© FSC DISCLAIMER This is a translation of the 2009 Annual Report of Acer Incorporated (the “Company”). The translation is intended for reference only and nothing else, the Company hereby disclaims any and all liabilities whatsoever for the translation. The Chinese text of the Annual Report shall govern any and all matters related to the interpretation of the subject matter stated herein. Acer Incorporated 2009 Annual Report INDEX 1. Business Report ........................................................................................... 3 1.1 Acer’s Core Values ................................................................................................................................. 6 1.2 2009 Operating Report ........................................................................................................................... 8 1.3 2010 Business Plan ................................................................................................................................ 9 2. Company In General .................................................................................... 11 2.1 Brief Account of the Company ............................................................................................................. 12 3. Corporate Governance Principles ............................................................. 15 3.1 Organization of the Company .............................................................................................................. 16 3.2 Information Regarding Board of Directors, Supervisors and Key Managers ...................................... 18 3.3 Corporate Governance Status ............................................................................................................. 22 4. Capital and Shares ......................................................................................29 4.1 Sources of Capital ............................................................................................................................... 30 4.2 Corporate Bonds ................................................................................................................................. 33 4.3 Special Shares ..................................................................................................................................... 33 4.4 Global Depository Receipts (GDRs) Issuance ..................................................................................... 34 4.5 Employee Stock Options ..................................................................................................................... 35 4.6 Mergers, Acquisitions, and Issuance of New Shares Due to Company Acquisitions ......................... 35 5. Acer’s Winning Formula .............................................................................. 37 5.1 Acer’s Winning Formula ....................................................................................................................... 38 5.2 The Five Keys to a Sustainable Future ................................................................................................ 38 5.3 Employees ........................................................................................................................................... 40 5.4 Important Contracts ............................................................................................................................ 43 6. Corporate Social Responsibility .................................................................45 6.1 Environmental, Safety and Health Management ................................................................................. 46 6.2 Stakeholders Communication and Management ................................................................................ 47 6.3 Social Welfare ...................................................................................................................................... 49 7. Financial Standing ....................................................................................... 51 7.1 Five-Year Consolidated Financial Information ..................................................................................... 52 7.2 Five-Year Financial Analysis ................................................................................................................ 54 7.3 Supervisors’ Review Report ................................................................................................................ 56 7.4 Financial Statements Consolidated Subsidiaries Audited by CPAs of the Past Year ......................... 57 7.5 Disclosure of the Impact on Company’s Financial Status Due to Financial Difficulties .................... 115 7.6 Financial Prediction and Achievements ............................................................................................. 115 8. Risk Management ...................................................................................... 117 eport 8.1 Recent Annual Investment Policy and Main Reasons of Gain or Loss and Improvement Plan ........ 118 R 8.2 Important Notices for Risk Management and Evaluation .................................................................. 119 2009 Annual Acer Incorporated 2. Acer Incorporated 2009 Annual Report 1. Business Report eport R 2009 Annual Acer Incorporated 3. 4. Acer Incorporated 2009 Annual Report Business Report to Shareholders I am very pleased to inform that in 2009 Acer became the world No. 2 ranking company for total PC shipments with 28.9% annual growth, according to the leading research company, Gartner. Acer also ranked No. 2 for notebook PCs for the third consecutive year with 36.9% on-year growth. Acer endured the global economic downturn in 2009 to emerge in healthy form. Not only that, we achieved record highs in annual consolidated revenues of NT$573.98B (US$17.9B) with 5% annual growth, and operating income of NT$15.34B (US$478M) with 9% annual growth. Profits-after-tax reached NT$11.35B (US$354M) and comprised almost entirely of core business income; excluding investment disposal gains, profits-after-tax grew 29% on year. Meanwhile, earnings-per-share was at NT$4.3. These results reflect on Acer’s sustainable business model, fast decision-making process, and end-to-end marketing strength. With the global economy on the path to recovery in 2010, the prevalence of the personal computer means this market is expected to recover at a faster pace. Acer has already received high demand from the European and Asia Pacific markets, and expects double-digit shipment growth this year. In addition, the emergence of a new ICT industry that encompasses the ‘4Cs’ – Computer, Communication, Consumer electronics and Content – opens up a new era of computing with innovative devices, software and content. Acer is aggressively researching and developing in this field to offer a total mobile solution, capitalize on new opportunities, and in addition, further expand market share in the BRIIC (Brazil, Russia, India, Indonesia, China) markets. Within Acer’s consumer and commercial market strategies, the focus for our consumer market are ultra- mobility notebooks with thin-and-light forms with all-day battery life, new netbook designs, and 3D desktops and notebooks. In the commercial arena, we will have a comprehensive product lineup targeting the specific needs of small and medium-size enterprises. Acer’s objective in 2010 is clear – to become the world’s No. 1 mobile PC company! The key to reaching Business Report this goal is our multi-brand strategy that pursues different customer segments globally with differentiated product designs from the four brands. At the same time, an effective and lean business model enables us to minimize operating costs as we grow, and ultimately increase operating income and profit, and raise overall competitiveness. As a global citizen, Acer is collaborating with suppliers to design environmentally- friendly products and establish a green PC supply chain. eport R Once again, on behalf of Acer, I wish to thank all our shareholders for their support and guidance. Sincerely, 2009 Annual J.T. Wang Acer Inc. Chairman and Group CEO Acer Incorporated 5. 6. Acer Incorporated 2009 Annual Report 1.1 Acer’s Core Values Core Value Rational Meaning Emotional Meaning Acer’s Core Values Value-creating ． Generating profit for shareholders ． Value for shareholders (good dividends ． Growing the business by achieving the and shares value) challenging financial and strategic objectives ． Value for customers (good products, ． Leveraging our key assets: Brands, People, services, easy to do business) Customers and Channel ． Value for employees (good company, environment, opportunities) The challenge for all businesses is to be unique. Whether you’re a customer, an employee or a Customer-centric ． Recognizing that customers are the essence ． Love and respect for our customers shareholder, the only way any business will attract you is if it stands out from the crowd. of our business ． Listen, learn and improve ． ． Placing first priority on listening to and Walk the talk (delivering on our Being unique, however, isn’t a quality you can simply switch on and off. satisfying customer needs promises) ． Delivering first-class products and services At Acer, we have built our reputation on creating value in every aspect of the company throughout our Ethical ． Being a good corporate citizen by playing a ． Trust, respect and honesty history. We create value for our: role in social growth ． Care for the environment • customers