Acer Incorporated 2013 Annual Report http://www.acer-group.com Printed on eco-friendly paper with soy ink. Published Date:MAY 8, 2014 1 1 Acer Incorporated Incorporated Acer Incorporated Acer APPENDIX 2013 Annual Report 1. Name, Title and Contact Details of Company’s Spokespersons: 2013 Annual Report Principal Nancy Hu CFO +886-2-2696-1234 Nancy.Hu @acer.com Deputy Claire Yang Associate PR Manager +886-2-2696-1234 [email protected] DISCLAIMER 2. Address and Telephone Numbers of Company’s Headquarter and Branches This is a translation of the 2013 Annual Report of Acer Incorporated (the “Company”). The transla- Office Address Tel Acer Inc. 7F.-5, No.369, Fuxing N. Rd., Songshan Dist., Taipei City +886-2-2719-5000 tion is intended for reference only and nothing else, the Company hereby disclaims any and all li- Registered Address 105, Taiwan abilities whatsoever for the translation. The Chinese text of the Annual Report shall govern any and Acer Inc. 8F., No.88, Sec. 1, Xintai 5th Rd., Xizhi Dist., New Taipei +886-2-2696-1234 all matters related to the interpretation of the subject matter stated herein. (Xizhi Office) City 221, Taiwan Acer Inc. 3F., No.139, Minzu Rd., East Dist., Hsinchu City 300, +886-3-533-9141 (Hsinchu Branch) Taiwan Acer Inc. 3F., No.371, Sec. 1, Wenxin Rd., Nantun Dist., Taichung +886-4-2250-3355 (Taichung Branch) City 408, Taiwan Acer Inc. 4F.-2, No.38, Xinguang Rd., Lingya Dist., Kaohsiung City +886-7-338-8386 (Kaohsiung Branch) 802, Taiwan Acer Inc. No.138, Nangong Rd., Luzhu Township, Taoyuan County +886-3-322-2421 (Shipping & Warehouse Manage- 338, Taiwan ment Center) 3. Address and Contact Details of Acer Shareholders’ Services Address: 7F.-5, No.369, Fuxing N. Rd., Songshan Dist., Taipei City 105, Taiwan Tel: +886-2-2719-5000 E-mail: [email protected] 4. Address and Contact Details of Auditing CPAs in the Most Recent Year Name: Sonia Chang and Steven Shih at KPMG Address: 68F., No.7, Sec. 5, Xinyi Rd., Xinyi Dist., Taipei City 110, Taiwan Tel: +886-2-8101-6666 Website: www.kpmg.com.tw 5. Overseas Securities Exchange Listed Market for GDRs: London Stock Exchange Market For further information, please refer to Website: www.Londonstockexchange.com Listed Market for ECB: Singapore Exchange Ltd. Company For further information, please refer to Website: www.sgx.com 6. Acer Group Website: www.acer-group.com 2 3 Acer Incorporated Incorporated Acer Incorporated Acer INDEX 2013 Annual Report 2013 Annual Report 1. Business Report 05 6. Corporate Social Responsibility 65 1.1 Acer’s Core Values 08 6.1 Environment, Safety and Health Management 66 1.2 2013 Operating Report 10 6.2 Supply Chain Management 68 1.3 2014 Business Plan 11 6.3 Communication 68 6.4 Community Involvement 69 6.5 Enforcement of Corporate Social Responsibility by the Company 70 2. Company In General 13 2.1 Brief Account of the Company 14 7. Financial Standing 77 7.1 Five-Year Consolidated Financial Information 78 3. Corporate Governance Principles 19 7.2 Five-Year Financial Analysis 81 7.3 Supervisors’ Review Report 85 3.1 Organization of the Company 20 7.4 Financial Statements Consolidated Subsidiaries Audited by CPAs of the Past Year 85 3.2 Information Regarding Board of Directors, Supervisors and Key Managers 22 7.5 Disclosure of the Impact on Company’s Financial Status Due to Financial Difficulties 85 3.3 Corporate Governance Status 32 7.6 Financial Prediction and Achievements 85 4. Capital and Shares 41 8. Risk Management 87 4.1 Sources of Capital 42 8.1 Recent Annual Investment Policy and Main Reasons of Gain or Loss and Improvement Plan 88 4.2 Corporate Bonds 47 8.2 Important Notices for Risk Management and Evaluation 89 4.3 Special Shares 51 4.4 Global Depository Receipts (GDRs) Issuance 52 4.5 Employee Stock Options 53 Appendix 93 4.6 Issuance of New Shares Due to Company’s Mergers and Acquisitions 53 2013 Consolidated Financial Statements 94 5. Acer’s Business Formula 55 5.1 Business Scope 56 5.2 Market Highlights 57 5.3 Keys to a Sustainable Future 57 5.4 Employees 59 5.5 Important Contracts 63 1 Business Report Business Breaking Barriers between People and Technology 6 7 Acer Incorporated Incorporated Acer Incorporated Acer 1. Business Report to Shareholders 2013 Annual Report 2013 Annual Report The global ICT industry endured profound change in the past Acer’s vision and basic direction for transformation, Build I wish thank our shareholders over your long-term support year, and obstacles within the company have resulted in our Your Own Cloud (BYOC™), a self-built cloud that will enable for Acer. We truly appreciate your encouragement, and I business underperformance. In fiscal year 2013, we reported our customers to seamlessly integrate their PC and mobile hope you can uphold the original intention to continue sup- consolidated revenues of NT$360.13 B, down 16.2% on year, devices to access their data — anytime, anywhere. porting Acer. loss after