AUO - Interim / Quarterly Report 2020

Stock Code ： 2409

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Financial Statements With Independent Auditors’ Review Report

For the Nine Months Ended September 30, 2020 and 2019

The independent auditors’ review report and the accompanying consolidated 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’ review report and consolidated financial statements shall prevail.

Independent Auditors’ Review Report

To the Board of Directors of AU Optronics Corp.:

Introduction

We have reviewed the accompanying consolidated balance sheets of AU Optronics Corp. and its subsidiaries (“the Company”) as of September 30, 2020 and 2019, and the consolidated statements of comprehensive income for the three and nine months ended September 30, 2020 and 2019, the consolidated statements of changes in equity and cash flows for the nine months ended September 30, 2020 and 2019, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standard 34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our review.

Scope of Review

We conducted our reviews in accordance with Statement on Auditing Standard No. 65, “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of the consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Company as of September 30, 2020 and 2019, and its consolidated financial performance for the three and nine months ended September 30, 2020 and 2019, and its consolidated cash flows for the nine months ended September 30, 2020 and 2019 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

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

KPMG

Hsinchu, Taiwan (Republic of China) October 28, 2020

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance, and cash flows in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Accounting Standard 34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. The standards, procedures and practices to review such consolidated financial statements are those generally accepted and applied in the Republic of China.

Reviewed only, not audited in accordance with generally accepted auditing standards as of September 30, 2020 and 2019

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

September 30, 2020, December 31, 2019 and September 30, 2019 (Expressed in thousands of New Taiwan dollars)

September 30, 2020 Assets Amount % Current assets: 1100 Cash and cash equivalents (Note 6(1)) $ 78,300,196 20 1110 Financial assets at fair value through profit or loss－current (Note 6(2)) 1,485,597 - 1170 Notes and accounts receivable, net (Note 6(4)) 42,465,794 11 1180 Accounts receivable from related parties, net (Notes 6(4)&7) 2,287,162 1 1210 Other receivables from related parties (Note 7) 49,384 - 1220 Current tax assets 238,475 - 130X Inventories (Note 6(5)) 26,745,836 7 1476 Other current financial assets (Notes 6(4)&8) 572,085 - 1479 Other current assets (Note 6(12)) 3,701,238 1 155,845,767 40 Noncurrent assets: 1517 Financial assets at fair value through other comprehensive income－ noncurrent (Note 6(3)) 6,597,877 2 1550 Investments in equity-accounted investees (Note 6(6)) 8,300,948 2 1600 Property, plant and equipment (Notes 6(8),7&8) 190,399,238 48 1755 Right-of-use assets (Note 6(9)) 11,478,578 3 1760 Investment property (Note 6(10)) 1,513,889 - 1780 Intangible assets (Note 6(11)) 12,853,570 3 1840 Deferred tax assets 5,185,656 1 1900 Other noncurrent assets (Notes 6(12)&8) 1,867,985 1 238,197,741 60 Total Assets $ 394,043,508 100	September 30, 2020	December 31, 2019	September 30, 2019 Amount % 71,149,438 18 1,554,539 - 37,700,728 9 1,919,682 1 245,555 - 29,846 - 25,435,065 6 2,798,447 1 4,191,271 1 145,024,571 36 7,490,600 2 6,196,924 2 213,038,144 52 12,442,321 3 739,645 - 13,027,317 3 6,692,017 2 2,639,228 - 262,266,196 64 407,290,767 100 September 30, 2020 Liabilities and Equity Amount % Current liabilities: 2100 Short-term borrowings (Note 6(13)) $ 100,000 - 2120 Financial liabilities at fair value through profit or loss－current (Note 6(2)) 39,726 - 2170 Accounts payable 45,176,165 12 2180 Accounts payable to related parties (Note 7) 6,957,253 2 2213 Equipment and construction payable (Note 7) 4,060,329 1 2220 Other payables to related parties (Note 7) 57,577 - 2230 Current tax liabilities 1,334,828 - 2250 Provisions－current (Note 6(15)) 719,682 - 2280 Lease liabilities－current (Note 6(9)) 575,800 - 2399 Other current liabilities 19,721,388 5 2322 Current installments of long-term borrowings (Notes 6(14)&8) 13,138,037 3 91,880,785 23 Noncurrent liabilities: 2540 Long-term borrowings, excluding current installments (Notes 6(14)&8) 106,154,347 27 2550 Provisions－noncurrent (Note 6(15)) 1,017,438 - 2570 Deferred tax liabilities 3,100,138 1 2580 Lease liabilities－noncurrent (Note 6(9)) 9,887,757 3 2600 Other noncurrent liabilities 1,767,862 - 121,927,542 31 Total liabilities 213,808,327 54 Equity(Note 6(17)): Equity attributable to shareholders of AU Optronics Corp.: 3100 Common stock 96,242,451 24 3200 Capital surplus 60,576,820 15 3300 Retained earnings 17,844,818 5 3400 Other components of equity (3,718,704) (1) 3500 Treasury shares (1,013,423 ) - 169,931,962 43 Non-controlling interests: 36XX Non-controlling interests 10,303,219 3 Total equity 180,235,181 46 Total Liabilities and Equity $ 394,043,508 100	September 30, 2020	December 31, 2019	September 30, 2019
		Amount % 80,449,772 20 1,521,406 - 30,308,675 8 1,778,499 - 3,956 - 79,886 - 23,460,072 6 2,302,383 1 3,295,562 1 143,200,211 36 7,545,171 2 5,999,479 2 206,734,543 52 12,207,768 3 1,555,130 - 12,808,326 3 5,181,617 1 2,405,346 1 254,437,380 64 397,637,591 100			Amount % 1,725,602 - 18,859 - 44,307,437 11 6,950,828 2 6,316,902 2 40,584 - 1,523,879 - 708,268 - 682,367 - 18,718,165 5 9,535,198 3 90,528,089 23 102,433,194 26 1,053,290 - 3,264,100 1 10,408,710 3 1,973,459 - 119,132,753 30 209,660,842 53 96,242,451 24 60,544,474 15 22,903,722 6 (2,005,384) (1) (1,013,423 ) - 176,671,840 44 11,304,909 3 187,976,749 47 397,637,591 100	Amount % 1,236,568 - 69,972 - 48,056,603 12 7,175,168 2 6,451,507 2 28,506 - 1,645,928 - 779,391 - 691,625 - 18,815,127 5 8,013,092 2 92,963,487 23 98,378,179 24 1,062,567 - 3,618,936 1 10,537,680 3 2,198,659 - 115,796,021 28 208,759,508 51 96,242,451 23 60,463,117 15 31,676,501 8 (1,297,240) - (234,762 ) - 186,850,067 46 11,681,192 3 198,531,259 49 407,290,767 100

See accompanying notes to the consolidated financial statements

Reviewed only, not audited in accordance with generally accepted auditing standards

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the Three and Nine Months Ended September 30, 2020 and 2019 (Expressed in thousands of New Taiwan dollars, except for earnings (loss) per share)

Three Months Ended September 30, 2020 2019 Amount % Amount % 4110 Revenue $ 73,350,885 100 70,482,069 101 4190 Less: sales return and discount 120,888 - 428,762 1 Net revenue(Notes 6(19)&7) 73,229,997 100 70,053,307 100 5000 Cost of sales(Notes 6(5),(9),(16),(20),(21)&7) 65,472,861 89 70,325,459 100 Gross profit (loss) 7,757,136 11 (272,152 ) - Operating expenses(Notes 6(9),(16),(20),(21)&7): 6100 Selling and distribution expenses 868,854 1 941,776 1 6200 General and administrative expenses 1,689,016 2 1,828,240 3 6300 Research and development expenses 2,546,878 4 2,394,891 4 Total operating expenses 5,104,748 7 5,164,907 8 Profit (loss) from operations 2,652,388 4 (5,437,059 ) (8 ) Non-operating income and expenses: 7100 Interest income (Note 6(22)) 109,567 - 211,399 - 7010 Other income (Notes 6(22)&7) 1,092,294 1 683,934 1 7020 Other gains and losses (Notes 6(22)&7) (30,639) - 561,969 1 7050 Finance costs (Notes 6(8)&(22)) (716,857) (1) (800,664) (1) 7060 Share of profit of equity-accounted investees (Note 6(6)) (27,852 ) - 63,834 - Total non-operating income and expenses 426,513 - 720,472 1 7900 Profit (loss) before income tax 3,078,901 4 (4,716,587) (7) 7950 Less: income tax expense(Note 6(23)) 68,577 - 20,366 - 8200 Profit (loss) for the period 3,010,324 4 (4,736,953 ) (7 ) 8300 Other comprehensive income(Notes 6(6), (17)&(23)): 8310 Items that will never be reclassified to profit or loss 8316 Unrealized gain (loss) on equity investments at fair value through other comprehensive income 293,569 - 362,644 - 8320 Equity-accounted investees – share of other comprehensive income (loss) (2,425 ) - (1,498 ) - 291,144 - 361,146 - 8360 Items that are or may be reclassified subsequently to profit or loss 8361 Foreign operations – foreign currency translation differences 761,836 1 (2,254,376) (3) 8370 Equity-accounted investees – share of other comprehensive income (loss) (4,030) - (16,587) - 8399 Related tax (136,829 ) - 406,453 1 620,977 1 (1,864,510 ) (2 ) 8300 Other comprehensive income (loss), net of tax 912,121 1 (1,503,364 ) (2 ) 8500 Total comprehensive income (loss) for the period $ 3,922,445 5 (6,240,317 ) (9 ) Profit (loss) attributable to: 8610 Shareholders of AU Optronics Corp. $ 2,893,732 4 (3,987,092) (6) 8620 Non-controlling interests 116,592 - (749,861 ) (1 ) $ 3,010,324 4 (4,736,953 ) (7 ) Total comprehensive income (loss) attributable to: 8710 Shareholders of AU Optronics Corp. $ 3,639,450 5 (5,067,798) (7) 8720 Non-controlling interests 282,995 - (1,172,519 ) (2 ) $ 3,922,445 5 (6,240,317 ) (9 ) Earnings (loss) per share(NT$, Note 6(24)) 9750 Basic earnings (loss) per share $ 0.30 (0.41 ) 9850 Diluted earnings (loss) per share $ 0.30 (0.41 )	Nine Months Ended September 30,	Nine Months Ended September 30,
	2020 Amount % 190,843,638 100 423,277 - 190,420,361 100 181,302,679 95 9,117,682 5 2,568,203 1 5,128,897 3 7,618,844 4 15,315,944 8 (6,198,262 ) (3 ) 412,415 - 2,340,056 1 71,950 - (2,246,879) (1) 49,391 - 626,933 - (5,571,329) (3) 398,915 - (5,970,244 ) (3 ) (967,052) (1) (1,695 ) - (968,747 ) (1 ) (984,033) - (34,513) - 183,624 - (834,922 ) - (1,803,669 ) (1 ) (7,773,913 ) (4 ) (5,058,790) (3) (911,454 ) - (5,970,244 ) (3 ) (6,772,224) (4) (1,001,689 ) - (7,773,913 ) (4 ) (0.53 ) (0.53 )	2019
		Amount % 208,151,036 101 1,327,551 1 206,823,485 100 204,869,209 99 1,954,276 1 2,890,384 1 5,621,161 3 7,400,230 4 15,911,775 8 (13,957,499 ) (7 ) 675,934 - 2,970,234 2 631,886 - (2,476,132) (1) 252,938 - 2,054,860 1 (11,902,639) (6) 555,247 - (12,457,886 ) (6 ) 500,794 - 329 - 501,123 - (1,547,420) - (15,165) - 296,321 - (1,266,264 ) - (765,141 ) - (13,223,027 ) (6 ) (10,357,238) (5) (2,100,648 ) (1 ) (12,457,886 ) (6 ) (10,806,838) (5) (2,416,189 ) (1 ) (13,223,027 ) (6 ) (1.08 ) (1.08 )

See accompanying notes to the consolidated financial statements

Reviewed only, not audited in accordance with generally accepted auditing standards AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the Nine Months Ended September 30, 2020 and 2019 (Expressed in thousands of New Taiwan dollars)

Equity Attributable to Shareholders of AU Optronics Corp.

