AUO — Audit Report / Information 2018

Nov 13, 2018

Stock Code：2409

AU OPTRONICS CORP.

Parent Company Only Financial Statements and Independent Auditors’ Report

For the Years Ended December 31, 2018 and 2017

The independent auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English version and Chinese version, the Chinese-language independent auditors’ report and the parent company only financial statements shall prevail.

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Independent Auditors’ Report

To the Board of Directors of AU Optronics Corp.:

Opinion

We have audited the parent company only financial statements of AU Optronics Corp. (“the Company”), which comprise the balance sheets as of December 31, 2018 and 2017, the statements of comprehensive income, the statements of changes in equity, and the statements of cash flows for the years ended December 31, 2018 and 2017, and notes to the parent company only financial statements including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and its financial performance and its cash flows for each of the years then ended, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements of the current period. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Impairment of long-term non-financial assets (including goodwill)

Refer to Note 4(16) “Impairment – non-financial assets”, Note 5(2) and Note 5(3) “Critical accounting judgments and key sources of estimation and assumption uncertainty”, Note 6(9) “Property, plant and equipment”, and Note 6(11) “Intangible assets” to the parent company only financial statements.

Description of key audit matter:

The Company operates in an industry with high investment costs, has goodwill through the acquisition of subsidiaries, and may experience volatility in response to changes in the external market; hence, it is important to assess the impairment of its long-term non-financial assets (including goodwill). The impairment assessment includes identifying cash-generating units, determining a valuation model, determining significant assumptions, and computing recoverable amounts. With the complexity of the impairment assessment process and the involvement of significant management judgment regarding assumptions used, this is one of the key areas our audit focused on.

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How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included understanding and testing the Company’s controls surrounding the impairment assessment and testing process; assessing whether there are impairment indications for the identified cash-generating units of the Company and its related assets; understanding and assessing the appropriateness of the valuation model used by the management in the impairment assessment and the significant assumptions used to determine related assets’ future cash flows projection, useful lives, and weighted-average cost of capital; retrospectively reviewing the accuracy of assumptions used in prior-period estimates and performing a sensitivity analysis of key assumptions and results; in addition to the above audit procedures, appointing specialists to evaluate the appropriateness of the weighted-average cost of capital used and related assumptions; performing an inquiry of the management and identifying any event after the balance sheet date if able to affect the results of the impairment assessment; and assessing the adequacy of the Company’s disclosures of its policy on impairment of noncurrent non-financial assets and other related disclosures.

Recognition of deferred tax assets

Refer to Note 4(21) “Income taxes”, Note 5(5) “Critical accounting judgments and key sources of estimation and assumption uncertainty”, and Note 6(26) “Income taxes” to the parent company only financial statements.

Description of key audit matter:

The recognition of deferred tax assets for the related unused tax losses, unused tax credits, and deductible temporary differences is based on management estimates of its future available taxable profits and the probability that the related deferred tax assets will be realized. This is one of the key areas our audit focused on.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included understanding and testing the controls surrounding the Company’s assessment process for recognition of deferred tax assets; understanding the components of the Company’s deferred tax assets and assessing the management estimates for assumptions used in the future cash flow projection and future taxable profits calculation; retrospectively reviewing the accuracy of assumptions used in prior-period estimates of future cash flow projection and assessing whether there are any other matters that will affect the recognition of deferred tax assets; and assessing the adequacy of the Company’s disclosures regarding its deferred tax asset recognition policy and other related disclosures.

Revenue recognition

Refer to Note 4(18) “Revenue from contracts with customers (policy applicable from January 1, 2018)”, Note 4(19) “Revenue recognition”, Note 6(19) “Revenue from contracts with customers”, and Note 6(20) “Revenue” to the parent company only financial statements.

Description of key audit matter:

Revenue is recognized when the control over a product has been transferred to the customer as specified in each individual contract with customers. The Company recognizes revenue depending on the various sales terms in each individual contract with customers to ensure the performance obligation has been satisfied by transferring control over a product to a customer. In addition, the Company operates in an industry in which sales revenue is easily influenced by various external factors such as supply and demand of the market, and this may impact the recognition of revenue. Consequently, this is one of the key areas our audit focused on.

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How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included understanding and testing the Company’s controls surrounding revenue recognition; assessing whether appropriate revenue recognition policies are applied through comparison with accounting standards and understanding the Company’s main revenue types, its related sales agreements, and sales terms; on a sample basis, inspecting contracts with customers or customers’ orders and assessing whether the accounting treatment of the related contracts (including sales terms) is applied appropriately; performing a test of details of sales revenue and understanding the rationale for any identified significant sales fluctuations and any significant reversals of revenue through sales discounts and sales returns which incurred within a certain period before or after the balance sheet date; and assessing the adequacy of the Company’s disclosures of its revenue recognition policy and other related disclosures.

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern, and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (inclusive of the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercised professional judgment and maintained professional skepticism throughout the audit. We also:

1. Identified and assessed the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

3. Evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

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1. Concluded on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

2. Evaluated the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

3. Obtained sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicated with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identified during our audit.

We also provided those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicated with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the parent company only financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Wei, Shing-Hai and Lu, Chien-Hui.

KPMG Hsinchu, Taiwan (Republic of China) January 28, 2019

Notice to Readers

The accompanying parent company only financial statements are intended only to present the financial position, financial performance, and cash flows in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The standards, procedures and practices to audit such parent company only financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English version and Chinese version, the Chinese-language independent auditors’ report and parent company only financial statements shall prevail.

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AU OPTRONICS CORP.

Balance Sheets

December 31, 2018 and 2017 (Expressed in thousands of New Taiwan dollars)

December 31, 2018 2017 Assets Amount % Amount % Current assets: 1100 Cash and cash equivalents (Note 6(1)) $ 30,316,278 9 72,423,147 19 1110 Financial assets at fair value through profit or loss－current (Note 6(2)) 52,434 - 36,373 - 1170 Accounts receivable, net (Note 6(5)) 41,612,155 12 35,338,161 10 1180 Accounts receivable from related parties, net (Notes 6(5)&7) 4,625,330 1 2,014,346 1 1210 Other receivables from related parties (Note 7) 27,905 - 1,220,323 - 1220 Current tax assets 26,282 - 17,699 - 130X Inventories (Note 6(6)) 20,209,268 6 19,226,315 5 1476 Other current financial assets 304,164 - 20,746 - 1479 Other current assets (Note 6(12)) 1,754,804 - 3,291,783 1 98,928,620 28 133,588,893 36 Noncurrent assets: 1517 Financial assets at fair value through other comprehensive income－noncurrent (Note 6(3)) 6,604,041 2 - - 1523 Available-for-sale financial assets－noncurrent (Note 6(4)) - - 3,941,588 1 1550 Investments in equity-accounted investees (Notes 6(7)&(8)) 73,281,985 21 74,112,669 20 1600 Property, plant and equipment (Notes 6(9),7&8) 148,448,632 43 141,796,990 38 1760 Investment property (Notes 6(10),(16)&8) 539,436 - 541,319 - 1780 Intangible assets (Note 6(11)) 12,476,746 4 12,983,137 3 1840 Deferred tax assets (Note 6(26)) 5,151,811 1 5,629,157 2 1900 Other noncurrent assets (Notes 6(12)&8) 1,973,250 1 1,508,134 - 248,475,901 72 240,512,994 64 Total assets $ 347,404,521 100 374,101,887 100 December 31, 2018 2017 Liabilities and Equity Amount % Amount % Current liabilities: 2120 Financial liabilities at fair value through profit or loss－current (Note 6(2)) $ 13,973 - 69,625 - 2170 Accounts payable 29,179,096 9 26,773,865 7 2180 Accounts payable to related parties (Note 7) 31,270,499 9 29,620,912 8 2213 Equipment and construction payable (Note 7) 7,125,831 2 5,935,402 2 2220 Other payables to related parties (Note 7) 224,886 - 256,813 - 2230 Current tax liabilities 1,267,055 - 512,602 - 2250 Provisions－current (Note 6(15)) 1,395,690 - 749,501 - 2399 Other current liabilities 17,353,370 5 19,608,762 5 2322 Current installments of long-term borrowings (Notes 6(14)&8) 22,212,000 7 7,517,000 2 110,042,400 32 91,044,482 24 Noncurrent liabilities: 2540 Long-term borrowings, excluding current installments (Notes 6(14)&8) 29,733,545 9 70,385,271 19 2550 Provisions－noncurrent (Note 6(15)) 777,445 - 786,274 - 2570 Deferred tax liabilities (Note 6(26)) 2,356,782 1 2,060,717 1 2600 Other noncurrent liabilities (Note 6(17)) 1,631,634 - 1,670,775 - 34,499,406 10 74,903,037 20 Total liabilities 144,541,806 42 165,947,519 44 Equity:(Note 6(18)) 3100 Common stock 96,242,451 28 96,242,451 26 3200 Capital surplus 60,622,043 17 60,540,326 16 3300 Retained earnings 46,845,991 13 51,115,529 14 3400 Other components of equity (847,770 ) - 256,062 - Total equity 202,862,715 58 208,154,368 56 Total Liabilities and Equity $ 347,404,521 100 374,101,887 100	December 31,	December 31,
	2018	2017
		Amount % 69,625 - 26,773,865 7 29,620,912 8 5,935,402 2 256,813 - 512,602 - 749,501 - 19,608,762 5 7,517,000 2 91,044,482 24 70,385,271 19 786,274 - 2,060,717 1 1,670,775 - 74,903,037 20 165,947,519 44 96,242,451 26 60,540,326 16 51,115,529 14 256,062 - 208,154,368 56 374,101,887 100

See accompanying notes to the parent company only financial statements

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AU OPTRONICS CORP.

Statements of Comprehensive Income

For the years ended December 31, 2018 and 2017 (Expressed in thousands of New Taiwan dollars, except for earnings per share)

4110 Revenue $ 4190 Less: sales return and discount Net revenue(Notes 6(19),(20)&7) 5000 Cost of sales(Notes 6(6),(16),(21),(22)&7) Gross profit Operating expenses:(Notes 6(16),(21),(22)&7) 6100 Selling and distribution expenses 6200 General and administrative expenses 6300 Research and development expenses Total operating expenses Profit from operations Non-operating income and expenses: 7010 Other income (Notes 6(23)&7) 7020 Other gains and losses (Notes 6(8),(9),(24)&7) 7050 Finance costs (Notes 6(9)&(25)) 7060 Share of profit of equity-accounted investees (Note 6(7)) Total non-operating income and expenses 7900 Profit before income tax 7950 Less: income tax expense(Note 6(26)) 8200 Profit for the year 8300 Other comprehensive income:(Notes 6(7),(17),(18)&(26)) 8310 Items that will never be reclassified to profit or loss 8311 Remeasurement of defined benefit obligations 8316 Unrealized loss on equity investments at fair value through other comprehensive income 8330 Equity-accounted investees – share of other comprehensive income 8349 Related tax 8360 Items that are or may be reclassified subsequently to profit or loss 8361 Foreign operations – foreign currency translation differences 8362 Net change in fair value of available-for-sale financial assets 8363 Effective portion of changes in fair value of cash flow hedges 8380 Equity-accounted investees – share of other comprehensive loss 8399 Related tax 8300 Other comprehensive income (loss), net of tax 8500 Total comprehensive income for the year $ Earnings per share (NT$, Note 6(27)) 9750 Basic earnings per share $ 9850 Diluted earnings per share $	2018	% 101 1 100 91 9 1 1 3 5 4 - - - - - 4 1 3 - - - - - 1 - - (1) - - - 3	2017	% 101 1 100 81 19 1 1 3 5 14 - - - (1 ) (1 ) 13 3 10 - - - - - (1) - - 1 - - - 10
	Amount 295,131,127 2,070,788 293,060,339 266,682,541 26,377,798 3,079,820 4,399,773 7,864,641 15,344,234 11,033,564 1,397,091 (152,891) (980,812) 688,041 951,429 11,984,993 1,824,395 10,160,598 (56,956) (756,179) 5,605 38,908 (768,622 ) 1,685,563 - - (2,125,649) 133,370 (306,716 ) (1,075,338 ) 9,085,260 1.06 1.04		Amount 322,136,372 2,296,477 319,839,895 260,253,394 59,586,501 3,100,757 4,564,759 8,607,714 16,273,230 43,313,271 1,120,880 (757,058) (1,704,032) (1,966,326 ) (3,306,536 ) 40,006,735 7,647,318 32,359,417 (98,091) - 42 16,675 (81,374 ) (4,482,634) 1,136,818 (21,992) 2,567,058 277,440 (523,310 ) (604,684 ) 31,754,733 3.36 3.24

See accompanying notes to the parent company only financial statements

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AU OPTRONICS CORP.

Statements of Changes in Equity

For the years ended December 31, 2018 and 2017 (Expressed in thousands of New Taiwan dollars)

Balance at January 1, 2017 $ Appropriation of earnings Legal reserve Cash dividends distributed to shareholders Profit for the year Other comprehensive income (loss), net of tax Total comprehensive income for the year Adjustments to capital surplus and retained earnings for changes in investees’ equity Differences between consideration and carrying amount arising from disposal of interest in subsidiary Balance at December 31, 2017 Adjustments on initial application of new standards Adjusted balance at January 1, 2018 Appropriation of earnings Legal reserve Cash dividends distributed to shareholders Profit for the year Other comprehensive income (loss), net of tax Total comprehensive income for the year Deemed contributions from shareholders Adjustments for changes in investees’ equity Group reorganization Disposal of equity investments at fair value through other comprehensive income Balance at December 31, 2018 $	Capital Stock Common Stock 96,242,451 - - - - - - - 96,242,451 - 96,242,451 - - - - - - - - - 96,242,451	Capital Surplus 59,979,723 - - - - - 42,407 518,196 60,540,326 - 60,540,326 - - - - - 33,304 28,889 19,524 - 60,622,043	Retained Earnings Legal Reserve Unappropriated Earnings Subtotal 2,657,792 21,585,361 24,243,153 781,894 (781,894 ) - - (5,389,577 ) (5,389,577 ) - 32,359,417 32,359,417 - (81,374 ) (81,374 ) - 32,278,043 32,278,043 - (16,090 ) (16,090 ) - - - 3,439,686 47,675,843 51,115,529 - 73,020 73,020 3,439,686 47,748,863 51,188,549 3,235,942 (3,235,942 ) - - (14,436,368 ) (14,436,368 ) - 10,160,598 10,160,598 - (16,862 ) (16,862 ) - 10,143,736 10,143,736 - - - - 158 158 - - - - (50,084 ) (50,084 ) 6,675,628 40,170,363 46,845,991	Retained Earnings Legal Reserve Unappropriated Earnings Subtotal 2,657,792 21,585,361 24,243,153 781,894 (781,894 ) - - (5,389,577 ) (5,389,577 ) - 32,359,417 32,359,417 - (81,374 ) (81,374 ) - 32,278,043 32,278,043 - (16,090 ) (16,090 ) - - - 3,439,686 47,675,843 51,115,529 - 73,020 73,020 3,439,686 47,748,863 51,188,549 3,235,942 (3,235,942 ) - - (14,436,368 ) (14,436,368 ) - 10,160,598 10,160,598 - (16,862 ) (16,862 ) - 10,143,736 10,143,736 - - - - 158 158 - - - - (50,084 ) (50,084 ) 6,675,628 40,170,363 46,845,991		Other Components of Equity	Other Components of Equity	Other Components of Equity	Subtotal 779,372 - - - (523,310 ) (523,310 ) - - 256,062 (73,215 ) 182,847 - - - (1,058,476 ) (1,058,476 ) - - (22,225 ) 50,084 (847,770 )	Total Equity
			Legal Reserve 2,657,792 781,894 - - - - - - 3,439,686 - 3,439,686 3,235,942 - - - - - - - - 6,675,628	Unappropriated **Earnings **	Cumulative Translation Differences 536,819 - - - (1,657,788 ) (1,657,788 ) - - (1,120,969) - (1,120,969 ) - - - (306,716 ) (306,716 ) - - (22,225 ) - (1,449,910 )	Unrealized Gains (Losses) on Financial Assets at Fair Value through Other Comprehensive Income	Unrealized Gains (Losses) on Available- for-sale Financial Assets 224,299 - - - 1,152,732 1,152,732 - - 1,377,031 (1,377,031 ) - - - - - - - - - - -	Unrealized Gains (Losses) on Cash Flow Hedges 18,254 - - - (18,254 ) (18,254 ) - - - - - - - - - - - - - - -
				21,585,361 (781,894 ) (5,389,577 ) 32,359,417 (81,374 ) 32,278,043 (16,090 ) - 47,675,843 73,020 47,748,863 (3,235,942 ) (14,436,368 ) 10,160,598 (16,862 ) 10,143,736 - 158 - (50,084 ) 40,170,363		- - - - - - - - - 1,303,816 1,303,816 - - - (751,760 ) (751,760 ) - - - 50,084 602,140				181,244,699 - (5,389,577 ) 32,359,417 (604,684 ) 31,754,733 26,317 518,196 208,154,368 (195 ) 208,154,173 - (14,436,368 ) 10,160,598 (1,075,338)
										9,085,260 33,304 29,047 (2,701 ) - 202,862,715

See accompanying notes to the parent company only financial statements

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AU OPTRONICS CORP.

Statements of Cash Flows

For the years ended December 31, 2018 and 2017 (Expressed in thousands of New Taiwan dollars)

2018 Cash flows from operating activities: Profit before income tax $ 11,984,993 Adjustments for: - depreciation 20,870,071 - amortization 506,391 - interest expense 980,812 - interest income (288,091) - dividend income (452,561) - share of profit of equity-accounted investees (688,041) - losses (gains) on disposals of property, plant and equipment, net (55,482) - impairment losses on assets 4,470 - gains on financial instruments at fair value through profit and loss (71,713) - unrealized foreign currency exchange losses 434,330 - others - Changes in operating assets and liabilities: - accounts receivable (6,056,978) - receivables from related parties (2,588,189) - inventories (982,953) - other current assets 1,019,479 - accounts payable 1,838,466 - payables to related parties 1,617,660 - net defined benefit liability (86,706) - provisions 629,203 - other current liabilities (2,265,052 ) Cash generated from operations 26,350,109 Cash received from interest income 304,697 Cash received from dividends 1,191,234 Cash paid for interest (871,657) Cash paid for income taxes (132,836 ) Net cash provided by operating activities 26,841,547

2017 40,006,735 22,902,707 619,697 1,704,032 (220,147) (246,000) 1,966,326 101,697 958,373 (526,803) 506,915 (25,532) 4,909,692 805,441 2,415,633 670,469 (828,537) 3,196,536 (84,660) (866,773) 4,185,602 82,151,403 197,031 954,095 (1,594,689) (66,559 ) 81,641,281

(Continued)

See accompanying notes to the parent company only financial statements

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AU OPTRONICS CORP.

Statements of Cash Flows (Continued)

For the years ended December 31, 2018 and 2017 (Expressed in thousands of New Taiwan dollars)

Cash flows from investing activities: Acquisitions of financial assets at fair value through other comprehensive income Acquisitions of equity-accounted investees Proceeds from disposals of equity-accounted investees Proceeds from return of capital by equity-accounted investees Acquisitions of property, plant and equipment Proceeds from disposals of property, plant and equipment Increase in refundable deposits Decrease (increase) in other financial assets Decrease (increase) in other receivables from related parties Net cash used in investing activities Cash flows from financing activities: Proceeds from long-term borrowings Repayments of long-term borrowings Guarantee deposits refunded Cash dividends Others Net cash used in financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at January 1 Cash and cash equivalents at December 31 $	2018 (3,418,633) (2,061,398) 2,338,360 94,760 (26,436,621) 78,774 (137,841) (5,161) 1,065,570 (28,482,190 ) 136,200 (26,217,000) - (14,436,368) 33,304 (40,483,864 ) 17,638 (42,106,869) 72,423,147 30,316,278	2017 - (400,000) 1,243,000 3,999,767 (28,770,918) 65,567 (398,890) 7,772 (1,065,570 ) (25,319,272 ) 25,951,100 (42,764,757) (9,825) (5,389,577) - (22,213,059 ) (93,074 ) 34,015,876 38,407,271 72,423,147

See accompanying notes to the parent company only financial statements

9-1

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

For the years ended December 31, 2018 and 2017 (Expressed in thousands of New Taiwan dollars, unless otherwise indicated)

1. Organization

AU Optronics Corp. (“AUO” or “the Company”) was founded on August 12, 1996 and is located in Hsinchu Science Park, the Republic of China (“ROC”). AUO’s main activities are the research, development, production and sale of thin film transistor liquid crystal displays (“TFT-LCDs”) and other flat panel displays used in a wide variety of applications. AUO also engages in the production and sale of solar modules and systems. AUO’s common shares have been publicly listed on the Taiwan Stock Exchange since September 2000, and its American Depositary Shares (“ADSs”) have been listed on the New York Stock Exchange since May 2002.

On September 1, 2001, October 1, 2006 and October 1, 2016, Unipac Optoelectronics Corp. (“Unipac”), Quanta Display Inc. (“QDI”) and Taiwan CFI Co., Ltd. (“CFI”) were merged with and into AUO, respectively. AUO is the surviving Company, whereas Unipac, QDI and CFI were dissolved.

2. The Authorization of Financial Statements

These parent company only financial statements were approved and authorized for issue by the Board of Directors of AUO on January 28, 2019.

3. Application of New and Revised Standards, Amendments and Interpretations

• (1) Impact of adoption of new, revised or amended standards and interpretations endorsed by the Financial Supervisory Commission, ROC (“FSC”)

In preparing the accompanying parent company only financial statements, the Company has adopted the following International Financial Reporting Standards (“IFRS”), International Accounting Standards (“IAS”), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) issued by the International Accounting Standards Board (“IASB”) (collectively, “IFRSs”) and endorsed by the FSC with effective date from January 1, 2018.

New, Revised or Amended Standards and Interpretations	Effective Date Issued by IASB
Amendments to IFRS 2,Share-based Payments - Classification and Measurement of Share-based Payment Transactions Amendments to IFRS 4,Insurance Contracts - Applying IFRS 9, Financial Instruments with IFRS 4, Insurance Contracts	January 1, 2018 January 1, 2018

(Continued)

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AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

New, Revised or Amended Standards and Interpretations

Effective Date Issued by IASB

IFRS 9,Financial Instruments IFRS 15,Revenue from Contracts with Customers Amendments to IAS 7,Statement of Cash Flows - Disclosure Initiative Amendments to IAS 12,Income Taxes - Recognition of Deferred Tax Assets for Unrealized Losses Amendments to IAS 40,Transfers of Investment Property Annual Improvements to IFRSs 2014 – 2016 Cycle: Amendments to IFRS 12,Disclosure of Interests in Other Entities Amendments to IFRS 1,First-time Adoption of International Financial Reporting Standards_and amendments to IAS 28, _Investments in Associates and Joint Ventures IFRIC 22,Foreign Currency Transactions and Advance Consideration

January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2017 January 1, 2018 January 1, 2018

Except for the items discussed below, the adoption of abovementioned standards and interpretations has not had a material impact on the Company’s accounting policies.

a. IFRS 9, Financial Instruments

IFRS 9 replaces the current standards on accounting for financial instruments, IAS 39, Financial Instruments: Recognition and Measurement . IFRS 9 contains three principal classification categories for financial assets: at amortized cost, at fair value through other comprehensive income (“FVTOCI”) and at fair value through profit or loss (“FVTPL”). Under IFRS 9, the classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. This Standard eliminates the classification of financial assets under IAS 39 which are held to maturity, loans and receivables and available for sale. In addition, IAS 39 has an exception for the measurement of investments in equity instruments (and its derivatives) that do not have a quoted market price in an active market and for which fair value cannot therefore be measured reliably; such financial instruments are measured at cost. IFRS 9 removes this exception and requires that all equity instruments (and its derivatives) should be measured at fair value.

See note 4(6) for an explanation of the Company’s accounting policies on how it classifies and measures financial assets and accounts for related gains and losses under IFRS 9. In addition, the adoption of IFRS 9 has not had a material impact on the Company’s accounting policies related to financial liabilities.

(Continued)

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AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Under IFRS 9, a new “expected credit loss” model is used to measure the impairment of financial assets, which replaces the “incurred loss” model in IAS 39. The new impairment model applies to financial assets at amortized cost and contract assets that result from transactions that are within the scope of IFRS 15, but not to investments in equity instruments.

See note 4(6) for an explanation of the Company’s accounting policies related to the impairment of financial assets under IFRS 9.

Upon the initial application of IFRS 9, the Company elected not to restate comparative information for prior reporting period with respect to the classification and measurement (including impairment) changes. The cumulative effect of initially applying this Standard was recognized in retained earnings and the components of other equity as at January 1, 2018. Accordingly, the information presented for 2017 does not generally reflect the requirements of IFRS 9, and therefore is not comparable to the information presented for 2018 under IFRS 9.

The following tables set out measurement categories, carrying amounts and related reconciliation for each class of the Company’s financial assets as at January 1, 2018 when retrospectively applying IFRS 9 (no change in measurement categories and carrying amounts for financial liabilities).

Financial assets Cash and cash equivalents Derivatives Investments in equity instruments Receivables, net (including related parties) Other financial assets, refundable deposits and restricted cash in banks	IAS 39	IAS 39	IFRS 9	IFRS 9	Note
	Measurement category Carrying amount (in thousands) Loans and receivables $ 72,423,147 Held for trading 36,373 Available-for-sale 3,941,588 Loans and receivables 38,572,830 Loans and receivables 438,436	Carrying amount	Measurement category Carrying amount (in thousands) Amortized cost $ 72,423,147 Mandatorily at FVTPL 36,373 FVTOCI 3,941,588 Amortized cost 38,572,830 Amortized cost 438,436	Carrying amount
					(i)

(Continued)

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AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Carrying amount as of December 31, 2017 under IAS 39 Reclassifi- cation Remeasure- ment Carrying amount as of January 1, 2018 under IFRS 9 (in thousands) Financial assets at FVTOCI $ - - - - Equity instruments - Reclassification from available-for- sale financial assets (including financial assets carried at cost) - 3,941,588 - 3,941,588 $ - 3,941,588 - 3,941,588 Carrying amount as of December 31, 2017 under IAS 39 Adjustments on initial application of new standards Carrying amount as of January 1, 2018 under IFRS 9 (in thousands) Investments in equity- accounted investees $ 74,112,669 (195 ) 74,112,474	Carrying amount as of December 31, 2017 under IAS 39	Carrying amount as of December 31, 2017 under IAS 39	Reclassifi- **cation **	Reclassifi- **cation **	Remeasure- ment	Carrying amount as of January 1, 2018 under IFRS 9	Adjustments to retained earnings on January 1, 2018	Adjustments to other equity on January 1, 2018	Note
			- 3,941,588				- - - Adjustments to retained earnings on January 1, 2018	- - - Adjustments to other equity on January 1, 2018	(i) Note
	$		3,941,588
		$ 74,112,669		(in thousands) (195 ) 74,112,474			73,020	(73,215 )	(ii)

• (i) The equity investments that previously classified as available-for-sale financial assets (including financial assets measured at cost) under IAS 39 were classified as at FVTPL or designated as at FVTOCI under IFRS 9 considering the Company’s －

• strategy for holding these equity investments. The related other equity unrealized gains (losses) on available-for-sale financial assets of $1,397,726 thousand was －

• reclassified to other equity unrealized gains (losses) on financial assets at fair value through other comprehensive income.

