25 Jun 2013 11:16
APPENDIX
1. Name, Title and Contact Details of Company's Spokespersons:
Principal | Eva Ho | CFO | +886-2-2696-1234 | Eva.Ho@acer.com |
Deputy | Henry Wang | Director | +886-2-2696-1234 | Henry.Wang@acer.com |
2. Address and Telephone Numbers of Company's Headquarter and Branches
Office | Address | Tel |
| |||
| Acer Inc. Registered Address | 7F.-5, No.369, Fuxing N. Rd., Songshan Dist., Taipei City 105, Taiwan | +886-2-2719-5000 | |||
Acer Inc. (Xizhi Office) | 8F., No.88, Sec. 1, Xintai 5th Rd., Xizhi Dist., New Taipei City 221, Taiwan | +886-2-2696-1234 |
| |||
| Acer Inc. (Hsinchu Branch) | 3F., No.139, Minzu Rd., East Dist., Hsinchu City 300, Taiwan | +886-3-533-9141 | |||
| Acer Inc. (Taichung Branch) | 3F., No.371, Sec. 1, Wenxin Rd., Nantun Dist., Taichung City 408, Taiwan | +886-4-2250-3355 | |||
| Acer Inc. (Kaohsiung Branch) | 4F.-2, No.38, Xinguang Rd., Lingya Dist., Kaohsiung City 802, Taiwan | +886-7-338-8386 | |||
| Acer Inc. (Shipping & Warehouse Management Center) | No.138, Nangong Rd., Luzhu Township, Taoyuan County 338, Taiwan | +886-3-322-2421 | |||
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: |
| stock.affairs@acer.com | |||
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. Listed Market for GDRs: London Stock Exchange Market
For further information, please refer to Website: www.Londonstockexchange.com
6. Acer Group Website: www.acer-group.com
DISCLAIMER
This is a translation of the 2012 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.
INDEX
1. Business Report
1.1 Acer's Core Values
1.2 2011 Operating Report
1.3 2012 Business Plan
2. Company In General
2.1 Brief Account of the Company
3. Corporate Governance Principles
3.1 Organization of the Company
3.2 Information Regarding Board of Directors, Supervisors and Key Managers
3.3 Corporate Governance Status
4. Capital and Shares
4.1 Sources of Capital
4.2 Corporate Bonds
4.3 Special Shares
4.4 Global Depository Receipts (GDRs) Issuance
4.5 Employee Stock Options
4.6 Issuance of New Shares Due to Company's Mergers and Acquisitions
5. Acer's Business Formula
5.1 Business Scope
5.2 Market Highlights
5.3 Keys to a Sustainable Future
5.4 Employees
5.5 Important Contracts
6. Corporate Social Responsibility
6.1 Environment, Safety and Health Management
6.2 Supply Chain Management
6.3 Communication
6.4 Community Involvement
6.5 Enforcement of Corporate Social Responsibility by the Company
7. Financial Standing
7.1 Five-year Consolidated Financial Information
7.2 Five-year Financial Analysis
7.3 Supervisors' Review Report
7.4 Financial Statements Consolidated Subsidiaries Audited by CPAs of the Past Year
7.5 Disclosure of the Impact on Company's Financial Status Due to Financial Difficulties
7.6 Financial Prediction and Achievements
8. Risk Management
8.1 Recent Annual Investment Policy and Main Reasons of Gain or Loss and Improvement Plan
8.2 Important Notices for Risk Management and Evaluation
Appendix
2012 Consolidated Financial Statements
1. Business Report to Shareholders
In fiscal year 2012, Acer's business suffered from the impacts of company transformation, sluggish European and US economies, key component supply issues, and less than anticipated sales of Windows 8 devices. Our consolidated revenue of NT$429.5B (US$14.7B) was down 9.6% year-on-year, and operating income was NT$1.03B (US$35.2M). Besides, in compliance with the GAAP we recognized NT$3.5B (US$120M) for the impairment of intangible assets in trademark rights, which resulted in profits after tax (PAT) losses of -NT$2.91B (-US$100M), and earnings per share (EPS) of -NT$1.07.
The intangible asset impairment comes from the revaluation of the Gateway, Packard Bell, eMachines, and Eten brands. It is part of an accounting procedure separate from cash expenses, and does not affect the company's business operation and working capital. The revaluation required exhaustive calculations along with rational estimations that take into full account of feasibility and appropriateness.
In terms of shipments, Acer ranked No. 4 for total PCs and No. 3 for notebooks worldwide in 2012 according to market research firm, IDC. In the last year, the whole ICT industry experienced a profound paradigm shift, with changing criteria on customer purchase, and the market sell-through becoming harder to forecast. To minimize our risks, we are no longer focused on maximizing volume growth only. Instead, Acer's main priorities now are to develop innovative products with differentiation, establish a clear brand positioning, and create value for our customers before pursuing for shipment growth.
In today's ICT industry, personal computers and the Wintel architecture no longer serve their former dominant roles. In place are the three ecosystems - iOS, Android and Windows - which shall co-exist and compete with each other. Without a single operating platform, industry players now have more opportunities for innovation but the keys to success still lie in providing the ultimate user experience, and creating product differentiation and customer value. Hence, Acer already began implementing its new strategy in the second half of 2012 to strengthen our marketing and R&D capabilities, invest more resources, and importantly, engrain marketing in the daily process of R&D and design.
The ICT industry faced many uncertainties last year, such as the weak demand for Windows 8 devices due to several unfavorable factors. However, so far this year we have seen the U.S. economy showing signs of recovery, the European economy stabilizing, fewer factors of uncertainty, rising demand for touch and type "duality" products, and maturity of the tablet PC market ready for higher growth. Based on these observations I expect the overall industry condition to be better than last year.
As for our product offering, we can no longer focus on traditional notebooks and netbooks. The growing momentum for the future comes from tablets, Ultrabooks, and touch notebooks. This year, Acer will strive to gain the leading position for touch devices, increase the sales of tablet PCs, and expand our smartphone business step by step. Today, there are more and more categories in the PC industry than before and the emergence of many cross-category devices. Acer will embrace these new opportunities for our onward growth.
In terms of cloud services, AcerCloud supports cross platforms for the three major operating systems: Windows, Android, and iOS. The most important feature of AcerCloud is that it allows users to easily manage their personal multimedia and data files on a variety of digital devices, regardless of which operating system they are running. Through AcerCloud, we expect to highlight our brand differentiation and build customer loyalty.
Following the company transition Acer now has a stronger organization and management team with a clear set of strategies. And as the overall external conditions start to look more promising we are confident of a turnaround and back on the right track for steady growth and profitability. With the determination to create product innovation and differentiation in the long term, we will gradually build Acer into a valuable global brand.
Lastly, please continue to support Acer as we will strive to create more benefits for all our shareholders. Thank you.
Sincerely,
J.T. Wang
Chairman & CEO
1.1 Acer's Core Values
Core Value | Rational Meaning | Emotional Meaning |
Value-creating
| ·; Generating profit for shareholders ·; Growing the business by achieving the challenging financial and strategic objectives ·; Leveraging our key assets: Brands, People, Customers and Channel | ·; Value for shareholders (good dividends and shares value) ·; Value for customers (good products, services, easy to do business) ·; Value for employees (good company, environment, opportunities) |
Customer-centric | ·; Recognizing that customers are the essence of our business ·; Placing first priority on listening to and satisfying customer needs ·; Delivering first-class products and services | ·; Love and respect for our customers ·; Listen, learn and improve ·; Walk the talk (delivering on our promises) |
Ethical | ·; Being a good corporate citizen by playing a role in social growth ·; Caring for the environment all across the business value chain ·; Building on trust and honesty internally and externally by respecting people, diversities and cultures | ·; Trust, respect and honesty ·; Care for the environment ·; An example to others |
Caring | ·; Creating an attractive workplace and ensuring a proper work-life balance ·; Providing employees with development and professional growth opportunities ·; Fostering teamwork and collaboration | ·; Energetic and inspiring workplace ·; Growth potential ·; Teamwork |
Innovative | ·; Challenging the way of doing things and adopting new ideas ·; Supporting continuous improvement in processes and products ·; Creating impact through original thinking | ·; Think big ·; Think smart ·; Think outside of the box (innovatively) |
Fast | ·; Putting speed in execution at the heart of our operations ·; Being proactive in making decisions ·; Anticipating changes ahead of competition as key to success | ·; Think fast ·; Act quickly ·; Get there first |
Effective | ·; Doing the right things right ·; Creating an empowered environment with clear responsibilities and targets ·; Recognizing the power of being simple and attentive to basics | ·; Clear objectives ·; Clear responsibilities ·; Keep it simple |
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 any business will attract you is if it stands out from the crowd.
Being unique, however, isn't a quality you can simply switch on and off.
At Acer, we have built our reputation on creating value in every aspect of the company throughout our history. We create value for our:
• customers by offering a continuous stream of innovative and empowering solutions that anticipate and satisfy their needs.
• investors by consistently providing positive returns year after year.
• employees, allowing us to realize our full potential and achieve our goals.
• business partners with win-win solutions with our vendors and our valuable channel partners.
Creating value through brand recognition is the way forward rather than competitive pricing. There's no other way to win tomorrow's business than to believe in the power of our brands right now.
To be a successful global brand company, it is critical that employees have a consistent set of core values as a solid basis. The defined core values will bring to the Company both short-term benefits and long-term advantages.
The approaches that we must base our actions: Value-creating, Customer-centric, Ethical and Caring.
The way we must act: Innovative, Fast and Effective.
We encourage all employees to understand, practice and emphasize the core values in our respective roles.
1.2 2012 Operating Report
1.2.1 Consolidated Operating Results
Unit: NT$ Thousand
Period Item | Most Recent 5-Year Financial Information | ||||
2008 | 2009 | 2010 | 2011 | 2012 | |
Operating revenue | 546,274,115 | 573,982,544 | 629,058,973 | 475,258,118 | 429,510,913 |
Gross profit | 57,285,660 | 58,327,860 | 64,481,268 | 38,522,725 | 43,195,744 |
Operating (loss) income | 14,072,302 | 15,339,466 | 18,203,913 | (6,480,072) | 1,024,706 |
Non-operating income and gain | 5,353,038 | 1,719,037 | 4,321,397 | 1,566,430 | 1,984,494 |
Non-operating expense and loss | 4,618,613 | 2,075,520 | 3,195,923 | 2,510,688 | 5,642,904 |
Continuing operating income before tax | 14,806,728 | 14,982,983 | 19,329,387 | (7,424,330) | (2,633,704) |
Income(loss) from discontinuned segment | 99,843 | 0 | 0 | 0 | 0 |
Extraordiniary items | 0 | 0 | 0 | 0 | 0 |
Cumulative effect of changes in accounting principle | 0 | 0 | 0 | 0 | 0 |
Income after income taxes | 11,742,135 | 11,353,374 | 15,117,997 | (6,601,968) | (2,910,326) |
EPS | 4.67 | 4.31 | 5.71 | (2.52) | (1.07) |
1.2.2 Budget Expenditure in 2012
Not applicable.
1.2.3 Financial Income and Earning Abilities
Unit: NT$ Thousand
Item | 2012 | |
Operating revenue | 429,510,913 | |
Financial Income | Gross profit | 43,195,744 |
Income after tax | (2,910,326) | |
Return on assets(%) | (0.94) | |
Earning Abilities | Return on equity(%) | (3.86) |
Net income ratio (%) | (0.68) | |
EPS(NTD) | (1.07) |
1.3 2013 Business Plan
1.3.1 Business Direction
A. Strengthen marketing and R&D capabilities, invest more resources and engrain marketing in the daily process of R&D and design.
B. Develop innovative products with differentiation, establish a clear brand positioning, and create value for our customers before pursuing for shipment growth.
C. Strengthen the tablet, Ultrabook and touch device business, and expand smartphone operations step by step.
D. Maintain fast and efficient logistics capability.
E. Carry out corporate social responsibilities.
1.3.2 Goals
A.Increase the shipments of tablets, Ultrabooks, touch devices, and smartphones.
B. Gradually increase proportion of revenues for commercial products.
C. Pursue for better operating income.
1.3.3 Partner Policy
A. Reinforce our cooperation with first-tier suppliers and channel partners.
B. Fully capitalize on partners' resources.
C. Share the success by rewarding our partners.
1.3.4 Future Strategy
A. Create value for customers and enhance our brand positioning.
B. Highlight our brand differentiation and build customer loyalty through "AcerCloud" service.
C. Implement sustainable development in order to accumulate long-term value for the company.
1.3.5 Impact on Company Due to Competition, Governmental Regulations and Overall Macro Market
A. The ICT industry experienced a profound paradigm shift, with changing criteria on customer purchase, and the market sell-through harder to forecast.
B. The ICT industry transformed from having a single to multiple operating system platforms. However the keys to success still lie in creating product differentiation and customer value, and providing the ultimate user experience.
C. Rising demand for touch and type "duality" products and the maturing of tablet PC market and supply chain shall bring higher growth.
D. Based on the observations that the U.S. economy is showing signs of recovery, the European economy is stabilizing, and fewer factors of uncertainty, the overall industry condition for 2013 shall be better than last year.
2. Company In General
2.1 Brief Account of the Company
2.1.1 Founded: August 1, 1976
1976 - 1986
·; Commercialized microprocessor technology
1987 - 2000
·; Created the Acer brand name and went global
2001 - 2007
·; Transformed from manufacturing to a marketing and sales company
2008 - beyond
·; Enhancing worldwide presence with a new multi-brand strategy
1976
·; Acer was founded under the name Multitech, focusing on trade and product design.
1978
·; Established the Microprocessor Training Centre, training 3,000 engineers for Taiwan's information industry.
1979
·; Designed Taiwan's first mass-produced computer for export.
1981
·; Acer manufacturing operations were established in the Hsinchu Science-based Industrial Park, Taiwan.
·; MicroProfessor-I debuted as Acer's first branded product.
1982
·; MicroProfessor-II was unveiled as Taiwan's first 8-bit home computer.
1983
·; First company to promote 16-bit PC products in Taiwan.
1984
·; Acer Peripherals, Inc. (now BenQ Corp.) and Multiventure Investments, Inc. were established.
1985
·; AcerLand, Taiwan's first and largest franchised computer retail chain was founded.
1986
·; Beat IBM with 32-bit PCs.
1987
·; The Acer name was created.
1988
·; Acer Inc. launched IPO.
1989
·; TI-Acer DRAM joint venture with Texas Instruments was formed.
1991
·; Introduced ChipUpä technology - world's first 386-to-486 single-chip CPU upgrade solution.
1992
·; Created the world's first 386SX-33 chipset.
·; Stan Shih introduced the Smiling Curve concept.
1993
·; Developed a 64-bit performance-enhanced I/O and CPU architecture to link MIPS RISC CPUs with Microsoftâ Windowsâ NT.
1994
·; Introduced the world's first dual Intelâ Pentiumâ PC.
1995
·; The popular Aspire multimedia PC brought Acer closer to the consumer electronics market.
1996
·; Announced its commitment to providing fresh technology to be enjoyed by everyone, everywhere.
1998
·; As official IT Sponsor of the 13th Asian Games in Bangkok, Acer introduced the world's first PC-based management system for a major international sporting event.
1999
·; Aspire Academy was set up in Aspire Park to help managers of Asian firms and MNCs with offices in Asia to improve their organizational and leadership effectiveness.
2000
·; As part of Acer's latest re-engineering, Acer split off its OEM business unit to create Wistron Corp., an independent design and IT manufacturing company.
2001
·; Adopted a new corporate identity to reflect the company's commitment to enhancing people's lives through technology.
2002
·; The Product Value Labs were inaugurated to enhance Acer's customer-centric focus, and integrated technologies that add value to customers' lives.
·; TravelMate C100 was the first convertible Tablet PC available in the worldwide market.
2004
·; Launched a new Folio design for notebooks, featuring pure functional simplicity, smooth curves and subtle elegance.
·; BusinessWeek selected Stan Shih as one of the "25 Stars of Asia."
·; Acer Founder Stan Shih retired from the Group.
2005
·; J.T. Wang assumed the position of Chairman and Chief Executive Officer, while Gianfranco Lanci stepped into the role of President of Acer Inc.
·; Launched Ferrari 4000, the first carbon-fiber notebook available in the worldwide market.
·; A series of Empowering Technology products were unveiled.
·; Became the worldwide No. 4 vendor for Total PCs and notebooks.
·; Became the No. 1 brand in EMEA and Western Europe for notebooks.
2006
·; First-to-market with a full line of Intel® Centrino® Duo mobile technology notebooks.
·; Became a Sponsor of Scuderia Ferrari.
·; Celebrated its 30th anniversary.
·; Acer AT3705-MGW LCD TV became the world's first digital TV to pass Intel® Viiv™ technology verification.
·; Became the No. 3 notebook and No. 4 desktop brand worldwide.
2007
·; Acer readies for Windows Vista™ with full range of Vista-certified LCD monitors.
·; Set the trend in product design with new Aspire Gemstone-design consumer notebooks.
·; Completed the merger of Gateway, Inc.
·; Announced its joining as an Olympic Worldwide Partner for the Winter Olympics in Vancouver 2010 and Summer Olympics in London 2012.
·; Became the No. 2 notebook and No. 3 desktop PC vendor worldwide.
2008
·; Announced the acquisition of E-ten and plan to enter the smart handheld market.
·; Launched the new Aspire Gemstone Blue notebooks, the first to feature full HD widescreen 18.4" and 16" LCDs, Blue-Ray Disc™ drive, and latest generation Dolby® Surround sound.
·; Aspire One was launched as Acer's first mobile internet device, and won the Japan Good Design award for quality design.
·; Ranked No. 3 for Total PCs and No. 2 for notebooks worldwide.
2009
·; Launched the Aspire Timeline notebooks - thin and light with all-day battery life.
·; BusinessWeek named Acer among the "10 Hottest Tech Company of 2009."
·; Voted Reader's Digest gold-medal Computer TrustedBrand in Asia for the 11th consecutive year.
·; Announced its first netbook based on the Android operating system.
·; Taiwan's Ministry of Economic Affairs presented Gianfranco Lanci with an Economic Medal for outstanding leadership, and building the Acer brand name worldwide.