Balance at January 1, 2019 $ Appropriation of earnings Legal reserve Special reserve Cash dividends distributed to shareholders Loss for the period Other comprehensive income (loss), net of tax Total comprehensive income (loss) for the period Changes in deemed contributions from shareholders Adjustments for changes in investees’ equity Treasury shares acquired Differences between acquisition price and carrying amount arising from acquisition of subsidiaries Adjustments for changes in ownership of subsidiaries Changes in non-controlling interests Balance at September 30, 2019 $ Balance at January 1, 2020 $ Appropriation of earnings Special reserve Loss for the period Other comprehensive income (loss), net of tax Total comprehensive income (loss) for the period Changes in deemed contributions from shareholders Adjustments for changes in investees’ equity Changes in non-controlling interests Disposal of equity investments measured at fair value through other comprehensive income Balance at September 30, 2020 $	Capital Stock Common Stock 96,242,451 - - - - - - - - - - - - 96,242,451 96,242,451 - - - - - - - - 96,242,451	Capital Surplus 60,622,043 - - - - - - (109 ) (51,740 ) - (22,282 ) (84,795 ) - 60,463,117 60,544,474 - - - - (38 ) 32,384 - - 60,576,820		Retained	Earnings	Subtotal 46,845,991 - - (4,812,122 ) (10,357,238) (130 ) (10,357,368 ) - - - - - - 31,676,501 22,903,722 - (5,058,790) (41 ) (5,058,831 ) - - - (73 ) 17,844,818	Other	Components of Equity Unrealized Gains (Losses) on Financial Assets at Fair Value through Other Comprehensive Income Subtotal 602,140 (847,770 ) - - - - - - - - 501,253 (449,470 ) 501,253 (449,470 ) - - - - - - - - - - - - 1,103,393 (1,297,240 ) 1,124,598 (2,005,384 ) - - - - (968,706 ) (1,713,393 ) (968,706 ) (1,713,393 ) - - - - - - 73 73 155,965 (3,718,704 )	Treasury Shares - - - - - - - - - (234,762 ) - - - (234,762 ) (1,013,423 ) - - - - - - - - (1,013,423 )	Equity Attributable to Shareholders of AU Optronics Corp. 202,862,715 - - (4,812,122 ) (10,357,238) (449,600 ) (10,806,838 ) (109 ) (51,740 ) (234,762 ) (22,282 ) (84,795 ) - 186,850,067 176,671,840 - (5,058,790) (1,713,434 ) (6,772,224 ) (38 ) 32,384 - - 169,931,962	Non- controlling Interests 14,415,973 - - - (2,100,648) (315,541 ) (2,416,189 ) - - - 22,282 84,795 (425,669 ) 11,681,192 11,304,909 - (911,454) (90,235 ) (1,001,689 ) - - (1 ) - 10,303,219	Total Equity 217,278,688 - - (4,812,122 ) (12,457,886) (765,141 ) (13,223,027 ) (109 ) (51,740 ) (234,762 ) - - (425,669 ) 198,531,259 187,976,749 - (5,970,244) (1,803,669 ) (7,773,913 ) (38 ) 32,384 (1 ) - 180,235,181
			Legal Reserve 6,675,628 1,016,060 - - - - - - - - - - - 7,691,688 7,691,688 - - - - - - - - 7,691,688	Special Reserve - - 847,770 - - - - - - - - - - 847,770 847,770 1,157,614 - - - - - - - 2,005,384	Unappropriated Earnings 40,170,363 (1,016,060 ) (847,770 ) (4,812,122 ) (10,357,238) (130 ) (10,357,368 ) - - - - - - 23,137,043 14,364,264 (1,157,614 ) (5,058,790) (41 ) (5,058,831 ) - - - (73 ) 8,147,746		Cumulative Translation Differences (1,449,910 ) - - - - (950,723 ) (950,723 ) - - - - - - (2,400,633 ) (3,129,982 ) - - (744,687 ) (744,687 ) - - - - (3,874,669 )	Unrealized Gains (Losses) on Financial Assets at Fair Value through Other Comprehensive Income 602,140 - - - - 501,253 501,253 - - - - - - 1,103,393 1,124,598 - - (968,706 ) (968,706 ) - - - 73 155,965

See accompanying notes to the consolidated financial statements

Reviewed only, not audited in accordance with generally accepted auditing standards AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2020 and 2019 (Expressed in thousands of New Taiwan dollars)

	Nine Months Ended	Nine Months Ended
	September 30,
	2020	2019
Cash flows from operating activities:
Loss before income tax	$ (5,571,329)	(11,902,639)
Adjustments for:
- depreciation	26,461,698	26,811,535
- amortization	216,920	345,161
- losses (gains) on financial instruments at fair value through profit
or loss	(48,810)	4,596
- interest expense	2,187,897	2,476,132
- interest income	(412,415)	(675,934)
- dividend income	(261,382)	(295,575)
- share of profit of equity-accounted investees	(49,391)	(252,938)
- gains on disposals of property, plant and equipment, net	(67,720)	(94,571)
- unrealized foreign currency exchange losses (gains)	28,249	(240,864)
- others	45,101	12,555
Change in operating assets and liabilities:
- notes and accounts receivable	(12,575,885)	7,389,325
- receivables from related parties	(554,091)	601,961
- inventories	(3,370,634)	845,506
- other current assets	854,238	(1,716,097)
- accounts payable	1,168,271	(2,527,277)
- payables to related parties	23,418	(985,510)
- net defined benefit liability	(75,856)	(76,232)
- provisions	(10,960)	(695,210)
- other current liabilities	819,892	(4,815,689 )
Cash generated from operations	8,807,211	14,208,235
Cash received from interest income	446,169	698,234
Cash received from dividends	603,621	568,871
Cash paid for interest	(2,165,881)	(2,661,428)
Cash paid for income taxes	(712,001 )	(1,954,340 )
Net cash provided by operating activities	6,979,119	10,859,572

(Continued)

See accompanying notes to the consolidated financial statements

Reviewed only, not audited in accordance with generally accepted auditing standards AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

For the Nine Months Ended September 30, 2020 and 2019 (Expressed in thousands of New Taiwan dollars)

Cash flows from investing activities: Acquisitions of financial assets at fair value through profit or loss Disposals of financial assets at fair value through profit or loss Acquisitions of financial assets at fair value through other comprehensive income Disposals of financial assets at fair value through other comprehensive income Acquisitions of equity-accounted investees Disposals of equity-accounted investees Acquisitions of property, plant and equipment Disposals of property, plant and equipment Decrease in refundable deposits Decrease in other financial assets Net cash outflow arising from acquisition of business Net cash used in investing activities Cash flows from financing activities: Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Payments of lease liabilities Guarantee deposits received (refunded) Cash dividends Repurchase of treasury shares Net change of non-controlling interests and others Net cash provided by 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 beginning of the period Cash and cash equivalents at end of the period $	Nine Months Ended September 30, 2020 2019 (1,830,684) (2,652,280) 1,935,242 2,911,179 (20,000) (10,714) 5,551 - (2,599,155) - 957,488 - (12,276,103) (23,553,959) 106,236 137,521 157,404 14,084 3,147 55,782 (252,535 ) - (13,813,409 )(23,098,387 ) 2,727,403 1,264,066 (4,342,014) (566,638) 15,030,400 70,420,000 (7,307,875) (49,892,994) (450,150) (519,876) (1,197) 8,417 - (4,812,122) - (234,762) (40 ) (425,778 ) 5,656,527 15,240,313 (971,813 )(1,015,356 ) (2,149,576) 1,986,142 80,449,772 69,163,296 78,300,196 71,149,438
	2020 (1,830,684) 1,935,242 (20,000) 5,551 (2,599,155) 957,488 (12,276,103) 106,236 157,404 3,147 (252,535 ) (13,813,409 ) 2,727,403 (4,342,014) 15,030,400 (7,307,875) (450,150) (1,197) - - (40 ) 5,656,527 (971,813 ) (2,149,576) 80,449,772 78,300,196

Cash flows from investing activities:
Acquisitions of financial assets at fair value through profit or loss
Disposals of financial assets at fair value through profit or loss
Acquisitions of financial assets at fair value through other comprehensive
income
Disposals of financial assets at fair value through other comprehensive
income
Acquisitions of equity-accounted investees
Disposals of equity-accounted investees
Acquisitions of property, plant and equipment
Disposals of property, plant and equipment
Decrease in refundable deposits
Decrease in other financial assets
Net cash outflow arising from acquisition of business
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Payments of lease liabilities
Guarantee deposits received (refunded)
Cash dividends
Repurchase of treasury shares
Net change of non-controlling interests and others
Net cash provided by 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 beginning of the period
Cash and cash equivalents at end of the period
$

Nine Months Ended
September 30,
2020
2019
(1,830,684) (2,652,280)
1,935,242
2,911,179
(20,000)
(10,714)
5,551
-
(2,599,155) -
957,488
-
(12,276,103) (23,553,959)
106,236
137,521
157,404
14,084
3,147
55,782
(252,535
) -
(13,813,409
)(23,098,387
)
2,727,403
1,264,066
(4,342,014)
(566,638)
15,030,400
70,420,000
(7,307,875) (49,892,994)
(450,150)
(519,876)
(1,197)
8,417
-
(4,812,122)
-
(234,762)
(40
)
(425,778
)
5,656,527
15,240,313
(971,813
)(1,015,356
)
(2,149,576)
1,986,142
80,449,772
69,163,296
78,300,196
71,149,438

2020
(1,830,684)
1,935,242
(20,000)
5,551
(2,599,155)
957,488
(12,276,103)
106,236
157,404
3,147
(252,535
)
(13,813,409
)
2,727,403
(4,342,014)
15,030,400
(7,307,875)
(450,150)
(1,197)
-
-
(40
)
5,656,527
(971,813
)
(2,149,576)
80,449,772
78,300,196

See accompanying notes to the consolidated financial statements

6-1

Reviewed only, not audited in accordance with generally accepted auditing standards as of September 30, 2020 and 2019 AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Nine Months Ended September 30, 2020 and 2019 (Expressed in thousands of New Taiwan dollars, unless otherwise indicated)

1. Organization

AU Optronics Corp. (“AUO”) 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 (“NYSE”) since May 2002. On and from October 1, 2019, AUO’s ADSs has delisted from the NYSE and begun trading on the overthe-counter (“OTC”) market. Further on October 28, 2020, AUO applied for the deregistration of its ADSs and underlying ordinary shares with the United States Securities and Exchange Commission (the “SEC”) and subsequently terminated its reporting obligations under the U.S. Securities Exchange Act.

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.

In order to advance AUO’s value transformation strategy, to accelerate the extension of the value chain and enhance the overall operating performance, upon the resolution of the shareholders’ meeting held on June 17, 2020, AUO will demerge and transfer the business of the General Display and the Public Information Display, including assets, liabilities and the operations, to its wholly-owned subsidiary, AUO Display Plus Corporation (“ADP”). ADP will issue new shares to AUO as the consideration. The effective date of the demerger is indicatively to be set on January 1, 2021.

The consolidated financial statements comprise AUO and its subsidiaries (collectively as “the Company”).

2. The Authorization of Financial Statements

These consolidated financial statements were approved and authorized for issue by the Board of Directors of AUO on October 28, 2020.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 consolidated 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, 2020.

New, Revised or Amended Standards and Interpretations	Effective Date Issued by IASB
Amendments to IFRS 3,Definition of a Business Amendments to IFRS 9, IAS 39 and IFRS 7,Interest Rate Benchmark Reform Amendments to IAS 1 and IAS 8,Definition of Material Amendments to IFRS 16,Covid-19 Related Rent Concessions	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020

The adoption of abovementioned standards and interpretations has not had a material impact on the Company’s accounting policies.

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

The following new, revised or amended standards and interpretations have been endorsed by the FSC with effective date from 2021.

New, Revised or Amended Standards and Interpretations	Effective Date Issued by IASB
Amendments to IFRS 4,Extension of the Temporary Exemption from Applying IFRS 9	January 1, 2021

The Company assesses that the adoption of the abovementioned amendments would not have material impact on its consolidated financial statements.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

A summary of the new or/and amended IFRSs 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 10 and IAS 28,Sale or Contribution of Assets between an Investor and its Associate or Joint Venture IFRS 17,Insurance Contracts Amendments to IFRS 17,Insurance Contracts Amendments to IAS 1,Classification of Liabilities as Current or Non- Current Amendments to IFRS 3,Reference to the Conceptual Framework Amendments to IAS 16,Property, Plant and Equipment – Proceeds before Intended Use Amendments to IAS 37,Onerous Contracts – Cost of Fulfilling a Contract Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16,Interest Rate Benchmark Reform－Phase 2 Annual Improvements to IFRSs 2018 – 2020	Subject to IASB’s announcement January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2022 January 1, 2022 January 1, 2022 January 1, 2021 January 1, 2022

New, Revised or Amended Standards and Interpretations

Effective Date
Issued by IASB

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 IFRS 17,Insurance Contracts
Amendments to IAS 1,Classification of Liabilities as Current or Non-
Current
Amendments to IFRS 3,Reference to the Conceptual Framework
Amendments to IAS 16,Property, Plant and Equipment – Proceeds
before Intended Use
Amendments to IAS 37,Onerous Contracts – Cost of Fulfilling a
Contract
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16,Interest
Rate Benchmark Reform－Phase 2
Annual Improvements to IFRSs 2018 – 2020

Subject to IASB’s
announcement
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2022
January 1, 2022
January 1, 2022
January 1, 2021
January 1, 2022

Note: Unless stated otherwise, the aforementioned new, revised and amended standards and interpretations are effective for annual periods beginning on or after the respective effective dates.

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

4. Summary of Significant Accounting Policies

(1) Statement of compliance

The accompanying consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations”) and IAS 34, Interim Financial Reporting , as endorsed and issued into effect by the FSC. The consolidated financial statements do not present all the disclosures required for a complete set of annual consolidated financial statements prepared under the IFRSs endorsed by the FSC with effective dates.