• (ii) In connection with the retrospective adjustment made upon initial application of IFRS 9 by subsidiaries and associates which account for using equity method, corresponding adjustments are made by the Company on January 1, 2018, which resulted in a decrease of investments in equity-accounted investees amounting to －

• $195 thousand, a decrease in other equity unrealized gains (losses) on financial assets at fair value through other comprehensive income of $93,910 thousand, an －

• increase in other equity unrealized gains (losses) on available-for-sale financial assets of $20,695 thousand and an increase in retained earnings of $73,020 thousand.

(Continued)

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AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

b. IFRS 15, Revenue from Contracts with Customers

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, using a five-step model framework to determine the method, timing and amount of revenue recognized. This Standard replaces existing revenue recognition guidance, including IAS 18, Revenue , IAS 11, Construction Contracts , and the related interpretations. See note 4(18) for an explanation of the relevant accounting policies. The nature and impact of the change in accounting policies are detailed below:

• (i) Sales of goods

Under IFRS 15, revenue for the sale of goods is recognized when a customer obtains control of the goods. For contracts that permit a customer to return goods, revenue is recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur.

For contracts with volume discounts to customers, under IFRS 15, revenue is recognized on a net basis of contract price less estimated volume discounts, and only to the extent that it is highly probable that a significant reversal will not occur.

Under IFRS 15, a refund liability (presented under other current liabilities) is measured at the amount of consideration received (or receivable) for which an entity does not expect to be entitled. The refund liability shall be updated at the end of each reporting period for changes in circumstances.

• (ii) Rendering of services

Under IFRS 15, for rendering of services, the consideration of the entire contract is allocated on a basis of a relative stand-alone selling price of the services. The stand-alone selling price is determined based on the list price of service at which the Company sells that service separately.

The Company elected to apply this Standard retrospectively only to contracts that are not completed at the date of initial application, and elected not to restate the comparative information for prior reporting period. Upon the initial application of this Standard, there was no cumulative effect and no adjustment was made to retained earnings on January 1, 2018.

The following tables summarize the impacts of adopting IFRS 15 on the Company’s parent company only financial statements for the year ended December 31, 2018.

(Continued)

14

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(i) Related impacts to the balance sheets

December 31, 2018 Carrying amount under IAS 18 and related standards and interpretations Adjustments from changes in accounting policies Carrying amount under IFRS 15 (in thousands) Accounts receivable, net $ 39,765,687 1,846,468 41,612,155 Accounts receivable from related parties, net 4,625,330 - 4,625,330 Impacts to total assets $ 1,846,468 Other current liabilities $ 15,506,902 1,846,468 17,353,370 Impacts to total liabilities $ 1,846,468 January 1, 2018 Carrying amount under IAS 18 and related standards and interpretations Adjustments from changes in accounting policies Carrying amount under IFRS 15 (in thousands) Accounts receivable, net $ 35,383,161 1,721,331 37,059,492 Accounts receivable from related parties, net 2,014,346 13,218 2,027,564 Impacts to total assets $ 1,734,549 Other current liabilities $ 19,608,762 1,734,549 21,343,311 Impacts to total liabilities $ 1,734,549	December 31, 2018	December 31, 2018	December 31, 2018
			Carrying amount under IFRS 15
			41,612,155 4,625,330 17,353,370
		Adjustments from changes in accounting policies (in thousands) 1,721,331 13,218 1,734,549 1,734,549 1,734,549	Carrying amount under IFRS 15
			37,059,492 2,027,564 21,343,311

(Continued)

15

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(ii) Related impacts to the statement of cash flows

For the year ended December 31, 2018 Carrying amount under IAS 18 and related standards and interpretations Adjustments from changes in accounting policies Carrying amount under IFRS 15 (in thousands) Accounts receivable $ (5,931,841) (125,137) (6,056,978) Receivables from related parties (2,601,407) 13,218 (2,588,189) Other current liabilities (2,376,971) 111,919 (2,265,052) Impacts to net cash provided by (used in) operating activities $ - Impacts to net increase (decrease) in cash and cash equivalents $ -	For the year ended December 31, 2018	For the year ended December 31, 2018	For the year ended December 31, 2018
		Adjustments from changes in accounting policies (in thousands) (125,137) 13,218 111,919 - -	Carrying amount under IFRS 15
			(6,056,978) (2,588,189) (2,265,052)

The above-mentioned reconciliation items represent volume discounts which the Company expects it may occur. Prior to the application of IFRS 15, the amount of the reconciliation item was recognized as a reduction of receivables. Under IFRS 15, such amount was recorded as a refund liability (presented under other current liabilities).

Notwithstanding the aforementioned difference, there are no material differences between the statement of comprehensive income prepared under IAS 18, IAS 11 and the related interpretations and the one prepared under IFRS 15 upon the initial application.

• c. Amendments to IAS 7, Disclosure Initiative

The amendments require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

The Company has disclosed a reconciliation between the opening and closing balances for liabilities with changes from financing activities in note 6(14) to meet the requirement as stated above.

(Continued)

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AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

• (2) Impact of the IFRSs that have been endorsed by the FSC but not yet in effect

According to Ruling No. 1070324857 issued on July 17, 2018 by the FSC, commencing from 2019, the Company is required to adopt the IFRSs that have been endorsed by the FSC with effective date from January 1, 2019. The related new, revised or amended standards and interpretations are set out below:

New, Revised or Amended Standards and Interpretations	Effective Date Issued by IASB
Amendments to IFRS 9,Prepayment Features with Negative Compensation IFRS 16,Leases Amendments to IAS 19,Plan Amendment, Curtailment or Settlement Amendments to IAS 28,Long-term Interests in Associates and Joint Ventures IFRIC 23,Uncertainty over Income Tax Treatments Annual Improvements to IFRSs 2015 – 2017 Cycle	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

Except for the items discussed below, the Company believes that the initial adoption of abovementioned standards or interpretations would not have a material impact on its accounting policies.

IFRS 16, Leases

IFRS 16 sets out the accounting standards for leases that will replace IAS 17, Leases and the related interpretations.

Upon the initial application of IFRS 16, if the Company is a lessee, it is required to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with exception for leases of low-value assets and short-term leases which the Company may elect to apply the accounting method similar to the accounting for operating lease under IAS 17. Additionally, a depreciation expense charged on the right-of-use asset and an interest expense accrued on the lease liability, for which interest is computed by using effective interest method, are recognized separately on the statement of comprehensive income. On the statement of cash flows, cash payments for the principal amount of the lease liability will be classified within financing activities; cash payments for interest portion will be classified within operating activities.

When IFRS 16 becomes effective, as a lessee, the Company will apply this Standard using the modified retrospective approach with the cumulative effect of the initial application of this Standard recognized at the date of initial application. Comparative financial information will not be restated. As a lessor, the Company is not required to make any adjustments for leases except it is an intermediate lessor in a sub-lease.

(Continued)

17

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

The Company has performed an assessment and identification over its current operating leases whether they are in scope of IFRS 16. The main impact to the Company may arise from its lease contracts of land and plant which are currently accounted as operating lease. Please refer to note 6(16) for the related disclosures. The Company has identified whether a contract that contains a lease meets the definition of a lease under this Standard, and if so, a right-of-use asset and a lease liability will be recognized. The Company estimated that the right-of-use asset and the lease liability would both increase by $10,788,985 thousand at January 1, 2019 as a result of the application of IFRS 16.

• (3) The IFRSs issued by the IASB but not yet endorsed by the FSC

A summary of the new standards and amendments issued by the IASB but not yet endorsed by the FSC is set out below.

New, Revised or Amended Standards and Interpretations	Effective Date Issued by IASB
Amendments to IFRS 3,Business Combinations Amendments to IFRS 10 and IAS 28,Sale or Contribution of Assets between an Investor and its Associate or Joint Venture IFRS 17,Insurance Contracts Amendments to IAS 1 and IAS 8,Definition of Material	January 1, 2020 Subject to IASB’s announcement January 1, 2021 January 1, 2020

As of the date that the accompanying parent company only financial statements were issued, the Company continues in assessing the potential impact on its financial position and results of operations as a result of the application of abovementioned standards and interpretations. The potential impact will be disclosed when the assessment is complete.

4. Summary of Significant Accounting Policies

The significant accounting policies applied in the preparation of these parent company only financial statements are set out as below. The significant accounting policies have been applied consistently to all periods presented in these financial statements.

(1) Statement of compliance

The parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

(Continued)

18

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(2) Basis of preparation

• a. Basis of measurement

The parent company only financial statements have been prepared on the historical cost basis except for the following material items in the balance sheets:

• (i) Financial instruments at fair value through profit or loss (including derivative financial instruments) (note 6(2));

• (ii) Financial assets at fair value through other comprehensive income (note 6(3));

• (iii) Available-for-sale financial assets measured at fair value (note 6(4)); and

• (iv) Defined benefit asset (liability) is recognized as the fair value of the plan assets less the present value of the defined benefit obligation (note 6(17)).

• b. Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment in which the entity operates. The parent company only financial statements are presented in New Taiwan Dollar (“NTD”), which is also the Company’s functional currency. All financial information presented in NTD has been rounded to the nearest thousand, unless otherwise noted.

• (3) Foreign currency

In preparing the parent company only financial statements, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date and the resulting exchange differences are included in profit or loss for the year. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date when the fair value was determined. The resulting exchange differences are included in profit or loss for the year except for those arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income. Non-monetary items in foreign currencies that are measured at historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences arising from the effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges are recognized in other comprehensive income.

(Continued)

19

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

For the purpose of presenting parent company only financial statements, the assets and liabilities of the Company’s foreign operations are translated into NTD using the exchange rates at each reporting date. Income and expenses of foreign operations are translated at the average exchange rates for the period unless the exchange rates fluctuate significantly during the period; in that case, the exchange rates at the dates of the transactions are used. Foreign currency differences are recognized in other comprehensive income and accumulated in equity.

• (4) Classification of current and non-current assets and liabilities

An asset is classified as current when:

• a. The asset expected to realize, or intends to sell or consume, in its normal operating cycle;

• b. The asset primarily held for the purpose of trading;

• c. The asset expected to realize within twelve months after the reporting date; or

• d. Cash and cash equivalent excluding the asset restricted to be exchanged or used to settle a liability for at least twelve months after the reporting date.

All other assets are classified as non-current.

A liability is classified as current when:

• a. The liability expected to settle in its normal operating cycle;

• b. The liability primarily held for the purpose of trading;

• c. The liability is due to be settled within twelve months after the reporting date; or

• d. The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments, do not affect its classification.

All other liabilities are classified as non-current.

• (5) Cash and cash equivalents

Cash comprises cash balances and demand deposits. Cash equivalents comprise short-term highly liquid investments that are readily convertible into known amount of cash and are subject to an insignificant risk of changes in their fair value. Time deposits with short-term maturity but not for investments and other purposes and are qualified with the aforementioned criteria are classified as cash equivalent.

(Continued)

20

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(6) Financial instruments

• a. Financial assets (policy applicable from January 1, 2018)

• (i) Classification of financial assets

The Company classifies financial assets into the following categories: financial assets at amortized cost, financial assets at fair value through other comprehensive income and financial assets at fair value through profit or loss. When, and only when, the Company changes its business model for managing financial assets it shall reclassify all affected financial assets.

(a) Financial assets at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as measured at fair value through profit or loss:

• i. it is held within a business model whose objective is to hold financial assets to collect contractual cash flows; and

• ii. its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Such financial assets are initially recognized at fair value, plus any directly attributable transaction costs. Subsequently, these assets are measured at amortized cost using the effective interest method, less any impairment losses. Interest income, foreign exchange gains and losses, and recognition (reversal) of impairment losses, are recognized in profit or loss.

• (b) Financial assets at fair value through other comprehensive income

On initial recognition, the Company is able to make an irrevocable election to present subsequent changes in the fair value of investments in equity instruments that is not held for trading in other comprehensive income. This election is made on an instrument-by-instrument basis.

Such financial assets are initially recognized at fair value, plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein are recognized in other － comprehensive income and accumulated in equity unrealized gains (losses) on financial assets at fair value through other comprehensive income, except for dividends deriving from equity investments which are recognized in profit or loss (unless the dividend clearly represents a recovery of part of the cost of the investment). When an investment is derecognized, the cumulative gain or

(Continued)

21

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

loss in equity will not be reclassified to profit or loss, instead, is reclassified to retained earnings.

Dividends on investments in equity instruments are recognized on the date that the Company’s right to receive the dividends is established.

• (c) Financial assets at fair value through profit or loss

All financial assets not classified as at amortized cost or at fair value through other comprehensive income as described above are measured at fair value through profit or loss. This includes all derivative financial assets.

Such financial assets are initially recognized at fair value, and attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, they are measured at fair value and changes therein are recognized in profit or loss.

• (ii) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses on financial assets at amortized cost (including cash and cash equivalents, receivables, refundable deposits and other financial assets, etc.) and contract assets.

The expected credit loss is the weighted average of credit losses with the respective risks of a default occurring on the financial instrument as the weights.

The Company measures the loss allowance for a financial instrument at an amount equal to lifetime expected credit losses, except for the financial instrument that is determined to have low credit risk at the reporting date and the credit risk thereof has not increased significantly since initial recognition, which is measured at an amount equal to the 12-month expected credit losses. For trade receivables and contract assets, the Company measures their loss allowances at an amount equal to lifetime expected credit losses.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition, the Company considers reasonable and supportable information that is relevant. This includes both qualitative and quantitative information and analysis, based on the Company’s historical experience and credit assessment as well as forward-looking information.

In the circumstance that a financial asset is past due or the borrower is unlikely to pay its credit obligations to the Company in full, the Company considers the credit risk on that financial asset has significantly increased, or further, to be in default.

(Continued)

22

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

At each reporting date, the Company assesses whether financial assets at amortized cost are credit-impaired. A financial asset is “credit-impaired” when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Loss allowances for financial assets are deducted from the gross carrying amount of the assets. The recognition or reversal of the loss allowance is recognized in profit or loss.

(iii) De-recognition of financial assets

The Company derecognizes financial assets when the contractual rights to the cash flows from the asset expire, or when the Company transfers substantially all the risks and rewards of ownership of the financial assets to another entity.

• b. Financial assets (policy applicable before January 1, 2018)

• (i) Classification of financial assets

The Company classifies financial assets into the following categories: financial assets at fair value through profit or loss, receivables and available-for-sale financial assets.

• (a) Financial assets at fair value through profit or loss

The Company has certain financial assets to hedge its exposure to foreign exchange risk arising from operating and financing activities. When a financial asset is not effective as a hedge, the Company accounts for it as a financial asset at fair value through profit or loss.

• (b) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated as available-for-sale or are not classified as receivables or financial assets at fair value through profit or loss. Available-for-sale financial assets are recognized initially at fair value, plus any directly attributable transaction cost. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, dividend income and foreign currency differences related to monetary financial assets, are recognized in other comprehensive income and presented within equity in unrealized gains (losses) on available-for-sale financial assets. When an investment is derecognized, the cumulative gain or loss in equity is reclassified to profit or loss. A regular way, purchase or sale of financial assets shall be recognized and derecognized, as applicable, using trade date accounting.

Investments in equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured, are carried at their cost less any impairment losses.

(Continued)

23

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Cash dividends on equity instruments are recognized in profit or loss on the date that the Company’s right to receive dividends is established.

• (c) Receivables

Receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Receivables comprise trade receivables and other receivables. Such assets are recognized initially at fair value, plus any directly attributable transaction costs. Subsequently, receivables are measured at amortized cost using the effective interest method, less any impairment. If the effect of discounting is immaterial, the short-term receivables are measured at the original amount.

(ii) Impairment of financial assets

Financial assets not measured at fair value through profit or loss are assessed at each reporting date for indicators of impairment. Financial assets are considered to be impaired if an objective evidence indicates that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of those assets have been negatively impacted.

When an available-for-sale equity security is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss. Such impairment losses are not reversed through profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognized in other comprehensive income and accumulated in other components of equity.

For receivables, the Company first assesses whether objective evidence of impairment exists that are individually significant. If there is objective evidence that an impairment loss has occurred, the amount of impairment loss is assessed individually. For receivables other than those aforementioned, the Company groups those assets and collectively assesses them for impairment. An impairment loss for trade receivables is reflected in an allowance account against the receivables. When it is determined a receivable is uncollectible, it is written off from the allowance account. If any subsequent recovery of receivable previously written off can be related objectively to an event occurring after the impairment loss was recognized, it is credited against the allowance account and recognized in profit or loss.

For equity instruments without a quoted market price in an active market, the objective evidence of impairment includes the investees’ financial information, current operating result, future business plans and relevant industry and public market information. An impairment loss for this kind of equity instruments is reduced from the carrying amount and any impairment loss recognized is not reversed through profit or loss in subsequent periods.

(Continued)

24

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Bad debt expenses and reversal of allowance for doubtful debts for trade receivables are recognized in general and administrative expenses while impairment losses and reversal of impairment for financial assets other than receivables are recognized in other gains and losses.

• (iii) De-recognition of financial assets

The Company derecognizes financial assets when the contractual rights to the cash inflow from the asset expire, or when the Company transfers substantially all the risks and rewards of ownership of the financial assets to another entity.

On de-recognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received or receivable and any cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss.

c. Financial liabilities

• (i) Classification of financial liabilities

The Company classifies financial liabilities into the following categories: financial liabilities at fair value through profit or loss and other financial liabilities.

• (a) Financial liabilities at fair value through profit or loss

The Company designates financial liabilities as held for trading for the purpose of hedging exposure to foreign exchange risk arising from operating and financing activities. When a financial liability is not effective as a hedge the Company accounts for it as a financial liability at fair value through profit or loss.

The Company designates financial liabilities, other than the one mentioned above, as at fair value through profit or loss at initial recognition. Attributable transaction costs are recognized in profit or loss as incurred. Financial liabilities in this category are subsequently measured at fair value and changes therein, which takes into account any interest expense, are recognized in profit or loss and presented under non-operating income and expenses.

(Continued)

25

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(b) Other financial liabilities

Financial liabilities not classified as held for trading, or not designated as at fair value through profit or loss (including loans and borrowings, trade and other payables), are measured at fair value, plus any directly attributable transaction cost at the time of initial recognition. Subsequent to initial recognition, they are measured at amortized cost calculated using the effective interest method, except for insignificant recognition of interest expense from short-term borrowings and payables. Interest expense not capitalized as an asset cost is recognized in profit or loss and presented under non-operating income and expenses.

(ii) De-recognition of financial liabilities

The Company derecognizes financial liabilities when the contractual obligation has been discharged, cancelled or expired. The difference between the carrying amount and the consideration paid or payable, including any non-cash assets transferred or liabilities assumed is recognized in profit or loss and presented under non-operating income and expenses.

d. Offsetting of financial assets and liabilities

The Company presents financial assets and liabilities on a net basis in the balance sheet when the Company has the legally enforceable rights to offset, and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

(7) Inventories

The cost of inventories includes all necessary expenditures and charges for bringing the inventory to a stable, useable and marketable condition and location. The production overhead is allocated to finished goods and work in process based on the normal capacity of the production facilities. Subsequently, inventories are measured at the lower of cost and net realizable value. Cost is determined using the weighted-average method. Net realizable value is calculated based on the estimated selling price less all estimated costs of completion and the estimated costs necessary to make the sale.

(8) Noncurrent assets held for sale

Noncurrent assets are classified as held for sale when their carrying amounts are expected to be recovered primarily through sale rather than through continuing use. Such noncurrent assets must be available for immediate sale in their present condition and the sale is highly probable within one year. When classified as held for sale, the assets are measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on initial classification as held for sale and subsequent gains or losses on re-measurement are recognized in profit or loss. However, subsequent gains are not recognized in excess of the cumulative impairment loss that has been recognized.

(Continued)

26

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

When intangible assets and property, plant and equipment are classified as held for sale, they are no longer amortized or depreciated. In addition, once an equity-accounted investee is classified as held for sale, it is no longer equity accounted.

• (9) Investments in associates

Associates are those entities in which the Company and its subsidiaries have the power to exercise significant influence, but not control or joint control, over their financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill, which is arising from the acquisition, less any accumulated impairment losses.

The difference between acquisition cost and fair value of associates’ identifiable assets and liabilities as of the acquisition date is accounted for as goodwill. Goodwill is included in the original investment cost of acquired associates and is not amortized. If the fair value of identified assets and liabilities is in excess of acquisition cost, the remaining excess over acquisition cost is recognized as a gain in profit or loss.

If an equity security is not acquired through cash, that is, by providing services or other assets, then the fair value of such security or the fair value of the services or assets surrendered, whichever is more objectively determinable, is the purchase price of the security. If an equity investment of associates is acquired by providing subsequent services and the cost is determined based on the fair value of such services, the Company defers and recognizes revenue using a reasonable amortization method over the future period when the service is rendered.

The parent company only financial statements include the Company’s share of the profit or loss and other comprehensive income of associates, after adjustments to align the accounting policies with those of the Company, from the date that significant influence commences until the date that significant influence ceases. When an associate incurs changes in its equity not derived from profit or loss and other comprehensive income, the Company recognizes all the equity changes in proportion to its ownership interest in the associate as capital surplus provided that the ownership interest in the associate remains unchanged.

(Continued)

27

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

The Company discontinues the use of the equity method from the date when the Company ceases to have significant influence over an associate, and then measures the retained interests at fair value at that date. The difference between the carrying amount of the investment at the date the equity method was discontinued and the fair value of the retained interests along with any proceeds from disposing of a part interest in the associate is recognized in profit or loss. Moreover, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that investment on the same basis as would be required if the associate had directly disposed of the related assets or liabilities. If the Company’s ownership interest in an associate is reduced, but the Company continues to apply the equity method, the Company shall reclassify to profit or loss the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest on the same basis as mentioned above.

If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Company continues to account for the investment using equity method and does not remeasure the interest previously held.

When the Company subscribes for additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the net assets of the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus. If the capital surplus arising from investment accounted for under the equity method in associates is insufficient to offset with the said corresponding amount, the differences will be charged or credited to retained earnings. If the Company’s ownership interest is reduced due to circumstances as mentioned above, the proportionate amount of the gains or losses previously recognized in other comprehensive income relating to that associate or joint venture shall be reclassified to profit or loss on the same basis as would be required if the associate or joint venture had directly disposed of the related assets or liabilities.

At the end of each reporting period, if there is any indication of impairment, the entire carrying amount of the investment including goodwill is tested for impairment as a single asset, by comparing its recoverable amount with its carrying amount. An impairment loss recognized forms part of the carrying amount of the investment in associates. Accordingly, any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

Profits and losses resulting from the transactions between the Company and associates are recognized in the parent company only financial statements only to the extent of interests in the associate that are not related to the Company.

When the Company’s share of losses exceeds its interest in an associate, the carrying amount of that interest, including any long-term investments that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Company has a legal or constructive obligation, or has made payments on behalf of the investee.

(Continued)

28

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(10) Investment in subsidiaries

The investees which are controlled by the Company are measured under equity method in preparing the parent company only financial statement. The profit, other comprehensive income and equity in the parent company only financial statement are equal to the profit, other comprehensive income and equity attributable to the shareholders of parent in the consolidated financial statement. The Company prepares the consolidated financial statement quarterly comprising of AUO and its subsidiaries.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing of control over the subsidiary are accounted for as equity transaction.

(11) Investments in joint ventures

Joint venture is a joint arrangement whereby the Company and other parties agreed to share the control of the arrangement, and have rights to the net assets of the arrangement. Unanimous consent from the parties sharing control is required when making decisions for the relevant activities of the arrangement. Investments in joint venture are accounted for in the Company’s parent company only financial statements under the equity method.

(12) Investment property

Investment property is the property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is measured at cost on initial recognition. Subsequent to initial recognition, investment properties are measured using the cost model. Depreciation is charged and recognized based on the depreciable amount. Depreciation methods, useful lives and residual values are in accordance with the policy of property, plant and equipment. Cost includes expenditure that is directly attributable to the acquisition of the investment property.

An investment property is reclassified to property, plant and equipment at its carrying amount when the use of the investment property changes.

(Continued)

29

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(13) Property, plant and equipment

a. Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributed to the acquisition of the asset, any cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management, the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, and any borrowing cost that is eligible for capitalization. The cost of the software is capitalized as part of the equipment if the purchase of the software is necessary for the equipment to be capable of operating.

When part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item and the useful life or the depreciation method of the significant part is different from another significant part of that same item, it is accounted for as a separate item (significant component) of property, plant and equipment.

The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and is recognized in profit or loss.

• b. Subsequent costs

Subsequent expenditure is capitalized only when it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. Ongoing repairs and maintenance expenses are recognized in profit or loss as incurred.

c. Depreciation

Excluding land, depreciation is provided over the estimated useful lives of the respective assets, considering significant components of an individual asset, on a straight-line basis less any residual value. If a component has a useful life that is different from the remainder of that asset, that component is depreciated separately. The depreciation charge is recognized in profit or loss.

Leased assets are depreciated over their useful lives if it is reasonably certain that the Company will obtain ownership by the end of the lease term. Otherwise, leased assets are depreciated over the shorter of the lease term and their useful lives.

(Continued)

30

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

The estimated useful lives of the assets, except for land are as follows:

• (i) Buildings: 20~50 years

• (ii) Machinery and equipment: 3~10 years

• (iii) Other equipment: 3~6 years

Depreciation methods, useful lives, and residual values are reviewed at each annual reporting date and, if necessary, adjusted as appropriate. Any changes therein are accounted for as changes in accounting estimates.

• d. Reclassification to investment property

A property is reclassified to investment property at its carrying amount when the use of the property changes from owner-occupied to investment purpose.

• (14) Leases

• a. Lessor

Lease income from an operating lease is recognized in profit or loss on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset, and recognized as an expense on a straight-line basis over the lease term. b. Lessee

Payments made under operating lease (excluding insurance and maintenance expenses) are recognized in profit or loss on a straight-line basis over the term of the lease.

• (15) Intangible assets

• a. Goodwill

Goodwill is recognized when the purchase price exceeds the fair value of identifiable net assets acquired in a business combination. Goodwill is measured at cost less accumulated impairment losses.

Equity-method goodwill is included in the carrying amounts of the equity investments. The impairment losses for the goodwill within the equity-accounted investees are accounted for as deductions of carrying amounts of investments in equity-accounted investees.

• b. Research and development

During the research phase, activities are carried out to obtain and understand new scientific or technical knowledge. Expenditures during this phase are recognized in profit or loss as incurred.

