 11,821 Sales and service center in Germany 420,988 Investing and trading activities 292,011 Selling main boards, computer peripherals, 985,082 Investing and trading activities 984,082 Trading of IT products 264,040 Investing and trading activities 185,648 Investing and trading activities 204,624 Manufacturing and selling electronic parts 256,672 Manufacturing and selling electronic parts 213,200 Investing and trading activities 1,115,200 Investing and trading activities 4,966,642 Investing and trading activities 1,142,796 Manufacturing and selling electronic parts, camera CAPITAL MAJOR BUSINESS / PRODUCTION ITEMS
˅˅ˉʳ ADDRESS 96.10.22 Dubai, UAE 94.12.21 British Islands Virgin 95.03.30 95.03.30 Shandong, China Huizhou, China 94.04.26 Singapore 89.02.03 British VirginIslands 94.03.30 British Virgin Islands 91.08.28 Islands Samoa 94.10.08 Shanghai, China 95.04.03 UK 95.02.21 Netherlands Emmen, 91.01.23 British Virgin Islands 91.07.09 Virgin British Islands 94.11.25 Kowloon, Hong Kong 87.12.09 Suzhou, China 89.02.11 British Virgin Islands 80.06.19 Germany BRD, 91.07.12 Paris, France 96.02.15 Islands Cayman 89.02.03 British Virgin Islands DATE OF OF DATE ESTABLISHMENT NAME OF CORPORATION SOUTH TEC ASIA LIMITED CENTRAL TEC ASIA LIMITED POWTEK HOLDINGS LTD Enertronix Holding Limited UNITED NEW LIMITED ASUS (Shanghai) Computer Co., Ltd. Powtek (Shanghai) Co., Ltd. 89.06.30 Shandong Enertronix Co., Ltd. Shanghai, China Huizhou Enertronix Co., Ltd. AVY PRECISION ELECTROPLATING (SUZHOU) CO., LTD. DEEP DELIGHT LTD CHANNEL PILOT LIMITED UNIMAX HOLDINGS LIMITED ASUS COMPUTER CORPORATION MOBOSTAR TECHNOLOGY LIMITED 87.03.26 ASUS TECHNOLOGY PTE. LTD. AsusEast FZCO Middle British Virgin Islands ASUS GmbH COMPUTER ASUS B.V. Benelux COMPUTER ASUS SARL FRANCE ASUSTEK (UK) LIMITED ASUS TECHNOLOGY (HONG KONG) LIMITED
226 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 computer peripherals computer Manufacturing Manufacturing and selling electronic products and telecommunication appliances andDesigning, selling manufacturing, maintaining peripheralscomputer and audio-video product 343 Sales and service center in Czech 455 Sales and service center in Singapore 557 Sales and service center in Polska 9,248 Investing and trading activities 2,240 Sales and service center in New Zealand 1,818 Sales and service center in Japan 2,220 Sales and service center in Italy 1,387 Sales and service center in Spain 2,452 Sales and service center in Vietnam 2,143 Sales and service center in Hungary 1,387 Sales and service center in Portugal 53,319 Sales and service center in India 46,596 Sales and service center in Korea 213,000 318,726 Selling main boards, notebooks, server and 394,492 service software and Providing computer system 600,000 Manufacturing peripherals computer 9,086,000 Investing activities 8,727,000 Investing activities 8,419,000 Investing activities 8,001,000 CAPITAL MAJOR BUSINESS / PRODUCTION ITEMS
˅˅ˊʳ ADDRESS 96.04.17 Taipei County 94.09.29 New Zealand 89.07.21 Italy 95.09.13 India 97.05.28 Japan 87.03.24 Taipei City 92.10.21 Singapore 96.03.06 Nederland 93.05.19 Barcelona, Spain 94.10.31 89.06.09 Praha, Czech Republic 96.05.10 Shanghai, China 97.05.21 Hungary Portugal 86.12.31 Taipei City 94.07.31 Warsaw, Poland 96.02.27 Taipei City 95.07.01 Korea 95.01.27 Taipei City DATE OF OF DATE ESTABLISHMENT NAME OF CORPORATION ASUS KOREA Co., Ltd. ASUSTEK COMPUTER (SINGAPORE) PTE, LTD. ASUS POLSKA SP.Z.O.O. ASUS New Zealand Limited Asus Technology Private Limited ASUS Technology Holland B.V. Co., ASUSLTD. Technology (Vietnam) ASUSTEK ITALY S.R.L. ASUS S.L. IBERICA, 96.03.01 ASUS Technology (Suzhou) Co. Ltd. ASUS Japan Incorporation Vietnam CZECH ASUS COMPUTER REPUBLIC S.R.O. 97.03.12 ASUS United Technology (Shanghai) Co., Ltd. Suzhou, China ASUS Hungary Services Limited Company Liability ASUS PORTUGAL, SOCIEDADE UNIPESSOAL LDA. Electronics Inc. Unimax Unihan Corporation ASUSPOWER INVESTMENT CO., LTD. ASUS INVESTMENT CO., LTD. ASUSTEK INVESTMENT CO., LTD. Advansus Corporation 87.03.24 Taipei City
227 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 Manufacturing Manufacturing and selling electronic service consultant providing business management parts, and wholesale Selling computer peripherals, office equipment, digital cameras and food products retail automation and wholesale Manufacturing electronic products and plastic components electronic parts, wholesaling storageData and processing equipment, wired and wireless manufacturing 1 Sales and service center in North America 328 Investing and trading activities 6,000 Travel agency 9,840 Trading peripherals computer 59,171 Trading parts electronic 33,512 Sales and service center in Japan 16,400 Sales and service center in North America 52,611 Trading activities 500,000 Investing activities 690,000 400,000 Designing and developing parts computer 402,384 Wireless equipment and wired communication 105,419 Investing activities 748,151 Sales and service center in Mexico 4,229,583 4,460,000 1,452,766 Installing, and repairing selling electronic products 1,100,270 1,384,703 Investing activities 5,198,155 Investing activities 11,447,200 Investing and trading activities 19,570,660 Investing activities CAPITAL MAJOR BUSINESS / PRODUCTION ITEMS
˅˅ˋʳ ADDRESS 96.12.11 Taipei City 95.11.06 Islands Samoa 94.01.24 Taipei City 91.10.21 CzechRepublic 87.04.15 Taipei County 91.07.22 Netherlands Emmen, 95.11.21 Islands Samoa 94.03.31 Taipei City 91.05.22 87.02.13 Taipei County British Virgin Islands 94.11.24 Taipei City 96.09.07 Islands Cayman 89.11.15 Chiba-ken, Japan 97.01.03 CA, USA 54.05.21 Taipei City 90.02.12 Kentucky, USA 93.11.22 America. Central Belize, 95.03.30 Virgin British Islands 96.09.07 Islands Cayman 96.01.03 Islands Samoa DATE OF OF DATE ESTABLISHMENT NAME OF CORPORATION Enertronix, Inc. Pegatron Holding Ltd. PEGATRON USA ASUS HOLLAND HOLDING B.V. AMA Precision Inc. Ability Enterprise Co., Ltd. Unihan Holding Ltd. Starlink Electronics Corporation Kinsus Interconnect Technology Corp. AsRock Inc. 89.09.11 ASUSPOWER CORPORATION PEGATRON TECHNOLOGY Taoyuan County SERVICE INC. PEGATRON JAPAN INC. PEGATRON S.A.DEMEXICO C.V. Travel Asfly Service Limited Hua-Yuan Limited Investment Enertronix International Limited 91.09.04 PEGATRON CZECH S.R.O. AMA TECHNOLOGY Chihuahua, Mexico CORPORATION AMA Holdings Limited METAL TRADINGS LTD. EXTECH LTD.