Except as described below, the significant accounting policies applied in the consolidated financial statements are the same as those applied in the consolidated financial statements for the year ended December 31, 2019 and have been applied consistently to all periods presented in the consolidated financial statements. Refer to Note 4 of the consolidated financial statements for the year ended December 31, 2019 for the details.

(2) Basis of consolidation

Principles of preparation of the consolidated financial statements are the same as those applied in the consolidated financial statements for the year ended December 31, 2019. Refer to Note 4(3) of the consolidated financial statements for the year ended December 31, 2019 for the details.

List of subsidiaries in the consolidated financial statements was as follows:

Name of Investor	Name of Subsidiary	Main Activities and Location Holding and trading company (Malaysia) Venture capital investment (Taiwan ROC) Venture capital investment (Taiwan ROC) Sales and leasing activities (Taiwan ROC) Construction project and related project management (Taiwan ROC) Holding company (Israel)	Percentage of Ownership (%)	Percentage of Ownership (%)	Percentage of Ownership (%)
			September 30, 2020 100.00 100.00 100.00 100.00 100.00 100.00	December 31, 2019	September 30, 2019
AUO AUO AUO AUO AUO AUO	AU Optronics (L) Corp. (AULB) Konly Venture Corp. (Konly) Ronly Venture Corp. (Ronly) Space Money Inc. (SMI) U-Fresh Technology Inc. (UTI) ComQi Ltd. (CQIL)			100.00 100.00 100.00 100.00 100.00 100.00	100.00 100.00 100.00 100.00 100.00 100.00

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Name of Investor	Name of Subsidiary	Main Activities and Location Sales and sales support activities (Netherlands) Manufacturing and sales company (Taiwan ROC) Research and development and sales activities (Taiwan ROC) Renewable energy power generation (Taiwan ROC) Manufacturing, development and sales company (Taiwan ROC) Holding company (Samoa) Holding company (Samoa) Manufacturing and sales company (Taiwan ROC) Holding company (Taiwan ROC) Manufacturing and sales company (Malaysia) Manufacturing and sales company (Japan) Sales and sales support activities (United States) Sales support activities (Japan) Sales support activities (South Korea) Holding company and sales support activities (Singapore) Assembly activities (Czech Republic) Sales support activities (PRC) Manufacturing and sales company (PRC)	Percentage of Ownership (%)	Percentage of Ownership (%)	Percentage of Ownership (%)
			September 30, 2020 100.00 100.00 100.00(1) 100.00(1) 100.00(1) 100.00(1) 100.00(1) 41.05(2) 100.00 100.00 99.9991 100.00 100.00 100.00 100.00 100.00 100.00 100.00	December 31, 2019	September 30, 2019
AUO AUO AUO AUO AUO AUO AUO and ADCM AUO, Konly and Ronly ACTW ACTW SDMC AULB AULB AULB AULB AULB AULB AULB	AU Optronics Europe B.V. (AUNL) AUO Crystal Corp. (ACTW) AUO Display Plus Corporation (ADP) Da Ping Green Energy Coporation (DPGE) AUO Health Corporation (AHTW) AUO Digitech (CAYMAN) Limited (ADCM) AUO Digitech Holding Limited (ADHLD) Darwin Precisions Corporation (DPTW) Sanda Materials Corporation (SDMC) AUO Crystal (Malaysia) Sdn. Bhd. (ACMK) M.Setek Co., Ltd. (M.Setek) AU Optronics Corporation America (AUUS) AU Optronics Corporation Japan (AUJP) AU Optronics Korea Ltd. (AUKR) AU Optronics Singapore Pte. Ltd. (AUSG) AU Optronics (Czech) s.r.o. (AUCZ)(3) AU Optronics (Shanghai) Co., Ltd. (AUSH) AU Optronics (Xiamen) Corp. (AUXM)			100.00 100.00 - - - - - 41.05(2) 100.00 100.00 99.9991 100.00 100.00 100.00 100.00 100.00 100.00 100.00	100.00 100.00 - - - - - 41.05(2) 100.00 100.00 99.9991 100.00 100.00 100.00 100.00 100.00 100.00 100.00

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Name of Investor	Name of Subsidiary	Main Activities and Location Manufacturing and sales company (PRC) Manufacturing and leasing activities (PRC) Repairing activities (Slovakia Republic) Manufacturing company (Singapore) Manufacturing and sales company (PRC) Research and development and IP related business (United States) Holding company (Malaysia) Manufacturing and sales company (PRC) Sales support activities (United States) Sales and sales support activities (Netherlands) Manufacturing and sales company (PRC) Intelligent health care services (PRC) Construction project and related project management (PRC) Integration service of software and hardware (PRC) Development and licensing of software (PRC) Construction project and related project management (PRC)	Percentage of Ownership (%)	Percentage of Ownership (%)	Percentage of Ownership (%)
			September 30, 2020 100.00 100.00 100.00 100.00 51.00 100.00 100.00 - 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	December 31, 2019	September 30, 2019
AULB AULB AULB AULB AULB AULB AULB and DPTW AUSG AUSG AUSG AUXM AUSH AUSH AUSH AUSH UFSZ	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) BriView (L) Corp. (BVLB) AUO Energy (Tianjin) Corp. (AETJ)(3) AUO Green Energy America Corp. (AEUS) AUO Display Plus Netherlands B.V. (ADPNL, formerly AUO Green Energy Europe B.V. (AENL)) BriView (Xiamen) Corp. (BVXM) AUO Care Information Tech. (Suzhou) Co., Ltd. (A-Care) U-Fresh Technology (Suzhou) Co., Ltd. (UFSZ) Edgetech Data Technologies (Suzhou) Corp., Ltd. (EDT) Mega Insight Smart Manufacturing (Suzhou) Corp., Ltd. (MIS) U-Fresh Environmental Technology (Shandong) Co., Ltd. (UFSD)			100.00 100.00 100.00 100.00 51.00 100.00 100.00 - 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	100.00 100.00 100.00 100.00 51.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Name of Investor	Name of Subsidiary	Main Activities and Location Holding company (United Kingdom) Sales support activities (United Kingdom) Sales company (United States) Research and development (Canada) Development and sales activities (United Kingdom) Development and sales activities (United States) Holding company (Malaysia) Holding company (BVI) Holding company (BVI) Holding company (Mauritius) Holding company (Mauritius) Holding company (Samoa) Holding company (Samoa) Manufacturing and sales company (PRC) Manufacturing and sales company (PRC) Manufacturing and sales company (PRC) Manufacturing and sales company (PRC) Holding company (Hong Kong)	Percentage of Ownership (%)	Percentage of Ownership (%)	Percentage of Ownership (%)
			September 30, 2020 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 - 100.00(3) 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	December 31, 2019	September 30, 2019
CQIL CQHLD CQHLD CQHLD CQUS CQUS DPTW DPTW DPTW DPTW and FRVI FHVI FHVI FHVI FFMI FTMI FWSA and FTMI PMSA DPLB	ComQi Holdings Ltd. (CQHLD) ComQi UK Ltd. (CQUK) ComQi Inc. (CQUS) ComQi Canada Inc. (CQCA) JohnRyan Limited (JRUK) JohnRyan Inc. (JRUS) Darwin Precisions (L) Corp. (DPLB) Forhouse International Holding Ltd. (FHVI) Force International Holding Ltd. (FRVI)(3) Forefront Corporation (FFMI) Fortech International Corp. (FTMI) Forward Optronics International Corp. (FWSA) Prime Forward International Ltd. (PMSA) Forhouse Electronics (Suzhou) Co., Ltd. (FHWJ) Fortech Electronics (Suzhou) Co., Ltd. (FTWJ) Suzhou Forplax Optronics Co., Ltd. (FPWJ) Fortech Electronics (Kunshan) Co., Ltd. (FTKS) Darwin Precisions (Hong Kong) Limited (DPHK)			100.00 100.00 100.00 100.00 100.00(1) 100.00(1) 100.00 100.00 - 100.00(3) 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00	100.00 100.00 100.00 100.00 - - 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Name of Investor	Name of Subsidiary	Main Activities and Location Manufacturing and sales company (Slovakia Republic) Manufacturing and sales company (PRC) Manufacturing and sales company (PRC) Manufacturing and sales company (PRC)	Percentage of Ownership (%)	Percentage of Ownership (%)	Percentage of Ownership (%)
			September 30, 2020 100.00 100.00 100.00 100.00	December 31, 2019	September 30, 2019
DPLB DPHK DPHK BVLB	Darwin Precisions (Slovakia) s.r.o. (DPSK) Darwin Precisions (Suzhou) Corp. (DPSZ) Darwin Precisions (Xiamen) Corp. (DPXM) BriView (Hefei) Co., Ltd. (BVHF)			100.00 100.00 100.00 100.00	100.00 100.00 100.00 100.00

Note 1: JRUK and JRUS were incorporated in October 2019. ADP was incorporated in May 2020. DPGE, ADCM and ADHLD were incorporated in August 2020. AHTW was incorporated in September 2020.
Note 2: Although the Company did not own more than 50% of the DPTW’s ownership interests, it was considered to have de facto control over the main operating policies of DPTW. As a result, DPTW was accounted for as a subsidiary of the Company.
Note 3: As of September 30, 2020, AETJ and FRVI were liquidated and AUCZ is still in the process of liquidation. After the liquidation of FRVI, its ownership in FFMI was transferred to DPTW.

(3) Leases

The Company elected to apply the practical expedient to COVID-19-related rent concessions on land that meet all of the following conditions, regardless of whether the rent concession otherwise meet the definition of a lease modification:

a. The rent concessions occurring as a direct consequence of the COVID-19 pandemic;
b. The change in lease payments that resulted in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
c. Any reduction in lease payments that affects only those payments originally due on or before June 30, 2021; and
d. There is no substantive change to other terms and conditions of the lease.

Under the practical expedient, the change in lease payments resulting from such rent concessions is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(4) Employee benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially-determined pension cost rate at the end of prior fiscal year, adjusted for significant market fluctuations subsequent to the end of prior fiscal year and for significant curtailments, settlements, or other significant one-time events.

(5) Income taxes

The Company measures and discloses interim period income tax expense in accordance with paragraph B12 of IAS 34, Interim Financial Reporting .

Income tax expense for the period is best estimated by multiplying pre-tax income of the interim period by a projected annual effective tax rate, and is recognized as current tax expense.

For a change in the statutory tax rate during the interim period, the effect on deferred taxes is recognized immediately during the interim reporting period in which the change in tax rate occurs.

Income taxes that are recognized directly in equity or other comprehensive income are measured in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding tax bases at the tax rates that are expected to be applied in the year in which the asset is realized or the liability is settled.

5. Critical Accounting Judgments and Key Sources of Estimations and Assumptions Uncertainty

The preparation of the consolidated financial statements in conformity with the Regulations and IAS 34, Interim Financial Reporting , as endorsed and issued into effect by the FSC 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.

In preparing the consolidated financial statements, critical accounting judgments and key sources of estimations and assumptions uncertainty used by management in the application of accounting policies are consistent with those described in Note 5 of the consolidated financial statements for the year ended December 31, 2019.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

6. Description of Significant Accounts

Except as described below, the description of significant accounts in the accompanying consolidated financial statements is not materially different from those described in Note 6 of the consolidated financial statements for the year ended December 31, 2019.

(1) Cash and Cash Equivalents

September 30, 2020 Cash on hand, demand deposits and checking accounts $ 36,127,857 Time deposits 42,172,339 Government bonds with reverse repurchase agreements - $ 78,300,196	December 31, 2019 (in thousands) 46,290,722 34,124,011 35,039 80,449,772	September 30, 2019 38,921,336 32,193,082 35,020
		71,149,438

Refer to Note 6(27) for the disclosure of currency risk and sensitivity analysis of the financial instruments of the Company.

As at September 30, 2020, December 31, 2019 and September 30, 2019, no cash and cash equivalents were pledged with banks as collaterals.

