WISTRON CORPORATION NON-CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2009 AND 2010
(With Independent Auditors Review Report Thereon)
Independent Auditors Review Report
The Board of Directors Wistron Corporation: We have reviewed the accompanying non-consolidated balance sheets of Wistron Corporation (the Company) as of September 30, 2009 and 2010, and the related non-consolidated statements of income and cash flows for the nine-month periods then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our reviews. Except as discussed in the third paragraph, we conducted our reviews in accordance with Republic of China Statement on Auditing Standards No. 36, Engagements to Review Financial Statements. A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. The Companys long-term equity investments of NT$19,699,454,000 and NT$30,617,754,000, deferred inter-company profits of NT$303,660,000 and NT$473,646,000 and foreign currency translation adjustment of NT$281,293,000 and NT$(454,738,000) as of September 30, 2009 and 2010, respectively, and the related investment income recognized under the equity method of NT$1,556,331,000 and NT$1,745,468,000, and unrealized inter-company profits of NT$(59,023,000) and NT$(199,213,000) for the nine-month periods ended September 30, 2009 and 2010, respectively, were accounted for in accordance with the equity method based on the unreviewed financial statements of the related investees of the Company. Therefore, we were unable to evaluate the effect on the Companys financial statements referred to in the first paragraph if such investees financial statements had been reviewed by independent auditors, nor were we able to satisfy ourselves as to these amounts by other review procedures. Based on our reviews, except for the effects of possible adjustments, if any, that might have been determined to be necessary had the investee companies financial statements been reviewed as discussed in the preceding paragraph, we are not aware of any material modifications that should be made to the non-consolidated financial statements referred to in the first paragraph in order for them to be in conformity with the related financial accounting standards of the Business Entity Accounting Act and of the Regulation on Handling Business Entity Accounting, and accounting principles generally accepted in the Republic of China.

Page 2

The accompanying non-consolidated financial statements as of and for the nine-month period ended September 30, 2010, have been translated into United States dollars solely for the convenience of the readers. We have reviewed the translation, and based on our review, we are not aware of any material modifications that should be made to such translation for it to be in conformity with the basis set forth in note 2(w) to the non-consolidated financial statements.
Taipei, Taiwan (the Republic of China) October 13, 2010
Note to Readers The accompany non-consolidated financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such non-consolidated financial statements are those generally accepted and applied in the Republic of China.

2010 NT$ 16,454,296 9,399,000 56,315 32,526,583 41,859,695 1,318,252 2,086,387 15,837,423 473,646 120,011,597 1,668,438 60,702 121,740,737 US$ 525,193 300,000 1,798 1,038,193 1,336,090 42,076 66,594 505,503 15,118 3,830,565 53,254 1,937 3,885,756
39,974,666 54,597,779 846,637 1,960,936 2,254,085 1,415,692 629,941 119,990,007 19,699,454 839,461 521,294 21,060,209 763,204 1,410,389 689,339 5,195,441 836,636 406,653 44,815 9,346,477 (5,927,710) 302,310 3,721,077 1,760,365 328,140 146,859,798
59,193,879 49,513,618 2,476,913 307,781 1,833,616 304,991 2,015,291 724,875 137,343,874 30,617,754 320,025 1,121,218 1,418,937 33,477,934 763,204 1,025,124 467,597 6,705,851 980,816 453,454 31,343 10,427,389 (7,322,834) 1,437,598 4,542,153 1,811,712 323,670 177,499,343
1,889,367 1,580,390 79,059 9,824 58,526 9,735 64,324 23,137 4,383,781 977,266 10,215 35,787 45,290 1,068,558 24,360 32,720 14,925 214,039 31,306 14,474 1,000 332,824 (233,732) 45,886 144,978 57,827 10,331 5,665,475
18,506,158 17,617,734 26,113 2,538,974 10,560,061 281,293 (11,551) (21,918) 49,496,864
19,642,663 18,355,192 32,677 3,452,438 15,708,054 (454,738) (84,969) (13,771) (878,940) 55,758,606
626,960 585,866 1,043 110,196 501,374 (14,514) (2,712) (440) (28,054) 1,779,719
Total liabilities and stockholders equity

146,859,798

177,499,343

5,665,475

See accompanying notes to non-consolidated financial statements.
Reviewed only, not audited in accordance with generally accepted auditing standards WISTRON CORPORATION NON-CONSOLIDATED STATEMENTS OF INCOME FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2009 AND 2010
(amounts expressed in thousands of dollars, except for earnings per common share)
2009 NT$ Revenues Less: sales returns and allowances Net revenues (note 5) Cost of sales (notes 4(d), 4(l), 4(n), 5 and 10) Gross profit Unrealized inter-company profits Realized gross profit Operating expenses (notes 4(h), 4(l), 4(n), 5 and 10): Selling Administrative Research and development Total operating expenses Operating income Non-operating income and gains: Interest income Investment income recognized under equity method, net (note 4(f)) Gain on disposal of property, plant and equipment Gain on disposal of investments (notes 4(b) and 4(f)) Foreign currency exchange gain, net Rental income (note 5) Evaluation gain on financial instruments (notes 4(b) and 4(p)) Other income Non-operating expenses and losses: Interest expense (note 4(g)) Loss on disposal of property, plant and equipment Foreign currency exchange loss, net Other loss (note 10) Income before income tax Income tax expense (note 4(m)) Net income 382,282,811 (3,263,674) 379,019,137 (361,139,491) 17,879,646 (59,023) 17,820,623 (5,212,952) (1,418,408) (5,495,705) (12,127,065) 5,693,558 25,760 1,556,2,549 51,196 95,851 45,198 1,777,203 (201,488) (2,473) (27,160) (8,834) (239,955) 7,230,806 (1,213,595) 6,017,211 Before After income income tax tax NT$ NT$ 4.03 3.75 3.35 3.12

2 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies The accompanying non-consolidated financial statements are prepared in accordance with accounting principles generally accepted in the ROC. These non-consolidated financial statements are intended to present the financial position of the Company, results of operations, and cash flows in accordance with accounting principles generally accepted in the ROC and not those of any other jurisdictions. The significant accounting policies adopted in preparing the non-consolidated financial statements are as follows: (a) Use of estimates The preparation of the accompanying non-consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. (b) Foreign currency transactions and translation The Companys functional and reporting currency is the New Taiwan dollar. Non-derivative foreign currency transactions are recorded at the exchange rates prevailing at the transaction date. At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are translated using the exchange rates on that date. The resulting unrealized exchange gain (loss) from such translations is reflected in the accompanying non-consolidated statements of income. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. If the financial assets or liabilities are evaluated at fair value through profit or loss, non-monetary assets and liabilities are translated using the spot rate on the balance sheet date, and the resulting unrealized exchange gain (loss) from such translations is reflected in the accompanying non-consolidated statements of income. If the financial assets or liabilities are evaluated at fair value through stockholders equity, the resulting unrealized exchange gain (loss) from such translations is recorded as a separate component of stockholders equity. For long-term equity investments in foreign subsidiaries and investees, which are accounted for by the equity method, if their reporting currency is not their functional currency, their financial statements are remeasured. The remeasurement difference is recorded as foreign currency exchange gain/loss. Furthermore, those financial statements are translated into the Companys reporting currency. Translation adjustments resulting from such translation are accounted for as foreign currency translation adjustment, which is a separate component of stockholders equity.