228 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 roducts; analyzing marketing strategy and parts R&D, manufacturing components, and Providing after-sales service mold selling technology, electronic and material semiconductor p Developing and designing new technology and developing new customers 9,248 Database service and trading material electronic 67,240 Investing in subsidiaries 11,637 Maintenance service 16,400 65,600 Office building leasing 66,469 Manufacturing, developing and selling electronic 56,059 Trading activities 93,152 Investing and trading activities 65,600 Database service and trading material electronic 68,880 Investing activities 131,200 Investing and trading activities 476,692 397,208 Investing and trading activities 402,128 Investing and trading activities 492,000 Investing activities 512,340 Sales and manufacturing circuit board and 492,000 Investing activities 4,231,564 Investing and trading activities 1,312,000 service Database management 1,707,568 Investing and trading activities CAPITAL MAJOR BUSINESS / PRODUCTION ITEMS
˅˅ˌʳ ADDRESS 94.05.07 Canada 91.07.25 British Virgin Islands 92.01.29 CA, USA 88.08.13 British VirginIslands 89.10.11 CA, USA 91.09.16 Netherlands Nijmegen, 96.02.09 90.05.22 TongZhou, China British Virgin Islands 95.12.04 95.12.05 Islands Samoa 96.04.09 Islands Cayman Suzhou, China 88.03.10 British Virgin Islands 92.02.19 CA, USA 89.02.03 British Virgin Islands DATE OF OF DATE ESTABLISHMENT NAME OF CORPORATION FengShuo Trading (TongZhou) Co., Ltd. Grandtech Precision (TongZhou) Co., Ltd. 96.04.29 STRATEGY TECHNOLOGY CO., LTD TongZhou, China COTEK HOLDINGS LIMITED ElectronicsCotek (Suzhou) Co., Ltd. KINSUS CORP.(USA) 89.02.17 KINSUS HOLDING (SAMOA) Suzhou, China LIMITED KINSUS HOLDING (CAYMAN) LIMITED Kinsus Interconnect Technology (Suzhou) Corp. ASIAROCK TECHNOLOGY LTD LEADER INSIGHT HOLDINGS LTD ASROCK EUROPE B.V. CALROCK HOLDINGS, LLC 92.02.19 FIRSTPLACE INTERNATIONAL LTD INC. ASROCK AMERICA, British Virgin Islands Asus Service Canada, Inc. 92.02.19 BOARDTEK HOLDINGS LIMITED MAGNIFICENT BRIGHTNESS British Islands Virgin LIMITED STRONG CHOICE GROUP LIMITED 88.08.13 WEST TEC ASIA LIMITED British VirginIslands 89.01.06 British Islands Virgin
229 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 Manufacturing, developing supply and units, computer selling cases, computer notebooks, systems, power main boards, computer peripherals and service maintenance Manufacturing, developing and selling computers, printers and electronic components, and after-sales service Developing, manufacturing and selling electronic components, circuit boards and relevant products, and after-sales service Manufacturing, developing and phones, computers, selling routers, mobile DTV and and after-sales components, service electronic Manufacturing, developing and selling computers, computer parts, and after-sales service application systems, and 1,640 Investing and trading activities 418,751 Selling the wire and cable 156,948 Investing and trading activities 626,259 Investing and trading activities 256,231 Manufacturing and selling earphone parts 656,000 Investing and trading activities 410,000 Investing activities 7,644,040 Investing and trading activities 8,875,499 1,337,087 1,261,702 1,989,129 7,462,829 1,149,640 Investing and trading activities 2,787,734 Investing and trading activities CAPITAL MAJOR BUSINESS / PRODUCTION ITEMS
˅ˆ˃ʳ ADDRESS 95.02.11 Shanghai, China 93.09.21 Shanghai, China 89.02.03 British Virgin Islands 94.05.30 Islands Cayman 88.08.13 British VirginIslands 93.02.17 British Virgin Islands 93.03.31 Virgin British Islands 94.09.15 South KLN, Hong Kong 97.01.29 Hong Kong 97.03.19 Jiangxi, China 95.05.29 Islands Cayman DATE OF OF DATE ESTABLISHMENT NAME OF CORPORATION PROTEK GLOBAL HOLDINGS LIMITED NORTH TEC ASIA LTD ASLINK PRECISION CO., LTD DIGITEK GLOBAL HOLDINGS LIMITED Boardtek (Suzhou) Computer Co., Ltd. (Suzhou) Computer Maintek Co., Ltd. 89.02.17 Suzhou, China 88.04.21 Protek (Shanghai) Limited Suzhou, China North Tec Asia (Shanghai) Limited ASLINK (H.K.) PRECISION CO., LIMITED Linktek Precision (Suzhou) Co., Ltd. ASAP INTERNATIONAL CO., LIMITED 94.08.01 ASAP TECHNOLOGY CO., LIMITED. (JIANGXI) CASETEK HOLDINGS LIMITED Suzhou, China Azure Holding wave(Cayman) Inc. (Suzhou) Computer Casetek Co., Ltd. 89.02.17 Suzhou, China
230 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 computer computer peripherals, precise cameras digital equipment, and Selling computer peripherals, digital cameras and components electronic Researching and producing the parts of notebooks, designing nonmetal tooling, equipment electronic and specific related producing products, repairing precise and after-sales service equipment and providing 5,000 Selling computer peripherals 5,846 Investing activities 1,469 Investing activities 98,165 59,495 Designing and selling products computer 49,200 73,594 parts Manufacturing electronic 12,724 Investing activities 65,660 Investing activities 65,600 Trading activities 39,688 Investing and trading activities 590,000 Selling of office machinery, electronic parts, 107,220 Designing and selling products computer 820,000 Investing and trading activities 164,000 Investing and trading activities 840,828 Investing activities 660,522 cases computer ofsteel stainless Tooling module CAPITAL MAJOR BUSINESS / PRODUCTION ITEMS
˅ˆ˄ʳ ADDRESS 94.04.22 Xindian City, Taipei County 97.06.30 Hong Kong 93.09.15 TaipeiCounty 97.05.30 Islands Samoa 97.09.18 Shanghai, China 89.12.27 Kunshan, China 96.04.27 Shanghai, China 93.03.12 91.07.15 Islands Cayman Shenzhen, China 78.03.21 81.09.09 British Virgin Islands 77.01.23 PORT LOUIS MAURITIUS CA, USA 91.09.30 Brunei 96.03.01 Islands Samoa 88.11.09 British Virgin Islands 95.10.26 Islands Samoa DATE OF OF DATE ESTABLISHMENT NAME OF CORPORATION SLITEK HOLDINGS LIMITED KAEDAR HOLDINGS LIMITED KAEDAR TRADING LTD. Core-Tek (Shanghai) Limited KAEDER ELECTRONICS (KUNSHAN) CO., LTD AzureWave Technologies, Inc. EZWave Technologies, Inc. Azwave Holding Inc. (Samoa) EMINENT STAR CO., LTD. AzureWave Technologies (Shanghai) Inc. JADE TECHNOLOGIES LIMITED HANNEX INTERNATIONAL LIMITED Azurewave Technology (Shenzhen) Co., Ltd. YEH-HUA Technologies (Nanjing) Inc. ABILITY ENTERPRISE (BVI) CO., LTD. 93.05.12 ACTION PIONEER INTERNATIONAL LTD. Nanjing, China VIEWQUEST TECHNOLOGIES INTERNATIONAL INC.
231 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470 Manufacturing and selling computer peripherals, and components electronic cameras digital 39,360 Investing activities 217,464 573,133 Investing activities 714,974 Producing and selling digital cameras CAPITAL MAJOR BUSINESS / PRODUCTION ITEMS
˅ˆ˅ʳ ADDRESS 77.10.22 83.11.12 British Virgin Islands 75.08.15 Islands Samoa 81.12.29 Taipei City Dongguan, China DATE OF OF DATE ESTABLISHMENT NAME OF CORPORATION VIEWQUEST TECHNOLOGIES (BVI) INC. ASSOCIATION INTERNATIONAL LTD. Co., InternationalAbility Investment Ltd. Ability Technology (Dongguan) Co., Ltd. Note: TheNote: paid-in involved capital foreign currency was exchanged under foreign exchange rate.
232 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