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

September 30, 2020 Financial assets mandatorily measured at FVTPL: Foreign currency forward contracts $ 80,876 Structured deposits 1,404,721 $ 1,485,597 Financial liabilities held for trading: Foreign currency forward contracts $ 39,726	December 31, 2019 (in thousands) 42,815 1,478,591 1,521,406 18,859	September 30, 2019 61,436 1,493,103 1,554,539 69,972

The Company entered into derivative contracts to manage the exposure to currency risk arising from operating activities. As of September 30, 2020, December 31, 2019 and September 30, 2019, the Company’s outstanding foreign currency forward contracts were as follows:

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

	September 30, 2020	September 30, 2020
Contract item Sell USD / Buy NTD Sell USD / Buy JPY Sell USD / Buy CNY Sell USD / Buy SGD Sell USD / Buy MYR Sell CNY / Buy USD Sell EUR / Buy JPY Sell HKD / Buy USD	Maturity date Oct. 2020 – Nov. 2020 Oct. 2020 – Dec. 2020 Oct. 2020 – Jun. 2021 Oct. 2020 – Nov. 2020 Oct. 2020 – Nov. 2020 Nov. 2020 – Dec. 2020 Oct. 2020 Oct. 2020 – Nov. 2020	Contract amount
		(in thousands) USD 375,600 / NTD 10,959,332 USD 128,887 / JPY 13,597,155 USD 98,500 / CNY 681,397 USD 28,524 / SGD 38,948 USD 623 / MYR 2,593 CNY 1,700,000 / USD 248,183 EUR 5,000 / JPY 628,175 HKD 153,000 / USD 19,732

	December 31, 2019	December 31, 2019
Contract item Sell USD / Buy NTD Sell USD / Buy JPY Sell USD / Buy CNY Sell USD / Buy SGD Sell USD / Buy MYR Sell CNY / Buy USD Sell EUR / Buy JPY Sell HKD / Buy USD	Maturity date Jan. 2020 Jan. 2020 – Apr. 2020 Jan. 2020 – Jun. 2020 Jan. 2020 – Feb. 2020 Jan. 2020 – Mar. 2020 Feb. 2020 – Mar. 2020 Jan. 2020 – Feb. 2020 Jan. 2020	Contract amount
		(in thousands) USD 176,600 / NTD 5,319,611 USD 47,292 / JPY 5,150,510 USD 61,500 / CNY 432,823 USD 39,276 / SGD 53,372 USD 703 / MYR 2,905 CNY 1,935,305 / USD 276,672 EUR 23,000 / JPY 2,788,285 HKD 60,177 / USD 7,721

	September 30, 2019	September 30, 2019
Contract item Sell USD / Buy NTD Sell USD / Buy JPY Sell USD / Buy CNY Sell EUR / Buy JPY Sell USD / Buy MYR Sell CNY / Buy USD Sell USD / Buy SGD	Maturity date Oct. 2019 Oct. 2019 – Jan. 2020 Oct. 2019 – Apr. 2020 Oct. 2019 – Dec. 2019 Oct. 2019 – Dec. 2019 Oct. 2019 – Dec. 2019 Oct. 2019 – Nov. 2019	Contract amount
		(in thousands) USD 235,000 / NTD 7,271,044 USD 62,894 / JPY 6,730,615 USD 87,000 / CNY 608,621 EUR 32,000 / JPY 3,792,126 USD 823 / MYR 3,440 CNY 1,696,071 / USD 237,555 USD 38,681 / SGD 53,646

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

September 30, 2020 Investments in equity instruments at FVTOCI: Equity securities – listed stocks $ 6,389,449 Equity securities – non-listed stocks 208,428 $ 6,597,877	December 31, 2019 (in thousands) 7,356,501 188,670 7,545,171	September 30, 2019 7,304,694 185,906 7,490,600

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.

(4) Notes and Accounts Receivable, net (Including Related and Unrelated Parties)

Notes receivable $ Accounts receivable Less: loss allowance $ Notes and accounts receivable, net $ Accounts receivable from related parties, net $	September 30, 2020 178,524 44,594,999 (20,567 ) 44,752,956 42,465,794 2,287,162	December 31, 2019 (in thousands) 128,666 31,976,246 (17,738 ) 32,087,174 30,308,675 1,778,499	September 30, 2019 121,407 39,536,425 (37,422 ) 39,620,410 37,700,728 1,919,682

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

September 30, 2020	September 30, 2020	September 30, 2020
Carrying amount of notes and accounts receivable (in thousands) 43,894,233 802,723 54,925 4,108 44,755,989	Weighted- average loss rate 0.00% 0.01% 0.95% 57.64%	Loss allowance for lifetime expected credit losses
		(in thousands) 83 62 520 2,368 3,033

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2019	December 31, 2019	December 31, 2019
Carrying amount of notes and accounts receivable Weighted- average loss rate Loss allowance for lifetime expected credit losses (in thousands) (in thousands) 31,061,173 0.00% 1 1,010,918 0.00% 4 15,233 0.95% 145 32,087,324 150 September 30, 2019		Loss allowance for lifetime expected credit losses
Carrying amount of notes and accounts receivable (in thousands) 38,970,558 630,799 19,527 1,609 39,622,493	Weighted- average loss rate	Loss allowance for lifetime expected credit losses
	0.00% 0.04% 1.65% 90.24%	(in thousands) 77 232 322 1,452 2,083

In addition, there was objective evidence indicating that, under reasonable expectation, some of the notes and accounts receivable would not be recovered in total; therefore, the Company recognized a loss allowance of $17,534 thousand, $17,588 thousand and $35,339 thousand as of September 30, 2020, December 31, 2019 and September 30, 2019, respectively.

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

		Nine Months Ended	Nine Months Ended
		September 30,
		2020	2019
		(in thousands)
Balance at beginning of the period	$	17,738	50,853
Provisions (reversals) charged to (against) expense		2,855	(12,728)
Write-offs		-	(714)
Effect of changes in foreign currency exchange rates		(26 )	11
Balance at end of the period	$	20,567	37,422

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The payment terms granted to customers are generally 25 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.

As at September 30, 2020, the Company did not sell its accounts receivables to banks. As at December 31, 2019 and September 30, 2019, the Company’s accounts receivables sold and derecognized were as follows:

	December 31, 2019	December 31, 2019
Underwriting bank CTBC Bank Taipei Fubon Bank DBS Bank Bank of Taiwan	Factoring limit (in thousands) USD 152,000 USD 120,000 USD 154,000 USD 250,000	Amount sold and derecognized (in thousands) USD 18,526 USD 56,020 USD 56,730 USD 15,718	Amount advanced (in thousands) NTD 500,000 NTD 1,500,000 NTD 1,520,000 USD 14,000	Principal terms
				See Notes(a)~(d) See Notes(a)~(d) See Notes(a)~(d) See Notes(a)~(d)

	September 30, 2019	September 30, 2019
Underwriting bank Taipei Fubon Bank E. SUN Bank DBS Bank Bank of Taiwan	Factoring limit (in thousands) USD 120,000 USD 50,000 USD 154,000 USD 250,000	Amount sold and derecognized (in thousands) USD 36,014 USD 17,795 USD 37,714 USD 17,694	Amount advanced (in thousands) NTD 1,000,000 USD 16,000 NTD 1,000,000 USD 16,000	Principal terms
				See Notes(a)~(d) See Notes(a)~(d) See Notes(a)~(d) See Notes(a)~(d)

Note (a): Under these facilities, the Company transferred accounts receivable to the respective underwriting banks, which are without recourse subject to the underwriting consents.

Note (b): The Company informed its customers pursuant to the respective facilities to make payment directly to the respective underwriting banks.

Note (c): As of December 31, 2019 and September 30, 2019, total outstanding receivables after the above transactions, net of fees charged by underwriting banks, of $487,754 thousand and $396,943 thousand, respectively, was recognized under other current financial assets. In addition, interest rates for the balance of advanced amount as of December 31, 2019 and September 30, 2019 were ranging from 1.07% to 2.44% and 1.10% to 2.96%, respectively.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note (d): To the extent of the amount transferred to the underwriting banks, risks of non-collection or potential payment default by customers in the event of insolvency are borne by respective banks. The Company is not responsible for the collection of receivables subject to these facilities, or for any legal proceedings and costs thereof in collecting these receivables. In case any commercial dispute between the Company and customers or other reasons results in the Company’s failure to perform the obligation under these facilities, the banks have requested the Company to issue promissory notes in the amounts equal to 10 percent of respective facilities or to transfer receivables in the amounts equal to 10 percent of respective facilities. Other than such arrangements, no collaterals were provided by the Company.

(5) Inventories

September 30, 2020 Finished goods $ 8,265,550 Work-in-progress 12,643,555 Raw materials 5,836,731 $ 26,745,836	December 31, 2019 (in thousands) 9,005,001 9,537,700 4,917,371 23,460,072	September 30, 2019
		9,243,401 10,790,701 5,400,963
		25,435,065

For the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019, the amounts recognized as cost of sales in relation to inventories were $65,472,861 thousand, $70,325,459 thousand, $181,302,679 thousand and $204,869,209 thousand, respectively. The net of provisions (reversals) for inventories written down (increased) to net realizable value, which were also included in cost of sales, amounted to $(1,169,011) thousand, $375,373 thousand, $(1,841,132) thousand and $56,832 thousand for the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019, respectively.

As at September 30, 2020, December 31, 2019 and September 30, 2019, none of the Company’s inventories was pledged as collateral.

(6) Investments in Equity-accounted Investees

September 30, 2020 Associates $ 8,020,492 Joint ventures 280,456 $ 8,300,948	December 31, 2019 (in thousands) 5,820,759 178,720 5,999,479	September 30, 2019
		5,891,464 305,460
		6,196,924

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

a. Associates

September 30, 2020 Amount Ownership interest (in thousands) % $ 2,766,208 27 2,344,877 20 1,027,090 33 736,751 17 681,345 25 443,533 34 20,688 $ 8,020,492	September 30, 2020 Amount Ownership interest (in thousands) % $ 2,766,208 27 2,344,877 20 1,027,090 33 736,751 17 681,345 25 443,533 34 20,688 $ 8,020,492	December 31, 2019	December 31, 2019	December 31, 2019	September 30, 2019	September 30, 2019	September 30, 2019
Amount		Amount		Ownership interest Amount % (in thousands) 27 $ 3,017,078 - - 33 1,007,719 17 711,915 25 646,140 34 436,458 72,154 $ 5,891,464			Ownership interest
(in thousands) $ 2,766,208 2,344,877 1,027,090 736,751 681,345 443,533 20,688 $ 8,020,492		(in thousands) $ 2,909,521 - 1,015,512 740,504 688,813 444,550 21,859 $ 5,820,759			(in thousands) $ 3,017,078 - 1,007,719 711,915 646,140 436,458 72,154 $ 5,891,464		% 27 - 33 17 25 34
	$ 8,020,492		$ 5,820,759			$ 5,891,464

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 (loss) $ Other comprehensive income (loss) Total comprehensive income (loss) $	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) (20,682) 61,812 54,548 257,621 (6,455 ) (18,085 ) (36,208 ) (14,836 ) (27,137 ) 43,727 18,340 242,785	Nine Months Ended September 30,	Nine Months Ended September 30,
	2020 (20,682) (6,455 ) (27,137 )		2019
			257,621 (14,836 ) 242,785

On February 5, 2020, AUO’s Board of Directors resolved to acquire common shares of ADLINK through tender offer. The tender offer consideration for each common share is NT$57 in cash. As of March 3, 2020, given that the accumulated tendered shares have reached the minimum amount of shares, according to the Regulations Governing Public Tender Offers for Securities of Public Companies, all the conditions of this tender offer have been satisfied and the offeree cannot revoke its offer to sell.

As of September 30, 2020, the Company holds a total of 43,501 thousand common shares of ADLINK for totaling of 20% equity interest in ADLINK.

Lextar’s Board of Directors approved a resolution on June 18, 2020 that Lextar will carry out a joint share exchange with Epistar Corporation (“Epistar”) for a newly incorporated company, Ennostar Inc. (“Ennostar”). Such plan was also approved by Lextar’s and Epistar’s special shareholders’ meetings held on August 7, 2020. As the examinational procedure of Antitrust authorities in China has not been completed yet, the record date of the share exchange was tentatively changed to January 6, 2021, through the negotiation between the chairman of the two companies. On the record date, Ennostar’s shares will be publicly listed on the Taiwan Stock Exchange and Lextar’s and Epistar’s listing and public offering will be terminated.

b. Joint ventures

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Company’s share of joint ventures’: Profit (loss) $ Other comprehensive income Total comprehensive income (loss) $	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) (7,170) 2,022 (5,157) (4,683) - - - - (7,170 ) 2,022 (5,157 ) (4,683 )	Nine Months Ended September 30,	Nine Months Ended September 30,
	2020 (7,170) - (7,170 )		2019
			(4,683) - (4,683 )

As at September 30, 2020, December 31, 2019 and September 30, 2019, none of the Company’s investments in equity-accounted investees was pledged as collateral.

(7) Acquisition of Business

In February 2020, the Company acquired the business of integration service of content management system and hardware from John Ryan International Inc., John Ryan Technology, Inc., Cutler holdings Inc. and their subsidiaries (hereinafter referred to as “John Ryan”). Through the acquisition of the business, the Company expects to extend the relevant business to the financial industry.

If the acquisition had taken place on January 1, 2020, management estimated that the Company’s consolidated revenue and net loss for the nine months ended September 30, 2020 would have been $190,434,150 thousand and $5,978,641 thousand, respectively. In determining these amounts, management had assumed that the fair value adjustments, determined provisionally, that arose on the acquisition date would have been the same if the acquisition had taken place on January 1, 2020. The aforementioned pro-forma information is presented for illustrative purposes only and is not necessarily an indication of revenue and results of operations of the Company that would have been achieved had the acquisition been completed on January 1, 2020, nor is it intended to be a projection of future results.