(Continued)

3 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
(c) Classification criteria for current or noncurrent assets and liabilities Cash and cash equivalents and assets, which are held for trading purposes or held for the short term and expected to be liquidated within 12 months after the balance sheet date are classified as current assets, otherwise are classified as noncurrent assets. Liabilities which are expected to be paid within 12 months after the balance sheet date are classified as current liabilities, otherwise are classified as noncurrent liabilities. (d) Asset impairment The Company assesses at each balance sheet date whether there is any indication that an asset (individual asset or cash-generating unit) other than goodwill may have been impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The Company recognizes impairment loss for an asset whose carrying value is higher than the recoverable amount. An impairment loss recognized in prior periods is reversed for assets other than goodwill if there is any indication that the impairment loss recognized no longer exists or has decreased. The carrying value after the reversal should not exceed the recoverable amount or the depreciated or amortized balance of the assets assuming no impairment loss was recognized in prior periods. Goodwill, intangible assets with indefinite useful life, and not-in-use intangible assets are subject to impairment test annually, and an impairment loss is recognized on the excess of carrying value over the recoverable amount. (e) Cash and cash equivalents The Companys cash and cash equivalents consist of cash on hand, cash in banks, miscellaneous petty cash, and other highly liquid investments which do not have a significant level of market or credit risk from potential interest rate changes.
4 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
(f) Financial instruments Financial instruments are initially recognized at fair value plus, in the case of a financial instrument not reported at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issuance of the financial instrument. A regular way purchase or sale of financial assets is recognized and derecognized using the trade date accounting. Subsequent to initial recognition, financial instruments are measured as follows: i Financial assets/liabilities at fair value through profit or loss An instrument is classified as financial instrument at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Derivatives that do not meet the criteria for hedge accounting are classified as financial assets or liabilities at fair value through profit or loss. Financial instruments at fair value through profit or loss are measured at fair value, and changes in fair value are recognized in profit or loss. ii Available-for-sale financial assets Available-for-sale financial assets are measured at fair value, and changes in fair value, other than impairment losses and foreign exchange gains and losses on available-for-sale monetary items, are recognized directly in equity. When an investment is derecognized, the cumulative gain or loss in equity is transferred to profit or loss. If there is an objective evidence which indicates that a financial asset is impaired, a loss is recognized in earnings. If, in a subsequent periods, the amount of the impairment loss decreases, for equity securities, the previously recognized impairment loss is reversed to the extent of the decrease and recorded as an adjustment to equity; for debt securities, the amount of the decrease is recognized in profit or loss, provided that the decrease is clearly attributable to an event which occurred after the impairment loss was recognized. iii Financial assets carried at cost Financial assets that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are carried at their original cost. If there is an objective evidence which indicates that a financial asset is impaired, a loss is recognized. A subsequent reversal of such impairment loss is prohibited.

7 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
An impairment test is performed annually. If any indication of impairment is identified, an impairment test is performed immediately. When the recoverable amount is below the book value, impairment loss is recognized. The difference between the selling price and the book value of long-term equity investments under the equity method is recognized as disposal gain or loss in the statement of income. If there is a capital surplus arising from long-term equity investments, such capital surplus is debited against the disposal gain or loss based on the disposal ratio. Unrealized gains and losses resulting from transaction between the Company and its investee companies and among subsidiaries are deferred. Gains and losses arising from transactions relating to depreciable or amortizable assets are recognized over their useful lives. Gains and losses from other assets are recognized when realized. When investee companies issue common stock and the Company does not purchase the stock in accordance with its ownership holding ratio, the Company adjusts its capital surplus based on the net changes in the capital surplus and long-term equity investment. If the capital surplus arising from long-term investment accounted for under the equity method is insufficient, the deficiency is debited to retained earnings. If the Company exercises significant influence but has no power to control an investee company and the investees equity becomes negative and the Company has guaranteed the payments of the investees debt or has provided other financial commitments to the investee, or if the investees loss is temporary in nature, then the investment loss is recognized continuously by using the equity method. On the other hand, if the Company has the power to control an investee company and the investees equity becomes negative and other shareholders have no obligation or are unable to provide funds to cover the loss, the Company recognizes the loss in full. The excess of recognized investment loss over the related long-term equity investment is accounted for as long-term equity investment credits, and after offsetting against the receivables from related parties, is reflected as a liability in the balance sheet. (l) Property, plant and equipment Property, plant and equipment are stated at cost. Interest expense related to the purchase and construction of property and equipment is capitalized and included in the cost of the related assets. Significant additions, improvements and replacements are capitalized. Maintenance and repair costs are expensed in the periods incurred. Property, plant and equipment are depreciated over their estimated useful lives using the straight-line method.

8 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
The Company accounts for the removal and recovery costs for fixed assets that are accrued during the non-production periods in accordance with Interpretation (97) 340 issued by the Accounting Research and Development Foundation. A component of a fixed asset is depreciated individually if it is a significant part of its total cost. The residual useful lives, the depreciation method, and the residual value are evaluated at each financial year-end and changes thereof are accounted for as changes in accounting estimates. The estimated useful lives of the respective classes of property, plant and equipment are as follows: i Buildings and improvements: 5 to 55 years ii Machinery and equipment: 3 to 10 years iii Molding equipment: 1 year iv Research and development equipment: 1 to 5 years v Furniture, fixtures and other equipment: 3 to 6 years Gains or losses on the disposal of property, plant and equipment are accounted for as nonoperating income or expense. Property being leased to others is measured at cost and classified as other assets. (m) Intangible assets Goodwill is accounted for in accordance with ROC SFAS No. 25 Business Combinations. It represents the excess of cost of acquisition over the Companys interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. Goodwill is measured at cost less accumulated impairment losses. Other intangible assets are stated at cost and primarily consist of core technology, customer relationships, patents and computer software. In accordance with SFAS No. 37 Intangible Assets, other than an intangible asset acquired by way of a government grant, which is measured at its fair value, an intangible asset is measured initially at cost. Subsequent to the initial recognition, an intangible asset is measured at its cost plus revaluation increment revalued in accordance with the laws, less any accumulated amortization and any accumulated impairment losses. The depreciable amount of capitalized development expenditure is determined after deducting its residual value. Amortization is recognized as an expense on a straight-line basis over the estimated useful lives of intangible assets from the date when they are made available for use. The estimated useful lives of the intangible assets are as follows: i Patents ii Software iii Core technology iv Customer relationships 10 years 3 years 2 years 5 years (Continued)
9 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
The residual value, amortization periods, and amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Any changes thereon are accounted for as changes in accounting estimates. In accordance with SFAS No. 37, except when it forms part of the cost of a business combination, expenditure on research is recognized as an expense when it is incurred. An intangible asset arising from development is recognized if, and only if, the Company can demonstrate all of the following: i the technical feasibility of completing the intangible asset so that it will be available for use or sale. ii its intention to complete the intangible asset and use or sell it. iii its ability to use or sell the intangible asset. iv how the intangible asset will generate probable future economic benefits. v the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset. vi its ability to measure reliably the expenditure attributable to the intangible asset during its development. Capitalized development expenditure is measured at cost less accumulated impairment losses. In accordance with SFAS No. 37, an intangible asset with an indefinite useful life is not amortized. The useful life of capitalized development expenditure not being amortized is reviewed each periods to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. If they do not, the change in the useful life assessment from indefinite to finite is accounted for as a change in accounting estimate. The Company currently cannot separate the research stage and development stage for its R&D projects. Therefore, all R&D expenditures are treated as incurred at the research stage. (n) Deferred expenses Deferred expenses are stated at cost and primarily consist of costs of improvements of buildings used for operations. These expenses are amortized by the straight-line method over their economic useful lives of 2 to 5 years.

