QISDA 2009 ANNUAL REPORT
Transkript
QISDA 2009 ANNUAL REPORT
T S E : 2 3 5 2 QI S D A 2 0 0 9 A N N U A L R E P O R T P r in t e d o n A p r il 2 0 , 2 0 1 0 Q is d a A n n u a l r e p o r t is a v a ila b le a t h t t p : / / Q is d a . c o m Tab le of C ontent & C ontac t I nf orm ati on Table of Contents Message to O u r Sh areh o lders … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … R ev iew o f O peratio n s an d Pro du ct Strategy … … … … … … … … … … … … … … … … … … … … … … … . Co rpo rate Go v ern an ce … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … .. Co mpan y Fin an cials … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … Contac t I nfor m ati on QISDA CORPORATION Headquarters / Taoyuan Plant 157 Shan-Y i ng R o ad, G u ei shan, T ao y u an 333, T ai w an, R .O .C . P ho ne: 886 -3-359-880 0 Tai p ei of f i c e 18 J i hu R o ad, N ei hu , T ai p ei 114 , T ai w an, R .O .C . P ho ne: 886 -2-2799-880 0 I N V E STO R R E L A TI O N S C O N TA C TS Sp ok esp erson D av i d W ang V i ce P r esi dent and C F O P ho ne: 886 -3-359-880 0 i nv est o r @ Q i sda.co m D ep uty Sp ok esp erson J asm i n H u ng Asso ci at e V i ce P r esi dent P ho ne: 886 -3-359-880 0 i nv est o r @ Q i sda.co m Q I SD A O N THE I N TE R N E T Q i sda’ s I nv est o r R el at i o ns ho w o r l dw i de w eb si t e o ffer s a w co r p o r at e i nfo r m at i o n, i ncl u annu al r ep o r t and fi nanci al W eb si t e: Q i sda.co m /i r .ht m m e p ag e o n t he eal t h o f di ng t he l at est r esu l t s. R E G I STR A R & TR A N SF E R A G E N T T ai shi n I nt er nat i o nal B ank B 1, 96 J i ang u o N . R o ad, Sec. 1, T ai p ei 10 4 , T ai w an, R .O .C . P ho ne: 886 -2-250 4 -8125 ht t p : //w w w .t ai shi nb ank .co m .t w I N D E PE N D E N T A C C O U N TA N TS P hi l i p T ang & So ni a C hang C P A K P M G P eat M ar w i ck 6 8F l , T ai p ei 10 1 T o w er N o . 7, Sec.5, X i ny i R o ad, T ai p ei 110 4 9, T ai w an, R .O .C . P ho ne: 886 -2-810 1-6 6 6 6 ht t p : //w w w .k p m g .co m .t w D O M E STI C STO C K E X C HA N G E L I STI N G Q i sda C om m on sh ares T ai w an St o ck Ex chang e C o r p o r at i o n ht t p : //w w w .t se.co m .t w /en/ Q i sda E x c h ang eab le B onds G r eT ai Secu r i t i es M ar k et I SI N : 23520 1 ht t p : //w w w .o t c.o r g .t w /en/ O V E R SE A S SE C U R I TY E X C HA N G E L I STI N G F o r fu r t her i nfo r m at i o n, v i si t Q i sda w o r l dw i de w eb si t e and Lo g i n at I nv est o r R el at i o ns Q i sda G lob al D ep osi tary Sh ares Lu x em b u r g St o ck Ex chang e I SI N : U S0 8230 120 10 ht t p : //w w w .b o u r se.l u 1 . 2 3 18 24 M essag e to ou r S h ar eh old er s M essag e to our Sh areh olders Dear esteemed Qisda sh areh o lders, Qisda' s 2009 co re co n so lidated rev en u es reach ed NT $ 79.67 billio n , w h ile th e Taiw an paren t co mpan y reco rded rev en u es o f NT $ 49.6 billio n . A f ter-tax lo sses o f NT $ 1.81 billio n resu lted in an af ter-tax lo ss per sh are o f NT $ 0.94. O v er th e past 2 years, Qisda h as carried o u t bu sin ess tran sf o rmatio n pro j ects in clu din g reo rgan iz atio n , rev italiz atio n o f co rpo rate cu ltu re, pro du ctio n an d o peratio n al mo dif icatio n s, IT system glo baliz atio n , impro v emen ts to in -h o u se v ertical in tegratio n capabilities, an d mu ch mo re. Th an k s to th e u n if ied ef f o rts o f th e co mpan y' s emplo yees, prelimin ary resu lts h av e begu n to sh o w u p o n Qisda' s f in an cials o v er th e past f ew q u arters. Sin ce th e f o u rth q u arter o f 2008—w h en th e co re bu sin ess w en t f ro m lo ss to pro f it—u n til th e en d o f 2009, Qisda w itn essed 5 su ccessiv e q u arters o f pro f itability. In 2009, w e saw a th irty-percen t in in crease pro du ctio n ef f icien cy w h ile lo sses attribu ted to cu sto mer co mplain ts o v er q u ality issu es decreased by eigh ty-percen t. In O DM su pplier assessmen ts by sev eral glo bal bran ded cu sto mers, Qisda h as su stain ed its o v erall po sitio n as o n e o f th e to p rated co mpan ies. Mean w h ile, th e co mpan y h as su ccessf u lly co n tro lled man po w er, capital req u iremen ts, an d in v en to ry lev els, w h ich h as led to an in crease in cash f lo w an d a redu ced debt po sitio n . Du rin g th e perio d o f glo bal f in an cial crisis an d eco n o mic declin e, Qisda remain ed stro n g an d emerged f ro m th e w o rldw ide crisis u n scath ed. A t th e same time, Qisda also reen gin eered its pro du ct lin es. Becau se o f th is, th e co mpan y’ s main stream LCD display an d pro j ecto r pro du ct lin es—bo th o f w h ich h av e eco n o mies o f scale an d are pro f itable—h av e been able to su stain a f irm po sitio n w ith in th e in du stry an d in crease mark et sh are. New pro du ct lin e dev elo pmen t w as classif ied in to tw o mark et segmen ts: "f u tu re main stream" an d "n ich e". Fu tu re main stream pro du cts lik e eBo o k R eaders, mo bile in tern et dev ices, an d mu ltimedia ro u ters h av e th e po ten tial to beco me a n ew spark in th e co mpan y' s rev en u e gro w th . Nich e pro du cts in clu de h igh er added-v alu e, h igh er pro f it pro du ct lin es lik e pro f essio n al displays, h igh -en d LED ligh tin g, an d remo te h ealth care dev ices. In 2009, n ew pro du ct lin e dev elo pmen t pro gressed smo o th ly an d establish ed a so lid f o u n datio n f o r rev en u e an d pro f it gro w th in 2010. O v er th e past 5 years, Qisda h as pu t an av erage o f 3 percen t o f th e co mpan y’ s tu rn o v er to w ard research an d dev elo pmen t ev ery year an d h as accu mu lated o v er 2,000 paten ts aro u n d th e w o rld. In 2009, Qisda co n tin u ed to receiv e in tern atio n al aw ards an d acclaim, in clu din g 10 red do t, 5 iF, an d 3 G-Mark design aw ards—th e o n ly co mpan y in th e design co n tract man u f actu rin g in du stry to receiv e su ch h igh h o n o rs. We stro n gly believ e th at o u tstan din g pro du ct design an d R & D capabilities are Qisda' s co re co mpetitiv e stren gth s. Lo o k in g to 2010, th e glo bal eco n o my is ex pected to mak e a pro tracted reco v ery. In additio n to co n tin u in g its o rgan iz atio n al tran sf o rmatio n an d impro v emen ts to th e co mpan y' s f in an cial stru ctu re, Qisda w ill also apply eq u al ef f o rt in pro mo tin g n ew pro du ct mark ets, ex pan din g mark et sh are, an d seek in g du al gro w th in rev en u e an d pro f its. In 2010, Qisda w ill also establish a Co rpo rate Su stain ability System th at w ill in clu de green o peratio n s, green pro du cts, green su pply ch ain s, a carbo n emissio n s man agemen t platf o rm, an d a so cial respo n sibility co mpo n en t. We are ex tremely gratef u l to each an d ev ery sh areh o lder f o r th eir lo n g-term su ppo rt an d en co u ragemen t. We an ticipate 2010 to be a year th at sees Qisda su rge f o rw ard. Th e man agemen t team w ill co n tin u e to w o rk u n ceasin gly to deliv er th e greatest ben ef it to bo th th e co mpan y an d to sh areh o lders. Sin cerely, K .Y . Lee Ch airman Hu i Hsiu n g CEO & Presiden t 2 R ev i ew R ev i ew of O p erati ons and Produc t Strateg y of O p er ati ons and P r od u c t S tr ateg y Monitor Business Unit Operational G u id el ines Th e primary o bj ectiv e o f th e mo n ito r bu sin ess u n it is to su stain man u f actu rers in th e w o rld th ro u gh its leadin g R & D pro grams. its po sitio n as o n e o f th e to p 5 B u s ines s S c ope O v e rv ie w of O p e r a t i on s Becau se th e LCD mo n ito r is a matu re pro du ct, A SPs dro pped du e to mark et co mpetitio n co n f ro n t th is type o f ch allen ge, Qisda establish ed stro n g relatio n sh ips w ith bran d cu sto mers in v ested in v ertical in tegratio n activ ities su ch as pan el mo du le assembly an d in -h o u se mech an parts to in crease th e v alu e-added pro po sitio n . New pro du ct areas su ch as mu ltif u n ctio n mo n an d all-in -o n e PCs are also f o cal po in ts f o r th e mo n ito r bu sin ess. . To an d ical ito rs P r od u c t O f f e r i n g 17"/19 "/20.1” co n su mer an d co mmercial LCD mo n ito rs 15.6”/18.5”/19”/20”/21.5”/22”/23”/24”/27” w ide screen an d pro f essio n al LCD mo n ito rs 21.5”/24”/27” mu ltif u n ctio n mo n ito rs 18.5” all-in -o n e PC I nd u s try Ov erv iew C u r r e n t S t a t u s a n d Tr e n d s i n D e v e l op m e n t Despite th e glo bal eco n o my gradu ally reco v erin g f ro m recessio n , in 2009 th e glo bal LCD mo n ito r mark et sligh tly declin ed to 163 millio n u n its acco rdin g to DisplaySearch . Fo r 2010, estimated to tal o u tpu t w ill reach 167 millio n u n its f o r emergin g mark et gro w th an d PC su bstitu tio n . Th e an n u al gro w th rate w ill be n ear 5% f o r th e n ex t f ew years. In 2010, LCD pan els w ill see a co n tin u ed imbalan ce in su pply an d deman d. Th e ch allen ge f o r system in tegrato rs w ill be mo re dif f icu lt becau se th e LCD mo n ito r mark et is matu re an d bo th u pstream & do w n stream co mpan ies are gro w in g. In su ch an en v iro n men t, co mpan ies w ith co re co mpeten ces lik e en h an cemen t o f v alu e added, in -h o u se v ertical in tegratio n , access to k ey co mpo n en ts an d eco n o mies o f scale w ill h av e a co mpetitiv e adv an tage. Th e LCD mo n ito r mark et is matu re, w ith a pen etratio n rate o f o v er 90%. In additio n to co st co mpetitio n an d u pstream/do w n stream relatio n sh ips, Qisda w ill strategically w o rk w ith bran d cu sto mers to dev elo p lo w po w er eco -f rien dly LED back ligh t so lu tio n s o r dif f eren tiatio n th ro u gh mu ltif u n ctio n LCD mo n ito rs to f u lf ill th e mark et deman d. 3 R ev i ew R es earc h & D ev el opm ent of O p erati ons and Produc t Strateg y C u rre n t S ta tu s To u ch screen LCD mo n ito rs Mu ltif u n ctio n mo n ito rs A ll-in -o n e PCs Precisio n co lo r in du strial mo n ito rs O n g oi n g E f f or t s High co n trast an d 3D/120Hz tech n o lo gy pro du cts HDMI1.4/Displaypo rt1.2 mu ltimedia mo n ito rs H.264 mu ltif u n ctio n mo n ito rs Green pro du cts an d f u ll series LED mo n ito rs S h ort and L ong -Term B u s ines s P l ans A s a pro f essio n al O DM/O EM man u f actu rer, Qisda applies th e f o llo w in g strategies to po sitio n as o n e o f th e to p 5 man u f actu rers in th e w o rld: Pro v ide all siz es o f LCD displays an d pro believ e Qisda h as distin ct adv an tage Co n tin u e co o peratin g w ith A U O ptro cu ltiv ate partn ersh ips w ith tier-o n e pan In crease v alu e-added in v alu e ch ain assembly, in -h o u se stampin g, an d in -h o In crease mu ltif u n ctio n mo n ito r/all-in -o n main tain its mo te larger-siz ed, h igh -perf o rman ce mo dels w h ere w e n ics Co rp. to dev elo p h igh el v en do rs to en su re smo o th s th ro u gh v ertical in tegratio u se plastic in j ectio n e PC pro du ct mix an d ex pan 4 q u ality LCD mo n ito rs an d su pply n , su ch as pan el mo du le d scale R ev i ew M ark et A nal y s is of O p erati ons and Produc t Strateg y Ma j or S a l e s Ma r k e t s Wo rldw ide Ma r k e t S h a r e In 2009, Qisda in creased sales an d mark et sh are despite a sligh t declin e in th e glo bal LCD mo n ito r mark et. Th e co mpan y main tain s w o rldw ide to p 5 leadin g po sitio n . P osi t i v e F a c t or s, N e g a t i v e F a c t or s, a n d S t r a t e g i e s P o s it iv e F a c t o r s In du stry co n so lidatio n ; big players gettin g bigger N e g a t iv e F a c t o r s Co mmo dity mark et; sev ere price co mpetitio n Sh o rt su pply in Ch in a’ s labo r mark et, w h ich mak es labo r co st h igh er an d tigh ten s material su pply ch ain s S t r a t e g ie s Su stain a leadin g in du stry po sitio n th ro u gh v ertical in tegratio n an d ex pan din g eco n o scale to lo w er co sts En h an ce design pro du ctiv ity to redu ce labo r u sage w h ile in creasin g cell pro du ctio n ach iev e better f lex ibility Max imiz e th e ben ef its ex pan ded eco n o mies o f scale an d in