(Continued)

31

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Expenditure arising from development is capitalized as an intangible asset when the Company demonstrates 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) the probability that 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; and

• (vi) its ability to measure reliably the expenditure attributable to the intangible asset during its development.

Development expenditure which fails to meet the criteria for recognition as an intangible asset is reflected in profit or loss when incurred. Capitalized development expenditure is measured at cost less accumulated amortization and any accumulated impairment losses.

• c. Other intangible assets

Other intangible assets acquired are measured at cost less accumulated amortization and any accumulated impairment losses.

• d. Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

• e. Amortization

The depreciable amount of an intangible asset is the cost less its residual value. Other than goodwill and intangible assets with indefinite useful life, an intangible asset with a finite useful life is amortized over 3 to 20 years using the straight-line method from the date that the asset is made available for use. The amortization charge is recognized in profit or loss.

The residual value, amortization period, and amortization method are reviewed at least annually at each annual reporting date, and any changes therein are accounted for as changes in accounting estimates.

(Continued)

32

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(16) Impairment – non-financial assets

Other than inventories, deferred tax assets and noncurrent assets held for sale, the carrying amounts of the Company’s investment property measured at cost and other long-term nonfinancial assets (property, plant and equipment and other intangible assets with finite useful lives), are reviewed at the reporting date to determine whether there is any indication of impairment. When there is an indication of impairment exists for the aforementioned assets, the recoverable amount of the asset is estimated. If it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit (“CGU”) to which the asset has been allocated to.

In performing an impairment test for other long-term non-financial assets, the estimated recoverable amount is evaluated in terms of an asset or a CGU. Any excess of the carrying amount of the asset or its related CGU over its recoverable amount is recognized as an impairment loss. The recoverable amount of an asset or a CGU is the higher of its fair value less costs of disposal and its value in use.

If there is evidence that the accumulated impairment loss of an asset other than goodwill and intangible assets with indefinite useful lives in prior years no longer exists or has decreased, the amount previously recognized as an impairment loss is reversed, and the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount. The increased carrying amount shall not exceed the carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized for the asset in prior years.

For goodwill and intangible assets with indefinite useful lives or that are not yet available for use, are required to be tested for impairment at least annually. Any excess of the carrying amount of the asset over its recoverable amount is recognized as an impairment loss.

For the purpose of impairment test, goodwill acquired in a business combination is allocated to CGUs that are expected to benefit from the synergies of the combination. If the recoverable amount of a CGU is less than its carrying amount, the difference is allocated first to reduce the carrying amount of any goodwill allocated to the unit, then the carrying amounts of the other assets in the unit on a pro rata basis. The impairment loss recognized on goodwill is not reversed in a subsequent period.

(17) Provisions

A provision is recognized when the Company has a present obligation arising from a past event, it is probable that the Company will be required to make an outflow of resources embodying economic benefits to settle the obligation, and the amount of the obligation can be estimated reliably. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as interest expense.

(Continued)

33

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

a. Warranties

A provision for warranties is recognized when the underlying products or services are sold. The provision is weighting factors based on historical experience of warranty claims rate and other possible outcomes against their associated probabilities.

b. Decommissioning obligation

The Company is subject to decommissioning obligations related to certain items of property, plant and equipment. Such decommissioning obligations are primarily attributable to clean-up costs, including deconstruction, transportation, and recover costs. The unwinding of the discount based on original discount rate is recognized in profit or loss as interest expense over the periods with corresponding increase in the carrying amounts of the accrued decommissioning costs. The carrying amount of the accruals at the end of the assets’ useful lives is the same as the estimated decommissioning costs.

c. Onerous contracts

A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.

d. Loss contingencies

Provision for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recognized when it is probable the present obligation as a result of a past event will result in an outflow of resources and the amount can be reasonably estimated. Management periodically assesses the obligation of all litigation and claims and relative legal costs.

Provisions recognized are the best estimates of the expenditure for settling the present obligation at each reporting date.

• (18) Revenue from contracts with customers (policy applicable from January 1, 2018)

Revenue is measured based on the consideration that the Company expects to be entitled in the transfer of goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. The following is a description of the Company’s major revenues:

(Continued)

34

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

a. Sales of goods

Revenue is recognized when the control over a product has been transferred to the customer. The transfer of control refers to the product has been delivered to and accepted by the customer without remaining performance obligations from the Company. Delivery occurs when the product has been shipped to the specified location and the risk of loss over the product has been transferred to the customer, as well as when the product has been accepted by the customer according to the terms of sales contract, or when the Company has objective evidence that all criteria for acceptance have been satisfied.

For certain contracts with volume discounts offer to customers, revenue is recognized on a net basis of contract price less estimated volume discounts, and only to the extent that it is highly probable that a significant reversal will not occur. The amount of volume discounts is estimated based on the expected value with reference to the historical experience, and is recorded as refund liability (presented under other current liabilities).

Trade receivable is recognized when the Company is entitled for unconditional right to receive payment upon delivery of goods to customers. The consideration received in advance from the customer according to the sales contract but without delivery of goods is recognized as a contract liability, for which revenue is recognized when the control over the goods is transferred to the customer.

The Company provides standard warranties for goods sold and has obligation to refund payments for defective goods, in which the Company has recognized provisions for warranties to fulfill the obligation. Refer to note 4(17) for further details.

b. Construction contracts

For construction contracts, revenue is recognized progressively based on the progress towards complete satisfaction of contract activities, and only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur.

If the Company cannot reasonably measure its progress towards complete satisfaction of performance obligations in accordance with the construction contracts, revenue is recognized only to the extent of contract costs incurred that it is expected to be recoverable.

The consideration is paid by the customer according to the agreed payment terms. The excess of the amount that has been recognized as revenue over the amount that the Company has issued a bill is recognized as a contract asset. When the entitlement to the payment becomes unconditional, the contract asset is transferred to receivables.

A contract liability is recognized for an advance consideration that the Company has billed to customers arising from construction contracts. When the construction is completed and accepted by the customers, the contract liability is transferred to revenue.

(Continued)

35

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

If there are changes in circumstances, the estimates of revenue, cost and the progress towards complete satisfaction of contract will be amended. Any changes therein are recognized in profit or loss during the period in which the changes and amendments are made.

The Company provides standard warranties for construction contracts and has recognized provisions for warranties to fulfill the obligation. Refer to note 4(17) for further details.

• c. Financing components

The Company expects that the length of time when the Company transfers the goods or services to the customer and when the customer pays for those goods or services will be less than one year. Therefore, the amount of consideration is not adjusted for the time value of money.

(19) Revenue recognition

• a. Goods sold (policy applicable before January 1, 2018)

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognized when the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized as a reduction of revenue as the sales are recognized.

The timing of the transfers of risks and rewards varies depending on the individual terms of the sales agreement.

• b. Government grants

Grants that compensate the Company for research and development expenditures are recognized in profit or loss on a systematic basis in the periods in which the expenses are recognized.

• (20) Employee benefits

• a. Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

(Continued)

36

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

b. Defined benefit plans

The Company’s net obligation in respect of defined benefit pension plans is calculated separately for each benefit plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. Discount rate is determined by reference to the yield rate of Taiwan government bonds at the reporting date. The calculation of defined benefit obligations is performed annually by a qualified actuary using the Projected Unit Credit Cost Method.

Remeasurements of the net defined benefit liability (asset) which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized in other comprehensive income in the period in which they occur, and which then are reflected in retained earnings and will not be reclassified to profit or loss.

c. Short-term employee benefits

Short-term employee benefit obligations, which are due to be settled within twelve months are measured on an undiscounted basis and are expensed as the related service is provided.

The expected cost of cash bonus or profit-sharing plans, which is anticipated to be paid within one year, are recognized as a liability when the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(21) Income taxes

Income tax expense comprises current and deferred taxes.

a. Current taxes

Current taxes comprise the expected tax payable or receivable on the taxable income or losses for the year and any adjustments to tax payable or receivable in respect of previous years. It is measured using the statutory tax rate or the actual legislative tax rate at the reporting date.

In accordance with the ROC Income Tax Act, undistributed earnings, if any, is subject to an additional surtax. The surtax on unappropriated earnings is expensed in the year the shareholders approved the distributions which is the year subsequent to the year the earnings arise.

(Continued)

37

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

b. Deferred taxes

Deferred taxes are recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax liabilities are recognized for temporary difference of future taxable income. Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized.

Deferred tax assets are reviewed at each reporting date, by considering global economic environment, industry environment, statutory tax deduction years and projected future taxable income, and reduced to the extent that it is no longer probable that future taxable profits will be available to allow all or part of the deferred tax asset to be recovered. Deferred tax assets which originally not recognized is also reviewed at each reporting date and recognized to the extent that it is probable that future taxable profits will be available to allow all or part of the deferred tax asset to be recovered.

Deferred taxes liabilities for taxable temporary differences related to investments in subsidiaries, associates and joint arrangements are recognized, unless the Company is able to control the timing of the reversal of the taxable temporary differences and it is probable that they will not reverse in the foreseeable future.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when the reverse, using the statutory tax rate or the actual legislative tax rate on the reporting date. Deferred tax assets and liabilities are offset only if certain criteria are met.

Current taxes and deferred taxes are recognized in profit or loss except to the extent that it relates to items recognized directly in equity or other comprehensive income.

(22) Business combinations

The consideration transferred in the acquisition is measured at fair value, as are identifiable net assets acquired. Goodwill is measured as the excess of the aggregate of the fair value of consideration transferred and the amount of any non-controlling interests in the acquiree over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred and the amount of any non-controlling interests in the acquiree, after reassessing all of the assets acquired and all of the liabilities assumed being properly identified, the difference is recognized in profit or loss as a gain on bargain purchase.

Acquisition-related costs are expensed as incurred, except that the costs are related to the issue of debt or equity instruments.

(Continued)

38

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Non-controlling interests in an acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation are measured, on a case-by-case basis, at either fair value or the present ownership instruments’ proportionate share in the recognized amounts of the acquiree’s net identifiable assets. All other components of non-controlling interests shall be measured at their acquisition-date fair values, unless another measurement basis is required by IFRSs endorsed by the FSC with effective dates.

Any contingent consideration included in the consideration transferred is recognized at fair value at the date of acquisition. Subsequent changes to the fair value of the contingent consideration during the measurement period shall adjust to the cost of the acquisition and the resulting goodwill retrospectively. An adjustment made during the measurement period is to reflect additional information obtained by the Company about facts and circumstances that existed as of the acquisition date. The measurement period shall not exceed one year from the acquisition date. The accounting treatment for those changes to the fair value of the contingent consideration that are not measurement period adjustments is depending on the classification of the contingent consideration. If the contingent consideration is classified as equity, it is not remeasured and the subsequent settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value are recognized in profit or loss.

(23) Earnings per share

Basic earnings per share is computed by dividing profit or loss by the weighted-average number of common shares outstanding during the period. In computing diluted earnings per share, profit or loss and the weighted-average number of common shares outstanding during the period are adjusted for the effects of dilutive potential common stock, assuming dilutive share equivalents had been issued.

The weighted-average outstanding shares are retroactively adjusted for the effects of stock dividends transferred from retained earnings or capital surplus to common stock.

(24) Operating segments

The Company has provided the operating segments disclosure in the consolidated financial statements. Thus, disclosure of the segment information in the parent company only financial statements is waived.

5. Critical Accounting Judgments and Key Sources of Estimation and Assumption Uncertainty

The preparation of the parent company only financial statements in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

(Continued)

39

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Estimates and underlying assumptions are reviewed by management on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about critical judgments, estimates and assumptions in applying accounting policies that have the significant effect on the amounts recognized in the parent company only financial statements is included in the following notes:

(1) Estimate of provisions

Provision for warranty is estimated when product revenue is recognized. The estimate has been made based on the quantities within the warranty period, the historical and anticipated warranty claims rate associated with similar products and services, and the projected unit cost of maintenance. The Company regularly reviews the basis of the estimate and if necessary, amends it as appropriate. There could be a significant impact on provision for warranty for any changes of the basis of the estimate.

Provision for unsettled litigation and claims is recognized when it is probable that it will result in an outflow of the Company’s resources and the amount can be reasonably estimated. While the ultimate resolution of litigation and claims cannot be predicted with certainty, the final outcome or the actual cash outflow may be materially different from the estimated liability.

(2) Impairment of long-term non-financial assets, other than goodwill

In the process of evaluating the potential impairment of tangible and intangible assets other than goodwill, the Company is required to make subjective judgments in determining the independent cash flows, useful lives, expected future income and expenses related to the specific asset groups with the consideration of the usage mode of asset and the nature of industry. Any changes in these estimates based on changed economic conditions or business strategies could result in significant impairment charges or reversal in future years.

(3) Impairment of goodwill

The assessment of impairment of goodwill requires the Company to make subjective judgment to determine the identified CGUs, allocate the goodwill to relevant CGUs and estimate the recoverable amount of relevant CGUs.

(4) Measurement of defined benefit obligations

Accrued pension liabilities and the resulting pension expenses under defined benefit pension plans are calculated using the Projected Unit Credit Cost Method. Actuarial assumptions comprise the discount rate, rate of employee turnover, long-term average future salary increase, etc. Changes in economic circumstances and market conditions will affect these assumptions and may have a material impact on the amount of the expense and the liability.

(Continued)

40

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(5) Realization of deferred tax assets

Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which those deferred tax assets can be utilized. Assessment of the realization of the deferred tax assets requires management’s subjective judgment and estimate, including the future revenue growth and profitability, the sources of taxable income, the amount of tax credits can be utilized and feasible tax planning strategies. Changes in the global economic environment, the industry trends and relevant laws and regulations may result in adjustments to the deferred tax assets.

• (6) Estimate of variable consideration of revenue (applicable from January 1, 2018)

The Company estimates the amount of variable consideration by using methods either the expected value or the most likely amount based on historical experience, market and economic situation and any known factors that would significantly affect the estimates. The amount of variable consideration is recognized as a reduction of revenue in the same period the related revenue is recognized. The Company periodically reviews the reasonableness of the estimated variable consideration. However, the adequacy of estimations may be affected by factors such as market price competition and the evolution of product technology, which could result in significant adjustments to the variable consideration.

• (7) Estimate of allowance for sales returns and discounts (applicable before January 1, 2018)

The Company records a provision as the deduction of revenue for estimated future sales returns and other allowances in the same period the related revenue is recognized. Estimated sales returns and other allowances are generally made and adjusted based on historical experience, management’s judgment and any known factors that would significantly affect the allowance, and management periodically reviews the reasonableness of the estimates.

• (8) Valuation of inventories

As inventories are stated at the lower of cost or net realizable value, the Company estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions of future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of inventories.

(Continued)

41

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

6. Description of Significant Accounts

• (1) Cash and Cash Equivalents

	December 31,	December 31,
	2018	2017
	(in thousands)
Cash on hand, demand deposits and checking accounts	$ 19,180,244	32,210,938
Time deposits	11,136,034	33,707,074
Government bonds with reverse repurchase agreements	-	6,505,135
	$ 30,316,278	72,423,147

Refer to note 6(29) for the disclosure of credit risk, currency risk and sensitivity analysis of the financial instruments of the Company.

As at December 31, 2018 and 2017, no cash and cash equivalents were pledged with banks as collaterals.

(2) Financial Assets and Liabilities at Fair Value through Profit or Loss

		December	31,
		2018	2017
		(in thousands)
Financial assets mandatorily measured at FVTPL:
Foreign currency forward contracts	$	52,434	-
Financial assets held for trading:
Foreign currency forward contracts		-	36,373
	$	52,434	36,373
Financial liabilities held for trading:
Foreign currency forward contracts	$	13,973	69,625

The Company entered into derivative contracts to manage the exposure to currency risk arising from operating activities. Refer to note 6(29) for the disclosure of the Company’s credit and currency risks related to financial instruments. As of December 31, 2018 and 2017, the Company’s outstanding foreign currency forward contracts were as follows:

(Continued)

42

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

	December 31, 2018	December 31, 2018
Contract item Sell USD / Buy NTD Sell USD / Buy JPY Sell NTD / Buy JPY Sell EUR / Buy JPY Sell CNY / Buy JPY Sell CNY / Buy USD	Maturity date Jan. 2019 Jan. 2019 Jan. 2019 – Mar. 2019 Jan. 2019 Jan. 2019 – Feb. 2019 Jan.2018 – Feb.2019	Contract amount
		(in thousands) USD 205,000 / NTD 6,305,641 USD 112,000 / JPY 12,531,420 NTD 2,054,260 / JPY 7,400,000 EUR 12,000 / JPY 1,536,180 CNY 60,800 / JPY 981,383 CNY 853,328 / USD 124,000

	December 31, 2017	December 31, 2017
Contract item Sell USD / Buy NTD Sell USD / Buy JPY Sell JPY / Buy NTD Sell EUR / Buy JPY Sell CNY / Buy JPY	Maturity date Jan. 2018 – Feb. 2018 Jan. 2018 – Feb. 2018 Jan. 2018 Jan. 2018 – Feb. 2018 Jan. 2018 – Mar. 2018	Contract amount
		(in thousands) USD 188,000 / NTD 5,626,355 USD 252,000 / JPY 28,230,187 JPY 10,000,000 / NTD 2,654,220 EUR 65,000 / JPY 8,691,815 USD 31,500 / JPY 532,493

(3) Financial Assets at Fair Value through Other Comprehensive Income

Investments in equity instruments at FVTOCI: Equity securities – listed stocks $	December 31, 2018 (in thousands) 6,604,041

The purpose that the Company invests in the abovementioned equity securities is for longterm strategies, but rather for trading purpose. Therefore, those equity securities are designated as financial assets at FVTOCI, whereas, were presented under available-for-sale financial assets as of December 31, 2017. Please refer to note 6(4).

If the value of these equity securities appreciates or depreciates by 10% at the reporting date, other comprehensive income would increase or decrease by $660,404 thousand for the year ended December 31, 2018, respectively.

(Continued)

43

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

－ (4) Available-for-sale Financial Assets noncurrent

Equity securities – listed stocks **$ **	December 31, 2017 (in thousands) 3,941,588

Available-for-sale securities held by the Company were publicly traded equity shares. If the share price of these securities appreciates or depreciates by 10% at the reporting date, other comprehensive income would increase or decrease by $394,159 thousand for the year ended December 31, 2017, respectively.

The abovementioned investments held by the Company were presented under financial assets at FVTOCI (refer to note 6(3)) as of December 31, 2018.

(5) Accounts Receivable, net (Including Related and Unrelated Parties)

Accounts receivable $ Less: loss allowance Less: allowance for sales returns and discounts $ Accounts receivable, net $ Accounts receivable from related parties, net $	December 31, 2018 2017 (in thousands) 46,252,776 38,708,016 (15,291) (19,589) - (1,335,920 ) 46,237,485 37,352,507 41,612,155 35,338,161 4,625,330 2,014,346

As of December 31, 2018, the Company measures loss allowance for accounts receivable using the simplified approach under IFRS 9 with the lifetime expected credit losses. Analysis of expected credit losses as of December 31, 2018, which was measured based on the aforementioned method, was as follows:

Carrying amount of accounts receivable (in thousands) Not past due $ 45,576,334 Past due less than 60 days 653,327 Past due 61~180 days 8,461 $ 46,238,122	Weighted- average loss rate 0.00% 0.07% 1.29%	Loss allowance for lifetime expected credit losses
		(in thousands) 89 439 109 637

(Continued)

44

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

In addition, the Company recognized a loss allowance amounting to $14,654 thousand as of December 31, 2018 for accounts receivable with gross carrying amount of $14,654 thousand, as there was objective evidence indicating that, under reasonable expectation, it would not be recovered in total.

As of December 31, 2017, the Company measured the allowance for doubtful debts for accounts receivable using the incurred loss model. Aging analysis of accounts receivable, which were past due but not impaired, as of December 31, 2017, was as follows:

			December
			31, 2017
			(in thousands)
Past due	less than 60 days	$	464,351
Past due	61~180 days		4,183
		$	468,534

The movement of the loss allowance for accounts receivable was as follows:

Balance at beginning of the year (IAS 39) $ Adjustments on initial application of IFRS 9 Provisions (reversals) charged to (against) expense Balance at end of the year $	For theyears ended December 31,	For theyears ended December 31,	For theyears ended December 31,
	2018 19,589 - (4,298 ) 15,291	2017
		Individually assessed for impairment Collectively assessed for impairment (in thousands) 12,765 6,824 - - 12,765 6,824	Collectively assessed for impairment

The payment terms granted to customers are generally 30 to 60 days from the end of the month during which the invoice is issued. This term is consistent with practices in our industry, and thus, no financing components involved.

Information about the Company’s exposure to credit risk is included in note 6(29).

As at December 31, 2018 and 2017, the Company did not sell its trade receivables to banks.

(Continued)

45

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(6) Inventories

		December 31,
		2018 2017
		(in thousands)
Finished goods	$	7,585,386 8,136,934
Work-in-progress		10,467,651 8,794,661
Raw materials		2,156,231 2,294,720
	$	20,209,268 19,226,315

For the years ended December 31, 2018 and 2017, the amounts recognized as cost of sales in relation to inventories were $266,682,541 thousand and $260,253,394 thousand, respectively. The net of provisions for inventories written down to net realizable value, which were also included in cost of sales, amounted to $922,443 thousand and $80,587 thousand for the years ended December 31, 2018 and 2017, respectively.

As at December 31, 2018 and 2017, none of the Company’s inventories was pledged as collateral.

(7) Investments in equity-accounted Investees

		December 31,	December 31,
		2018	2017
		(in thousands)
Subsidiaries	$	70,184,683	71,500,434
Associates		3,097,302	2,612,235
	$	73,281,985	74,112,669

• a. Subsidiaries

Refer to consolidated financial statements for the year ended December 31, 2018 and 2017 for the details.

The following table summarized the amount recognized by the Company at its share of those subsidiaries.

The Company’s share of subsidiaries’: Profit (loss) for the year $ Other comprehensive income for the year Total comprehensive income (loss) for the year $	For the years ended December 31, 2018 2017 (in thousands) 638,531 (2,014,868) (427,892 ) (1,919,518 ) 210,639 (3,934,386 )

(Continued)

46

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

b. Associates

Name of associate Lextar Electronics Corp. (“Lextar”) Star River Energy Corp. (“SREC”) Star Shining Energy Corp. (“SSEC”)	Principal activities Manufacturing and sales of Light Emitting Diode Holding company Holding company	Principal place of business Taiwan ROC Taiwan ROC Taiwan ROC	December 31, 2018 Amount Ownership interest (in thousands) % $ 1,740,230 15 414,978 32 942,094 31 $ 3,097,302	December 31, 2017	December 31, 2017
			Amount	Amount	Ownership interest % 15 32 35
			(in thousands) $ 1,740,230 414,978 942,094 $ 3,097,302	(in thousands) $ 1,753,090 509,946 349,199 $ 2,612,235

None of the above associates is considered individually material to the Company. The following table summarized the amount recognized by the Company at its share of those associates.

The Company’s share of associates’: Profit for the year $ Other comprehensive loss for the year Total comprehensive income for the year $	For the years ended December 31, 2018 2017 (in thousands) 49,510 48,542 (6,588 ) (35,309 ) 42,922 13,233

As at December 31, 2018 and 2017, none of the Company’s investments in equity-accounted investees was pledged as collateral.

(8) Acquisition of Subsidiaries

In March 2018, the Company obtained control over ComQi Ltd. (CQIL) and its subsidiaries (collectively as ComQi) by acquiring 100% of shareholdings of CQIL. ComQi is engaged in integration service of content management system and hardware. Through the acquisition of ComQi, the Company expects to be able to provide a total solution for the upstream and downstream of public information displays.

(Continued)

47

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

If the acquisition had taken place on January 1, 2018, management estimated that the Company’s consolidated revenue and net profit for the year ended December 31, 2018 would have been $307,673,560 thousand and $7,956,563 thousand, respectively. In determining these amounts, management had assumed that the fair value adjustments that arose on the acquisition date would have been the same if the acquisition had taken place on January 1, 2018. The aforementioned pro-forma information is presented for illustrative purposes only and is not necessarily an indication of consolidated revenue and consolidated results of operations of the Company that would have been achieved had the acquisition been completed on January 1, 2018, nor is it intended to be a projection of future results.

Acquisition-related costs of $12,191 thousand on legal fees and due diligence fees were expensed and recognized in operating expenses in the statement of comprehensive income.

The following table summarizes each major class of consideration transferred, the assets acquired and liabilities assumed at the acquisition date and the amount of goodwill recognized.

• a. Consideration transferred

		Amounts
		(in thousands)
Cash	$	467,920
Contingent consideration		283,354
	$	751,274

In accordance with the terms of the contingent consideration, in the event that ComQi’s annual net revenue and annual recurring revenue for the year ended December 31, 2018 are greater than the agreed revenue targets in the agreement, the Company will pay additional consideration of USD4,000 thousand and USD7,000 thousand, respectively, to the original shareholders of ComQi. Under the arrangement of the contingent consideration, the potential undiscounted amount of the contingent payment that the Company may have to pay in the future is between USD0 and USD11,000 thousand.

The fair value of the contingent consideration estimated using Monte Carlo simulation amounted to $283,354 thousand. The fair value measurement was based on the significant unobservable inputs in the market and categorised as a Level 3 fair value under IFRS 13. The significant inputs in the valuation technique used are discount rate of 8.5%, revenue volatility rate of 30.8% and AUO’s credit spread of 0.88%.

As ComQi’s annual net revenue and annual recurring revenue for the year ended December 31, 2018 were not greater than the agreed revenue targets in the agreement, the Company remeasured the fair value of the contingent consideration and determined the value was zero. The change in the fair value of the contingent consideration of $283,354 thousand was not a measurement period adjustment, and therefore, was recognized under other gains and losses in the consolidated statement of comprehensive income.

(Continued)

48

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

• b. Identifiable assets acquired and liabilities assumed

The following table summarizes the fair value of identifiable assets acquired and liabilities assumed recognized at the acquisition date:

Cash and cash equivalents $ Accounts receivable and other current assets Property, plant and equipment Intangible assets Accounts payable and other current liabilities Other liabilities $	Fair value (in thousands) 19,432 36,851 3,712 150,436 (57,361) (2,120 ) 150,950

• c. Goodwill arising from the acquisition for which is attributable mainly to the synergies expected to be achieved from integrating ComQi into the Company’s existing business has been recognized as follows:

Consideration transferred $ Less: Fair value of identifiable net assets $	Amounts (in thousands) 751,274 (150,950 ) 600,324

The Company will continue to review the aforesaid matters during the measurement period. If new information obtained within one year from the acquisition date about facts and circumstances that existed at the acquisition date which leads to an adjustment to the above amounts, or any additional provisions as at the acquisition date, then the accounting for the acquisition will be revised.