(q) Treasury stock Treasury stock is accounted for at acquisition cost. Upon disposal of the treasury stock, the sale proceeds in excess of cost are accounted for as capital surplustreasury stock. If the sale proceeds are less than cost, the deficiency is accounted for as a reduction of the remaining balance of capital surplustreasury stock. If the remaining balance of capital surplustreasury stock is insufficient to cover the deficiency, the remainder is recorded as a reduction of retained earnings. If treasury stock is retired, the weighted-average cost of the retired treasury stock is written off to offset the par value and the capital surplus premium, if any, of the stock retired. If the weightedaverage cost written off exceeds the sum of both the par value and the capital surplus premium, the difference is accounted for as a reduction of capital surplustreasury stock, or a reduction of retained earnings for any deficiency where capital surplustreasury stock is insufficient to cover the difference. If the weighted-average cost written off is less than the sum of both the par value and premium, if any, of the stock retired, the difference is accounted for as an increase in capital surplustreasury stock. (r) Share-based payment The employee stock options which were granted before January 1, 2008, are accounted for based on Interpretations (92) 070, 071 and 072 issued by the Accounting Research and Development Foundation. Under these Interpretations, the Company adopts the intrinsic value method to recognize the compensation cost, for the difference between the market price of the stock and the exercise price of the employee stock option on the measurement date. This compensation cost is charged to expense over the employee vesting periods and increases the stockholders equity accordingly. (s) Revenue recognition Revenue is recognized when products are delivered to customers and the significant risks and rewards of ownership are transferred. Repair income is recognized when the service is provided.
12 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS

2010 Investment income (loss) NT$ US$

Book value NT$ US$

Under equity method: Cowin Worldwide Corporation (Cowin) Win Smart Co., Ltd. (Win Smart) Wistron InfoComm (Philippines) Corporation (WPH) Wistron Mexico S.A. de C.V. (WMX) Wistron InfoComm (Texas) Corporation (WTX) AII Holding Corp. (AIIH) Wistron Service B.V. (WSE) SMS InfoComm (Singapore) Pte. Ltd. (WSG) Wistron LLC (WLLC) WiseCap Ltd. (WCL) International Standards Labs (ISL) Wistron NeWeb Corporation (WNC) AOpen Inc. (AOI) Wistron Information Technology and Services Corporation (WITS) Wistron Optronics Corporation (WOC, formerly WOD) Main Source Technology Co., Ltd. (Main Source) Anextek Global Incorporated (AGI) ACA Digital Corporation (ACA) WisVision Corporation (WVS) Wistron Europe Holding Cooperatie U.A. (WEH) Cetus International Co., Limited (CTI) SMS InfoComm Technology Services Limited Company (WTR) SMS InfoComm Technology Services and Management Solutions (WBR) Super Elite Ltd. (Super Elite) Deferred credits of long-term equity investments Prepaid long-term lnvestments: Information SuperGrid Technology Global Inc. Information SuperGrid Technology China Limited.
125,050 135,422 345,464 1,157,459 4,833 252,435 25,610 5,460 3,065 1,193 70,262 40,341 9,274 10,000 6,110 15,091 8,400 12,005 1,4,995 2,378
100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 26.38% 24.65% 29.40% 100.00% 35.48% 99.94% 27.26% 100.00% 99.98% 30.00% 99.90% 99.90% 43.17%
3,845,471 13,222,163 1,060,832 3,281,608 546,452 2,806,639 918,767 110,103 1,008,602 488,751 28,008 1,985,156 316,479 206,849 54,940 13,221 12,477 342,346 167,109 39,126 41,364 85,649 83,125 (47,483) 30,617,754
122,741 422,029 33,860 104,743 17,442 89,583 29,326 3,514 32,193 15,63,363 10,101 6,602 1,398 10,927 5,334 1,249 1,320 2,734 2,653 (1,516) 977,266
3,746,951 13,222,163 1,060,832 3,281,608 546,452 2,950,011 918,767 110,103 1,008,602 488,751 28,008 1,978,193 319,299 178,225 54,466 13,221 12,477 342,346 67,109 39,126 41,364 85,649 61,520

26 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
Repayment: The principal is payable in lump sum on maturity date if not refinanced before the payment date. Covenants: during the credit term, the Company is committed to maintain the following financial ratios: (i) Current ratio should not be lower than 100%. (ii) Loan to equity ratio should not be higher than 100%. (iii) Interest coverage ratio should not be lower than 400%. (iv) Total tangible net assets should not be lower than NT$25,000,000. Compliance with the above-mentioned financial ratios is determined based on the semiannual and annual consolidated financial statements reviewed or audited by independent auditors recognized by the lead bank and the arranger. As of September 30, 2009 and 2010, the Company was in compliance with the covenants. Breach of covenant: if a breach of covenant occurs, the Companys credit facility is promptly restricted. Without the consent of a majority of banks, the credit facility is no longer available to the Company. In addition, if the consent of a majority of banks is obtained, the arranger is eligible to act as follows: (i) To call part or all of the unused credit facility;
(ii) To inform the Company in writing that the loan is due immediately, and the principal with corresponding interest and penalty should be repaid to each bank; (iii) To request payment from the Company by exercising the right derived from the promissory note; (iv) To exercise the rights within the regulations, agreement, guarantee and other documents without further notifications. The Company has agreed to waive its rights for the abovementioned notifications from the bank syndicate.
27 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
(l) Accrued pension liability The following table sets forth the benefit obligation and net retirement plan assets (accrued pension liability) related to the Companys defined benefit retirement plan as of and for the ninemonth periods ended September 30, 2009 and 2010: 2009 NT$ Retirement plan assets Periodic pension cost: Defined benefit pension plan cost Defined contribution pension plan cost Prepaid pension cost (accrued pension liability) (under deferred expense and other assets and other liabilities) Unrecognized pension cost 699,279 36,485 114,NT$ 759,828 41,372 129,655 US$ 24,252 1,321 4,138

32 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
On June 19, 2009, the Company offered 15,000 thousand global depository receipts (GDRs) in the Luxembourg Stock Exchange representing 150,000 thousand shares of common stock, at par value of NT$10 per share. Each GDR represents ten shares of the Companys common stock. The offering price was US$14.9 per GDR. The offering and issuance of the GDRs were authorized and approved by the ROC Securities and Futures Bureau (SFB) through its letter 0980026551 on June 8, 2009. The total capital received from the offering of these GDRs amounted to US$223,500 on June 19, 2009, and the net proceeds thereof, after deducting the underwriting expense of US$3,554, amounted to US$219,946 (equivalent to NT$7,233,783). The paid-in capital in excess of par value of NT$5,733,783 was recognized in capital surplus. On June 23, 2009, the Companys shareholders approved a resolution to distribute a stock dividend of 108 shares per thousand shares with a face value of NT$1,637,968 and stock dividends (20,182,000 shares) as employees bonus of NT$982,073. The number of shares distributed to employees as employees bonus is calculated based on the closing price of NT$48.66 on the day before the approval of stockholders and the effect of stock dividends that will be distributed. The paid-in capital in excess of par value of NT$780,250 was recognized in capital surplus. The Company issued GDRs representing the Companys common stock, therefore, the ratio for the stock dividend to be distributed to shareholders changed to 98.28 shares per thousand shares. The dividend distribution date was set on August 10, 2009. The related registration processes were completed. As of September 30, 2009 and 2010, the Companys authorized common stock consisted of 2,500,000,000 shares with par value of NT$10 per share, of which 1,850,616,000 shares and 1,964,266,000 shares, respectively, were issued. (2) Treasury stock (i) For the nine-month period ended September 30, 2010, in order to provide some incentives to employees, the Company acquired 17,474,000 treasury shares to be made available for sale to its employees in accordance with Securities and Exchange Act. (ii) According to the Securities and Exchange Act, the number of treasury shares shall not exceed 10% of the number of shares issued. Moreover, the total amount of treasury stock shall not exceed the sum of retained earnings, paid-in capital in excess of par value, and realized capital surplus. Based on the Companys financial statements issued on April 12, 2010, the maximum number of Company shares that the Company was allowed to acquire was 187,027,000 shares, with a value not exceeding NT$31,259,410. For the nine-month period ended September 30, 2010, the maximum number of shares acquired was 17,474,000 shares, with total cost of NT$878,940, which was below the ceiling set under the Securities and Exchange Act.