·; Launched the high-end and stylish Liquid smartphones.
·; Became the world No. 2 company in Total PCs.
2010
·; Launched the green Aspire Timeline notebook - free from PVC and BFR materials
·; Provided and managed computing facilities to ensure the smooth running of sports events at the Vancouver 2010 Olympic Winter Games.
·; Chairman J.T. Wang named in TIME magazine's annual list of 100 most influential people in the world.
·; Acer launched clear.fi, a new entertainment experience allowing real-time sharing and playing of multi-format content over multi-platform devices.
·; Integrated Founder Tech's PC sales team and channels in the China market.
·; Successfully issued US$500 million in convertible bonds.
·; Announced expansion to Chongqing in western China, creating a new global IT manufacturing center and Acer's second China base.
·; Hosted the third annual CSR Forum with the ultimate goal of building a sustainable supply chain.
2011
·; Acer products began to ship from China's Chongqing production base.
·; Acer EMEA cleared its high channel inventory with a one-time US$150 million write-off.
·; Sir Julian Horn-Smith and Dr. F.C. Tseng were elected as independent board directors.
·; Debuted first Ultrabook™: Aspire S3.
·; Announced key management reshuffle - Scott Lin to concurrently head China operations, and Oliver Ahrens to front EMEA operations.
2012
·; Acquired US-based iGware with US$320 million for mid- to long-term investment in cloud technology.
·; Unveiled world's thinnest Ultrabook™: Aspire S5.
·; Presented Aspire Timeline Ultra Series, extending mainstream notebook features with Ultrabook™ trend.
·; Announced AcerCloud application results.
·; Recruited Eva Ho as the new CFO.
·; Introduced new Full HD tablet, the ICONIA TAB A700.
·; Strengthened executives' remuneration management system in order to enhance corporate governance and maintain shareholders' long-term interests.
·; Supplied all computing equipment for the London 2012 Olympic Games; successfully completed the mission and earned high appraisals from the assembly.
·; Appointed Michael Birkin as Chief Marketing Officer to strengthen Acer as a marketing-oriented company.
·; Launched a full range of Windows 8 touch products for the most complete user experience.
·; Revitalized the global website - Acer.com - to provide web surfers with a highly intuitive and excellent user experience.
·; Aspire S7 was named as CES Innovations 2013 Design and Engineering Award Honoree.
·; Appointed Tiffany Huang as president of Personal Computer Global Operations.
2013
·; Extended AcerCloud to support top three operating systems, making it easy to share files and media among Windows, iOS and Android devices.
·; Recognized a total of NT$3.5B (US$120.1M) intangible asset impairment based on the Generally Accepted Accounting Principle (GAAP) and thorough assessment.
·; Launched B6 and V6 series commercial LED-backlit monitors made with post-consumer recycled plastic and complied with EPEAT standards for environmental protection.
·; Held the fifth annual Corporate Social Responsibility Forum to continue exploring and leading the global trend of sustainable management.
3. Corporate Governance Principles
3.1 Organization of the Company
3.1.1 Department Functions
Corporate Functions
Marketing Committee
‧Integrating brand positioning and marketing strategies
Auditor
‧Evaluation, planning and improvement of Acer's internal operations
Corp. Sustainability Office
‧Strategic planning and management in corporate sustainability, with the aim of fulfilling corporate social responsibilities.
Public Relations
‧Managing external public relations
CFO & Spokesperson
‧Managing long-term finance, investments and corporate spokesperson
Commercial Business Global Operations Preparatory Office
‧Business development, product solution management, R&D, presales & technical support of commercial business of global accounts.
CTO Office
‧Managing mid-to long-term technology development planning, technology integration and collaboration
Operation Analysis Office
‧Planning, analysis and improvement of business model and business management
PC Global Operations
‧Product marketing and supply chain management of Acer's PC products and services
Asia Pacific Operations
‧Sales, marketing and after-sales service of Acer's IT products in Asia Pacific
Greater China Operations
‧Sales, marketing and after-sales service of Acer's IT products in Greater China
EMEA Operations
‧Sales, marketing and after-sales service of Acer's IT products in Europe, Middle East and Africa
Pan America Operations
‧Sales, marketing and after-sales service of Acer's IT products in Pan America
Cloue Technology Business
‧Establishing Acer Cloud infrastructure and providing value-added cloud service to customer.
Smartphone Business
‧Product marketing and supply chain management of Acer's smartphone products and services
Design Center
‧Research and development, design and patent of Acer's product.
Global Information Technology
‧Corporate information infrastructure and information systems management
Global Customer Service
‧Global services strategy and global service center management
Marketing & Branding
‧Corporate brand management, consolidation and implementation of global marketing strategies
Channel Business
‧Channel distribution of non-Acer branded 3C products in Taiwan
e-Enabling Services Business
‧ICT solutions and services provider, including information security management, mobility applications, software systems development, systems integration, system operation services, value-added business solutions, and Internet data center services
Global Finance
‧Corporate finance, investment, treasury, credit and risk control and accounting services management
Global Human Resources
‧Human resources and organizational strategy
Global Legal
‧Corporate and legal affairs, intellectual property
General Affairs
‧General affairs, transportation service, office facilities management
3.2 Information Regarding Board of Directors, Supervisors and Key Managers
(1) Board of Directors and Supervisors (April 21, 2013)
Title | Name | Date of Election | Term | Shares Held When Elected | Shares Held at Present | Shares Held by Spouse & Minors | Education | Current Position(s) in Other Companies | Spouse or Immediate Family Holding Managerial Position | |||||
Number | Percentage | Number | Percentage | Number | Percentage | Title | Name | Relation- ship | ||||||
Chairman | J.T. Wang | 06/15/2011 | 3 | 15,142,159 | 0.53 | 15,142,159 | 0.53 | 206,771 | 0.01 | Bachelor | (Note 1) | None | - | - |
Director | Stan Shih | 06/15/2011 | 3 | 74,806,719 | 2.64 | 74,733,499 | 2.64 | 17,634,157 | 0.62 | Master | 1. Director of Qisda Corp. 2. Director of Wistron Corp. 3. Independent director of TSMC Co, Ltd. 4. Director of Dragon Investment Co., Ltd. 5.Director of Acer SoftCapital | Supervisor | Carolyn Yeh | Wife |
Director | Hsin-I Lin | 06/15/2011 | 3 | 0 | 0 | 0 | 0 | 0 | 0 | Bachelor | 1. Director of Yulon Motor Co, Ltd. 2.Director of China Motor Corp. Co 3. Independent director of E.Sun Financial Holdings Co Ltd. 4.Independent director of Sinyi Realty Inc. | None | - | - |
Director | Hung Rouan Investment Corp. | 06/15/2011 | 3 | 67,799,202 | 2.39 | 67,799,202 | 2.39 | 0 | 0 | - | - | None | - | - |
Director | Smart Capital Corp. | 06/15/2011 | 3 | 11,260 | 0 | 11,260 | 0 | 0 | 0 | - | - | None | - | - |
Legal Representative of Director | Philip Peng (Representative of Smart Capital Corp.) | 06/15/2011 | 3 | 1,003,469 | 0.04 | 1,003,469 | 0.04 | 258,007 | 0.01 | Master | 1. Director of Wistron Corp. 2. Director of iDSoftCapital Inc. 3. Supervisor of Dragon 4. Investment Co., Ltd. 5. Others (Note 1) | None | - | - |
Independent Director | Julian Michael Horn-Smith | 06/15/2011 | 3 | 0 | 0 | 0 | 0 | 0 | 0 | Bachelor | - | None | - | - |
Independent Director | F.C. Tseng | 06/15/2011 | 3 | 0 | 0 | 0 | 0 | 0 | 0 | Ph. D. | 1.Vice Chairman of TSMC Limited 2. Chairman of Global Unichip Corp. 3. Chairman of TSMC China Company Limited 4. Director of Digimax, Inc. 5. Director of Vanguard International Semiconductor Corp. | None | - | - |
Supervisor | Carolyn Yeh | 06/15/2011 | 3 | 17,707,377 | 0.62 | 17,634,157 | 0.62 | 74,733,499 | 2.64 | Bachelor | 1. Chairman of iDSoftCapital Inc. 2.Others (Note 1) | Director | Stan Shih | Husband |
Supervisor | George Huang | 06/15/2011 | 3 | 6,261,844 | 0.22 | 6,261,844 | 0.22 | 1,386,315 | 0.05 | Bachelor | 1. Supervisor of Apacer Technology Inc. 2. Supervisor of Les Enphants Co., Ltd. 3. Supervisor of Motech Industries Inc 4.Independent director of PChome Online Inc 5. Independent director of Bio Net Corp. 6. Independent Supervisor of InterServ International Inc. 7. Independent director of Taiwan Taxi Corp. | None | - | - |
Note1: Appointed by Company to be Director and/or President of certain subsidiaries.
Major Institutional Shareholders (April 21, 2013)
Name of Acer's Institutional Shareholders | Major Shareholders of Acer's Institutional Shareholders | Percentage of Shares |
Smart Capital Corp. | Philip Peng | 66.67% |
Jill Ho | 33.33% | |
Hung Rouan Investment Corp. | Carolyn Yeh | 20.13% |
Shih Hsuen Rouan Charity Foundation | 1.60% | |
Shih Hsuen Rouan | 17.25% | |
Shih Hsuen Huei | 26.09% | |
Shih Hsuen Lin | 17.16% | |
Shih Fang Cheng | 8.93% | |
Yeh Ting Yu | 8.84% |
Professional qualifications and independence analysis of directors and supervisors
Criteria
Name | Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience | Independence Criteria(Note) | Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director | |||||||||||
An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University | A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company | Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ||
J.T. Wang | P | P | P | P | P | P | P | 0 | ||||||
Stan Shih | P | P | P | P | P | 1 | ||||||||
Hsin-I Lin | P | P | P | P | P | P | P | P | P | P | P | 2 | ||
Hung Rouan Investment Corp. | Not applicable. | |||||||||||||
Smart Capital Corp. Philip Peng (Representative of Smart Capital Corp.) | Not applicable. | |||||||||||||
Julian Michael Horn-Smith | P | P | P | P | P | P | P | P | P | P | P | 0 | ||
F.C. Tseng | P | P | P | P | P | P | P | P | P | P | P | 0 | ||
Carolyn Yeh | P | P | P | P | 0 | |||||||||
George Huang | P | P | P | P | P | P | P | P | 3 |
Note: Please tick the corresponding boxes if directors or supervisors have been any of the following during the two years prior to being elected or during the term of office.
1. Not an employee of the Company or any of its affiliates.
2. Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares.
3. Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
4. Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the persons in the preceding three subparagraphs.
5. Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in the top five in holdings.
6. Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the Company.
7. Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof.
8. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
9. Not been a person of any conditions defined in Article 30 of the Company Law.
10. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.
(2) Key Managers (April 21, 2013)
Title
|
Name
| Date of Accession | Shares Held Directly | Shares Held by Spouse & Minors | Shares Held by the Other's | Education | Current Position(s) in Other Companies | Spouse or Immediate Family Holding Position as President or Vice President |
| ||||||||||
Number | Percentage | Number | Percentage | Number | Percentage | Title | Name | Relationship |
| ||||||||||
Chairman & CEO | J.T. Wang | 04/20/2011 | 15,142,159 | 0.53 | 206,771 | 0.01 | 0 | 0 | Bachelor | (Note3) | None | - | - |
| |||||
| Corp. President | Jim Wong | 11/01/2001 | 4,301,026 | 0.15 | 0 | 0 | 0 | 0 | Master | (Note3) | None | - | - | |||||
Sr. Corp.VP & Chairman of Marketing Committee | Walter Deppeler | 09/29/2007 | 0 | 0 | 0 | 0 | 0 | 0 | Bachelor | (Note3) | None | - | - |
| |||||
| Sr. Corp.VP & President of GC | Scott Lin | 11/01/2001 | 1,155,001 | 0.04 | 7,593 | 0 | 0 | 0 | Bachelor | (Note3) | None | - | - | |||||
| Sr. Corp.VP & President of AAP | Steve Lin | 11/01/2001 | 2,080,822 | 0.07 | 0 | 0 | 0 | 0 | Bachelor | - | None | - | - | |||||
| Sr. Corp.VP & President of EMEA | Oliver Ahrens | 04/01/2009 | 0 | 0 | 0 | 0 | 0 | 0 | Bachelor | (Note3) | None | - | - | |||||
| Corp.VP & President of PA | Emmanuel Fromont | 01/01/2011 | 0 | 0 | 0 | 0 | 0 | 0 | Bachelor | (Note3) | None | - | - | |||||
| Corp.VP & President of CBG | James Chiang | 01/01/2003 | 1,207,457 | 0.04 | 5,168 | 0 | 0 | 0 | Bachelor | (Note3) | None | - | - | |||||
| Corp.VP & President of ETBG (Note 1) | Simon Hwang | 09/01/2008 | 0 | 0 | 0 | 0 | 0 | 0 | Bachelor | (Note3) | None | - | - | |||||
| President of EBBG | Ben Wan | 05/16/2002 | 0 | 0 | 0 | 0 | 0 | 0 | Master | (Note3) | None | - | - | |||||
| President of PCGO (Note 1) | Campbell Kan | 03/28/2007 | 0 | 0 | 0 | 0 | 0 | 0 | Master | - | None | - | - | |||||
| President of PCGO (Note 2) | Tiffany Huang | 01/01/2013 | 163 | 0 | 83 | 0 | 0 | 0 | Bachelor | - | None | - | - | |||||
| CTO and President of Design Center | Jackson Lin | 02/16/2004 | 320,083 | 0.01 | 7,329 | 0 | 0 | 0 | Master | - | None | - | - | |||||
| President of SPBG | ST Liew | 01/01/2012 | 0 | 0 | 0 | 0 | 0 | 0 | Bachelor | - | None | - | - | |||||
| GM of SPBG | Dave Chan | 01/01/2012 | 0 | 0 | 0 | 0 | 0 | 0 | Master | - | None | - | - | |||||
| VP of SPBG (Note 2) | Wayne Ma | 11/01/2008 | 0 | 0 | 0 | 0 | 0 | 0 | Bachelor | - | None | - | - | |||||
| VP of GCRO | Peter Shieh | 11/01/2001 | 507,737 | 0.02 | 78,387 | 0 | 0 | 0 | Bachelor | - | None | - | - | |||||
| VP of GCRO | Jafa Lin | 07/01/1996 | 181,228 | 0.01 | 0 | 0 | 0 | 0 | Bachelor | - | None | - | - | |||||
| VP of EBBG | Michael Wang | 11/01/2008 | 7,261 | 0 | 0 | 0 | 0 | 0 | Bachelor | - | None | - | - | |||||
| CFO | Eva Ho | 03/01/2012 | 0 | 0 | 0 | 0 | 0 | 0 | Master | - | None | - | - | |||||
| CFO(acting) (Note 1) | Lilia Wang | 09/21/2011 | 0 | 0 | 0 | 0 | 0 | 0 | Bachelor | (Note3) | None | - | - | |||||
| Director of Branch Office | PH Wu | 01/12/2006 | 20,457 | 0 | 0 | 0 | 0 | 0 | Bachelor | - | None | - | - | |||||
| Director of Branch Office | TC Yang | 01/12/2006 | 107,561 | 0 | 0 | 0 | 0 | 0 | Bachelor | - | None | - | - | |||||
| Director of Branch Office | YS Shiau | 01/12/2006 | 272,358 | 0.01 | 0 | 0 | 0 | 0 | Bachelor | - | None | - | - | |||||
Note 1: Lilia Wang released on 2012.03.01
Simon Hwang released on 2012.03.29
Campbell Kan released on 2013.01.01
Note 2: Wayne Ma assumed position on 2012.10.24
Tiffany Huang assumed position on 2013.01.01
Note 3: Appointed by Company to be Director and/or President of certain subsidiaries.