(5)Directors, Supervisors and Presidents of Affiliated Enterprises As of 12/31/2008 SHAREHOLDING NAME OF CORPORATION TITLE NAME OF PERPRESENTATIVE SHARES % Chairman Asustek Computer Inc.ȐRepresentativeǺT.H. Tungȑ 1,884,628,141 100% Director Asustek Computer Inc.ȐRepresentativeǺTed Hsuȑ ɡ ɡ Pegatron Corporation Director Asustek Computer Inc.ȐRepresentativeǺJason Chengȑ ɡ ɡ Supervisor Asustek Computer Inc.ȐRepresentativeǺJerry Shenȑ ɡ ɡ Chairman Asustek Computer Inc.ȐRepresentativeǺCheng-kuei Lin*ȑ 815,640,733 100.00% Director Asustek Computer Inc.ȐRepresentativeǺJonney Shihȑ ɡ ɡ Askey Computer Corporation Director & President Asustek Computer Inc.ȐRepresentativeǺYu-Zhong Huang*ȑ ɡ ɡ Supervisor Asustek Computer Inc.ȐRepresentativeǺSharon Suȑ ɡ ɡ Chairman Asustek Computer Inc.ȐRepresentativeǺJonathan Tsangȑ 19,000,000 100% Director Asustek Computer Inc.ȐRepresentativeǺJonney Shihȑ ɡ ɡ ASUS TECHNOLOGY INC. Director & President Asustek Computer Inc.ȐRepresentativeǺJerry Shenȑ ɡ ɡ Supervisor Asustek Computer Inc.ȐRepresentativeǺSandy Weiȑ ɡ ɡ Chairman Asustek Computer Inc.ȐRepresentativeǺJerry Shenȑ 27,370,600 91.24% Director & President Asustek Computer Inc.ȐRepresentativeǺChe-Wei Lin*ȑ ɡ ɡ ASMEDIA TECHNOLOGY INC. Director Asustek Computer Inc.ȐRepresentativeǺHH Chengȑ ɡ ɡ Supervisor Asustek Computer Inc.ȐRepresentativeǺSandy Weiȑ ɡ ɡ Chairman Asustek Computer Inc.ȐRepresentativeǺJonney Shihȑ 10,046,980 85.00% Director Asustek Computer Inc.ȐRepresentativeǺJonathan Tsangȑ ɡ ɡ AXUS MICROSYSTEMS INC. Director Asustek Computer Inc.ȐRepresentativeǺJerry Shenȑ ɡ ɡ Supervisor Asustek Computer Inc.ȐRepresentativeǺSandy Weiȑ ɡ ɡ President Jeffer Wang 393,999 3.33% Chairman Asustek Computer Inc.ȐRepresentativeǺH.C. Hungȑ 5,469,750 51.00% Director Asustek Computer Inc.ȐRepresentativeǺJonney Shihȑ ɡ ɡ SHINEWAVE INTERNATIONAL INC. Supervisor Asustek Computer Inc.ȐRepresentativeǺCK Hsiehȑ ɡ ɡ Director Mercuries Data Systems Ltd.ȐRepresentativeǺShiang-Jhong Chenȑ 2,145,000 10.00% Chairman Asustek Computer Inc.ȐRepresentativeǺJonney Shihȑ 50,000,000 100% Director Asustek Computer Inc.ȐRepresentativeǺJonathan Tsangȑ ɡ ɡ Hua-Cheng Venture Capital Corp. Director Asustek Computer Inc.ȐRepresentativeǺJerry Shenȑ ɡ ɡ Supervisor Asustek Computer Inc.ȐRepresentativeǺDavid Changȑ ɡ ɡ Chairman Asustek Computer Inc.ȐRepresentativeǺJonney Shihȑ 50,000,000 100% Director Asustek Computer Inc.ȐRepresentativeǺJonathan Tsangȑ ɡ ɡ Hua-Cheng Venture Capital Corp. Director Asustek Computer Inc.ȐRepresentativeǺJerry Shenȑ ɡ ɡ Supervisor Asustek Computer Inc.ȐRepresentativeǺDavid Changȑ ɡ ɡ Chairman Asustek Computer Inc.ȐRepresentativeǺJerry Shenȑ 14,181,707 56.73% Director & President Asustek Computer Inc.ȐRepresentativeǺDaniel Lanȑ ɡ ɡ International United Technology Supervisor Asustek Computer Inc.ȐRepresentativeǺMark Leeȑ ɡ ɡ Co., Ltd. Director HUA ENG WIRE & CABLE CO.,LTD.ȐRepresentativeǺMS Linȑ 2,384,570 9.54% Supervisor China International Investment Co., Ltd.ȐRepresentativeǺJP Hsiehȑ 215,500 0.86% Chairman Asustek Computer Inc.ȐRepresentativeǺEric Chenȑ 7,700,000 77.00% Director Asustek Computer Inc.ȐRepresentativeǺBarry Huangȑ ɡ ɡ Director Asustek Computer Inc.ȐRepresentativeǺSamson Huȑ ɡ ɡ eCareme Technologies, Inc. Supervisor Asustek Computer Inc.ȐRepresentativeǺDalian Wuȑ ɡ ɡ Director Chung-Yuan Chu* 1,185,714 11.86% Director Han-Chang Wu* 428,583 4.29% Supervisor Hou-Sheng Li* 440,714 4.41% Chairman Asustek Computer Inc.ȐRepresentativeǺJonney Shihȑ 765,000 51% Supervisor Asustek Computer Inc.ȐRepresentativeǺSandy Weiȑ ɡ ɡ ASUSCOM NETWORK INC. Director Asuspower Investment Inc.ȐRepresentativeǺTed Hsuȑ 105,000 7% Director Asustek Computer Inc.ȐRepresentativeǺT.H. Tungȑ 527,000 35.13% President Benson Lin ɡ ɡ GREENASUS RECYCLING CO., Chairman Asustek Computer Inc.ȐRepresentativeǺJonney Shihȑ 100,000 100% LTD. Director Asustek Computer Inc.ȐRepresentativeǺJason Chengȑ ɡ ɡ
233 ! 233 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
SHAREHOLDING NAME OF CORPORATION TITLE NAME OF PERPRESENTATIVE SHARES % Director Asustek Computer Inc.ȐRepresentativeǺSandy Weiȑ ɡ ɡ Supervisor Asustek Computer Inc.ȐRepresentativeǺJames Huangȑ ɡ ɡ Director Asustek Computer Inc.ȐRepresentativeǺJonney Shihȑ 50,000 100% Director Asustek Computer Inc.ȐRepresentativeǺT.H. Tungȑ ɡ ɡ ASUS COMPUTER INTERNATIONAL Director Asustek Computer Inc.ȐRepresentativeǺIvan Hoȑ ɡ ɡ President Jackie Hsu ɡ ɡ Asustek Holdings Limited Chairman & President Asustek Computer Inc.ȐRepresentativeǺJonney Shihȑ 53,452,104 100% ASUS INTERNATIONAL LTD Chairman Asustek Computer Inc.ȐRepresentativeǺJonney Shihȑ 244,730,042 100% Asus Holland B. V. Chairman & President Asustek Computer Inc.ȐRepresentativeǺJonney Shihȑ 30,000,000 100% ASUSCHANNEL corp. Chairman & President Asustek Computer Inc.ȐRepresentativeǺJonney Shihȑ 50,000 100% AMA CORPORATION Chairman & President Asustek Computer Inc.ȐRepresentativeǺJonathan Tsangȑ 6,000,000 100% Central Tec Asia Ltd. Chairman & President Asustek Holdings LimitedȐRepresentativeǺJonney Shihȑ 2,020,000 100% South Tec Asia Ltd. Chairman & President Asustek Holdings LimitedȐRepresentativeǺJonney Shihȑ 5,660,000 100% POWTEK HOLDINGS LTD Chairman & President Asustek Holdings LimitedȐRepresentativeǺJonney Shihȑ 8,050,000 100% UNITED NEW LIMITED Chairman Asustek Holdings LimitedȐRepresentativeǺEric Changȑ 17,396,100 51.00% ENERTRONIX HOLDING LIMITED Chairman Asustek Holdings Limited (RepresentativeǺJerry Shen) 12,835,000 100% ASUS UNITED TECHNOLOGY ɡ 100% Chairman South Tec Asia Ltd.ȐRepresentativeǺJackie Hsuȑ (GUANGZHOU) CO., LTD. ASUS COMPUTER (SHANGHAI) CO., LTD. Chairman Central Tec Asia Ltd. ȐRepresentativeǺRoger Kulaiȑ ɡ 100% Powtek (Shanghai) Co., Ltd. Chairman POWTEK HOLDINGS LTDȐRepresentativeǺJackie Hsuȑ ɡ 100% AVY PRECISION ELECTROPLATING Chairman UNITED NEW LIMITEDȐRepresentativeǺChun-Yi Tung*ȑ ɡ 100% (SUZHOU) CO., LTD. ENERTRONIX HOLDINGS LTD Shandong Enertronix Electronic Co., Ltd. Director ɡ 100% (RepresentativeǺHwa-Rong Jeng*) Enertronix (HuiZhou) Co., Ltd. Director ENERTRONIX HOLDINGS LTD(RepresentativeǺT.C.Chen) ɡ 100% TOPTEK PRECISION INDUSTRY Chairman AMA CORPORATIONȐRepresentativeǺMin-Fa Yeh*ȑ ɡ 100% CO., LIMITED SHINEWAVE INTERNATIONAL INC. eMES (SHUZHOU) CO., LTD. Chairman ɡ 100% ȐRepresentativeǺJiunn-Hwa Yu*ȑ DEEP DELIGHT LTD Chairman ASUS INTL LTDȐRepresentativeǺJonney Shihȑ 151,422,000 100% Asus Computer Corp. Chairman & President ASUS INTL LTDȐRepresentativeǺJonney Shihȑ 3,000,000 100% UNIMAX HOLDINGS LIMITED Director ASUS INTL LTDȐRepresentativeǺJonney Shihȑ 6,500,000 100% Director UNIMAX HOLDINGS LIMITEDȐRepresentativeǺJonathan Tsangȑ 21,300,000 100% Director UNIMAX HOLDINGS LIMITEDȐRepresentativeǺJustin Linȑ ɡ ɡ UNIMAX ELECTRONICS INC. Director & President UNIMAX HOLDINGS LIMITEDȐRepresentativeǺBarry Huangȑ ɡ ɡ Supervisor UNIMAX HOLDINGS LIMITEDȐRepresentativeǺMark Leeȑ ɡ ɡ CHANNEL PILOT LTD. Chairman ASUS INTL LTDȐRepresentativeǺJonney Shihȑ 30,033,000 100% Chairman CHANNEL PILOT LTD. ȐRepresentativeǺJonathan Tsangȑ 30,002,500 100% ASUS TECHNOLOGY PTE LTD. Director CHANNEL PILOT LTD. ȐRepresentativeǺBenson Linȑ ɡ ɡ Director CHANNEL PILOT LTD. ȐRepresentativeǺDarwin Wuȑ ɡ ɡ ASUS United Technology Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺPeter Shihȑ ɡ 100% (Shanghai) Co., Ltd. ASUS COMPUTER Czech Republic s.r.o. Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺSteve Changȑ ɡ 100% ASUS TECHNOLOGY (HONG Chairman ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺJonathan Tsangȑ 500,000 100% KONG) LIMITED Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺBenson Linȑ ɡ ɡ ASUS COMPUTER GmbH Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺEric Chenȑ ɡ 100% ASUS COMPUTER Benelux B.V. Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺEric Chenȑ ɡ 100% ASUSTEK (UK) LIMITED Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺSteve Changȑ ɡ 100% Chairman ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺSteve Changȑ ɡ 100% ASUS FRANCE SARL Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺMadeleine Hungȑ ɡ ɡ ASUS TECHNOLOGY ITALY S.R.L. Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺEric Chenȑ ɡ 100% ASUS KOREA CO., LTD. Chairman ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺJonathan Tsangȑ 358,433 100% 234 ! 234 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