37 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
For the nine-month periods ended September 30, 2009 and 2010, the Company recognized employees bonus amounting to NT$765,320 (NT$636,746 net of tax) and NT$1,099,775 (NT$954,254 net of tax), respectively, and directors and supervisors emoluments amounting to NT$54,666 (NT$45,482 net of tax) and NT$78,555 (NT$68,161 net of tax), respectively. Employees bonus and directors and supervisors emoluments were estimated at 14% and 1% of the net income for the nine-month periods ended September 30, 2009 and 2010, respectively. The difference between the amounts of employees bonus and directors and supervisors emoluments approved in the shareholders meeting and that recognized in the financial statements, if any, is accounted for as a change in accounting estimates and recognized in profit or loss in the following year. In addition, the number of shares distributed to employees as employees bonus is calculated based on the closing price on the day before the approval of stockholders and the effect of dividends that will be distributed. The appropriation of 2008 and 2009 earnings was approved at the shareholders meetings on June 23, 2009, and June 18, 2010, respectively, as follows: 2008 NT$ Employees bonuscash Employees bonusstock (was calculated based on the par value and closing price and the effect of dividends on the day before shareholders meeting) Directors and supervisors emoluments 2009 NT$ 1,196,481

982,073 61,902 1,043,975

82,212 1,278,693
The appropriation of earnings did not differ from the resolutions approved by the Companys board of directors and the recognized amount. Appropriation of employees bonus and directors and supervisors emoluments, and the related information can be obtained on the public information website.
38 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
(o) Earnings per share (EPS) For the nine-month periods ended September 30, 2009 and 2010, the Companys earnings per share were calculated as follows:
2009 Weightedaverage number of outstanding shares of common stock (in thousands)

Amount Before income tax NT$ Basic EPSretroactively adjusted: Net income belonging to common shareholders Diluted EPS: Effect of potentially dilutive common stock: Employees bonus Stock options Common shareholders net income plus the effect of potentially dilutive common stock After income tax NT$
EPS (in dollars) Before income tax NT$ After income tax NT$

7,230,806

6,017,211

1,796,452

27,080 105,000
1,928,Weightedaverage number of outstanding shares of common stock (in thousands)
Amount Before income tax NT$ US$ Basic EPS: Net income belonging to common shareholders Diluted EPS: Effect of potentially dilutive common stock: Employees bonus Stock options Common shareholders net income plus the effect of potentially dilutive common stock After income tax NT$ US$
EPS (in dollars) Before income tax NT$ US$ After income tax NT$ US$

10,290,523

328,456

8,928,895

284,995

1,958,247

42,742 16,620

2,017,609

39 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
(p) Disclosure of financial instruments (1) The Companys non-derivative financial assets and liabilities include cash and cash equivalents, accounts and notes receivable/payable, receivables from/payables to related parties, other financial assets-current, short-term liabilities, current portion of long-term borrowings and other payables. As the carrying amounts of these financial instruments approximate fair value because of their short term maturities, the book value method is considered to be a reasonable basis to assess their fair value. As of September 30, 2009 and 2010, the carrying amounts of the Companys financial assets and liabilities that were not recorded at fair value were as follows:
2009 Carrying amount NT$ Financial assets: Financial assets carried at cost noncurrent: Privately held stock Financial liability: Long-term borrowings Off-balance-sheet financial instrument: Endorsement Fair value NT$ Carrying amount NT$ US$ 2010 Fair value NT$ US$

521,294 -

5,796,000

1,418,937 -

45,290 -

13,756,579

25,014,248

798,412

The following methods and assumptions were used to estimate the fair value of each class of financial instruments: (i) If public quote of financial assets at fair value through profit or loss and available-for-sale financial assets is available, then the quote is adopted as the fair value. If market value is not available, a valuation method is used. The assumptions used are the same as those used by financial market traders when quoting their prices and are attainable by the Company. (ii) Financial assets carried at costnoncurrent: Privately held stock is not traded in the public market, and fair value is impractical to assess. (iii) Long-term borrowings: As these borrowings bear floating interest rates which are calculated based on the prevailing market rate adjusted by the Companys credit spread, the fair value of long-term borrowings equals their carrying value.

Cowin WJP WCL AIIH and Cowin The Company and Cowin WPH, Cowin, WAKS, WIKS, WEKS and WCZ Cowin, WZS, WAKS, WIKS and WEKS WCZ WOK WOC (formerly WOD) The Company and WVS WMKS WITX The Company and WITX WVS and AIIH The Company, Cowin and WVS WIN The Company and WMX WAKS, WIKS and WEKS WITX and WMX The Company, WITX and WMX WVS Cowin and WVS WSG The Company, WMKS The Company and WSG
51 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
6. Pledged Assets As of September 30, 2009 and 2010, details of pledged assets were as follows: Book value 2010 NT$ 2,133

Pledged assets

Pledged to secure

2009 NT$ 2,353

US$ 68
Other assetsrestricted deposit Standby LC 7. Significant Commitments and Contingencies
(a) As of September 30, 2010, the Company had operating lease contracts for office premises, with future rental commitments as follows: Period Amount NT$ 60,772 50,196 32,856 19,912 6,857 170,593
US$ 1,940 1,602 1,219 5,445
2010.10~2011.9 2011.10~2012.9 2012.10~2013.9 2013.10~2014.9 2014.10~2015.9
(b) As of September 30, 2009 and 2010, the Company had provided promissory notes amounting to US$650,000 and US$1,100,000, respectively, as collateral for factored accounts receivable. Please see note 4(c) for details. 8. Significant Casualty Loss: None. 9. Significant Subsequent Events: None.
52 WISTRON CORPORATION NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
10. Other (a) Total personnel, depreciation, and amortization expenses incurred for the nine-month periods ended September 30, 2009 and 2010, were as follows:
Cost of sales NT$ Personnel expenses Salaries Labor and health insurance Pension Others Depreciation Amortization 2009 Operating expenses NT$ 2010 Total NT$ Cost of sales NT$ Operating expenses NT$ Total NT$ Cost of sales US$ Operating expenses US$ Total US$
602,141 34,105 25,479 23,614 57,056 14,098
3,158,434 156,546 125,047 71,468 1,528,281 505,653
3,760,575 190,651 150,526 95,082 1,585,337 519,751
683,167 35,381 27,341 16,528 42,946 6,342
3,931,926 186,505 143,686 82,920 1,260,358 519,206
4,615,093 221,886 171,027 99,448 1,303,304 525,548

21,806 1,527 1,371 203

125,500 5,953 4,586 2,647 40,228 16,572
147,306 7,082 5,459 3,174 41,599 16,775
(note) For each of the nine-month periods ended September 30, 2009 and 2010, the depreciation of property for operating lease amounted to NT$2,445, respectively, which was accounted for under other loss. (b) Reclassification Certain accounts in the 2009 non-consolidated financial statements have been reclassified to conform to the 2010 financial statement presentation for comparison purposes. These reclassifications do not have a significant impact on the non-consolidated financial statements. 11. Segment Information In accordance with ROC SFAS No 23, Interim Financial Reporting, an enterprise is not required to follow the principles outlined in ROC SFAS No. 20, Segment Reporting, when preparing interim financial statements.