(Continued)

49

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(9) Property, Plant and Equipment

Cost: Land $ Buildings Machinery and equipment Other equipment Accumulated depreciation and impairment loss: Buildings Machinery and equipment Other equipment Prepayments for purchase of land and equipment, and construction in progress Net carrying amounts $ Cost: Land $ Buildings Machinery and equipment Other equipment Accumulated depreciation and impairment loss: Land and buildings Machinery and equipment Other equipment Prepayments for purchase of land and equipment, and construction in progress Net carrying amounts $		For theyear ended December 31, 2018	For theyear ended December 31, 2018	For theyear ended December 31, 2018
	Balance, Beginning of Year 6,344,658 87,649,494 661,302,840 19,077,836 774,374,828 21,158,080 617,002,758 15,596,915 653,757,753 21,179,915 141,796,990	Additions Disposal or write off Reclassification (in thousands) - - - (530) - 47,840 1,410,817 (5,753,325) 37,224,181 3,950,266 (71,087 ) 1,099,302 5,360,553 (5,824,412 ) 38,371,323 1,792,255 - - 15,373,101 (5,743,0020) - 3,707,302 (70,729 ) - 20,872,658 (5,813,731 ) - 22,174,428 - (38,371,323 ) For theyear ended December 31, 2017			Balance, End of Year
					6,344,658 87,696,804 694,184,513 24,056,317
					812,282,292
					22,950,335 626,632,857 19,233,488
					668,816,680
					4,983,020
					148,448,632
	Balance, Beginning of Year 5,785,702 87,649,494 662,411,932 20,814,990 776,662,118 19,362,830 607,605,792 16,438,235 643,406,857 2,178,718 135,433,979	Additions 558,956 - 1,237,617 3,061,241 4,857,814 1,795,250 17,802,079 4,261,870 23,859,199 25,539,074	Disposal or write off (in thousands) - - (8,555,790) (5,127,191 ) (13,682,981 ) - (8,405,113) (5,103,190 ) (13,508,303 ) -	Reclassification - - 6,209,081 328,796 6,537,877 - - - - (6,537,877 )	Balance, End of Year
					6,344,658 87,649,494 661,302,840 19,077,836
					774,374,828
					21,158,080 617,002,758 15,596,915
					653,757,753
					21,179,915
					141,796,990

As of December 31, 2018 and 2017, a non-irrigated farmland located in LongTan plant amounted to $23,671 thousand was registered in the name of a farmer due to regulations. An agreement of pledge had been signed between the Company and the farmer clarifying the rights and obligations of each party.

(Continued)

50

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

In 2017, the Company wrote down certain machineries and equipment with low utilization resulting from the decline in the application for certain products associated with its display segment and recognized an impairment loss of $895,954 thousand.

In 2018 and 2017, the Company wrote down certain long-term assets with lower capacity utilization associated with its energy segment and recognized impairment losses of $4,470 thousand and $62,419 thousand, respectively.

The capitalized borrowing costs were $290,262 thousand and $100,549 thousand for the years ended December 31, 2018 and 2017, respectively. The interest rates applied for the capitalization, ranged from 1.73% to 1.91% and 1.53% to 1.98% for the years ended December 31, 2018 and 2017, respectively.

Certain property, plant and equipment were pledged as collateral, see note 8.

(10) Investment Property

Investment Property
Cost: Land $ Buildings $ Accumulated depreciation: Buildings $ Net carrying amounts $ Fair Value $ Cost: Land $ Buildings $ Accumulated depreciation: Buildings $ Net carrying amounts $ Fair Value $	For theyear ended December 31, 2018
	Balance, Beginning of Year Additions Disposal Balance, End of Year (in thousands) 465,868 - - 465,868 96,000 - - 96,000 561,868 - - 561,868 20,549 1,883 - 22,432 541,319 539,436 1,502,896 1,500,985 For theyear ended December 31, 2017		Balance, End of Year
			465,868 96,000
			561,868
			22,432
			539,436
			1,500,985
	Balance, Beginning of Year 465,868 96,000 561,868 18,668 543,200 1,480,369	Additions Disposal (in thousands) - - - - - - 1,881 -	Balance, End of Year
			465,868 96,000
			561,868
			20,549
			541,319
			1,502,896

(Continued)

51

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

The fair value of investment property is based on a valuation performed by a qualified independent appraiser who holds a recognized and relevant professional qualification and has recent valuation experience in the location and category of the investment property being valued. The valuation is performed using sales comparison approach and land development analysis approach with reference to available market information.

Sales comparison approach is through comparison, analysis, adjustment and other means of value for comparable properties to estimate the value of the investment property. Land development analysis approach determine the fair value of investment property based on the value prior to development or construction, after deducting the direct cost, indirect cost, capital interest and profit during the development period, and also consider total sales price of properties after completion of development or construction. It also incorporates the possibility of changes in utility of land through development or improvement in accordance with legal use and density of the land. The overall capital interest rate and the rate of return used in the valuation were 1.86% and 10%, respectively.

Certain investment property were pledged as collateral, see note 8.

(11) Intangible Assets

Cost: Goodwill $ Patent and technology fee Accumulated amortization: Goodwill Patent and technology fee Net carrying amounts $ Cost: Goodwill $ Patent and technology fee Accumulated amortization: Patent and technology fee Net carrying amounts $	For theyear ended December 31, 2018	For theyear ended December 31, 2018	For theyear ended December 31, 2018
	Balance, Beginning of Year Additions Reclassification Balance, End of Year (in thousands) 11,280,595 - - 11,280,595 12,078,767 - - 12,078,767 23,359,362 - - 23,359,362 10,376,225 506,391 - 10,882,616 12,983,137 12,476,746 For theyear ended December 31, 2017 Balance, Beginning of Year Additions Reclassification Balance, End of Year (in thousands) 11,280,595 - - 11,280,595 12,078,767 - - 12,078,767 23,359,362 - - 23,359,362 9,756,528 619,697 - 10,376,225 13,602,834 12,983,137		Balance, End of Year
			11,280,595 12,078,767
			23,359,362
			10,882,616
			12,476,746
	Balance, Beginning of Year 11,280,595 12,078,767 23,359,362 9,756,528 13,602,834	Additions Reclassification (in thousands) - - - - - - 619,697 -
			11,280,595 12,078,767
			23,359,362
			10,376,225
			12,983,137

(Continued)

52

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

For the purpose of impairment test, the following table shows the information of the operating business that the Company’s goodwill allocating to.

Display business $	December 31,	December 31,
	2018 2017 (in thousands) 11,280,595 11,280,595	2017

The Company’s goodwill has been tested for impairment at least once at the end of the annual reporting period. The recoverable amount was determined based on value in use of the operating business.

The key assumptions used in the estimation of the recoverable amount included discount rate and terminal growth rate. The annual discount rate for the year 2018 and 2017 were 11.57% and 11.35%, respectively, based on industry weighted average cost of capital. The cash flow projection for the year 2018 and 2017 were determined based on the financial budgets approved by management covering the future five-year period and extrapolated with a steady annual terminal growth rate of negative 1% for subsequent years, respectively. The key assumptions abovementioned represents the management’s forecast of the future for the related industry by considering the history information from internal and external sources.

Based on the impairment assessments for the years ended December 31, 2018 and 2017, no impairment losses were recognized as the recoverable amount of the cash-generating unit was higher than its carrying value.

(12) Other Current Assets and Other Noncurrent Assets

Refundable and overpaid tax $ Refundable deposits Prepayments for purchases Others Less: current Noncurrent $	December 31,	December 31,
	2018 2017 (in thousands) 414,004 559,496 585,697 416,606 373,119 1,968,726 2,355,234 1,855,089 3,728,054 4,799,917 (1,754,804 ) (3,291,783 ) 1,973,250 1,508,134	2017
		4,799,917 (3,291,783 )
		1,508,134

(Continued)

53

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(13) Short-term Borrowings

Unused credit facility

$	December 31,	December 31,
	2018 2017 (in thousands) 9,831,986 8,610,657	2017

(14) Long-term Borrowings

Bank or agent bank Syndicated loans: Bank of Taiwan and others Bank of Taiwan and others Bank of Taiwan and others Unsecured loans Less: transaction costs Less: current portion Unused credit facility Interest rate range	Durations From Feb. 2015 to Aug. 2019 $ From Apr. 2016 to Apr. 2021 From May 2017 to May 2022 From May 2016 to Aug. 2023 $ $	December 31, 2018 2017 (in thousands) 5,912,000 22,704,000 36,175,000 37,500,000 10,000,000 10,000,000 300,000 8,100,000 52,387,000 78,304,000 (441,455 ) (401,729 ) 51,945,545 77,902,271 (22,212,000 ) (7,517,000 ) 29,733,545 70,385,271 75,120,300 36,621,547 1.5991%~ 1.9598% 1.2860%~ 1.7895%

The Company entered into the aforementioned long-term loan arrangements with banks and financial institutions to finance capital expenditures for purchase of machinery and equipment, and to fulfill working capital, as well as to repay the matured debts. A commitment fee is negotiated with the leading banks of syndicated loans, and is calculated based on the committed-to-withdraw but unused balance, if any. No commitment fees were paid for the year ended December 31, 2018.

These credit facilities contain covenants that require the Company to maintain certain financial ratios, calculating based on the Company’s annual consolidated financial statements prepared in accordance with Taiwan Financial Reporting Standards, such as current ratio, leverage ratio, interest coverage ratio, tangible net worth and others as specified in the loan agreements. As of December 31, 2018 and 2017, the Company complied with all financial covenants required under each of the loan agreements.

Refer to note 6(29) for detailed information of exposures to interest rate, currency, and liquidity risks. Refer to note 8 for assets pledged as collateral to secure the aforementioned long-term borrowings.

(Continued)

54

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

The reconciliation of liabilities to cash flows arising from financing activities was as follows:

Long-term borrowings Balance at January 1, 2018 $ 77,902,271 Cash flows (26,080,800) Non-cash changes: Changes in exchange rate Amortization on transaction costs 124,074 Balance at December 31, 2018 $ 51,945,545	Short-term borrowings Guarantee deposits (in thousands) - 765,883 - - (8,568) - - - 757,315	Total liabilities from financing activities 78,668,154 (26,080,800) (8,568) 124,074 52,702,860

(15) Provisions

Balance at January 1, 2018 $ Additions (Reversals) Usage Effect of change in exchange rate Balance at December 31, 2018 Less: current Noncurrent $ Balance at January 1, 2017 $ Additions (Reversals) Usage Effect of change in exchange rate Balance at December 31, 2017 Less: current Noncurrent $	Warranties(i) 1,446,255 55,884 (68,252) - 1,433,887 (656,442 ) 777,445 1,378,941 190,144 (122,830) - 1,446,255 (659,981 ) 786,274	Litigation and claims Others (in thousands) 89,520 - 336,601 305,510 - - 5,647 2,510 431,228 308,020 (431,228 ) (308,020 ) - - 1,027,327 - 90,945 - (1,025,032) - (3,720 ) - 89,520 - (89,520 ) - - -	Total 1,535,775 697,455 (68,252) 8,157 2,173,135 (1,395,690 ) 777,445 2,406,268 281,089 (1,147,862) (3,720 ) 1,535,775 (749,501 ) 786,274

(i) The provisions for warranties for the years ended December 31, 2018 and 2017 were estimated based on historical experience of warranty claims rate associated with similar products and services. The Company expects most warranty claims will be made within two years from the date of the sale of the product.

(Continued)

55

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(16) Operating Leases

a. Lessees

Future minimum lease payments under non-cancellable operating leases as of December 31, 2018 and 2017 were as follows:

Less than one year $ Between one and five years More than five years $	December 31,	December 31,
	2018 2017 (in thousands) 570,122 565,046 2,076,520 2,185,705 1,198,438 1,445,412 3,845,080 4,196,163	2017
		4,196,163

The Company entered into various operating lease agreements for land with Hsinchu Science Park Bureau beginning from March 1, 1994 for a period of 20 years, with renewal option upon expiration. The Company had on July 2003 and November 2006, entered into various operating lease for land with Central Science Park Administration Bureau for period from July 28, 2003 till December 31, 2023 and November 9, 2006 till December 31, 2025. All lease amounts are adjusted in accordance with the land value announced by the government from time to time.

The Company had also on February 2008 and October 2018, respectively, renewed its lease agreements with Hsinchu Science Park Bureau and Southern Taiwan Science Park Bureau, respectively, for the lands in Longtan Science Park and Kaohsiung Science Park. The period covers from February 9, 2008 till December 31, 2027 and October 23, 2018 till October 22, 2038, respectively. All lease amounts are adjusted in accordance with the land value announced by the government from time to time.

Rental expense for operating leases amounted to $691,663 thousand and $706,655 thousand for the years ended December 31, 2018 and 2017, respectively.

b. Lessor

The Company leased its investment properties to third parties under operating lease. Refer to note 6(10) for further information on investment properties.

(Continued)

56

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Future minimum lease receivables under non-cancellable operating leases as of December 31, 2018 and 2017 were as follows:

Less than one year $ Between one and five years More than five years $	December 31,	December 31,
	2018 2017 (in thousands) 21,684 21,684 45,840 32,208 71,126 79,178 138,650 133,070	2017
		133,070

In addition to the above-mentioned, the Company also leased partial offices to others. See note 6(23) for rental income for the years ended December 31, 2018 and 2017. Repair and maintenance expenses incurred from aforementioned operating leases for the years ended December 31, 2018 and 2017 amounted to $3,059 thousand and $3,089 thousand, respectively.

(17) Employee Benefits

• a. Defined benefit plans

Pursuant to the ROC Labor Standards Act, the Company has established defined benefit pension plan covering their full-time employees in the ROC. This plan provides for retirement benefits to retiring employees based on years of service and the average salaries and wages for the six-month period before the employee’s retirement. The funding of this retirement plan by the Company is contributed monthly based on a certain percentage of employees’ total salaries and wages. The fund is deposited with Bank of Taiwan.

• (i) Reconciliation for the Company’s present value of defined benefit obligation and the fair value of plan assets:

Present value of defined benefit obligation $ Fair value of plan assets Net defined benefit liability $	December 31, 2018 2017 (in thousands) (3,224,379) (3,099,874) 2,367,273 2,213,018 (857,106 ) (886,856 )

(Continued)

57

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(ii) Movement in net defined benefit asset (liability)

Balance at January 1, $ Included in profit or loss Service cost Interest cost Expected return on plan assets Included in other comprehensive income Remeasurements (loss) gain: Actuarial (loss) gain arising from: - demographic assumptions - financial assumptions - experience adjustment Return on plan assets excluding interest income Other Contributions paid by the employer Benefits paid Others Balance at December 31, $	Defined benefit obligation 2018 2017 (3,099,874 ) (2,979,116 ) (1,935) (2,487) (49,598) (53,624) - - (51,533 ) (56,111 ) (15,795) (21,054) (178,212) (126,708) 84,437 66,016 - - (109,570 ) (81,746 ) - - 36,598 17,099 36,598 17,099 (3,224,379 ) (3,099,874 **) **	Fair value of plan assets 2018 2017 (in thousands) 2,213,018 2,105,690 - - - - 35,408 37,902 35,408 37,902 - - - - - - 52,614 (16,345 ) 52,614 (16,345 ) 102,831 102,870 (36,598 ) (17,099 ) 66,233 85,771 2,367,273 2,213,018	Net defined benefit asset(liability)	Net defined benefit asset(liability)
	2018 (3,099,874 ) (1,935) (49,598) - (51,533 ) (15,795) (178,212) 84,437 - (109,570 ) - 36,598 36,598 (3,224,379 **) **		2018 (886,856) (1,935) (49,598) 35,408 (16,125 ) (15,795) (178,212) 84,437 (52,614 ) (56,956 ) 102,831 - 102,831 (857,106 )	2017
				(873,426 ) (2,487) (53,624) 37,902 (18,209 ) (21,054) (126,708) 66,016 (16,345 ) (98,091 ) 102,870 - 102,870 (886,856 )

(iii) Plan assets

Pursuant to the ROC Labor Standards Act, the Company contributes an amount based on a certain percentage of employees’ total salaries and wages paid every month to its pension fund (the “Fund”), which is administered by the Bureau of Labor Fund, Ministry of Labor and supervised by the employees’ pension plan committee (the “Committee”) and deposited in the Committee’s name with Bank of Taiwan. Under the ROC Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, the minimum return on the plan assets should not be lower than the average interest rate on two-year time deposits published by the local banks. The government is not only responsible for the determination of the investment strategies and policies, but also for any shortfall in the event that the rate of return is less than the required rate of return.

As of December 31, 2018, the Fund deposited in the Committee’s name in the Bank of Taiwan amounted to $2,367,273 thousand. Information on utilization of labor pension funds, including the yield rate of funds and the component of plan assets are available at the Bureau of Labor Funds, Ministry of Labor website.

(Continued)

58

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

• (iv) Defined benefit obligation

• (a) Principal actuarial assumptions

Discount rate Rate of increase in future salary	December 31,	December 31,
	2018 1.22% 2.90%	2017
		1.60% 3.00%

The Company anticipates contributing $102,831 thousand to the defined benefit plans in the next year starting from January 1, 2019.

As at December 31, 2018, the weighted-average duration of the defined benefit obligation was 20 years.

• (b) Sensitivity analysis

Reasonably possible changes at December 31, 2018 and 2017 to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

Discount rate $ Rate of increase in future salary $	December 31, 2018 Changes in assumptions + 0.25% - 0.25% (in thousands) (159,872 ) 169,102 165,850 (157,706 )	December 31, 2017
		Changes in assumptions + 0.25% - 0.25% (in thousands) (158,544 ) 167,984 165,222 (156,819 )

In practical, the relevant actuarial assumptions are correlated to each other. The approach to develop the sensitivity analysis as above is the same approach to recognize the net defined benefit liability in the balance sheet.

The approach to develop the sensitivity analysis and its relevant actuarial assumptions are the same as those in previous year.

b. Defined contribution plans

Commencing July 1, 2005, pursuant to the ROC Labor Pension Act (the “Act”), employees who elected to participate in the Act or joined the Company after July 1, 2005, are subject to a defined contribution plan under the Act. Under the defined contribution plan, the Company contributes monthly at a rate of no less than six percent of the employees’ monthly salaries and wages to the employee’s individual pension fund account at the ROC Bureau of Labor Insurance.

(Continued)

59

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

The Company has set up defined contribution plan in accordance with the Act. For the years ended December 31, 2018 and 2017, $942,864 thousand and $929,853 thousand, respectively, of the pension costs under the pension plan to the ROC Bureau of the Labor Insurance.

(18) Capital and Other Components of Equity

• a. Common stock

The Company’s authorized common stock, with par value of $10 per share, both amounted to $100,000,000 thousand as at December 31, 2018 and 2017.

The Company’s issued and outstanding common stock, with par value of $10 per share, both amounted to $96,242,451 thousand as at December 31, 2018 and 2017.

The Company’s ADSs were listed on the New York Stock Exchange. Each ADS represents 10 shares of common stock. As of December 31, 2018, the Company has issued 51,674 thousand ADSs, which represented 516,741 thousand shares of its common stock.

• b. Capital surplus

The components of capital surplus were as follows:

From common stock $ From convertible bonds From others $	December 31, 2018 2017 (in thousands) 52,756,091 52,756,091 6,049,862 6,049,862 1,816,090 1,734,373 60,622,043 60,540,326

According to the ROC Company Act, capital surplus, including premium from stock issuing and donations received, shall be applied to offset accumulated deficits before it can be distributed by issuing common stock as stock dividends or by cash according to the proportion of shareholdings. Pursuant to the ROC Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the total sum of capital surplus capitalized per annum shall not exceed 10 percent of the paid-in capital.

(Continued)

60

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

c. Legal reserve

According to the ROC Company Act, 10 percent of the annual earnings after payment of income taxes shall be allocated as legal reserve until the accumulated legal reserve equals the paid-in capital. When a company incurs no loss, it may, pursuant to a resolution to be adopted by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by cash, only the portion of legal reserve which exceeds 25 percent of the paid-in capital may be distributed.

d. Distribution of earnings

In accordance with the Company’s Articles of Incorporation, where 10 percent of the annual earnings, after payment of income taxes and offsetting accumulated deficits, if any, shall be set aside as a legal reserve until the accumulated legal reserve equals the Company’s paid-in capital. In addition, a special reserve in accordance with applicable laws and regulations shall also be set aside. The remaining current-year earnings together with accumulated undistributed earnings from preceding years can be distributed after the earnings distribution plan proposed by the board of directors is approved by resolution of the shareholders’ meeting.

The Company’s dividend policy is to pay dividends from surplus considering factors such as the Company’s current and future investment environment, cash requirements, domestic and overseas competitive conditions and capital budget requirements, while taking into account shareholders’ interest, maintenance of balanced dividend and the Company’s long-term financial plan. If the current-year retained earnings available for distribution reach 2% of the paid-in capital of the Company, dividend to be distributed shall be no less than 20% of the current-year retained earnings available for distribution. If the current-year retained earnings available for distribution do not reach 2% of the paid-in capital of the Company, the Company may decide not to distribute dividend. The cash portion of the dividend, which may be in the form of cash and stock, shall not be less than 10% of the total dividend distributed during the year. The dividend distribution ratio aforementioned could be adjusted by the shareholders’ meeting after taking into consideration factors such as finance, business and operations, etc.

Pursuant to relevant laws or regulations or as requested by the local authority, total net debit balance of the other components of equity shall be set aside from current earnings as special reserve, and not for distribution. Subsequent decrease pertaining to items that are accounted for as a reduction to the other components of equity shall be reclassified from special reserve to undistributed earnings.

(Continued)

61

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

The Company’s appropriations of earnings for 2016 had been approved in the shareholders’ meeting held on June 15, 2017. The appropriations and dividends per share were as follows:

shareholders’ meeting held on June 15, share were as follows:	2017. The appropriations and dividends per	2017. The appropriations and dividends per
Legal reserve $ Cash dividends to shareholders $	For fiscalyear 2016
	Appropriation of earnings Dividends per share (in thousands, except for per share data) 781,894 5,389,577 $0.56 6,171,471	Dividends per share

The aforementioned appropriation of earnings for 2016 was consistent with the resolutions of the board of directors’ meeting held on March 22, 2017.

The Company’s appropriations of earnings for 2017 had been approved in the shareholders’ meeting held on June 15, 2018. The appropriations and dividends per share were as follows:

Legal reserve $ Cash dividends to shareholders $	For fiscalyear 2017	For fiscalyear 2017
	Appropriation of earnings Dividends per share (in thousands, except for per share data) 3,235,942 14,436,368 $1.50 17,672,310	Dividends per share

The aforementioned appropriation of earnings for 2017 was consistent with the resolutions of the board of directors’ meeting held on March 23, 2018.

Information on the approval of board of directors and shareholders for the Company’s appropriations of earnings are available at the Market Observation Post System website.

(Continued)

62

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

e. Other components of equity

Balance at January 1, 2018 $ Adjustments on initial application of new standards Foreign operations – foreign currency translation differences Net change in fair value of financial assets at FVTOCI Equity-accounted investees – share of other comprehensive income Cumulative unrealized loss of equity instruments transferred to retained earnings due to disposal Group reorganization Related tax Balance at December 31, 2018 $ Balance at January 1, 2017 $ Foreign operations – foreign currency translation differences Effective portion of changes in fair value of cash flow hedges Net change in fair value of available- for-sale financial assets Equity-accounted investees – share of other comprehensive income Related tax Balance at December 31, 2017 $	Cumulative translation differences (1,120,969) - 1,685,563 - (2,125,649) - (22,225) 133,370 (1,449,910 ) Cumulative translation differences 536,819 (4,482,634) - - 2,551,144 273,702 (1,120,969 **) **	Unrealized gains (losses) on financial assets at FVTOCI Unrealized gains (losses) on available- for-sale financial assets (in thousands) - 1,377,031 1,303,816 (1,377,031) - - (756,179) - 4,419 - 50,084 - - - - - 602,140 - Unrealized gains (losses) on available- for-sale financial assets Unrealized gains (losses) on cash flow hedges (in thousands) 224,299 18,254 - - - (21,992) 1,136,818 - 15,914 - - 3,738 1,377,031 -	Total 256,062 (73,215) 1,685,563 (756,179) (2,121,230) 50,084 (22,225) 133,370
			(847,770 ) Total 779,372 (4,482,634) (21,992) 1,136,818 2,567,058 277,440 256,062

(Continued)

63

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(19) Revenue from Contracts with Customers

Primary geographical markets: PRC (including Hong Kong) $ Taiwan Singapore Japan Others $ Major products: Products for Televisions $ Products for Mobile PCs and Devices Products for Monitors Products for Commercial and Others(i) Solar Products $ Major customers: Customer A $ Others (individually not greater than 10%) **$ **	For theyear ended December 31, 2018	For theyear ended December 31, 2018	For theyear ended December 31, 2018
	Display segment 109,586,951 91,085,995 39,367,379 16,888,485 24,898,667 281,827,477 110,451,334 74,393,888 47,032,467 49,949,788 - 281,827,477 34,869,029 246,958,448 281,827,477	Energy segment (in thousands) 1,031,491 5,464,243 - 460,783 4,276,345 11,232,862 - - - - 11,232,862 11,232,862 - 11,232,862 11,232,862	Total segments
			110,618,442 96,550,238 39,367,379 17,349,268 29,175,012
			293,060,339
			110,451,334 74,393,888 47,032,467 49,949,788 11,232,862
			293,060,339
			34,869,029 258,191,310
			293,060,339

(i) Others include sales from products for other applications and sales of raw materials, components and from service charges.

Refer to note 6(20) for revenue related information for the year ended December 31, 2017.

(20) Revenue

Sale of goods $ Other operating revenue $	For the year ended December 31, 2017
	(in thousands) 310,000,538 9,839,357
	319,839,895

Refer to note 6(19) for the disaggregation of revenue for the year ended December 31, 2018.

Refer to the consolidated financial statements for segment revenue information for the year ended December 31, 2017.

(Continued)

64

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(21) Remuneration to Employees and Directors

According to the Company’s Articles of Incorporation, the Company should distribute remuneration to employees and directors no less than 5% and no more than 1% of annual profits before income tax, respectively, after offsetting accumulated deficits, if any. Only employees, including employees of affiliate companies that meet certain conditions are entitled to the abovementioned remuneration which to be distributed in stock or cash. The said conditions and distribution method are decided by board of directors or the personnel authorized by board of directors.

The Company accrued remuneration to employees based on the profit before income tax excluding the remuneration to employees and directors for each period, multiplied by the percentage resolved by board of directors. For the years ended December 31, 2018 and 2017, the Company estimated the remuneration to employees amounting to $1,215,696 thousand and $4,062,114 thousand, respectively. Remuneration to directors was estimated based on the amount expected to pay and recognized together with the remuneration to employees as cost of sales or operating expenses. If remuneration to employees is resolved to be distributed in stock, the number of shares is determined by dividing the amount of remuneration by the closing price of the shares (ignoring ex-dividend effect) on the day preceding the board of directors’ meeting. If there is a change in the proposed amounts after the annual financial statements are authorized for issue, the differences are accounted for as a change in accounting estimate and adjusted prospectively to next year’s profit or loss.

Remuneration to employees and directors for 2017 in the amounts of $4,062,114 thousand and $132,604 thousand, respectively, in cash for payment had been approved in the meeting of board of directors held on March 23, 2018. The aforementioned approved amounts are the same as the amounts charged against earnings of 2017.