creased mark et sh are by: Pro v ide all siz es o f so lu tio n s an d pro mo te larger-siz ed, h igh -perf o rman ce mo dels w h believ e Qisda h as distin ct adv an tage Co n tin u e co o peratin g w ith A U O ptro n ics Co rp. to dev elo p h igh q u ality LCD mo n ito cu ltiv atin g partn ersh ips w ith tier-o n e pan el v en do rs to en su re smo o th su pply Ex ten d th e v alu e-added in v alu e ch ain s th ro u gh v ertical in tegratio n , su ch as pan el assembly, in -h o u se stampin g an d in -campu s plastic in j ectio n In crease mu ltif u n ctio n mo n ito r/all-in -o n e PC pro du ct mix to en large pro du ct po rtf o in crease A SP 5 mies o f lin es to ere w e rs w h ile mo du le lio an d R ev i ew P roj ec tor Business Unit of O p erati ons and Produc t Strateg y Operational G u id el ines Th e 2010 go als f o r th e pro j ecto r O DM bu sin ess are to ach iev e h igh er gro w th in sh ipmen ts an d main tain a to p 3 po sitio n w o rldw ide. A t th e same time, w e aim to redu ce co sts an d impro v e q u ality to pro v ide better cu sto mer serv ice to bo o st gro w th rates. B u s ines s S c ope O v e rv ie w of O p e r a t i on s Qisda’ s O DM bu sin ess captu red 13% glo bal mark et sh are an d main tain ed a to p 3 po sitio n in 2009. Mo reo v er, ex cept DLP pro j ecto r, w e are th e o n ly man u f actu rer in Taiw an th at h as LCD pro j ecto r mass pro du ctio n ex perien ce. P r od u c t O f f e r i n g s A w ide ran ge o f pro j ecto rs w ith h o me, o f f ice an d edu catio n al applicatio n s P r oj e c t F e a t u r e s Th e MP515ST pro j ecto r, w ith reso lv es th e setu p issu es in co In additio n , High Def in itio n au dio /v ideo ex perien ce in th a n ew gen eratio n , sh o rt-th ro w pro j ectio n len s dev elo ped by Qisda, n f eren ce ro o ms, classro o ms, an d in h o me en tertain men t applicatio n s. Mu ltimedia In terf ace (HDMI) an d 10W speak ers pro v ide th e best is catego ry. Th e SP920p pro j ecto r, w ith n ew gen eratio n du al lamp o ptical en gin e dev elo ped by Qisda an d tw o h igh -ef f icien cy 280w mercu ry lamps, ach iev es brigh tn ess u p to 6000 lu men s. I nd u s try Ov erv iew C u r r e n t S t a t u s a n d Tr e n d s i n D e v e l op m e n t A cco rdin g to in du stry repo rts, 2009 w o rldw ide pro j ecto r sh ipmen ts w ere 5.6 millio n f o recast f o r 2010 is 6.2 millio n u n its. u n its an d th e Th e mark et is ex pected to co n tin u e gro w in g in th e n ex t f ew years du e to th e dev elo pmen t o f tech n o lo gies f o r mo re applicatio n s an d lo w er prices. O n ly man u f actu rers w ith su f f icien t eco n o mic scale w ill su rv iv e th e sev ere co mpetitio n co min g in th e n ex t f ew years. 6 R ev i ew R es earc h & D ev el opm ent of O p erati ons and Produc t Strateg y Te c h n ol og i e s i n D e p l oy m e n t Th e MP515ST f eatu res a sh o rt-th ro w pro j ectio n len s an d HDMI in terf ace th at co u ld f u lf ill v ario u s u ser applicatio n s an d pro v ide o ptimu m v ideo perf o rman ce Th e SP920p ach iev es brigh tn ess u p to 6000 lu men s th ro u gh a n ew gen eratio n du al lamp o ptical en gin e O n -g oi n g E f f or t s Impro v in g co lo r man agemen t an d reso lu tio n Dev elo pin g sh o rt-th ro w ratio , w ide-screen , an d h igh brigh tn ess pro j ecto rs to satisf y edu catio n al an d co mmercial mark ets Short a n d L on g -Te rm Dev elo p n ew B u s in e s s P la n s DLP an d LCD pro j ecto r tech n o lo gies an d ex ten d th em to o u r O DM/O EM bu sin ess En h an ce pro du ct applicatio n s f o r h o me, o f f ice, an d edu catio n al mark ets M ark et A nal y s is Ma j or S a l e s Ma r k e t s Wo rldw ide Ma r k e t S h a r e In 2009, Qisda w as o n e o f th e to p 3 pro j ecto r man u f actu rers P osi t i v e F a c t or s, N e g a t i v e F a c t or s, a n d S t r a t e g i e s P o s it iv e F a c t o r s Qisda’ s pro j ecto r sh ipmen ts dro pped 5% betw een 2008 an d 2009, w h ich w as better th an a 10% dro p in sh ipmen ts w o rldw ide. Hav in g large eco n o mies o f scale is th e critical f acto r f o r k ey co mpo n en t so u rcin g an d man u f actu rin g o peratio n s. Bo th eco n o mic scale an d leadin g tech n o lo gy allo w u s to be co mpetitiv e in th e f ace o f co n tin u o u s price ero sio n th at w ill o ccu r in th e n ex t f ew years N e g a t iv e F a c t o r s Sh o rter pro du ct lif ecycles, mo re co mpetito rs, an d an disru pted mark et prices S t r a t e g ie s abu n dan ce o f dif f eren t mo dels h av e In crease o peratio n al ef f icien cy to co n tro l in v en to ry an d f u lf ill cu sto mer n eeds Dev elo p n ew DLP an d LCD pro j ecto r tech n o lo gies an d ex ten d th em to o u r O DM/O EM bu sin ess En h an ce pro du ct applicatio n s f o r h o me, o f f ice, an d edu catio n al mark ets 7 R ev i ew of O p erati ons and Produc t Strateg y S c a nner/ P rinter/ C a reS P C Business Unit Operational G u id el ines Cu rren t co mpetitio n w ith in th e in du stry h as led to co n su mer an d IT pro du ct prices to dro p sign if ican tly. Qisda SPC BU h as mo dif ied its bu sin ess o rien tatio n f ro m h igh v o lu me, lo w margin segmen ts to h igh er v alu e, n ich e mark et segmen ts to pu rsu e mo re pro f itable margin s. B u s ines s S c ope O v e rv ie w of O p e r a t i on s In 2009, w e lau n ch ed a min i-ph o to scan n er pro du ct lin e an d h ealth care gatew ay pro du ct an d receiv ed po sitiv e mark et f eedback . In 2010, th ese n ich e pro du ct lin es are f o recast to see sign if ican t gro w th . Fo r traditio n al prin ter pro du ct lin es, Qisda h as pro v ided added-v alu e th ro u gh v ertical in tegratio n an d greater pro j ect co n tro l ef f icien cy f o r O DM cu sto mers. A s a resu lt, Qisda added an o th er h igh -v o lu me pro j ect an d ex pects to see sign if ican t gro w th in 2010. P r od u c t O f f e r i n g Min i-ph o to scan n ers High speed in k j et prin ters Co lo r laser prin ters A DF mo du les Medical electro n ics O ptical to u ch mo du les I nd u s try Ov erv iew C u r r e n t S t a t u s a n d Tr e n d s i n D e v e l op m e n t A cco rdin g to sev eral mark etin g su rv eys, co n su mer prin ter/scan n er rev en u es an d o peratin g margin s h av e dro pped sign if ican tly. Th eref o re, Qisda is f o cu sin g o n bu sin ess segmen ts an d n ich e applicatio n s th at o f f er h igh er margin s. In o rder to pu rsu e special segmen ts in th e mark et, it is critical to f in d n ew segmen ts, def in e specif icatio n s, an d seek o u t su itable ch an n els to pro mo te n ich e segmen ts. A dditio n ally, w e are migratin g in to th e medical electro n ics in du stry u sin g Qisda’ s co re v alu es an d capabilities. Th is in du stry is in a gro w th perio d an d is a mo re stable in du stry co mpared to IT. Ho w ev er, it w ill tak e time to bu ild th e req u ired in f rastru ctu re f o r ev eryth in g f ro m ch an n els to su pply ch ain s. 8 R ev i ew of O p erati ons and Produc t Strateg y Qisda o w n s co mmu n icatio n , imagin g pro cessin g, an d data man agemen t tech n o lo gies as w ell as ch an n el dev elo pmen t k n o w ledge. Th eref o re, w e w ill f o cu s o n th ree dev elo pmen tal o bj ectiv es: 1) In crease scan n in g tech n o lo gy applicatio n s by f o cu sin g o n th e specializ ed min i-ph o to scan n ers an d ex ten din g th ese ef f o rts to o ptical to u ch mo du le applicatio n s 2) Fo r prin ters, w e w ill co n tin u e to co o perate w ith partn ers to seek h igh er v alu e segmen ts 3) In medical electro n ics, w e w ill pro v ide to tal so lu tio n s, in clu din g medical meters, gatew ays an d in stitu tio n -site serv ers. R es earc h & D ev el opm ent Te c h n ol og i e s i n D e p l oy m e n t Paper pick u p in h igh -speed prin ters an d du plex prin tin g co n tro ls High -speed au to matic do cu men t f eeder Stan d alo n e ph o to /f ilm scan n in g tech n o lo gy CMO S-based to u ch pan el tech n o lo gy Embedded SO C system f o r Win CE, mo bile mo du les, an d medical sen so rs Serv er so f tw are applicatio n s, platf o rms, an d in f rastru ctu re f o r th e h ealth y care in du stry Short a n d L on g -Te rm B u s in e s s P la n s Co lo r laser prin ters an d min i ph o to scan n ers are Qisda w ill en h an ce pro du ct f u n ctio n s, in crease ef f icien cy to main tain its leadin g po sitio n Co n tin u e co o peratin g w ith strategic partn ers o n mark et lau n ch Medical dev ices began sh ippin g in 2009 an d w so lu tio n s Deliv er CMO S-based to u ch pan el mo du le in 2010 bo th f o recast to see stro n g gro w th in 2010. co st co mpetitiv en ess an d bo o st o peratio n h igh -speed prin ters an d h av e a su ccessf u l ill co n tin u e w ith ev en mo re pro du cts an d M ark et A nal y s is Ma j or S a l e s Ma r k e t s Wo rldw ide Ma r k e t S h a r e Co lo r laser prin ters w ill o w n n early 3% o f th e w o rldw ide mark et w ith a leadin g bran d partn ersh ip in 2010. Min i ph o to scan n ers are ex pected to h av e mo re th an 70% w o rldw ide mark et sh are in th e A 6 scan n er segmen t in 2010. 9 R ev i ew of O p erati ons and Produc t Strateg y P osi t i v e F a c t or s, N e g a t i v e F a c t or s, a n d S t r a t e g i e s P o s it iv e F a c t o r s Th e n ich e segmen t in min i ph o to scan n ers an d medical electro n ics is gro w in g an d Qisda is demo n stratin g leadin g capabilities co mpared to o th er co mpetito rs Qisda h as stro n g partn ersh ip w ith to p tier co lo r laser prin ter player N e g a t iv e F a c t o r s Pro f its w ill be af f ected by material an d labo r co st in creases in Ch in a S t r a t e g ie s Fo r n ich e segmen ts, Qisda is creatin g mo re pro du ct applicatio n s an d so lu tio n s to in crease rev en u e an d pro f it Fo r co mmo dity segmen ts, Qisda w ill en h an ce strategic co o peratio n w ith cu sto mers to in crease eco n o mies o f scale 10 R ev i ew of O p erati ons and Produc t Strateg y I nf ota inm ent S ol utions Business Unit Operational G u id el ines Th e In f o tain men t So lu tio n s bu sin ess u n it is f o cu sin g o n small an d mediu m to large-siz ed TFT-LCD pan el applicatio n s f o r bo th stan dard an d cu sto miz ed system design s. Th ese applicatio n s in clu de au to mo tiv e so lu tio n s, co n su mer in f o tain men t so lu tio n s, an d in du strial so lu tio n s. Emph asis o n tren dy co n su mer electro n ic dev ices in clu des pro du cts lik e eBo o k R eaders, Tablets, mu ltimedia ro u ters, digital ph o to f rames an d po w er gatew ays. Beh in d th e pan el su pply stren gth o f th e Gro u p, w e’ v e po sitio n ed o u rselv es at mo re adv an ced lev el v is-à-v is o u r co mpetito rs in th e IT in du stry. B u s ines s S c ope O v e rv ie w of O p e r a t i on s A u t o m o t iv e S o lu t io n s A u to mo tiv e So lu tio n s f o cu ses o n pro v idin g O DM/O EM serv ices f o r au to mo tiv e in f o tain men t systems, in clu din g au dio , v ideo , an d n av igatio n systems th at co mbin e Blu eto o th an d Telematics in acco rdan ce w ith cu sto mer req u iremen ts. C o n s u m e r I n f o t a in m e n t S o lu t io n s Co n su mer In f o tain men t so lu tio n s f o cu s o n dev elo pin g tren dy co n su mer in f o tain men t pro du cts, in clu din g eBo o k R eaders, Tablets, mu ltimedia ro u ters (in tegrated w ireless n etw o rk tech n o lo gy w ith mu ltimedia f u n ctio n ality) digital ph o to f rames an d po w er gatew ays. I n d u s t r ia l S o lu t io n s In du strial so lu tio n s co v er 7” to 65” displays f o r in du strial applicatio n s. Th is mark et co v ers pro f essio n al graph ic display so lu tio n s w ith h an d-w ritin g in pu t, graph ic so lu tio n s w ith mu lti-to u ch o r du al-h an d-w ritin g in pu t, as w ell as su rv eillan ce an d medical applicatio n s. P r od u c t O f f e r i n g s A u t o m o t iv e S o lu t io n s In f o tain men t systems in clu din g f ro n t an d rear seat in f o tain men t In tegratin g in f o rmatio n an d en tertain men t in to in f o tain men