3.3 Corporate Governance Status
3.3.1 Meetings Held by the Board of Directors
The Board of Directors held nine meetings. The record of the Directors' attendances is shown below:
Title | Name | No. of Meetings Attended | No. of Meetings Attended by Proxy | Meeting Attendance Rate(%) | Note |
Chairman | J.T. Wang | 9 | 0 | 100% | |
Director | Stan Shih | 9 | 0 | 100% | |
Director | Hsin-I Lin | 6 | 3 | 67% | |
Director | Hung Rouan Investment Corp. | 9 | 0 | 100% | |
Director | Philip Peng (Representative of Smart Capital Corp.) | 9 | 0 | 100% | |
Director | Julian Michael Horn-Smith | 7 | 1 | 78% | |
Director | F.C. Tseng | 9 | 0 | 100% |
3.3.2 Operational Situation of the Audit Committee: Not applicable.
3.3.3 Supervisor's Participation of Meetings Held by the Board
The Board of Directors held nine meetings. The record of the supervisors' attendances is shown below:
Title | Name | No. of Meetings Attended | Meeting Attendance Rate (%) | Note |
Supervisor | Carolyn Yeh | 9 | 100% | |
Supervisor | George Huang | 7 | 78% |
3.3.4 Enforcement of Corporate Governance Implemented by the Company and Reasons for Discrepancy
Items | Enforcement Status | Discrepancy between the corporate governance principles implemented by the Company and the Principles, and the reason for the discrepancy |
A. The ownership structure and shareholders' rights | ||
a. The handling of the shareholders' proposals and disputes | The Company has designated the Office of Shareholders' Affairs to handle the shareholders' proposals and disputes. | No discrepancy |
b. Information held on the identities of major shareholders and their ultimate controlling persons | The Company holds information on the identities of major shareholders and their ultimate controlling persons. | No discrepancy |
c. The establishment of risk control mechanism and firewalls with affiliates | The Company has established the appropriate risk control mechanism and firewalls according to internal rules such as rules of supervision over subsidiaries, rules governing endorsement and guarantee, and the rules governing acquisitions and dispositions of assets etc. | No discrepancy |
B. The composition and duties of Board of Directors | ||
a. The election of independent directors | The Company elected two independent directors in 2011 AGM. | No discrepancy. |
b. The regular evaluation of the independence of CPA | The evaluation of the CPA is one of the main duties of the Financial Statement and Internal Control Review Committee | No discrepancy |
C. The establishment of communication channels with stakeholders | The Company has established the appropriate communication channels with suppliers, buyers, banks, investors and other stakeholders. | No discrepancy
|
D. The disclosure of information | ||
a. The utilization of website to disclose the information on finance, operations and corporate governance | The Company has set up Acer Group website (http://www.acer-group.com) containing the information regarding its finance and operations. The Company also discloses the enforcement of corporate governance in the shareholders' meeting and other institutional investor meetings. | No discrepancy |
b. Others means of disclosing information | The Company has one chief speaker, one acting speakers and designated team to be responsible for gathering and disclosing the information. | No discrepancy |
E. The establishment and enforcement of Nomination and Compensation Committee or any other Functional Committees | Following the enactment of "Regulations Governing the Establishment of and Exercise of Powers by Remuneration Committee" by Financial Supervisory Commission on March 18, 2011, the Company adjusted the establishment of Remuneration Committee, which approved by the BOD on August 31, 2011, and the initial meeting was convened on September 1, 2011. The duty of Remuneration Committee is to determine and regularly review the performance evaluation and remuneration strategies, policies, standard, structures of Board directors, supervisors, and Company officers, and determine and review their remuneration. | No discrepancy |
F. If the Company has implemented the corporate governance principles according to TSE Corporate Governance Best-Practice Principles, please identify the discrepancy between your principles and their implementation: The Company follows the spirit inside of TSE Corporate Governance Best-Practice Principles even though Company did not enact the corporate governance principles. | ||
G. Other important information that may facilitate better understanding of the status of corporate governance (e.g. human rights, employee rights, investors relationships, supplier relationships, interested parties' rights, D&O liabilities insurance, etc.): l The Company has actively participated in community or charitable activities, the details please refer to"6. Corporate Social Responsibility." l The Company has set up an exclusive web site for the new labor pension system containing information for employees regarding the laws and regulations, and to offer assistance. l In additional to the training courses required by authorities, the Company also held related training courses for members of the Board. l The Company has clearly set forth in the rules for the proceedings of Board meetings, that a director shall voluntarily abstain from voting on a proposal involved with his/her own interests. l The Chairman of the Company does not act as the President, and both of them are not spouses or relatives within one degree of kinship. l The Company has purchased liability insurance for directors and officers. |
3.3.5 The Establishment and Enforcement of Remuneration Committee
The Acer Inc. "Board of Directors and Supervisors Remuneration Guidelines" and "Executive Remuneration Guideline" are proposed by Remuneration Committee and effective after the approval of Acer Inc. Board of Directors. The compensation of Board Directors is defined in "Acer's Articles of Incorporation". Where this Company has earnings at the end of the fiscal year, after paying all relevant taxes, making up losses of previous year, this Company shall first set aside ten percent (10%) of said earnings as legal reserve, except that such legal reserve amounts to the total authorized capital. Thereafter, this Company shall set aside or reverse a special reserve in accordance with the applicable laws and regulations. Then, if still any balance left over, not more than one percent (1%) shall be distributed as profit sharing for Board of directors and supervisors according to Acer Inc. "Board of Directors and Supervisors Remuneration Guidelines". Employee Director shall receive no Director profit sharing.
The remuneration of Acer executive is governed under Acer Group "Executive remuneration guideline". The short-term incentive links to both individual and company overall team performance, while the long-term incentive links to long-term shareholders' value. The annual KPIs, which includes a portion of strategic KPIs assigned by the top management whether financial or non-financial, ensures the executive team move on the same direction to reach the strategic goal of the company. Standards of Business Conduct (SBC) is reminded and confirmed by each executive on the compensation sign back letter each year.
Remuneration Committee held five meetings from Jan.1, 2012 to Dec. 31, 2012. The record of their attendances is shown below:
Title | Name | No. of Meetings Attended | No. of Meetings Attended by Proxy | Meeting Attendance Rate(%) | Note |
Independent Director | Julian Michael Horn-Smith | 5 | 0 | 100% | Chair |
Independent Director | F.C. Tseng | 5 | 0 | 100% | |
Director | Hsin-I Lin | 5 | 0 | 100% |
3.3.6 Status and Measures of Ethical Practice
As good corporate citizens Acer Group respect human rights, local communities and compliance with laws, environment, ethics, safety standards, regulations and social norms. Based on our core values of "Serve with honor and work with pride", we have formulated a Standards of Business Conduct (SBC) document to guide us on how we interact with each other, our customers, our business partners, our shareholders and the communities where the Acer Group does business. This is done every day in every decision and every action by each one of us. We continue to build on our reputation for trust, integrity and honesty, both internally and externally, by appreciating people, their diversities and cultures.
You are welcome to visit Acer Group website (http://www.acer-group.com) for the details of our "Standards of Business Conduct."
3.3.7 Statement of Personnel Having Licenses Associated with Financial Information Transparency from Competent Authorities
Name of Licenses | Numbers | |
Internal Auditor | Financial Officer | |
Certified Public Accountants (CPA) | 0 | 3 |
US Certified Public Accountants (US CPA) | 0 | 1 |
Certified Internal Auditor (CIA) | 1 | 3 |
BS7799/ISO 27001 Lead Auditor | 1 | 0 |
Certificated Business Valuator | 0 | 1 |
3.3.8 Statement of Internal Control System
Date: March 28, 2013
Based on the findings of a self-assessment, Acer Incorporated (hereinafter, the "Company") states the following with regard to its internal control system during year 2012:
1. The Company is fully aware that establishing, operating, and maintaining an internal control system are the responsibility of its Board of Directors and managers. The Company has established such a system aimed at providing reasonable assurance regarding the achievement of objectives in the following categories: (1) effectiveness and efficiency of operations (including profitability, performance, and safe-guarding of assets), (2) reliability of financial reporting, and (3) compliance with applicable laws and regulations.
2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the three objectives mentioned above. Moreover, the effectiveness of an internal control system may be subject to changes of environment or circumstances. Nevertheless, the internal control system of the Company contains self-monitoring mechanisms, and the Company promptly takes corrective actions whenever a deficiency is identified.
3. The Company evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Taiwanese "Regulations Governing Establishment of Internal Control Systems by Public Companies" promulgated by the Securities and Futures Bureau of the Financial Supervisory Commission (hereinafter, the "Regulations"). The criteria adopted by the Regulations identify five constituent elements of internal control based on the process of management control: (1) control environment, (2) risk assessment and response, (3) control activities, (4) information and communication, and (5) monitoring. Each constituent element further contains several items. Please refer to the Regulations for details.
4. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria. While performing the internal control audit, the Company found a sales employee who convicted crime by deceiving supervisor during the shipping process. Total loss caused by this case is about NTD 15M which has no significant impact to the Company. The Company has taken quick actions to review and adjust the whole Sales and AR processes, to enhance the control over customer order management, shipping address management and AR reconciliation. In the meantime, the Company has restated the importance of Code of Conduct and urged employees to comply with it and act for the best of The Company.
5. Based on the findings of the evaluation mentioned in the preceding paragraph, the Company believes that, as of December 31, 2012, its internal control system (including its supervision of subsidiaries), as well as its internal controls to monitor the achievement of its objectives concerning operational effectiveness and efficiency, reliability of financial reporting, and compliance with applicable laws and regulations, were effective in design and operation, and reasonably assured the achievement of the achievement of the above-stated objectives.
6. This Statement will be an essential content of the Company's Annual Report for the year 2012 and Prospectus, and will be publicly disclosed. Any false-hood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Taiwan Securities and Exchanged Act.
7. This Statement has been passed by the Board of Directors in their meeting held on March 28, 2013, with 0 of the 7 attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.
Acer Incorporated
------------------------------------------ --------------------------------------------
Chairman of the Board of Directors CEO of Acer Inc. & Corp. President
3.3.9 Resolutions of the Board of Directors' Meeting and the General Shareholders' Meeting
Resolutions of the Board of Directors' Meeting
Date | Meeting | Major Resolutions |
January 12,2012 | First 2012 Special BOD Meeting | I. To Agree the "Application of Taiwan Bonus Guidelines" and "Bonus Payment Amount" for CEO, Corp. President, and TWN Employed 1ST Tier Executives and Officers. II. To Agree the 2012 Remuneration Proposal for CEO, Corp. President, and 1st Tier Executives and Officers. III. To Release Ms. Angelina Hwang From Acer Management Team IV. To Appoint Mr.S.T.Liew and Mr.Dave Chan as the Co-President of Smart Phone BG V. To Agree on The New Appointment and Remuneration Proposal of 1ST Tier Executive of The Company. |
March 29,2012 | First 2012 BOD Meeting | I. To Approve the 2011 Financial Statements and Business Report II. To Approve Acer's Statement of Internal Control System for 2011 III. To Approve the Appointment CPAs of KPMG as the Auditors of Acer Incorporated IV. To Approve the Agenda and Logistics of 2012 General Shareholder's Meetings V. To Approve Amendments to Acer's Articles of Incorporation, VI. To Approve Amendments to Acer Incorporated Regulations for the Conduct of Shareholders'Meeting. VII. To Approve Buying Back the Year 2010 First Issuance of Unsecured Overseas Convertible Corporate Bonds. VIII. To Approve the "Board of Directors and Supervisors Remuneration Guidelines" IX. To Propose the Name and Amount of Fixed Compensation for Board of Directors and Supervisors. X. To Agree on 2011 Bonus Result of Company 1st Tier Executives XI. To Release Mr. Wayne Ma and Mr. Simon Hwang from Acer Management Team XII. To Approve Amendments to Acer's "Procedures of Acquiring or Disposing of Assets" XIII. To Approve The Internal Control Procedure of "Management of the Adoption of International Financial Reporting Standards" and "Management of Accounting Professional Judgment Procedures, Accounting Policies and Changes in Accounting Estimates" XIV. To Approve the Amendment of Acer's Internal Control Policies and 2012 Annual Audit Plan XV. To Decide the Effective Date of the New Issued Shares for the Execution of Acer and E-ten Employee Stock Option XVI .To Approve Acer's Corporate Guarantees Related Issues |
April 25,2012 | Second 2012 BOD Meeting | I. To Approve the First Quarter of 2012 Financial Statements II. To Approve the Related Items of Adoption IFRSs III. To Approve the Proposal for Loss off-setting of 2011 Retained Earnings IV. To Approve Buying Back the Year 2010 First Issuance of Unsecured Overseas Convertible Corporate Bonds V. To Decide the Effective Date of the New Issued Shares for the Execution of Acer Employee Stock Option VI. The Corporate Guarantees of Acer Incorporated and its Subsidiaries. |
July 2,2012 | Second 2012 Special BOD Meeting | I. TO repurchase the Company's shares as Treasury Stock for the purpose of retaining the key employees |
August 30,2012 | Third 2012 BOD Meeting | I. To Approve the First Half of FY2012 Financial Statements II. To Approve the Addition of the ECB Opening Entries Related to IFRS Adoption III. To approve Acer Global Marketing Organization Plan IV. To Approve The Existing Executive Quarterly Incentive (2011Q3~2012Q2) and Related Incentive Payout Proposal V. To Implement "Acer Executive 2012 Remuneration Target Amount" Approved On Apr.2012 Until Jan.1,2013 VI. To Approve The 2012 KPI Items And Target Amount For 1st Tier Executive's Individual MBO Following Current Existing MIBO Scheme. VII. To Agree On The Proposal Of Title Change For Selective 1ST Tier Executives VIII. To Approve the Actual and Estimated Increase or Decrease of Acer's Corporate Guarantees |
October 24,2012 | Fourth 2012 BOD Meeting | I. To Amend the Regulations Governing Procedure for Board of Directors Meeting II. To Amend the Accrual of Employee Bonus for 212 III. To Approve the Third Quarter of FY2012 Financial Statements IV. Global Operation Model Proposal V. To Establish Three 100% owned Entities for Business Requirements VI. To Approve Buying Back the Year 2010 First Issuance of Unsecured Overseas Convertible Corporate Bonds VII. To Execute Capital Injection in Brazil for USD40,000,000 VIII. To Proposed to Dispose E-TEN Tai-Shan Building IX. To Entrust The HIB Portfolio and M&A Cases To iD SoftCapital Inc. X. Review the proposed Acer's 1st tier organization and personnel Adjustments XI. Propose to appoint Mr. Wayne Ma, current Special Assistant of Corp. President Office as VP of Smart Phone Business Group XII. To Approve Acer's 2013 Annual Audit Plan XIII. To Amend the "Internal Control Procedure of Stock Affairs" XIV. The Renewal of The Bank Facilities XV. To Approve the Actual and Estimated Increase or Decrease of Acer's Corporate Guarantees |
December 4,2012 | Third 2012 Special BOD Meeting | I. To Approve to dispose North Sioux City Buildings (NSC Buildings) of Gateway II. To Approve the proposed Acer's 1st tier organization and personnel Adjustments |
March 28,2013 | First 2013 BOD Meeting | I. To Approve the Non-Financial Assets Impairment Test Result II. To Approve the 2012 Financial Statements and Business Report III. To Approve Acer's Statement of Internal Control System for 2012 IV. To Approve the Appointment CPAs of KPMG as the Auditors of Acer Incorporated V. To Approve the Impact Amounts of Retained Earnings and Special Reserve from First-Time Adoption of IFRS VI. To Approve the Agenda and Logistics of 2013 General Shareholder's Meeting VII. To Approve the second Issuance of Unsecured Convertible Corporate Bonds VIII. To Approve the Issuance of Acer's Performance Guarantee for Acer India(Private)Limited Acquiring Government Tender IX. To Approve the Compensation Proposal of New Appointed 1ST Tier Executives X. To Approve the Proposal of 2013 STI/LPI KPI Target Setting of CEO, Corp. President and Company 1st Tier Executives XI. To Approve the Proposal of 2013 LTI Incentive Tools XII. To Approve the Personnel Appointment of Company 1st Tier Organization XIII. To Approve the Acer's Corporate Guarantees |
May 7,2013 | Second 2013 BOD Meeting | I. To Approve the First Quarter of 2013 Financial Statements II. To Approve the appropriation of retained earnings for 2012 losses III. To Amend Acer's Articles of Incorporation IV. To Propose to Amend the Convene Issue of the Company's 2013 General Shareholder's Meeting V. To Restructure the Investment Framework of Acer Operations in Mainland China VI. Proposal of the Contingency Plan for 2011 Deferred Incentive for Selective 1st Tier Executives VII. Proposal of the 2012 MBO Bonus Result for CEO, Corp. President and 1st Tier Executive VIII. Propose to Approve the Charter, Suggested Chairman and Members and Follow Up Plan for "Key Position Recruiting Committee" IX. Proposal to Modify Partial Articles In Acer Group "Executive Remuneration Guidelines" X. The Corporate Guarantees of Acer Incorporated and its Subsidiaries XI. Reports of the Procedures Governing Lending of Capital to other for Acer subsidiaries and related items |
Implementation of Resolutions in 2012 General Shareholders' Meeting
Major Resolutions | Carries out the situation |
1.To approve Amendments to Acer Incorporated Regulations for the Conduct of Shareholders' Meetings | The shareholder meeting resolution passes according to the document |
2.To accept 2011 Financial Statements and Business Report | The shareholder meeting resolution passes according to the document |
3.To approve the Proposal for 2011 Profit & Loss Appropriation | The shareholder meeting resolution passes according to the document |
4.To approve Amendments to Acer's Articles of Incorporation | The shareholder meeting resolution passes according to the document |
5.To approve Amendments to Acer's "Procedures of Acquiring or Disposing of Assets" | The shareholder meeting resolution passes according to the document |
6.To approve Amendments to Acer's "Procedures Governing Lending of Capital to Others" | The shareholder meeting resolution passes according to the document |
4. Capital and Shares
4.1 Sources of Capital
4.1.1 Sources of Capital (April 21, 2013)
Unit: Share/NT$ Thousand
Date | Price of Issuance | Authorized Common stock | Paid-in Common stock | Notes | ||
Shares | Value | Shares | Value | |||
June, 2012 | Share/NT$10 | 3,500,000,000 | 35,000,000 | 2,834,726,828 | 28,347,268 | - |
Unit: Share
Shares Category | Authorized capital | Notes | ||
Issued shares | Non-issued | Total | ||
Common shares | 2,834,726,828 | 665,273,172 | 3,500,000,000 | - |
4.1.2 Shareholding Structure(April 21, 2013)
Unit: Share
Category/Number | Government Institution | Financial Institution | Other Institution | Individual | FINI and Foreign Investors | Total |
No. of Shareholders | 14 | 42 | 504 | 357,065 | 972 | 358,597 |
Shares | 9,868,451 | 21,293,287 | 269,495,181 | 1,818,138,698 | 715,931,211 | 2,834,726,828 |
Percentage | 0.35% | 0.75% | 9.50% | 64.14% | 25.26% | 100.00% |
4.1.3 Distribution of Shareholdings (April 21, 2013)
Category | The Number of Shareholders | Shares | Percentage |
1~999 | 128,066 | 37,290,838 | 1.32% |
1,000~5,000 | 164,943 | 371,820,690 | 13.12% |
5,001~10,000 | 34,712 | 264,335,414 | 9.32% |
10,001~15,000 | 10,918 | 135,412,802 | 4.78% |
15,001~20,000 | 6,582 | 120,290,859 | 4.24% |
20,001~30,000 | 5,311 | 133,650,411 | 4.71% |
30,001~50,000 | 3,969 | 156,182,471 | 5.51% |
50,001~100,000 | 2,432 | 174,707,956 | 6.16% |
100,001~200,000 | 900 | 126,446,189 | 4.46% |
200,001~400,000 | 362 | 101,051,263 | 3.56% |
400,001~600,000 | 119 | 58,282,237 | 2.06% |
600,001~800,000 | 74 | 51,633,617 | 1.82% |
800,001~1,000,000 | 49 | 44,387,751 | 1.57% |
1,000,001 and above | 160 | 1,059,234,330 | 37.37% |
Total | 358,597 | 2,834,726,828 | 100.00% |
4.1.4 List of Major Shareholders (April 21, 2013)
Item Name | Shares | Percentage |
Stan Shih | 74,733,499 | 2.64% |
Yen, Wei | 74,687,775 | 2.63% |
Hung Rouan Investment Corp. | 67,799,202 | 2.39% |
VANGUARD EMERGING MARKETS STOCK INDEX FUND, A SERIES OF VANGUARD INTERNATIONAL EQUITY INDEX FUNDS | 54,392,905 | 1.92% |
Government of Singapore | 36,139,150 | 1.27% |
Management Board of Public Service Pension Fund | 34,988,175 | 1.23% |
Acer GDR | 34,569,790 | 1.22% |
JPMorgan Chase Bank N.A. Taipei Branch in custody for ABU DHABI Investment Authority | 27,324,037 | 0.96% |
MSCI Equity Index Fund B - Taiwan | 19,368,472 | 0.68% |
Carolyn Yeh | 17,634,157 | 0.62% |
4.1.5 Market Price Per Share, Net Value, Earning& Dividend For Last Two Years
Unit: NT$
Period Item | 2011 | 2012 | Until Mar. 31st, 2013 | ||
Market Price Per Share | Highest | 91.00 | 46.15 | 28.20 | |
Lowest | 27.30 | 22.30 | 23.90 | ||
Average | 49.01 | 31.58 | 25.83 | ||
Net Value Per Share | Before Distribution | 28.44 | 27.56 | 28.17 | |
After Distribution | Un-appropriated | Un-appropriated | Un-appropriated | ||
Earning Per Share | Weighted Average Share Numbers | 2,624,535 | 2,722,601 | 2,722,361 | |
Thousand shares | Thousand shares | Thousand shares | |||
Earning Per Share | Current | -2.52 | 0.19 | 0.19 | |
Adjusted | 5.71 | Un-appropriated | Un-appropriated | ||
Dividend Per Share | Cash Dividend (NT$) | 0 | 0 | Un-appropriated | |
Stock Dividend | Retained Earning (%) | - | |||
Capital Surplus (%) | - | ||||
Accumulated unpaid dividends | - | - | - | ||
Return on Investment Analysis | P/E Ratio | -19.45 | -29.51 | 135.94 | |
P/D Ratio | - | - | - | ||
Cash Dividend Yield | 0.00% | - | - |
4.1.6 Dividend Distribution Plan Proposed To General Shareholders' Meeting
As the industry prosperity and the trends rapidly changed, the dividends strategy of the Company depends on yearly earnings and external environments, therefore, cash dividends of this Company shall be distributed at least ten percent of yearly dividends for complying with related regulations, which was approved at the Shareholder's Meeting on June 17, 2004.