Acquisition-related costs are at approximately $4,670 thousand on legal fees and due diligence fees and were recognized in operating expenses in the consolidated statement of comprehensive income.

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

a. Consideration transferred (translated at the exchange rates on the balance sheet date)

		Amounts
		(in thousands)
Cash	$	209,034
Contingent consideration		43,501
	$	252,535

In accordance with the terms of the contingent consideration, in the event that the annual revenue and the annual recurring revenue rendered from the acquired business for the year ended December 31, 2020 are either greater than the agreed revenue targets or hit the agreed goals specified in the agreement, or in the event that John Ryan assists in acquiring specific business within the period specified in the agreement, the Company will pay additional consideration of USD750 thousand and USD1,492 thousand, respectively, to John Ryan. 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 USD2,242 thousand.

The fair value of the contingent consideration estimated using Monte Carlo simulation and expected value was $43,501 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 5.2% and revenue volatility rate of 12.8%.

As of September 30, 2020, there were no changes to the amount of contingent consideration recognized, the range of estimation results and the assumptions used to estimate the contingent consideration.

b. Identifiable assets acquired and liabilities assumed

The following table summarized the fair value of identifiable assets acquired and liabilities assumed recognized at the acquisition date (translated at the exchange rates on the balance sheet date):

Accounts receivable and other current assets $ Property, plant and equipment Intangible assets Accounts payable and other current liabilities $	Fair value (in thousands) 24,133 2,174 125,035 (37,851 ) 113,491

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

c. Goodwill arising from the acquisition for which is attributable mainly to the synergies expected to be achieved from integrating the acquired business into the Company’s existing business has been recognized as follows (translated at the exchange rates on the balance sheet date):

Consideration transferred $ Less: Fair value of identifiable net assets $	Amounts (in thousands) 252,535 (113,491 ) 139,044

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 provisional amounts, or any additional provisions as at the acquisition date, then the accounting for the acquisition will be revised.

(8) 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 $	Nine Months Ended September 30, 2020	Nine Months Ended September 30, 2020	Nine Months Ended September 30, 2020
	Balance, Beginning of Period 8,858,648 119,697,249 841,581,837 35,834,437 1,005,972,171 39,170,748 737,292,828 27,646,410 804,109,986 4,872,358 206,734,543	Additions Disposal, write off, reclassification and others (in thousands) - (867) 11,972 (59,196) 1,102,820 (10,379,975) 3,549,206 (1,229,654 ) 4,663,998 (11,669,692 ) 2,158,921 (160,762) 19,150,657 (16,539,929) 4,560,504 (2,715,804 ) 25,870,082 (19,416,495 ) 5,419,092 (8,295,116 )	Balance, End of Period
			8,857,781 119,650,025 832,304,682 38,153,989 998,966,477 41,168,907 739,903,556 29,491,110 810,563,573 1,996,334 190,399,238

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

	Nine Months Ended September 30, 2019	Nine Months Ended September 30, 2019
Balance, Beginning of Period 8,859,323 121,219,360 835,933,620 35,129,124 1,001,141,427 36,031,326 721,833,348 28,090,987 785,955,661 6,400,709 221,586,475	Adjustments on initial application of new standards - - - (2,620 ) (2,620 ) - - (855 ) (855 ) -	Additions	Balance, End of Period
			8,868,773 120,645,861 839,221,670 34,742,862
			1,003,479,166
			38,066,945 734,142,452 27,510,212
			799,719,609
			9,278,587
			213,038,144

There was no significant change in the Company’s property, plant and equipment for the nine months ended September 30, 2020 and 2019. Refer to Note 6(9) of the consolidated financial statements for the year ended December 31, 2019 for the related disclosures.

The following table summarized the Company’s capitalized borrowing costs and the interest rate range applied for the capitalization:

Capitalized borrowing costs $ The interest rates applied for the capitalization	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) 6,664 40,213 33,007 110,961 0.88%~ 1.77% 1.07%~ 5.71%	Nine Months Ended September 30,	Nine Months Ended September 30,
	2020 6,664		2019
			110,961
			1.07%~ 5.71%

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(9) Lease Arrangements

a. Lessee

(i) Right-of-use assets

September 30, 2020 December 31, 2019 September 30, 2019 (in thousands) Carrying amount of right-of-use assets Land $ 11,016,087 11,595,815 11,796,645 Buildings 437,767 575,724 594,067 Other equipment 24,724 36,229 51,609 $ 11,478,578 12,207,768 12,442,321 Three Months Ended September 30, Nine Months Ended September 30, 2020(1) 2019 2020 2019 (in thousands) Additions to right-of-use assets$ (406 ) 292 106,182 143,580 Depreciation charge for right-of-use assets Land $ 136,167 141,153 412,433 426,753 Buildings 44,948 59,185 142,045 177,419 Other equipment 1,615 16,723 37,138 49,797 $ 182,730 217,061 591,616 653,969	September 30, 2020 December 31, 2019 September 30, 2019 (in thousands) Carrying amount of right-of-use assets Land $ 11,016,087 11,595,815 11,796,645 Buildings 437,767 575,724 594,067 Other equipment 24,724 36,229 51,609 $ 11,478,578 12,207,768 12,442,321 Three Months Ended September 30, Nine Months Ended September 30, 2020(1) 2019 2020 2019 (in thousands) Additions to right-of-use assets$ (406 ) 292 106,182 143,580 Depreciation charge for right-of-use assets Land $ 136,167 141,153 412,433 426,753 Buildings 44,948 59,185 142,045 177,419 Other equipment 1,615 16,723 37,138 49,797 $ 182,730 217,061 591,616 653,969	September 30, 2020 December 31, 2019 September 30, 2019 (in thousands) Carrying amount of right-of-use assets Land $ 11,016,087 11,595,815 11,796,645 Buildings 437,767 575,724 594,067 Other equipment 24,724 36,229 51,609 $ 11,478,578 12,207,768 12,442,321 Three Months Ended September 30, Nine Months Ended September 30, 2020(1) 2019 2020 2019 (in thousands) Additions to right-of-use assets$ (406 ) 292 106,182 143,580 Depreciation charge for right-of-use assets Land $ 136,167 141,153 412,433 426,753 Buildings 44,948 59,185 142,045 177,419 Other equipment 1,615 16,723 37,138 49,797 $ 182,730 217,061 591,616 653,969	September 30, 2019	September 30, 2019
			11,796,645 594,067 51,609
			12,442,321
2020(1) (406 )				2019
				143,580
136,167 44,948 1,615	141,153 59,185 16,723	412,433 142,045 37,138		426,753 177,419 49,797
182,730	217,061	591,616		653,969

(1) Including the effect of exchange rate conversion.

(ii) Lease liabilities

28 (Continued) September 30, 2020 Future minimum lease payments Interests Present value of minimum lease payments (in thousands) Less than one year $ 761,506 185,706 575,800 Between one and five years 2,783,324 641,661 2,141,663 More than five years 9,001,929 1,255,835 7,746,094 $ 12,546,759 2,083,202 10,463,557 Lease liabilities－current $ 575,800 Lease liabilities－noncurrent $ 9,887,757	September 30, 2020	September 30, 2020	September 30, 2020
		Interests (in thousands) 185,706 641,661 1,255,835 2,083,202 $ $	Present value of minimum lease payments
			(Continued) 575,800 2,141,663 7,746,094 10,463,557 575,800 9,887,757

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2019 Future minimum lease payments Interests Present value of minimum lease payments (in thousands) Less than one year $ 879,518 197,151 682,367 Between one and five years 2,874,682 678,576 2,196,106 More than five years 9,588,087 1,375,483 8,212,604 $ 13,342,287 2,251,210 11,091,077 Lease liabilities－current $ 682,367 Lease liabilities－noncurrent $ 10,408,710 September 30, 2019 Future minimum lease payments Interests Present value of minimum lease payments (in thousands) Less than one year $ 891,976 200,351 691,625 Between one and five years 2,902,177 686,979 2,215,198 More than five years 9,735,296 1,412,814 8,322,482 $ 13,529,449 2,300,144 11,229,305 Lease liabilities－current $ 691,625 Lease liabilities－noncurrent $ 10,537,680	December 31, 2019	December 31, 2019	December 31, 2019
			Present value of minimum lease payments
		Interests (in thousands) 200,351 686,979 1,412,814 2,300,144 $ $	Present value of minimum lease payments
			691,625 2,215,198 8,322,482 11,229,305 691,625 10,537,680

(iii) Significant lease agreements

AUO has entered into various land lease agreements with Hsinchu Science Park Bureau, Central Science Park Administration Bureau and Southern Taiwan Science Park Bureau, respectively, for the construction of plant for operations. All lease amounts are adjusted in accordance with the land value announced by the government from time to time. In January 2019, AUO modified one of its lease contracts due to the decrease of the scope of the lease, and therefore, the carrying amount of the right-of-use asset was reduced by $1,063,998 thousand. The difference between the remeasurement of the lease liability and the reduction of the right-of-use asset was recognized in profit or loss.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(iv) Sublease of right-of-use assets

The Company subleased part of its right-of-use assets under operating leases. For the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019, the income from sublease were $1,243 thousand, $1,797 thousand, $4,932 thousand and $6,827 thousand, respectively. Right-of-use assets that meet the definition of investment properties are reclassified to investment properties. Refer to Note 6(11) of the consolidated financial statements for the year ended December 31, 2019 for further information on investment properties.

(v) Additional lease information

The Company applies the recognition exemption to account for short-term leases and leases of low-value assets, primarily for some leases of office buildings and other sporadic leasing. The amounts recognized in profit or loss during the lease term were as follows:

Expenses relating to short-term leases $ Expenses relating to leases of low-value assets, excluding short-term leases of low- value assets $ Variable lease payments not included in the measurement of the lease liability $ COVID-19-related rent concessions (recognized as deduction of rent expense) $	Three Months Ended September 30, Nine Months Ended September 30, 2020(2) 2019 2020 2019 (in thousands) 2,496 3,243 7,045 12,816 (33 ) 9 397 36 145 (1 ) 426 (8 ) 34,347 - 34,347 -	Three Months Ended September 30, Nine Months Ended September 30, 2020(2) 2019 2020 2019 (in thousands) 2,496 3,243 7,045 12,816 (33 ) 9 397 36 145 (1 ) 426 (8 ) 34,347 - 34,347 -
	2020(2) 2,496 (33 ) 145 34,347
		12,816 36 (8 ) -

(2) Including the effect of exchange rate conversion.

Total cash outflow for the Company’s leases in which it acts as a lessee for the nine months ended September 30, 2020 and 2019 were $593,642 thousand and $690,405 thousand, respectively.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

b. Lessor

There was no significant addition in the Company’s operating lease contracts for the nine months ended September 30, 2020 and 2019. Refer to Note 6(10) of the consolidated financial statements for the year ended December 31, 2019 for the relevant information.

(10) Investment Property

September 30, 2020 Land $ 728,781 Buildings 759,829 Right-of-use assets 25,279 $ 1,513,889	December 31, 2019 (in thousands) 729,639 798,671 26,820 1,555,130	September 30, 2019 739,645 - - 739,645

There was no significant change in the Company’s investment property for the nine months ended September 30, 2020 and 2019. For other relevant information, refer to Note 6(11) of the consolidated financial statements for the year ended December 31, 2019.

The fair value of the Company’s investment property was not materially different from those disclosed in Note 6(11) of the consolidated financial statements for the year ended December 31, 2019.

As at September 30, 2020, December 31, 2019 and September 30, 2019, there was no investment property that was pledged as collateral.

(11) Intangible Assets

September 30, 2020 Goodwill $ 12,019,963 Patent and technology fee 714,797 Others 118,810 $ 12,853,570	December 31, 2019 (in thousands) 11,880,919 927,407 - 12,808,326	September 30, 2019 11,880,919 1,036,078 110,320 13,027,317

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Company acquired goodwill and other intangible assets from the acquisition of business in February 2020. See Note 6(7) for further details. Except for the aforementioned transaction, there was no significant change in the Company’s intangible assets for the nine months ended September 30, 2020 and 2019. Information on amortization for the periods presented is disclosed in Note 6(21). For other relevant information, refer to Note 6(12) of the consolidated financial statements for the year ended December 31, 2019.