SHAREHOLDING NAME OF CORPORATION TITLE NAME OF PERPRESENTATIVE SHARES % Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺBensom Linȑ ɡ ɡ Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺKevin Duȑ ɡ ɡ ASUS NEW ZEALAND LIMITED Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺTed Chenȑ 118,000 100% ASUS POLSKA SP.z.o.o. Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺEric Chenȑ 1,000 100% ASUSTEK COMPUTER(S) PTE, LTD. Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺDarwin Wuȑ 20,002 100% Chairman ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺJonathan Tsangȑ 7,500,000 100% ASUS TECHNOLOGY PRIVATE LIMITED Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺDarwin Wuȑ ɡ ɡ Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺAlbert Tungȑ ɡ ɡ ASUS IBERICA S.L. Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺEric Chenȑ 3,000 100% ASUS Technology Holland B.V. Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺJonathan Tsangȑ 200,000 100% ASUS Hungary Services Limited Director Asus Technology Holland B.V.ȐRepresentativeǺEric Chenȑ 50,000 100% Liability Company ASUS PORTUGAL, SOCIEDADE Asus Technology Holland B.V.ȐRepresentativeǺSean Director 30,000 100% UNIPESSOAL LDA Chenȑ ASUS Technology (Vietnam) Co., LTD. Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺJonathan Tsangȑ ɡ 100% Chairman ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺJonathan Tsangȑ 5 100% Asus Middle East FZC Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺBensonLinȑ ɡ ɡ Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺMarvis Hsiaoȑ ɡ ɡ Chairman ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺKevin Duȑ 500 100% Asus Japan Incorporation Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺHideki Satoȑ ɡ ɡ ASUS Technology (Suzhou) Co. Ltd. Director ASUS TECHNOLOGY PTE LTD.ȐRepresentativeǺVictor Kaoȑ ɡ 100% MOBOSTAR TECHNOLOGY DEEP DELIGHT LTDȐRepresentativeǺJonney Shihȑ Director 50,000 100% LTD. International United Technology Co., Ltd. Director International United Technology Co., Ltd. (RepresentativeǺJerry Shen) ɡ 100% GREAT EXTEND INVESTMENT CORP. Director ASMEDIA TECHNOLOGY INC. (RepresentativeǺChe-Wei Lin*) 150,000 100% Dynalink International Corporation Director Askey Computer Corp. (RepresentativeǺCheng-Kuei Lin*) 32,160,172 100% Magic International Company Limited Director Askey Computer Corp. (RepresentativeǺCheng-Kuei Lin*) 72,525,738 100% Askey International Corporation Director Askey Computer Corp. (RepresentativeǺCheng-Kuei Lin*) 3,700,000 100% Magic International Company Limited(RepresentativeǺCheng-Kuei Magicom International Corporation Director 61,030,000 100% Lin*) Magic International Company Limited(RepresentativeǺCheng-Kuei Leading Profit Company Limited Director 50,000 100% Lin*) Magic International Company Limited(RepresentativeǺCheng-Kuei Uni Leader International Limited Director 50,000 100% Lin*) Magic International Company Limited(RepresentativeǺCheng-Kuei Goodsmart International Limited Director 50,000 100% Lin*) Magic International Company Limited(RepresentativeǺCheng-Kuei Openbase Limited Director 50,000 100% Lin*) Double Tech Limited Director Dynalink International Corporation(RepresentativeǺCheng-Kuei Lin*) 50,000 100% Askey (Vietnam) Company Limited Director Dynalink International Corporation(RepresentativeǺCheng-Kuei Lin*) 2,883,359 100% BIG Profit Ltd. Director Dynalink International Corporation(RepresentativeǺCheng-Kuei Lin*) 50,000 100% Famous Star Investments Ltd. Director Dynalink International Corporation(RepresentativeǺCheng-Kuei Lin*) 13,050,000 100% Magic International Company Limited(RepresentativeǺCheng-Kuei Chairman ɡ 100% Askey Technology (Shanghai) Limited Lin*) President ɡ ɡ Hon-Man Lui* Askey Technology (Jiangsu) Limited Director & President Magicom International Corporation(RepresentativeǺYu-Chung Huang*) ɡ 100% ASHINE TECHNOLOGY (SUZHOU) LTD. Director & President Magicom International Corporation(RepresentativeǺYu-Chung Huang*) ɡ 100% ASON TECHNOLOGY (SUZHOU) Director & President Magicom International Corporation(RepresentativeǺChi-Hsish Chang*) ɡ 100% LTD WUJIANG WILL Director & President Famous Star Investments Ltd. (RepresentativeǺHon-Man Lui*) ɡ 100% STAR INVESTMENTS LIMITED Unihan Corporation Chairman Pegatron CorporationȐRepresentativeǺT.H. Tungȑ 800,100,000 100% 235 ! 235 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
SHAREHOLDING NAME OF CORPORATION TITLE NAME OF PERPRESENTATIVE SHARES % Director Pegatron CorporationȐRepresentativeǺTed Hsuȑ ɡ ɡ Director Pegatron CorporationȐRepresentativeǺJason Chengȑ ɡ ɡ Supervisor Pegatron CorporationȐRepresentativeǺJerry Shenȑ ɡ ɡ Chairman Pegatron CorporationȐRepresentativeǺJerry Shenȑ 40,238,437 100% Director Pegatron CorporationȐRepresentativeǺHt Tungȑ ɡ ɡ Enteronix, Inc. Director Pegatron CorporationȐRepresentativeǺT.C. Chenȑ ɡ ɡ Supervisor Pegatron CorporationȐRepresentativeǺSharon Suȑ ɡ ɡ Chairman Unihan CorporationȐRepresentativeǺT.H. Tungȑ 40,000,000 100% Director Unihan CorporationȐRepresentativeǺSteven Chouȑ ɡ ɡ Director Unihan Corporation.ȐRepresentativeǺKevin Wangȑ ɡ ɡ AMA PRECISION INC. Director Unihan CorporationȐRepresentativeǺDavis Luȑ ɡ ɡ Director Unihan CorporationȐRepresentativeǺHank Chungȑ ɡ ɡ Supervisor Unihan CorporationȐRepresentativeǺEric Changȑ ɡ ɡ Supervisor Unihan CorporationȐRepresentativeǺVivian Hsiehȑ ɡ ɡ Chairman ADVANTECH Co., Ltd. (RepresentativeǺKC Liu) 30,000,000 50% Director ADVANTECH Co., Ltd. (RepresentativeǺJeff Chen) ɡ ɡ Supervisor ADVANTECH Co., Ltd. (RepresentativeǺShu-Mei Tsai*) ɡ ɡ ADVANSUS COMPUTER CO., LTD Director Pegatron CorporationȐRepresentativeǺTed Hsuȑ 30,000,000 50% Director Pegatron CorporationȐRepresentativeǺJerry Shenȑ ɡ ɡ Supervisor Pegatron CorporationȐRepresentativeǺSharon Suȑ ɡ ɡ Director Jason Chen ɡ ɡ Chairman Ted Hsu ɡ ɡ Director Asus Investment Inc.ȐRepresentativeǺT.H. Tungȑ 54,493,099 49.54% Director Asus Investment Inc.ȐRepresentativeǺJerry Shenȑ ɡ ɡ Director Asus Investment Inc.ȐRepresentativeǺSterling Wuȑ ɡ ɡ ASROCK Inc. Independent director Tze-Kaing Yang* ɡ ɡ Supervisor Asuspower Investment Inc.ȐRepresentativeǺSandy Weiȑ 2,658,096 2.42% Supervisor Hsu-Ling Wang* ɡ ɡ Supervisor Chen-Hung Tsai* ɡ ɡ Chairman Asus Investment Inc.ȐRepresentativeǺT.H. Tungȑ 60,128,417 13.48% Supervisor Asustek Investment Inc.ȐRepresentativeǺCharlesCT Linȑ 58,233,091 13.06% Director Asuspower Investment Inc.ȐRepresentativeǺTed Hsuȑ 55,556,221 12.46% Director Asuspower Investment Inc.ȐRepresentativeǺJerry Shenȑ ɡ ɡ Director China International Development Consulting, Inc. 3,585,117 0.80% ȐRepresentativeǺChing-Yi Chang*ȑ 3,006,803 ɡ KINSUS Interconnect Technology Director Ming-Tung Kuo* 2,516,869 0.56% Corporation Director Jane Lu ɡ ɡ Director Chin-Tsai Chen* ɡ ɡ Director Chung-Pen Chang* ɡ ɡ Supervisor Chun-Pao Huang* ɡ ɡ Supervisor Hsiang-Hsiang Wu* ɡ ɡ Director & President Chung-Jen Cheng* ɡ ɡ Chairman Chia Mei Investment Co., Ltd.