t systems C o n s u m e r I n f o t a in m e n t S o lu t io n s eBo o k R eaders, Tablets, mu ltimedia ro u ters, digital ph o to f rames an d po w er gatew ays A f u ll ran ge o f mu ltimedia an d in f o tain men t dev ices alo n g w ith in tern et serv ices th ro u gh Wi-Fi an d 3G n etw o rk s 11 R ev i ew I n d u s t r ia l S o lu t io n s of O p erati ons and Produc t Strateg y Display so lu tio n s f o r special applicatio n s lik e pro f essio n al graph ics, edu catio n , su rv eillan ce, o u tdo o r media, gamin g, digital sign age, etc. P r od u c t F e a t u r e s A u to mo tiv e So lu tio n s w o rk s o n dev elo pin g n ew gen eratio n in f o tain men t so lu tio n s th at co u ld meet cu sto mer req u iremen ts in 3 to 5 years. Platf o rm dev elo pmen t f o cu ses o n u ser-f rien dlin ess, style, af f o rdability, du rability, an d q u ality Co n su mer In f o tain men t So lu tio n s pro du cts f o cu s o n dev elo pin g n ew in f o rmatio n an d en tertain men t dev ices f o r bran ded co mpan ies. By in tegratin g Wi-Fi an d 3.5G w ireless capabilities in to a co n su mer dev ice, u sers can access th e in tern et an yw h ere, an ytime In du strial So lu tio n s pro du cts are ex tremely reliable, du rable, an d co me w ith an ex ten ded w arran ty. We also w o rk w ith leadin g in du strial PC mak ers, to u ch so lu tio n mak ers an d 3D display so u rces to pro v ide cu sto mers in tegrated so lu tio n s f o r th eir applicatio n s I nd u s try Ov erv iew C u r r e n t S t a t u s a n d Tr e n d s i n D e v e l op m e n t Wh ile matu re au to mark ets h av e beco me satu rated, o th er emergin g mark ets are stren gth en in g th eir co mpetitiv en ess. In o rder to f u lf ill th e v ario u s req u iremen ts o f dif f eren t regio n s, A u to mo tiv e So lu tio n s pro du cts are mo v in g to w ard lo w er co st pro du ctio n & materials an d th e co mbin atio n o f mu ltiple applicatio n s to in crease v alu e. Th e applicatio n o f small to mediu m-siz ed pan els (3”-10”) w ith in tegrated in tern et co n n ectiv ity an d mu ltimedia f u n ctio n ality h as gro w n dramatically in recen t years. Th e mo st po pu lar pro du cts in clu de eBo o k R eaders, Tablets, mu ltimedia ro u ters an d digital ph o to f rames. To geth er w ith th e stan dardiz atio n o f digitaliz ed co n ten t an d th eir accelerated pro mo tio n by lo cal go v ern men ts, w e believ e th at mu ltimedia applicatio n s f o r po rtable co n su mer electro n ics dev ices w ill co n tin u e to gro w in th e n ear f u tu re. Th e mark et f o r in du siz e f o r larger th an ch aracteristics o f cases—th eref o re th strial display so lu tio n s is still in a prematu re stage bu t it is gro w in g f ast. Th e mark et 26” pu blic displays is pro j ected to be o v er 2 millio n u n its in 2010. Th e bu sin ess in du strial so lu tio n s are: 1) man y mo dels w ith small q u an tities 2) ten der e su ppo rt o f k ey co mpo n en t v en do rs is critical to bu sin ess su ccess. R es earc h & D ev el opm ent Te c h n ol og i e s i n D e p l oy m e n t Blu eto o th h an d-f ree an d A 2DP applicatio n Ho le-less IR co n tro l tech n o lo gy 6” an d 9” EPD w ith to u ch pan el R esistiv e, capacitiv e, o ptical an d magn etic LCD to u ch Display diagn o stic & mo n ito rin g so f tw are dev elo pmen Embedded Wi-Fi co n n ectio n ; in tegratio n w ith 3.5 G co 3D display implemen ts Partial z o o min g f ro m f rame bu f f er f o r mu lti-display co n 12 pan els t n n ectio n tro l R ev i ew O n -g oi n g E f f or t s of O p erati ons and Produc t Strateg y Bu ild u p Win CE capability Clo u d Co mpu tin g Dev ices Wireless LA N, an d DLNA tech n o lo gy Satellite an d IP radio f u n ctio n V ario u s digital TV stan dards (ISDB, DMB-TH, DV B-H, A TSC) En h an ce A n dro id/Win CE design capability Ef f icien t po w er / battery sav in g mo de 3D Displays Displays w ith h igh brigh tn ess Displays w ith LED back ligh t To tal so lu tio n s f o r digital sign age Display f o r graph ics u sers w ith bo th pen in pu t & S h or t a n d L on g -Te r m mu lti-to u ch B u si n e ss P l a n s A u t o m o t iv e S o lu t io n s Establish relatio n sh ips w ith glo bal tier-1 cu sto mers an d sell pu re display systems in th e sh o rt-term In th e lo n g-term, ex pan d ex ten sio n mo dels based o n cu rren t co -dev elo pmen t platf o rms to f u lf ill cu sto mers’ lo w er co st an d h igh er v alu e req u iremen ts to co mplete th eir ro admap C o n s u m e r E le c t r o n ic S o lu t io n s Co n so lidate th e ex istin g mark et sh are an d activ ely cu ltiv ate a po sitiv e co n n ectio n w ith cu sto mers to f acilitate po ten tial bu sin ess o ppo rtu n ities In tegratio n o f v ario u s mu ltimedia f eatu res to geth er w ith n etw o rk co n n ectiv ity an d ex pan sio n o f th e n ew po rtable co n su mer electro n ic dev ice secto r in 2010 I n d u s t r ia l S o lu t io n s In tegrate in du strial TFT-LCD pan els w ith specif ic applicatio n systems to dev elo p pro du cts f o r pu blic display, in du strial display, an d v ario u s special display applicatio n s M ark et A nal y s is Ma j or sa l e s m a r k e t s A u to mo tiv e so lu tio n s pro du cts: Eu ro pe, J apan , an d Ch in a Co n su mer in f o tain men t dev ices: No rth A merica, Eu ro pe, an d A sia In du strial so lu tio n pro du cts: Eu ro pe, A sia, an d th e A mericas 13 R ev i ew Ma r k e t S h a r e of O p erati ons and Produc t Strateg y O bserv in g co n su mer beh av io r in recen t years h as sh o w n th at peo ple are n o w mo re w illin g to spen din g mo re w h en pu rch asin g n ew perso n al electro n ic dev ices. In sh o rt, it is f o reseeable th at th e mark et deman d f o r eBo o k R eaders, Tablets, mu ltimedia ro u ters an d digital ph o to f rames w ill co n tin u e to in crease in f u tu re. In th e past, w e su ccessf u lly dev elo ped digital ph o to f rames th at captu red 8% o f th e glo bal mark et. In 2010, w e are targetin g 10% o f th e w o rldw ide mark et sh are. P osi t i v e F a c t or s, N e g a t i v e F a c t or s, a n d S t r a t e g i e s P o s it iv e F a c t o r s A u to mo tiv e So lu tio n s w ill tak e u p as mu ch as 40% o f th e co st o f a car. Th is h as beco me th e maj o r gro w th area amo n g all au to mo bile co mpo n en ts. New IT applicatio n s are co n sidered a k ey driv in g f o rce in au to mo tiv e so lu tio n s. It is a n ich e mark et f o r IT co mpan ies to en ter th e f ield o f au to mo bile applicatio n s Co n su mer in f o rmatio n dev ices main ly emph asiz e EPD tech n o lo gy an d TFT-LCD pan els applicatio n s. With th e Gro u p' s v ertical in tegratio n capabilities co u pled w ith great pro cu remen t po w er, w e are in a co mparably co mpetitiv e po sitio n in th e in du stry Sign age display sh ipmen t q u an tities are ex pected to f o r n ich e mo n ito r dev elo pmen t in crease 45% an n u ally—a so lid su ppo rt N e g a t iv e F a c t o r s Th e co n serv ativ e an d clo sed o f f au to mo bile in du stry su pply ch ain is th e greatest ch allen ge f o r IT co mpan ies. A lo n g h isto ry an d su stain able su pply to au to mark et is req u ired to be reco gn iz ed as a q u alif ied su pplier to car mak ers an d tier-1 su ppliers Th e co n su mer in f o tain men t so lu tio n s mark et is co n sidered a mo re ch allen gin g in du stry to en ter du e to div erse cu sto mer specif icatio n req u iremen ts, price sen sitiv ity an d f lu ctu atio n o f sales f o recasts. A s a resu lt, it is dif f icu lt to mak e pro du ct lif ecycle pro j ectio n s an d material preparatio n s. Th eref o re, w e mu st pay atten tio n to mark et tren ds an d co n tin u o u sly in co rpo rate n ew tech n o lo gies in to th e pro du ct lin e Th e In du strial So lu tio n bu sin ess div isio n w ill lev erage co rpo rate po w er & reso u rces to en su re th e su pply o f special-pu rpo se LCD pan els an d allo cate k ey co mpo n en ts to o th er bu sin ess div isio n s to o v erco me th e ch allen ges o f small v o lu me pro cu remen t S t r a t e g ie s En gage k ey cu sto mers in j o in t-dev elo pmen t pro j ects Tak e adv an tage o f stro n g pan el an d EPD su pply f ro m th e Gro u p an d in crease co rpo rate stren gth in mu ltimedia image tu n in g, n etw o rk in g co mpatibility, h igh -en d So C dev elo pmen t ex perien ce, ID design capability, an d so f tw are in tegratio n sk ills U tiliz e th e Gro u p in tegratio n capabilities ef f ectiv ely to allo w u s to be in a mo re adv an tageo u s po sitio n in th e pan el su pply ch ain 14 R ev i ew of O p erati ons and Produc t Strateg y Mob il e C om m unic a tions Business Unit Operational G u id el ines Qisda h as a w ealth o f ex perien ce in glo bal mo bile ph o n e O DM bu sin ess th at allo w s u s to ef f icien tly u tiliz e o u r design , man u f actu rin g, & serv ice reso u rces. Th e Mo bile Co mmu n icatio n bu sin ess u n it’ s co re co mpetitiv en ess lies in o u r pro du ct in n o v atio n an d design capabilities. B u s ines s S c ope O v e rv ie w of O p e r a t i on s Sin ce Qisda re-en tered mo bile ph o n e mark et as a pu re O DM su pplier th ree years ago , w e h av e w o rk ed clo sely w ith bran d cu sto mers, teleco ms, an d tech n o lo gy partn ers. Cu rren tly, pro gress in th e bu sin ess lin e is in lin e w ith ex pectatio n s. Qisda su ccessf u lly sh ipped 3G ph o n es to to p-f iv e bran ded cu sto mer begin n in g in th e th ird q u arter o f 2008. Th e co mpan y co n tin u es to ex pan d bu sin ess th ro u gh th e co mmercializ atio n o f pro du cts to en su re eco n o mies o f scale an d capital in v estmen t in th e dev elo pmen t o f h igh v alu e-added pro du ct lin es. We h av e spen t years o n th e dev elo pmen t o f mo bile ph o n es an d w ireless co mmu n icatio n s mo du les w h ile deliv erin g pro du cts to to p f iv e mo bile ph o n e bran d cu sto mers. With ex ten siv e ex perien ce in mo bile ph o n e an d w ireless co mmu n icatio n mo du le dev elo pmen t, Qisda ef f icien tly u tiliz es its v alu able reso u rces to dev elo p leadin g pro du cts f o r o u r cu sto mers. P r od u c t O f f e r i n g s WCDMA /HSDPA mo bile ph o n es EDGE/WCDMA /HSPA smartph o n e & tablet dev ices GSM/GPR S/WCDMA /HSPA w ireless mo du les HSPA (3.5G) Wireless LA N cards P r od u c t F e a t u r e s Qisda main tain s a co n sisten t v ersatility w h ile co n tin u in g o u r dev o tio n to aesth etics an d co n su mer lif estyle n eeds. With leadin g mo bile co mmu n icatio n tech n o lo gy—lik e 3G/3.5G mo bile tech n o lo gy an d po w erf u l mu ltimedia f eatu res—co n su mers can en j o y a pleasu rable ex perien ce w ith in n o v ativ e tech n o lo gy. O v er th e past f ew years, w e f o cu sed o n th e dev elo pmen t o f tablet dev ices by in tegratin g w ireless co mmu n icatio n s an d to u ch co n tro l in terf aces w ith n ew in tern et applicatio n s. In additio n to 3G ph o n es, Qisda h as su ccessf u lly sh ipped 3.5G WLA N cards & U SB do n gles to th e A sian & Eu ro pean teleco mmu n icatio n s cu sto mers. 15 R ev i ew I nd u s try Ov erv iew of O p erati ons and Produc t Strateg y I n d u st r y Tr e n d s Th e 2010 glo bal mo bile ph o n e sh ipmen t f o recast po in ts to w ard 12% gro w th o v er 2009 sh ipmen ts. Th e sh ipmen t o f smartph o n es, w h ich o f f er w ider ran ge o f in tern et serv ices, in creased 29% co mpared to 2008. A h igh rate o f pen etratio n in dev elo ped co u n tries in Eu ro pe, No rth A merica, an d East A sia, alo n g w ith th e tren d to w ard smartph o n e/in tern et applicatio n s led by th e iPh o n e & Go o gle A n dro id, n ew mo bile ph o n e deman d w o u ld co me main ly f ro m th e replacemen t mark et an d f irst-time deman d in dev elo pin g co u n tries lik e Braz il, R u ssia, In dian , an d Ch in a (BR IC). We an ticipate a stro n g deman d f ro m Ch in a, In dia, an d Braz il. Ho w ev er, w e believ e th at th e co n su mers w o u ld n o t co mpro mise th eir deman ds f o r perso n al en tertain men t. Cu sto mer pref