The proposed dividend distribution plan, agreed by the Company's Board of Directors, will be submitted to the Shareholders' Meeting on June 15, 2012 for approval:
FY2012 beginning balance of the un-appropriated retained earnings of the Company is NT$314,561,453 in 2012. After plus the net loss after tax of 2012, NT$2,910,326,078 for FY2012, the deficit to be compensated is 2,595,764,625. It is proposed to compensate the deficit by the legal reserve of 2,595,764,625. After Subject to the appropriation, the ending balance of the un-appropriated retained earnings is 0.
4.1.7 Analysis on Impact of Proposed Stock Dividends Appropriation in Terms of Operating Results, Earnings Per Share and Rate of Return of Shareholders' Investment
None
4.1.8 Employees' Bonuses and Remunerations to Directors, Supervisors
1.Where this Company has earnings at the end of the business operational year, after paying all relevant taxes, making up losses of previous year, setting aside a legal reserve of ten percent (10%) and setting aside or reversing a special reserve as required by laws or competent authorities, the balance of the earnings shall be distributed as follows:
(1)Over five percent (5%) as employee bonuses; Employees may include subsidiaries that that meet certain criteria set by the board of directors.
(2)Not more than one percent (1%) as remuneration of directors and supervisors; and
(3)The remainder may be allocated to shareholders as bonuses. The Company shall not pay dividends or bonuses when there is no profit.
2.The Board of Directors proposed a dividend distribution plan of year 2012 as follows: NT$0 as cash bonuses to employees, NT$0 as remuneration to directors and supervisors.
3. The Bonuses to Employees and Remunerations to Directors, Supervisors in 2012:
2012 | ||||
Dividend Distribution Approved by the Shareholders' Meeting | Dividend Distribution Proposed by the BOD | Different Value | Different Reason | |
The Dividend Distribution: | - | - | ||
1. Cash Bonuses to Employees (Unit: NT$ Thousand) | NT$0 | NT$0 | ||
2. Stock Bonuses to Employees | ||||
(1)Number of Shares | 0 shares | 0 shares | ||
(2)Value (Unit: NT$ Thousand) | 0 | 0 | ||
(3)Circulation Rate of Shares in Stock Market on Ex-right Day | 0% | 0% | ||
3. Remunerations to Directors, Supervisors (Unit: NT$ Thousand) | NT$0 | NT$0 | ||
Earning Per Share (EPS): Original EPS Reset EPS |
NT$-2.52 NT$-2.52 |
NT$-2.52 NT$-2.52 | - | - |
4.1.9 Buyback of Treasury Stock: (March 31, 2013)
Term of Buyback | The First Buyback in Year 2011 | The Second Buyback in Year 2011 | The Buyback in Year 2012 |
Purpose of Buyback | Shares Transferred to Employees | Shares Transferred to Employees | Shares Transferred to Employees |
Period of Buyback | March 31, 2011 to May 30, 2011 | June 2, 2011 to August 1, 2011 | July 3, 2012 to September 2, 2012 |
Price Range of Buyback | NT$55 to NT$100 | NT$55 to NT$80 | NT$28 to NT$35 |
Class and Quality of Bought back | Common Shares: 28,619,000 shares | Common Shares: 27,000,000 shares | Common Shares: 10,000,000 shares |
Amount of Shares Bought back | NT$1,526,797,373 | NT$ 1,341,450,925 | NT$ 271,182,250 |
Number of Shares having been written off and Transferred | - | - | - |
Number of the Company Shares Held in accumulation | 28,619,000 shares | 55,619,000 shares | 65,619,000 shares |
Number of the Company Shares Held in accumulation out of the Total Number Shares issued (%) | 1.011% | 1.964% | 2.314% |
4.2 Corporate Bonds:
Corporate Bonds | The 1st Overseas Unsecured Convertible Bonds | The 2nd Overseas Unsecured Convertible Bonds | |
Issuing Date | August 10,2010 | August 10,2010 | |
Denomination | US$100,000 | US$100,000 | |
Listing | Expected to be on the Singapore Stock Exchange | Expected to be on the Singapore Stock Exchange | |
Issue Price | US$100.0000 | US$100.0000 | |
Issue Size | US$300,000,000 | US$200,000,000 | |
Coupon Rate | 0% | 0% | |
Maturity Date | 5 years from the Issuing Date | 7 years from the Issuing Date | |
Cuarantor | None | None | |
Trustee | Citigroup International Limited | Citigroup International Limited | |
Underwriters | Lead Underwriters: J. P. Morgan Securities Ltd. Citigroup Global Markets Limited Local Lead Underwriter: Grand Cathay Securities Corporation | Lead Underwriters: J. P. Morgan Securities Ltd. Citigroup Global Markets Limited Local Lead Underwriter: Grand Cathay Securities Corporation | |
Legal Counsel | None | None | |
Auditor | Sonia Chang and Agnes Yang | Sonia Chang and Agnes Yang | |
Repayment | Unless previously redeemed, repurchased and cancelled or converted, the Bonds will be redeemed by the Issuer on the Maturity Date at the amount which represents for the holder of the Bonds the par value of the Bonds plus a gross yield of 0.43% per annum, calculated on a semi-annual basis. The actual gross yield shall be jointly determined by the Issuer and the Lead Underwriters based on the market conditions on the pricing date. | Unless previously redeemed, repurchased and cancelled or converted, the Bonds will be redeemed by the Issuer on the Maturity Date at the amount which represents for the holder of the Bonds the par value of the Bonds plus a gross yield of 2.5% per annum, calculated on a semi-annual basis. The actual gross yield shall be jointly determined by the Issuer and the Lead Underwriters based on the market conditions on the pricing date. | |
Outstanding | US$173,400,000 | US$148,800,000 | |
Redemption or Early Repayment Clause | A.The Issuer may early redeem the Bonds in whole or in part at any time after 3 years following the Issuing Date at the Bonds'applicable Early Redemption Amount, if the Closing Price of the common shares of Acer traded on TSE (using the price after conversion of such price into U.S. dollars at the then prevailing exchange rate on the relevant dates) reaches 130% or above of the applicable Early Redemption Amount divided by the Conversion Ratio, defined to be the principal amount of Bonds divided by the Conversion Price at that time (translated into U.S. dollars at a fixed exchange rate determined on the pricing date) for 20 consecutive trading days. The actual date from which the Issuer may early redeem the Bonds will be jointly determined by the Issuer and the Lead Underwriters based on the market conditions on the pricing date. B. The Issuer may redeem all outstanding Bonds at the Bonds' applicable Early Redemption Amount, in the event that more than 90% of the Bonds have been redeemed, repurchased and cancelled or converted. C. If as a result of changes to the relevant tax laws and regulations in the ROC, the Issuer becomes obligated to pay any additional costs, the Issuer may redeem all Bonds at the Bonds' applicable Early Redemption Amount. Bondholders may elect not to have their bonds redeemed but with no entitlement to any additional amounts or reimbursement of additional tax. | A.The Issuer may early redeem the Bonds in whole or in part at any time after 3 years following the Issuing Date at the Bonds'applicable Early Redemption Amount, if the Closing Price of the common shares of Acer traded on TSE (using the price after conversion of such price into U.S. dollars at the then prevailing exchange rate on the relevant dates) reaches 130% or above of the applicable Early Redemption Amount divided by the Conversion Ratio, defined to be the principal amount of Bonds divided by the Conversion Price at that time (translated into U.S. dollars at a fixed exchange rate determined on the pricing date) for 20 consecutive trading days. The actual date from which the Issuer may early redeem the Bonds will be jointly determined by the Issuer and the Lead Underwriters based on the market conditions on the pricing date. B. The Issuer may redeem all outstanding Bonds at the Bonds' applicable Early Redemption Amount, in the event that more than 90% of the Bonds have been redeemed, repurchased and cancelled or converted. C. If as a result of changes to the relevant tax laws and regulations in the ROC, the Issuer becomes obligated to pay any additional costs, the Issuer may redeem all Bonds at the Bonds' applicable Early Redemption Amount. Bondholders may elect not to have their bonds redeemed but with no entitlement to any additional amounts or reimbursement of additional tax | |
Covenants | None | None | |
Credit Rating | None | None | |
Other rights of Bondholders | Amount of Converted or Exchanged Common Shares,GDRs or Other Securities | US$126,600,000 | US$51,200,000 |
Conversion Right | In accordance with indicative Offering Plan for an Issue of Overseas Unsecured Convertible Bonds | In accordance with indicative Offering Plan for an Issue of Overseas Unsecured Convertible Bonds | |
Diluyion Effect and Other Adverse Effects on Existing Shareholders | When all The 1st and 2nd Overseas Unsecured Convertible Bonds convert into common shares, the maximum share dilution will be 6.14%. And this CB is issued at premium; therefore, it will not be a material adverse effect on the shareholders equity. | ||
Paying & Conversion Agent | Citibank N.A. London Branch | Citibank N.A. London Branch |
4.2.1 The Data ofConvertible Bonds
1. The 1st Overseas Unsecured Convertible Bonds:
Overseas Unsecured Convertible Bonds | The 1st Overseas Unsecured Convertible Bonds | ||
Period Item | 2012 | As of March 31, 2013 | |
Market Price | Highest | US$99.837 | US$ 100.382 |
Lowest | US$93.594 | US$ 99.298 | |
Average | US$98.005 | US$ 99.770 | |
Conversion Price | NTD$102.01 | NTD$102.01 | |
Conversion Price in Issuing Date | August 10,2010 NTD$110.76 | August 10,2010 NTD$110.76 | |
Conversion Target | Common Shares of Acer | Common Shares of Acer |
2. The 2nd Overseas Unsecured Convertible Bonds
Overseas Unsecured Convertible Bonds | The 2nd Overseas Unsecured Convertible Bonds | ||
Period Item | 2012 | As of March 31, 2013 | |
Market Price | Highest | US$103.201 | US$ 103.758 |
Lowest | US$86.959 | US$ 102.918 | |
Average | US$98.833 | US$ 103.370 | |
Conversion Price | NTD$104.96 | NTD$104.96 | |
Conversion Price in Issuing Date | August 10,2010 NTD$113.96 | August 10,2010 NTD$113.96 | |
Conversion Target | Common Shares of Acer | Common Shares of Acer |
4.3 Special Shares:
Not applicable.
4.4 Global Depository Receipts (GDRs) Issuance (March 31, 2013)
Date of issuance
Description | November 1,1995 | July 23, 1997 | ||
Date of issuance | November 1,1995 | July 23, 1997 | ||
Location of issuance and transaction | London | London | ||
Total amount of issuance | US$220,830,000 | US$160,600,000 | ||
Unit price of issuance | US$32.475 | US$40.15 | ||
Total number of units issued | 6,800,000units | 4,000,000units | ||
Sources of valuable securities demonstrated | Capital increased in cash | Capital increased in cash | ||
Number of valuable securities demonstrated | Each unit stands for Acer's 5 common shares | Each unit stands for Acer's 5 common shares | ||
Rights and obligations of GDR holders | Same as Acer's common shareholders | Same as Acer's common shareholders | ||
Consignee | None | None | ||
Depository organization | Citicorp | Citicorp | ||
Custodian organization | Citibank Taipei Branch | Citibank Taipei Branch | ||
Balance not retrieved | 6,913,939 units of Global Deposit Receipt as representing 34,569,695 shares of common stocks | |||
Method to allocate fees incurred during the period of issuance and existence | The expenses incurred by issuance being taken to offset premium reserve. Expenses incurred during existence being taken as expenses of the current term. | The expenses incurred by issuance being taken to offset premium reserve. Expenses incurred during existence being taken as expenses of the current term. | ||
Any key issue for the depository and custodian agreements | None | None | ||
Market Price Per Share |
2012
| Highest | US$ 7.46 | |
Lowest | US$ 3.66 | |||
Average | US$ 5.30 | |||
Until March 31, 2013
| Highest | US$ 4.61 | ||
Lowest | US$ 4.06 | |||
Average | US$ 4.29 |
4.5 Employee Stock Options (March 31, 2013)
Employee Stock Option Granted | E-ten First Grant of 2007 | First Grant of 2009 | First Grant of 2010 | Second Grant of 2010 | |
Approval Date by the Authority | June 06, 2007 | July 27, 2009 | July 20, 2010 | July 20, 2010 | |
Grant Date | August 22, 2007 | Octorber 30, 2009 | Octorber 29, 2010 | June 15, 2011 | |
Number of Options Granted | 9,345,794 units(Note1) | 14,000 units(Note2) | 4,000 units(Note2) | 10,000 units(Note2) | |
Percentage of Shares Exercisable to Outstanding Common Shares (%) | 0.329 | 0.494 | 0.141 | 0.353 | |
Option Duration | 6 years | 3 years | 3 years | 3 years | |
Source of Option Shares | New common stocks | ||||
Vesting Schedule | 2nd Year: up to 50% 3rd Year: up to 75% 4th Year: up to 100% | From the second anniversary of the grant date, except that all or partial options revoked by the company, 100% vested options can be exercised without conditions | |||
Shares Exercised | 4,931,599 shares | 1,927,000 shares | 0 shares | 0 shares | |
Value of Shares Exercised | NT$ 206,246,673 | NT$ 72,917,680 | NT$ 0 | NT$ 0 | |
Invalid Shares | 2,546,347 shares | 120,000 shares | - | - | |
Shares Unexercised | 1,867,848 shares | 11,953,000 shares | 4,000,000 shares | 10,000,000 shares | |
Adjusted Exercise Price Per Share | NT$ 38.30 | NT$ 37.84 | NT$ 45.04 | NT$ 25.99 | |
Percentage of Shares Unexercised to Outstanding Common Shares (%) | 0.066% | 0.422% | 0.141% | 0.353% | |
Impact on Shareholders' Equity | Dilution to Shareholders' Equity is limited. | ||||
Note 1.One unit shall purchase one Acer common share
Note 2.One unit shall purchase one thousand Acer common shares
4.6 Mergers, Acquisitions, and Issuance of New Shares Due to Company Acquisitions:
4.6.1 Underwriter's Opinion for the Mergers and Acquisitions.
1. Underwriter's Opinion of the Impact of Acer's Operating Business, Financial Aspect and Stock Holders' Equity
Acer Incorporated (thereafter "Acer") completed a capital raise by issuing 122,178,242 shares of common stock on 12nd January, 2012, then acquired 28,791,209 shares of iGware common stock by share-swap, and then completed the registration process of aforementioned transaction by 9th March, 2012. In accordance to Item 8, Paragraph 1, Article 9 of "Regulations Governing the Offering and Issuance of Securities by Securities Issuers", we, as the lead underwriter, provide evaluation regarding the impact of the aforementioned share-swap to Acer's business, financial performance and shareholders' equity in the first quarter of 2012:
(1)Impact to Corporate Business
Acer is an international hi-tech company. Its main business is development, design, marketing and service of Acer-brand desktop computer, laptop computer, server, LCD screen, digital family and related products. Through the share-swap, Acer would acquire and utilize the cloud core technology and capacity of iGware in creation of Acer Cloud, in order to serve vast Acer product user at an open platform. Acer Cloud would enable users to consolidate all their Acer products, including personal computer, tablet computer and smart-phone; the users would be able to enjoy and effectively manage all individually-owned Acer information and communication equipment as well as contents under superior safety mechanism of Acer Cloud. As Acer and iGware shares R&D source and achievement, Acer launched Acer Cloud service at 2012; the beta version of Acer Cloud has been available at North America and Greater China region since second quarter of 2012, and then has been subsequently available at France, Germany, Italy and United Kingdom by 31st August of 2012. Consumers may download Acer Cloud at Google Play. The "IT Month" of December 2012 focus on cloud service, smartphone, 4k high-resolution large-size television, wireless communication and human-face identification, and Acer utilized the marketing opportunity of IT Month by exhibiting the first Acer cloud smartphone at Acer's showroom "Unlimited Exploration Hall", displaying how smartphone and home cloud server are connected and the consequence of smart life created by this new technology. Acer also offered actual experience to audiences of Unlimited Exploration Hall, promoting the efficiency of Acer cloud service that is not limited by location and free of charge. With the open platform beyond Android and Windows, a user may transfer a picture taken by smartphone to home computer immediately, and may open music or office documents in home computer with his smart phone. Acer cloud service is expected to be able to support iOS, Android and Windows. The launch of Acer Cloud is a strong evidence that share-swap is beneficial to business of Acer.
