Asustek Computer Inc. 2011 ANNUAL REPORT
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2357 ASUSTeK Computer Inc. 2011 ANNUAL REPORT Taiwan Stock Exchange Market Observation Post System:http://newmops.twse.com.tw ASUS annual report is available at http://taiwan.asus.com.tw/investor.aspx Printed on April 27, 2012 321 I. SPOKESPERSON & DEPUTY SPOKESPERSON Spokesperson: David Chang Title: Chairman Office - Chief Special Assistant Tel.: 886(2)2894-3447 EXT: 2330 E-mail: [email protected] Deputy Spokesperson: Nick Wu Title: Management Headquarters - Finance Division - Senior Director Tel.: 886(2) 2894-3447 EXT: 2343 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. Rd., Zhongzheng Dist., Taipei City Tel. : 886(2) 2389-2999 Website : http://www.toptrade.com.tw IV. AUDITORS Name : CPA: CHOU TSENG HUI-CHIN & HSUEH MING-LING CPA Firm : PricewaterhouseCoopers, Taiwan Address : 27F., No.333, Sec. 1, Keelung Rd., Xinyi Dist., Taipei City 110 Tel. : 886(2)2729-6666 E-mail : http://www.pwc.com/tw V. EXCHANGEABLE BOND EXCHANGE MARKETPLACE Marketable security: GDR London Stock Exchange: http://www.londonstockexchange.com VI. COMPANY WEBSITE http://www.asus.com 322 �� CONTENTS �� Page I. Letter to shareholders ……………………………………………………………………… 1 II. Introduction of the company ……………………………………………………………… 3 1. Establishment date ………………………...……………………………………………….. 3 2. Development history ……………………………………………………………………… 3 III. Corporate governance report ……………………………………………………………... 16 1. Organization of company ………………………………………………………………… 16 2. Directors, Supervisors, President, Vice President, Assistant V.P., and department heads.... 18 3. Corporate governance …………………………………………………………………….. 27 4. CPAs fees …………...…..………………………………………………………………….. 45 5. CPA’s information …………………………………………………………………………. 45 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 ………… 46 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 ……………………………………………………………………………………….. 47 8. The relation of the top ten shareholders as the definition of Finance Standard Article 6 …. 48 9. Investment from Directors, Supervisors, Managers, and directly or indirectly controlled businesses ………………………………………………………………………………… 49 IV. Stock subscription …………………………………………………………………………. 53 1. Capital and shares …………………………………………………………………………. 53 2. Corporate bonds …………………………………………………………………………… 60 3. Preferred stock ……………………………………………………………………………. 62 4. Issuance of global depository receipts …………………………………………………….. 62 5. Employees stock option certificates ………………………………………………………. 64 6. Merger and acquisitions or stock shares transferred with new stock shares issued……….. 64 7. Fund implementation plan ………………………………………………………………… 64 V. Overview of business operation………………………………..…………………………… 65 1. Principal activities ………………………………………………………………………… 65 2. Market analysis and the condition of sale and production ………………………………… 69 3. Status of employees ……………………………………………………………………….. 75 4. Expenditure on environmental protection ………………………………………………… 75 5. Employee / employer relation …………………………………………………………….. 78 6. Important agreements ……………………………………………………………………… 83 323 VI. Financial information ………………………………………………………………. 84 1. Condensed balance sheet and income statement over the last five years …………………. 84 2. Financial analysis in the past five years …………………………………………………… 86 3. Supervisor’s report in the most recent years ………………………………………………. 90 4. Financial statements in the most recent years …………………………………………….. 91 5. Consolidated financial statements in the most recent years ………………………………. 91 6. Impact of financial difficulties of the Company and related party on the Company’s financial position ………………………………………………………………………….. 91 VII. Review of financial position, management performance and risk management ………. 195 1. Financial position ………………………………………………………………………….. 195 2. Management performance …………………………………………………………………. 195 3. Analysis of cash flows ……………………………………………………………………... 197 4. Impact of major capital expenditure on finance and business …………………………….. 198 5. Policies, reasons for gain or loss and action plan in regard to investment plans in current year and the next year…………………………………………………………………….. 198 6. Risk management …………………………………………………………………………. 198 7. Other important matters …………………………………………………………………… 202 VIII Special disclosures …………………………………………………………………………. 203 1. Related party ……………………………………………………………………………… 203 2. Subscription of marketable securities privately in the most recent years …………………. 