eren ce is to f o cu s o n af f o rdably priced dev ices th at pro v ide mo re in tegrated f eatu res & serv ices lik e to u ch co n tro l f u n ctio n s f o u n d in smartph o n es an d tablet dev ices. C u r r e n t S t a t u s a n d Tr e n d s i n D e v e l op m e n t We ex pect WCDMA /HSPA capable mo bile dev ices to reach 37% o f to tal mo bile ph o n e v o lu me. We co n sider th is to be a maj o r o ppo rtu n ity in th e n ex t 3-5 years. O v er th e past 4 years, h eav y in v estmen t in Qisda’ s co re co mpeten ce in 3G/3.5G tech n o lo gy h as po sitio n ed th e co mpan y to capitaliz e o n th is tren d w h ile co n tin u in g to dev elo p 3G/3.5G smartph o n es an d mo bile in tern et dev ices. R es earc h & D ev el opm ent Te c h n ol og i e s i n D e p l oy m e n t GSM/GPR S/EDGE f eatu re ph o n es & Win do w s Mo bile smartph o n es WCDMA /HSDPA f eatu re ph o n es WCDMA /HSDPA /HSU PA Win do w s Mo bile smartph o n es GSM/TD-SCDMA Du al-Mo de f eatu re ph o n es U MA /SIP Du al-Mo de Win do w s Mo bile smartph o n es GSM/GPR S/WCDMA /HSPA w ireless co mmu n icatio n mo du les HSPA w ireless LA N cards WIMA X Du al-mo de smartph o n e platf o rms O n -g oi n g E f f or t s HSPA an d & LTE Platf o rm an d Pro du cts (Smartph o n e, & Tablet dev ices) O pen o peratin g system (A n dro id /Win do w s Mo bile ) platf o rm dev elo pmen t To u ch Screen U ser In terf ace Fix ed Mo bile Co n v ergen ce GPS & Lo catio n Based Serv ice WiMA X /Mo bile n etw o rk Mu lti-Mo de Mo bile A pplicatio n Near Field Co mmu n icatio n 16 S h ort and L ong -Term R ev i ew B u s ines s P l ans of O p erati ons and Produc t Strateg y Main tain an d dev elo p bu sin ess relatio n sh ips w ith to p 5 bran d O DM cu sto mers Th e 3G mark et w ill co n tin u e to gro w ; w ith stro n g 3G dev elo pmen t ex perien ce an d o perato r cu sto miz atio n capabilities, Qisda w ill stren gth en o u r 3G/3.5G R & D capabilities to bu ild u p O DM bu sin ess an d en h an ce o u r cu sto mer po rtf o lio M ark et A nal y s is Ma j or S a l e s Ma r k e t s Wo rk in g w ith th e to p 5 bran ded O DM cu sto mers, o u r 3G ph o n es h av e been sh ippin g to Eu ro pe, LA TA M, an d A sia sin ce th e th ird-q u arter o f 2008 3.5G w ireless mo du les are main ly so ld to th e n o tebo o k co mpu ter an d IT cu sto mers in Taiw an . Th ese cu sto mers th en in tegrate o u r w ireless mo du les in to th eir pro du cts an d sell th em in Eu ro pe an d th e U S. U SB do n gles are so ld main ly to mo bile teleco ms in A sia-Pacif ic S tra te g ie s Stren gth en 3G/3.5G R & D capability an d o perato r co mplian ce to gain mo re co mpetitiv e adv an tages to o f f set o u r smaller eco n o mical scale Lev erage in -h o u se an d in tra-gro u p v ertical in tegratio n to gain access to th e latest tech n o lo gies an d realiz e co st ben ef its Tak e adv an tage o f o u r h igh ly regarded in du strial design capabilities to dev elo p elegan t pro du cts w ith u ser-f rien dly in terf ace 17 Cor p or ate G ov er nanc e C orp orate G ov ernanc e C orporate G ov ernanc e S tru c tu re Qisda co mplies w ith Co mpan y Law , th e Secu rities an d Ex ch an ge A ct, an d o th er relev an t law s an d regu latio n s o f th e R epu blic o f Ch in a to f o rmu late an d implemen t th e co mpan y' s co rpo rate go v ern an ce stru ctu re. Qisda' s co rpo rate go v ern an ce stru ctu re mo del is made u p o f tw o u n its, th e bo ard o f directo rs an d th e au dit co mmittee. Th e au dit co mmittee is made u p o f members in depen den t o f th e bo ard o f directo rs. Members o f th e bo ard o f directo rs (in clu din g in depen den t directo rs) are selected based o n sh areh o lder v o tes. In prin cipal, th e respo n sibilities o f th e bo ard o f directo rs are carried o u t in acco rdan ce w ith relev an t law s, co mpan y regu latio n s, an d sh areh o lder reso lu tio n s. Th e bo ard o f directo rs is also respo n sible f o r su perv isio n o f co mpan y man agemen t an d o v erall o peratio n al statu s. Th e au dit co mmittee' s respo n sibilities in clu de accu rate f in an cial repo rtin g, selectio n an d perf o rman ce o f in depen den t acco u n tan ts, ef f ectiv e implemen tatio n o f in tern al co n tro ls in acco rdan ce w ith relev an t law s an d regu latio n s, an d man agemen t o f ex istin g an d/o r po ten tial risk . Qisda h as alw ays believ ed th at u ph o ldin g sh areh o lder righ ts an d in terests is a primary task . In additio n to h av in g a pro f essio n al man agemen t team rich in ex perien ce, th e bo ard o f directo rs also po ssesses th e n ecessary ex ecu tiv e k n o w ledge, tech n o lo gical k n o w -h o w , pro f essio n al acco mplish men ts, an d dev o tio n to th e max imiz in g sh areh o lder righ ts an d in terests. Th e bo ard o f directo rs h as 9 members (in clu din g 3 in depen den t directo rs). Th e ch airman is elected by th e bo ard. Bo ard members all h av e 5 o r mo re years ex perien ce in bu sin ess admin istratio n , legal, f in an ce, acco u n tin g, o r o th er pro f essio n al ex perien ce req u ired by th e co mpan y. P rim ary R ol es of G ov ernanc e E ntities Qisda' s bo ard o f directo rs co n siders co mpan y an d sh areh o lder in terests as to p prio rities in perf o rmin g o peratio n al ev alu atio n s an d passin g sign if ican t reso lu tio n s. Th e au dit co mmittee f u lf ills a su perv iso ry ro le th ro u gh pru den t an d caref u l o v ersigh t o f th e o peratio n s o f th e co mpan y an d th e bo ard o f directo rs. B oa r d of D i r e c t or s A cco rdin g to th e Secu rities an d Ex ch an ge A ct A rticle 26, Paragraph 3, Su bparagraph 8 regu latio n s, Qisda created th e "R egu latio n s Go v ern in g Pro cedu re f o r Bo ard o f Directo rs Meetin gs". O f f icial bo ard o f directo r bu sin ess, o peratio n al pro cedu res, reco rds o f o f f icial bu sin ess, an d an n o u n cemen ts o n co mpan y an d o th er related matters are carried o u t acco rdin g to th ese regu latio n s. Qisda' s bo ard o f directo rs sh all co n v en e at least o n ce per q u arter. Th e gu idin g po licy o f th e bo ard members sh all be to max imiz e sh areh o lder righ ts an d in terests th ro u gh u prigh t man agemen t, f aith f u l o bligatio n , th e h igh est degree o f perso n al o v ersigh t, an d pru den t applicatio n o f th e au th o rity o f th eir po sitio n s. A u d i t C om m i t t e e In 2008, th e co mpan y in stalled in depen den t directo rs an d an au dit co mmittee in acco rdan ce w ith th e Secu rities an d Ex ch an ge A ct an d sh areh o lder reso lu tio n s. Th ro u gh th e "A u dit Co mmittee Ch arter" as def in ed by th e bo ard o f directo rs, th e au dit co mmittee preserv es an d stren gth en s th e o rgan iz atio n ' s strategic po licies an d w o rk s to in crease o peratio n al ef f icien cy th ro u gh practical 18 C orp orate G ov ernanc e applicatio n o f co rpo rate go v ern an ce. Qisda' s au dit co mmittee mu st co n v en e at least o n ce per q u arter an d req u est th e atten dan ce o f acco u n tan ts, in tern al au dito rs, risk man agemen t, legal, an d f in an ce departmen t represen tativ es. By pro v idin g in f o rmatio n o n au dit co mmittee repo rts an d in q u iries in to recen t f in an cial repo rtin g statu s, th e resu lts o f in tern al au dits, sign if ican t litigatio n , an d f in an cial o peratin g statu s, th e au dit co mmittee can assist in v esto rs in en su rin g th at co mpan y go v ern an ce is tran sparen t an d sh areh o lder righ ts an d in terests are saf egu arded. B oard of D irec tors B oa r d Me m b e r s Title Na m e Ch airm an K .Y . Lee Direc to r Stan Sh ih Direc to r Sh eaf f er Lee Direc to r Darly V en tu re I n c . Hu i Hs iu n g Direc to r AU Optro n Co rp. K u o -Hs in Ts Ch in a Dev elo pm I n d u s trial B Daw -Y i, Hs ic s ai Date: April 20, 2010 E d u c a tio n & E x p er ien c e MB A, Sw itzerlan d I MD B .S., Elec tric al En g in eerin g , N atio n al Taiw an U n iv ers ity V ic e P res id en t o f Ac er P C P ro d u c t Mark etin g M.S., Elec tro n ic En g in eerin g , N atio n al Ch iao Tu n g U n iv ers ity Ch airm an o f Ac er G ro u p EMB A, N atio n al Ch en g Ch i U n iv ers ity B .S., Elec tric al En g in eerin g , N atio n al Ch en g K u n g U n iv ers ity As s o c iate V ic e P res id en t, Ac er Am eric a P res id en t, B en Q Co rp. P h .D., P h y s ic s , U n iv ers ity o f Calif o rn ia-B erk eley B .S., P h y s ic s , N atio n al Taiw an U n iv ers ity EV P o f AU Optro n ic s Co rp. B .A., B u s in es s Ad m in is tratio n , N atio n al Ch en g K u n g U n iv ers ity MB A, Th e Oh io State U n iv ers ity en t G M, W ealth Man ag em en t G ro u p & P res id en t, Direc to r an k : Taiw an Sec u rities , Tais h in F in an c ial Ho ld in g Co ., Ltd . u EMB A, N atio n al Ch en g Ch i U n iv ers ity B .S., Mac h an ic al En g in eerin g , N atio n al Ch en g K u n g U n iv ers ity I n d epen d en t Ch in g -Y an g Su V ic e CEO, Y u lo n G ro u p Direc to r Direc to r, Ch in a Mo to r Co rp., Y u lo n Mo to r Co rp. Ch airm an , F o rtu n e Mo to rs Co ., Ltd . P h .D., Th e Stru c tu re o f Tec h n o lo g y , Dem an d , an d ,Mark et o f U S Au to m o b ile I n d u s try , MI T M.S., Tran s po rtatio n En g in eerin g , N atio n al Taiw an U n iv ers ity I n d epen d en t K an e K . W an g Ch air P ro f es s o r, G rad u ate I n s titu tio n o f I n d u s trial Direc to r Ec o n o m ic s , N atio n al Cen tral U n iv ers ity I n d epen d en t Direc to r Min -Ts u n g Lan P h .D., Co m pu ter Arc h itec tu re, U CLA B .S. Elec tric al En g in eerin g , N atio n al Taiw an U n iv ers ity Co n s u ltan t, Tran s As ia Telec o m G M, N x N et Sy s tem s , I n c . Sr. V P , V is ta I n c u b atio n Tec h Co rp CEO, Ac er I n tern et Serv ic es G M, G reater Ch in a R eg io n , Cirru s Lo g ic V P an d Depu ty Co u n try Man ag er, AT& T Ch in a Mem b er o f Tec h n ic al Staf f ( D-MTS) , AT& T B ell Lab s 19 C u r r en t P o s itio n s Ch airm an : B en Q Co rp., AU Optro n ic s Co rp. Direc to r: Dax o n Tec h n o lo g y I n c ., Darf o n Elec tro n ic s Co rp., SiP ix Tec h n o lo g y I n c ., Lex tar Elec tro n ic s Co rp. Ch ief Co n s u ltan t: iD So f tCapital I n c . Direc to r: Ac er I n c ., Taiw an Sem ic o n d u c to r Man u f ac tu rin g Co m pan y , W is tro n Co rp. Ch airm an : Darf o n Elec tro n ic s Co rp., Dazzo Tec h n o lo g y Co rp., Dars h in Mic ro elec tro n ic s In c . Direc to r: B en Q Co rp., Lite-On I T Co rp. Ch airm an , Q So lu tio n s I n c Direc to r: AU P res id en t, Q V P & G M, I n f B u s in es s G ro is d a Elec tro n ic s Co rp., Q is d a ., SiP ix Tec h n o lo g y I n c . Optro n ic s Co rp. is d a Co rp. o rm atio n Tec h n o lo g y Dis play u p, AU Optro n ic s Co rp. MD, Ch in a Dev elo pm en t F Co rpo ratio n Ch airm an , G ran d Cath ay Co rpo ratio n Ch airm an , Jo y Tec h n o lo g y Ltd . P res id en t, CMI Ho ld in g s Ltd in an c ial Ho ld in g Sec u rities ( Sh en zh en ) Co ., . Direc to r an d P ro f es s o r, Ch in a U n iv ers ity o f Tec h n o lo g y I n d epen d en t Direc to r, F o rm o s a Ad v an c ed Tec h n o lo g ies Co ., Ltd Direc to r, B o s to n Lif e Sc ien c e V en tu re Co ., G lo b al Strateg ic I n v es tm en t Man ag em en t In c . Su perv is o r, P latin u m Optic s Tec h n o lo g y I n c . Co n s u ltan t, V o x b o n e S.A. Ma t e r i a l R e sol u t i on s A p p r ov e d b y B oa r d Me e t i n g s D ate 20 0 9/0 3/17 N o. 1st B o ar d M eet i ng A p p rov al E v ents 20 0 9/0 4 /28 20 0 9/0 8/27 20 0 9/10 /20 2nd B o ar d M eet i ng 3r d B o ar d M eet i ng 4 t h B o ar d M eet i ng C orp orate G ov ernanc e Accep t ed Q i sda’ s 20 0 8 b u si ness r ep o r t and fi nanci al st at em ent s Accep t ed t he p r o p o sal fo r 20 0 9 defi ci t co m p ensat i o n b y cap i t al r eser v e El ect i o n o f a new i ndep endent di r ect o r Ap p r o v ed t he p r o p o sal fo r r el easi ng fo r di r ect o r s fr o m no n-co m p et i t i o n Ap p r o v ed t o co nv ene 20 0 9 Q i sda Annu