Remuneration to employees and directors for 2016 in the amounts of $1,107,486 thousand and $24,226 thousand, respectively, in cash for payment had been approved in the meeting of board of directors held on March 22, 2017. The aforementioned approved amounts are the same as the amounts charged against earnings of 2016.

The information about the Company’s remuneration to employees and directors is available at the Market Observation Post System website.

(Continued)

65

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(22) Additional Information of Expenses by Nature

Employee benefits expenses: Salaries and wages Labor and health insurances Retirement benefits Remuneration to directors Other employee benefits Depreciation(i) Amortization		For theyears ended December 31,	For theyears ended December 31,	For theyears ended December 31,	For theyears ended December 31,
		2018	Total Recognized in cost of sales (in thousands) 21,663,996 18,837,334 1,801,755 1,379,609 958,989 702,969 58,713 - 1,479,112 1,197,272 20,868,188 19,925,544 506,391 619,697		2017
	Recognized in cost of sales 16,109,604 1,394,015 707,531 - 1,236,157 18,424,568 506,391	Recognized in operating expenses			Recognized in operating expenses	Total
		5,554,392 407,740 251,458 58,713 242,955 2,443,620 -			6,612,117 400,451 245,093 168,886 219,536 2,975,282 -	25,449,451 1,780,060 948,062 168,886 1,416,808 22,900,826 619,697

(i) The above depreciation did not include the depreciation of investment property.

The Company had 23,261 and 24,277 employees, including both 7 non-employee directors as of December 31, 2018 and 2017, respectively.

(23) Other Income

Interest income on bank deposits $ Interest income on government bonds with reverse repurchase agreements and others Rental income, net Dividend income Grants and Others $	For the years ended December 31,	For the years ended December 31,
	2018 2017 (in thousands) 259,588 200,560 28,503 19,587 364,893 345,576 452,561 246,000 291,546 309,157 1,397,091 1,120,880	2017
		1,120,880

(Continued)

66

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(24) Other Gains and Losses

Foreign exchange losses, net $ Gains on valuation of financial instruments at FVTPL, net Gains (losses) on disposals of property, plant and equipment, net Impairment losses on assets Litigation losses and others $	For the years ended December 31, 2018 2017 (in thousands) (111,958) (1,093,680) 549,805 1,475,591 55,482 (101,697) (4,470) (958,373) (647,750 ) (78,899 ) (152,891 ) (757,058 )

(25) Finance Costs

Interest expense on bank borrowings $ Interest expense on others $	For the years ended December 31,	For the years ended December 31,
	2018 2017 (in thousands) 851,067 1,559,195 129,745 144,837 980,812 1,704,032	2017
		1,704,032

(26) Income Taxes

According to the amendment to the ROC Income Tax Act enacted on February 7, 2018, an increase in the corporate income tax rate from 17% to 20% is applicable to the Company starting from fiscal year 2018 and beyond.

(Continued)

67

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

a. Income tax expenses

The components of income tax expense for the years ended December 31, 2018 and 2017 were as follows:

Current income tax expense: Current year $ Adjustment to prior years Deferred tax expense (benefit): Temporary differences Investment tax credit and tax losses carryforwards Effect of changes in statutory income tax rate Total income tax expense $	For the years ended December 31,	For the years ended December 31,
	2018 2017 (in thousands) 1,266,731 168,593 (388,025 ) 193 878,706 168,786 (413,271) 32,347 1,911,841 7,446,185 (552,881 ) - 945,689 7,478,532 1,824,395 7,647,318	2017
		168,786
		32,347 7,446,185 -
		7,478,532
		7,647,318

Income taxes expense (benefit) recognized directly in other comprehensive income for the years ended December 31, 2018 and 2017 were as follows:

Items that will never be reclassified to profit or loss: Remeasurement of defined benefit obligations $ Items that are or may be reclassified subsequently to profit or loss: Foreign operations – foreign currency translation differences Cash flow hedges Equity-accounted investees – share of other comprehensive income $	For the years ended December 31,	For the years ended December 31,
	2018 2017 (in thousands) (38,908 ) (16,675 ) 241,618 (762,048) - (3,738) (374,988 ) 488,346 (133,370 ) (277,440 )	2017
		(762,048) (3,738) 488,346
		(277,440 )

(Continued)

68

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Reconciliation of the expected income tax expense (benefit) calculated based on the ROC statutory income tax rate compared with the actual income tax expense (benefit) as reported in the statements of comprehensive income for the years ended December 31, 2018 and 2017, was as follows:

Income tax expense at statutory tax rate $ Tax on undistributed earnings, net Effect of changes in statutory income tax rate Net of non-taxable income and non-deductible expense Effect of change of unrecognized deductible temporary differences, tax losses carryforwards, and investment tax credits Adjustments to prior year Additional income tax under the Alternative Minimum Tax Act Income tax expense $	For the years ended December 31,	For the years ended December 31,
	2018 2017 (in thousands) 2,396,999 6,801,145 1,266,731 146,123 (552,881) - (67,590) (147,606) (830,839) 824,992 (388,025) 193 - 22,471 1,824,395 7,647,318	2017
		7,647,318

• b. Deferred tax assets and liabilities

Deferred tax assets have not been recognized in respect of the following items.

Deductible temporary differences $ Unused tax losses carryforwards $	December 31,	December 31,
	2018 2017 (in thousands) 253,978 338,646 11,276,085 10,331,010 11,530,063 10,669,656	2017
		10,669,656

Under the ROC tax laws, approved tax losses can be carried forward for 10 years to offset future taxable profits.

As of December 31, 2018, the expiration period for abovementioned unrecognized deferred tax assets of unused tax losses carryforwards were as follows:

Year of assessment 2012 $ 2015 2016 $	Unrecognized deferred tax assets (in thousands) 9,155,302 2,100,232 20,551 11,276,085	Expiration inyear
		2022 2025 2026

(Continued)

69

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

As of December 31, 2018, the aggregate taxable temporary differences associated with investments in subsidiaries not recognized as deferred tax liabilities amounted to $15,301 thousand.

The components of and changes in deferred tax assets and liabilities were as follows:

Deferred tax assets Deferred tax liabilities Total December 31, 2018 December 31, 2017 December 31, 2018 December 31, 2017 December 31, 2018 December 31, 2017 (in thousands) Tax losses carryforwards $ 2,650,785 3,878,232 - - 2,650,785 3,878,232 Unrealized loss and expenses 303,467 251,516 (2,586) (59,650) 300,881 191,866 Inventories write-down 809,322 531,108 - - 809,322 531,108 Accumulated amortization of goodwill in accordance with local tax laws - - (2,213,429) (1,881,415) (2,213,429) (1,881,415) Remeasurement of defined benefit plans 194,838 155,930 - - 194,838 155,930 Others 1,193,399 812,371 (140,767 ) (119,652 ) 1,052,632 692,719 $ 5,151,811 5,629,157 (2,356,782 ) (2,060,717 ) 2,795,029 3,568,440 January 1, 2017 Recognized in profit or loss Recognized in other comprehensive income December 31, 2017 Recognized in profit or loss Recognized in other comprehensive income December 31, 2018 Deferred tax assets (liabilities): (in thousands) Investment tax credits $ 11,324,417 (7,446,185) - 3,878,232 (1,227,447) - 2,650,785 Unrealized loss and expenses 188,144 3,722 - 191,866 109,015 - 300,881 Inventories write-down 517,408 13,700 - 531,108 278,214 - 809,322 Accumulated amortization of goodwill in accordance with local tax laws (1,881,415) - - (1,881,415) (332,014) - (2,213,429) Remeasurement of defined benefit plans 139,255 - 16,675 155,930 - 38,908 194,838 Cash flow hedges (3,738) - 3,738 - - - - Others 468,786 (49,769 ) 273,702 692,719 226,543 133,370 1,052,632 $ 10,752,857 (7,478,532 ) 294,115 3,568,440 (945,689 ) 172,278 2,795,029	Deferred	tax assets	Deferred tax liabilities	Deferred tax liabilities	Total	Total	Total
	December 31, 2018	December 31, 2017		December 31, 2017			December 31, 2017
							3,878,232 191,866 531,108 (1,881,415) 155,930 692,719 3,568,440 December 31, 2018 2,650,785 300,881 809,322 (2,213,429) 194,838 - 1,052,632 2,795,029
						- - - - 38,908 - 133,370
						172,278

c. Assessments by the tax authorities

As of December 31, 2018, the tax authorities have completed the examination of income tax returns of the Company through 2016.

(27) Earnings per Share

Basic earnings per share Profit attributable to shareholders $ Weighted-average number of common shares outstanding during the year Basic earnings per share **$ **	For the years ended December 31,	For the years ended December 31,
	2018 (in thousands, share 10,160,598 9,624,245 1.06	2017
		except for per data) 32,359,417 9,624,245 3.36

(Continued)

70

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Diluted earnings per share Profit attributable to shareholders $ Weighted-average number of common shares outstanding during the year Effect of employee remuneration in stock Diluted earnings per share **$ **	For the years ended December 31,	For the years ended December 31,
	2018 (in thousands, share 10,160,598 9,624,245 164,609 9,788,854 1.04	2017
		except for per data) 32,359,417 9,624,245 347,903 9,972,148 3.24

(28) Financial Instruments

a. Fair value and carrying amount

The carrying amounts of the Company’s current non-derivative financial instruments, including financial assets at amortized cost (loans and receivables) and financial liabilities at amortized cost, were considered to approximate their fair value due to their short-term nature. This methodology applies to cash and cash equivalents, receivables or payables (including related parties) and other current financial assets.

Except for aforementioned financial instruments, the carrying amount and fair value of other financial instruments of the Company as of December 31, 2018 and 2017 were as follows:

December 31, 2018 December 31, 2017 Carrying Amount Fair Value Carrying Amount Fair Value (in thousands) Financial assets: Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL $ 52,434 52,434 - - Financial assets held for trading - - 36,373 36,373 Financial assets at FVTOCI 6,604,041 6,604,041 - - Available-for-sale financial assets－ noncurrent - - 3,941,588 3,941,588 Financial assets at amortized cost (loans and receivables): Refundable deposits 585,697 585,697 416,606 416,606	December 31, 2018	December 31, 2018	December 31, 2017	December 31, 2017
	Carrying Amount	Fair Value	Carrying Amount	Fair Value
				- 36,373 - 3,941,588 416,606

(Continued)

71

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

December 31, 2018 December 31, 2017 Carrying Amount Fair Value Carrying Amount Fair Value (in thousands) Financial liabilities: Financial liabilities at FVTPL: Financial liabilities held for trading $ 13,973 13,973 69,625 69,625 Financial liabilities at amortized cost: Long-term borrowings (including current installments) 51,945,545 51,945,545 77,902,271 77,902,271 Guarantee deposits 757,315 757,315 765,883 765,883	December 31, 2018	December 31, 2018	December 31, 2017	December 31, 2017
	Carrying Amount	Fair Value	Carrying Amount	Fair Value
				69,625 77,902,271 765,883

• b. Valuation techniques and assumptions applied in fair value measurement

The fair values of financial assets and financial liabilities with standard terms and conditions and traded in active markets are determined with reference to quoted market prices. The fair values of other financial assets and financial liabilities without quoted market prices are estimated using valuation approach. The estimates and assumptions used are the same as those used by market participants in the pricing of financial instruments.

Fair value of foreign currency forward contract is measured based on the maturity date of each contract with quoted spot rate and quoted swap points from Reuters quote system.

The refundable deposits and guarantee deposits are based on carrying amount as there is no fixed maturity.

The fair value of floating-rate long-term borrowings approximates to their carrying value.

The Company refers to the quoted spot rates from Reuters quote system for US Dollar’s closing price and other currencies’ buy rates, which has been applied consistently to all periods presented and served as the basis for retranslation of the fair value of abovementioned financial instruments that denominated in foreign currencies.

c. Fair value measurements recognized in the balance sheets

The Company determines fair value based on assumptions that market participants would use in pricing an asset or a liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

• (i) Level 1 inputs: Unadjusted quoted prices for identical assets or liabilities in active markets.

(Continued)

72

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

• (ii) Level 2 inputs: Other than quoted prices included within Level 1, inputs are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• (iii) Level 3 inputs: Derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair value measurement level of an asset or a liability within their fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

Level 1 December 31, 2018 Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL $ - Financial assets at FVTOCI 6,604,041 Financial liabilities at FVTPL: Financial liabilities held for trading - December 31, 2017 Financial assets at FVTPL: Financial assets held for trading $ Available-for-sale financial assets－ noncurrent 3,941,588 Loans and receivables: Financial liabilities at FVTPL: Financial liabilities held for trading -	Level 2 Level 3 (in thousands) 52,434 - - - 13,973 - 36,373 - - - 69,625 -	Total
		52,434 6,604,041 13,973 36,373 3,941,588 69,625

There were no transfers between Level 1 and 2 for the years ended December 31, 2018 and 2017.

(Continued)

73

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(29) Financial Risk Management

• a. Risk management framework

The managerial officers of related divisions are appointed to review, control, trace and monitor the strategic risks, financial risks and operational risks faced by the Company. The managerial officers report to executive officers the progress of risk controls from time to time and, if necessary, report to the board of directors, depending on the extent of impact of risks.

• b. Financial risk information

Hereinafter discloses information about the Company’s exposure to variable risks, and the goals, policies and procedures of the Company’s risk measurement and risk management.

The Company is exposed to the following risks due to usage of financial instruments:

• (i) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company’s exposures to credit risk are mainly from:

• (a) The carrying amount of financial assets recognized in the balance sheets.

• (b) The amount of contingent liabilities as a result from the Company providing financial guarantee to its customers.

The Company’s potential credit risk is derived primarily from cash in bank, cash equivalents and trade receivables. The Company deposits its cash and cash equivalent investments with various reputable financial institutions of high credit quality. The Company also entered into reverse repurchase agreements with securities firms or banks in Taiwan covering government bonds that classified as cash equivalents. There should be no major concerns for the performance capability of trading counterparts. Management performs periodic evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any one institution. Management believes that there is a limited concentration of credit risk in cash and cash equivalent investments.

The majority of the Company’s customers are in high technology industries. Management continuously evaluates and controls the credit quality, credit limit and financial strength of its customers to ensure any overdue receivables are taken necessary procedures. The Company also flexibly makes use of prepayments, accounts receivable factoring and credit insurance as credit enhancement instruments. If necessary, the Company will request collaterals or assurance from its customers in order to reduce the credit risk from particular customers.

(Continued)

74

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Additionally, on the reporting date, the Company reviews the recoverability of its receivables to provide appropriate valuation allowances. Consequently, management believes there is a limited concentration of its credit risk.

For the years ended December 31, 2018 and 2017, the Company’s five largest customers accounted for 37.8% and 37.2%, respectively, of the Company’s net revenue. There is no other significant concentration of credit risk.

Refer to note 6(5) for expected credit loss analysis of accounts receivable and the movement in the loss allowance of accounts receivable.

For credit of guarantee, the Company’s policy is to provide financial guarantees only to subsidiaries. Refer to note 13(1)b. for information about endorsements or guarantees provided by the Company to its subsidiaries as of December 31, 2018.

(ii) Liquidity risk

Liquidity risk is the risk that the Company has no sufficient working capital and unused credit facilities to meet its obligations associated with matured financial liabilities, that may resulting from an economic downturn or uneven demand and supply in the market and cause a significant decrease in product selling prices and market demands.

Liquidity risk of the Company is monitored through its corporate treasury department which tracks the development of the actual cash flow position for the Company and uses input from a number of sources in order to forecast the overall liquidity position both on a short and long term basis. Corporate treasury invests surplus cash in money market deposits with appropriate maturities to ensure sufficient liquidity is available to meet liabilities when due, without incurring unacceptable losses or risking damage to the Company’s reputation. As at December 31, 2018, the Company’s working capital together with existing unused credit facilities under its existing loan agreements will be sufficient to fulfill all of its contractual obligations. Therefore, management believes that there is no liquidity risk resulting from incapable of financing to fulfill the contractual obligations.

The following, except for payables (including related parties) and equipment and construction payable, are the contractual maturities of other financial liabilities. The amounts include estimated interest payments but exclude the impact of netting agreements.

(Continued)

75

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

December 31, 2018 Non-derivative financial liabilities Long-term borrowings (including current installments) $ Refundable deposits Derivative financial instruments Foreign currency forward contracts－inflows Foreign currency forward contracts－outflows $ December 31, 2017 Non-derivative financial liabilities Long-term borrowings (including current installments) $ Refundable deposits Derivative financial instruments Foreign currency forward contracts－inflows Foreign currency forward contracts－outflows $	Contractual cash flows 53,691,689 757,315 (16,354,682) 16,337,417 54,431,739 Contractual cash flows 81,219,844 765,883 (18,183,543) 18,233,626 82,035,810	2019.1.1~ 2019.12.31 22,903,847 - (16,354,682) 16,337,417 22,886,582 2018.1.1~ 2018.12.31 8,801,654 - (18,183,543) 18,233,626 8,851,737	2020.1.1~ 2021.12.31 2022.1.1~ 2023.12.31 (in thousands) 28,468,316 2,319,526 - - - - - - 28,468,316 2,319,526 2019.1.1~ 2020.12.31 2021.1.1~ 2022.12.31 (in thousands) 50,985,378 21,432,812 - - - - - - 50,985,378 21,432,812	2024 and thereafter - 757,315 - - 757,315 2023 and thereafter - 765,883 - - 765,883

The Company is not expecting that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

(iii) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, which will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable range, while optimizing the return.

The Company buys and sells derivatives, and also incurs financial assets and liabilities, in order to manage market risks. All such transactions are executed in accordance with the Company’s handling procedures for conducting derivative transactions, and also monitored by internal audit department.

(Continued)

76

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(a) Currency risk

The Company is exposed to currency risk on foreign currency denominated financial assets and liabilities arising from operating, financing and investing activities such that the Company uses forward exchange contracts to hedge its currency risk. Gains and losses derived from the foreign currency fluctuations on underlying assets and liabilities are likely to offset. However, transactions of derivative financial instruments help minimize the impact of foreign currency fluctuations, but the risk cannot be fully eliminated.

The Company periodically examines portions exposed to currency risks for individual asset and liability denominated in foreign currency and uses forward contracts as hedging instruments to hedge positions exposed to risks. The contracts have maturity dates that do not exceed six months, and do not meet the criteria for hedge accounting.

• I. Exposure of currency risk

The Company’s significant exposure to foreign currency risk was as follows:

December 31, 2018 December 31, 2017 Foreign currency amounts Exchange rate NTD Foreign currency amounts Exchange rate NTD (in thousands) (in thousands) (in thousands) (in thousands) Financial assets Monetary items USD $ 1,716,412 30.8020 52,868,922 1,581,833 29.840 47,201,897 JPY 8,705,129 0.2775 2,415,673 6,301,118 0.2644 1,666,016 EUR 28,478 35.2036 1,002,528 78,578 35.632 2,799,891 Non-monetary items USD 1,743,967 30.8020 53,717,672 1,780,476 29.840 53,129,404 Financial liabilities Monetary items USD 1,511,459 30.8020 46,555,960 1,329,498 29.840 39,672,220 JPY 29,016,969 0.2775 8,052,209 31,045,674 0.2644 8,208,476 EUR 3,490 35.2036 122,861 4,805 35.632 171,212	December 31, 2018	December 31, 2018	December 31, 2018	December 31, 2017	December 31, 2017	December 31, 2017
	Foreign currency amounts	Exchange rate	NTD	Foreign currency amounts	Exchange rate	NTD
						(in thousands) 47,201,897 1,666,016 2,799,891 53,129,404 39,672,220 8,208,476 171,212

II. Sensitivity analysis

The Company’s exposure to foreign currency risk arises mainly from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, trade receivables and trade payables that are denominated in foreign currency. Depreciation or appreciation of the NTD by 1% against the USD, EUR and JPY at December 31, 2018 and 2017, while all other variables were remained constant, would have increased or decreased the net profit before tax for the years ended December 31, 2018 and 2017 as follows:

(Continued)

77

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

		For the years	ended
		December	31,
		2018	2017
		(in thousands)
1% of depreciation	$	15,561	36,159
1% of appreciation		(15,561)	(36,159)

III. Foreign exchange gain (loss) on monetary items

With varieties of functional currencies within the Company, the Company disclosed foreign exchange gain (loss) on monetary items in aggregate. The aggregate of realized and unrealized foreign exchange losses for the years ended December 31, 2018 and 2017 were $111,958 thousand and $1,093,680 thousand, respectively.

(b) Interest rate risk

The Company’s exposure to changes in interest rates is mainly from floatingrate long-term debt obligations. Any change in interest rates will cause the effective interest rates of long-term borrowings to change and thus cause the future cash flows to fluctuate over time. The Company will, depending on the market condition, enter into and designate interest rate swaps as hedges of the variability in cash flows attributable to interest rate risk.

The following sensitivity analysis is determined based on the exposure to interest rate risk. For floating-rate debts, the analysis assumes that the balances of outstanding debts at the end of the reporting period had been outstanding for the entire year.

For the Company’s floating-rate debts, assuming all other variables were remained constant, an increase or a decrease in the interest rate by 0.25% would have resulted in a decrease or an increase in the net profit before tax for the years ended December 31, 2018 and 2017 by $130,968 thousand and $195,760 thousand, respectively.

(c) Equity price risk

See note 6(3) and note 6(4) for disclosure of equity price risk analysis.

(Continued)

78

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(30) Capital Management

Through clear understanding and managing of significant changes in external environment, related industry characteristics, and corporate growth plan, the Company manages its capital structure to ensure it has sufficient financial resources to sustain proper liquidity, to invest in capital expenditures and research and development expenses, to repay debts and to distribute dividends in accordance to its plan. The management pursues the most suitable capital structure by monitoring and maintaining proper financial ratios as below. The Company aims to enhance the returns of its shareholders through achieving an optimized debt-toequity ratio from time to time.

	December 31,	December 31,
	2018	2017
	(in thousands)
Total liabilities	$ 144,541,806	165,947,519
Total equity	202,862,715	208,154,368
Interest-bearing debts	51,945,545	77,902,271
Debt-to-equity ratio	71%	80%
Interest-bearing debt-to-equity ratio	26%	37%
Net debt-to-equity ratio(i)	11%	3%

(i) Net debt-to-equity ratio is defined as interest-bearing debts less cash and cash equivalents divided by total equity.

7. Related-party Transactions

• (1) Name and relationship of related parties

The following is a summary of subsidiaries and related parties that have had transactions with the Company during the periods presented in the parent company only financial statements.

Name of related party Relationship with the Company AU Optronics (L) Corp. (AULB) Subsidiary of the Company Konly Venture Corp. (Konly) Subsidiary of the Company Ronly Venture Corp. (Ronly) Subsidiary of the Company Darwin Precisions Corporation (DPTW) Subsidiary of the Company AUO Crystal Corp. (ACTW) Subsidiary of the Company Space Money Inc. (SMI) Subsidiary of the Company U-Fresh Technology Inc. (UTI) Subsidiary of the Company LiGen Power Corporation (LGPC) Subsidiary of the Company AU Optronics Corporation America (AUUS) Subsidiary of the Company AU Optronics Corporation Japan (AUJP) Subsidiary of the Company AU Optronics Europe B.V. (AUNL) Subsidiary of the Company

(Continued)

79

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Name of related party

AU Optronics Korea Ltd. (AUKR) AU Optronics Singapore Pte. Ltd. (AUSG) AU Optronics (Czech) s.r.o. (AUCZ) AU Optronics (Shanghai) Co., Ltd. (AUSH) AU Optronics (Xiamen) Corp. (AUXM) AU Optronics (Suzhou) Corp., Ltd. (AUSZ) AU Optronics Manufacturing (Shanghai) Corp. (AUSJ)

AU Optronics (Slovakia) s.r.o. (AUSK) AFPD Pte., Ltd. (AUST) AU Optronics (Kunshan) Co., Ltd. (AUKS) a.u. Vista Inc. (AUVI) Fortech Electronics (Suzhou) Co., Ltd. (FTWJ) Darwin Precisions (Suzhou) Corp. (DPSZ) Darwin Precisions (Xiamen) Corp. (DPXM) BriView (Xiamen) Corp. (BVXM) AUO Care Information Tech. (Suzhou) Co., Ltd. (A-Care)

AUO Green Energy America Corp. (AEUS) AUO Green Energy Europe B.V. (AENL) ComQi Inc. (CQUS) Lextar Electronics Corporation (“Lextar”) Wellybond Corporation (“WBC”) Raydium Semiconductor Corporation (“Raydium”) Dazzo Technology Corporation (“Dazzo”) Star River Energy Corp. (“SREC”) Sungen Power Corporation (“SGPC”) Evergen Power Corporation (“EGPC”) Star Shining Energy Corporation (“SSEC”) TronGen Power Corporation (“TGPC”) Fargen Power Corporation (“FGPC”) ChampionGen Power Corporation (“CGPC”) Daxin Materials Corp. (“Daxin”) Qisda Corporation (“Qisda”) Qisda (Suzhou) Co., Ltd. (“QCSZ”) Qisda Electronics (Suzhou) Co., Ltd. (“QCES”) Qisda Optronics (Suzhou) Co., Ltd. (“QCOS”) Qisda Japan Co., Ltd. (“QJTO”)

Relationship with 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 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 Associate of the Company Subsidiary of Lextar Associate of the Company Subsidiary of Raydium Associate of the Company Subsidiary of SREC Subsidiary of SREC Associate of the Company Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Associate of the Company AUO’s director Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda

(Continued)

80

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Name of relatedparty Mainteq Europe B.V. (“MQE”) BenQ Corporation (“BenQ”) BenQ Materials Corp. (“BMC”) BenQ Asia Pacific Corp. (“BQP”) BenQ Guru Corporation (“GST”) BenQ Europe B.V. (“BQE”) BenQ America Corporation (“BQA”) DFI Inc. (“DFI”) BenQ Foundation	Relationship with the Company
	Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Substantive related party

Note : For the information in respect of the Company’s subsidiaries, please refer to the consolidated financial statements for the year ended December 31, 2018 and 2017.

• (2) Compensation to key management personnel

Key management personnel’s compensation comprised:

		For the years	ended
		December	31,
		2018	2017
		(in thousands)
Short-term employee benefits	$	334,713	564,515
Post-employment benefits		2,457	2,244
	$	337,170	566,759

• (3) Except for otherwise disclosed in other notes to the parent company only financial statements, the Company’s significant related party transactions and balances were as follows:

• a. Sales

				Accounts receivable	Accounts receivable
		Sales		from relatedparties
		For the years	ended
		December	31,	December 31,
		2018	2017	2018	2017
			(in thousands)
Subsidiaries	$	2,476,237	3,724,043	2,028,364	309,541
Associates		1,871,511	1,207,560	659,372	184,444
Others		11,651,266	11,499,744	1,937,594	1,520,361
	$	15,999,014	16,431,347	4,625,330	2,014,346

(Continued)

81

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

The collection terms for sales to related parties were 30 to 55 days from the end of the month during which the invoice is issued. The pricing for sales to related parties were not materially different from those with third parties.