97,712 1,907 25,066 15,078 -
189,356 4,305 232,965 1,277,885 833,547

5,7,021 38,514 25,122

Wistron Corporation Notes to Nonconsolidated Financial Statements As of and for the nine-month periods ended September 30, 2004 and 2005
(amounts expressed in thousands of New Taiwan dollars and US dollars, except for per share information and unless otherwise noted)
1. Organization and Business Scope Wistron Corporation (the Company) was incorporated on May 30, 2001, as a company limited by shares under the laws of the Republic of China (ROC). Pursuant to its restructuring plan whose purpose was to improve business performance and competitiveness, Acer Inc. (AI) decided to spin off its product Design, Manufacturing, and Services (DMS) business. The Company was established to assume this DMS business and acquire the net assets of this business spun off from AI. The Company is engaged in the research, development, design, manufacturing, testing and sale of the following products, semi-finished products, and their peripheral equipment, parts and components: (1) Desktop computers, notebook computers, motherboards, servers, system platforms, high-speed and multi-function multiple-CPU computer systems, multi-media computers, network computers, consumer-type computers and special computers, micro-processors, CD-ROMs, PDAs, panel PCs, pocket computers and interface cards; (2) video and internet telephones, video conferencing equipment and telecommunication equipment; (3) digital satellite TV receivers, set-top boxes, digital video decoders and multi-media appliance products; (4) digital cameras, CD-ROM drives and DVDROM drives; (5) wireless receiver products (mobile phones, wireless LAN cards, and Bluetooth communication modules); and (6) LCD TVs and other video electronic products. As of September 30, 2004 and 2005, the Company had total manpower in Taiwan of 3,423 and 2,761 employees, respectively. 2. Summary of Significant Accounting Policies The Company prepares its financial statements in accordance with accounting principles generally accepted in the ROC. These nonconsolidated financial statements are intended to present the financial position of the Company and the related results of operations and cash flows using accounting principles and practices generally accepted in the ROC and not those of other jurisdictions. The financial statements of the Companys subsidiaries are not consolidated in the accompanying nonconsolidated financial statements. The investments in these subsidiaries were accounted for in these nonconsolidated financial statements using the equity method as described in paragraph (g). The significant accounting policies adopted in preparing the nonconsolidated financial statements are as follows:

7 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
For the portion of the retirement plan adopting the defined contribution scheme, in accordance with the New Act, the Company provides monthly contributions to the Bureau of Labor Insurance equal to 6% of the workers monthly wages. The amount of contribution is recognized as expense of the current period. (n) Convertible bonds payable The cost of issuing convertible bonds is capitalized as deferred costs and amortized as interest expense over the period between the issuing date and reselling date. When the bondholders exercise the reselling right, the unamortized amount is recorded as interest expense based on the reselling ratio. When bondholders exercise the conversion right, the number of shares the bond is converted into is calculated based on the face value of the convertible bond and the conversion price on the conversion date. The excess of the conversion price over the par value and the unamortized bond issuance costs are recorded as capital surplus. (o) Revenue recognition Revenue is recognized when products are delivered to customers and the significant risks and rewards of ownership are transferred. Repair income is recognized when the services are provided. (p) Asset impairment Effective January 1, 2005, the Company adopted ROC SFAS 35 Accounting for Asset Impairment. In accordance with SFAS 35, the Company assesses at each balance sheet date whether there is any indication that an asset (individual asset or cash-generating unit) other than goodwill may have been impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The Company recognizes impairment loss for an asset whose carrying value is higher than the recoverable amount. An impairment loss recognized in prior periods is reversed for assets other than goodwill if there is any indication that the impairment loss recognized no longer exists or has decreased. The carrying value after the reversal should not exceed the recoverable amount or the depreciated or amortized balance of the assets assuming no impairment loss was recognized in prior periods. The Company performs an impairment test on the cash-generating unit to which goodwill is allocated on an annual basis and recognizes an impairment loss on the excess of carrying value over the recoverable amount.

8 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
(q) Income taxes Income taxes are accounted for using the asset and liability method. Deferred income tax is determined based on differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect during the years in which the differences are expected to reverse. The income tax effects of taxable temporary differences are recognized as deferred income tax liabilities. The income tax effects resulting from deductible temporary differences, net operating loss carryforwards, and income tax credits are recognized as deferred income tax assets. The realization of the deferred income tax assets is evaluated, and if it is considered more likely than not that the asset will not be realized, a valuation allowance is recognized accordingly. The classification of deferred income tax assets and liabilities as current or noncurrent is based on the classification of the related asset or liability. If the deferred income tax asset or liability is not directly related to a specific asset or liability, then the classification is based on the expected realization date of the asset or liability. A tax imputation system was adopted in accordance with the amended ROC Income Tax Law. Under this system, the Company may retain the earnings arising after December 31, 1997, by paying a 10% surtax on such undistributed earnings, and the surtax is accounted for as income tax expense on the date when the stockholders resolve not to distribute the earnings. (r) Treasury stock Treasury stock is accounted for at acquisition cost. Upon disposal of the treasury stock, the excess of the sale proceeds over cost is accounted for as capital surplus treasury stock. If the sale proceeds are less than cost, the deficiency is accounted for as a reduction of the remaining balance of capital surplus treasury stock. If the remaining balance of capital surplus treasury stock is insufficient to cover the deficiency, the remainder is recorded as a reduction of retained earnings. If treasury stock is retired, the weighted-average cost of the retired treasury stock is written off to offset the par value and the capital surplus premium, if any, of the stock retired. If the weightedaverage cost written off exceeds the sum of both the par value and the capital surplus premium, the difference is accounted for as a reduction of capital surplus treasury stock, or a reduction of retained earnings for any deficiency where capital surplus treasury stock is insufficient to cover the difference. If the weighted-average cost written off is less than the sum of both the par value and premium, if any, of the stock retired, the difference is accounted for as an increase in capital surplus treasury stock.