tax of NT$20.52B, and loss per share of NT$7.54. After adjustment due to compliance with the International The vision is also about transforming from a hardware Sincerely, Financial Reporting Standard (IFRS), our accumulated loss company into a "hardware + software + services" player as is NT$21.79B. We reported the above to all shareholders we prepare to embrace new opportunities in the era of cloud in accordance with laws (Article 211 of Company Act) and technology. Acer’s role in the future is to become the “enabler regulations. of BYOC,” and build in the BYOC angel into all Acer hardware and software. At the Computex Taipei international trade- A main part of the loss was due to compliance with the IFRS show in June we will showcase a wide range of BYOC services to recognize NT$9.94B for the impairment of intangible as- for all visitors to experience! Stan Shih sets in trademark right ect. Other key factors of our loss were Chairman NT$3.18B for inventory write off and NT$1.02B for man- Finally, on January 1 this year, as Acer carried out a series of power reduction. changes, I hired Jason Chen, former senior vice president of Worldwide Sales and Marketing at Taiwan Semiconductor Consequently, our former chairman and president resigned Manufacturing Company (TSMC), as the new CEO and corpo- to take responsibility. On November 5, I returned to Acer rate president. as chairman of the Transformation Committee. Then on November 21, I assumed the company chairmanship in order During this time, I held frequent in depth discussion with to transform and lead our company through during this George Huang of the Transformation Committee and Jason important time. on business management and strategy. An important con- clusion we reached is the “5Cs” - Communication, Commu- I focused on re-engineering the organization culture and nication, Communication, Consensus, and Commitment – as engraining the benevolent thinking of the Wangdao ideol- Acer’s top-down management culture. ogy, and hoped to combine the qualities of professionalism and entrepreneurship. I pushed for change in the company Through our efforts over the past few months our company business strategy while restructuring the organization, and has taken many new initiatives, and I feel assured that Acer is through extensive communication we reached the consensus moving towards the right direction, as employee morale and to define the new corporate vision. confidence are gradually restored. The challenge that we face today was accumulated from long ago, therefore it cannot be The consensus among all our employees was that a company expected for our operations to improve immediately. Time is without change cannot sustain! Following intensive internal needed for our efforts to reflect in the financial figures and I communication, on December 18 we publicly announced hope that you will have the patience. 8 9 Acer Incorporated Incorporated Acer Incorporated Acer 1.1 Acer’s Core Values Acer’s Core Value The challenge for all businesses is to be unique. Whether you’re a customer, an employee or a shareholder, the only way to attract any business is if you stand out from the crowd. This means designing innovative products that add value by providing quality products and services to win consumers’ interest and approval. 2013 Annual Report Core Value Rational Meaning Emotional Meaning 2013 Annual Report • Increase products’ add-on value • Value for shareholders (good dividends Being unique, however, isn’t a quality you can simply switch on and off. • Generating profit for shareholders and share value) At Acer, we have built our reputation on creating value in every aspect of the company throughout our history, by: • Growing the business by achieving the • Value for customers (innovative, easy- • upholding and realizing the altruistic values of the Wangdao ideology by continuously innovating and creating value, ensuring Value-creating challenging financial and strategic objectives to-use products, services, and efficient business model) the balance of interests, and pursuing for sustainable development. • Leveraging our key assets: Brands, People, Customers and Channel • Value for employees (good company, • creating value for customers by offering a continuous stream of innovative and empowering solutions that anticipate and environment, opportunities) satisfy their needs. • Recognizing that customers are the essence of • Reflect and realize customers’ • creating value for investors by consistently providing positive returns year after year. our business expectation on our business • Placing first priority on listening to and satisfying • Love and respect for our customers • creating value for employees allowing them to realize their full potential and achieve goals. Customer-centric customer needs • creating value for business partners with win-win solutions with vendors and valuable channel partners.