(RepresentativeǺChing-His Tong*) 480,634 0.11% Director Chia Mei Investment Co., Ltd.(RepresentativeǺChiung-Shiung Tong*) - - Vice Chairman Unihan CorporationȐRepresentativeǺSj Liaoȑ 53,627,374 12.99% Managing director Unihan CorporationȐRepresentativeǺT.H. Tungȑ - - Director Unihan CorporationȐRepresentativeǺHt Tungȑ - - ABILITY ENTERPRISE CO., LTD. Director Unihan CorporationȐRepresentativeǺMing-Jen Tseng*ȑ - - Director Unihan CorporationȐRepresentativeǺMing-Jang Ju*ȑ - - Director Unihan CorporationȐRepresentativeǺ˦̈̆˼˸ʳ˪˴́˺ȑ - - Director Lin Shih Investment Co., Ltd.(RepresentativeǺYarn-Chen Chen*) 4,870,499 1.15% Supervisor Chia Nine Investment Co., Ltd.(RepresentativeǺYi-Nai Tung*) 2,080,666 0.49% Supervisor Asuspower Investment Inc.(RepresentativeǺEric Chang) 10,513 0.00% Chairman Asuspower Investment Inc.ȐRepresentativeǺJames Huangȑ 35,770,796 51.84% STARLINK ELECTRONICS CORP. Director & President Asustek Investment Inc.ȐRepresentativeǺGordon Tuȑ 11,558,824 16.75% 236 ! 236 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
SHAREHOLDING NAME OF CORPORATION TITLE NAME OF PERPRESENTATIVE SHARES % Director Asustek Investment Inc.ȐRepresentativeǺEric Chungȑ ɡ ɡ Supervisor Asustek Investment Inc.ȐRepresentativeǺLisa Wuȑ ɡ ɡ Chairman Pegatron CorporationȐRepresentativeǺTed Hsuȑ 841,900,000 100% ASUSPOWER INVESTMENT Director Pegatron CorporationȐRepresentativeǺT.H. Tungȑ ɡ ɡ INCORPORATION Director Pegatron CorporationȐRepresentativeǺJonney Shihȑ ɡ ɡ Supervisor Pegatron CorporationȐRepresentativeǺSharon Suȑ ɡ ɡ Chairman Pegatron CorporationȐRepresentativeǺT.H. Tungȑ 908,600,000 100% Director Pegatron CorporationȐRepresentativeǺJonney Shihȑ ɡ ɡ Asus Investment Inc. Director Pegatron CorporationȐRepresentativeǺTed Hsuȑ ɡ ɡ Supervisor Pegatron CorporationȐRepresentativeǺSharon Suȑ ɡ ɡ Chairman Pegatron CorporationȐRepresentativeǺJonney Shihȑ 872,700,000 100% Director Pegatron CorporationȐRepresentativeǺTed Hsuȑ ɡ ɡ Asustek Investment Inc. Director Pegatron CorporationȐRepresentativeǺT.H. Tungȑ ɡ ɡ Supervisor Pegatron CorporationȐRepresentativeǺSharon Suȑ ɡ ɡ PEGATRON HOLDING LIMITED Director Pegatron CorporationȐRepresentativeǺT.H. Tungȑ 569,666,472 100% UNIHAN HOLDING LIMITED Director Unihan CorporationȐRepresentativeǺT.H. Tungȑ 158,480,341 100% Pegatron USA President Pegatron CorporationȐRepresentativeǺJerry Yehȑ 50,000 100% Asuspower Corp. Chairman & President Asuspower Investment Inc.ȐRepresentativeǺTed Hsuȑ 349,000,000 100% Pegatron Japan Inc. Chairman Asuspower Investment Inc.ȐRepresentativeǺSj Liaoȑ ɡ 100% Magnificent Brightness Ltd. Director Pegatron Holding LimitedȐRepresentativeǺT.H. Tungȑ 129,011,090 100% Strong Choice Group Ltd. Director Pegatron Holding LimitedȐRepresentativeǺT.H. Tungȑ 12,110,000 100% Boardtek Holdings Ltd. Director Pegatron Holding LimitedȐRepresentativeǺT.H. Tungȑ 52,060,000 100% PROTEK GLOBAL HOLDINGS LTD. Director Pegatron Holding LimitedȐRepresentativeǺT.H. Tungȑ 233,050,000 100% ASLINK PRECISION CO., LTD Director Pegatron Holding LimitedȐRepresentativeǺJerry Shenȑ 19,093,263 100% NORTH TEC ASIA LTD Director Pegatron Holding LimitedȐRepresentativeǺT.H. Tungȑ 35,050,000 100% DIGITEK GLOBAL HOLDINGS LTD. Director Pegatron Holding LimitedȐRepresentativeǺT.H. Tungȑ 50,000 100% West Tec Asia Ltd. Director Pegatron Holding LimitedȐRepresentativeǺT.H. Tungȑ 2,840,000 100% Casetek Holdings Ltd. Director Unihan Holding LimitedȐRepresentativeǺT.H. Tungȑ 84,980,000 100% Magnificent Brightness Ltd. ɡ 100% MAINTEK COMPUTER (SUZHOU) CO., LTD. Chairman (RepresentativeǺFeng-Chang Kang*)
BOARDTEK COMPUTER (SUZHOU) CO., LTD. Chairman Boardtek Holdings Ltd.ȐRepresentativeǺFeng-Chang Kang*ȑ ɡ 100% CASETEK COMPUTER (SUZHOU) CO., LTD. Chairman Casetek Holdings Ltd.ȐRepresentativeǺFeng-Chang Kang*ȑ ɡ 100% SLITEK HOLDING LTD. Chairman Casetek Holdings Ltd.ȐRepresentativeǺEric Changȑ 1,210,000 100% PROTEK (SHANGHAI) LIMITED Chairman PROTEK GLOBAL HOLDINGS LTD.ȐRepresentativeǺTimber Changȑ ɡ 100% NORTH TEC ASIA (SHANGHAI) LIMITED Chairman NORTH TEC ASIA LTDȐRepresentativeǺTimber Changȑ ɡ 100% LINKTEK PRECISION (SUZHOU) ASLINK (H.K.) PRECISION CO., LTD Chairman ɡ 100% CO., LIMITED ȐRepresentativeǺYu-Chin Chuang*ȑ AMA TECHNOLOGY CORPORATION Director AMA PRECISION INC.ȐRepresentativeǺSteven Chouȑ 300,000 100% AMA Holdings Limited Director AMA PRECISION INC.ȐRepresentativeǺT.H. Tungȑ 3,214,000 100% EXTECH LTD. Director AMA Holdings LimitedȐRepresentativeǺSteven Chouȑ 1,604,000 88.91% METAL TRADINGS LTD. Director AMA Holdings LimitedȐRepresentativeǺSteven Chouȑ 1,604,000 100% FENGSHUO TRADING Chairman EXTECH LTD.ȐRepresentativeǺMichael Yehȑ ɡ 100% (TONGZHOU) CO. LTD Grandtech Precision Ltd. Chairman METAL TRADINGS LTD.ȐRepresentativeǺMichael Yehȑ ɡ 100% Chairman KINSUS Interconnect Technology Corp.ȐRepresentativeǺMing-Tung Kuo*ȑ 500,000 100% KINSUS CORPORATION(USA) Director T.H. Tung ɡ ɡ Director Ivan Ho ɡ ɡ KINSUS HOLDING(SAMOA) KINSUS Interconnect Technology Corp.ȐRepresentativeǺMing-Tung Kuo*ȑ 15,000,000 100% Chairman LIMITED KINSUS HOLDING (CAYMAN) LIMITED Chairman KINSUS HOLDING(SAMOA) LIMITEDȐRepresentativeǺMing-Tung Kuo*ȑ 15,000,000 100% KINSUS INTERCONNECT KINSUS HOLDING(CAYMAN) LIMITED President ɡ 100% TECH.(SUZHOU) CORP. ȐRepresentativeǺChing-Feng Cheng*ȑ PEGATRON TECHNOLOGY SERVICE Chairman Asuspower Investment Inc.ȐRepresentativeǺIvan Hoȑ 2,800 100% 237 ! 237 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
SHAREHOLDING NAME OF CORPORATION TITLE NAME OF PERPRESENTATIVE SHARES % INC. Director Asuspower Investment Inc.ȐRepresentativeǺJay Huangȑ ɡ ɡ Director Asuspower Investment Inc.ȐRepresentativeǺRoger Kulaiȑ ɡ ɡ Director Asuspower Investment Inc.ȐRepresentativeǺAndy Yangȑ ɡ ɡ ASUS SERVICE CANADA Director PEGATRON TECHNOLOGY SERVICE INC.(RepresentativeǺIvan Ho) 500 100% STRATEGY TECHNOLOGY CO.,LTD. Director STARLINK ELECTRONICS CORP.ȐRepresentativeǺJames Huangȑ 4,000,001 100% Cotek Holdings Ltd. Director STRATEGY TECHNOLOGY CO.,LTDȐRepresentativeǺJames Huangȑ 12,260,000 100% COTEK ELECTRONICS Cotek Holdings Ltd.ȐRepresentativeǺFeng-Chang Kang*ȑ Chairman ɡ 100% (SUZHOU) CO., LTD. Director Asuspower Investment Inc. ɡ 40.51% Pegatron MEXICO S.A.DEC.V. Director Asus Investment Inc. ɡ 59.49% President Jay Huang ɡ ɡ Director Pegatron CorporationȐRepresentativeǺT.H. Tungȑ ɡ 92.45% ASUS HOLLAND HOLDING B.V. Director Asus Investment Inc.ȐRepresentativeǺT.H. Tungȑ ɡ 7.55% ASFLY TRAVEL SERVICE LIMITED Chairman Asus Investment Inc.ȐRepresentativeǺT.H. Tungȑ ɡ 100% HUA-YUAN Investment Limited Chairman Asus Investment Inc.ȐRepresentativeǺT.H. Tungȑ ɡ 100% ASUS HOLLAND HOLDINGS B.V. PEGATRON CZECH S.R.O. Director & President ɡ 100% ȐRepresentativeǺJason Chengȑ Azurewave (Cayman ) Holding Inc. Chairman UNIHAN HOLDING LTD.ȐRepresentativeǺTed Hsuȑ 12,098,722 60.49% Chairman Azurewave (Cayman)Holding Inc.ȐRepresentativeǺTed Hsuȑ 56,656,238 96.03% Director Azurewave (Cayman)Holding Inc.ȐRepresentativeǺSharon Suȑ ɡ ɡ AzureWave Technologies, Inc. Director & President Azurewave (Cayman)Holding Inc.ȐRepresentativeǺTseng-Chieh Lee*ȑ ɡ ɡ Supervisor Azurewave (Cayman)Holding Inc.