9 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
(s) Net income per common share Net income per common share is calculated as net income divided by the weighted-average number of outstanding common shares. The increase in the number of outstanding shares through distribution of stock dividends from retained earnings or capital surplus is included in the outstanding shares retroactively. Stock options and convertible bonds are dilutive potential common stock. The computation of diluted earnings per share is based on the abovementioned weighted-average number of outstanding common shares plus the weighted-average number of common shares which would be issued on the conversion of all the dilutive potential common shares into common shares. (t) Convenience translation into U.S. dollars The nonconsolidated financial statements are stated in New Taiwan dollars. Translation of the 2005 New Taiwan dollar financial statement amounts into U.S. dollar amounts is included solely for the convenience of the readers, using the spot rate of the Bank of Taiwan on September 30, 2005, of NT$33.18 to US$1 uniformly for all the financial statement accounts. The convenience translations should not be construed as representations that the New Taiwan dollar amounts have been, could have been, or could in the future be, converted into U.S. dollars at this rate or any other rate of exchange. 3. Changes in Accounting Policies The Company adopted ROC SFAS No. 35 Accounting for Asset Impairment in 2005. After performing an impairment test on those assets with an indication of impairment, the Company determined that no impairment loss shall be recognized as of September 30, 2005. 4. Significant Account Disclosures (a) Cash and cash equivalents The components of cash and cash equivalents as of September 30, 2004 and 2005, were as follows: 2004.9.30 NT$ Cash on hand Cash in banks Time deposits (maturing within one year) Repurchased commercial paper and government bonds 5,170 485,764 1,050,337 1,506,469 3,047,740 2005.9.30 NT$ US$ 8,227 309,896 4,955,945 1,839,652 7,113,9,340 149,365 55,445 214,398 (Continued)
10 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
(b) Short-term investments Short-term investments as of September 30, 2004 and 2005, were as follows: 2004.9.30 NT$ Mutual funds (c) Accounts receivable As of September 30, 2004 and 2005, the factored accounts receivable that met the derecognition criteria were as follows: (Unit: US$ thousand)
2004.9.30 Factored amount US$ 73,015 90,068 34,142 54,420 US$ 251,645 Factoring credit limit 66,376 81,472 30,000 49,473 227,321 Advance amount 66,376 130,945 30,000 49,473 276,794 Important derecognition clause without recourse Derecognized amount 73,015 90,068 34,142 54,420 251,645

2005.9.30 NT$ US$ 4,074,000 122,785

1,885,890

Buyer Chinatrust Bank ICBC (note 2) Standard Chartered Bank Chang Hwa Bank (note 1)

Interest rate

Collateral 135,000 100,000 235,000

1.38%~2.37%

2005.9.30 Factored amount US$ 28,025 3,177 74,949 191,585 147,871 31,711 15,856 15,856 US$ 509,030 Factoring credit limit 25,216 2,698 68,018 171,880 132,273 28,540 14,270 14,270 457,165 Advance amount 25,216 2,698 68,018 171,880 132,273 28,540 14,270 14,270 457,165 Important derecognition clause without recourse Derecognized amount 28,025 3,177 74,949 191,585 147,871 31,711 15,856 15,856 509,030
Buyer Tai Shin Commercial Bank Standard Chartered Bank Chinatrust Bank ICBC (note 4) Chang Hwa Bank (note 3) Taiwan Business Bank (note 1) Farmer Bank (note 1) Fuhwa Bank (note 1)
Collateral 135,000 430,000 200,000 765,000

2.88%~4.43%

(note 1): Accounts receivable factored were accounts receivable from AI. (note 2): Including related-party receivables from AI of US$54,420. (note 3): Including related-party receivables from AI of US$15,856. (note 4): Including related-party receivables from AI of US$118,916. (Continued)
11 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
The abovementioned sales of accounts receivable to banks are recognized when the ownership and significant risks of the factored accounts receivable are transferred. As of September 30, 2004 and 2005, accounts receivable factored to banks amounted to US$251,645 (approximately NT$8,550,897) and US$509,030 (approximately NT$16,889,615), respectively, of which NT$826,532 and NT$1,720,802, respectively, were still retained by the banks for compensation in any business disputes related to the factored accounts receivable and were classified as other financial assets current in the accompanying nonconsolidated balance sheets. (d) Inventories The components of inventories as of September 30, 2004 and 2005, were as follows: 2004.9.30 NT$ Raw materials Work in process Finished goods Inventories in transit Less: provision for loss on obsolescence and price decline 2,905,697 95,156 2,294,272 89,694 (475,481) 4,909,338 2005.9.30 NT$ US$ 2,305,144 127,274 2,228,347 25,979 (438,000) 4,248,744 69,474 3,836 67,(13,201) 128,051

As of September 30, 2004 and 2005, the insurance coverage for inventories amounted to NT$6,604,187 and NT$5,155,800, respectively. (e) Long-term equity investments Long-term equity investments as of September 30, 2004 and 2005, and related investment income or loss for the nine-month periods ended September 30, 2004 and 2005, were as follows:
2004.9.30 Number of Percentage of ownership Book value shares NT$ 12,050 27,610 3,745 31,100.00% 100.00% 100.00% 40.71% 31.76% 100.00% 158,419 746,715 128,663 15,841 854,670 16,Investment Share of net equity of investee income (loss) NT$ NT$ 102,003 746,715 128,663 15,841 835,020 16,914 (105,944) (80,792) (52,162) (10,472) 82,468 1,073
Investee Under equity method: Cowin Worldwide Corp. (Cowin) Win Smart Co., Ltd. (Win Smart) Acer Soft Capital Limited (ASC) PlayCoo Corporation (PCC) Wistron NeWeb Corporation (WNC) International Standard Labs (ISL)
12 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements

Investee

2004.9.30 Number of Percentage of ownership Book value shares NT$ 95,234 6,881 150,000 186,947 2,34.01% 76.46% 100.00% 100.00% 100.00% 100.00% 100.00% 1,396,322 10,349 1,148,480 239,516 745,641 252,998 30,181
2004 Investment Share of net equity of investee income (loss) NT$ NT$ 1,394,846 15,493 1,148,480 239,516 745,641 252,998 30,181 (320,296) (4,504) (28,037) (1,126,501) 8,202 15,075 36,855 (12)
AOpen Inc. (AOI) Wistron Nexus Incorporated (WNI) Anextek Global Incorporated (AGI) Wistron InfoComm (Philippines) Corporation (WPH) Wistron InfoComm Hungary KFT (WHU) Wistron Mexico S.A. de C.V. (WMX) Wistron InfoComm (Texas) Corporation (WTX) Wistron InfoComm Holland B.V. (AIIE) Wistron Information Technology & Services (WITS) M-Display Optronics Corp. (M-Display) Main Source Tchnology Co., Ltd. (Main Source) Other Deferred credits from long-term equity investments Under cost method or lower-of-cost-or-market method: Super Elite Ltd. Bcome Electronics Inc. High-Tek Harness Enterprise Co., Ltd. Golana Technology Corp. IP Fund II, L.P. Visionetics Prepaid long-term equity investments: IP Fund III, L.P. Long-term investment credits: AII Holding Corp. (AIIH) Wistron Service B.V. (WSE)

9,000 6,500 6,110

(h) Short-term borrowings For the nine-month periods ended September 30, 2004 and 2005, the average interest rates on short-term borrowings were 1.71% and 3.60% per annum, respectively. Unused credit facilities as of September 30, 2004 and 2005, amounted to approximately NT$12,443,480 and NT$14,553,440, respectively. The Company was not required to pay commitment fees on these facilities. The Company provided some assets as collateral for these credit facilities. For the description of pledged assets related to these credit facilities, please see note 6. (Continued)
16 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
(i) Convertible bonds payable The Company issued the overseas convertible bonds in Luxembourg with a face value of US$120,000 in February 2004, the details of which were as follows: (1) As of September 30, 2004 and 2005, the components of convertible bonds payable were as follows:
2004.9.30 NT$ 3,993,240 23,294 84,360 4,100,894 2005.9.30 US$ 120,(56,200) (25,565) 38,340 NT$ 3,993,240 2,790 (1,876,518) (833,547) (8,080) 1,277,885
US$ Principal Convertible bond premium Cumulative amount of redeemed bonds Cumulative amount converted to common stock Unrealized foreign exchange loss (gain)