(12) Other Current Assets and Other Noncurrent Assets

September 30, 2020 Refundable and overpaid tax $ 1,323,869 Refundable deposits 505,024 Prepayments for equipment 431,194 Prepayments for purchases 107,898 Long-term receivables 1,749 Others 3,199,489 5,569,223 Less: current (3,701,238 ) Noncurrent $ 1,867,985	December 31, 2019 (in thousands) 1,458,170 663,911 453,300 158,521 5,812 2,961,194 5,700,908 (3,295,562 ) 2,405,346	September 30, 2019
		1,710,062 720,280 444,368 265,799 5,987 3,684,003
		6,830,499 (4,191,271 )
		2,639,228

(13) Short-term Borrowings

Unsecured borrowings $ Unused credit facilities $ Interest rate range	September 30, 2020 100,000 35,496,580 1.14%~ 1.35%	December 31, 2019 (in thousands) 1,725,602 37,982,721 1.20%~ 4.35%	September 30, 2019
			1,236,568
			36,872,621
			1.37%~ 4.35%

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(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 Bank of Taiwan and others Bank of China and others Unsecured loans Secured loans Less: transaction costs Less: current portion Unused credit facilities Interest rate range	Durations From Feb. 2019 to Feb. 2024 $ From Mar. 2019 to Apr. 2023 From May 2017 to May 2022 From Jul. 2018 to Oct. 2019 From Nov. 2015 to Nov. 2023 From Apr. 2017 to Aug. 2023 From Apr. 2017 to Apr. 2032 $ $	September 30, 2020 42,000,000 23,000,000 8,000,000 - 18,482,404 10,680,924 17,459,292 119,622,620 (330,236 ) 119,292,384 (13,138,037 ) 106,154,347 54,165,575 0.75%~ 5.15%	December 31, 2019 (in thousands) 42,000,000 23,000,000 10,000,000 - 21,500,826 8,050,310 7,671,932 112,223,068 (254,676 ) 111,968,392 (9,535,198 ) 102,433,194 32,265,575 1.00%~ 5.43%	September 30, 2019 42,000,000 23,000,000 10,000,000 410,000 24,493,953 5,256,772 1,503,119 106,663,844 (272,573 ) 106,391,271 (8,013,092 ) 98,378,179 25,665,575 1.08%~ 5.66%

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 TIFRSs, such as current ratio, leverage ratio, interest coverage ratio, tangible net worth and others as specified in the loan agreements. As of September 30, 2020, December 31, 2019 and September 30, 2019, the Company complied with all financial covenants required under each of the loan agreements.

Refer to Note 8 for assets pledged as collateral to secure the aforementioned long-term borrowings. For other relevant information, refer to Note 6(15) of the consolidated financial statements for the year ended December 31, 2019.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(15) Provisions

Warranties(i) Balance at January 1, 2020 $ 1,292,246 Additions (Reversals) 242,710 Usage (221,444) Effect of change in exchange rate 25 Balance at September 30, 2020 1,313,537 Less: current (535,576 ) Noncurrent $ 777,961 Balance at January 1, 2019 $ 1,463,869 Additions (Reversals) 137,067 Usage (354,119) Effect of change in exchange rate (158 ) Balance at September 30, 2019 1,246,659 Less: current (439,104 ) Noncurrent $ 807,555 Current $ 486,517 Noncurrent 805,729 Balance at December 31, 2019 $ 1,292,246	Litigation, claims and others (in thousands) 469,312 - (32,226) (13,503 ) 423,583 (184,106 ) 239,477 1,074,180 (391,633) (86,525) (723 ) 595,299 (340,287 ) 255,012 221,751 247,561 469,312	Total
		1,761,558 242,710 (253,670) (13,478 ) 1,737,120 (719,682 ) 1,017,438 2,538,049 (254,566) (440,644) (881 ) 1,841,958 (779,391 ) 1,062,567 708,268 1,053,290 1,761,558

(i) The provisions for warranties 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.

(16) Employee Benefits

a. Defined benefit plans

Subsequent to December 31, 2019, there was no significant market volatility, significant curtailment, reimbursement and settlement or other significant one-time events. Therefore, the pension cost in the consolidated interim financial statements was measured and disclosed by the Company according to the pension cost valued by actuary as of December 31, 2019 and 2018.

For the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019, the Company set aside $2,178 thousand, $3,576 thousand, $6,532 thousand and $10,683 thousand, respectively, of the pension costs under the defined benefit plans.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

b. Defined contribution plans

AUO and its subsidiaries in the ROC have set up defined contribution plans in accordance with the ROC Labor Pension Act. For the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019, these companies set aside $234,746 thousand, $242,457 thousand, $702,953 thousand and $738,963 thousand, respectively, of the pension costs under the pension plan to the ROC Bureau of Labor Insurance. Except for the aforementioned companies, other foreign subsidiaries recognized pension expenses of $127,042 thousand, $183,943 thousand, $397,578 thousand and $612,273 thousand for the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019, respectively, for the defined contribution plans based on their respective local government regulations.

(17) Capital and Other Components of Equity

a. Common stock

AUO’s authorized common stock, with par value of $10 per share, all amounted to $100,000,000 thousand as at September 30, 2020, December 31, 2019 and September 30, 2019.

AUO’s issued common stock, with par value of $10 per share, all amounted to $96,242,451 thousand as at September 30, 2020, December 31, 2019 and September 30, 2019.

On September 9, 2019, AUO’s Board of Directors approved the delisting of ADSs from the NYSE and trading on the OTC market. On and from October 1, 2019, AUO’s ADSs has begun trading on the OTC market. As of September 30, 2020, AUO has issued 33,415 thousand ADSs, which represented 334,148 thousand shares of its common stock.

b. Capital surplus

The components of capital surplus were as follows:

September 30, 2020 From common stock $ 52,756,091 From convertible bonds 6,049,862 From others 1,770,867 $ 60,576,820	December 31, 2019 (in thousands) 52,756,091 6,049,862 1,738,521 60,544,474	September 30, 2019 52,756,091 6,049,862 1,657,164 60,463,117

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

According to the ROC Company Act, capital surplus, including premium from stock issuing and donations received, may be used to offset a deficit. When a company has no deficit, such capital surplus may 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.

c. Retained earnings and dividend policy

In accordance with AUO’s Articles of Incorporation, after payment of income taxes and offsetting accumulated deficits, the legal reserve shall be set aside until the accumulated legal reserve equals AUO’s paid-in capital. In addition, a special reserve in accordance with applicable laws and regulations shall also be set aside or reversed. The remaining current-year earnings together with accumulated undistributed earnings from preceding years can be distributed according to relevant laws and AUO’s Articles of Incorporation.

Legal reserve may be used to offset a deficit. When the Company incurs no loss, it may distribute its legal reserve by issuing new shares or by cash in accordance with the proportion of shareholdings for the portion in excess of 25% of the paid-in capital.

AUO’s dividend policy is to pay dividends from surplus considering factors such as AUO’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 AUO’s long-term financial plan. If the current-year retained earnings available for distribution reach 2% of the paid-in capital of AUO, 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 AUO, AUO 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 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)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

AUO’s appropriations of earnings for 2018 had been approved in the shareholders’ meeting held on June 14, 2019. The appropriations and dividends per share were as follows:

Legal reserve $ Special reserve Cash dividends to shareholders $	For fiscalyear 2018	For fiscalyear 2018
	Appropriation of earnings Dividends per share (in thousands, except for per share data) 1,016,060 847,770 4,812,122 NT$0.50 6,675,952	Dividends per share

The aforementioned appropriation of earnings for 2018 was consistent with the resolutions of the Board of Directors’ meeting held on March 22, 2019.

AUO’s annual shareholders’ meeting held on June 17, 2020 resolved to set aside a special reserve of NT$1,157,614 thousand and not to distribute dividends for 2019.

The aforementioned appropriation of earnings for 2019 was consistent with the resolutions of the Board of Directors’ meeting held on March 20, 2020.

Information on the approval of Board of Directors and shareholders for AUO’s appropriations of earnings are available at the Market Observation Post System website.

d. Treasury shares

Information on AUO’s treasury share transactions is as follows:

Nine Month Ended September 30,	Nine Month Ended September 30,	Nine Month Ended September 30,	2020
Reason for reacquisition Transferring to employees	Number of shares, Beginning of Period 125,000	Additions Reductions (in thousands of shares) - -		Number of shares, End of Period
				125,000

Pursuant to the Securities and Exchange Act, the number of shares repurchased shall not exceed 10 percent of the number of the Company’s issued and outstanding shares, and the total amount repurchased shall not exceed the sum of the Company’s retained earnings, share premium, and realized capital surplus. Also, the shares repurchased for transferring to employees shall be transferred within five years from the date of reacquisition and those shares not transferred within the five-year period are to be retired.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

In accordance with the Securities and Exchange Act, treasury shares held by AUO shall not be pledged, and do not hold any shareholder rights before their transfer.

e. Other components of equity

Balance at January 1, 2020 $ 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 Related tax Balance at September 30, 2020 $ Balance at January 1, 2019 $ Foreign operations – foreign currency translation differences Net change in fair value of financial assets at FVTOCI Equity-accounted investees – share of other comprehensive income Related tax Balance at September 30, 2019 $	Cumulative translation differences (3,129,982) (882,207) - (34,513) - 172,033 (3,874,669 ) (1,449,910) (1,192,758) - (15,165) 257,200 (2,400,633 )	Unrealized gains (losses) on financial assets at FVTOCI (in thousands) 1,124,598 - (967,052) (1,654) 73 - 155,965 602,140 - 500,794 459 - 1,103,393	Total (2,005,384) (882,207) (967,052) (36,167) 73 172,033 (3,718,704 ) (847,770) (1,192,758) 500,794 (14,706) 257,200 (1,297,240 )

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

f. Non-controlling interests, net of tax

Balance at beginning of the period $ Equity attributable to non-controlling interests: Loss for the period Adjustment of changes in ownership of investees Foreign currency translation differences, net of tax Effect of acquisition of non-controlling interests Proceeds from subsidiaries capital increase and others Balance at end of the period $	Nine Months Ended September 30, 2020 2019 (in thousands) 11,304,909 14,415,973 (911,454) (2,100,648) - 84,795 (90,235) (315,541) - (389,430) (1 ) (13,957 ) 10,303,219 11,681,192

(18) Share-based Payments

There was no significant change in the Company’s share-based payments for the nine months ended September 30, 2020 and 2019. Refer to Note 6(20) of the consolidated financial statements for the year ended December 31, 2019 for the related information.

(19) Revenue from Contracts with Customers

	Three Months Ended September 30,	Three Months Ended September 30,	Three Months Ended September 30,	Three Months Ended September 30,	Total segments 23,627,228 21,680,802 11,319,578 6,109,070 7,316,629
	2020	Total segments Display segment (in thousands) 25,649,030 23,348,589 23,775,211 20,538,382 10,892,390 11,319,578 5,064,330 5,942,933 7,849,036 6,134,967 73,229,997 67,284,449		2019
Display segment 25,554,834 22,603,179 10,892,390 4,965,406 6,943,837 70,959,646	Energy segment 94,196 1,172,032 - 98,924 905,199 2,270,351			Energy segment 278,639 1,142,420 - 166,137 1,181,662
			67,284,449	2,768,858	70,053,307

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

	Three Months Ended September 30,	Three Months Ended September 30,	Three Months Ended September 30,	Three Months Ended September 30,
	2020			2019
Display segment 22,325,691 21,746,137 11,967,545 14,920,273 - 70,959,646 8,725,120 62,234,526	Energy segment - - - - 2,270,351 2,270,351 - 2,270,351			Energy segment - - - - 2,768,858 2,768,858	Total segments
					20,525,886 19,547,813 9,972,410 17,238,340 2,768,858
					70,053,307
				- 2,768,858	9,512,135 60,541,172
70,959,646	2,270,351	73,229,997	67,284,449	2,768,858	70,053,307
				30,
	2020	Total segments Display segment (in thousands) 62,690,510 73,060,116 63,880,815 62,377,761 29,951,902 29,831,206 13,626,838 15,275,078 20,270,296 17,248,640 190,420,361 197,792,801 58,677,661 69,754,687 55,162,111 52,027,403 28,891,615 30,837,914 41,171,787 45,172,797 6,517,187 - 190,420,361 197,792,801		2019
Display segment 62,537,431 60,343,461 29,951,902 13,225,081 17,845,299 183,903,174 58,677,661 55,162,111 28,891,615 41,171,787 - 183,903,174	Energy segment 153,079 3,537,354 - 401,757 2,424,997 6,517,187 - - - - 6,517,187 6,517,187			Energy segment 782,937 3,436,884 - 897,015 3,913,848 9,030,684 - - - - 9,030,684 9,030,684	Total segments
					73,843,053 65,814,645 29,831,206 16,172,093 21,162,488
					206,823,485
					69,754,687 52,027,403 30,837,914 45,172,797 9,030,684
					206,823,485

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

	Nine	Months Ended September	Months Ended September	30,	Total segments 27,440,229 179,383,256
	2020	Total segments Display segment (in thousands) 24,717,383 27,440,229 165,702,978 170,352,572 190,420,361 197,792,801		2019
Display segment 24,717,383 159,185,791 183,903,174	Energy segment - 6,517,187			Energy segment - 9,030,684
	6,517,187	190,420,361	197,792,801	9,030,684	206,823,485

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

(20) Remuneration to Employees and Directors

According to AUO’s Articles of Incorporation, AUO 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.

AUO did not accrue remuneration to employees and directors due to the loss-making position for the nine months ended September 30, 2020 and 2019. 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 consolidated 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 2018 in the amounts of $1,215,696 thousand and $27,780 thousand, respectively, in cash for payment had been approved in the meeting of Board of Directors held on March 22, 2019. The aforementioned approved amounts are the same as the amounts charged against earnings of 2018.