ȐRepresentativeǺCharlesCT Linȑ ɡ ɡ Chairman AzureWave Technologies, Inc. (RepresentativeǺTseng-Chieh Lee*) 500,000 100% Director AzureWave Technologies, Inc. (RepresentativeǺJing-Xiang Lee*) ɡ ɡ EzWAVE Technology Inc. Director AzureWave Technologies, Inc. (RepresentativeǺYan-Rui Lee*) ɡ ɡ Supervisor AzureWave Technologies, Inc. (RepresentativeǺHung-Lin Shih*) ɡ ɡ AZWAVE Holding(SAMOA)INC. Director AzureWave Technologies, Inc. (RepresentativeǺTseng-Chieh Lee*) 2,000,000 100% AzureWave Technologies (Shanghai) Inc. Chairman AZWAVE Holding (SAMOA) INC. (RepresentativeǺTseng-Chieh Lee*) ɡ 100% TWINHAN TECHNOLOGY CO., LTDȐRepresentativeǺ˛̈́˺ˀ˟˼́ʳ EMINENT STAR COMPANY LIMITED Director 387,923 100% ˦˻˼˻ʽȑ JADE TECHNOLOGIES LIMITED Director EMINENT STAR COMPANY LTD.ȐRepresentativeǺHung-Lin Shih*ȑ 44,781 100% HANNEX INTERNATIONAL LIMITED Director EMINENT STAR COMPANY LTD.ȐRepresentativeǺHung-Lin Shih*ȑ 178,235 100% AzureWave Technologies Director JADE TECHNOLOGIES LTD.ȐRepresentativeǺHung-Lin Shih*ȑ ɡ 33.33% (ShenZhen) Inc. Director EMINENT STAR COMPANY LTD.ȐRepresentativeǺHung-Lin Shih*ȑ ɡ 66.67% YEH-HUA Technologies (Nanjing) Inc. Director HANNEX INTERNATIONAL LIMITEDȐRepresentativeǺHung-Lin Shih*ȑ ɡ 100% ASLINK (H.K.) PRECISION CO., LIMITED Director ASLINK PRECISION CO., LTD(CAYMAN)ȐRepresentativeǺJerry Shenȑ 4,785,010 100% ASIAROCK TECHNOLOGY LIMITED Chairman ASROCK Inc.ȐRepresentativeǺTed Hsuȑ 40,000,000 100% LEADER INSIGHT HOLDINGS Ltd. Chairman ASROCK Inc.ȐRepresentativeǺTed Hsuȑ 2,100,000 100% ASROCK EUROPE B.V. Director & President ASIAROCK TECHNOLOGY LIMITEDȐRepresentativeǺGary Tsuiȑ 200,000 100% CALROCK HOLDINGS LLC. Chairman ASIAROCK TECHNOLOGY LIMITEDȐRepresentativeǺTed Hsuȑ 2,000,000 100% FIRSTPLACE INT’L Ltd. Chairman LEADER INSIGHT HOLDINGS Ltd.ȐRepresentativeǺTed Hsuȑ 2,050,000 100% ASROCK AMERICA INC. Director FIRSTPLACE INT’L Ltd. ȐRepresentativeǺSterling Wuȑ 2,000,000 100% ENERTRONIX INTERNATIONAL LIMITED Chairman Enertronix, Inc. (RepresentativeǺJerry Shen) 10,000 100% Chairman Ability Enterprise Co., Ltd. (RepresentativeǺMing-Jen Tseng*) 57,313,286 100% Director Ability Enterprise Co., Ltd. (RepresentativeǺJin-Ju Tong*) ɡ ɡ Ability International Investment Co., Ltd. Director Ability Enterprise Co., Ltd. (RepresentativeǺJason Yang) ɡ ɡ Supervisor Ability Enterprise Co., Ltd. (RepresentativeǺSusie Wang) ɡ ɡ ABILITY ENTERPRISE (BVI) CO.,LTD. Chairman Ability Enterprise Co., Ltd. (Representative: Ching-His Tong*) ɡ 100% ASSOCIATION INTERNATIONAL Chairman Ability Enterprise Co., Ltd.(Representative: Chiung Shiung Tong*) ɡ 100% LIMITED Director Ability Enterprise Co., Ltd. (Representative: Sen-Tai Wen*) ɡ 100% VIEWQUEST TECHNOLOGIES Director ABIKITY ENTERPRISE CO., LTD(Representative: Ming-Jen Tseng*) ɡ ɡ INTERNATIONAL INC. Director Ability Enterprise Co., Ltd.(Representative: Robert Wen-Bin Tsay*) ɡ ɡ 238 ! 238 WorldReginfo - d06407b9-3069-44cc-9922-2f4df2fe1470
SHAREHOLDING NAME OF CORPORATION TITLE NAME OF PERPRESENTATIVE SHARES % VIEWQUEST TECHNOLOGIES (BVI) INC. Chairman Ability Enterprise Co., Ltd. (Representative: Ching-His Tong*) ɡ 100% Ability Enterprise Co., Ltd. ACTION PIONEER INTERNATIONAL LTD. Chairman ɡ 100% (Representative: Chiung-Shiung Tong*) ASSOCIATION INTERNATIONAL LIMITED Ability Technology (Dongguan) Co., Ltd. Chairman ɡ 100% (Representative: Ching-His Tong*) ASAP INTERNATIONAL CO., ASLINK PRECISION CO., LTD Director 6,375,000 51% LIMITED. (Representative: Yu-Chin Chuang*) ASAP TECHNOLOGY (JIANGXI) CO., ASAP INTERNATIONAL CO., LIMITED. Chairman ɡ 100% LIMITED. (Representative: Cheng-Wei Wu*) KAEDER TRADING LTD Director Casetek Holdings Limited (Representative: Eric Chang) 5,000,000 100% KAEDER HOLDINGS LIMITED Director Casetek Holdings Limited (Representative: Eric Chang) 25,000,000 100% Core-Tek (Shanghai) Limited Director Casetek Holdings Limited (Representative: Eric Chang) ɡ 100% KAEDER ELECTRONICS (KUNSHAN) KAEDER HOLDINGS LIMITED Director ɡ 100% CO., LTD (Representative: Li-Hsiang Wu*) Note1: Stock shares are yet to be confirmed. Note2: (*) Standards for the English transliteration of company’s name or individual’s name.
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0.22 0.17 1.96 1.29 2.42 3.08 (0.16) (0.05) (1.23) (0.12) (1.11) PER SHARE(NTD) EARNINGS (LOSS) EARNINGS 15 - 757 - (111) (151) - 9,400 - 2,547 4,961 - 9,559 - 23,357 - 23,791 - 20,999 15,232 31,067 - 45,949 (3,920) (2,546) (2,136) - (2,386) (5,949) - (4,691) - (9,882) Note1 (4,815) Note1 157,725 - 136,269 (37,018) (69,315) - (70,165) Note1 (159,813) - (243,297) - 4,743,946 - 5,526,317 NET INCOME (LOSS) INCOME 593 (33) (281) (214) (112) (204) (165) (130) (934) 2,650 1,676 8,676 24,150 39,762 23,305 15,858 13,303 (1,638) (5,949) (2,718) - - - OPERATING INCOME (LOSS) NET REVENUES OPERATING 889 - 1,728 - 559,540 - 460,423 - 3,122,243 - 1,853,394 - NET WORTH
2 25 533,794 - 10 13,540 55,641 26 197,614 - 60 1,094 - ˅ˇ˃ʳ TOTAL LIABILITIES
TOTAL ASSETS 4,920 1,304 3,694 (2,390) - 1,640 199,860 192,847 7,013 3,533,460 1,640 1,904,323 1,889,542 14,781 13,243,527 8,342 11,802 7,970 3,832 9,963 (5,352) 1,000 891 1,640 1,154 1,640 348,280 323,457 24,823 753,348 1,640 1,728 - 69,163 203,450 117,901 85,549 - 62,948 236,818 150,248 86,570 655,920 16,400 8,839,052 8,996,065 (157,013) 18,967,219 100,092 250,000 236,298 23,225 213,073 114,655 (9,204) 500,000 533,819 118,200 197,529 32,763 164,766 162,101 100,000 164,379 71,024 93,355 32,080 300,000 325,061 146,386 178,675 281,874 (85,890) 121,360 13,550 428,040 460,423 - 190,000 4,077,915 3,743,751 334,164 17,199,512 (225,589) 107,250 182,346 56,134 126,212 127,787 200,000 197,640 119,162 34,228 3,619 30,609 31,693 (9,762) 196,800 39,513 3,336 36,177 - 1,054,854 559,540 - 1,753,229 1,822,881 1,709 1,821,172 - 2,001,784 3,122,243 - 2,378,844 1,853,394 - 8,027,145 15,778,823 269 15,778,554 - 8,156,520 13,144,517 3,859,301 9,285,216 22,422,825 18,846,281 153,150,531 63,176,447 89,974,084 303,748,099 173,557 CAPITAL Limited ȑ Shanghai Ȑ NAME OF CORPORATION OF NAME Hua-Cheng Venture CapitalVenture Corp. Hua-Cheng Goodsmart International Goodsmart Ltd. International Askey Computer Corporation Computer Askey PEGATRON CORPORATION International United Technology Co.,International Technology United Ltd. Hua-Min Investment Co.,Ltd. Investment Hua-Min Famous Star Investments Limited Star Investments Famous Technology Askey Openbase Limited SHINEWAVE INC. INTERNATIONAL B.V. HOLLAND ASUS LIMITED INTERNATIONAL ASUS LIMITEDASUSTEK HOLDINGS CORPORATION ASUSCHANNEL CORPORATION AMA INC. TECHNOLOGY ASMEDIA eCareme Technologies, Inc. eCareme COMPUTER ASUS INTERNATIONAL TOPTEK INDUSTRY PRECISION CO., LIMITED eMES (SHUZHOU) LTD.CO., 210,789GREAT EXTEND INVESTMENT CORP. 356,647 359,983 (3,336) 1,191,980 (85,810) GREENASUS RECYCLING LTD.CO., RECYCLING GREENASUS International Corp. Askey Corp. International Dynalink Co., Ltd. Magic International Limited Company (Vietnam) Askey Double Tech Ltd. Big Profit Limited Magicom International Corp. International Magicom ASUS TECHNOLOGY INCORPORATION ASUS AXUS MICROSYSTEMSAXUS INC. 2. Summarized Operation2. Summarized Results Affiliated of Enterprises
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- PER SHARE(NTD) EARNINGS (LOSS) EARNINGS 629 - 121 - (66) - (10) Note1 (936) - 4,434 Note1 1,870 Note1 2,860 - 1,666 - 19,263 - 18,006 - 16,400 - 16,436 Note1 (2,120) - (5,962) Note1 (1,530) - 173,502 Note1 (45,984) - (21,188) - (50,371) Note1 (11,913) - (61,249) Note1 (22,478) - (21,137) Note1 (17,830) Note1 (103,822) - (325,794) - 5,007,498 - 5,007,428 - - NET INCOME (LOSS) INCOME 572 (62) (52) (52) (52) (50) (28) (53) (137) (258) (971) 5,707 9,395 1,927 2,009 2,640 19,031 (1,489) - OPERATING INCOME (LOSS) - - NET REVENUES OPERATING 903 48,036 (1,439) 5,771 - 69,556 - 94,424 - 143,567 - 187,291 - 108,974499,151 - - 458,752 - - 9,434,465 - NET WORTH