(2)Impact to Financial Performance
As cloud technology development becomes the industrial major trend, the acquisition of iGware is a part of Acer's long-term development strategy, and has nothing to do with short-term performance. It is expected that in the future 10 years, Acer Cloud will be one of the major differentiation of all Acer products. Acer Cloud hopefully upgrade Acer brand, create brand equity, and becomes a positive factor of Acer's EPS and Book Value per Share in the long run.
(3)Impact to Shareholders' Equity
Acer expands its business segments through the share-swap, and the launch of Acer Cloud would generate revenue and profit, which consequently improves shareholders' equity. It is a proof that share-swap is beneficial to shareholders' equity.
(4)Synergy after Share-Swap
The share-swap reference date is 12nd January, 2012, and registration process of aforementioned transaction was completed by 9th March, 2012. Both Acer and iGware does its best effort on post-merger consolidation and cooperation in sales, back-up support, finance and other functions since completion of share-swap. It is expected that synergy of the consolidation will appear gradually.
2. Execution Update and Impact of Acer's Stock Holders' Equity of the Unachieved Goals: Not applicable.
4.6.2 Resolutions of Mergers and Acquisitions in the Meeting of the Board of Directors in the Previous Year:
To Report the Shares Acquirement of iGware Inc. by Receiving Assignment of Shares and Cash Investment
(1) In order to develop mid to long-term layout and build up unique Acer Cloud system to obviously promote Acer brand positioning and brand value. The Company acquired iGware Inc.("iGware") by receiving assignment of shares and cash investment with the result that iGware has become and been merged into Acer Cloud Technology Inc., a 100% owned subsidiary of the Company, which approved by the BOD on July 21, 2011 and with the approval of the Investment Commission, Ministry of Economic Affairs("MOEA"), and January 3, 2012 Order No. Financial-Supervisory-Securities- Issue 1000062734 of the Financial Supervisory Commission ("FSC"), Executive Yuan.
(2) According to the executed Agreements, the exchange ratio goes to 1 iGware common share for around every 4.24 existing Acer shares. Fractional share shall be substituted with cash, except the combination of shares by some iGware shareholders.
(3) The share exchange date was set on January 12, 2012, and the Company totally issued 122,178,242 new shares and USD 150 million to acquire 100% shares of iGware. The shares conversion and capital amendment registration were approved by March 9 2012 per Order No. Economic-Authorization-Commerce 10101035580 of the Department of Commerce, MOEA.
5. Acer's Business
5.1 Business Scope
5.1.1 Business Portfolio
Acer's core business comprises of the marketing, R&D, design, sales, to services of our brand name products that include the personal computer, LCD monitor, server, projector, tablet PC, smartphone, and ICT devices. Currently, we are also actively developing AcerCloud applications and services.
PC remains the core of Acer's business. In 2012, notebook PCs accounted for 66% of the total revenues from ICT product lines, while desktops contributed 16%, and displays took 8%.
5.1.2 Industry Highlights
The ICT industry has entered the era of three ecosystems - iOS, Android and Windows - which shall co-exist and compete with each other. No single operating platform can serve the dominant role. In the past, the winning factors were associated with cost, speed, and scale. Now, the keys to success lie in the ability to providing the ultimate user experience, and creating product differentiation and customer value.
In addition, as the whole ICT industry is experiencing a profound paradigm shift, there are more and more categories in the PC industry than before, along with the emergence of many cross-category devices. With changing criteria on customer purchase, the market sell-through has become harder to forecast.
In terms of mobile devices, we can no longer focus on traditional notebooks. The growing momentum for the future comes from tablets, Ultrabooks, and touch notebooks. Due to the rising demand for touch and type "duality" products and maturity of the tablet PC market ready for higher growth, we expect an accelerated growth in 2013.
5.1.3 Technology and R&D
In 2012, Acer spent NT$1.5 billion on R&D, which accounted for 0.42% of our total revenue and focused on the user interface, industrial design, ICT related hardware and software, and cloud technology. After a year of intense research and development, AcerCloud achieved visible result, and has extended its support across three major operating systems: Windows, Android and iOS. Users can easily manage their personal multimedia and data files on a variety of digital devices regardless of which operating system they are running.
Acer has spent a lot of effort in developing green products as well. For example, we launched the eco-friendly S235HL monitor featuring mercury-free LED technology and conserves up to 68% power. This model won both the coveted iF product design award of Germany and Computex design & innovation award of Taipei in 2012. In addition, the Aspire S7 Ultrabook uses 94% less aluminum alloy than other unibody designs, therefore saves more energy. Recently we also introduced the B6 and V6 series commercial LED-backlit monitors made with post-consumer recycled plastic and are EPEAT gold registered for environmental protection in Europe and USA.
5.1.4 Long and Short Term Business Plan
In the short term, Acer will develop innovative products with differentiation, establish a clear brand positioning, and create value for our customers. Moreover, we will strengthen the tablet, Ultrabook and touch device business, and expand smartphone operations step by step.
In the long run, we will strive to enhance our brand positioning, increase operating margin, and continue to develop AcerCloud services as well as commercial products.
5.2 Market Highlights
5.2.1 Market Study
Acer's key market is EMEA (Europe, Middle East, Africa), followed by Pan America, Asia Pacific, and Greater China. Last year, the revenue from EMEA accounted for 38% of Acer's total revenue, Pan America region held 28%, Asia-Pacific took 18%, and Greater China contributed 16%.
In terms of shipments, according to market research firm, IDC, Acer ranked No. 4 worldwide for total PCs with a market share of 9.6%, No.3 for notebooks worldwide and held 12.8% of the share in 2012. Acer also ranked No.2 for total PCs and notebooks in both EMEA and Asia Pacific.
In addition, many of Acer's OEMs are based in Chongqing, which has steadily improved its local infrastructure, supply chains and overall production environment. Hence, we have significantly increased our notebook manufacturing and shipments from Chongqing.
5.3 Keys to a Sustainable Future
5.3.1 Sustainable and Mutually Beneficial Business Model
Acer adheres to a channel business model that involves collaboration with first-class suppliers and distributors, leveraging their resources and ultimately, sharing the fruits of success among all partners. In addition, our low capital and operating expense policy has been beneficial to the steady growth of our business operations.
5.3.2 Simplify to Win
Focusing on our own brand as the core business, Acer operates on mainstream products. We streamline our multi-brands and models, and simplify operating procedures in order to avoid back-end and front-end operation complications. By placing the main resources on innovation, design, and quality, we can bring more values for the consumers.
5.3.3 Fast and Efficient Global Operations
Having a single global top management team, Acer makes decisions quickly on major issues, matched with good executions. Also, with a flexible and efficient global logistics capability, we can respond to market demand in a timely manner.
5.3.4 End-to-End Marketing Strengths
Thinking from the consumers' perspectives, Acer understands and develops innovative products to meet their real needs. We rapidly bring these products to market for consumers and achieve high performance sales.
Appendix
1. Key Buyers and Suppliers Accounting Over 10% of Total Net Sales and Purchase:
(1) Key Buyers for Acer Inc. (Parent Company)
Unit: NT$ Thousand
Item | Year 2011 | Year 2012 | Current Year as of Mar.31,2013 | |||||||||
From | Amount | Percentage of total net sales (%) | Relationship with Acer Inc. | From | Amount | Percentage of total net sales (%) | Relationship with Acer Inc. | From | Amount | Percentage of total net sales (%) | Relationship with Acer Inc. | |
1 | AEG | 116,322,012 | 28.67 | (Note 1) | AEG | 125,448,158 | 34.84 | (Note 1) | AEG | 27,796,198 | 36.78 | (Note 1) |
2 | AAC | 104,884,601 | 25.85 | (Note 1) | AAC | 81,802,342 | 22.72 | (Note 1) | AAC | 16,419,034 | 21.73 | (Note 1) |
3 | AAPH | 68,122,014 | 16.79 | (Note 1) | AAPH | 59,444,642 | 16.51 | (Note 1) | AAPH | 13,739,154 | 18.18 | (Note 1) |
4 | ACCN | 40,231,472 | 11.17 | ACCN | 8,257,607 | 10.93 | (Note 1) |
Note 1: Subsidiary of the Company.
(2) Key Suppliers for Acer Inc. (Parent Company)
Unit: NT$ Thousand
Item | Year 2011 | Year 2012 | Current year as of Mar. 31 ,2013 | |||||||||
From | Amount | Percentage of total net purchase (%) | Relationship with Acer Inc. | From | Amount | Percentage of total net purchase (%) | Relationship with Acer Inc. | From | Amount | Percentage of total net purchase (%) | Relationship with Acer Inc. | |
1 | Supplier A | 96,100,604 | 27.05 | none | Supplier A | 67,043,187 | 21.12 | none | Supplier A | 13,695,517 | 22.57 | none |
2 | Supplier B | 45,847,328 | 12.91 | none | Supplier B | 38,573,549 | 12.15 | none | Supplier B | 9,858,116 | 16.25 | none |
Supplier D | 37,246,411 | 10.48 | none | Supplier C | 37,230,425 | 11.73 | none | Supplier D | 6,282,182 | 10.35 | none | |
Supplier D | 31,917,676 | 10.05 | none | |||||||||
Others | 176,068,530 | 49.56 | Others | 142,695,628 | 44.95 | Others | 30,840,713 | 50.83 | ||||
Total | 355,262,873 | 100.00 | Total | 317,460,465 | 100.00 | Total | 60,676,528 | 100.00 |
2. Production Value in the Last Two Years:
Not applicable.
3. The Sales Value in the Last Two Years:
Unit: NT$ Thousand
Year
Major production | 2011 | 2012 | ||
Domestic Sales | Foreign Sales | Domestic Sales | Foreign Sales | |
Computer | 10,778,052 | 314,562,452 | 8,869,823 | 292,620,511 |
Peripherals & Others | 7,330,797 | 73,042,567 | 6,673,833 | 51,780,417 |
Total | 18,108,849 | 387,605,019 | 15,543,656 | 344,400,928 |
5.4 Employees
5.4.1 Global Human Asset Management
Employees are the Company's key assets and the main driver of business growth. Acer has fostered a work environment that empowers employees by entrusting them with the tasks matched to their skill or qualification. There are clear objectives and reward for achievement, extensive communication and interaction among coworkers, constant encouragement for innovations, and an effective decision making process. On-the-job training provides the ideal platform for learning and development.
As a result of employees' joint effort, Acer has received numerous industry and media recognition. For example, Acer has been voted by Reader's Digest readers as a "Trusted Brand" in Asia for consecutive years since 1999; in 2007 Forbes selected Acer as one of the "Fabulous 50" - a list of the best of Asia-Pacific's biggest listed companies. In 2011, Forbes selected Acer as one of "Most Popularity in 100 Global Companies".Summary of Acer's Workforce:
-By Manpower, Age and Years of Service
Date Category | December 2011 | December 2012 | March 2013 |
Manpower | 7,894 | 7,967 | 7,956 |
Average Age | 37.2 | 36.0 | 36.2 |
Average Years of Employment | 5.4 | 6.2 | 6.3 |
Male (%) | 66.1% | 66.8% | 66.7% |
Female (%) | 33.9% | 33.2% | 33.3% |
.
-By Job Function
Date Job Function | December 2011 | December 2012 | March 2013 |
General Management | 220 | 192 | 192 |
Sales & Product Marketing | 2,841 | 2,483 | 2,481 |
Customer Service | 2,239 | 2,382 | 2,355 |
Research & Development | 922 | 1,416 | 1,424 |
Sales Support | 1,015 | 861 | 872 |
Administration | 657 | 633 | 632 |
Total | 7,894 | 7,967 | 7,956 |
- By Education Level
Date Education Level | December 2011 | December 2012 | March 2013 |
Doctor of Philosophy | 0.3% | 0.4% | 0.4% |
Master's Degree | 23.3% | 24.1% | 24.1% |
Bachelor's Degree | 43.7% | 43.8% | 43.8% |
Vocational Study | 28.7% | 28.0% | 28.0% |
Senior High School or below | 4.0% | 3.7% | 3.7% |
Total | 100% | 100% | 100% |
5.4.2 Recruitment
The Company abides to each country's labor laws and customs. We are committed to providing equal opportunities and prohibiting discrimination against candidates in regards to their ethnic origin, gender, age, religion or nationality, and we are sticking to the principle of putting the right people at the right position. Acer seeks high-potential candidates with multi-disciplinary backgrounds in order to build a strong global workforce.
5.4.3 Training and Development
In facilitating Acer's strategy transformation, the focused areas of our training in 2012 covered promotion of Acer's Brand Values, Creating Value for Customers through Innovation, Streamlining Process Management for Enhancing Efficiency, Enhancing Product and Service Quality, Conducting Effective Internal and External Marketing, and strengthening core competencies of staff and managerial competencies at each level, in pursuit of highly effective implementation of strategy.
The training were conducted through new-hire training, general training, professional training, managerial competency training, and online learning. To assure training quality and effectiveness, all trainings are carried out in compliance with the "Management Procedures for Internal and External Training." Training in Taiwan area in 2012 included the offering of 176 training courses which attracted 4,256 personnel for a total of 14,721 person-hours of training. There have been 6,338 personnel who undertook a total of 32,959 person-hours of training worldwide.
Training Scheme and Implementation
l New Employee Training: Orientate the new employees by shaping essential mindset and providing essential knowledge, covering the overview of Acer's organization, culture, core values and standards of business conduct, policies and systems, Welfare Committee and Employee Representative Meeting, IP sense, etc. In 2012, 374 new employees have attended the training.
l General Skill Training: The training covers essential common knowledge and skills, e.g., Electrostatic Discharge protection, Tools for Systematic Innovation- AIM (Aachener Innovation Model), Problem Analysis and Improvement-DMAIC approach, Mind Mapping, negotiation skill, etc. In 2012, we have 1,816 Taiwan employees who received the General Skill training.
l Professional Training: The training is provided for advancing the professional knowledge and skills. For example, Tablet Devices Product Trend and Application, Touch Device Tech Development Analysis, App marketing, ICT consumer needs etc.
l Managerial Training: In the course of Acer's transition efforts, the training focus at each managerial level will be leading changes, boosting morale, selecting and retaining talents. The typical managerial training for senior level is Dynamic Competitive Strategy, Leading Changes. Communication and Coaching, and High-Performance Team-working are held primarily for intermediate mangers. For supervisory level of mangers, the emphasis will be on the fundamental managerial competencies- plan, do, check, action and basic coordination and communication skills.
l By abiding by the regulations of OHSAS 18001 requirements, we have General Safety, Health, and Hygiene Training for our staff. In 2012, there have been 7 sessions held, with 841 people receiving the training
Multiple Ways of Learning and Development
Each employee is provided with multiple development paths to enhance the profession--- for example, from company within, such opportunities can be found as on-the-job training, coaching, job rotation, speech, online learning and reading seminar, etc. For the company outside, they include profession club seminars, short-term intensive training hosted by the prestigious universities or training institutions. For enhancing staff professional skills, we have the 'Regulations of Acquiring Professional Certificates', regulating the subsidiary for test-taking fees, and further, the dedicated incentives for the staff who successfully get the essential professional certificates.
5.4.4 Compensation
Acer provides a competitive salary package to attract and retain high-potential human assets. The Company surveys global IT companies' salary levels annually, to ensure that our salary packages are adjusted accordingly and reasonably to reflect market conditions. On top of the monthly salary, the Company offers the bonuses that are differentiated from the performance of business unit and each individual. Taking Taiwan for example, in addition to the fixed monthly salary and festival bonuses, Acer offers incentives that reward new innovations, intellectual property rights, sales achievements, performance bonus and profit sharing.
5.4.5 Welfare
The Company abides to each country's labor laws and customs, and strives to provide a comfortable working environment, attractive welfare programs, candid communication ways to enhance productivity and creativity. Taking Taiwan for example, Acer has established a welfare committee that initiates activities for employees' welfare. For example: Acer provides group insurance, educational grants, Acer Family Days, internal social clubs, speeches on topics of arts appreciation, domestic and overseas holiday breaks, gift money for wedding or funeral, and emergency relief measures, etc. Besides, we have recreation and leisure facilities installed in office area to release employees' pressure from work, and provide health-promotion programs to keep the body and mind well-balanced.
5.4.6 Pension
The Company abides to each country's labor laws and customs. Taking Taiwan for example, Acer conforms to the Labor Standards Act and Labor Pension Act by contributing a portion of employees' salaries toward a pension scheme. Besides, employees who have served for 15 years and have reached 50 years of age can apply for early retirement.
5.4.7 Employee Relations
Acer respects employees' opinions and is dedicated to maintaining a harmonious relation between managers and their team members. In the past two years, Acer has not suffered any financial loss from employee conflict.
Taking Taiwan for example, Acer offers multiple channels for interaction in order to improve two-way communication:
l A Dedicated Hotline: A hotline for each supporting function has been set up for employees to call, in confidence, to express concerns or issues. Acer will provide counsel and/or resolve the issues in the most efficient way.
l Open and Candid Communication Channels: Employees can report areas of concern to their immediate supervisor or choose to convey to higher authorities for resolution. Meanwhile, the Company Chairman & CEO meets face-to-face with employee representatives from each office area on a quarterly basis, to discuss areas of improvement and respond to issues. The Chairman & CEO also assigns the relevant member(s) to aggressively follow up on change or improvement, and to report on progress at the next quarterly meeting to ensure the resolution effectiveness. The meeting minutes are published on the Company Intranet for all employees' attention.
l Employee Opinion Survey and People Management Effectiveness Survey: Both surveys aim to explore the various aspects of the experience working at Acer, and pinpoint where the attention is addressed, and thus guide to make some essential improvements for the overall Company and immediate managers' people management skills, respectively.