al m eet i ng o f shar eho l der s Ap p r o v ed t o i nv est U S$ 1 m i l l i o n i n Y aw han ( Su z ho u ) C o ., Lt d. v i a Q i sda ( L) C o r p . and adj u st t he i nv est m ent st r u ct u r es i n M ai nl and C hi na. Ap p r o v ed t o r em o v e t he no n-co m p et i t i o n r est r i ct i o ns o n Q i sda m anag er s w ho hav e b een ap p o i nt ed t o act as t he di r ect o r s o f t he ent er p r i se i nv est ed b y Q i sda i n t he M ai nl and C hi na Accep t ed Q i sda’ s 20 0 9 Q 1 fi nanci al st at em ent s Accep t ed Q i sda’ s 20 0 9 H 1 fi nanci al st at em ent s Ap p r o v ed t he fu nd l endi ng t o t he su b si di ar y o f Q i sda C z ech s.r .o . Accep t ed Q i sda’ s 20 0 9 Q 3 fi nanci al st at em ent s Creating Value for Shareholders and G iv ing B ac k to the Com m unity is an I ntegral P art of Q isda Value Qisda’ s bo ard o f directo rs aims to co n tin u e actin g in th e best in terest o f o u r sh areh acco rdan ce w ith co mmo n ly accepted co rpo rate go v ern an ce prin ciples. It’ s w ith stan dard th at o u r bo ard members w o rk clo sely w ith a dedicated team o f au dit co certif icate pu blic acco u n tan ts in carryin g o u t its su perv iso r du ty. Th e bo ard members sh all ben ch mark Qisda again st best-in -class co rpo rate go v ern in saf egu ardin g sh areh o lders’ in terests an d mak in g reco mmen datio n s th at w ill en h retu rn -o n -in v estmen t to o u r sh areh o lders. o lders, in th e h igh est mmittee an d an ce practices an ce by K . Y . L e e , C h a i r m a n 20 C orp orate G ov ernanc e C or p or a t e E x e c u t i v e O f f i c e r s Title Na m e Date: April 20, 2010 P er s o n n el E d u c a tio n & E x p er ien c e O th er C u r r en t P o s itio n s P h .D., P h y s ic s , U n iv ers ity o f Calif o rn ia-B erk eley Ch airm an , Q is d a B .S., P h y s ic s , N atio n al Taiw an U n iv ers ity P res id en t an d CEO Hu i Hs iu n g Elec tro n ic s Co rp., Q is d a EV P o f AU Optro n ic s Co rp. So lu tio n s I n c ., SiP ix Tec h n o lo g y , I n c . Direc to r: AU Optro n ic s Co rp. Ex ec u tiv e V ic e P res id en t Herm it Hu an g V ic e P res id en t & CTO, Ad v an c ed Tec h n o lo g y Cen ter K elv in Lee Sen io r V ic e P res id en t, G lo b al C.M. W u Man u f ac tu rin g Operatio n s V ic e P res id en t & G M, V ic e P res id en t & G M, Mo n ito r B U P ro j ec to r B U V ic e P res id en t & G M, I n f o tain m en t So lu tio n s B U V ic e P res id en t, G lo b al SCM Cen ter V ic e P res id en t, G lo b al Man u f ac tu rin g Operatio n s V ic e P res id en t, V ertic al I n teg ratio n Operatio n s V ic e P res id en t & CDO, Creativ e Des ig n Cen ter V ic e P res id en t & F in an c e Cen ter CF O, Spark Hu an g April Hu an g Alph a Ts ai Jo e Hu an g Mark Hs iao Jam es T. W an g Man f red W an g Direc to r: Q is d a Elec tro n ic s Elec tro n ic s En g in eerin g , N atio n al Taipei I n s titu te o f Co rp., Q is d a So lu tio n s I n c . Tec h n o lo g y P h .D., Elec tric al En g in eerin g , N atio n al Taiw an U n iv ers ity M.S., Elec tric al En g in eerin g , N atio n al Ch en g K u n g EMB A, P ac if ic W es tern U n iv ers ity B .S., Elec tro n ic s En g in eerin g , Ch u n g Y u an Ch ris tian - U n iv ers ity EMB A, N atio n al Ch en g Ch i U n iv ers ity - B .S., P h y s ic s , Tam k an g U n iv ers ity B .S., Ec o n o m ic s , N atio n al Taiw an U n iv ers ity Alph a P u b lis h in g I n c . To k y o , Japan - Mark etin g Man ag er o f Dax o n Tec h n o lo g y I n c . EMB A, N atio n al Ch en g Ch i U n iv ers ity M.S., Elec tric al En g in eerin g , State U n iv ers ity o f N ew Direc to r: Q is d a Elec tro n ic s Co rp., Q is d a So lu tio n s I n c . U n iv ers ity Y o rk - B .S., Elec tric al En g in eerin g , N atio n Taiw an U n iv ers ity . EMB A, Ts in g h u a U n iv ers ity in B eij in g MB A, U n iv ers ity o f G reen w ic h B .S., Ch em ic al En g in eerin g , Tam k an g U n iv ers ity As s o c iate V ic e P res id en t o f AU Optro n ic s Co rp. P h . D., Mec h an ic al En g in eerin g , Oh io State U n iv ers ity B .S., Mec h an ic al En g in eerin g , N atio n Taiw an U n iv ers ity M.S., I n d u s trial Des ig n , Th e State Ac ad em y o f F in e Arts an d Des ig n in Stu ttg art B .S., Applied Arts , F u Jen Cath o lic U n iv ers ity M.S., U n iv ers ity o f Mas s ac h u s etts Dav id W an g P res id en t, Q is d a Co rp. EMB A, N atio n al Taiw an U n iv ers ity B .S., F in an c e, N atio n al Ch u n g Hs in g U n iv ers ity CEO o f Y ag eo , F erro x c u b e CF O o f Y ag eo , Eu ro pe 21 - Su perv is o r, Taiw an Des ig n Cen ter Direc to r: Lite-On I T Co rp. Su perv is o r: Q is d a Elec tro n ic s Co rp., Q is d a So lu tio n s I n c ., B riv iew Tec h n o lo g y Co rp. C orp orate G ov ernanc e G rou p Org aniz ation C om p a n y O r g a n i z a t i on C h a r t D at e: A p r il 2 0 , 2 0 1 0 S h ar eh old er ’ s M eet ing A ud it C om m it t ee Boar d of D ir ect or s A ud it Of f ice C h air m an P r esid ent & C E O C r eat iv e D esig n C ent er Global M f g . Op er at ions A d v anced T ech nolog y C ent er S uz h ou S t r at eg ic P lanning Of f ice M ex ico M easur em ent & R eg ulat or y C er t if icat ion D iv ision C z ech P ublic C or p . C om m D ep t . T ech nical W r it er D ep t . Global S C M C ent er Global Business Op er at ions V er t ical I nt eg r at ion Op er at ions F inance C ent er M onit or BU H R C ent er P r oj ect or BU I T S D iv ision S P C L eg al Of f ice BU I nf ot ainm ent S olut ions BU M obile C om m unicat ions BU L if est y le P r od uct s BU Global S ales & S er v ice 22 Corporate Governance A f f i l i a t e d C om p a n i e s D at e: D ecem ber 3 1 , 2 0 1 0 Qisda Corporation Manufacturing Subsidiarie s 1 0 0 % Sal e s Subsidiarie s Qisda M e x ic a n a S . A . D e C . V . 1 0 0 % I nv e stm e nt/ H o l ding C o m p anie s Qisda C z e c h s. r . o . 1 0 0 % Qisda ( S u z h o u ) C o . , Lt d. ( QA LA ) 1 0 0 % Qisda E l e c t r o n ic s ( S u z h o u ) QC H K 1 0 0 % Qisda O p t r o n ic s ( S u z h o u ) QC H K 7 2 .2 % Qisda ( S h a n g h a i) C o . , Lt d. QC H K 1 0 0 % Qisda P r e c isio n I n du st r y ( S u Z h o u ) 1 5 .8 % Qisda E l e c t r o n ic s C o r p . ( QT E S ) ( QC S Z ) QC H K 1 0 0 % 3 0 .7 % Qisda A m e r ic a C o r p . ( QZ B R ) QL L B 1 0 0 % B e n QC o rp . ( QJ T O ) ( QM M X ) 1 0 0 % 9 8 .7 % Qisda J a p a n C o . , Lt d. 1 0 0 % D a r f o n E l e c t r o n ic s C o r p . D a x o n T e c h n o lo g y In c . D a r ly V e n t u r e , I n c . C o . Lt d. ( QC E S ) 1 0 0 % D a r l y V e n t u r e ( L) Lt d. ( D V LB ) C o . Lt d. ( QC O S ) 1 0 0 % Qisda S dn . B h d. ( QLP G ) ( QC S H ) 3 4 .3 % C o . , Lt d. ( QC P S ) B e n QB M H o l din g C a y m a n C o r p . (B M H C ) 1 0 0 % Qisda ( L) C o r p . ( QLLB ) QL L B 1 0 0 % 23 Qisda ( H o n g K o n g ) Lim it e d ( QC H K ) C om p an y Company Financials F in an c ial s Capital and Shares Sh a r e s T y p e a n d Sh a r e s O u t s t a n d i n g Shares T y p e Authorized Shares O utstan din g shares U n -issued shares T otal shares 1,9 28,217 ,60 6 3,0 7 1,7 82,39 4 5,0 0 0 ,0 0 0 ,0 0 0 Common Shares O w n e r s h i p a n d D i s t r i bu t i o n o f Sh a r e s L i st ed Shares and P ri v at e P l ac ement Shares As of Ap ril 1 7, 2 01 0 N um b er of sharehol ders D omest i c I nd i v i d u al s N otes N um b er of shares hel d % of shares hel d 165,331 1,159 ,460 ,261 60 . 13% O t her D omest i c Corp orat i ons 212 29 8,7 7 0 ,235 15. 49 % F orei g n I nst i t u t i ons and I nd i v i d u al s 39 4 29 8,7 88,866 15. 50 % 62 17 1,17 9 ,9 9 9 8. 88% D omest i c F i nanc i al I nst i t u t i ons G ov ernment A g enc i es T ot al 8 166,0 0 7 18,245 0 .0 0 % 1,9 28,217 ,60 6 10 0 . 0 0 % M ark et and Sales Statu s Sa l e s by B u s i n e s s U n i t M ain P roduc ts Uni t : N T $ 1,0 0 0 Sal es of 2 009 M oni t or B u si ness Uni t Sal es % 34,851,60 6 7 0 P roj ec t or B u si ness Uni t 7 ,49 0 ,864 15 SP C B u si ness Uni t 2,287 ,244 5 I nf ot ai nment Sol u t i ons B u si ness Uni t 1,648,656 3 M ob i l e Commu ni c at i ons B u si ness Uni t 1,47 9 ,0 38 3 O t hers 1,838,531 4 T ot al 49 ,59 5,9 39 24 10 0 Com pany Sa l e s A r e a s A reas F i nanci al s Uni t : NT $ 1,000 2 009 2 008 S al es % S al es % D omest i c 2,914,380 6 5,205,108 7 A meri c a 9,281,949 18 14,355,792 19 E u rop e 16,117,990 33 33,033,608 44 A si a 18,700,781 38 19,956,603 26 2,580,839 5 2,927,051 4 49,595,939 100 75,478,162 100 O t hers T ot al P r o d u c t i o n St a t u s i n t h e L a s t T w o Y e a r s Uni t : Set 1,000; NT $ 1,000 2 009 M ai n P rod u cts P rod u cti on 2 008 P rod u cti on Capaci ty P rod u cti on P rod u cti on P rod u cti on Q u anti ty A m ou nt Capaci ty Q u anti ty P rod u cti on A m ou nt M oni t or B u si ness Uni t 25 22 88,274 19 18 83,519 P roj ec t or B u si ness Uni t 10 9 111,859 0 0 37,009 0 0 312 2 1 44,314 15 14 95,027 0 0 14,084 0 0 778 0 0 1,043 O t hers 30 27 181,804 147 134 1,483,732 T ot al 80 72 478,054 168 153 1,663,701 SP C B u si ness Uni t I nf ot ai nment Sol u t i ons B u si ness Uni t M ob i l e Commu ni c at i ons B u si ness Uni t Not e: T he f i g u res of p rod u c t i on q u ant i t y and amou nt w ere b ased on T ai w an ent i t y ; ov ersees ent i t i es w ere ex c l u d ed . Sa l e s St a t u s i n t h e L a s t T w o Y e a r s Uni t : Set 1,000; NT $ 1,000 2 009 M ai n P rod u cts D om esti c S al es Q u al i ty M oni t or B u si ness Uni t P roj ec t or B u si ness Uni t SP C B u si ness Uni t I nf ot ai nment Sol u t i ons B u si ness Uni t M ob i l e Commu ni c at i ons B u si ness Uni t O t hers T ot al 2 008 E x ports S al es V al u e Q u al i ty V al u e D om esti c S al es Q u al i ty V al u e E x ports S al es Q u al i ty V al u e 188 754,959 8,966 34,096,647 311 1,852,590 8,810 45,887,990 48 278,711 530 7,211,570 26 337,516 602 8,241,745 2 2,570 310 2,284,674 54 183,823 2,190 8,990,016 14 17,222 700 1,631,434 9 14,270 743 1,505,060 103 348,899 609 1,130,139 94 283,486 685 1,183,880 27 1,511,436 51 327,095 116 1,564,501 442 5,433,285 382 2,914,380 11,166 46,681,559 610 4,236,186 13,472 71,241,976 25 N e t W o r t h , E a r n i n g , D i v i d e n d s a n d M a r k e t P r i c e P e r Sh a r e M ark et P ri c e P er Share Net W ort h P er Share (Not e 1) E arni ng s P er Share (E P S) D i v i d end s P er Share R et u rn O n I nv est ment H i g hest M ark et P ri c e L ow est M ark et P ri c e A v erag e M ark et P ri c e B ef ore D i st ri b u t i on A f t er D i st ri b u t i on W ei g ht ed A v erag e Shares E P S E P S-ad j u st ed (Not e 2) Cash d i v i d end s St oc k d i v i d end s- E arni ng s St oc k d i v i d end s- Cap i t al Su rp l u s A c c u mu l at ed Und i st ri b u t ed D i v i d end P ri c e/ E arni ng R at i o (Not e 3) P ri c e/ D i v i d end R at i o (Not e 4) Cash D i v i d end Y i el d R at e (Not e 5) No te 1 : S ub j ec t to c h a ng e a f ter s h a reh o l d ers ’ m eeting res o l utio n M ar. 3 1 , 2 01 0 20. 9 14. 1 18. 33 12. 58 1,925,668 0. 90 - Com pany F i nanci al s Unit: NT$; Per 1 , 0 0 0 2 009 21. 20 5. 51 14. 73 11. 83 1,925,668 (0. 94) - S h a re 2 008 35. 75 4. 81 21. 03 11. 73 1,856,809 (1. 7) - No te 2 : R etro a c tiv e a d j us tm ent f o r c a p ita l iz a tio n o f b o nus No te 3 : Pric e/ E a rning ra tio = A v era g e m a rk et p ric e/ E a rning s p er s h a re No te 4 : Pric e/ D iv id end ra tio = A v era g e m a rk et p ric e/ C a s h d iv id end s p er s h a re No te 5 : C a s h d iv id end y iel d ra te = C a s h d iv id end s p er s h a re/ A v era g e m a rk et p ric e D iv id e n d P o lic y Ac c o r d i n g t o Q i s d a ' s Ar t i c l e o f I n c o r p Af t e r m a k i n g t h e f i n a l s e t t l e m e n t o f a c c o r d in g t o t h e f o llo w in g s e q u e n c e a s id e 1 0 % t h e r e o f f o r le g a l r e s e r v e , s e o f t h e c o m p e t e n t a u t h o r it ie s , a n d d g iv e n y e a r a n d t h e p r e c e d in g y e a r s p a id . If t h e r e is a n y r e s id u a l a m o u n s h a ll d is t r ib u t e t h e r e s id u a l a m o u n t in o r a t io n , t h a c c o u n t, s : p a y in g t t t in g a s id e is t r ib u t in g d u r in g w h t a fte r d e a c c o rd a n e c o m p th e C o h e ta x e s p e c ia c a sh d ic h t h e d u c t in g c e w it h a n y 's d iv id e n d p o lic y is a s m p a n y s h a ll a llo c a t e t h e s , m a k in g u p lo s s f o r p r e c e l r e s e r v e in a c c o r d a n c e w iv id e n d s t o S e r ie s A P r e f e d iv id e n d s h a v e b e e n a c c th e a m o u n ts sta te d a b o t h e f o llo w in g o r d e r s : f o llo w s : n e t p r o f it d in g y e a r s it h t h e r e g rre d S to c k u m u la t e d v e , th e C o , if a n y , , s e t t in g u la t io n s fo r th e b u t n o t m p a n y 1 . 