120,120,700

According to the convertible bond covenants, bondholders can request the Company to redeem the bonds at face value two years after the issue date (February 5, 2006). As of September 30, 2005, the Company anticipates the bondholders will exercise the right; therefore, the bonds payable were reclassified to current liability on March 31, 2005. (2) Bond conversion covenants: Issue date Maturity Coupon Rate Collateral February 5, years Zero None
The holders are allowed to convert the convertible bonds into common shares of the Company 30 days after the issue date and 30 days prior to maturity. The conversion price was NT$38.09, NT$34.91, NT$29.67 and NT$29.44 per share as of February 5, 2004, August 23, 2004, February 5, 2005, and September 22, 2005, respectively, with a fixed rate of exchange applicable on conversion of the bonds of US$1.00:NT$33.39. The bondholders can request the Company to redeem the bond at face value two years after the issue date. The Company can redeem all or part of the bonds two years after the issue date under the following conditions: (i) if the closing price of the shares, translated into US dollars at the prevailing exchange rate, on each of 20 consecutive trading days is at least 120% of the conversion price of the convertible bonds, the Company can notify the bondholders about the (Continued)

20 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
(7) The Company was granted investment tax credits for investment in certain high-tech industries, for purchases of automatic machinery and equipment, and for expenditures in research and development and employee training. These investment tax credits can be used to reduce the income tax liability in the current year and in the following four years at an amount not exceeding 50% of the income tax liability for each year during the first four years, with full utilization of the balance of the remaining unused investment tax credits in the final year. As of September 30, 2005, unused investment tax credits available to the Company were as follows: Expiration date December 31, 2006 December 31, 2007 December 31, 2008 December 31, 2009 Unused investment tax credits NT$ US$ 230,957 390,167 400,732 314,836 1,336,692 6,961 11,759 12,077 9,489 40,286
(8) Imputed tax credit account (ICA) and creditable ratio As of September 30, 2004 and 2005, the undistributed earnings were as follows: 2004.9.30 NT$ Before January 1, 1998 From January 1, 1998 Total Balance of imputation credit account (46,752) (46,752) 17,080 2005.9.30 NT$ US$ 1,857,930 1,857,930 33,830 55,995 55,995 1,020
2003 Creditable ratio for earnings distribution to domestic stockholders
The ROC income tax authorities have examined and assessed the Companys income tax returns for all years through 2001.
21 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
(l) Stockholders Equity (1) Common stock The Companys shareholders resolved during their meeting on June 16, 2004, to distribute cash dividends of NT$441,199 and remuneration for directors and supervisors of NT$14,452, and to capitalize the unappropriated earnings of NT$441,199 and employees bonus of NT$144,500 by issuing 58,569,955 shares of common stock as stock dividends and bonuses. The common shares for the stock dividends were issued on August 23, 2004, based on a resolution approved by the members of the board of directors during their meeting. The related registration process was completed. For the nine-month period ended September 30, 2005, 20,723,000 units of employee stock options were exercised at a conversion price of NT$13.10 per share, 19,462,000 shares were registered with the government authorities, and the remaining 1,261,000 shares, amounting to NT$16,519, had not been registered with the government authorities. As of September 30, 2005, NT$12,610 was recorded as shares subscribed and the remaining NT$3,909 was recorded as capital surplus proceeds in excess of par value. The Company issued NT$1,500,000 of global depository receipts (GDRs) in Luxembourg representing 150,000 thousand shares of common stock, at par value of NT$10 per share, on September 22, 2005. Each GDR represents ten shares of common stock. The offer price was US$9.3448 per GDR. The offer and issuance of the GDRs were authorized and approved by the ROC from Securities and Futures Bureau (SFB) on August 22 and September 19, 2005. The Company received capital totaling US$140,172 on September 22, 2005, and after deducting the underwriting expense of US$2,487, the net amount was US$137,685, equivalent to NT$4,562,200. The paid-in capital in excess of par value amounted to NT$3,062,200, recognized in capital surplus proceeds in excess of par value. As of September 30, 2004 and 2005, the Companys authorized common stock consisted of 1,223,700,000 and 1,600,000,000 shares, respectively, with par value of NT$10 per share, of which 948,991,000 shares and 1,147,598,000 shares, respectively, were issued. (2) Employee stock option plan The Companys board of directors during their meetings on April 2 and 4, 2002, approved issuance of 50 million and 22 million units, respectively, of employee stock options with the right for each unit to purchase one share of the Companys common stock. These options were fully issued on April 3 and 9, 2002.

3,891,976 5,691,976

7,564,9,365,134

227,282,253

According to the ROC Company Law, with the exception of capital surplus derived from long-term equity investments accounted for by the equity method, realized capital surplus could only be transferred to common stock after deducting accumulated deficit, if any. Capital surplus derived from long-term equity investments accounted for by the equity method cannot be used for any purpose. Realized capital surplus includes paid-in capital in excess of par value of common stock. Issuance of stock dividends from paid-in capital in excess of par value of common stock is subject to certain restrictions imposed by the SFB.
24 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
(5) Legal reserve and unappropriated earnings The Companys articles of incorporation stipulate that 10% of the balance of annual income after deducting accumulated deficit, if any, must be set aside as a legal reserve. The remaining balance, if any, must be distributed as follows: 5% to 10% of the unappropriated earnings as employee bonuses. The employees eligible for the bonuses include the employees of the Companys subsidiaries that meet certain criteria. The Companys board of directors determines the criteria; 1% of unappropriated earnings as remuneration for directors and supervisors, distributed in cash; and the remainder, after retaining a portion for certain business considerations, as additional dividends to stockholders. Legal reserve can only be used to offset an accumulated deficit. However, when it reaches an amount equal to one-half of the paid-in share capital, the amount of one-half of the legal reserve can be transferred to common stock. In addition, stock dividends and bonuses cannot be distributed if the Company has no unappropriated earnings. Because the Company is a technology- and capital-intensive enterprise and is in its growth phase, it has adopted a more prudent approach in the appropriation of its remaining earnings as its dividend policy, in order to sustain its long-term capital needs and thereby maintain continuous development and steady growth. The ratio for distributing stock dividends shall not be lower than 10% of total distribution. This dividend policy was approved on June 7, 2002, during the Companys shareholders meeting. (m) Earnings per share For the nine-month periods ended September 30, 2004 and 2005, the Companys earnings per share were calculated as follows:

2004 Weightedaverage number of outstanding shares of common stock (in thousands)
Amount Before income taxes NT$ Basic EPS: Net loss belonging to common shareholders After income taxes NT$
EPS (in dollars) Before After income income taxes taxes NT$ NT$

(980,463)

(981,846)

936,482

(1.05)
25 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
For the nine-month period ended September 30, 2004, employee stock options and convertible bonds were antidilutive; thus, diluted EPS was not disclosed.
2005 Weightedaverage number of outstanding shares of common stock (in thousands)
Amount Before income taxes NT$ US$ Basic EPS: Net income belonging to common shareholders Diluted EPS: Effect of common stock with dilution potential: Stock options Convertible bonds payable Common shareholders net income plus the effect of common stock with dilution potential After income taxes NT$ US$
EPS (in dollars) Before After income income taxes taxes NT$ US$ NT$ US$