• b. Purchases

				Notes and accounts payable	Notes and accounts payable
		Purchases		to relatedparties
		For the years	ended
		December	31,	December 31,
		2018	2017	2018	2017
			(in thousands)
Subsidiaries	$	90,178,389	82,415,577	26,799,904	25,623,346
Associates		4,201,227	3,668,183	1,577,440	1,365,794
Others		13,949,794	12,299,890	2,893,155	2,631,772
	$	108,329,410	98,383,650	31,270,499	29,620,912

The payment terms for purchases from related parties were 30 to 120 days. The pricing and payment terms with related parties were not materially different from those with third parties.

• c. Acquisition of property, plant and equipment

		For the years	ended
		December	31,
		2018	2017
		(in thousands)
Subsidiaries	$	258,967	215,946
Associates		6,527	1,549
Others		3,418	-
	$	268,912	217,495

• d. Disposal of property, plant and equipment and others

Subsidiaries $	Proceeds from disposal Gains on disposal For the years ended December 31, For the years ended December 31, 2018 2017 2018 2017 (in thousands) 36,021 15,899 7,880 -	Gains on disposal	Gains on disposal
		For the years ended December 31,
	2018 36,021		2017
			-

(Continued)

82

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

• e. Other related party transactions

Transaction type Other receivables due from related parties Other payables due to related parties (including payables for equipment) Transaction type Rental income Administration and other income Rental and other expenses	Type of relatedparty Subsidiaries $ Associates Others $ Subsidiaries $ Associates Others $ Type of relatedparty Subsidiaries $ Associates Others $ Subsidiaries $ Associates Others $ Subsidiaries $ Associates Others **$ **	December 31, 2018 December 31, 2017 (in thousands) 21,284 1,207,570 1,961 8,937 4,660 3,816 27,905 1,220,323 211,551 250,451 17,757 7,831 3,615 5,635 232,923 263,917 Year Ended December 31,	December 31, 2018 December 31, 2017 (in thousands) 21,284 1,207,570 1,961 8,937 4,660 3,816 27,905 1,220,323 211,551 250,451 17,757 7,831 3,615 5,635 232,923 263,917 Year Ended December 31,
		2018 2017 (in thousands) 48,560 48,609 38,002 31,845 90,491 81,471 177,053 161,925 62,994 77,224 7,626 6,782 6,149 4,791 76,769 88,797 721,134 737,023 31,783 16,855 11,096 14,928 764,013 768,806	2017

The Company leased portion of its facilities to related parties. The collection term was 15 days from quarter-end, and the pricing was not materially different from that with third parties.

For the years ended December 31, 2018 and 2017, the Company had received cash dividends from related parties of $1,191,234 thousand and $954,095 thousand, respectively.

(Continued)

83

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

8. Pledged Assets

The carrying amounts of the assets which the Company pledged as collateral were as follows:

Pledged assets Restricted cash in banks(i) Land and building (including investment property) Machinery and equipment	Pledged to secure Guarantees for warranties $ Long-term borrowings Long-term borrowings $	December 31, 2018 December 31, 2017 (in thousands) 6,245 1,084 25,903,994 40,192,245 36,075,058 15,339,365 61,985,297 55,532,694	December 31, 2017

(i) Classified as other noncurrent assets.

9. Significant Contingent Liabilities and Unrecognized Commitments

The significant commitments and contingencies of the Company as of December 31, 2018, in addition to those disclosed in other notes to the parent company only financial statements, were as follows:

• (1) As at December 31, 2018, the Company had the following outstanding letters of credit for the purpose of purchasing machinery and equipment and materials:

Currency USD JPY	December 31, 2018
	(in thousands) 6,686 651,771

• (2) Starting 1998, AUO has entered into technical collaboration, patent licensing, and/or patent cross licensing agreements with Fujitsu Display Technologies Corp. (subsequently assumed by Fujitsu Limited), Toppan Printing Co., Ltd. (“Toppan Printing”), Semiconductor Energy Laboratory Co., Ltd., Japan Display Inc. (formerly Japan Display East Inc./Hitachi Displays, Ltd.), Panasonic Liquid Crystal Display Co., Ltd. (formerly IPS Alpha Technology, Ltd.), LG Display Co., Ltd., Sharp Corporation, Samsung Electronics Co., Ltd., Hydis Technologies Co., Ltd., Seiko Epson Corporation and others. AUO believes that it is in compliance with the terms and conditions of the aforementioned agreements.

• (3) In April 2011, AUO signed a long-term materials supply agreement with Korean OCI Company Ltd. (“OCI”), under which, AUO and OCI agreed on the supply of certain polysilicon. Purchase prices were determined and adjusted through negotiation on each order basis between both parties. AUO paid proportionate prepayments in three installments to OCI in 2011. In May 2015 and December 2016, the supply agreement was amended and the amended effective term is from April 15, 2011 to December 31, 2020.

(Continued)

84

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

• (4) As at December 31, 2018, significant outstanding purchase commitments for construction in progress, property, plant and equipment totaled $12,318,433 thousand.

• (5) There were civil lawsuits filed against AUO, AUUS and various manufacturers in the TFTLCD industry in the United States and Canada alleging, among other things, antitrust violations. As of January 28, 2019, AUO and AUUS have reached settlement agreements with the relevant plaintiffs. In addition to the above cases in the United States and Canada, a lawsuit was filed by certain consumers in Israel against certain LCD manufacturers including AUO in the District Court of the Central District in Israel (“Israeli Court”). The defendants contested various issues including whether the lawsuit was properly served. In December 2016, the Israeli Court overturned the original decision and revoked the permission for this case to serve out of Israeli jurisdiction. The plaintiffs lodged an appeal to the Israeli Supreme Court but the Israeli Supreme Court overruled the appeal in August 2017. In January 2018, the parties reached a settlement agreement and agreed to commence the required proceedings for withdrawing the lawsuit. A lawsuit was filed in September 2018 by the Government of Puerto Rico on its own behalf and on behalf of all consumers and governmental agencies of Puerto Rico against certain LCD manufacturers including AUO and AUUS in the Superior Court of San Juan, Court of First Instance alleging unjust enrichment and claiming unspecified monetary damages. AUO has retained counsel to handle the related matter and intends to defend this lawsuit vigorously, and at this stage, the final outcome of these matters is uncertain. AUO is reviewing the merits of this lawsuit on an on-going basis.

• (6) At the end of February 2017, one of AUO’s subsidiaries in the PRC, AUSZ received an administrative complaint filed by Shenzhen China Star Optoelectronics Technology Co., Ltd. (“CSOT”) alleging that AUSZ infringes two PRC patents, and the complaint requests that AUSZ cease the alleged infringing act. Based on the Company’s preliminary assessment, it believes that its subsidiary does not infringe the two PRC patents as alleged, and further that the two PRC patents appear to be invalid. In response to such administrative complaint, AUSZ has filed a request to invalidate the two PRC patents accordingly. In April 2017, CSOT filed civil lawsuits in the Intermediate People’s Court of Shenzhen Municipality against the subsidiary claiming infringement of the same two PRC patents. In June 2017, CSOT filed civil lawsuits in the No.1 Intermediate People’s Court of Chongqing Municipality against the subsidiary claiming infringement of three PRC patents (including one of the above mentioned PRC patents). CSOT requested that AUSZ ceases the alleged infringing act and claimed approximate RMB49.91 million for economic loss for each of the said respective four PRC patents and compensation for reasonable fees and litigation expenses such as notarization fees and attorney fees incurred by CSOT. On September 24, 2017, the relevant parties reached a settlement agreement and agreed to withdraw relevant legal proceedings.

• (7) In July 2018, Vista Peak Ventures, LLC (“VPV”) filed three lawsuits in the United States District Court for the Eastern District of Texas against AUO, claiming infringement of certain of VPV’s patents in the United States relating to the manufacturing of TFT-LCD panels. In the complaints, VPV seeks, among other things, unspecified monetary damages for past damages and an injunction against future infringement. While AUO intends to defend the suits vigorously, the ultimate outcome of the three matters is uncertain. AUO is reviewing the merits of the lawsuits on an on-going basis.

(Continued)

85

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

As of January 28, 2019, the Company has made certain provisions with respect to certain of the above lawsuits as the management deems appropriate, considering factors such as the nature of the litigation or claims, the materiality of the amount of possible loss, the progress of the cases and the opinions or views of legal counsel and other advisors. Management will reassess all litigation and claims at each reporting date based on the facts and circumstances that exist at that time, and will make additional provisions or adjustments to previous provisions. The ultimate amount cannot be ascertained until the relevant cases are closed. The ultimate resolution of the legal proceedings and/or lawsuits cannot be predicted with certainty. While management intends to defend certain of the lawsuits described above vigorously, there is a possibility that one or more legal proceedings or lawsuits may result in an unfavorable outcome to the Company. In addition to the matters described above, the Company is also a party to other litigations or proceedings that arise during the ordinary course of business. Except as mentioned above, the Company, to its knowledge, is not involved as a defendant in any material litigation or proceeding which could be expected to have a material adverse effect on the Company’s business or results of operations.

10. Significant Disaster Losses: None.

11. Subsequent Event: None.

12. Others

Since 2010, there have been environmental proceedings relating to the development project of the Central Taiwan Science Park in Houli, Taichung, which AUO’s second 8.5-generation fab is located at. The proceedings were initiated by six residents in Houli District, Taichung City (the “Plaintiffs”) to object the administrative dispositions of the environmental assessment and development approval issued in 2010 by the Environmental Protection Administration (“EPA”) of the Executive Yuan of Taiwan to the third phrase development area in the Central Taiwan Science Park (the “Project”). On August 8, 2014, the Plaintiffs reached a settlement with the defendants (i.e. the governmental authorities, including the EPA of the Executive Yuan of Taiwan, the Ministry of Science and Technology (former National Science Council of the ROC Executive Yuan) and the Central Taiwan Science Park Development Office) in the Taipei High Administrative Court. The second phase environmental impact assessment for the Project continues to proceed. On December 14, 2017, the EPA of the Executive Yuan of Taiwan held the third review meeting of the investigation group. The review meeting reached the conclusion of suggesting approval for the Project. On November 6, 2018, the EPA approved the Project, but on December 6, 2018, five residents in Houli District, Taichung City filed administrative appeal to the Appeals Review Committee of the Executive Yuan requesting a withdrawal of the approval. Currently management does not believe that this event will have a material adverse effect on the Company’s operation and will continue to monitor the development of this event.

(Continued)

86

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

13. Additional Disclosures

• (1) Information on significant transactions:

Following are the additional disclosures required by the Regulations Governing the Preparation of Financial Reports by Securities Issuers for the Company for the year ended December 31, 2018.

• a. Financings provided: Please see Table 1 attached.

• b. Endorsements / guarantees provided: Please see Table 2 attached.

• c. Marketable securities held (excluding investment in subsidiaries, associates and joint ventures): Please see Table 3 attached.

• d. Individual marketable securities acquired or disposed of with costs or prices exceeding NT$300 million or 20% of the paid-in capital: Please see Table 4 attached.

• e. Acquisition of individual real estate with costs exceeding NT$300 million or 20% of the paid-in capital: None.

• f. Disposal of individual real estate with prices exceeding NT$300 million or 20% of the paid-in capital: Please see Table 5 attached.

• g. Purchases from or sales to related parties with amounts exceeding NT$100 million or 20% of the paid-in capital: Please see Table 6 attached.

• h. Receivables from related parties with amounts exceeding NT$100 million or 20% of the paid-in capital: Please see Table 7 attached.

• i. Information about trading in derivative instruments: Please see note 6(2).

• (2) Information on investees (excluding information on investment in Mainland China): Please see Table 8 attached.

• (3) Information on investment in Mainland China:

• a. The related information on investment in Mainland China: Please see Table 9(1) and (2) attached.

• b. Upper limit on investment in Mainland China: Please see Table 9(1) and (2) attached.

• c. Significant transactions:

Significant direct or indirect transactions with the investees in Mainland China for the year ended December 31, 2018, for which intercompany transactions were eliminated upon consolidation, are disclosed in note 13(1) “Information on significant transactions”.

(Continued)

87

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

14. Segment Information

The Company has provided the operating segments disclosure in the consolidated financial statements. Disclosure of the segment information in the parent company only financial statements is waived.

88

AU OPTRONICS CORP. AND SUBSIDIARIES

Financings Provided

For the year ended December 31, 2018

(Amount in thousands of New Taiwan Dollars)

Table 1

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Financing Limits on
Financial Maximum Amount Allowance Collateral Limits for Each Financing
No. [Financing ] Borrowing Statement Related Balance for Ending Balance Actually Interest Rate Nature of Transaction Reason for for Bad Borrowing Company’s Total
Company Company Party the Period (Notes 1 and 2) Drawn Down Financing Amounts Financing Company Financing
Account (Note 3) (Note 1 and 4) Debt Item Value (Note 1 and 5) Amount
(Note 1 and 5)
0 AUO ACTW Other Yes 2,000,000 2,000,000 - Markup rate on Needs for - Operating - - - 20,286,272 81,145,086
receivables short-term short-term capital
from related financing cost financing
parties
0 AUO AUKS Other Yes 3,200,000 295,590 - Markup rate on Needs for - Operating - - - 20,286,272 81,145,086
receivables short-term short-term capital
from related financing cost financing
parties
0 AUO AUSK Other Yes 1,321,446 - - Markup rate on Needs for - Operating - - - 20,286,272 81,145,086
receivables short-term short-term capital
from related financing cost financing
parties
1 AULB AUSK Other Yes 1,114,233 1,003,303 1,003,303 Markup rate on Needs for - Operating - - - 53,679,085 53,679,085
receivables short-term short-term capital
from related financing cost financing
parties
1 AULB AUKS Other Yes 3,360,975 3,360,975 - Markup rate on Needs for - Operating - - - 21,471,634 21,471,634
receivables short-term short-term capital
from related financing cost financing
parties
2 AUXM AUKS Other Yes 3,809,105 3,809,105 896,260 Markup rate on Needs for - Operating - - - 5,252,404 5,252,404
receivables short-term short-term capital
from related financing cost financing
parties
2 AUXM BVHF Other Yes 1,055,498 - - Markup rate on Needs for - Operating - - - 5,252,404 5,252,404
receivables short-term short-term capital
from related financing cost financing
parties
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89

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Financing Limits on
Financial Maximum Amount Allowance Collateral Limits for Each Financing
No. [Financing ] Borrowing Statement Related Balance for Ending Balance Actually Interest Rate Nature of Transaction Reason for for Bad Borrowing Company’s Total
Company Company Account Party the Period (Note 3) (Notes 1 and 2) (Note 1 and 4)Drawn Down Financing Amounts Financing Debt Item Value (Note 1 and 5)Company Financing Amount
(Note 1 and 5)
3 AUSJ AUKS Other Yes 1,507,567 1,434,016 1,120,325 Markup rate on Needs for - Operating - - - 1,539,156 1,539,156
receivables short-term short-term capital
from related financing cost financing
parties
4 AUSZ BVHF Other Yes 586,388 - - Markup rate on Needs for - Operating - - - 5,221,115 5,221,115
receivables short-term short-term capital
from related financing cost financing
parties
4 AUSZ AUKS Other Yes 4,481,300 4,481,300 1,792,520 Markup rate on Needs for - Operating - - - 5,221,115 5,221,115
receivables short-term short-term capital
from related financing cost financing
parties
5 DPSZ AUKS Other Yes 450,020 448,130 448,130 Adjusted by Needs for - Operating - - - 738,495 738,495
receivables base lending short-term capital
from related rate of People’s financing
parties Bank of China
5 DPSZ BVHF Other Yes 304,922 - - Adjusted by Needs for - Operating - - - 738,495 738,495
receivables base lending short-term capital
from related rate of People’s financing
parties Bank of China
6 DPXM BVHF Other Yes 258,011 - - Adjusted by Needs for - Operating - - - 1,840,655 1,840,655
receivables base lending short-term capital
from related rate of People’s financing
parties Bank of China
7 FPWJ BVHF Other Yes 152,461 - - Adjusted by Needs for - Operating - - - 264,994 264,994
receivables base lending short-term capital
from related rate of People’s financing
parties Bank of China
8 FTKS BVHF Other Yes 199,372 - - Adjusted by Needs for - Operating - - - 538,375 538,375
receivables base lending short-term capital
from related rate of People’s financing
parties Bank of China
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90

**No. **	Financing Company	Borrowing Company Financial Statement Account	Borrowing Company Financial Statement Account	Related Party	Maximum Balance for the Period (Note 3)	Ending Balance (Notes 1 and 2) Amount Actually Drawn Down (Note 1 and 4)	Ending Balance (Notes 1 and 2) Amount Actually Drawn Down (Note 1 and 4)	Interest Rate	Nature of Financing	Transaction Amounts Reason for Financing	Transaction Amounts Reason for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Note 1 and 5)	Limits on Financing Company’s Total Financing Amount (Note 1 and 5)
													Item	Value
9	FTWJ	FHWJ	Other receivables from related parties	Yes	208,292	89,626	89,626	Adjusted by base lending rate of People’s Bank of China	Needs for short-term financing	-	Operating capital	-	-	-	2,239,397	2,239,397

Note 1: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the exchange rates at the reporting date.

Note 2: The ending balance represents the amounts approved by the Board of Directors.

Note 3: The maximum balance for the period represents the highest amount in New Taiwan Dollar announced or occurred during the period.

Note 4: All inter-company transactions between AUO and its subsidiaries have been eliminated in the consolidated financial statements.

Note 5: The policy for the limit on total financing amount and the financing limit for any individual entity are prescribed as follows:

• a. AUO: The total amount available for lending purposes shall not exceed 40% of AUO’s net worth as stated in its latest audited financial statement. The total amount for lending to a company shall not exceed 10% of AUO’s net worth as stated in its latest audited financial statement.

• b. AULB, AUSZ, AUXM and AUSJ: The total amount available for lending purposes shall not exceed 40% of the net worth of the lending company as stated in its latest audited financial statement. The total amount for lending to a company shall not exceed 40% of the net worth of the lending company as stated in its latest audited financial statement.

• c. In the event that the financing is between foreign subsidiaries whose voting shares are 100% owned, directly or indirectly, by AUO, the aggregate amount available for lending to such borrowers and total amount lendable to each of such borrowers both shall not exceed the net worth of the lending company as stated in its latest audited financial statement.

• d. DPSZ, DPXM, FTWJ, FPWJ and FTKS: The total amount available for lending purposes shall not exceed 40% of the net worth of the lending company. The total amount for lending to a company shall not exceed 40% of the net worth of the lending company.

• e. In the event that the financing is between foreign subsidiaries whose voting shares are 100% owned, directly and indirectly, by DPTW, the aggregate amount available for lending to such borrowers shall not exceed the net worth of the lending company, and the total amount lendable to each of such borrowers shall not exceed the net worth of the lending company.

91

AU OPTRONICS CORP. AND SUBSIDIARIES

Endorsements/ Guarantees Provided

For the year ended December 31, 2018 (Amount in thousands of New Taiwan Dollars)

Table 2

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Ratio of
Limits on Maximum Endorsement/ Endorsement/ Endorsement/
Guaranteed Party Maximum Amount of Accumulated
Endorsement/ Endorsement/ Guarantee Guarantee Guarantee
Endorsement/ Amount Actually Endorsement/ Endorsement/
No. Endorser/ Guarantee Guarantee Ending Balance Drawn Down Guarantee Guarantee to Net Guarantee Provided by Provided by Provided to
Guarantor Nature of Amount Provided (Note 3 and 4) Amount Parent Subsidiary to Subsidiaries in
Name Relationship for Each Party Balance for the Period (Note 2) (Note 4) Collateralized by Properties Worth per Latest Financial Allowable Company to Parent Mainland
(Note 1) (Note 4 and 5) Statements (Note 4 and 5) Subsidiary Company China
0 AUO AUKS 2 101,431,358 16,785,917 15,799,613 14,942,284 - 7.79% 202,862,715 Yes No Yes
1 AUXM AUO and 3 、 4 13,131,010 2,345,550 2,240,650 - - 17.06% 13,131,010 No Yes No
AUST
1 AUXM AUO 3 13,131,010 9,757,488 9,321,104 - - 70.99% 13,131,010 No Yes No
2 AUSJ AUO 3 3,847,889 1,501,152 1,434,016 - - 37.27% 3,847,889 No Yes No
3 AUSZ AUO and 3 、 4 13,052,787 1,548,063 1,478,829 - - 11.33% 13,052,787 No Yes No
AUSK
3 AUSZ AUO 3 13,052,787 7,411,938 7,080,454 1,344,390 - 54.24% 13,052,787 No Yes No
----- End of picture text -----

Note 1: The relationship between the endorser/ guarantor and the guaranteed party:

1. A company with which it does business.

2. A company in which the Company directly and indirectly holds more than 50% of the voting shares.

3. A company that directly and indirectly holds more than 50% of the voting shares in the Company.

4. Companies in which the Company holds, directly or indirectly, 90% or more of the voting shares.

5. A company that fulfills its contractual obligations by providing mutual endorsements/ guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.

6. A company that all capital contributing shareholders make endorsements/ guarantees for their jointly invested company in proportion to their shareholding percentages.

7. Companies in the same industry provide among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other.

Note 2: The maximum endorsement/ guarantee balance for the period represents the highest amount in New Taiwan Dollar announced or occurred during the period. Note 3: The ending balance represents the amounts approved by the Board of Directors.

• Note 4: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the exchange rates at the reporting date.

Note 5: The policy for the limit of total endorsement/ guarantee amount and the limit on endorsement/ guarantee amount provided to each party are prescribed as follows:

• a. AUO: The total endorsement/ guarantee amount provided shall not exceed the net worth of AUO as stated in its latest audited financial statement. The aggregate amount of endorsement/ guarantee provided to each guaranteed party shall not exceed 50% of AUO’s net worth as stated in its latest audited financial statement.

• b. AUSZ, AUXM and AUSJ: The total endorsement/ guarantee amount provided and the aggregate amount of endorsement/ guarantee provided to each guaranteed party both shall not exceed the net worth of the endorser/ guarantor as stated in its latest audited financial statement.

92

AU OPTRONICS CORP. AND SUBSIDIARIES

Marketable Securities Held (Excluding Investment in Subsidiaries, Associates and Joint Ventures)

December 31, 2018

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated, and shares in thousands)

Table 3

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Relationship December 31, 2018
Name of Type and Name of with the
Holder Marketable Securities Securities Financial Statement Account Shares Carrying Percentage of Fair Value Note
Issuer Amount Ownership
AUO Stock Related party Financial assets at FVTPL— noncurrent 1,700 - 17.00% -
BenQ ESCO Corp.
AUO Stock Related party Financial assets at FVTOCI— noncurrent 335,231 6,604,041 17.04% 6,604,041
Qisda
AULB Stock - Financial assets at FVTPL— noncurrent 3 - 2.22% -
Abakus Solar AG
AUSH Shareholding T-powertek - Financial assets at FVTOCI— noncurrent - CNY 6,250 2.16% CNY 6,250
Optronics Co., Ltd.
FPWJ Structured deposit - Financial assets at FVTPL－current - CNY 91,753 - CNY 91,753
FTKS Structured deposit - Financial assets at FVTPL－current - CNY 274,091 - CNY 274,091
Konly Stock - Financial assets at FVTOCI— noncurrent 609 42,123 2.80% 42,123
PlayNitride Inc.
Konly Stock Financial assets at FVTOCI— noncurrent 13 33,501 6.13% 33,501
SnapBizz Cloudtech Pvt.
Ltd.
Konly Stock - Financial assets at FVTPL－noncurrent 4,000 - 10.87% -
a2peak power Co., Ltd.
Konly Stock - Financial assets at FVTPL－noncurrent 1,500 - 3.26% -
Chen Feng Optronics
Corporation
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93

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Relationship December 31, 2018
Name of Type and Name of with the
Holder Marketable Securities Securities Financial Statement Account Shares Carrying Percentage of Fair Value Note
Issuer Amount Ownership
Konly Stock - Financial assets at FVTPL－noncurrent 4,200 - 8.52% -
UniBright Chemical Co.,
Ltd.
Konly Stock - Financial assets at FVTOCI－noncurrent 2,006 7,345 4.01% 7,345
Azotek Co., Ltd.
Konly Stock - Financial assets at FVTOCI－noncurrent 1,667 - 5.15% -
ATS International Inc.
Konly Stock Related party Financial assets at FVTOCI－noncurrent 10,145 199,859 0.52% 199,859
Qisda
DPTW Stock Related party Financial assets at FVTOCI－noncurrent 4,700 56,400 12.11% 56,400
Wibase Industrial Solutions
Inc.
DPTW Stock - Financial assets at FVTOCI－noncurrent 7,000 8,649 4.59% 8,649
D8AI Holdings Corporation
Ronly Stock - Financial assets at FVTPL－current 600 - 1.22% -
UniBright Chemical Co.,
Ltd.
Ronly Stock - Financial assets at FVTPL－current 41 - 0.49% -
Exploit Technology Co., Ltd.
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94

AU OPTRONICS CORP. AND SUBSIDIARIES

Individual Marketable Securities Acquired or Disposed of with Costs or Prices Exceeding NT$300 Million or 20% of the Paid-in Capital

For the year ended December 31, 2018

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated, and shares in thousands)

Table 4

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Type and Financial Beginning Balance Acquisition Disposal Ending Balance
CompanyName Marketable Name of Statement Counterparty Relationship Shares Amount Shares Amount Shares Amount Carrying Gain/Loss Shares Amount Note
Securities Account Amount on Disposal
AUO Stock Investments in - - 35,000 349,199 58,000 580,000 - - - - 93,000 942,094 3
SSEC equity-accounted
investees
AUO Stock Investments in The original - - - 39,974 821,138 - - - - 39,974 766,795 2
CQIL equity-accounted shareholders
investees
AUO Stock Financial assets at - - 186,364 3,941,588 148,867 3,418,633 - - - - 335,231 6,604,041 1
Qisda FVTOCI－
noncurrent
AUO Stock Investments in - - 331,450 5,068,459 46,743 635,810 - - - - 378,193 5,005,774 6
ACTW equity-accounted
investees
Konly Stock Investments in - - 53,577 819,283 - - 43,455 591,081 591,545 - 10,122 133,974 6
ACTW equity-accounted
investees
DPSZ Structured Financial assets at - - - - - CNY 100,000 - CNY 100,367 CNY 100,367 - - -
deposit FVTPL－current
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95

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Type and Financial Beginning Balance Acquisition Disposal Ending Balance
Company Name of
Name Marketable Statement Counterparty Relationship Shares Amount Shares Amount Shares Amount Carrying Gain/Loss Shares Amount Note
Securities Account Amount on Disposal
FPWJ Structured Financial assets at - - - - - CNY 90,000 - - - - - CNY 91,753 5
deposit FVTPL－current
FTKS Structured Financial assets at - - - - - CNY 370,000 - CNY 102,331 CNY 102,331 - - CNY 274,091 5
deposit FVTPL－current
ACTW Stock Investments in - - - - 151,834 2,338,470 - - - - 116,836 1,987,129 4
SDMC equity-accounted
investees
AUO Stock Investments in - - 151,827 2,312,272 - - 151,827 2,338,360 2,406,420 - - - 4
SDMC equity-accounted
investees
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• Note 1: The ending balance includes unrealized gain (loss) on equity investments at fair value through other comprehensive income.