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(21) Additional Information of Expenses by Nature

	Three Months Ended September 30,	Three Months Ended September 30,	Three Months Ended September 30,
	2020		2019
Recognized in cost of sales $ 5,362,662 340,619 276,415 768,324 7,463,847 56,834	Recognized in operating expenses	Total	Recognized in operating expenses
	2020		2019
Recognized in cost of sales $ 16,864,253 1,022,354 843,113 2,294,274 22,896,292 210,547	Recognized in operating expenses	Total	Recognized in operating expenses
	5,582,003 362,395 263,950 400,691 3,565,406 6,373		5,751,059 371,315 283,799 424,014 3,043,860 17,551

(22) Non-Operating Income and Expenses

a. Interest income

Interest income on bank deposits $ Interest income on government bonds with reverse repurchase agreements and others $	Three Months Ended September 30, Nine Months Ended September 30, 2020(i) 2019 2020 2019 (in thousands) 109,628 207,695 401,438 670,308 (61 ) 3,704 10,977 5,626 109,567 211,399 412,415 675,934	Nine Months Ended September 30,	Nine Months Ended September 30,
	2020(i) 109,628 (61 ) 109,567		2019
			670,308 5,626
			675,934

(i) Including the effect of exchange rate conversion.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

b. Other income

Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) 126,942 131,449 353,165 370,022 261,382 295,575 261,382 295,575 585,668 126,382 1,299,499 1,552,792 118,302 130,528 426,010 751,845 1,092,294 683,934 2,340,056 2,970,234	Nine Months Ended September 30,	Nine Months Ended September 30,
2020 126,942 261,382 585,668 118,302 1,092,294		2019
		370,022 295,575 1,552,792 751,845
	2,340,056	2,970,234

c. Other gains and losses

Foreign exchange losses, net $ Gains on valuation of financial instruments at FVTPL, net Gains on disposals of property, plant and equipment, net Others $	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) (189,111) (115,206) (369,271) (173,774 136,533 230,718 402,347 414,080 32,863 74,662 67,720 94,571 (10,924 ) 371,795 (28,846 ) 297,009 (30,639 ) 561,969 71,950 631,886	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) (189,111) (115,206) (369,271) (173,774 136,533 230,718 402,347 414,080 32,863 74,662 67,720 94,571 (10,924 ) 371,795 (28,846 ) 297,009 (30,639 ) 561,969 71,950 631,886
		2019 (173,774 414,080 94,571 297,009 631,886

d. Finance costs

Interest expense on bank loans $ Interest expense on lease liabilities Finance expense and other interest expense $	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) 628,657 702,238 1,986,311 2,035,472 48,191 52,487 135,624 157,685 40,009 45,939 124,944 282,975 716,857 800,664 2,246,879 2,476,132
	2020 628,657 48,191 40,009 716,857

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(23) Income Taxes

The Company cannot file a consolidated tax return under local regulations. Therefore, AUO and its subsidiaries calculate their income taxes liabilities individually on a stand-alone basis using the enacted tax rates in their respective tax jurisdictions.

Income tax expense is best estimated by multiplying pre-tax income of the interim period by a projected annual effective tax rate as forecasted by the management.

The components of income tax expense were as follows:

Current income tax expense: Current year $ Adjustment to prior years and others $	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) 82,559 30,668 410,540 594,061 (13,982 ) (10,302 ) (11,625 ) (38,814 ) 68,577 20,366 398,915 555,247
	2020 82,559 (13,982 ) 68,577

Income taxes expense (benefit) recognized directly in other comprehensive income were as follows:

Items that are or may be reclassified subsequently to profit or loss: Foreign operations – foreign currency translation differences $	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) 136,829 (406,453 ) (183,624 ) (296,321 )	Nine Months Ended September 30,	Nine Months Ended September 30,
	2020 136,829		2019
			(296,321 )

As of September 30, 2020, the tax authorities have completed the examination of income tax returns of AUO through 2018.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(24) Earnings (Loss) per Share

Three Months Ended	Nine Months Ended
September 30,	September 30,
2020 2019	2020 2019
(in thousands, except	for per share data)

Basic and diluted earnings (loss) per share Profit (loss) attributable to AUO’s shareholders $ Weighted-average number of common shares outstanding during the period Basic and diluted earnings (loss) per share (NT$) $	2,893,732 9,499,245 0.30	(3,987,092 ) 9,622,539 (0.41 )	(5,058,790 ) 9,499,245 (0.53 )	(10,357,238 )
				9,623,674
				(1.08 )

Since AUO incurred net loss for the nine months ended September 30, 2020 and 2019, there were no potential ordinary shares with dilutive effect for the periods.

(25) Cash Flow Information

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

Long-term borrowings (including current installments) Balance at January 1, 2020 $ 111,968,392 Cash flows 7,722,525 Non-cash changes: Addition (decrease) of leases - Changes in lease payments - Changes in exchange rate (452,375) Amortization on transaction costs 53,842 Balance at September 30, 2020 $ 119,292,384 Balance at January 1, 2019 $ 86,305,318 Cash flows 20,527,006 Non-cash changes: Addition (decrease) of leases - Changes in exchange rate (644,604) Amortization on transaction costs 203,551 Balance at September 30, 2019 $ 106,391,271	Short-term borrowings 1,725,602 (1,614,611) - - (10,991) - 100,000 546,472 697,428 - (7,332) - 1,236,568	Guarantee deposits Lease liabilities (in thousands) 785,456 11,091,077 (1,197) (450,150) - (101,991) - (34,347) 9,738 (41,032) - - 793,997 10,463,557 816,512 12,689,526 8,417 (519,876) - (921,279) (27,480) (19,066) - - 797,449 11,229,305	Total liabilities from financing activities
			125,570,527 5,656,567 (101,991) (34,347) (494,660) 53,842 130,649,938 100,357,828 20,712,975 (921,279) (698,482) 203,551 119,654,593

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(26) Financial Instruments

a. Fair value and carrying amount

The carrying amounts of the Company’s current non-derivative financial instruments, including financial assets 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), other current financial assets, and short-term borrowings.

Disclosures of fair value are not required for the financial instruments abovementioned and lease liabilities. Other than those, the carrying amount and fair value of other financial instruments of the Company as of September 30, 2020, December 31, 2019 and September 30, 2019 were as follows:

September 30, 2020 Carrying Amount Fair Value Financial assets: Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL $ 1,485,597 1,485,597 Financial assets at FVTOCI 6,597,877 6,597,877 Financial assets at amortized cost: Long-term receivables 1,749 1,749 Refundable deposits 505,024 505,024 Financial liabilities: Financial liabilities at FVTPL: Financial liabilities held for trading 39,726 39,726 Financial liabilities at amortized cost: Long-term borrowings (including current installments) 119,292,384 119,292,384 Guarantee deposits 793,997 793,997 Long-term payables 154,950 154,950	September 30, 2020	September 30, 2020	December 31, 2019	December 31, 2019	September 30, 2019	September 30, 2019
	Carrying Amount	Fair Value	Carrying Amount	Fair Value	Carrying Amount	Fair Value
		1,485,597 6,597,877 1,749 505,024 39,726 119,292,384 793,997 154,950			1,554,539 7,490,600 5,987 720,280 69,972 106,391,271 797,449 309,963	1,554,539 7,490,600 5,987 720,280 69,972 106,391,271 797,449 309,963

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.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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.

Fair value of structured investment product is measured based on the discounted future cash flows arising from principal consideration and probable gains estimate to be received.

Fair value of long-term receivable (payable) is determined by discounting the expected cash flows at a market interest rate.

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.

c. Fair value measurements recognized in the consolidated 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 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.
(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.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Level 1 September 30, 2020 Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL $ - Financial assets at FVTOCI 6,389,449 Financial assets at amortized cost: Long-term receivables - Financial liabilities at FVTPL: Financial liabilities held for trading - Financial liabilities at amortized cost: Long-term payables - December 31, 2019 Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL $ - Financial assets at FVTOCI 7,356,501 Financial assets at amortized cost: Long-term receivables - Financial liabilities at FVTPL: Financial liabilities held for trading - Financial liabilities at amortized cost: Long-term payables - September 30, 2019 Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL $ - Financial assets at FVTOCI 7,304,694 Financial assets at amortized cost: Long-term receivables - Financial liabilities at FVTPL: Financial liabilities held for trading - Financial liabilities at amortized cost: Long-term payables -	Level 2 Level 3 (in thousands) 1,485,597 - - 208,428 1,749 - 39,726 - 154,950 - 1,521,406 - - 188,670 5,812 - 18,859 - 309,960 - 1,554,539 - - 185,906 5,987 - 69,972 - 309,963 -	Total
		1,485,597 6,597,877 1,749 39,726 154,950 1,521,406 7,545,171 5,812 18,859 309,960 1,554,539 7,490,600 5,987 69,972 309,963

There were no transfers between Level 1 and 2 for the nine months ended September 30, 2020 and 2019.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

d. Reconciliation for fair value measurements categorized within Level 3

		Nine Months Ended	Nine Months Ended
		September 30,
		2020	2019
		(in thousands)
Financial assets at FVTOCI－equity instruments
without active market
Balance at beginning of the period	$	188,670	176,025
Purchases		20,000	10,714
Effect of exchange rate change		(242 )	(833 )
Balance at end of the period	$	208,428	185,906

e. Description of valuation processes and quantitative disclosures for fair value measurements categorized within Level 3

The Company’s management reviews the policy and procedures of fair value measurements at least once at the end of the annual reporting period, or more frequently as deemed necessary. When a fair value measurement involves one or more significant inputs that are unobservable, the Company monitors the valuation process discreetly and examines whether the inputs are used the most relevant market data available.

Item Financial assets at FVTOCI–equity instruments without active market	Valuation technique Market approach	Significant unobservable inputs � Price-Book ratio (0.92~2.65 at Sep. 30, 2020, 0.7~2.95 at Dec. 31, 2019 and 0.75~4.29 at Sep. 30, 2019)	Inter-relationship between significant unobservable inputs and fairvalue measurement
			� The higher the price- book ratio is, the higher the fair value is. � The higher the price- earnings ratio is, the hiher the fair value is

The higher the priceearnings ratio is, the higher the fair value is.
Price-Earnings ratio (12.21~24.76 at Sep. 30, 2020, 7.85~31.28 at Dec. 31, 2019 and 17.86~21.70 at Sep. 30, 2019)
The greater degree of lack of marketability is, the lower the fair value is.
Discount for lack of marketability (20%~36% at Sep. 30, 2020, 20%~28% at Dec. 31, 2019 and Sep. 30, 2019)

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(27) Financial Risk Management

Except as described below, both the goals and policies of the Company’s financial risk management and the Company’s exposure to credit risk, liquidity risk and market risk were not materially different from those disclosed in Note 6(31) of the consolidated financial statements for the year ended December 31, 2019.

Refer to Note 6(4) for the information about credit risk exposure for notes and accounts receivable.

a. Exposure of currency risk

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

September 30, 2020 December 31, 2019 September 30, Foreign currency amounts Exchange rate NTD Foreign currency amounts Exchange rate NTD Foreign currency amounts Exchange rate (in thousands) (in thousands) (in thousands) (in thousands) (in thousands) Financial assets Monetary items USD $ 2,119,342 29.1510 61,780,939 1,499,405 30.1350 45,184,570 1,735,324 31.0420 JPY 12,208,142 0.2759 3,368,226 22,122,120 0.2768 6,123,403 19,878,419 0.2873 EUR 26,458 34.2291 905,634 46,595 33.7422 1,572,218 48,409 33.8296 Non-monetary items USD 1,674 29.1510 48,799 1,726 30.1350 52,013 2,757 31.0420 RMB - - - - - - 19,653 4.3480 Financial liabilities Monetary items USD 1,546,586 29.1510 45,084,528 1,515,582 30.1350 45,672,064 1,595,053 31.0420 JPY 20,643,798 0.2759 5,695,624 22,187,729 0.2768 6,141,563 22,553,998 0.2873 EUR 150 34.2291 5,134 239 33.7422 8,064 585 33.8296	September 30, 2020	September 30, 2020	September 30, 2020	December 31, 2019	December 31, 2019	December 31, 2019	September 30,	September 30,	2019 NTD (in thousands) 53,867,928 5,711,070 1,637,657 85,583 85,451 49,513,635 6,479,764 19,790
	Foreign currency amounts	Exchange rate	NTD	Foreign currency amounts	Exchange rate	NTD	Foreign currency amounts	Exchange rate
								31.0420 0.2873 33.8296 31.0420 4.3480 31.0420 0.2873 33.8296

b. 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, loans and borrowings and trade payables that are denominated in foreign currency. Depreciation or appreciation of the NTD by 1% against the USD, EUR and JPY at September 30, 2020 and 2019, while all other variables were remained constant, would have increased or decreased the net profit before tax for the nine months ended September 30, 2020 and 2019 as follows:

1% of depreciation $ 1% of appreciation	Nine Months Ended September 30,	Nine Months Ended September 30,
	2020 2019 (in thousands) 152,695 52,035 (152,695) (52,035)	2019

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

c. Foreign exchange gain (loss) on monetary items

With varieties of functional currencies within the consolidated entities of 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 three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019 were $189,111 thousand, $115,206 thousand, $369,271 thousand and $173,774 thousand, respectively.