1,805,633

54,419

1,805,525

54,416

912,821

16,774 84,203

1,013,798

(n) Financial instruments The Company utilized foreign currency options, forward foreign currency exchange contracts, nonprincipal delivery forward contracts, and cross currency swap contracts to hedge a majority of the foreign exchange rate fluctuation risks from existing assets and liabilities denominated in foreign currencies and anticipated foreign currency cash for the coming three months. (1) Currency option contracts (i) Call options 2004.9.30 Notional amount Contract period US$ 10,000 2004/07/19~2004/10/15

Options written

USD CALL / NTD PUT
For the nine-month period ended September 30, 2004, premiums paid for the contract were US$39.5. As of September 30, 2004, the fair value of the contract quoted by the bank was approximately US$18.
26 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
(ii) Put options 2004.9.30 Notional amount Contract period US$ 2,000 2004/10/01~2004/11/29
For the nine-month period ended September 30, 2004, premiums from these contracts aggregating to US$6 were received up front. The fair value of the premiums quoted by the banks was approximately US$(5) as of September 30, 2004. The Company enters into currency option contracts in order to hedge its existing foreign currency exposures and anticipated cash flows. When the holders exercise the options, the Company will use its existing foreign currency assets or liabilities to settle its obligations. Therefore, the market risk related to the changes in exchange rates is not considered significant. (2) Forward foreign currency exchange contracts As of September 30, 2004 and 2005, the Company had several forward foreign exchange contracts and cross currency swap contracts outstanding. The net receivable or payable balance related to these contracts is classified as prepaid expenses and other current assets or accrued expenses and other current liabilities in the accompanying nonconsolidated balance sheets. Details of the gross and net payable balances as of September 30, 2004 and 2005, are as follows: 2004.9.30 NT$ Forward foreign currency contract receivable Forward foreign currency contract payable Unamortized forward foreign currency discount Forward foreign currency contract payable, net Fair value 1,561,720 (1,563,080) 526 (834) (1,033) 2005.9.30 NT$ US$ -

28 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
(ii) Long-term equity investments The fair values of long-term equity investments are based on quoted market prices. Management believes that it is not practicable to estimate the fair value of long-term equity investments that do not have readily available market price information. (iii) Convertible bonds payable Market prices are used as fair value. (iv) Derivative financial instruments The fair value of derivative financial instruments represents the estimated amount that the Company would receive or pay to terminate the contracts at the balance sheet date, generally including unrealized gains or losses on unsettled agreements. The fair values are based on quotations received from financial institutions. (v) Endorsements and guarantees The fair values are based on contract prices. (4) Concentrations of credit risk Concentrations of credit risk exist if the financial instrument transactions are obviously concentrated on a few counter-parties, or the counter-parties are engaged in similar business activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. The Companys accounts receivable that obviously concentrated on specific customers as of September 30, 2004 and 2005, were as follows: Customer 2004.9.30 NT$ 3,295,421 3,766,558 7,061,979 2005.9.30 NT$ US$ 3,815,003 3,701,955 7,516,958 114,979 111,572 226,551

Customer A AIIH

29 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
5. Transactions with Related Parties (a) The names and relationships of the related parties with which the Company had significant transactions were as follows: Name Acer Incorporated (AI) Acer America Corp. (AAC) AII Holding Corporation (AIIH) Wistron InfoComm (Texas) Corporation (WTX) Wistron InfoComm (Philippines) Corporation (WPH) Wistron InfoComm Hungary KFT (WHU) Wistron Service B.V. (WSE) Cowin Worldwide Corporation (Cowin) Win Smart Co., Ltd. (Win Smart) Wistron Mexico S.A. de C.V. (WMX) Acer Soft Capital Limited (ASC) International Standards Labs (ISL) Anextek Global Incorporated (AGI) Integrated Manufacturing Service (IMS) Wistron K.K. (WJP) Wistron InfoComm (American) Corporation (WSJ) Wistron InfoComm (Zhongshan) Corporation (WZS) Wistron Service (Kuanshan) Co., Ltd. (WSKS) Wistron InfoComm (Kuanshan) Co., Ltd. (WAKS) Wistron InfoComm Technology (Kuanshan) Co., Ltd. (WIKS) Wistron InfoComm Manufacturing (Kuanshan) Co., Ltd. (WEKS) AOpen Inc. (AOI) Wistron NeWeb Corporation (WNC) BenQ Corp. (BQY) AU Optronics Corp. (AUO) Relationship Primary stockholder of the Company Subsidiary of AI Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of AIIH Subsidiary of AIIH Subsidiary of AIIH Subsidiary of AIIH Subsidiary of Win Smart Subsidiary of Win Smart Subsidiary of Win Smart Subsidiary of Win Smart Investee of the Company accounted for by equity method Investee of the Company accounted for by equity method Investee of AI accounted for by equity method Investee of BQY accounted for by equity method

10,162,880 (3,698,384) (422,906) 6,041,590 208,212 8,637 261,619 478,468
12,677,150 (6,576,125) 6,101,025 277,263 26,218 382,666 686,147
382,072 (198,195) 183,877 8,11,534 20,680
Long-term equity investment credits were recognized as netting of receivable from related parties to reflect the book value of receivable from related parties.
35 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
(12) Related-party payables As of September 30, 2004 and 2005, payables to related parties resulting from the above transactions were as follows: 2004.9.30 NT$ Payables to related parties: Notes and accounts payable Other payables related party: Payable to related party from AI spin-off Research and development payable Advances from related parties 2005.9.30 NT$ US$
9,199,802 1,238,446 5,245 253,730 1,497,421
12,154,833 910,961 5,504 292,892 1,209,357

366,330 27,8,827 36,448

(13) Endorsements and guarantees The Company provided endorsements and guarantees to related parties to secure their bank loans and guarantees to vendors. Such endorsements and guarantees as of September 30, 2004 and 2005, were as follows:
Related parties Endorsement NT$ 1,800,940 1,359,200 509,700 306,300 237,860 29,000 679,600 2004.9.30 Used NT$ 1,529,100 949,741 441,740 306,300 186,890 10,500 543,680 Guarantee NT$ 45,873 1,019,400 3,398,000 101,940 Endorsement NT$ US$ 1,493,100 995,400 829,500 292,600 179,000 331,800 45,000 30,000 25,000 8,819 5,395 10,000 2005.9.30 Used NT$ US$ 819,129 19,339 331,800 292,600 24,10,000 8,819 Guarantee NT US$ 995,400 1,692,180 30,000 51,000 -
Cowin AIIH and Cowin WZS WJP WHU ASC AIIH WPH, Cowin, WAKS and WIKS WAKS and WIKS WTX and WMX Cowin, WZS, WAKS, WIKS and WEKS

4,922,600

3,967,951

4,565,213

4,121,400

124,214

1,462,868

44,089

99,540 2,787,120

3,000 84,000

36 WISTRON CORPORATION Notes to Nonconsolidated Financial Statements
6. Pledged Assets As of September 30, 2004 and 2005, details of pledged assets were as follows: Book value 2005.9.30 NT$ US$ 964,026 29,054

Pledged assets

Pledged to secure

2004.9.30 NT$ 977,256

Property, plant and equipment 7. Significant Commitments

Line of credit

(a) As of September 30, 2005, the Company had operating lease contracts for office premises, with future rental commitments as follows: Period Amount NT$ US$ 2,2,26 89
2005.10~2006.9 2006.10~2007.9
(b) As of September 30, 2004 and 2005, the Company had provided promissory notes amounting to US$235,000 and US$765,000, respectively, as collateral for factored accounts receivable. Please see note 4(c) for details. 8. Significant Subsequent Events: None.