5 % ~ 2 0 % o f t h e r e s id u a l a m o u n t t o e m p lo y e e s a s b o n u s ; 2 . No m o r e t h a n 1 % o f r e s i d u a l a m o u n t f o r r e m u n e r a t i o n o f d i r e c t o r s ; 3 . Al l o r p a r t o f t h e r e m a i n i n g r e s i d u a l a m o u n t t o t h e s h a r e h o l d e r s a s d i v i d e n d a n d b o n u s . T h e C o m p a g r o w in g p e c a s h f lo w d th e C o m p a e n d o f th e e x p a n d in g P r in c ip a lly , d iv id e n d . n y is b e lo n g e d t r io d . In o r d e r t o e m a n d , th e C o m n y c o u ld k e e p g f is c a l y e a r , w h a n d c a s h f lo w d t h e r a t io o f c a s h o te c h n o e x e c u te p a n y a d r o w in g a e n d is t r ib e m a n d d iv id e n d lo g ic a l a n d l o n g -t e r m c o p t s r e s id u a n d o p e r a t in u t in g d iv id a n d d is t r ib u t o t o t a l d iv c a p it a l c a p a c it y h ig h t e c h in d u s t r y a n d is in t a p it a l p la n n in g a n d s a t is f y t h e s h a r e h o ld e r s w l d iv id e n d p o lic y a s it s d iv id e n d p o lic y . T h e r e f o g e v e r . If t h e C o m p a n y h a s r e s id u a l p r o f it a t t e n d , t h e C o m p a n y s h o u ld c o n s id e r t h e f u t u t e d iv id e n d b y s t o c k m a in ly a n d c a s h p a r t ia id e n d s h o u ld n o t lo w e r t h a n T e n p e r c e n t o f t o 26 h e it h re , h e re lly . ta l Com pany M o s t R e c e n t 5 -y e a r F i n a n c i a l A n a l y s i s I tem T ot al l i ab i l i t i es t o t ot al asset s (%) F i nanc i al rat i os F i nanc i al c ap i t al t o f i x ed asset s (%) Cu rrent rat i os (%) L i q u i d i t y rat i os Q u i c k rat i os (%) T i me i nt erest earned A / R t u rnov er (t i mes) A / R t u rnov er d ay s O p erat i ng I nv ent ory t u rnov er (t i mes) p erf ormanc e A / P t u rnov er (t i mes) anal y si s I nv ent ory t u rnov er d ay s F i x ed asset s t u rnov er (t i mes) T ot al asset s t u rnov er (t i mes) R et u rn on asset s (%) R et u rn on eq u i t y (%) P rof i t ab i l i t y O p erat i ng i nc ome t o p ai d -i n-c ap i t al (%) rat i os P B T t o p ai d -i n-c ap i t al (%) Net i nc ome rat i o (%) E P S (NT $ ) Cash f l ow rat i o (%) Cash F l ow Cash f l ow ad eq u ac y (%) Cash rei nv est ment rat i o (%) O p erat i ng l ev erag e L ev erag e F i nanc i al L ev erag e 27 2 009 58 2214 81 74 5. 11 71 33. 97 13. 13 11 29. 88 0. 91 (2) (8) 0 (9) (4) (0. 94) 57 25 575 - 2 008 65 2288 105 98 4. 36 84 28. 29 11. 61 13 42. 3 1. 18 (3) (14) (8) (16) (4) (1. 7) 24 12 - Y ear 2 007 69 2516 116 102 4 5. 09 72 35. 22 8. 53 10 64. 13 1. 58 8 22 (31) 31 4 3. 11 - 2 006 76 642 85 78 4. 60 79 29. 24 6. 49 12 22. 91 1. 62 (32) (86) (17) (105) (21) (17. 97) 4 - F i nanci al s 2 005 51 978 144 121 4. 25 86 25. 02 5. 86 15 20. 98 1. 49 (6) (11) (3) (20) (4) (2. 12) 55 - Qisda Corporation Non-consolidated Balance Sheets December 31, 2008 and 2009 (Expressed in thousands of New Taiwan dollars and US dollars) 2008 Assets NT$ 2009 NT$ Liabilities and Stockholders’ Equity Current assets: Cash and cash equivalents (note 4(a)) 774,104 24,229 53,913 57,718 1,806 4,569,254 2,216,694 69,380 Accounts receivables from related parties (notes 4(e) and 5) 6,844,522 5,773,245 180,696 Other receivables, net (notes 4(c) and 7(e)) 1,063,665 1,314,745 41,150 Other payable to related parties (note 5) 409,805 1,872,013 58,592 Accrued expenses (note 4(h)) Other receivable from related parties (note 5)) Other financial assets current (note 6) Inventories (note 4(d)) Prepaid expenses and other current assets Fixed assets held for sale (note 4(f)) Deferred income tax assets – current (note 4(l)) Total current assets NT$ NT$ US$ Current liabilities: 7,923,880 Financial assets at fair value through profit or loss current (note 4(b)) Notes and accounts receivable, net (note 4(c)) 2009 2008 US$ 492,900 - - 1,304,921 40,843 109,084 43,837 1,372 - Financial liabilities at fair value through profit or loss current (note 4(b)) Accounts payable Accounts payable to related parties (note 5) Advance receipts 1,434,006 12,777 Short-term borrowings (note 4(g)) - 225,467 277,889 8,698 23,139,273 13,635,166 426,766 8,953,540 1,024,960 309,379 40,770 32,080 1,276 1,147,622 1,856,434 58,104 1,230,370 2,850,652 89,222 156,122 49,729 1,556 3,635,451 4,525,536 141,645 20,414 316,305 652,240 Bonds payable due within one year (note 4(i)) 3,478,672 1,600,000 50,078 Long-term debt due within one year (notes 4(j) and 6) 2,400,000 1,400,000 43,818 Deferred inter-company profits (note 5) 303,100 160,290 5,017 Other current liabilities (notes 4(f) and 7(k)) 198,475 2,545,818 79,682 22,129,036 16,706,429 522,892 Total current liabilities Long-term liabilities: Long-term investments: Equity method (notes 4(e), 5 and 6) Financial liabilities at fair value through profit or loss-noncurrent (note4(b)) Bonds payable (note4(i)) 35,580,730 33,782,324 1,057,350 1,620,717 4,014,859 125,661 158,508 59,157 1,851 37,359,955 37,856,340 1,184,862 652,697 644,490 20,172 Deferred profits on sale-leaseback transaction (note 4(f)) 1,481,470 1,484,575 46,465 Other liabilities (note 4(e)) Machinery and equipment 844,142 852,923 26,695 Total other liabilities Furniture and fixtures 115,803 115,396 3,612 Available-for-sale financial assetsnoncurrent (notes 4(b) and 6) Financial assets carried at cost noncurrent (note 4(b)) Property, plant and equipment (notes 4(f) , 5 and 6): Land Buildings Miscellaneous equipment 48,768 15,014 Net property, plant and equipment Intangible assets Total long-term liabilities 46,900 - Total liabilities Idle Assets (note 4(f)) Refundable deposits Deferred expenses Deferred income tax assets noncurrent (note 4(l)) Prepaid pension cost (note 4(k)) Total other assets Total assets 774 3,518 16,600,000 13,800,000 431,925 18,200,000 13,937,151 436,217 3,144,284 98,412 Common stock (1,373,640) (1,484,549) (46,465) Capital surplus: 1,784,254 1,659,735 51,947 45,961 718,745 22,496 9,553 494,243 15,470 837,476 1,212,988 37,966 41,166,512 31,856,568 997,075 19,282,176 19,282,176 603,511 Stockholders’ equity: (note 4(b)(m)) 3,157,894 72,877 827,923 1,468 - Additional paid-in-capital in excess of the common stock’s par value 2,738,580 1,196,756 37,457 Capital surplus from long-term equity investments 4,042,814 3,684,210 115,312 6,781,394 4,880,966 152,769 - - 1,439 Legal reserve Other assets Assets for lease (notes 4(f) and 6) 24,736 112,415 Other liabilities Prepayments for plant and equipment Less: accumulated depreciation Long-term debt (notes 4(j) and 6) 1,600,000 Special reserve 125,383 144,912 4,536 104,324 104,324 3,265 Cumulative translation adjustment 95,210 92,459 2,894 Unrealized loss on available-for-sale financial assets Treasury stock 30,629 124,997 3,912 980,315 900,359 28,180 100,567 105,948 3,316 1,436,428 1,472,999 46,103 63,792,787 54,670,201 1,711,117 Accumulated deficit Total stockholders’ equity 344,527 175,173 (2,061,523) - - (1,807,773) (56,581) 1,052,316 812,471 25,429 (2,870,090) (273,084) (8,547) (77,698) (81,123) (2,539) 22,626,275 22,813,633 714,042 63,792,787 54,670,201 1,711,117 Commitments and contingencies (notes 4(b)(c)(g)(j), 5 and 7) Total liabilities and stockholders’ equity (Note:Translation of New Taiwan dollar amounts into U.S. dollar amounts is included in the non-consolidated financial statements solely for the convenience of the readers, using the noon buying rate of the Federal Reserve Bank in New York on December 31, 2009, of NT$31.95 to US$1 uniformly for all the financial statements accounts.) Qisda Corporation Non-consolidated Statements of Operations For the years ended December 31, 2008 and 2009 (Expressed in thousands of New Taiwan dollars and US dollars, expect earnings per share) 2008 2009 NT$ Net sales (note 5) Cost of goods sold (notes 4(d)(k), 5 and 10) Gross profit US$ 75,478,162 49,595,939 1,552,299 (73,115,507) (46,518,811) (1,455,988) 2,362,655 3,077,128 96,311 29,865 142,810 4,470 2,392,520 3,219,938 100,781 (1,193,341) (827,090) (25,887) (650,825) (511,023) (15,994) (2,163,700) (1,796,157) (56,218) (4,007,866) (3,134,270) (98,099) (1,615,346) 85,668 2,682 Change in unrealized inter-company profits (note 5) Realized gross profit NT$ Operating expenses: (notes 4(f)(k), 5 and 10) Selling Administrative Research and development Operating income (loss) Non-operating income: Interest income (note 5) Dividend income Evaluation gain on financial intruments, net (notes 4(b)(o)) Gain on disposal of property, plant and equipment (note 5) 28,908 31,972 1,001 205,158 566,489 79,136 117,125 10,767 2,487 3,666 337 78 Gain on disposal of investments, net (note 4(e)) 647 23 1 203,009 130,302 4,078 1,083,347 292,676 9,161 Others (note 5) Non-operating expenses: (1,094,378) (544,277) (17,035) Investment loss recorded under the equity method, net (note 4(e)) Interest expense (899,204) (1,370,767) (42,904) Other invetment loss (note 4(b)) - (86,097) (2,695) Loss on disposal of property, plant and equipment (note 5) Foreign currency exchange loss, net (14,546) (488) (15) (588,633) (127,379) (3,987) Others (note 4(i)) Loss before income tax Income tax expense (note 4(l)) (expressed in New Taiwan dollars and US dollars):(note 4(n)) Basic earnings per share (29,575) (926) (2,158,583) (67,562) (3,149,860) (1,780,239) (55,719) - Net loss Earnings per share (21,100) (2,617,861) (3,149,860) (27,534) (862) (1,807,773) (56,581) Before tax After tax Before tax After tax (1.70) (1.70) (0.92) (0.94) Qisda Corporation Statements of Changes in Stockholders' Equity For the years ended December 31, 2008 and 2009 (Expressed in thousands of New Taiwan dollars) Balance as of January. 