˅ˇ˄ʳ - TOTAL LIABILITIES - TOTAL ASSETS 1,640 566,261 586,307 (20,046) 5,560,287 4,465 11,394 6,716 4,678 21,288 2,312 12,495 11,592 1,640 3,979,841 5,333,565 (1,353,724) 15,820,686 1,640 5,771 - 2,376 37,770 31,424 6,346 108,997 4,901 110,015 105,412 4,603 132,633 - 36,548 17,191 2,044 15,147 10,551 (9,410) 78,524 110,437 40,975 69,462 257,584 (15,875) 46,596 49,852 4,036 45,816 32,695 (15,873) 98,400 94,424 - 66,256 69,556 - 11,821 530,220 495,283 34,937 3,420,862 (19,904) 426,625 571,568 144,954 426,614 170,514 (7,508) 204,624 17,869 17,869 - 213,200 143,567 - 264,040 499,151 - 185,648 108,974 - 984,082 59,885,403 50,451,917 9,433,491 250,715,186 5,671,591 420,988 187,291 - 256,672 450,736 273,979 176,757 778,511 (13,700) 985,082 9,434,465 - 292,011 1,169,584 671,556 498,028 6,850,614 (124,392) 464,969 458,752 - 1,115,200 1,311,764 332,929 978,835 285,048 4,966,642 4,948,704 76,607 4,872,097 - 2,340,605 13,375,187 10,701,111 2,674,076 27,904,543 (31,466) 1,142,796 1,162,738 141,315 1,021,423 312,673 (49,918) CAPITAL NAME OF CORPORATIONOF NAME CHANNEL PILOT LIMITEDCHANNEL HOLDINGS LIMITEDUNIMAX ASUS COMPUTER (SHANGHAI) CO., LTD.CO., COMPUTER ASUS (SHANGHAI) Co., Ltd. (Shanghai) Powtek Electronic Enertronix Co., Ltd. Shandong Co., Ltd. KOREA ASUS ASUS COMPUTER ASUS CORPORATION AVY PRECISION ELECTROPLATINGAVY (SUZHOU) CO., LTD. DEEP DELIGHT LIMITED MiddleASUS East FZCO SOUTH LIMITED TEC ASIA LIMITED TEC ASIA CENTRAL POWTEK LIMITED HOLDINGS UNITED NEW LIMITED Co., Ltd. Enertronix (HuiZhou) COMPUTER ASUS GmbH ASUS COMPUTER B.V. ASUS Benelux ASUSTEK (UK) LIMITED TECHNOLOGY (HONG KONG) ASUS LIMITED 2,117 10,865 6,808 4,057 33,645 MOBOSTAR LIMITEDTECHNOLOGY TECHNOLOGY PTE.ASUS LIMITED International United Technology Co., Technology Ltd. United International ENERTRONIX LIMITEDHOLDING ASUS FRANCE SARL FRANCE ASUS Leading Profit Co.,Leading Ltd. TECHNOLOGY LTD(SUZHOU) ASON TECHNOLOGYASHINE LTD.(SUZHOU) Askey Technology (Jiangsu) Limited (Jiangsu) Technology Askey UNI Leader International Ltd. WUJIANG WILL STAR INVESTMENTS LIMITED INVESTMENTS STAR WILL WUJIANG
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2.63 6.15 3.33 3.26 0.61 0.41 4.93 0.25 0.08 (1.05) (1.73) (2.55) PER SHARE(NTD) EARNINGS (LOSS) EARNINGS 486 - 344 - 806 - (883) - (336) - (505) - 1,776 - 1,495 - 1,167 - 8,508 - 9,783 - 18,382 - 95,508 - 27,159 Note1 45,793 (2,868) - 676,110 133,342 552,613 347,250 481,909 - 215,044 (22,355) (64,518) (175,705) (110,100) Note1 2,859,176 - 1,355,528 2,198,380 NET INCOME (LOSS) INCOME 687 278 (731) (999) (437) (513) 3,017 2,565 1,047 2,540 5,694 15,243 39,649 30,040 13,329 (1,214) (1,272) (1,968) (1,068) (57,961) OPERATING INCOME (LOSS) NET REVENUES OPERATING 955 16,984 (1,254) 1,299,480 - NET WORTH
˅ˇ˅ʳ TOTAL LIABILITIES TOTAL ASSETS 343 17,220 14,394 2,826 50,360 557 36,744 18,734 18,010 134,533 2,452 14,063 13,108 2,240 14,276 11,165 3,111 12,349 (4,162) 9,248 3,121,084 3,110,225 10,859 4,915 2,220 56,001 48,217 7,784 186,617 1,818 12,688 11,244 1,444 25,856 1,387 35,568 25,717 9,851 163,767 1,387 12,068 10,203 1,865 22,536 53,319 60,913 7,293 53,620 107,282 16,400 31,332 13,429 17,903 120,547 600,000 889,048 270,592 618,456 1,936,573 394,492 716,250 293,506 422,744 671,716 402,384 562,855 181,030 381,825 772,085 (65,258) 213,000 146,562 4,304 142,258 - 690,000 64,141 243,908 (179,767) 72,099 (7,807) 400,000 882,642 333,014 549,628 2,158,465 190,356 1,384,703 1,299,480 - 4,229,583 10,030,804 2,961,521 7,069,283 33,217,872 1,751,427 5,198,155 6,239,260 876 6,238,384 - 1,100,270 7,714,896 1,596,719 6,118,177 5,265,579 688,180 9,086,000 15,298,749 56,731 15,242,018 - 8,001,000 45,020,974 30,476,850 14,544,124 148,257,368 2,833,217 2,107,520 19,570,660 26,132,185 1,093 26,131,092 - CAPITAL NAME OF CORPORATIONOF NAME KINSUS Interconnect Technology CorporationKINSUS Interconnect Technology IncorporationASROCK 4,460,000 20,000,606 2,156,339 17,844,267 12,214,983 2,142,670 ABILITY ENTERPRISE LTD.CO., PEGATRON USA B.V.HOLDING HOLLAND ASUS PRECISION INC. AMA ASUSTEK ASUSTEK INVESTMENT INCORPORATION COMPUTER LTDCO., ADVANSUS Enertronix, Inc. 8,727,000Pegatron Holding Ltd. 14,710,751 30,368 14,680,383 - ASUS COMPUTERASUS s.r.o. Czech Republic Unihan Holding Ltd. Holding Unihan CORP. ELECTRONICS STARLINK ASUSPOWER INVESTMENTASUSPOWER INCORPORATION 8,419,000 13,730,171 812,998 12,917,173 - ASUS INVESTMENTASUS INCORPORATION ASUS New Zealand Limited New ASUS ASUS Technology Private Technology Limited ASUS Co., LTD.(Vietnam) Technology ASUS S.R.L. ASUSTEK ITALY ASUS Technology Holland Technology B.V. ASUS S.L IBERICA ASUS Co. Ltd. (Suzhou) Technology ASUS Japan IncorporationASUS Co., Ltd. (Shanghai) Technology United ASUS Company Liability Limited Services Hungary ASUS 318,726 2,143 10,135,171 10,116,080 7,675 19,091 4,573 39,696,567 3,102 (754,018) 24,430 UNIMAX ELECTRONICS INC. UNIMAX ELECTRONICS UNIHAN CORPORATION ASUS Polska Sp.Polska z ASUS o.o. ASUSTEK COMPUTER PTE, (SINGAPORE) LTD. 455 4,351 299 4,052 4,369 ASUS PORTUGAL, SOCIEDADE UNIPESSOAL LDA. LDA. UNIPESSOAL SOCIEDADE PORTUGAL, ASUS
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PER SHARE(NTD) EARNINGS (LOSS) EARNINGS 814 - 104 - (139) - (101) - (320) - (675) - 9,494 Note1 1,431 - 2,643 - 9,532 - 3,833 - 20,708 - 95,836 - 55,711 - 90,420 - 45,889 Note1 54,971 - 50,132 - 10,518 Note1 46,679 - 46,679 - (1,834) - 703,730 - (25,889) Note1 (12,756)(13,123) - Note1 (95,677) - (44,287) - (166,354)(125,160) - - (125,110) Note1 NET INCOME (LOSS) (52) (52) (52) (26) (56) (26) (52) (52) (26) (189) (259) (325) 9,292 2,599 6,012 14,624 12,723 43,057 13,503 (6,904) - - - OPERATING INCOME (LOSS) INCOME NET REVENUES OPERATING 33,518 - 65,568 - 42,411 - 866,416 - 103,384 - 561,027 - 561,027 - 2,987,367 - 9,282,145 -
NET WORTH ˅ˇˆʳ 69 34,083 - TOTAL LIABILITIES TOTAL ASSETS 1 295,230 180,493 114,737 540,325 328 88,129 88,413 (284) 797,353 9,248 421,472 269,750 151,722 2,933,034 6,000 40,030 21,529 18,501 37,397 9,840 196,854 209,335 (12,481) 1,803,163 (44,929) 33,512 112,133 68,349 43,784 213,103 52,611 65,568 - 16,400 21,166 273 20,893 16,018 68,880 34,152 59,171 42,411 - 65,60065,600 72,727 222,854 636 190,684 72,091 32,170 1,093,632 - (1,901) 67,240 33,518 - 66,469 66,200 23,814 42,386 134,296 (10,926) 11,637 14,063 2,426 11,637 55,064 402,128 238 471,369 (471,131) - 397,208 866,416 - 748,151 928,998 54,863 874,135 731,923 500,000 474,603 341 474,262 - 131,200 236,222 475,559 (239,337) 353,134 (70,163) 105,419 103,384 - 492,000 561,027 - 492,000 561,027 - 512,340 582,172 22,098 560,074 - 1,312,000 3,400,389 786,668 2,613,721 4,781,904 118,759 1,707,568 2,987,367 - 1,452,766 6,568,442 5,274,751 1,293,691 17,076,099 (95,267) 4,231,564 9,282,145 - 11,447,200 37,674,418 8,433,793 29,240,625 3,733,404 (278,600) CAPITAL NAME OF CORPORATION OF NAME HUA-YUAN Investment Limited Investment HUA-YUAN ASFLY TRAVEL SERVICE LIMITED SERVICE TRAVEL ASFLY Enertronix International Limited International Enertronix PEGATRON Mexico, S.A. PEGATRONDE C.V. Mexico, S.A. ASUSPOWER CORPORATION ASUSPOWER PEGATRON INC. TECHNOLOGY SERVICE PEGATRON Inc. JAPAN PEGATRON s.r.o. Czech Corporation Technology AMA Holdings Limited AMA KINSUS INTERCONNECT TECH.(SUZHOU) CORP. TECHNOLOGY LIMITED ASIAROCK Ltd. Holdings Leader Insight ASROCK EUROPE B.V. ASROCK METAL TRADINGS LTD.METAL EXTECH LTD. TRADING FENGSHUO (TONGZHOU) LTDCO. PrecisionGrandtech Ltd. Co.,STRATEGY Ltd. Technology 56,059COTEK HOLDINGS LIMITED LTD. CO., COTEK(SUZHOU) ELECTRONICS 76,975 KINSUS CORP. (USA) 476,692 11,448 919,131 65,527 1,390,499 210,413 (471,368) LLC. Holdings, CalRock 195,058 (131,645) KINSUS HOLDING (SAMOA) LIMITED (SAMOA) KINSUS HOLDING LIMITED (CAYMAN) KINSUS HOLDING Firstplace International Ltd. International Firstplace ASRock America, Inc. America, ASRock Inc. Canada, Service Asus BRIGHTNESSMAGNIFICENT LIMITED BOARDTEK HOLDINGS LIMITEDBOARDTEK HOLDINGS STRONG GROUPCHOICE LIMITED