• Note 2: The acquisition amount of $69,864 thousand is to participate in CQIL’s capital injection after the merger. The ending balance includes the recognition of investment gain (loss) and foreign currency translation differences under the equity method.

• Note 3: The acquisition amount is to participate in SSEC’s capital injection. The ending balance includes the recognition of investment gain (loss) and capital surplus under the equity method.

• Note 4: a. As part of a business restructuring, AUO, Konly and Ronly disposed all of their shareholdings in SDMC to ACTW during the second quarter of 2018. This was treated as an equity transaction as there was no change in control of SDMC by the Company.

• b. The ending shares include the return of capital of SDMC totaling 34,998 thousand shares. The ending balance includes proceeds from return of capital, cash dividend, and the recognition of investment gain (loss) and foreign currency translation differences under the equity method.

• Note 5: The ending balance includes the gain/loss on valuation of the financial asset.

• Note 6: a. As part of a business restructuring, Konly and Ronly disposed its shareholdings in ACTW to AUO, respectively, during December 2018. This was treated as an equity transaction as there was no change in control of ACTW by the Company.

• b. The ending balance includes the recognition of investment gain (loss), foreign currency translation differences and capital surplus, etc. under the equity method.

96

AU OPTRONICS CORP. AND SUBSIDIARIES

Disposal of Individual Real Estate with Costs Exceeding NT$300 Million or 20% of the Paid-in Capital For the year ended December 31, 2018

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated)

Table 5

Company Name	Property	Date of the Event	Date of Original Acquisition Carrying Amount	Date of Original Acquisition Carrying Amount	Transaction Amount	Status of Proceeds Collection	Gain (Loss) on Disposal	Counterparty	Relationship	Purpose of Disposal Pricing Reference	Purpose of Disposal Pricing Reference	Other Terms	Note
AUSK	Land and buildings	November 2018	February 2010 EUR 54,764		EUR 85,139	EUR 84,395	EUR 30,375	ZNO Slovakia s.r.o.	Third party	To enhance the utilization of assets Real estate valuation report		None
BVHF	Land and buildings	December 2017	February 2011 to February 2017 CNY 433,171		CNY 483,322	CNY 483,322	CNY 50,151	Hefei Heng Chuang Intelligent Technology Co., Ltd.	Third party	To enhance the utilization of assets Real estate valuation report		None
FTKS	Land and buildings	October 2017	August 2004 to December 2016	413,878	CNY 215,527	CNY 215,527	561,815	The Administration Committee of Kunshan Economic and Technology Development Zone	Third party	To meet the regulatory plan and urban construction plan required by Kunshan Economic and Technology Development Zone	Real estate valuation report	None

97

AU OPTRONICS CORP. AND SUBSIDIARIES

Purchases from or Sales to Related Parties with Amounts Exceeding NT$100 Million or 20% of the Paid-in Capital For the year ended December 31, 2018

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated)

Table 6

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Transactions with
Transaction Details Terms Different Notes/Accounts Receivable (Payable)
from Others
Company Counterparty Relationship Percentage of Note
Name Percentage of Unit Credit Total
Purchases/ Amount Ending Balance
Total Credit Terms Price Terms Notes/Accounts
Sales (Note 2) (Note 2)
Purchases/Sales (Note 1) (Note 1) Receivable
(Payable)
AUO ACTW Subsidiary held by AUO Purchases 125,605 - OA 45 days - (15,837) -
and Konly
AUO AUCZ Subsidiary 100% held by Purchases 398,004 - OA 45 days - (57,498) -
AULB
AUO AUKS Subsidiary 51% held by Purchases 12,170,274 6% OA 45 days - (2,019,995) (3)%
AULB
AUO AULB Subsidiary 100% held by Purchases 60,863,968 30% OA 45 days - (21,213,644) (35)%
AUO
AUO AUSK Subsidiary 100% held by Purchases 118,955 - OA 45 days - (14,925) -
AULB
AUO BMC Subsidiary of Qisda Purchases 5,011,966 2% OA 90 days - (1,350,707) (2)%
AUO DPTW Subsidiary held by AUO, Purchases 10,037,876 5% OA 60 days - (2,431,371) (4)%
Konly and Ronly
AUO Daxin Equity-accounted investee Purchases 3,086,760 1% OA 120 days - (1,078,356) (2)%
held by Konly and Ronly
AUO Qisda AUO's director Purchases 8,924,867 4% OA 45 days - (1,539,995) (3)%
AUO Lextar Equity-accounted investee Purchases 209,869 - OA 120 days - (71,233) -
held by AUO, Konly and
Ronly
AUO Raydium Equity-accounted investee Purchases 904,598 - OA 120 days - (427,851) (1)%
held by Konly
AUO AUST Subsidiary 100% held by Purchases 6,361,928 3% OA 45 days - (1,025,313) (2)%
AULB
AUO ACTW Subsidiary held by AUO Sales (772,213) - OA 30 days - 61,675 -
and Konly
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98

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Transactions with
Transaction Details Terms Different Notes/Accounts Receivable (Payable)
from Others
Company Counterparty Relationship Percentage of Note
Name Percentage of Unit Credit Total
Purchases/ Amount Ending Balance
Total Credit Terms Price Terms Notes/Accounts
Sales (Note 2) (Note 2)
Purchases/Sales (Note 1) (Note 1) Receivable
(Payable)
AUO BVXM Subsidiary 100% held by Sales (1,036,445) - OA 45 days - 229,242 -
AUXM
AUO BenQ Subsidiary of Qisda Sales (3,590,347) (1)% EOM 55 days - 532,512 1%
AUO CGPC Subsidiary of SSEC Sales (259,246) - EOM 25 days - 142,800 -
AUO DPTW Subsidiary held by AUO, Sales (265,229) - EOM 45 days - 31,259 -
Konly and Ronly
AUO DPXM Subsidiary 100% held by Sales (321,831) - EOM 45 days - 21,667 -
DPHK
AUO FGPC Subsidiary of SSEC Sales (964,403) - EOM 25 days - 196,141 -
AUO QCOS Subsidiary of Qisda Sales (233,352) - EOM 55 days - 41,401 -
AUO QCSZ Subsidiary of Qisda Sales (7,732,441) (3)% EOM 55 days - 1,347,828 3%
AUO SGPC Subsidiary of SREC Sales (460,244) - EOM 25 days - 316,757 1%
AUO TGPC Subsidiary of SSEC Sales (184,534) - EOM 25 days - 834 -
ACMK ACTW Subsidiary held by AUO Purchases USD 43,008 93% OA 60 days - USD (8,799) (95)%
and Konly
AUCZ AUO Ultimate parent company Sales CZK (294,485) (100)% OA 45 days - CZK 45,547 100%
AUKS AUSZ Subsidiary 100% held by Purchases CNY 83,084 5% OA 60 days - CNY (33,447) (5)%
AULB
AUKS AUXM Subsidiary 100% held by Purchases CNY 46,302 3% OA 60 days - CNY (648) -
AULB
AUKS AUO Ultimate parent company Sales CNY (2,682,858) (100)% OA 45 days - CNY 450,089 100%
AULB BMC Subsidiary of Qisda Purchases USD 68,583 2% OA 90 days - USD (18,854) (2)%
AULB DPTW Subsidiary held by AUO, Purchases USD 67,437 2% EOM 120 days - USD (24,222) (2)%
Konly and Ronly
AULB Qisda AUO's director Purchases USD 82,680 2% OA 120 days - USD (31,686) (3)%
AULB Raydium Equity-accounted investee Purchases USD 126,863 3% OA 120 days - USD (50,192) (5)%
held by Konly
AULB AUO Ultimate parent company Sales USD (2,015,977) (100)% OA 45 days - USD 922,752 98%
AULB AUXM Subsidiary 100% held by Sales USD (10,774) - OA 45 days - USD 8,503 1%
AULB
AULB AUSZ Subsidiary 100% held by Sales USD (12,025) - OA 45 days - USD 10,716 1%
AULB
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99

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Transactions with
Transaction Details Terms Different Notes/Accounts Receivable (Payable)
from Others
Company Counterparty Relationship Percentage of Note
Name Percentage of Unit Credit Total
Purchases/ Amount Ending Balance
Total Credit Terms Price Terms Notes/Accounts
Sales (Note 2) (Note 2)
Purchases/Sales (Note 1) (Note 1) Receivable
(Payable)
AUSH AUO Ultimate parent company Sales CNY (29,861) (98)% OA 45 days - - -
AUSJ AULB Subsidiary 100% held by Sales CNY (82,301) (100)% OA 45 days - - -
AUO
AUSK AUO Ultimate parent company Sales EUR (3,738) (69)% OA 45 days - EUR 613 16%
AUST AUO Ultimate parent company Sales USD (211,476) (100)% OA 45 days - USD 33,287 100%
AUSZ AULB Subsidiary 100% held by Purchases CNY 82,910 30% OA 45 days - CNY (73,544) (19)%
AUO
AUSZ AUKS Subsidiary 51% held by Sales CNY (83,084) (4)% OA 60 days - CNY 33,447 9%
AULB
AUSZ AULB Subsidiary 100% held by Sales CNY (1,758,886) (95)% OA 45 days - CNY 339,075 91%
AUO
AUUS AUO Ultimate parent company Sales USD (5,082) (100)% OA 30 days - - -
AUXM AULB Subsidiary 100% held by Purchases CNY 74,006 22% OA 45 days - CNY (58,356) (26)%
AUO
AUXM AUKS Subsidiary 51% held by Sales CNY (46,301) (4)% OA 60 days - CNY 648 -
AULB
AUXM AULB Subsidiary 100% held by Sales CNY (1,148,773) (93)% OA 45 days - CNY 235,260 95%
AUO
AUXM BVXM Subsidiary 100% held by Sales CNY (24,240) (2)% OA 45 days - CNY 7,107 3%
AUXM
BVHF Lextar Equity-accounted investee Purchases CNY 59,656 13% EOM 120 days - CNY (20,754) (6)%
held by AUO, Konly and
Ronly
BVHF Raydium Equity-accounted investee Purchases CNY 24,052 5% EOM 90 days - CNY (6,360) (2)%
held by Konly
BVHF DPTW Subsidiary held by AUO, Purchases CNY 89,387 19% EOM 60 days - CNY (241,581) (64)%
Konly and Ronly
BVHF DPTW Subsidiary held by AUO, Sales CNY (653,258) (100)% EOM 60 days - CNY 430,596 100%
Konly and Ronly
BVXM DPXM Subsidiary 100% held by Purchases CNY 38,496 11% OA 120 days - CNY (15,928) (14)%
DPHK
BVXM AUXM Subsidiary 100% held by Purchases CNY 24,240 7% OA 45 days - CNY (7,107) (6)%
AULB
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100

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Transactions with
Transaction Details Terms Different Notes/Accounts Receivable (Payable)
from Others
Company Counterparty Relationship Percentage of Note
Name Percentage of Unit Credit Total
Purchases/ Amount Ending Balance
Total Credit Terms Price Terms Notes/Accounts
Sales (Note 2) (Note 2)
Purchases/Sales (Note 1) (Note 1) Receivable
(Payable)
BVXM AUO Ultimate parent company Purchases CNY 233,645 68% OA 45 days - CNY (51,155) (43)%
DPSZ DPTW Subsidiary held by AUO, Purchases CNY 46,155 27% EOM 60 days - CNY (10,055) (28)%
Konly and Ronly
DPSZ DPTW Subsidiary held by AUO, Sales CNY (244,732) (84)% EOM 90 days - CNY 69,383 82%
Konly and Ronly
DPXM Lextar Equity-accounted investee Purchases CNY 93,244 7% EOM 120 days - CNY (42,159) (5)%
held by AUO, Konly and
Ronly
DPXM AUO Ultimate parent company Purchases CNY 69,600 5% EOM 45 days - CNY (4,896) (1)%
DPXM DPTW Subsidiary held by AUO, Purchases CNY 40,829 3% EOM 60 days - CNY (368,034) (47)%
Konly and Ronly
DPXM BVXM Subsidiary 100% held by Sales CNY (38,496) (2)% OA 120 days - CNY 15,928 2%
AUXM
DPXM DPTW Subsidiary held by AUO, Sales CNY (1,956,961) (96)% EOM 60 days - CNY 935,836 97%
Konly and Ronly
FTWJ DPTW Subsidiary held by AUO, Purchases CNY 219,491 31% EOM 60 days - CNY (286,964) (57)%
Konly and Ronly
FTWJ Lextar Equity-accounted investee Purchases CNY 53,137 8% EOM 120 days - CNY (19,693) (4)%
held by AUO, Konly and
Ronly
FTWJ DPTW Subsidiary held by AUO, Sales CNY (825,281) (82)% EOM 90 days - CNY 551,170 87%
Konly and Ronly
M.Setek ACTW Subsidiary held by AUO Sales JPY (5,129,949) (100)% OA 45 days - JPY 1,969,947 100%
and Konly
ACTW AUO Ultimate parent company Purchases 773,368 18% OA 30 days - (61,675) (7)%
ACTW M.Setek Subsidiary 99.9991% held Purchases 1,400,989 33% OA 45 days - (545,849) (65)%
by SDMC
ACTW AUO Ultimate parent company Sales (121,373) (2)% OA 45 days - 15,867 1%
ACTW ACMK Subsidiary 100% held by Sales (1,197,270) (19)% OA 60 days - 271,015 25%
ACTW
UTI AUO Ultimate parent company Sales (165,959) (74)% OA 60 days - 6,522 40%
DPTW AUO Ultimate parent company Purchases 261,444 1% EOM 45 days - (30,133) (1)%
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101

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Transactions with
Transaction Details Terms Different Notes/Accounts Receivable (Payable)
from Others
Company Counterparty Relationship Percentage of Note
Name Percentage of Unit Credit Total
Purchases/ Amount Ending Balance
Total Credit Terms Price Terms Notes/Accounts
Sales (Note 2) (Note 2)
Purchases/Sales (Note 1) (Note 1) Receivable
(Payable)
DPTW FTWJ Subsidiary 100% held by Purchases 3,740,260 18% EOM 90 days - (1,131,005) (23)%
FTMI
DPTW DPSZ Subsidiary 100% held by Purchases 1,116,381 5% EOM 90 days - (301,590) (6)%
DPHK
DPTW DPXM Subsidiary 100% held by Purchases 8,869,212 42% EOM 60 days - (2,356,456) (47)%
DPHK
DPTW EFOP Equity-accounted investee Purchases 1,449,636 7% Payment in - - -
held by DPTW advanced
DPTW BVHF Subsidiary 100% held by Purchases 2,968,106 14% EOM 60 days - (774,031) (15)%
BVLB
DPTW BVHF Subsidiary 100% held by Sales (406,330) (2)% EOM 60 days - 105,625 2%
BVLB
DPTW QCES Subsidiary of Qisda Sales (283,204) (1)% EOM 120 days - 95,563 2%
DPTW AUO Ultimate parent company Sales (10,115,728) (48)% OA 60 days - 2,244,059 47%
DPTW AULB Subsidiary 100% held by Sales (2,015,968) (10)% EOM 120 days - 746,099 16%
AUO
DPTW DPXM Subsidiary 100% held by Sales (185,130) (1)% EOM 60 days - 21,574 -
DPHK
DPTW FTWJ Subsidiary 100% held by Sales (1,002,942) (5)% EOM 60 days - 204,056 4%
FTMI
DPTW DPSZ Subsidiary 100% held by Sales (210,629) (1)% EOM 60 days - 39,520 1%
DPHK
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Note 1: Transaction terms with the related parties were determined in accordance with mutual agreements when there were no similar transactions with related parties. Except for the event aforesaid, other transaction terms with related parties were similar to those with third parties.

Note 2: All inter-company transactions between AUO and its subsidiaries have been eliminated in the consolidated financial statements.

102

AU OPTRONICS CORP. AND SUBSIDIARIES

Receivables from Related Parties with Amounts Exceeding NT$100 Million or 20% of the Paid-in Capital December 31, 2018

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated)

Table 7

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Amounts
Overdue Receivables
Ending Balance Received in Allowance
Company Turnover
Counterparty Relationship of Receivables Subsequent for Bad
Name Rate
(Note 3) Amount Action Taken Period Debts
(Note 1)
AUO CGPC Subsidiary of SSEC 142,800 3.63 - - - -
AUO BenQ Subsidiary of Qisda 532,512 5.54 329 Will be collected in next period - -
AUO AUSZ Subsidiary 100% held by AULB 1,003,168 - 439 Will be collected in next period - -
AUO QCSZ Subsidiary of Qisda 1,347,828 7.45 - - - -
AUO SGPC Subsidiary of SREC 316,757 2.91 - - - -
AUO AUXM Subsidiary 100% held by AULB 672,003 - 15 Will be collected in next period - -
AUO FGPC Subsidiary of SSEC 196,141 7.73 78,960 Will be collected in next period - -
AUO BVXM Subsidiary 100% held by AUXM 229,242 6.65 16,576 Will be collected in next period - -
AUKS AUO Ultimate parent company CNY 450,089 6.65 CNY 22,514 Collected in subsequent period CNY 226,444 -
AULB AUSK Subsidiary 100% held by AULB USD 32,601 (Note 2) - - - -
AULB AUSZ Subsidiary 100% held by AULB USD 10,716 2.22 USD 3 Collected in subsequent period USD 151 -
AULB AUO Ultimate parent company USD 928,892 (Note 2) USD 239,722 Collected in subsequent period USD 399,074 -
AULB AUXM Subsidiary 100% held by AULB USD 8,503 2.49 USD 28 Collected in subsequent period USD 383 -
AUSJ AUKS Subsidiary 51% held by AULB CNY 252,813 (Note 2) - - - -
AUST AUO Ultimate parent company USD 33,287 5.86 - - - -
AUSZ AUKS Subsidiary 51% held by AULB CNY 438,946 (Note 2) CNY 9,000 Collected in subsequent period CNY 15,367 -
AUSZ AULB Subsidiary 100% held by AUO CNY 339,075 5.07 CNY 79,612 Collected in subsequent period CNY 137,899 -
AUXM AUKS Subsidiary 51% held by AULB CNY 204,068 (Note 2) CNY 70 Will be collected in next period - -
AUXM AULB Subsidiary 100% held by AUO CNY 235,260 5.49 CNY 56,559 Collected in subsequent period CNY 88,459 -
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103

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Amounts
Overdue Receivables
Ending Balance Received in Allowance
Company Turnover
Counterparty Relationship of Receivables Subsequent for Bad
Name Rate
(Note 3) Amount Action Taken Period Debts
(Note 1)
BVHF DPTW Subsidiary held by AUO, Konly CNY 430,608 (Note 2) CNY 132,654 Collected in subsequent period CNY 74,701 -
and Ronly
DPSZ DPTW Subsidiary held by AUO, Konly CNY 69,952 (Note 2) CNY 13,602 Collected in subsequent period CNY 6,793 -
and Ronly
DPSZ AUKS Subsidiary 51% held by AULB CNY 101,353 (Note 2) - - - -
DPXM DPTW Subsidiary held by AUO, Konly CNY 936,387 (Note 2) - - CNY 225,757 -
and Ronly
FTWJ DPTW Subsidiary held by AUO, Konly CNY 551,170 1.41 - - CNY 136,443 -
and Ronly
M.Setek ACTW Subsidiary held by AUO and JPY 1,969,947 5.14 JPY 351,991 Will be collected in next period - -
Konly
ACTW M.Setek Subsidiary 99.9991% held by 253,680 - - - - -
SDMC
ACTW ACMK Subsidiary 100% held by ACTW 271,028 (Note 2) - - - -
DPTW AULB Subsidiary 100% held by AUO 746,099 2.58 - - 167,759 -
DPTW FTWJ Subsidiary 100% held by FTMI 1,289,509 (Note 2) 31,755 Collected in subsequent period 429,550 -
DPTW DPXM Subsidiary 100% held by DPHK 1,651,736 (Note 2) 571 Collected in subsequent period 1,038,715 -
DPTW BVHF Subsidiary 100% held by BVLB 1,084,214 (Note 2) 507 Will be collected in next period - -
DPTW AUO Ultimate parent company 2,244,059 4.99 193,164 Will be collected in next period - -
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Note 1: Until the end of January 2019.

Note 2: The ending balance includes other receivables from transactions not related to ordinary sales. Note 3: All inter-company transactions between AUO and its subsidiaries have been eliminated in the consolidated financial statements.

104

AU OPTRONICS CORP. AND SUBSIDIARIES

Information on Investees (Excluding Information on Investment in Mainland China)

For the year ended December 31, 2018

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated, and shares in thousands)

Table 8

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Original Investment Amount December 31, 2018 Net Income Investor’s Share of
Investor Investee Profit (Loss)
Company Company Location Main Activities December 31, 2018 December 31, 2017 Shares Percentage of Ownership Carrying Amount(Note 1 and 2) (Loss) of Investee of Investee Note
(Note 1 and 2)
AUO AULB Malaysia Holding and trading 59,058,698 59,058,698 1,882,189 100.00% 53,565,171 971,698 857,785 Subsidiary
company
AUO AUNL Netherlands Sales support of TFT- 24,275 - 50 100.00% 25,464 1,775 - Subsidiary
LCD panels (Note 7)
AUO Konly Taiwan ROC Venture capital 4,227,070 4,227,070 284,302 100.00% 5,296,190 193,482 193,482 Subsidiary
investment
AUO Ronly Taiwan ROC Venture capital 1,778,692 1,778,692 149,412 100.00% 2,076,069 59,387 59,387 Subsidiary
investment
AUO DPTW Taiwan ROC Manufacturing, design 3,569,155 3,569,155 190,108 28.56% 3,369,060 321,898 91,946 Subsidiary
and sales of TFT-LCD
modules, TV set,
backlight modules and
related parts
AUO ACTW Taiwan ROC Manufacturing and sales 15,138,528 14,502,718 378,193 93.52% 5,005,774 (638,203) (530,635) Subsidiary
of ingots and solar (Note 8)
wafers
AUO SDMC Taiwan ROC Holding company - 4,954,843 - - - 237,563 20,675 Subsidiary
(Note 4)
AUO SREC Taiwan ROC Venture capital 379,040 473,800 37,904 32.01% 414,978 88,937 28,472 Associate
investment
AUO Lextar Taiwan ROC Manufacturing and sales 881,076 881,076 78,418 15.33% 1,740,230 49,292 7,551 Associate
of Light Emitting Diode
AUO SMI Taiwan ROC Sales of content 30,000 30,000 3,000 100.00% 29,272 (659) (659) Subsidiary
management system and
hardware; leasing
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105

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Original Investment Amount December 31, 2018 Net Income Investor’s Share of
Investor Investee Profit (Loss)
Company Company Location Main Activities December 31, 2018 December 31, 2017 Shares Percentage of Ownership Carrying Amount(Note 1 and 2) (Loss) of Investee of Investee Note
(Note 1 and 2)
AUO UTI Taiwan ROC Planning, design and 50,000 50,000 5,000 100.00% 50,888 1,682 1,682 Subsidiary
development of
construction for
environmental
protection and related
project management
AUO SSEC Taiwan ROC Holding company 930,000 350,000 93,000 31.00% 942,094 41,302 13,487 Associate
AUO CQIL Israel Holding company 821,138 - 39,974 100.00% 766,795 (35,333) (55,132) Subsidiary
Konly DPTW Taiwan ROC Manufacturing, design 703,795 703,795 42,598 6.40% 754,916 321,898 20,603 Subsidiary
and sales of TFT-LCD
modules, TV set,
backlight modules and
related parts
Konly ACTW Taiwan ROC Manufacturing and sales 589,793 3,121,856 10,122 2.50% 133,974 (638,203) (78,728) Subsidiary
of ingots and solar (Note 8)
wafers
Konly SDMC Taiwan ROC Holding company - 18,844 - - - 237,563 - Subsidiary
(Note 4)
Konly SREC Taiwan ROC Holding company 17,760 22,200 1,776 1.50% 19,444 88,937 1,334 Associate
Konly Raydium Taiwan ROC IC design 175,857 175,857 11,454 17.63% 716,380 561,869 99,333 Associate
Konly Daxin Taiwan ROC Research, manufacturing 154,748 154,748 19,114 18.61% 492,348 655,535 121,984 Associate
and sales of display
related chemicals
Konly Lextar Taiwan ROC Manufacturing and sales 450,674 450,674 26,133 5.11% 579,925 49,292 2,516 Associate
of Light Emitting Diode
Konly LGPC Taiwan ROC Renewable energy - 100,000 - - - 87 87 (Note 5)
power generation
Konly CGPC Taiwan ROC Solar power generation - 10,000 - - - (781) (781) (Note 6)
Konly Ubitech Inc. Taiwan ROC Development and sales 27,000 27,000 357 26.31% 18,116 (11,370) (7,944) Associate
of software for POS
system
Konly SSEC Taiwan ROC Holding company 60,000 20,000 6,000 2.00% 60,780 41,302 826 Associate
Konly WMI Taiwan ROC Developing and 15,000 - 2,500 12.50% 14,041 2,081 (729) Associate
providing CRM APP
Konly SkyREC Ltd. BVI Data consulting service 46,016 - 188 16.12% 43,346 (11,878) (2,662) Associate
for retail
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106