203 3. The stock shares of the company held or disposed by the subsidiaries in the most recent years ……………………………………………………………………………………… 203 4. Supplementary disclosures ……………………………………………………………….. 203 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 …………………………………………………………………. 203 324 I. Letter to Shareholders First of all, I would like to thank you for your continuing support to ASUS. Subject to the nearing saturation and economic downturn for the European and American computer markets which lead to the reduction in consumer expenditures and the rise of tablet PC, the global computer market growth rate continued to decline in 2011. Ultrabook featuring ultra-slim body is bringing the hope of growth in the laptop computer industry. Nonetheless, due to higher initial cost, the overall laptop computer demand has been suppressed. Asian, South America and emerging markets from other regions are in stark contrast to the European and American market with observations of continuous growth in shipments. The tablet PC market continues to grow substantially with major appeals in “light, thin, short, and compact." Due to a high demand for information in life, consumers need to browse the websites, receive email, search for data, and share information at all time. Moreover, the leisure, entertainment and gaming functions are turning tablet PC into another main tool for information, browsing and entertainment, following the footsteps of laptop computers and SMART phones. Under this industry situation, the turnover of ASUS headquarters was NTD317.7 Billion, profit before tax was NTD19.795 Billion, and the net income was NTD16.578 Billion for 2011, a growth rate of 1% as compared with 2010. The computer brands of ASUS were consolidated in 2011 (the Company's Financial Report) and the turnover reached NTD350.5 Billion, a growth rate of 9% as compared with 2010. The consolidated net income was NTD16.578 Billion and although with a mere 1% growth rate in net income, the profits related to the main business line have in fact increased from NTD13.641 Billion to 17.830 Billion, a significant growth rate of 31% as compared with 2010. ASUS is highly recognized on an international level, for its innovation and Koreyoshi. In 2011 alone, ASUS products have been awarded with 3,886 internationally renowned awards from worldwide, receiving in average of 10.6 international awards daily. These honors best exhibit the “brilliant innovation, perfect quality" implemented by ASUS employees and at the same time serve as the best proofs for the superiority and quality assurance of ASUS products. Additionally, ASUS has been ranked at the top 3 of the 2011 Taiwan Global Brand Value Survey organized by Interbrand and sponsored by Bureau of Foreign Trade, Ministry of Economic Affairs, for the ninth consecutive year with a high growth rate of 27.4%. The brand valued at USD1.638 Billion. ASUS is creating a number of popular products through its design thinking and is in constant pursuit of ultimate fashion and beauty. ASUS not only appeals with fashion in product appearance but also includes attentive design of user experience that puts products back to user orientation. The unparalleled user experience plus the aesthetically stunning craft are making inroads to the consumer market vigorously. This year in CES, ASUS was a huge hit in one fell swoop to have won six CES Product Innovation Awards in the wireless handheld, four areas of personal electronic products, audio equipment, computer hardware and parts. In particular, Padphone won the wireless handheld product category in Best Innovation Award. Padphone integrated the two most popular products, namely the SMART phone and the tablet PC, with which the consumers can easily switch between mobile phone and PC for any occasions and events, depending on the required size of monitors. The battery run-time can also be extended via the power of tablet PC. Meanwhile, the mobile phone also provides 3G mobile internet for tablet PC, to share exciting digital content. The advantage of dual function as SMART phone and tablet PC in one Padfone is bringing consumers with more flexibility and brand-new mobile experience. ASUS won the 2012 iF Gold Award from Germany in February with its exquisite design in 1 innovation and quality. The P1 Featherweight Portable Projector featuring lightweight and neat appearance, has won iF Gold Award in one fell swoop. The P1 LED projector is targeting at business elites, weighing only 415 gram, which size