5.4.8 Acer Employee Management
To ensure business growth on a healthy and comprehensive management system, the mutual rights and obligations between the Company and employees are explicitly specified as follows:
l Authority Management
According to the levels of management responsibilities, "The Table of Authority Approval", "Regulations on Delegated Deputy", and the "Scheme of Job Categories and Titles" are regulated to assure well-functioned in all layers of directive operations, and furthermore, to provide staff with a sound roadmap for career development paths.
l Standards of Business Conduct
For enhancing the overall corporate competitiveness and playing a responsible role in the social, economic, and environmental conduct of our operations, the Standards of Business Conduct of Acer are thus updated. By the guidance of the Standards of Business Conduct, we strengthen our corporate culture aiming to protect Acer's legitimate business interests around the world, and further assure the service quality of our customers, suppliers, and other business partners as well as the communities in which we operate.
Following are the essences of the Acer's Standards of Business Conduct.
1. Create work environment with care, respect, and fairness.
2. Continue to promote technological innovation and provide high quality-assured products and service.
3. Comply with the laws for maintaining free and fair competition.
4. Promote research and development of advanced technologies and products that will benefit the environment.
5. Comply with all intellectual property rights laws and regulations.
6. Prohibit any employees from engaging in any activities that lead to illegal or improper business interactions.
7. Employ a fair and objective evaluation process for selecting the business partners.
8. Conduct corporate communication based on integrity and objective facts.
9. Ensure the advertisements are truthful and accurate.
10. Comply in full with all accounting laws and regulations
11. Obey the laws regarding with lenders and export credit.
12. Refrain employees from receiving improper personal benefits
13. Forbid illegal or improper payments unaccepted by local business laws or sound business practices.
14. Prohibit employees from accepting inappropriate value of gifts or customary business amenities beyond a reasonable level.
15. Protect company assets (including physical assets, intellectual property rights, and information assets).
16. Safeguard the confidential and proprietary information and avoid using such information for pursuing personal interests.
17. Ban the use, sale, or possession of illegal drugs
18. Undertake all activities in harmony with the community and provide voluntary services.
19. No political contributions shall be made unless permitted by the applicable laws in locals
l Sexual Harassment Prevention Measures
The Company is dedicated to ensuring gender equality and human dignity in workplace, securing work environment free from sexual harassment and discrimination. With the promise, the Prevention Measures and Disciplinary Actions on Sexual Harassment is enacted, which specifies the reporting channels, dealing procedures, and disciplines.
l Declaration of Secrecy and Intellectual Property Rights
The Company places extreme importance on the protection of intellectual properties rights. All staff are required to have the Declaration on Non-Disclosure Agreement signed when onboard, which declares the obligations to protect confidential information and the restrictions on use of the confidential information during the employment period and employment termination.
5.5 Important Contracts
Nature of Contracts | Contracting Parties | Beginning and Ending Dates of Contracts | Major Content | Restrictive Clauses |
Software License Agreement | Microsoft Inc. | Aug 1, 2011~Jul 31, 2014 | Obtain license from Microsoft for using certain software | Confidential Non-assignable |
Patent License Agreement | IBM Corporation | From Oct. 29, 2003 ~ | Cross license arrangements for certain patents | Confidential Non-assignable |
Nov 22, 2006 until the end of related patents period | ||||
Lucent Technologies GRL, LLC | Jul 31, 2010~Jul 30, 2013 | Cross license arrangements for certain patents | Confidential Non-assignable | |
MPEG LA, LLC | Jun 1, 1994 until the expiration of all MPEG-2 Patent Portfolio | Obtain license for MPEG-2 encoding/decoding patents | Confidential Non-assignable | |
Hewlett-Packard Development L.P. | Jun 13, 2008~Jun 12 2014 | Cross license arrangements for certain patents | Confidential Non-assignable | |
Microsoft Corp. | Sep 1, 2011~Aug 31, 2014 | Cross license arrangements for certain patents | Confidential Non-assignable | |
Syndicated Loan Agreement | A bank group led by the arrangers, Citibank Taiwan(management), Taipei Fubon, Bank of Taiwan, Chinatrust, Taishin, Taiwan Cooperative, DBS, Landbank, Taiwan Business, Megabank, Chang Hwa and ANZ. | Nov 17, 2011-Nov 16, 2016 | A maximum syndicated financing amount of NT$15 billion | Confidential, Non-assignable, Certain financial ratio covenants |
Sale Agreement | National Center for High-performance Computing | Oct 28,2010~ Mar 27, 2014 | construct a high-performance computing system and provide competent after-service | Confidential, Non-assignable |
6. Corporate Social Responsibility
Acer aims to actively meet our Corporate Social Responsibility (CSR) within the context of stable profit and sustainable growth. Above all, we are dedicated to seeing the world grow as a whole by pursuing global economic growth, environmental protection and social progress. The vision of a sustainable Acer can be achieved through corporate responsibility, innovation, increasing profitability, operational efficiency and sustainability. We embedded Acer spirit of "Innovative Caring," in our business operation and dedicated to enhancing corporate performance, ensuring benefits for employees and shareholders, and providing consumers with state-of-the-art technology. To visualize Acer vision and spirit for a sustainable development, our CSR agendas have encompassed several important topics including environment, safety and health management, supply chain management, stakeholders communication and community involvement.
In spring 2008, the Board of Directors highlighted the milestones for embedding CSR within Acer, and designated Acer Inc. CEO as the Corporate Sustainability Officer of the Corporate Sustainability Office (CSO), which was set up to respond to challenges from the organizational level. We spent almost one year to complete an integrated strategy and set the 2008-2010 CSR action plans for a sustainable Acer. Next phase, with Acer's CSR policy as foundation, we will take into account stakeholders' suggestions to establish longer-term CSR targets and strategies to internalize CSR programs throughout the whole global organization and suppliers. In 2012, we established GCSRC (Global Corporate Social Responsibility Committee) to include the heads of the most critical departments to create the CSR and sustainability practice strategy, to come out the annual implementation plan, and to examine the implementation performance.
In 2012, our concrete works in the environment, safety and health management aspects, we get the third party verification for the GHGs emissions data of Acer Group global operation sites in 2009 and 2011, implementation of office carbon reduction program, enhance suppliers' capacity to greenhouse gases management, and launch of several projects to improve the health and safety of our employees. For supply chain management, we expanded suppliers' Social and Environmental Responsibility (SER) on-site audits, investigated smelters in our supply chain for conflict minerals issue. Acer has taken multiple actions to comply with California Transparency in Supply Chains Act of 2010 (SB 657).
6.1. Environment, safety and health management
6.1.1 The Environmental Protection
1. Energy and Climate Change
We continue to implement the Acer Integrated Energy and Climate Change Policy and get the third party verification for the GHGs emissions data of Acer Group global operation sites in 2009 and 2011.We also increase green and renewable electricity in our major operation in Europe like German and Italy to reduce our carbon emission.
Regarding the cooperation with suppliers, we have continually encouraged our major suppliers to respond to CDP supply chain questionnaires on GHG emissions and response measures to climate change, and make this information openly available or disclose it to other members of the Supply Chain Program. Besides, we also encourage our suppliers to set reduction target to reduce the emission through the whole value chain. And we provide training courses for some of our suppliers and consultant to improve their capacity to respond to the questionnaire and assisted suppliers to gradually enhance their overall capacity to the climate change, carbon reduction and energy efficiency. Acer has also enhance the carbon reduction target is to reduce absolute GHG emissions by 30% below 2009 levels by 2015 and 60% below 2009 by 2020, we will fulfill the goal by implement internal energy efficiency program and procure more renewable energy and green electricity.
2. Green Product Management
Acer is fully aware of the potential impact our products may have on the environment during its whole life cycle. Hence, our product design takes into consideration the ways to reduce environmental loading from the product development stage, in addition to the emphasis on the user needs, functionality and added value. For example, we evaluated the use of post-consumer recycled plastics in our products.
For legal compliance, we meet RoHS and WEEE directives and green related legislation requirements for green in every country while at the same time we fulfill other international requirments such as REACH and ErP. In the future, we will keep watching the development of Substance of Very High Concern (SVHC) of REACH and the ECO design requirements listed down in the implementing measures to ErP Directive.
For voluntary environmental requirement, several of our products meet the ENERGY STAR® specifications, receive Taiwan Green Mark and Sweden TCO certification and are EPEAT Gold or Sliver registered.
In 2012, we continually to introduce also some lunched PVC and BFRs free laptop and desktop computers products. Acer has been striving in a proactive way to move towards Halogenated-free products with constant efforts.
Acer continually launched thin and light based products, like Ultrabook, to meet consumer demand as well as reduce the consumption of product materials. The idea of thin and light products emerged from the concept to conserve the natural resources on Earth, such as metals and oil.
Acer always commits to offer energy-saving products. The design of Desktop, Notebook computer and Monitors are aimed to meet or exceed the criteria for the Energy Star award.
Furthermore, Acer supports the sustainable approach to forestry practices and stop the business relationship with the manufacturers that are involved in deforestation and illegal logging." And we start to apply the sustainable forest certification paper into packaging of product. Acer evaluates packaging design and material use from life cycle perspective including reduce energy consumption by less packaging and use eco-friendly materials, including recyclable, reusable and renewable, to lower the environmental impact caused by packaging.
3. Office Carbon Reduction
Acer's primary facilities are offices, and thus the electricity we consume is used for typical air conditioning and lighting. We study measures to lower the usage of electricity every year. In 2012, we adopted energy-saving lighting, replaced cooling tower with equipment that use less water and the operating time of the ventilator, equipped the pump of the cooling tower with frequency conversion, and added timers for the lighting of the restrooms. With these measures, Acer further saves electricity and reduce greenhouse gases emissions.
6.1.2 Safety and Health
1. Environmental Safety and Health Management
Acer introduced the ISO 14001 (Environmental Management System) and OHSAS 18001 (Occupational Safety and Health Management System) in the Taiwan headquarter and gradually broadens the scope. We believe these systems can help the Company to further minimize any negative impacts to the environment from its business operations while at the same time fostering the jobsite safety and health management.
2. Working Environment and Employee Safety
Acer cares the working environment where employee's safety and health would largely depend on. In 2012, we reduced the coldness of the meeting rooms on the top floor, lowered the noise of the cooling tower on the rooftop, enhanced the ventilation of the office, and prevented the fire protection coatings on the office ceilings from falling off. Acer also implemented environment, health and safety management system and conducted office sites hazards identification. We then improved items with significant risks to lower the hazards.
3. Emergency Accident Operation
Acer has established its own emergency operation procedures in the events of fire, earthquake, typhoon, power failure, water supply failure, contagious disease and other major accidents. In the fire safety aspect, we have organized a self-protection fire fighting team by the employees and their main duties are to extinguish the fire at the initial stage, evacuate the rest of the employees when necessary and reduce possible damage from the accidents.
4. Employee Health
For Labor Safety and Health education program, we keep on giving the training and a total of 841 staff received the training in 2012. Acer also cooperated with Xizhi Cathay General Hospital to provide medical services, first aid training, health lecturers, and quit smoking class.
Employees are the most important assets to Acer. In addition to a series of physical and mental health seminars, an employee leisure zone has been set up at its Taiwan headquarter along with some other recreational facilities such as basketball courts, table tennis, shooting machine, video games, and electric massage chairs. Since 2008, we have introduced visually impaired masseurs to provide massage service for employees. These various activities help Acer's employees to enrich their leisure time and better balance their professional and personal lives.
In 2012, Acer organized several movie appreciation events, arts and cultural activities, lectures about physical, mental and spiritual, outings, Acer family day, and more. A total of 34,153 colleagues and their families participated in these activities.
6.2 Supply Chain Management
Acer understands the impact that a brand company can make onto the society and environment from the supply chain perspective. To tackle the challenge for a sustainable environment, Acer has demanded all its suppliers to comply with the local regulations where they have business presence, additionally, Acer requires its suppliers to follow the various requirement and guidance put forward by the Company to embed the environmental protection philosophy in the supply chain management. We aim to boost the supply chain as a whole regarding as the worldwide leaders in Social and Environmental Responsibility (SER).
Acer applied to the Electronic Industry Citizenship Coalition (EICC) in May 2008 basing on which developed Acer Supplier Code of Conduct. We believe the EICC Code of Conduct can unify the rules of compliances across the industry-wise, enhance suppliers' capacity of human rights, health, safety, environment, ethics, and social responsibility in the supply chain. Acer first tier suppliers had been requested to sign Acer Supplier Code of Conduct Declaration. Moreover, we collaborated with third-party auditors and "Validated Audit Process" of EICC to launch on-site auditing.
We expanded supplier audit in social and environmental responsibility. We conducted 77 audits of our supply chain - a 93 percent increase over 2011 -covering more than one 100 thousand workers made Acer products. On the issue of conflict minerals, we requested suppliers to identify the smelters in their supply chain that supply tantalum, tin, tungsten or gold. Acer suppliers must conduct their operations in a socially and environmentally responsible way. We also join the "Implementation Programme of the Supplement on Gold to OECD Due Diligence Guidance for Responsible Supply Chains." To comply with California Transparency in Supply Chains Act of 2010 (SB 657), Acer has taken multiple actions to verify the absence of forced labor, slavery and human trafficking in supply chain, including supplier risk assessment, declaration, on-site audit and training etc.
6.3. Communication
6.3.1. Communication with Stakeholders
Acer is positioned to be a trustworthy and respectable company in the ICT industry among its stakeholders. With that in mind, we endeavor to understand stakeholder's opinions and recommendations, and build a good communication channel with them to ensure mutual understandings and respects. Stakeholders are defined as consumers, investors, suppliers, media, Non-governmental Organizations (NGOs), government, community, academia, trade organizations and others. In addition to CSR performance disclosure for stakeholders on all fronts via Acer's designated Acer Sustainability webpage, we also respond to concerns raised by stakeholders via cr@acer.com and fill out questionnaires formulated by academia, analysts, investors, customers and the NGOs.
6.3.2. Acer CSR Forum
Acer understands that to practice CSR fully requires the cooperation among all stakeholders. Acer has held annual CSR Forum since 2008. Using the forum as a dialogue platform, Acer invited stakeholders to communicate their expectations and suggestions with the its suppliers and the Taiwan ICT industry in the hopes of improving the sustainability of Taiwan's ICT industry.
6.3.3. Consumer Relation
Customers are the reason for our existence. Acer designs and conducts regular customer satisfaction surveys tailored to each region to get customer feedback and work on the area that need improvement to enhance the quality of customer service.
In addition to the regular customer satisfaction survey, we also establish a complete globalized service structure in all major localized service sites and design different service programs for variety of customers and retailers. Consumers and corporate customers can communicate with us through multiple channels including,
(1) Global web site download and actively update service
(2) Call center support center / technical support
(3) Direct service center
(4) Authorized service center and professional system repair company
(5) International Traveler Warranty service center
As number of computer and internet users increases, the data confidentiality becomes customers major concern; we are committed to the protection of customers confidential information and strictly follow Acer's privacy policies to request all Acer employee must protect customers' confidential information and private data with cautious; we also implement data protection and security related tool to protect customers personal data in the products. In the same time, a dedicate mail account is set up to handle all escalation of privacy protection related case. All of our service engineers have signed a non-disclosure agreement and prior to any actual repair, our service staff will provide the customer with a maintenance service list to the customer to decide if any private information need to be deleted or removed and store in another hard drive or memory drive to prevent confidential information from being compromised.
6.4 Community Involvement
6.4.1. Acer Volunteer Team
The Acer Volunteer Team was established in October 2004 for the purpose of giving employees a channel to contribute their spare time and energy to public welfare service. Apart from providing opportunities for interaction and friendship between employees from different departments and backgrounds, the volunteer service also bring Acer employees new life experiences and personal growth through the activities. At initial stage, the volunteer activities mainly revolved around Acer core business. In 2012, The Volunteer Team organizes a variety of charity activities including money donations, blood donations, carbon emission reductions, overseas volunteering service, after-class guidance for the children from the disadvantaged families in the Xizhi District.
6.4.2 Acer Foundation
Acer Foundation is committed to promote digital opportunity since its establishment. In 2012, Acer Foundation continued to participate in "Digital Feast-A Dream Come True" charity event by the Department of Social Welfare, Taipei City Government. This project sponsors the youths from underprivileged families, to buy quality computer facilities at an incredibly affordable price, so that they are given a digital opportunity to learn. The two Acer Digital Mobile Vans also continue to enhance digital competitiveness of the underprivileged in Hualien; in 2012, Acer sponsored two more Acer Digital Mobile Vans in the Yilan county. The mobiles were equipped with the notebooks and ICT technology and can go to the communities to deliver computer classes upon application. By this way, people can have more opportunities to learn computer and thus increase their digital competiveness which can better their lives.
Acer held "Acer Incredible Green Contest" to encourage the utilization of ICT related technologies to create environmental friendly solution. Students at all levels are encouraged to create green-centric applications to generate innovative and sustainable solutions embracing energy saving, carbon reduction, ecological conversation, and other environmental issues.