1, 2008 Net loss for 2008 Issuance of common stock for cash (note 4(m)) Retained Unrealized Loss on Earnings Available-for-sale (Accumulated Financial Assets Deficit) NT$ NT$ Common Stock Capital Surplus Legal Reserve Special Reserve NT$ NT$ NT$ NT$ 5,366,084 - - 3,445,276 - - - (3,149,860) 2,738,580 - - 15,389,280 2,261,420 - Cumulative Translation Adjustment Treasury Stock Total NT$ NT$ NT$ (862,944) 687,770 - - - (83,102) (3,149,860) 23,942,364 - - - 5,000,000 Appropriation of earnings and capital surplus (note 4(m)): Appropriation of legal reserve and special reserve - 344,527 (519,700) - - - - 1,412,056 - - - (1,412,056) - - - - Bonus to employees - in stock 219,420 - - - (219,420) - - - Cash dividends to shareholders - - - - (176,507) - - - Directors remuneration - Stock dividends to shareholders - 175,173 (176,507) - - - - (29,256) - - Change in treasury stock held by subsidiaries - - - - - - - Adjustments of net equity of investee companies - - - - - - - (1,323,270) Change in cumulative translation adjustment - - - - - - 364,546 - 364,546 - - - - - - (1,323,270) (29,256) 5,404 5,404 Change in unrealized loss on available-for-sale financial assets (note 4(b)) (1,639,420) (1,639,420) Change in unrealized loss on available-for-sale financial assets held by equity method investees Balance as of December 31, 2008 Net loss for 2009 19,282,176 - - - 6,781,394 344,527 - - 175,173 - (2,061,523) (367,726) (2,870,090) - - 1,052,316 (367,726) (77,698) (1,807,773) - - - 2,061,523 - 22,626,275 (1,807,773) Appropriation of earnings and capital surplus: (note 4(m)) Decrease in capital surplus and legal reserve to offset - - Change in treasury stock held by subsidiaries accumulated deficit - (1,541,823) - (344,527) - (175,173) - - - - Adjustments of net equity of investee companies - (358,605) - - - - - Change in cumulative translation adjustment - - - - - - - - - - - 2,394,142 202,864 (3,425) (3,425) - (358,605) - (239,845) - - 2,394,142 - - (239,845) Change in unrealized loss on available-for-sale financial assets (note 4(b)) Change in unrealized gain on available-for-sale financial assets held by equity method investees Balance as of December 31, 2009 19,282,176 - - - 4,880,966 - - (1,807,773) (273,084) 812,471 202,864 (81,123) 22,813,633 Qisda Corporation Non-consolidated Statements of Cash Flows For the years ended December 31, 2008 and 2009 (Expressed in thousands of New Taiwan dollars and US Dollars) 2008 NT$ Cash flows from operating activities: Net loss Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Amortization Amortization of discount on convertible bond Change in provision for bad debt Change in provision for inventory obsolescence Investment loss on long-term equity investments, net Cash dividends received from investments recognized under equity method Gain on disposal of investments Loss (gain) on redemption of bonds Impairment loss on financial assets carried at cost Gain on disposal of property, plant and equipment, net Amortization of deferred profits on sale-leaseback transaction Amortization of bond issuance costs Deferred income tax assets Differences in accounts in the accompanying balance sheets: Financial assets/ liabilities at fair value through profit or loss Notes and accounts receivable Receivables from related parties Other receivables Inventories Prepaid expenses and other current assets Prepaid pension Accounts payable Payables to related parties Deferred inter-company profit Accrued expenses and other current liabilities Other liabilities Net cash provided by operating activities Cash flows from investing activities: Increase in receivables from related parties Addition to long-term equity investments Other financial assetscurrent Additions to property, plant and equipment Proceeds from disposal of idle assets Proceeds from disposal of property, plant and equipment Increase in intangible assets, refundable deposits and deferred assets Proceeds from investees’ capital reduction Net cash used in investing activities Cash flows from financing activities: Increase (decrease) in short-term borrowings Decrease in long-term debt Redemption of bonds Distribution of cash dividends, and directors' remuneration Issuance of common stock for cash Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental disclosure of cash flow information: Cash paid during the period for: Interest Income taxes Supplemental disclosure of non-cash investing and financing activities: Changes in unrealized loss on available-for-sale financial assets Adjustments of net equity of investee companies Increase (decrease) in cumulative translation adjustment (3,149,860) 169,153 355,625 87,996 (16,901) 9,410 899,204 1,974,756 (647) (126) (64,590) (109,176) 1,400 - 2009 NT$ (1,807,773) US$ (56,581) 136,614 65,478 8,721 (18,544) (18,448) 1,370,767 404,260 (23) 10,511 # 86,097 (1,999) (109,178) 1,200 27,534 4,276 2,049 273 (580) (577) 42,904 12,653 (1) 329 2,695 (63) (3,417) 37 862 (566,489) 1,368,329 10,485,219 903,082 2,291,730 (18,683) (14,477) (1,595,011) (6,568,284) (29,865) (1,162,967) (19,105) 5,229,723 (10,767) 2,371,104 1,221,316 (92,493) 147,533 65,247 (5,381) 708,812 1,513,889 (142,810) 3,573,363 (7,482) 9,497,548 (337) 74,213 38,226 (2,895) 4,617 2,042 (168) 22,185 47,383 (4,470) 111,842 (234) 297,263 (1,306,767) 10,151 (68,935) 65,774 31,322 (87,301) 22,429 (1,333,327) (1,620,795) (34,100) 492,900 (71,495) 742 53,905 (131,378) 13,877 (1,296,344) (50,729) (1,067) 15,427 (2,237) 23 1,687 (4,112) 434 (40,574) 258,816 (2,236,745) (205,763) 5,000,000 2,816,308 6,712,704 1,211,176 7,923,880 (7,928,580) (3,800,000) (3,622,400) (15,350,980) (7,149,776) 7,923,880 774,104 (248,156) (118,936) (113,377) (480,469) (223,780) 248,009 24,229 1,102,684 6,803 594,391 1,878 18,604 59 (1,639,420) (1,323,270) 364,546 (2,394,142) (358,605) (239,845) (74,934) (11,224) (7,507) Qisda Corporation and subsidiaries Consolidated Balance Sheets December 31, 2008 and 2009 (expressed in thousands of New Taiwan dollars and US dollars) 2008.12.31 Assets NT$ 2009.12.31 NT$ Liabilities and Stockholders’ Equity Current assets: Cash and cash equivalents (note 4(a)) 19,627,193 9,850,766 308,318 1,392,532 1,118,201 34,998 4,904 1,066 33 Short-term borrowings (notes 4(i) and 6) Financial liabilities at fair value through profit or loss current (note 4(b)) Notes and accounts payable 18,875,167 17,463,506 546,589 Notes and accounts receivable from related parties (note 5) 2,650,670 1,258,944 39,404 Other payables to related parties (note 5) Other receivables, net (notes 4(c) ,5 and 7(l)) 3,332,842 3,151,402 98,635 Accrued expenses and other current liabilities (notes 4(f) and 7(k)) Other receivables from related parties (note 5) 88,821 14,424 451 3,486,426 1,855,568 58,077 17,698,890 15,129,466 473,536 1,461,246 1,500,736 46,971 Other financial assets – current (note 6) Inventories (note 4(d)) Prepaid expenses and other current assets Fixed assets held for sale (note 4(f)) 12,777 Deferred income tax assets – current (note 4(n)) Total current assets - Accounts payable to related parties (note 5) 570,302 17,850 69,175,722 51,914,381 1,624,862 22,950,366 20,619,971 645,382 1,657,977 4,094,155 128,143 450,666 268,815 8,414 25,059,009 24,982,941 781,939 Financial assets carried at cost noncurrent (note 4(b)) Property, plant and equipment: (notes 4(f)(l) and 6) 1,947,729 1,928,767 60,368 Buildings 16,919,228 18,171,658 568,753 Machinery and equipment 16,408,608 513,571 21,691,373 24,736 774 20,993,896 657,086 Financial liabilities at fair value through profit or loss noncurrent (note 4(b)) Long-term debt (notes 4(k) and 6) 1,600,000 112,415 3,519 23,291,373 21,131,047 661,379 Liability under capital lease (note 4(l)) 963,246 993,623 31,099 Deferred profits on sale-leaseback transaction (note 4(f)) 827,923 718,745 22,496 Other liabilities 626,637 625,391 19,574 2,417,806 2,337,759 73,169 98,882,394 80,035,067 2,505,010 19,282,176 19,282,176 603,511 Other liabilities: Total liabilities 28,733 29,942 1,543,744 48,317 Common stock 196,275 1,022,432 32,001 Capital surplus: 4,287,405 2,514,252 78,693 46,965,150 48,259,023 1,510,454 Stockholders’ equity: (note 4 (o)) Additional paid-in-capital in excess of the common stock’s par value 2,738,580 1,196,756 37,457 Capital surplus from long-term equity investments 4,042,814 3,684,210 115,312 (811,547) (1,062,639) (33,259) (16,521,934) (18,824,841) (589,197) 29,631,669 28,371,543 887,998 Special reserve 3,164,724 3,266,878 102,250 Accumulated deficit 6,781,394 Legal reserve Cumulative translation adjustment 193,000 6,041 Unrealized loss on available-for-sale financial assets Treasury stock Refundable deposits (note 4(l)) 157,483 232,411 7,274 Deferred expenses and other assets (notes 4(f)(h)(m)) 868,528 1,017,265 31,840 Total assets 1,089 14,210,858 Long-term liabilities: 956,641 Total other assets 74,622 34,792 1,770,462 956,548 1,332,148 Deferred income tax assets – noncurrent (note 4(n)) 2,384,179 20,795 56,566,261 Leased assets - 1,747,301 73,173,215 Total current liabilities 663,647 Other assets Pledged cash and cash equivalents (note 6) 814,011 50,078 918,007 Intangible assets(note 4(g)) 26,007,636 93,575 21,203,522 Less: allowance for impairment of fixed assets 3,728 23,150,643 1,600,000 1,108,792 Prepayments for plant and equipment 219,788 2,989,723 20,217,025 Leasehold improvement 119,099 4,818,170 Furniture and fixtures Miscellaneous equipment 7,022,224 505,672 3,478,672 Total other liabilities Land 25,241,104 Bonds payable due within one year (note 4(j)) Total long-term liabilities Available-for-sale financial assets noncurrent (notes 4(b) and 6) Net property, plant and equipment US$ Long-term debt due within one year (notes 4(k) and 6) Bonds payable (note 4(j)) Less: accumulated depreciation NT$ - 544,254 Long-term investments: Equity method (notes 4(e) and 6) NT$ Current liabilities: Financial assets at fair value through profit or loss current (note 4(b)) Available-for-sale financial assets current (note 4(b)) Notes and accounts receivable, net (note 4(c)) 2009.12.31 2008.12.31 US$ 1,145,354 1,190,518 37,262 2,171,365 2,633,194 82,417 129,202,489 111,168,937 3,479,466 Minority interest Total stockholders’ equity Commitments and contingencies (notes 4(b)(k), and 7 ) Total liabilities and stockholders’ equity 344,527 175,173 4,880,966 152,769 - - - - (2,061,523) (1,807,773) 1,052,316 812,471 (56,581) 25,429 (2,870,090) (273,084) (8,547) (77,698) (81,123) (2,539) 22,626,275 22,813,633 714,042 7,693,820 8,320,237 260,414 30,320,095 31,133,870 974,456 129,202,489 111,168,937 3,479,466 (Note:Translation of New Taiwan dollar amounts into U.S. dollar amounts is included in the consolidated financial statements solely for the convenience of the readers, using the noon buying rate of the Federal Reserve Bank in New York on December 31, 2009, of NT$31.95 to US$1 uniformly for all the financial statements accounts.) Qisda Corporation and subsidiaries Consolidated Statements of Operations For the years ended December 31, 2008 and 2009 (expressed in thousands of New Taiwan dollars and US dollars, except earnings per share) 2008 NT$ Net sales (note 5) Cost of goods sold (notes 4(d) (m) (o), 5 and 10(a)) Gross profit 2009 NT$ US$ 169,507,542 150,144,170 4,699,348 (156,623,352) (134,115,531) (4,197,669) 12,884,190 16,028,639 501,679 Operating expenses (notes 4(f) (m) (o) and 10(a)): Selling (9,109,250) (7,602,882) (237,962) Administrative (3,218,019) (3,473,515) (108,717) Research and development Operating income (loss) (3,658,412) (3,479,331) (108,899) (15,985,681) (14,555,728) (455,578) (3,101,491) 1,472,911 46,101 Non-operating income: Interest income Investment income recorded under the equity method, net (note 4(e)) 381,375 1,752,544 Evaluation gain on financial instruments, net (notes 4(b)(q)) Foreign currency exchange gain, net 170,289 - 427,567 5,330 - 156,379 - 4,894 14,264 447 Dividend income 221,546 122,093 3,821 Gain on disposal of investments, net (note 4(b)(e)) 745,443 438,273 13,718 Gain on disposal of property, plant and equipment 244,195 64,042 Others 834,680 603,660 # 1,569,000 4,607,350 2,004 18,894 49,108 Non-operating expenses: Interest expense (note 4(f)) (2,188,441) (1,219,899) (38,182) (1,918,168) (60,037) (142,103) (86,097) (2,695) Loss on disposal of property, plant and equipment (180,655) (110,636) Foreign currency exchange loss, net (855,308) - Impairment Loss (note 4(f)(g)) (416,462) (306,813) (281,573) (179,461) (8,813) (4,089,782) (3,795,834) (118,806) Investment loss recorded under the equity method, net (note 4(e)) - Other investment loss (note 4(b)) Others (note 4(j)) Loss before income tax Income tax expense(note 4(n)) Net loss Attributable to: Shareholders of the parent Minority interest Net loss (5,616) (2,583,923) (753,923) (23,597) (941,184) (505,504) (15,822) (3,525,107) (1,259,427) (39,419) (3,149,860) (375,247) (1,807,773) 548,346 (56,581) 17,162 (3,525,107) (1,259,427) (39,419) (1.70) (0.94) Earnings per share (expressed in New Taiwan dollars)(note 4(p)): Basic earnings per share (3,463) - Qisda Corporation and subsidiaries Consolidated Statements of Changes in Stockholder's Equity For the years ended December 31, 2008 and 2009 (Expressed in thousands of New Taiwan dollars) Balance as of January 1, 2008 Special Reserve Retained Earnings (Accumulated Deficit) Cumulative Translation Adjustment Unrealized Loss on Available-for-sale Financial Assets Treasury Stock NT$ NT$ NT$ NT$ NT$ Common Stock Capital Surplus Legal Reserve NT$ NT$ NT$ - - 3,445,276 - - (3,149,860) - - 15,389,280 Net loss for 2008 - Issuance of common stock for cash 2,261,420 5,366,084 2,738,580 - 687,770 (862,944) Minority Interest NT$ (83,102) - - - - - - - Total NT$ 3,748,369 27,690,733 (375,247) (3,525,107) 5,000,000 Appropriation of earnings and capital surplus (note 