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Original Investment Amount December 31, 2018 Net Income Investor’s Share of
Investor Investee Profit (Loss)
Company Company Location Main Activities December 31, 2018 December 31, 2017 Shares Percentage of Ownership Carrying Amount(Note 1 and 2) (Loss) of Investee of Investee Note
(Note 1 and 2)
Ronly DPTW Taiwan ROC Manufacturing, design 845,510 845,510 40,509 6.09% 717,894 321,898 19,592 Subsidiary
and sales of TFT-LCD
modules, TV set,
backlight modules and
related parts
Ronly ACTW Taiwan ROC Manufacturing and sales - 292,430 - - - (638,203) (3,458) Subsidiary
of ingots and solar (Note 8)
wafers
Ronly SDMC Taiwan ROC Holding company - 2,107 - - - 237,563 - Subsidiary
(Note 4)
Ronly Daxin Taiwan ROC Research, manufacturing 70,021 70,021 6,312 6.15% 162,592 655,535 40,284 Associate
and sales of display
related chemicals
Ronly Lextar Taiwan ROC Manufacturing and sales 323,431 323,431 34,338 6.71% 762,023 49,292 3,306 Associate
of Light Emitting Diode
DPTW BVLB Malaysia Holding company 1,051,289 1,051,289 36,000 29.71% 291,964 141,027 41,898 Subsidiary
DPTW DPLB Malaysia Holding company 4,362,627 4,384,080 92,267 100.00% 6,432,222 6,014 21,786 Subsidiary
DPTW FHVI BVI Holding company 2,362,321 2,544,294 22,006 100.00% 4,144,583 489,776 597,366 Subsidiary
DPTW FRVI BVI Holding company 274,700 274,700 8,200 100.00% 89,147 4,322 4,152 Subsidiary
DPTW EFOP Taiwan ROC Manufacturing and sales 338,729 338,729 33,873 49.00% 221,956 (150) (73) Joint Venture
of polymer plasticized
raw materials
DPTW Darwin Summit Thailand International trade 3,740 - 40 40.00% 6,830 584 234 Associate
Corporation Ltd.
ACTW ACMK Malaysia Manufacturing and sales 449,975 449,975 46,196 100.00% 507,155 44,131 44,131 Subsidiary
of solar wafers
ACTW SDMC Taiwan ROC Holding company 1,988,488 - 116,836 100.00% 1,987,129 237,563 186,296 Subsidiary
(Note 4)
SDMC M.Setek Japan Manufacturing and sales 23,596,368 24,001,168 11,404,184 99.9991% 1,924,877 240,137 240,135 Subsidiary
of ingots
AULB AUUS United States Sales and sales support USD 1,000 USD 1,000 1,000 100.00% USD 1,902 USD 83 USD 83 Subsidiary
of TFT-LCD panels
AULB AUJP Japan Sales support of TFT- USD 276 USD 276 1 100.00% USD 1,730 USD 78 USD 78 Subsidiary
LCD panels
AULB AUNL Netherlands Sales support of TFT- - USD 59 - - - USD 59 USD 59 Subsidiary
LCD panels (Note 7)
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107

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Original Investment Amount December 31, 2018 Net Income Investor’s Share of
Investor Investee Profit (Loss)
Company Company Location Main Activities December 31, 2018 December 31, 2017 Shares Percentage of Ownership Carrying Amount(Note 1 and 2) (Loss) of Investee of Investee Note
(Note 1 and 2)
AULB AUKR South Korea Sales support of TFT- USD 155 USD 155 - 100.00% USD 963 USD 91 USD 91 Subsidiary
LCD panels
AULB AUCZ Czech Assembly of solar USD 20,531 USD 20,531 - 100.00% USD 14,233 USD 484 USD 484 Subsidiary
Republic modules
AULB AUSK Slovakia Repairing of TFT-LCD USD 54,349 USD 54,349 - 100.00% USD 67,675 USD 30,747 USD 30,747 Subsidiary
Republic modules
AULB AUST Singapore Manufacturing TFT- USD 321,161 USD 384,900 907,114 100.00% USD 207,186 USD 3,929 USD 3,929 Subsidiary
LCD panels based on
low temperature
polysilicon technology
AULB AUVI United States Research and USD 5,000 USD 5,000 5,000 100.00% USD 5,619 USD 169 USD 169 Subsidiary
development and IP
related business
AULB BVLB Malaysia Holding company USD 85,171 USD 85,171 85,171 70.29% USD 22,425 USD 4,671 USD 3,283 Subsidiary
AULB AUSG Singapore Holding company and USD 86,685 USD 104,716 266,268 100.00% USD 64,307 USD 258 USD 258 Subsidiary
sales support of TFT-
LCD panels
AUSG AEUS United States Sales support of solar- USD 3,510 USD 9,510 9,510 100.00% USD 815 USD (21) USD (21) Subsidiary
related products
AUSG AENL Netherlands Sales support of solar- USD 45 USD 45 - 100.00% USD 189 USD 21 USD 21 Subsidiary
related products
DPLB DPHK Hong Kong Holding company USD 103,785 USD 104,484 10 100.00% USD 209,333 USD 312 USD 312 Subsidiary
(Note 9)
DPLB DPSK Slovakia Manufacturing, USD 4,216 USD 4,216 - 100.00% USD 3,268 USD (113) USD (113) Subsidiary
Republic assembly and sales of
automotive parts
FHVI FTMI Mauritius Holding company USD 6,503 USD 7,103 6,503 100.00% USD 79,772 USD 479 USD 479 Subsidiary
FHVI FWSA Samoa Holding company USD 19,000 USD 19,000 19,000 100.00% USD 14,440 USD (573) USD (573) Subsidiary
FHVI PMSA Samoa Holding company USD 39,673 USD 39,673 31,993 100.00% USD 43,696 USD 19,590 USD 19,590 Subsidiary
FHVI FLMI Mauritius Holding company - USD 7,774 - - - USD 341 USD 341 (Note 5)
FRVI FFMI Mauritius Holding company USD 8,200 USD 8,200 653 100.00% USD 1,259 USD 143 USD 143 Subsidiary
M.Setek Ichijo Japan Manufacturing of JPY 5,000 JPY 5,000 - 38.46% - - - Associate
Seisakusyo Co., semiconductor (Note 3)
Ltd. equipment and related
parts
M.Setek Langfang PRC Manufacturing and sales JPY 619,952 JPY 619,952 - 56.00% - - - Associate
Songgong of monocrystalline solar (Note 3)
Semiconductor wafers
Co., Ltd.
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108

Investor Company	Investee Company	Location	Main Activities	Original Investment Amount	Original Investment Amount	December 31, 2018 Net Income (Loss) of Investee Investor’s Share of Profit (Loss) of Investee (Note 1 and 2) Shares Percentage of Ownership Carrying Amount (Note 1 and 2)	Note
				December 31, 2018	December 31, 2017
CQIL CQHLD CQHLD CQHLD	CQHLD CQUK CQUS CQCA	United Kingdom United Kingdom United States Canada	Holding company Sales support of content management system Sales of content management system and hardware Research and development of content management system	USD 4,071 - USD 1 -	- - - -	635,703 100.00% USD (11,735) USD (1,201) USD (1,201) - 100.00% USD (2,380) USD 427 USD 427 1 100.00% USD (8,384) USD (260) USD (260) - 100.00% USD (579) USD 584 USD 584	Subsidiary Subsidiary Subsidiary Subsidiary

Note 1: All inter-company transactions between AUO and its subsidiaries have been eliminated in the consolidated financial statements.

Note 2: Inclusive of the amortization of differences between the investment cost and the entity’s share of the net value of investee, and the effect of upstream and sidestream transactions.

Note 3: The carrying amount includes accumulated impairment loss.

Note 4: As part of a business restructuring, AUO, Konly and Ronly disposed all of their shareholdings in SDMC to ACTW during the second quarter of 2018. Note 5: Have been liquidated.

Note 6: Konly disposed all its shareholdings in CGPC to SSEC, an associate of the Company, during the third quarter of 2018.

Note 7: As part of a business restructuring, AULB disposed all of its shareholdings in AUNL to AUO in December 2018.

Note 8: As part of a business restructuring, Konly and Ronly disposed its shareholdings in ACTW to AUO, respectively, in December 2018. Note 9: The registration of the alteration of DPHK’s common stock has not been completed.

109

AU OPTRONICS CORP. AND SUBSIDIARIES

Information on Investment in Mainland China

For the year ended December 31, 2018

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated)

Table 9

1. AUO:

(1) Related information on investment in Mainland China

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Accumulated Accumulated
Total Amount Investment Outflow of Investment Flows Investment Outflow of Net Income % Ownership Investor’s Share Amount of the Carrying Accumulated Inward
Investee of Paid-in Method of (Loss) of through Direct or of Profit (Loss) of Investment as Remittance of
Main Activities from Taiwan from Taiwan as Note
Company Capital Investment as of January of December Investee Indirect Investee of December Earnings as of
(Note 2) 1, 2018 Outflow Inflow 31, 2018 (Note 4 and 5) Investment (Note 4 and 5) 31, 2018 December 31,
(Note 2) 2018
(Note 2) (Note 2)
A-Care Design, 22,407 (Note 1) - - - - (7,457) 100% (7,457) 15,065 -
development and
sales of software
and hardware for
health care industry
AETJ Manufacturing and 523,634 (Note 1) - - - - 54 100% 54 52,847 -
sales of solar
modules
AUKS Manufacturing and 29,600,722 (Note 1) 15,096,368 - - 15,096,368 (4,826,713) 51% (2,461,624) 7,545,794 -
sales of TFT-LCD
panels
AUSH Sales support of 92,406 (Note 1) 30,802 - - 30,802 1,164 100% 1,164 470,562 -
TFT-LCD panels
AUSJ Manufacturing and 3,326,616 (Note 1) 2,464,160 - - 2,464,160 (131,634) 100% (201,026) 3,777,093 - Note 7
assembly of TFT-
LCD modules
AUSZ Manufacturing and 8,562,956 (Note 1) 6,160,400 - - 6,160,400 1,528,417 100% 1,505,364 13,029,267 - Note 7
assembly of TFT-
LCD modules
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110

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Accumulated Accumulated
Total Amount Investment Outflow of Investment Flows Investment Outflow of Net Income % Ownership Investor’s Share Amount of the Carrying Accumulated Inward
Investee of Paid-in Method of (Loss) of through Direct or of Profit (Loss) of Investment as Remittance of
Main Activities from Taiwan from Taiwan as Note
Company Capital Investment as of January of December Investee Indirect Investee of December Earnings as of
(Note 2) 1, 2018 Outflow Inflow 31, 2018 (Note 4 and 5) Investment (Note 4 and 5) 31, 2018 December 31,
(Note 2) 2018
(Note 2) (Note 2)
AUXM Manufacturing and 7,700,500 (Note 1) 7,700,500 - - 7,700,500 866,160 100% 856,698 13,121,357 - Note 7
assembly of TFT-
LCD modules
BVCH Manufacturing and 450,897 (Note 1) 230,091 - - 230,091 19,978 19% 3,796 90,782 -
sales of liquid
crystal products and
related parts
BVHF Manufacturing and 2,262,407 (Note 1) - - - - 141,089 100% 141,089 980,683 - Note 6
sales of liquid
crystal products and
related parts
BVXM Manufacturing and 2,688,780 (Note 1) - - - - 149,286 100% 149,286 1,285,191 -
sales of liquid
crystal products and
related parts
EDT Design and sales of 8,963 (Note 1) - - - - (2) 100% (2) 8,961 -
software and
hardware integration
system and
equipment relating
to intelligent
manufacturing
MIS Development and 13,444 (Note 1) - - - - (372) 100% (372) 13,079 -
licensing of
software relating to
intelligent
manufacturing, and
related consulting
services
UFSZ Planning, design 17,925 (Note 1) - - - - 300 100% 300 18,220 -
and development of
construction project
for environmental
protection and
project management
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111

• (2) Upper limit on investment in Mainland China

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Accumulated Investment in Mainland China Investment Amounts Authorized by Upper Limit on Investment Stipulated by
as of December 31, 2018 (Note 2) Investment Commission, MOEA (Note 2) Investment Commission, MOEA (Note 3)
31,682,321 (USD1,028,580) 41,356,808 (USD1,335,003 and HKD60,000) 130,367,213
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• Note 1: Indirect investments in Mainland China through companies registered in a third region.

• Note 2: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the exchange rates at the reporting date.

• Note 3: Pursuant to the Regulations Governing Permission for Investment and Technical Cooperation in the Mainland Area, AUO’s accumulated investments in Mainland China did not exceed the upper limit on investment amount or ratio stipulated by the Investment Commission, Ministry of Economic Affairs (“MOEA”).

• Note 4: Amounts were recognized based on the investees’ audited financial statements except for BVCH.

• Note 5: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the average exchange rates for the year of 2018. Note 6: BVHF is 100% owned by BVLB, a jointly-owned subsidiary of AUO and DPTW.

• Note 7: The share of profit (loss) of investee and the carrying amount of the investment as of December 31, 2018 both include the effect of sidestream transactions.

112

2. DPTW:

(1) Related information on investment in Mainland China

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Accumulated
Accumulated
Accumulated Investment Flows Outflow of Carrying Inward
Total Amount Outflow of Investment Net Income % Ownership Investor’s Share Amount of the Remittance of
Investee of Paid-in Method of Investment from Taiwan (Loss) of through Direct or of Profit (Loss) of Investment as
Company Main Activities Capital Investment from Taiwan as as of Investee Indirect Investee of December Earnings as of Note
December 31,
(Note 4) of January 1, Outflow Inflow December (Note 2 and 6) Investment (Note 2 and 6) 31, 2018 2018
2018 (Note 4) 31, 2018 (Note 4)
(Note 4)
(Note 4)
BVHF Manufacturing and 2,262,407 (Note 1) 492,832 - - 492,832 141,089 29.71% 141,089 980,683 - Note 5
sales of liquid crystal
products and related
parts
DPSZ Manufacturing and 770,050 (Note 1) 462,030 - - 462,030 56,544 100% 56,544 1,846,236 1,026,211 Note 12
sales of backlight
modules and related
parts
DPXM Manufacturing and 2,156,140 (Note 1) 2,156,140 - - 2,156,140 (57,989) 100% (57,989) 4,601,637 1,594,004
sales of backlight
modules and related
parts
FHWJ Manufacturing of 200,213 (Note 1) 252,576 - - 252,576 4,322 100% 4,322 38,760 -
motorized treadmills
FPWJ Manufacturing and 893,258 (Note 1) 585,238 - - 585,238 (26,414) 100% (26,414) 662,485 - Note 8
sales of precision
plastic parts
FTKS Manufacturing and 1,108,872 (Note 1) 1,108,872 - - 1,108,872 591,428 100% 591,428 1,345,937 -
sales of backlight
modules and related
parts
FTWJ Manufacturing and 1,078,070 (Note 1) 200,213 - - 200,213 (80,080) 100% (80,080) 2,239,397 433,524 Note 7
sales of backlight
modules and related
parts
FLWJ Manufacturing and - (Note 1) 172,491 - (172,491) - 4,468 - 4,468 - 71,005 Note 9
sales of precision
metal parts
DPCD Manufacturing and - (Note 1) - - - - 165 - 165 - 21,532 Note 10
sales of backlight
modules and related
parts
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113

I		Total Amount of Paid-in Mh f	Total Amount of Paid-in Mh f	Accumulated Outflow of I	Investment Flows	Investment Flows	Accumulated Outflow of Investment f Ti	Net Income L f	% Ownership hh Di	Investor’s Share f Pfi L f Carrying Amount of the I	Investor’s Share f Pfi L f Carrying Amount of the I	Accumulated Inward Remittance of
nvestee Company	Main Activities	Capital (Note 4)	etod o Investment	nvestment from Taiwan as of January 1, 2018 (Note 4)	Outflow	Inflow	rom awan as of December 31, 2018 (Note 4)	(oss) o Investee (Note 2 and 6)	troug rect or Indirect Investment	o rot (oss) o Investee (Note 2 and 6)	nvestment as of December 31, 2018 (Note 4)	Earnings as of December 31, 2018 (Note 4)	Note
FTXM	Manufacturing and sales of backlight modules and related parts	-	(Note 1)	18,481	-	(18,481)	-	3,113	-	3,113	-	871,148	Note 11

• (2) Upper limit on investment in Mainland China

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Accumulated Investment in Mainland China Investment Amounts Authorized by Upper Limit on Investment Stipulated by
as of December 31, 2018 (Note 4) Investment Commission, MOEA (Note 4) Investment Commission, MOEA (Note 3)
5,257,901 (USD170,700) 5,800,109 (USD188,303) 7,076,909
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• Note 1: Indirect investments in Mainland China through companies registered in a third region.

• Note 2: Amounts were recognized based on the investees’ audited financial statements.

• Note 3: Pursuant to the Regulations Governing Permission for Investment and Technical Cooperation in the Mainland Area, DPTW’s accumulated investments in Mainland China did not exceed the upper limit on investment amount or ratio stipulated by the Investment Commission, Ministry of Economic Affairs (“MOEA”).

• Note 4: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the exchange rates at the reporting date.

• Note 5: BVHF is 100% owned by BVLB, a jointly-owned subsidiary of AUO and DPTW. Accordingly, the share of profit (loss) of investee and the carrying amount of the investment as of December 31, 2018 disclosed in the table are presented based on 100% held.

• Note 6: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the average exchange rates for the year of 2018.

• Note 7: The amount of paid-in capital includes the capitalization of retained earnings amounting to USD28,500 thousand for the years from 2005 to 2007.

• Note 8: The paid-in capital of USD10,000 thousand injected from the offshore holding company was from FTWJ’s appropriation of earnings remitted to the offshore holding company.

• Note 9: The amount of accumulated inward remittance of earnings as of December 31, 2018 was the proceeds of USD2,305 thousand from FLWJ’s return of residual capital upon liquidation (exclusive of the original investment amount of USD5,600 thousand).

• Note 10: The amount of accumulated inward remittance of earnings as of December 31, 2018 was the proceeds from DPCD’s return of residual capital upon liquidation.

• Note 11: The amount of accumulated inward remittance of earnings as of December 31, 2018 included the proceeds of USD19,049 thousand (net of tax of USD360 thousand) from FTXM’s return of earnings and residual capital upon liquidation in 2018 and the proceeds of USD9,233 thousand (net of tax of USD977 thousand) from the appropriation of earnings in 2016, but did not include the return of the original investment of USD600 thousand in 2018 and USD3,150 thousand in 2013.

• Note 12: The amount of paid-in capital includes the capital injection of USD1,000 thousand from DPLB in 2010 and the capitalization of retained earnings of USD9,000 thousand from DPSZ in 2012.

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AU OPTRONICS CORP.

Cash and Cash Equivalents

December 31, 2018

(In thousands of New Taiwan Dollars, unless otherwise indicated)

Item Petty cash Cash in Banks	Description Checking accounts Demand deposits Foreign currency deposits (note) USD : 131,731 thousand JPY：8,373,028 thousand EUR：9,310 thousand CNY：5,307 thousand Time deposits TWD : 6,700,000 thousand Foreign currency time deposits (note) USD : 144,018 thousand	Amount
		$ 19 85,470 12,362,111 6,732,644 6,700,000 4,436,034 $ 30,316,278

Note ： Exchange rate at balance sheet date was as follows:

USD ： 30.802 JPY ： 0.2775 EUR ： 35.2036 CNY ： 4.4813

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AU OPTRONICS CORP.

Accounts Receivable

December 31, 2018

(In thousands of New Taiwan Dollars)

Customer Name Customer A Customer B Customer C Customer D Customer E Customer F Customer G Others (less than 5% for each customer) Less: Loss allowance	Description From operating activities From operating activities From operating activities From operating activities From operating activities From operating activities From operation activities From operation activities	Amount Remark $ 5,160,121 4,736,016 4,157,790 3,434,393 3,332,460 2,813,609 2,478,303 15,514,754 (15,291 ) $ 41,612,155

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AU OPTRONICS CORP.

Inventories

December 31, 2018

(In thousands of New Taiwan Dollars)

Item Finished goods Work in process Raw materials	Amount Book value (note) Net realizable value $ 7,585,386 10,021,418 10,467,651 12,581,235 2,156,231 2,199,593 $ 20,209,268 24,802,246	Remark
	Book value (note) $ 7,585,386 10,467,651 2,156,231 $ 20,209,268
		The determination of net realizable value, please refer to note 4(7) to this parent company only financial statements.

Note ： Cost less allowance of inventories written down.

Other Current Assets and Other Non-Current Assets

Please refer to note 6(12) to this parent company only financial statements for the details.

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AU OPTRONICS CORP.

Changes in Investments in Equity-accounted Investees

For the year ended December 31, 2018

(In thousands of New Taiwan Dollars, unless otherwise indicated, and shares in thousands)

Investee Name	Beginning balance (note 1)	Beginning balance (note 1)	Addition (Disposal) (note 2)	Addition (Disposal) (note 2)	Share of profit(loss)	Capital surplus	Cash dividend	Cumulative translation differences	Unrealized gains (losses) on financial assets at fair value though other comprehensive income	Other adjustments (note 3)	Ending balance(note 1)	Ending balance(note 1)	Ending balance(note 1)	Market value or net asset value	Market value or net asset value	Guarantee or Pledged
	Shares Amount 1,882,189 $ 53,129,408 331,450 5,068,459 284,302 5,381,807 190,108 3,431,979 149,412 2,097,372 151,827 2,312,272 3,000 29,931 5,000 49,206 78,418 1,753,090 47,380 509,946 35,000 349,199 - - - - $ 74,112,669	Amount	Shares	Amount							Shares	Amount	% of Ownership	Unit price	Totalprice
AULB ACTW. Konly. DPTW Ronly SDMC SMI UTI Lextar SREC SSEC CQIL AUNL					$ 857,785 (530,635) 193,482 91,946 59,387 20,675 (659) 1,682 7,551 28,472 13,487 (55,132) - 688,041	$ (3,743) (460,542) 11,572 - 2,641 - - - 5,116 - (592) - 3,742 (441,806 **) **	$ - (265,128) (290,750) (76,043) (62,366) - - - (15,706) (28,680) - - - (738,673 **) **			$ - - 27,993 - (1,131) - - - (2,582) - - - - 24,280	1,882,189 378,193 284,302 190,108 149,412 - 3,000 5,000 78,418 37,904 93,000 39,974 50	$ 53,565,171 5,005,774 5,296,190 3,369,060 2,076,069 - 29,272 50,888 1,740,230 414,978 942,094 766,795 24,450 73,281,985	100.00 93.52 100.00 28.56 100.00 - 100.00 100.00 15.33 32.01 31.00 100.00 100.00	(NT$) - - - 16.05 - - - - 17.85 - - - -	$ 53,679,085 5,005,774 5,296,190 3,051,233 2,076,069 - 29,272 50,888 1,399,769 414,978 942,094 38,599 25,464	None None None None None - None None None None None None None
		74,112,669						95,967

Note 1：The amount is net of accumulated impairment. Note 2：Including: (1) The Company acquired shareholdings in ACTW from Konly and Ronly; (2) The Company disposed all of its shareholdings in SDMC to ACTW; (3) Return of capital by SREC; (4) The Company joined the capital injuction in SSEC; (5)The Company acquired 100% of the shareholdings of CQIL and its subsidiaries; (6)The Company acquired all of the shareholdings of AUNL from AULB.

Note 3：Including share of actuarial gains (losses) in investees' defined benefits plan and so on.

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AU OPTRONICS CORP.

Changes in Property, Plant and Equipment

For the year ended December 31, 2018

Please refer to note 6(9) to this parent company only financial statements for the details.

Changes in Intangible Assets

Please refer to note 6(11) to this parent company only financial statements for the details.

Accounts Payable December 31, 2018

(In thousands of New Taiwan Dollars)

Vendor name Company A Company B Company C Company D Others (less than 5% for each vendor)	Description Using in operation Using in operation Using in operation Using in operation Using in operation	Amount $ 3,431,532 2,956,584 2,166,673 1,729,977 18,894,330 $ 29,179,096	Remark

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AU OPTRONICS CORP.

Other Current Liabilities

December 31, 2018

(In thousands of New Taiwan Dollars)

Item Description Amount Accrued payroll and bonus $ 4,441,347 Profit sharing to employees 2,483,828 Refund liability 1,846,468 Accrued royalty and others 8,581,727 $ 17,353,370 Equipment and Construction Payable Vendor name Company W Company X Company Y Others (less than 5% for each vendor)		Remark	Remark
		Amount
		$ 870,230 443,920 409,029 5,402,652 $ 7,125,831
			7,125,831

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AU OPTRONICS CORP.

Long-term borrowings

December 31, 2018

(In thousands of New Taiwan Dollars, unless otherwise indicated)

Financial institution	Limit of credit facility	More than oneyear	Within oneyear	Duration and repayment terms	Interest rate	Collateral Buildings, machinery and equipment Buildings, Machinery and equipment Machinery and equipment Standby letter of credit
		$ - 19,875,000 10,000,000 300,000 30,175,000 (441,455 ) $29,733,545	$ 5,912,000 16,300,000 - - 22,212,000 - 22,212,000	February 2015-August 2019 Repayable in 5 semi-annual installments starting from August 2017 April 2016-Apr 2021 Repayable in 6 semi- annual installments starting from October 2018 May 2017-May 2022 Repayable in 5 semi- annual installments starting from May 2020 August 2018-August 2023 Repayable at maturity in Aug 2023	1.8023% Loan A: 1.9598% Loan B: 1.8545% 1.7895% 1.5991%

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AU OPTRONICS CORP.

Net Revenue

For the year ended December 31, 2018

(In thousands of New Taiwan Dollars)

Item Products ten inches and above in diagonal length Products which are under ten inches in diagonal length Sales of raw material and others Total	Quantity (Panels in thousands) 114,581 166,606 497,970	Amount $ 228,960,615 48,000,397 16,099,327 $293,060,339	Remark

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AU OPTRONICS CORP.

Cost of Sales

For the year ended December 31, 2018

(In thousands of New Taiwan Dollars)

Item Raw materials used Balance, beginning of year (note) Add：Purchases Transferred from work in process Less：Raw materials, end of year (note) Sale of raw materials Transferred to other expenses and others Subtotal Direct labor Manufacturing expenses Manufacturing cost Work in process, beginning of year (note) Add：Purchases Rework on finished goods Less：Work in process, end of year (note) Transferred reworked products to finished goods Transferred to raw materials Sale of work in process Transferred to other expenses and others Cost of finished goods Finished goods, beginning of year (note) Add：Purchases Transferred of reworked products from work in process Less：Finished goods, end of year (note) Transferred to work in process for rework Transferred to other expenses and others Cost of goods sold Add：Cost of raw materials sold Cost of work in process sold Other operating cost Write-downs of inventories Cost of idle capacity Cost of Sales

Amount $ 3,011,073 95,549,112 32,886,725 (2,853,559) (6,010,783) (35,721,588 ) 86,860,980 11,293,660 117,261,533 215,416,173 9,820,963 56,288,281 18,365,300 (11,474,466) (17,805,134) (32,886,725) (52,437) (8,035,170 ) 229,636,785 9,518,443 17,985,190 17,805,134 (9,927,850) (18,365,300) (1,516,906 ) 245,135,496 6,010,783 52,437 12,562,421 922,443 1,998,961 $266,682,541

Note：The amounts were stated at cost.

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AU OPTRONICS CORP.

Selling and Distribution Expenses

For the year ended December 31, 2018

(In thousands of New Taiwan Dollars)

Item Salary expenses Freight expenses Warranty expenses Others (less than 5% for each item)	Description	Amount $ 1,017,997 1,151,575 559,354 350,894 $ 3,079,820	Remark

General and Administrative Expenses

Item Salary expenses Professional service fees Management fees of the Science Park Administration Depreciation expenses Repairs and maintenance expenses Others (less than 5% for each item)	Description	Amount $ 1,524,906 491,210 266,577 263,348 244,266 1,609,466 $ 4,399,773	Remark

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AU OPTRONICS CORP.

Research and Development Expenses

For the year ended December 31, 2018

(In thousands of New Taiwan Dollars)

Item Salary expenses Depreciation expenses Indirect material expenses Others (less than 5% for each item)	**Description **	Amount $ 3,011,489 2,174,983 1,362,155 1,316,014 $ 7,864,641	Remark

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