6.5 Enforcement of Corporate Social Responsibility by the Company
Item | Implementation Status | Deviations from "Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies" and reasons |
1. Exercising Corporate Governance | ||
(1) The company declares its corporate social responsibility policy and examines the results of the implementation.
| Since 2008, Acer's social responsibility agenda has focused on the following five areas: energy and climate, green product, recycling, supply chain management, and reporting. Implementation result is shown on Acer Annual CR report. | No discrepancy |
(2) The company establishes exclusively (or concurrently) dedicated units to be in charge of proposing and enforcing the corporate social responsibility policies. | In the spring of 2008, to materialize the implementation of our social responsibility, a various functions and positions had been set up across the Company, including the Executive Committee of CSR in the Board, Corporate Sustainability Officer and the Corporate Sustainability Office (CSO), the CSR Working Group and the regional headquarters of the CSR Executive Committee, etc. and we established Global CSR Committee in 2012. Their major roles and responsibilities are to carry out Acer CSR agendas and achieve our CSR promises in a systematic, feasible and organized way in accordance with Acer's core value. From the organizational level, we focus on the implementation and development of sustainability and CSR governance, the operation of the working group, the communication with stakeholders and the establishment of a smooth communication channel. We regularly update CSR information via our designated Acer Sustainability webpage and incorporate higher level communication with our suppliers and business partners in the CSR agendas. | No discrepancy |
(3)The company organizes regular training on business ethics and promotion of matters prescribed in the preceding Article for directors, supervisors and employees, and should incorporate the foregoing into its employee performance appraisal system to establish a clear and effective reward and discipline system. | Acer promulgated the 'Standards of Business Conduct' (SBC) as the guidelines for all employees to follow in conducting the business operation and activities. It is every employee's responsibility to abide by the SBC. An appropriate training of SBC shall be arranged upon a new employee joining in the Company, which stresses the importance of sticking to the rules. The SBC is also built in the performance appraisal system with reward and punishment. For any staff violating the norms, the necessary disciplinary actions will be taken or even dismissal. | No discrepancy |
2. Fostering a Sustainable Environment | ||
(1) The company endeavors to utilize all resources more efficiently and uses renewable materials which have a low impact on the environment.
| We launch the new generation of thin and light based products, Ultrabook Aspire S7, to reduce the consumption of product materials as well as lower the packaging volume to reduce the GHG emission. The Aspire S7-391 features an Acer-patented structural design wherein the cover, made of white Gorilla® Glass 2, also forms part of the Ultrabook's framework. This design enables the S7-391 to be built super thin. This unique structural design requires minimal aluminum and uses 94% less raw material than conventional unibody designs. The Aspire S7 Series benchmark for power consumption is higher than the industry standard. It consumes 64% less power than is mandated by the ENERGY STAR® 5.2 specification. Regarding the material of product, we have introduced display products which contain 65% Post-consumer recycled plastics and keep evaluate to use in other major product line to reduce the limit resource consumption. We also use the recycled materials as major sources of our packaging to lower the use of virgin tree fiber. | No discrepancy |
(2)The company establishes proper environmental management systems based on the characteristics of their industries.
| Basing on ISO 14001 (Environmental Management System) standards, we develop Acer environmental management systems, aiming to promote pollution prevention and management and minimize any negative impacts to the environment from our business operations for the purpose of a sustainable development of the Company. We assessed impacts on the environments from our business operations by adopting ISO 14001 standards, which cover the full product life cycle ranging from design and development, manufacturing, suppliers management, sales and marketing and after-sales services. Besides, Acer demands that its first-tier suppliers establish an environmental management system. Currently, all first tier suppliers to Acer are ISO 14001 Certified. In order to enhance the supplier's environmental management , we also request second or upstream tier's key components and assign parts suppliersto get ISO 14001 Certificated. | No discrepancy |
(3) The company establishes dedicated units or assigns dedicated personnel for environment management to maintain the environment.
| Acer organizes ISO 14001 Executive Committee to plan, implement and manage environment relating issues. The major responsibilities of the Committee are to ensure the compliance of environmental legislation through constant studies on the product and environment related laws and regulations, and timely control of the latest global movements on environmental protection issues. Both internal and external audits and management review have been implemented to ensure that ISO 14001 can be executed properly and the improvement over environment can continue in effect. Acer broadens the ISO 14001 scope to cover Xizhi head office all business units, function units and stocks office. All units assign a dedicated person to participate in the ISO 14001 Executive Committee activities which includes relative training and operation , continue to improve the environment of the office and facilities.
| No discrepancy |
(4) The company monitors the impact of climate change on its operations and should establish company strategies for energy conservation and carbon and greenhouse gas reduction. |
Acer identifies and assesses the risk and opportunities coming along with the climate change through hosting Acer CSR Forum annually,and joining international organization like Carbon Disclosure Project Supply Chain Program and Electronic Industry Citizenship Coalition directly. We assisted suppliers to gradually enhance their overall capacity to the climate change, carbon reduction and energy efficiency and to reach our mid-term and long-term carbon reduction target.
| No discrepancy |
3. Preserving Public Welfare | ||
(1) The company complies with relevant labor laws and regulations,respect international labor rights principles, protects the legal rights and interests of employees,maintain no discrimination of the hiring policy, and has in place appropriate management methods and procedures.
| Acer promulgated the "Standards of Business Conduct" (SBC) as the guidelines for all employees to follow in conducting business operation and activities. The SBC complies with local regulations, such as labor law where Acer has business presence. It embraces the diversity and culture of all employees and provides a work environment free from discrimination (based on race, color, age, gender, ethnicity, region, or nationality) in area such as employment, promotion, etc. Child labor is strictly prohibited. HR system such as employment contract, work rule, HR policy and regulations are in place to protect the legitimate interests of employees. | No discrepancy |
(2) The company provides safe and healthy work environments for its employees, and organizes training on safety and health for its employees on a regular basis.
| Environmental Safety management At the Acer headquarters in Taiwan, a security guard is stationed at the main entrance checking the credentials of all guests and authorizing permission of entry. Employees and guests must use an access card to enter the general office areas in normal office hours. Entry into laboratories and information management system facilities requires an additionally authorized access card. During holidays and evening, entry into the office area requires an additional personal identity number. In the interest of safety for female employees, entry into women's restrooms also requires card access; inside these restrooms emergency alarms and telephones have been installed to provide a double measure of protection. | No discrepancy |
Emergency ResponseAcer has organized its own firefighting unit set up for the initial line of self-defense in an emergency. The team's primary mission is to carry out initial fire extinguishing efforts and evacuate employees in the case of a fire emergency, thus reducing the impact of disaster. Acer coordinates with the Building Management Committee to conduct biannual fire safety drills and cooperates with the Fire Department to conduct updated training. Representatives are chosen from each department to set up a first-aid personnel team, fire prevention supervisor and labor safety and health management. The personnel also receive updated training and examinations to ensure they are kept well informed of the reaction procedures to lower the damages when accidents happen. | ||
Employee Safety and Health Acer has organized its own firefighting unit set up for the initial line of self-defense in an emergency. The team's primary mission is to carry out initial fire extinguishing efforts and evacuate employees in the case of a fire emergency, thus reducing the impact of disaster. Acer coordinates with the Building Management Committee to conduct biannual fire safety drills and cooperates with the Fire Department to conduct updated training. Representatives are chosen from each department to set up a first-aid personnel team, fire prevention supervisor and labor safety and health management. The personnel also receive updated training and examinations to ensure they are kept well informed of the reaction procedures to lower the damages when accidents happen.
Acer cooperates with professional medical institutions to perform health checkup for all employees on biannual basis. Based on the results of health examination, for any employee having significantly abnormal health condition, their health status will be monitored and tracked with the assistance of the medical entities. Besides, a series of physical and mental health seminars were organized for the employee. An employee leisure zone has been set up at its Taiwan headquarter along with some other recreational facilities such as basketball courts, table tennis, shooting machine, video games, and electric massage chairs. Since 2008, we have introduced visually impaired masseurs to provide massage service for employees.
In Y2012, several sessions of movie theater appreciation, arts and cultural activities, lectures about physical, mental and spiritual, outings, Acer family day, have been organized. It has been 34,153 colleagues with their families participating in these various programs. | ||
Others In addition to these jobsite safety measures, Acer conducts drinking water quality inspection, CO2 level inspections, legionnaire's disease inspection and one electromagnetic wave inspection of the office area annually. These checks go to ensure a healthy and safe office environment and to provide employees with a peace-of-mind. | ||
(3)The company establishes the communication mechanisam with employees regularly and inform the employees about significant operation change in a reasonably way. | Acer values its employee opinions and sets up an array of communication channels including internal announcement, supporting service helpline, cross level communication, employee opinion survey, employee grievance channel, etc. Besides, the Acer Gardeners' Meeting is held quarterly and chaired by CEO. Employee representatives can take full advantage of this channel, propose their suggestions on the company's business management, working environment, and labor rights. CEO communicates with them face to face, makes resolutions and assigns the relevant department for implementation. | |
(4) The company establishes and discloses policies on consumer rights and interests and provides a clear and effective procedure for accepting consumer complaints.
| Acer is a celebrated multinational brand company with business presence around the world. Service centers are established in our major operating countries, featuring a variety of service programs according to the nature of different customer groups and sales channels in hopes of building a robust global service network. Acer's private and corporate customers can conveniently contact Acer via multiple conduits for communication: (1) Acer Global Download (2) Call Center/Help Center and Technical Support(3) Depot/Repair Center(4) Acer Service Partner and the Third Party Maintainer:(5) International Traveler Warranty (ITW) Repair Center: | No discrepancy |
(5) The company cooperates with its suppliers to jointly foster a stronger sense of corporate social responsibility.
| Acer regards our suppliers as part of our greater corporate family. We give clear directives to our suppliers regarding social and environmental issues such as green manufacturing and labor rights to keep them on the cutting edge, and hold regular audits and meetings to support their capacity building and ensure that our directives are being followed. In the future we expect to work even more closely together with our suppliers to solve social and environmental problems and create a sustainable supply chain. | No discrepancy |
(6) The company, through commercial activities, non-cash property endowments, volunteer service or other free professional services, participates in community development and charities events. | The Acer Volunteer Team was established in October 2004 for the purpose of giving employees a channel to contribute their spare time and energy to public welfare service. The Volunteer Team organizes a variety of charity activities including blood donation, monetary donation, carbon reduction, overseas volunteering services, and after-class guidance for the children from the disadvantaged families of XiZhi District. | No discrepancy |
4. Enhancing Information Disclosure | ||
(1) The measures of disclosing relevant and reliable information relating to their corporate social responsibility. | We disclose our CSR information and CR report on the below website: Chinese http://www.acer-group.com/public/Sustainability/chinese/index.htmEnglish http://www.acer-group.com/public/Sustainability/index.htm | No discrepancy |
(2) The company produces corporate social responsibility reports disclosing the status of their implementation of the corporate social responsibility policy. | ||
5. If the Company has established corporate social responsibility principles based on "Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies", please describe any discrepancy between the principles and their implementation: To boost Acer's overall competitiveness, fulfill its corporate responsibility in the social, economical and environmental aspects, and make Acer a leading brand-name in the history, the Standards of Business Conduct (SBC) were revised and promulgated in 2009 that serve as behavioral guidelines to Acer global employees providing them principles of conducting business at worldwide These guidelines no only protect Acer's global business interest in a legitimate manner but also help to enhance its service quality for customers, partners, and the communities.
| ||
6. Other important information to facilitate better understanding of the Company's corporate social responsibility practices (e.g., systems and measures that the company has adopted with respect to environmental protection, community participation, contribution to society, service to society, social and public interests, consumer rights and interests, human rights, safety and health, other corporate social responsibilities and activities, and the status of implementation.): More information can be found at: 1. Acer Sustainability website http://www.acer-group.com/public/Sustainability/index.htm 2. Acer Foundation website http://www.acerfoundation.org.tw/english/index.php | ||
7. If the products or corporate social responsibility reports have received assurance from external institutions, they should state so below: 2011 Acer Corporate Responsibility Report has been validated by SGS. The contents of the report meet the requirements of Global Reporting Initiative G3.1 Application Level B+. |
7. Financial Standing
7.1 Five-Year Consolidated Financial Information
7.1.1 Five-Year Balance Sheet under International Financial Reporting Standards ("IFRS")
Consolidated Balance Sheet under International Financial Reporting Standards ("IFRS")
Unit: NT$ Thousand
Period Item | Current year as of Mar. 31, 2013 | |
Current assets | 162,471,338 | |
Net property, plant and equipment | 6,583,798 | |
Intangible assets | 39,535,035 | |
Other assets | 10,850,093 | |
Total assets | 219,440,264 | |
Current Liabilities | Before Distribution | 124,142,561 |
After Distribution | Un-appropriated | |
Long-term liabilities | 18,602,094 | |
Total Liabilities | Before Distribution | 142,744,655 |
After Distribution | Un-appropriated | |
Equity attributable to owners of the Company |
| |
Common stock | 28,347,268 | |
Capital surplus | 43,435,754 | |
Retained Earnings | Before Distribution | 12,554,154 |
After Distribution | Un-appropriated | |
Other reserves | (1,589,599) | |
Treasury Stock | (6,054,286) | |
Non-controlling interests | 2,318 | |
Total equity | Before Distribution | 76,695,609 |
After Distribution | Un-appropriated |
Five-Year Balance Sheet under Statements of Financial Accounting Standards ("SFAS")
Unit: NT$ Thousand
Period Item | Most Recent 5-Year Financial Information | |||||
2008 | 2009 | 2010 | 2011 | 2012 | ||
Current assets | 186,390,592 | 232,107,877 | 225,760,825 | 195,729,745 | 170,840,056 | |
Fund and Long-term equity investments | 6,773,547 | 8,872,750 | 6,233,280 | 3,795,462 | 3,449,711 | |
Net property, plant and equipment | 9,336,221 | 8,676,173 | 5,818,230 | 6,938,898 | 6,572,348 | |
Intangible assets | 34,746,765 | 35,444,068 | 36,392,935 | 35,404,199 | 39,316,838 | |
Other assets | 6,195,100 | 5,923,820 | 6,293,260 | 6,439,424 | 6,480,040 | |
Total assets | 243,442,225 | 291,024,688 | 280,498,530 | 248,307,728 | 226,658,994 | |
Current Liabilities | Before Distribution | 149,315,158 | 179,846,517 | 162,558,924 | 146,039,649 | 143,018,437 |
After Distribution | 154,601,124 | 188,183,352 | 172,076,142 | 146,039,649 | Un-appropriated | |
Long-term liabilities | 4,134,920 | 12,371,856 | 20,666,296 | 24,404,677 | 4,755,200 | |
Other liabilities | 7,114,532 | 5,928,652 | 3,164,937 | 2,111,787 | 3,853,206 | |
Total Liabilities | Before Distribution | 160,564,610 | 198,147,026 | 186,390,156 | 172,556,113 | 151,626,843 |
After Distribution | 165,850,575 | 206,483,861 | 195,907,374 | 172,556,113 | Un-appropriated | |
Common stock | 26,428,560 | 26,882,283 | 27,023,449 | 27,098,915 | 28,347,268 | |
Capital surplus | 37,129,952 | 38,494,118 | 39,578,915 | 40,219,518 | 44,096,498 | |
Retained Earnings | Before Distribution | 22,771,901 | 28,575,011 | 35,329,280 | 19,049,268 | 16,138,942 |
After Distribution | 17,485,935 | 20,238,176 | 25,812,062 | 19,049,268 | Un-appropriated | |
Unrealized Gain (loss) on Financial assets | (1,729,631) | 1,014,317 | 460,600 | (630,621) | (904,177) | |
Translation adjustments | 1,241,058 | 959,621 | (5,095,919) | (3,580,136) | (5,655,033) | |
Minimum Pension Liability adjustment | (283) | (7,908) | (23,957) | (16,993) | (331,753) | |
Treasury Stock | (3,522,598) | (3,522,598) | (3,522,598) | (6,390,846) | (6,662,028) | |
Minority Interest | 558,656 | 482,818 | 358,604 | 2,510 | 2,434 | |
Stockholders' Equity | Before Distribution | 82,877,615 | 92,877,662 | 94,108,374 | 75,751,615 | 75,032,151 |
After Distribution | 77,591,648 | 84,540,827 | 84,591,156 | 75,751,615 | Un-appropriated |
7.1.2 Five-Year Consolidated Income Statement under International Financial Reporting Standards ("IFRS")
Consolidated Income Statement under International Financial Reporting Standards ("IFRS")
Unit: NT$ Thousand
Period Item | Current year as of Mar. 31, 2013 |
Revenue | 91,972,997 |
Gross profit | 7,832,337 |
Operating (loss) income | 28,713 |
Non-operating Income and Loss | 421,284 |
Earnings before taxes | 449,997 |
Income(Loss) from Continuned segment | 514,570 |
Income(Loss) from Discontinuned segment | 0 |
Net earningsIncome after income taxes | 514,570 |
Other comprehensive income (loss) for the period, net of tax | 1,944,798 |
Total comprehensive income (loss) for the period | 2,459,368 |
Earnings attributable to Shareholders of the Company | 514,551 |