4(o)): Appropriation of legal reserve and special reserve - - (519,700) - - - - - Stock dividends to shareholders 1,412,056 - - - (1,412,056) - - - - - 219,420 - - - (219,420) - - - - - Bonus to employees - in stock 344,527 175,173 Cash dividends to shareholders - - - - (176,507) - - - - Directors remuneration - - - - (29,256) - - - - Changes in minority interest - - Change in treasury stock held by subsidiaries - - Adjustments of net equity of investee companies - Change in cumulative translation adjustment - Change in unrealized loss on available-for-sale financial assets (note 4(b)) - - - (176,507) (29,256) 4,320,698 - - - - - - - - - - - - - - - - - - (1,323,270) 364,546 5,404 - - 4,320,698 - 5,404 - - (1,323,270) - - 364,546 (1,639,420) - - (1,639,420) (367,726) - Change in unrealized loss on available-for-sale financial assets held by equity method investees (note 4(b)) Balance as of December 31, 2008 Net loss for 2009 19,282,176 - 6,781,394 - 344,527 - 175,173 (2,061,523) - 1,052,316 (2,870,090) (77,698) (1,807,773) - - - 2,061,523 - (367,726) 7,693,820 30,320,095 548,346 (1,259,427) Appropriation of earnings and capital surplus (note 4(o)): Decrease in capital surplus and legal reserve to offset accumulated deficit - - - - - - - - - - - - - - - - - - - - - - - - - - - - (239,845) - - - - - 2,394,142 - - 2,394,142 - - - - - 202,864 - - - Change in treasury stock held by subsidiaries - Adjustments of net equity of investee companies - Changes in minority interest - Change in cumulative translation adjustment - Change in unrealized loss on available-for-sale financial assets (note 4(b)) (1,541,823) (358,605) (344,527) (175,173) (239,845) - (3,425) - - (3,425) - (358,605) 78,071 78,071 Change in unrealized loss on available-for-sale financial assets held by equity method investees (note 4(b)) Balance as of December 31, 2009 19,282,176 4,880,966 (1,807,773) 812,471 (273,084) (81,123) 202,864 8,320,237 31,133,870 Qisda Corporation and subsidiaries Consolidated Statements of Cash Flows For the years ended December 31, 2008 and 2009 (expressed in thousands of New Taiwan dollars and US Dollars) 2,008 NT$ Cash flows from operating activities: Net loss Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation Amortization Impairment loss Other investment loss Evaluation gain on financial instruments Loss (gain) on disposal of property, plant and equipment, net Amortization of deferred profits on sale-leaseback transaction Loss (gain) on redemption of bonds Deferred assets charged to expenses Fixed assets charged to expenses Gain on disposal of investments Investment loss (income) recorded under the equity method, net Cash dividends received from investments recorded under equity method Amortization of bond issuance costs Amortization of discount on convertible bond Deferred income tax assets Differences in accounts in the accompanying balance sheets: Financial assets at fair value through profit or loss Notes and accounts receivable Receivables from related parties Inventories Other receivables Other financial assetscurrent Prepaid expenses and other current assets Prepaid pension Notes and accounts payable Payables to related parties Accrued expenses and other current liabilities Other liabilities Net cash provided by operating activities Cash flows from investing activities: Decrease in pledged cash and cash equivalents Proceeds from disposal of property, plant and equipment Additions to property, plant and equipment Increase in other assets Proceeds from disposal of long-term equity investments Additions to long-term equity investments Proceeds from investees’ capital reduction Decrease (increase) in available-for-sale financial assets Net cash used in investing activities Cash flows from financing activities: Issuance of common stock for cash Increase (decrease) in short-term borrowings Decrease in long-term debt Increase in long-term debt Redemption of bonds Cash dividend, directors' remuneration and employees' bonuses Decrease in minority interest Net cash provided by (use in) financing activities Effect of exchange rate changes Effect of new consolidated subsidiaries Net increase(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental disclosure of cash flow information: Cash paid during the period for: Interest Income taxes Supplemental disclosure of non-cash investing and financial activities: Changes in unrealized loss on available-for-sale financial assets Adjustments of net equity of investee companies Increase (decrease) in cumulative translation adjustment 2009 NT$ US$ (3,525,107) (1,259,427) (39,419) 3,583,732 743,784 416,462 142,103 (427,567) (63,540) (109,176) (126) 1,275 8,970 (745,443) (1,752,544) 1,585,358 0 89,396 112,795 3,732,994 450,652 281,573 86,097 (156,379) 46,594 (109,178) 10,511 7,136 30 (438,273) 1,918,168 231,277 0 9,921 (71,212) 116,839 14,105 8,813 2,695 (4,894) 1,459 (3,417) 329 223 1 (13,718) 60,037 7,239 0 311 (2,229) 1,065,325 5,111,616 (1,403,358) 11,216,542 845,196 32,383 4,822 (14,477) (6,286,435) (3,963,821) (1,289,797) 875,818 6,254,186 306,786 1,411,661 1,466,123 2,569,424 181,440 48,665 (39,490) (3,587) 2,856,993 650,875 2,207,311 29,131 16,425,816 9,602 44,183 45,888 80,420 5,679 1,523 (1,236) (112) 89,421 20,372 69,086 912 514,112 499,577 (7,446,330) (916,986) 894,923 (59,500) 20,576 (1,254) (7,008,994) 1,389,193 224,489 (3,330,293) (857,029) 612,814 (5,504) 13,254 3,929 (1,949,147) 43,480 7,026 (104,234) (26,824) 19,180 (172) 415 123 (61,006) 5,000,000 9,410,214 (931,442) 1,642,576 (2,236,745) (205,763) (705,448) 11,973,392 (768,425) 1,065,393 11,515,552 8,111,641 19,627,193 (18,218,880) (5,763,771) 3,268,295 (3,622,400) (79,753) (24,416,509) 163,413 (9,776,427) 19,627,193 9,850,766 (570,231) (180,400) 102,294 (113,377) (2,496) (764,210) 5,114 (305,990) 614,309 308,319 2,150,115 440,004 1,384,640 186,195 429,793 (113,549) (2,394,142) (358,605) (239,845) (74,934) (11,224) (7,507) (1,639,420) (1,323,270) 364,546 Qisda Fact Sheet Qisda Fact Sheet Founded A p ril 2 1 , 1 9 8 4 R ev enue US $ 2 . 4 9 B il l io n ( Y ea r 2 0 0 9 ) P r es i dent & C E O H ui H s iung M a r k et C a p . C h a ir m a n G r oup C om p a ny P r oduc t P or t f ol i o US $ 1 . 0 9 B il l io n ( M a r. 3 1 , 2 0 1 0 ) K . Y . L ee A U O p tro nic s C o rp o ra tio n, B enQ Inc . , B enQ C o rp o ra tio n, D a rf o n E l ec tro nic s C o rp o ra tio n, D a x o n Tec h no l o g y G uru S o f tw a re C o . , B enQ H o s p ita l , D a rw in Prec is io ns , L td , R a y d ium C o rp o ra tio n, C a nd o C o rp o ra tio n, W el l y p o w er C o . , L td , a nd D is p la y s S em ic o nd uc to r D a x in M a teria l C o rp o ra tio n M ul tif unc tio n M o nito rs Tra d itio na l M NT ( 4 :3 ) : 1 7 ” , 1 9 ” , 2 0 ” W id e s c reen M NT: 1 5 . 6 ” W 1 8 . 5 ” W 1 9 ” W 2 0 ” W Pro f es s io na l M o nito r/ M ed ic a l a nd B ro a d c a s ting 2 1 . 5 ” W 2 2 ” W 2 3 ” W 2 4 ” W 2 7 ” W Ind us tria l S o l utio ns : Pro f es s io na l D is p l a y f o r S ec urity , G ra p h ic s , E d uc a tio n, M ed ic a l a nd G a m ing a p p l ic a tio ns D ig ita l S ig na g e D is p l a y a nd O p en F ra m e Pen/ To uc h L C D P r oj ec t or s D is p l a y a nd M o d ul e D a ta Pro j ec to r, V id eo Pro j ec to r, S h o rt th ro w A l l -i n-O ne P C :1 8 .5 ” ,2 1 .5 ” Pro j ec to r I m a g i ng D ev i c es C o l o r Ink j et Printer, C o l o r Ink j et M ul tif unc tio na l Printer C o l o r L a s er Printer( C L P) , C o l o r L a s er M ul tif unc tio na l Printer( M F P) H ig h -s p eed ink j et p rinter, H ig h -s p eed M ul tif unc tio na l Printer Im a g e S c a nner, A uto D o c um ent F eed er M ini Ph o to S c a nner, Pro ta b l e S c a nner M ob i l e C om m uni c a t i on D ev i c es W C D M A , S m a rtp h o ne M ID ( M o b il e Internet D ev ic e) M o b il e Ta b l et D ua l -M o d e Ph o ne: W iM a x + C el l ua r W irel es s M o d ul e: G S M / G PR S / W C D M A / H S D PA / H S UPA US B M o d em C a rd : H S D PA / H S UPA A ut om ob i l e I nf ot a i nm ent E l ec t r oni c s : T S 1 6 9 4 9 C er t i f i ed A / V / N ( A ud io / V id eo / Na v ig a tio n) S y s tem s A uto m o tiv e TF T-L C D D is p l a y V eh ic l e R ea r S ea t E nterta inm ent S y s tem A uto m o tiv e Tel em a tic s Na v ig a tio n M o d ul es C ons um er E l ec t r oni c s : eB o o k R ea d er, Ta b l et, D ig ita l Ph o to F ra m e M ul tim ed ia R o uter H ea l t h c a r e E l ec t r oni c s L i f es t y l e P r oduc t s : L E D l ig h ting d ev ic e Qisda Fact Sheet G l ob a l R & D C ent er & M a nuf a c t ur i ng R & D C ent er : Ta iw a n: Ta ip ei, Ta o y ua n, H s inc h u C h ina : S uz h o u G l ob a l M a nuf a c t ur i ng : B rno , C z ec h R ep ub l ic L C D M o nito r L C D M o nito r M ex ic a l i, M ex ic o Ta o y ua n, Ta iw a n L C D M o nito r A uto m o b il e Inf o ta inm ent E l ec tro nic s TS 1 6 9 4 9 C ertif ied Ind us tria l S o l utio ns ( ex c l ud e Pen/ To uc h L C D L if es ty l e Pro d uc ts M ul tif unc tio n M o nito rs D is p l a y ) S uz h o u, C h ina L C D M o nito r Pro f es s io na l M o nito r Pro j ec to rs Ind us tria l S o l utio ns A l l -in-O ne PC Im a g ing D ev ic es A uto m o b il e inf o ta inm ent E l ec tro nic s TS 1 6 9 4 9 C ertif ied C o ns um er E l ec tro nic s H ea l th c a re E l ec tro nic s M o b il e C o m m unic a tio n D ev ic es M o b il e C o m m unic a tio n d ev ic es S h a ng h a i, C h ina N um b er of E m p l oy ee G l ob a l O p er a t i ons 7 , 1 0 0 p eo p l e ( M a r. 2 1 , 2 0 1 0 ) Ta iw a n( Ta ip ei, Ta o y ua n, H s inc h u) , C h ina ( S uz h o u, S h a ng h a i) , C z ec h R ep ub l ic , M ex ic o , J a p a n, A m eric a I ndus t r y A c h i ev em ent 1 9 9 4 1 9 9 6 F o rm ed Ta iw a n 1 st w irel es s c o m m unic a tio ns a nd m o b il e p h o ne d ev el o p m ent Inv es ted in A c er D is p l a y Tec h no l o g y ( no w A U O p tro nic s -- w o rl d ’ s to p 3 m a nuf a c turer o f l a rg e-s iz e TF T-L C D p a nel s ) 1 9 9 7 L a unc h ed Ta iw a n 1 s t G S M m o b il e p h o ne 2 0 0 0 L a unc h ed W W 1 st s m a rt p h o ne 2 0 0 0 -2 0 0 5 W W 1 st s c a nner m a nuf a c turer 2 0 0 1 Intro d uc ed B enQ b ra nd 2 0 0 4 L a unc h ed W W 1 st 1 2 m s res p o ns e tim e L C D m o nito r 2 0 0 5 L a unc h ed W W 1 st 2 m s g ra y to g ra y res p o ns e tim e L C D m o nito r L a unc h ed Ta iw a n 1 st O L E D p a nel p h o ne L a unc h ed Ta iw a n 1 st 3 G p h o ne 2 0 0 6 L a unc h ed W W 1 s t L C D m o nito r w ith H D M I interf a c e O b ta ined M ic ro s o f t W ind o w s V is ta C ertif ic a te f o r L C D m o nito r L a unc h ed 3 . 5 G p h o ne ( Ta iw a n F irs t) W W # 4 p ro j ec to r m a nuf a c turer 2 0 0 6 , 2 0 0 7 W W to p 5 L C D m o nito r m a nuf a c turer; 2 0 0 6 W W 1 st in 2 0 ” a b o v e L C D m o nito r m a rk et 2 0 0 7 W W To p 5 S PC -M F P m a nuf a c turer C o m p a ny re-na m ed Q is d a c o rp . B enQ b ra nd b us ines s s p un o f f a nd c o m p a ny p o s itio ned a s p ro f es s io na l O D M / E M S Pro v id er. Th e s p in-o f f ef f ec tiv e o n S ep . 1 Pro j ec to r b us ines s ra nk ed W W # 3 S c a nner/ Printer/ C o p ier b us ines s ra nk ed W W # 5 L C D m o nito r b us ines s ra nk ed W W # 6 2 0 0 8 Po s itio ned a s a O D M / O E M m a nuf a c turer, Q is d a rec eiv es 5 R ed D o t d es ig n a w a rd a nd 4 G o o d D es ig n A w a rd s , th e h ig h es t a m o ng p a rtic ip a nts f ro m Ta iw a n 2 0 0 9 R ec eiv ed 5 iF a w a rd s , 1 0 red d o t d es ig n a w a rd s a nd 3 G -M a rk a w a rd s . R ec o rd ed a s th e to p w inner a m o ng a l l Ta iw a nes e c o m p a nies f o r a s ec o nd c o ns ec utiv e y ea r. 2 0 1 0 R ec ev ied 1 0 iF a w a rd s , to p p ed a l l c o m p etito rs f ro m Ta iw a n. Q C M -3 3 0 S m a rtp h o ne, o ne o f iF 2 0 1 0 a w a rd ed p ro d uc ts , ea rned iF g o l d a w a rd . L C D m o nito r b us ines s unit ea rned th e w o rl d ’ s f irs t c ertif ic a te o f c a rb o n f o o tp rint v erif ic a tio n s ta tem ent o p inio n f o r its TF T-L C D m o nito rs . R ec eiv ed 8 red d o t a w a rd s . Q is d a .c o m