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0.00 8.43 PER SHARE(NTD) EARNINGS (LOSS) EARNINGS 184 Note1 247 - (33) - (99) Note1 (248) 5,772 - 6,588 - 5,516 - 5,516 Note1 12,930 - 48,952 - 50,175 Note1 (3,479) - (3,577) - (3,724) - (3,455) Note1 116,563 Note1 499,959 - 388,856 - 192,908 - 230,644 155,912 - 263,121 Note1 499,975 Note1 658,716 Note1 (40,888) Note1 (11,320) - 1,529,717 - 1,529,753 Note1 NET INCOME (LOSS) INCOME (52) (54) (52) (53) (58) (248) (234) (965) (195) (154) (100) (201) 42,484 69,220 - - - - - OPERATING INCOME (LOSS) NET REVENUES OPERATING 29,977 - 62,320 - 416,270 - 202,357 - 5,665,288 - 1,742,789 - 10,305,292 - NET WORTH
5 98,357 - 93 2,564 - 30 871,271 - ˅ˇˇʳ TOTAL LIABILITIES TOTAL ASSETS 5,846 5,763 505 5,258 - 1,469 2,657 5,000 473 12,879 (12,406) - 1,640 541,595 539,572 2,023 - 73,594 424,138 361,818 62,320 569,166 (10,486) 12,724 16,336 914 15,422 - 98,165 98,362 39,688 29,977 - 65,600 62,320 - 93,152 202,357 - 107,220 9,225 1,769 7,456 19,154 590,000 1,752,481 782,422 970,059 4,185,094 236,387 656,000 1,211,475 264,979 946,496 - 156,948 551,298 304,968 246,330 1,399,817 626,259 712,434 1,550 710,884 - 820,000 871,301 410,000 416,270 - 164,000 457,246 136,450 320,796 419,870 140,032 2,787,344 5,665,288 - 1,149,640 1,742,789 - 8,875,499 39,624,664 29,320,515 10,304,149 115,253,305 1,546,833 7,644,040 10,305,292 - CAPITAL NAME OF CORPORATIONOF NAME KAEDER ELECTRONICS (KUNSHAN) CO., LTD (KUNSHAN) ELECTRONICS KAEDER Technologies,AzureWave Inc. 660,522 Inc. EzWAVE Technology 1,553,755 Inc. TechnologiesAzureWave (Shanghai) 744,676 809,079 1,676,245 199,583 Core-Tek (Shanghai) Limited Core-Tek (Shanghai) Jade Technologies Limited AzureWave Technologies (ShenZhen) Inc. TechnologiesAzureWave (ShenZhen) CASETEK CASETEK COMPUTER (SUZHOU) CO., LTD. SLITEKLIMITED HOLDINGS 1,261,702 7,974,072 4,254,751 3,719,321 3,610,958 Azwave Holding (Samoa) Inc. (Samoa) Holding Azwave Limited Star Company Eminent NORTH TEC ASIA (SHANGHAI) LIMITEDNORTH (SHANGHAI) TEC ASIA (H.K.) LIMITEDASLINK CO., PRECISION LINKTEK CO., LIMITED (SUZHOU) PRECISION 1,337,087 CO., LIMITED INTERNATIONAL ASAP 256,231 3,084,350 CO., TECHNOLOGY(JIANGXI) LIMITED.ASAP LIMITEDCASETEK HOLDINGS 183,202 1,343,175 418,751 1,741,175 480,053 79,663 2,685,039 103,539 64,896 498,503 226,392 415,157 60,910 (44,994) (8,476) International Limited Hannex NORTH LIMITED TEC ASIA LTD.CO., PRECISION ASLINK DIGITEKLIMITED HOLDINGS GLOBAL BOARDTEK COMPUTER CO., LTD.(SUZHOU) MAINTEK COMPUTER (SUZHOU) CO., LTD. 1,989,129PROTEK LIMITED (SHANGHAI) 6,787,183 7,462,829 23,752,793 3,800,608 13,530,691 2,986,575 10,222,102 2,487,699 14,479,077 Inc. Holding (Cayman) Azurewave (366,461) 600,979 TRADING LTD. KAEDAR PROTEK GLOBAL HOLDINGS LTD. PROTEKHOLDINGS GLOBAL LIMITED HOLDINGS KAEDAR WEST LIMITED TEC ASIA
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(0.84) PER SHARE(NTD) EARNINGS (LOSS) EARNINGS
(260) - (308) - 36,406 Note1 (3,479) Note1 196,378 - (47,891) (47,735) - (294,574) - NET INCOME (LOSS) INCOME
9,526 - - - - OPERATING INCOME (LOSS)
NET REVENUES OPERATING 398 - NET WORTH
˅ˇˈʳ TOTAL LIABILITIES
TOTAL ASSETS 59,495 6,793 1,041 5,752 10,130 (3,495) 65,600 88,655 26,307 62,348 - 39,360 62,412 44,143 18,269 - 49,200 637 239 573,133 461,287 414 460,873 29,329 714,974 1,239,691 470,398 769,293 53,715 (46,811) 217,464 4,501,990 4,580,771 (78,781) 31,315,369 (90,290) 840,828 3,007,405 17,169 2,990,236 - CAPITAL NAME OF CORPORATIONOF NAME ABILITY ENTERPRISE (BVI) CO., LTD. ACTION PIONEER INTERNATIONAL LTD. Ltd. (Dongguan)Co., Technology Ability VIEWQUEST TECHNOLOGIES INTERNATIONAL INC. VIEWQUEST TECHNOLOGIES (BVI) INC. LTD. INTERNATIONAL ASSOCIATION Co., Ltd. International Investment Ability YEH-HUA Technologies Inc. (Nanjing) YEH-HUA Note 1: It’s not applied to company limited.
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ASUSTeK Computer Inc. Declaration of Internal Control Date: April 22, 2009
The internal control system for the period of January 1 ~ December 31, 2008 is with the following declarations made in accordance with the self-inspection conducted:
1. We understand it is the responsibility of the company’s management to have internal control system established, enforced, and maintained. The company has the internal control system established to provide a reasonable assurance for the realization of 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 system is to ensure the realization of the aforementioned three objectives. Due to the change of environment and condition, the effectiveness of an internal control system could change at any time. Our internal control system is designed with self-monitoring mechanism; therefore, we are able to have corrective actions initiated upon identifying any nonconformity.
3. We have based on the internal control criteria of “Governing Rules for handling internal control system by public offering companies” (referred to as “the Governing Rules” hereinafter) to determine the effectiveness of internal control design and enforcement. The internal control criteria of the “Governing Rules” is the management control process and with the internal control divided into five elements: 1. Environment control, 2. Risk analysis, 3. Control process, 4. Information and communication, and 5. Supervision. Each element is subdivided into several items. Please refer to the “Governing Rules” for the details of the said items.
4. We have based on the aforementioned internal control criteria to inspect the effectiveness of internal control design and enforcement.
5. We believe that our audits provide a reasonable basis for our opinion. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the internal control system (including the supervision and management over the subsidiaries) including the fulfillment of business performance and efficiency, the reliability of financial statements and the obedience of governing regulations, 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 forgery and concealment of the aforementioned information to the public, we will be held responsible by law in accordance with Securities Transaction Regulation No. 20, No. 32, No. 171, and NO. 174.
7. We hereby declared that the Declaration of Internal Control was approved by the Board of Directors on April 22, 2009 unanimously by the directors at the meeting
ASUSTeK Computer Inc.
Chairman: Jonney Shih
President: Jerry Shen
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ASUSTek Computer Inc.
Chairman
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