Earnings attributable to Non-controlling interests | 19 |
Total comprehensive income (loss) attributable to Shareholders of the Company | 2,459,384 |
Total comprehensive income (loss) attributable to Non-controlling interests | (16) |
EPS | 0.19 |
Five-Year Consolidated Income Statement under Statements of Financial Accounting Standards ("SFAS")
Unit: NT$ Thousand
Period Item | Most Recent 5-Year Financial Information | ||||
2008 | 2009 | 2010 | 2011 | 2012 | |
Operating revenue | 546,274,115 | 573,982,544 | 629,058,973 | 475,341,991 | 429,510,913 |
Gross profit | 57,285,660 | 58,327,860 | 64,481,268 | 38,606,598 | 43,195,744 |
Operating (loss) income | 14,072,302 | 15,339,466 | 18,203,913 | (6,396,199) | 1,024,706 |
Non-operating Income and Gain | 5,353,038 | 1,719,037 | 4,321,397 | 1,482,557 | 1,984,494 |
Non-operating Expense and Loss | 4,618,613 | 2,075,520 | 3,195,923 | 2,510,688 | 5,642,904 |
Continuing operating income before tax | 14,806,728 | 14,982,983 | 19,329,387 | (7,424,330) | (2,633,704) |
Income(Loss) from Discontinuned segment | 99,843 | 0 | 0 | 0 | 0 |
Extraordiniary Items | 0 | 0 | 0 | 0 | 0 |
Cumulative Effect of changes in accounting principle | 0 | 0 | 0 | 0 | 0 |
Income after income taxes | 11,742,135 | 11,353,374 | 15,117,997 | (6,601,968) | (2,910,326) |
EPS | 4.67 | 4.31 | 5.71 | (2.52) | (1.07) |
7.1.3 CPAs' and Auditors' Opinions:
Year | Name of CPA(s) | Auditors' Opinion |
2008 | Sonia Chang, Agnes Yang | Modified unreserved |
2009 | Sonia Chang, Agnes Yang | Unreserved |
2010 | Sonia Chang, Agnes Yang | Unreserved |
2011 | Sonia Chang, Steven Shih | Unreserved |
2012 | Sonia Chang, Steven Shih | Unreserved |
7.2 Five-Year Financial Analysis under International Financial Reporting Standards ("IFRS")
Financial Analysis under International Financial Reporting Standards ("IFRS")
Period Item | Current year | ||
as of Mar. 31, 2013 | |||
Financial Ratio | Total liabilities to total assets(%) | 65.05 | |
Long-term debts to fixed assets(%) | 1,447.46 | ||
Ability to payoff debt | Current ratio(%) | 130.87 | |
Quick Ratio(%) | 96.58 | ||
Interest protection | 333 | ||
Ability to operate | A/R turnover (times) | 5.43 | |
A/R turnover days | 67 | ||
Inventory turnover (times) | 8.09 | ||
A/P turnover (times) | 5 | ||
Inventory turnover days | 45 | ||
Fixed assets turnover (times) | 56.90 | ||
Total assets turnover (times) | 1.65 | ||
Earning ability | Return on assets(%) | 1.21 | |
Return on equity(%) | 2.73 | ||
To pay-in capital % | Operating income | 0.41 | |
PBT | 6.35 | ||
Net income ratio (%) | 0.56 | ||
EPS(NTD) | 0.19 | ||
Cash flow(%) | Cash flow ratio | (4.58) | |
Cash flow adequacy ratio | N.A. | ||
Cash reinvestment ratio | (0.10) | ||
Leverage | Operating leverage | 261.30 | |
Financial leverage | (0.18) |
1. Financial Ratio
(1)Total liabilities to total assets=Total liabilities/Total assets
(2)Long-term funds to Net property, plant and equipment=(Net equity+Long term debts)/Net property, plant and equipment
2. Ability to Pay off debt
(1)Current ratio=Current Assets/Current liability
(2)Quick ratio=(Current assets-Inventory-Prepaid expenses)/Current liability
(3)Interest protection=Net income before income tax and interest expense/Interest expense
3. Ability to Operate
(1)Account receivable (including account receivable and notes receivable from operation) turnover=Net sales/the average of ac- count receivable (including account receivable and notes receivable from operation) balance
(2)A/R turnover day=365/account receivable turnover
(3)Inventory turnover=Cost of goods sold/the average of inventory
(4)Account payable (including account payable and notes payable from operation)turnover=Cost of goods sold/the average of account payable(including account payable and notes payable from operation)balance
(5)Inventory turnover day=365/Inventory turnover
(6)Net property, plant and equipment turnover=Net sales/Average Net property, plant and equipment
(7)Total assets turnover=Net sales/Average Total assets
4. Earning Ability
(1)Return on assets=[PAT+Interest expense×(1-Tax rate)]/the average of total assets
(2)Return on equity=PAT/the average of total equity
(3)Net income ratio=PAT/Net sales
(4)EPS =(Earning attributable to shareholders of the Company -Dividend from prefer stock)/weighted average outstanding shares
5. Cash Flow
(1)Cash flow ratio=Cash flow from operating activities/Current liability
(2)Cash flow adequacy ratio=Most recent 5-year Cash flow from operating activities=Most recent 5-year (Capital expenditure+the increase of inventory+cash dividend)
(3)Cash reinvestment ratio=(Cash flow from operating activities-cash dividend)/(Gross property, plant and equipment+long- term investment+other non-current assets+working capital)
6. Leverage
(1)Operating leverage=(Net revenue-variable cost of goods sold and operating expense)/operating income
(2)Financial leverage=Operating income/(Operating income-interest expenses)
Five-Year Financial Analysis under Statements of Financial Accounting Standards ("SFAS")
Period Item | Most Recent 5-Year Financial Information | ||||||
2008 | 2009 | 2010 | 2011 | 2012 | |||
Financial Ratio | Total liabilities to total assets (%) | 65.96 | 68.09 | 66.45 | 69.49 | 66.90 | |
Long-term debts to fixed assets(%) | 1,008.19 | 1,281.42 | 2,207.07 | 1,473.84 | 1,272.61 | ||
Ability to Payoff Debt | Current ratio(%) | 124.83 | 129.06 | 138.88 | 134.03 | 119.45 | |
Quick Ratio(%) | 95.47 | 98.43 | 110.22 | 102.13 | 86.52 | ||
Interest protection | 12 | 25 | 20 | (6) | (2) | ||
Ability to Operate | A/R turnover (times) | 5.18 | 5.19 | 5.85 | 5.11 | 5.65 | |
A/R turnover days | 70 | 70 | 62 | 71 | 65 | ||
Inventory turnover (times) | 13.24 | 11.31 | 12.22 | 10.75 | 9.27 | ||
Inventory turnover days | 28 | 32 | 30 | 34 | 39 | ||
A/P turnover (times) | 6.39 | 5.79 | 5.70 | 4.95 | 4.95 | ||
Fixed assets turnover (times) | 58.51 | 66.16 | 108.12 | 70.28 | 65.35 | ||
Total assets turnover (times) | 2.24 | 1.97 | 2.24 | 1.91 | 1.89 | ||
Earning Ability | Return on assets(%) | 5.23 | 4.42 | 5.59 | (2.18) | (0.94) | |
Return on equity(%) | 14.65 | 12.92 | 16.17 | (7.77) | (3.86) | ||
To Pay-in Capital % | Operating income | 53.25 | 57.06 | 67.36 | (23.60) | 3.61 | |
PBT | 56.03 | 55.74 | 71.53 | (27.40) | (9.29) | ||
Net income ratio (%) | 2.15 | 1.98 | 2.40 | (1.39) | (0.68) | ||
EPS(NTD) | 4.67 | 4.31 | 5.71 | (2.52) | (1.07) | ||
Cash Flow (%) | Cash flow ratio | (3.46) | 21.24 | 8.14 | 4.14 | 0.41 | |
Cash flow adequacy ratio | 17.55 | 47.06 | 63.82 | 59.10 | 78.63 | ||
Cash reinvestment ratio | (21.40) | 40.47 | 5.60 | (4.81) | 1.17 | ||
Leverage | Operating leverage | 3.14 | 3.12 | 2.99 | (4.95) | 33.22 | |
Financial leverage | 1.10 | 1.04 | 1.06 | 0.87 | 5.05 |
1. Financial Ratio
(1) Total liabilities to total assets=Total liabilities/Total assets
(2) Long-term funds to fixed assets=(Net equity+Long term debts)/Net fixed assets
2. Ability to Pay off debt
(1) Current ratio=Current Assets/Current liability
(2) Quick ratio=(Current assets-Inventory-Prepaid expenses)/Current liability
(3) Interest protection=Net income before income tax and interest expense/Interest expense
3. Ability to Operate
(1) Account receivable (including account receivable and notes receivable from operation) turnover=Net sales/the average of account receivable (including account receivable and notes receivable from operation) balance
(2) A/R turnover day=365/account receivable turnover
(3) Inventory turnover=Cost of goods sold/the average of inventory
(4) Account payable (including account payable and notes payable from operation)turnover=Cost of goods sold/the average of account payable(including account payable and notes payable from operation)balance
(5) Inventory turnover day=365/Inventory turnover
(6) Fixed assets turnover=Net sales/Net Fixed Assets
(7) Total assets turnover=Net sales/Total assets
4. Earning Ability
(1) Return on assets=〔PAT+Interest expense×(1-Tax rate)〕/the average of total assets
(2) Return on equity=PAT/the average of net equity
(3) Operating income on pay-in capital ratio=Operating income/pay-in capital
(4) PBT on pay-in capital ratio=PBT/pay-in capital
(5) Net income ratio=PAT/Net sales
(6) EPS =(PAT-Dividend from prefer stock)/weighted average outstanding shares
5. Cash Flow
(1) Cash flow ratio=Cash flow from operating activities/Current liability
(2) Cash flow adequacy ratio=Most recent 5-year Cash flow from operating activities/Most recent 5-year (Capital expenditure+the increase of inventory+cash dividend)
(3) Cash reinvestment ratio=(Cash flow from operating activities-cash dividend) /(Gross fixed assets+long-term investment+other assets+working capital)
6. Leverage
(1) Operating leverage=(Net revenue-variable cost of goods sold and operating expense)/operating income
(2) Financial leverage=Operating income/(Operating income-interest expenses)
7.3 Supervisors' Review Report
To: The 2013 General Shareholders' Meeting
The Board of Directors of the Company has prepared the 2012 financial report, including balance sheet, statement of income, statements of changes in stockholders' equity, and statement of cash flows. Sonia Chang and Steven Shih at KPMG have been retained by the Board of Directors of the Company to issue an audit report. The undersigned supervisors have reviewed the audit report and the aforesaid documents, which were made by the Board of Directors in compliance with Article 228 of the Company Law, and did not find any incompliance. In accordance with Article 219 of the Company Law, it is hereby submitted for your review and perusal.
Supervisor: George Huang
Supervisor: Carolyn Yeh
Dated: March 28, 2013
7.4 Financial Statements Consolidated Subsidiaries Audited by CPAs of the Past Year
Please refer to Appendix
7.5 Disclosure of the Impact on Company's Financial Status Due to Financial Difficulties
Not applicable.
7.6 Financial Prediction and Achievements
7.6.1 Financial Forecast of Year 2012:
Not applicable.
8. Risk Management
8.1 Recent Annual Investment Policy and Main Reasons of Gain or Loss and Improvement Plan
Unit: NT$ Thousand
Description Item | Amount (Note) | Business Type | Year 2012 P&L | Main reason of Gain or Loss | The Plan for Improvement | Investment Plan for Next Year |
Acer European Holdings B.V. | 19,651,271 | Sales and Maintenance of "Acer" brand-name information technology products | 10,552 | Due to the operating profit for the market of EMEA | NA | No material investment plan for next year |
Acer Holdings International, Incorporated | 12,945,379 | Sales and Maintenance of "Acer" brand-name information technology products | (9,591) | Due to the operating loss for the market of AAP | Enhance the management for the loss subsidiaries and manage the operating expenses | |
Boardwalk Capital Holding Limited | 30,082,795 | Sales and Maintenance of "Acer" brand-name information technology products | (1,426,995) | Due to the operating loss for the market of PA | Capital injection to the Brasil subsidiary | |
Acer Worldwide Incorporated | 2,816,911 | Investing and Holding company | 515 | Increasing of Investment Gain | NA | |
E-TEN INFORMATION SYSTEMS CO., LTD. | 6,486,948 | PDA manufacturing and sale | 277,309 | Gain on Operating activities | NA | |
Cross Century Investment Limited | 1,133,044 | Investing and Holding company | 1,086 | Increasing of Investment Gain | NA | |
Acer CyberCenter Services Ltd. | 1,923,118 | Data storage and processing company | 177,913 | Gain on Operating activities | NA | |
Acer Greater China (B.V.I.) Corp. | 7,318,915 | Sales and Maintenance of "Acer" brand-name information technology products | 297,003 | Due to the operating profit for the market of GC | NA | |
Acer Softcapital Incorporated | 888,688 | Investing and Holding company | (62,050) | Increasing of Investment Loss | No plan for writing-off investment for 2013 | |
Wistron Corporation | 1,369,229 | Investing on industry of manufacturing computer and information technology products | 86,219 | Gain on Operating activities | NA | |
Acer Digital Service Co., | 930,469 | Investing and holding companies | 68,378 | Gain on Investment activities | NA | |
Bluechip | 89,694 | Sales of software | 4,810 | Gain on Operating activities | NA | |
Weblink International Inc. | 1,288,454 | Sales and distribution of computer products and electronic communication products | 69,254 | Gain on Operating activities | NA | |
Aegis Semiconductor Technology Inc. | 27,908 | Semi-conductor test service | 0 | NA | NA |
8.2 Important Notices for Risk Management and Evaluation
Risk Management Organization
l Board of Directors - review and approve the risk management policy and the authority for decision
l The head and top management of Business Units - oversee risk management activities with periodic monitoring and evaluation
l Auditors - provide annual auditing plan; review the Company's internal execution and control of risk management
l Operation Analysis Office - take responsibility of planning, analysis and improvement of business model and business management
l Global Legal - review legal contracts and agreements; manage lawsuit and litigation affairs
l Treasury - manage financial hedging and deals
l Accounting - oversee monetary transactions, ensure consistency with booking keeping and accuracy of financial reporting
8.2.1 Impact of Interest Rate, Exchange Rate and Inflation on Company's P&L and Future Strategy
1.Interest Rate Fluctuation
Notwithstanding U.S. employment and housing market shown some recovery but the financial cliff and economic growth are still the issue. FED continued to keep USD interest rate at a low level this year. Economy in Eurozone shown a slight recovery but for each country the situation is not the same. To support overall economic growth, ECB has no intention to hike interest rate at this moment. Currently the quantitative easing monetary policy adopted among major economy entities, the R.O.C. central bank is following and expect to maintain interest rates at a low level. Our funding cost of liability will not increase due to the low interest rate. We usually use the New Taiwan Dollar (NTD) and short-term foreign currency deposits to optimize return at low risk level.
2.Exchange Rate
The economy in Eurozone is becoming stable but the measure of expenditure curtail will impact the recovery. We expected that EUR might range trend in this year. RMB long-term trends show slightly appreciation, but will have wide fluctuation in short-term period. NTD has been influenced by some currencies depreciation. Expected the trend will back to normal in second half year and continue to appreciate steadily. Consistent execution of a conservative hedging strategy will continue to be maintained in order to minimize the impact of foreign exchange rate fluctuation on the Company's earnings.
3.Inflation
Even though the quantitative easing monetary policy adopted among major economy entities, the recovery of worldwide economy is still slow. The inflation issue might not be very serious this year. However, if the rise in commodity prices causes an increase in production cost, appropriate measures will be taken accordingly to avoid loss.
8.2.2 How Corporate Image Change Affects Company's Risk Management Mechanism
The Company split off its manufacturing division at the end of year 2000 in order to focus on the design and marketing of IT products and services. The potential crises within manufacturing and marketing companies are very different, and the Company's crisis management now focuses on our global supply-chain and logistics. By outsourcing our manufacturing sector to multiple vendors and suppliers, the Company gained greater flexibility in inventory control and lowered risks compared to a single-vendor policy. With the ever-changing global economy, it is essential to be prepared for risks and challenges at all times. The Company's risk management team has a clear sense of crisis management and has taken the precautions where necessary. We have set up a crisis mechanism that will minimize potential damages to ensure the Company's sustainable management.
8.2.3 Predicted Benefits and Potential Risk to Company with Factory/Office Expansion
Not applicable.
8.2.4 Potential Risks to Company from the Consentration of Procurement and Sales
None
8.2.5 Affect on Company from Shares Transfers by Directors, Supervisors or Shareholders Holding More Than 10% Shares
Not applicable.
8.2.6 Impact and Potential Risks to Company Management Team Change
Not applicable.
8.2.7 The major litigious, non-litigious or administrative disputes that: (1) involve Acer and/or any Acer director, any Acer supervisor, the general manager, any person with actual responsibility for the firm, any major shareholder holding a stake of greater than 10 %, and/or any company or companies controlled by Acer; and (2) have been concluded by means of a final and unappealable judgment, or are still under litigation. Where such a dispute could materially affect shareholders' equity or the prices of the company's securities, the facts of the dispute, amount of money at stake in the dispute, the date of litigation commencement, the main parties to the dispute, and the status of the dispute as of the date of printing of this annual report shall be disclosed as follows:
1. (1) Similar to other IT companies, Acer receives notices from third parties asserting that Acer has infringed certain patents or demands Acer obtain certain patents licenses. Acer takes these matters seriously and may take appropriate counter actions.
(2) Ericsson Inc. and Telefonaktiebolaget LM Ericsson filed patent infringement lawsuits against Acer Inc. and its US subsidiaries, Acer America Corporation and Gateway Inc., which pending before the United States District Court for the Eastern District of Texas; and in August 2011, Telefonaktiebolaget LM Ericsson filed patent infringement lawsuits against Acer's subsidiary, Acer Computer GmbH, which pending before the German Regional Court of Mannheim. US and German law firms have been retained to consult for and represent Acer on those matter; and both US and Germany lawsuits have been supported by the relevant components suppliers. Up to date there foresee no immediately material adverse effect toward Acer's business operations and finance.
(3) In February 2012, AcerInc. and its Italian subsidiary, Acer Europe Services S.r.l. filed petition before the Court of Milan, Italy, for the ascertainment of Mr. Gianfranco Lanci's violation of non-compete covenant under the Separation Agreement executed between Acer Inc. and him. It is estimated that the progress and result of this case will not materially affect Acer's finance and business.
(4)In May and August 2012, the U.S. International Trade Commission (ITC) launched its investigations on alleged infringement of U.S. patents (US patent No. 5809336 is involved in the latest case in August) by numerous companies, including Acer. Technology Properties Limited LLC (TPL) alone filed a Complaint with the US ITC for the first case and with the other two companies, Patriot Scientific Corporation (PTSC) and Phoenix Digital Solutions LLC (PDS) for the latter one. While filing a Complaint with the US ITC in 2012, TPL also filed a Complaint with the US District Court for the Eastern District of Texas at the same time for the related patents. The alleged claim of infringement goes back to as early as 2007, when Acer filed lawsuit against TPL on grounds that TPL's patents (i.e. including the alleged patent in the investigation in August) are invalid. Subsequently, TPL counter-filed against Acer on patent infringement and reported the dispute. ITC's investigation is the continuation of the same patent dispute. These disputes are handled carefully and the appropriate corresponding is taken. Up to date there foresee no immediately material adverse effect toward Acer's business operations and finance.
(5) A former employee of Acer's Taiwan business group was involved in fraudulent order placing in collaboration with external parties and selling company goods for own profit. Acer has investigated, discharged the employee and filed both civil lawsuits and criminal complaints against the suspects. The preliminary estimate for loss is around NT$15 million in deductibles from Acer's risk insurance cover. The loss has no impact on business operations. The Company has view of internal control and audit measures, and is constantly improving related processes.
2. In year 2011 and as of the date of printing of this annual report, any Acer director, supervisor, the general manager, any person with actual responsibility for the firm, any major shareholder holding a stake of greater than 10% were not involved in any material litigious, non-litigious or administrative disputes.
3. In year 2011 and as of the date of printing of this annual report, any company or companies controlled by Acer were not involved in any material litigious, non-litigious or administrative disputes.
8.2.8 Other Risks:
None