(28) Capital Management

The objectives, policies and procedures of the Company’s capital management have been applied consistently with those described in the consolidated financial statements for the year ended December 31, 2019. Also, there was no significant change in the Company’s capital management information as disclosed for the year ended December 31, 2019. Refer to Note 6(32) of the consolidated financial statements for the year ended December 31, 2019 for the relevant information.

7. Related-party Transactions

All inter-company transactions and balances between AUO and its subsidiaries have been eliminated upon consolidation, and therefore, are not disclosed in this note. The transactions between the Company and other related parties are set out as follows:

(1) Name and relationship of related parties

The following is a summary of related parties that have had transactions with the Company during the periods presented in the consolidated financial statements.

Name of relatedparty
Lextar Electronics Corporation (“Lextar”)
Lextar Electronics (Suzhou) Co., Ltd. (“LESZ”)
Lextar Electronics (Xiamen) Co., Ltd. (“LEXM”)
Lextar Electronics (Chuzhou) Corp. (“LEXCZ”)
Wellybond Corporation (“WBC”)
TRENDYLITE CORPORATION
(“TRENDYLITE”)
Raydium Semiconductor Corporation (“Raydium”)
Raydium Semiconductor (Kunshan) Co., Ltd.
(“RKS”)

Relationship with the Company

Associate
Subsidiary of Lextar
Subsidiary of Lextar
Subsidiary of Lextar
Subsidiary of Lextar
Subsidiary of Lextar
Associate
Subsidiary of Raydium

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Name of related party

Raydium Semiconductor (SAMOA) Corp. (“RSA”) Star River Energy Corp. (“SREC”) Sungen Power Corporation (“SGPC”) Evergen Power Corporation (“EGPC”) Star Shining Energy Corporation (“SSEC”) Fargen Power Corporation (“FGPC”) Sheng Li Energy Corporation (“SLEC”) ChampionGen Power Corporation (“CGPC”) TronGen Power Corporation (“TGPC”) Ri Ji Power Corporation (“RJPC”) Ri Jing Power Corporation (“RGPC”) Mao Zheng Energy Corporation (“MZEC”) Mao Xin Energy Corporation (“MXEC”) Sheng Feng Power Corporation (“SFPC”) WishMobile, Inc. (“WMI”) Daxin Materials Corp. (“Daxin”) Darwin Summit Corporation Ltd. (“DSC”) Ubitech Inc. (“Ubitech”) ADLINK Technology Inc. (“ADLINK”) ADLINK Technology (China) Co., Ltd. (“ADLINKCN”) BVCH Optronics (Sichuan) Corp. (“BVCH”) Evonik Forhouse Optical Polymers Corp. (“EFOP”) ToYou Display (Suzhou) Co., Ltd. (“TYSZ”) WiBASE Industrial Solutions Inc. (“WIS”)

Qisda Corporation (“Qisda”)

Qisda Vietnam Co., Ltd (“QVH”) BenQ Corporation (“BenQ”) BenQ Materials Corp. (“BMC”) Qisda (Suzhou) Co., Ltd. (“QCSZ”) Qisda Electronics (Suzhou) Co., Ltd. (“QCES”) Qisda Optronics (Suzhou) Co., Ltd. (“QCOS”)

Relationship with the Company

Subsidiary of Raydium Associate Subsidiary of SREC Subsidiary of SREC Associate Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Associate Associate Associate Associate Associate Subsidiary of ADLINK

Joint venture[(i)] Joint venture Joint venture DPTW represented as a director of WIS Corporate shareholder of AUO of which accounts for AUO using the equity method Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Name of related party

Qisda Precision Industry (Suzhou) Co., Ltd. (“QCPS”) Qisda Japan Co., Ltd. (“QJTO”) BenQ Europe B.V. (“BQE”) BenQ Asia Pacific Corp. (“BQP”) BenQ America Corporation (“BQA”) Mainteq Europe B.V. (“MQE”) BenQ Co., Ltd. (“BQC”)

BenQ Technology (Shanghai) Co., Ltd. (“BQls”) Guru Systems (Suzhou) Co., Ltd. (“GSS”) BenQ GURU Corp. (“GST”) BenQ Material (Suzhou) Co., Ltd. (“BMS”) Suzhou BenQ Hospital Co., Ltd. (“QCHS”) DFI Inc. (“DFI”) Data Image Corporation (“DIC”) Data Image (Suzhou) Corporation (“DICSZ”) Sysage Technology Co., Ltd. (“Sysage”) BenQ Medical Technology Corp. (“BMTC”) ACE Pillar Co., Ltd. (“ACE”) Tianjin ACE Pillar Co., Ltd. (“ACETJ”) BenQ Foundation AUO 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 Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda 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 Substantive related party

(i) BVCH had been liquidated in December 2019.

(2) Compensation to key management personnel

Key management personnel’s compensation comprised:

Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) 28,248 30,112 87,380 89,650 556 688 1,766 2,066 28,804 30,800 89,146 91,716	Nine Months Ended September 30,	Nine Months Ended September 30,
2020 28,248 556 28,804		2019
		89,650 2066
	89,146	, 91,716

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(3) Except for otherwise disclosed in other notes to the consolidated financial statements, the Company’s significant related party transactions and balances were as follows:
a. Sales

Sales	Sales	Sales	Sales
Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) 79,025 246,158 432,411 855,961 5,843 - 7,428 - 3,157,847 2,657,398 7,872,521 8,120,155 3,242,715 2,903,556 8,312,360 8,976,116 Accounts receivable from relatedparties September 30, 2020 December 31, 2019 September 30, 2019 (in thousands) $ 300,885 280,009 144,620 1,986,277 1,498,490 1,775,062 $ 2,287,162 1,778,499 1,919,682		Nine Months Ended September 30,
		2020	2019
			855,961 - 8,120,155
		8,312,360	8,976,116
	December 31, 2019 September 30, 2019 (in thousands) 280,009 144,620 1,498,490 1,775,062 1,778,499 1,919,682		September 30, 2019
			1,919,682

The collection terms for sales to related parties were 25 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

Purchases	Purchases	Purchases
Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) 2,101,267 2,242,275 5,963,291 6,697,466 273,260 294,655 649,777 844,554 4,293,296 4,252,074 12,065,530 12,876,493 6,667,823 6,789,004 18,678,598 20,418,513	Nine Months Ended September 30,
2020 2,101,267 273,260 4,293,296 6,667,823	2020	2019
		6,697,466 844,554 12,876,493
	18,678,598	20,418,513

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Accounts payable to relatedparties September 30, 2020 December 31, 2019 September 30, 2019 (in thousands) Associates $ 2,864,716 2,825,292 3,109,760 Joint ventures 20,808 72,942 - Others 4,071,729 4,052,594 4,065,408 $ 6,957,253 6,950,828 7,175,168	Accounts payable relatedparties	Accounts payable relatedparties	to
		December 31, 2019 September 30, 2019 (in thousands) 2,825,292 3,109,760 72,942 - 4,052,594 4,065,408 6,950,828 7,175,168	September 30, 2019
			7,175,168

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

Acquisitionprices	Acquisitionprices	Acquisitionprices
Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) 4,361 6,346 8,761 6,555 1,397 7,978 11,400 14,879 5,758 14,324 20,161 21,434	Nine Months Ended September 30,
2020 4,361 1,397 5,758		2019
		6,555 14,879 21,434

d. Disposal of property, plant and equipment and others

Proceeds from disposal	Proceeds from disposal	Proceeds from disposal
Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) 76 - 34,927 - 4,061 - 4,061 - 4,137 - 38,988 -	Nine Months Ended September 30,
2020 76 4,061 4,137		2019
		- - -

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Others: QCES $ Others $	Gains on disposal	Gains on disposal	Gains on disposal
	Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) 76 - 29,381 - 3,180 - 3,180 - 3,256 - 32,561 -	Nine Months Ended September 30,
	2020 76 3,180 3,256	2020	2019 - - -

e. Other related party transactions

Transaction type Other receivables due from related parties Other payables due to related parties, including payables for equipment	Type of relatedparty September 30, 2020 December 31, 2019 (in thousands) Associates $ 594 2,727 Joint ventures 5,542 - Others 43,248 1,229 $ 49,384 3,956 Associates $ 20,269 13,980 Others 40,342 35,991 $ 60,611 49,971	September 30, 2019
		225,123 - 20,432
		245,555
		10,681 28,174
		38,855

Transaction type	Type of relatedparty Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) Associates $ 12,773 12,879 35,570 38,959 Joint ventures 1,653 1,653 4,959 4,959 Others: BMC 23,691 20,705 71,108 62,601 Others 5,883 15,721 8,978 23,174 $ 44,000 50,958 120,615 129,693	Nine Months Ended September 30,	Nine Months Ended September 30,
			2019
Rental income			38,959 4,959 62,601 23,174
			129,693

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Transaction type	Type of relatedparty Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 (in thousands) Associates $ 4,660 4,254 19,954 15,836 Joint ventures - 26 - 223 Others 4,982 4,710 6,899 6,632 $ 9,642 8,990 26,853 22,691 Associates $ 22,809 3,927 62,229 8,894 Joint ventures - - - 37 Others 13,215 15,613 49,201 39,087 $ 36,024 19,540 111,430 48,018	Nine Months Ended September 30,	Nine Months Ended September 30,
			2019
Administration and other income Other expenses			15,836 223 6,632
			22,691
			8,894 37 39,087
			48,018

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 nine months ended September 30, 2020 and 2019, the Company entitled for cash dividends declared by related parties of $603,621 thousand and $566,865 thousand, respectively. As of September 30, 2020 and 2019, the aforementioned dividends were all received.

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 buildings Machinery and equipment	Pledged to secure Customs duties and guarantee for warranties $ Long-term borrowings limit Long-term borrowings limit $	September 30, 2020 30,913 48,592,169 49,231,542 97,854,624	December 31, 2019 (in thousands) 35,809 28,423,642 42,968,184 71,427,635	September 30, 2019
				35,971 18,158,409 39,514,238
				57,708,618

(i) Classified as other current financial assets and other noncurrent assets by its liquidity.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

9. Significant Contingent Liabilities and Unrecognized Commitments

The significant commitments and contingencies of the Company as of September 30, 2020, in addition to those disclosed in other notes to the consolidated financial statements, were as follows:

(1) Outstanding letters of credit

As at September 30, 2020, the Company had the following outstanding letters of credit for the purpose of purchasing machinery and equipment and materials:

Currency USD JPY	September 30, 2020
	(in thousands) 2,032 5,370

(2) Technology licensing agreements

Starting in 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., Sanyo Electronic Co., Ltd., Seiko Epson Corporation and others. AUO believes that it is in compliance with the terms and conditions of the aforementioned agreements.

(3) Purchase commitments

a. Starting from 2006, DPTW has entered into a long-term materials supply agreement with Evonik Forhouse Optical Polymers Corp. (“EFOP”), a joint venture of the Company. Under the agreement, DPTW and EFOP agreed on the supply of certain optical-grade molding compounds at agreed prices and quantities.
b. As at September 30, 2020, significant outstanding purchase commitments for construction in progress, property, plant and equipment totaled $5,633,135 thousand.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(4) Litigation

a. Antitrust civil actions lawsuits in the United States and other jurisdictions

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. In April 2019, the Central District Court of Israel in Lod approved the settlement. In May 2014, LG Electronics Nanjing Display Co., Ltd. and seven of its affiliates filed a lawsuit in Seoul Central District Court against certain LCD manufacturers including AUO, alleging overcharge and claiming damages. AUO does not believe service has been properly made, but in order to protect its rights, AUO has retained counsel to handle the related matter, and at this stage, the final outcome of these matters is uncertain. AUO has been reviewing the merits of this lawsuit on an on-going basis.

In September 2018, AUUS received a complaint filed 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.

b. Alleged patent infringements

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. On September 27, 2019, the relevant parties reached a settlement agreement, and all pending lawsuits that have been filed by VPV against AUO were dismissed on October 10, 2019.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

As of October 28, 2020, 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

(1) Seasonality of operations

The Company’s operations are not materially influenced by seasonality or cyclicality.

(2) 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 “Project”). The Environmental Protection Administration (“EPA”) of the Executive Yuan of Taiwan issued the environmental assessment and development approval in 2010. On October 24, 2019, the Appeal Review Committee of the Executive Yuan rejected the administrative appeal filed by five local residents. On December 24, 2019, the residents have proceeded to file an administrative action for invalidating the environmental assessment again. 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)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

13. Additional Disclosures

(1) Information on significant transactions:

Following are the additional disclosures required by the Regulations for the Company for the nine months ended September 30, 2020.

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: None.
g. Purchases from or sales to related parties with amounts exceeding NT$100 million or 20% of the paid-in capital: Please see Table 5 attached.
h. Receivables from related parties with amounts exceeding NT$100 million or 20% of the paid-in capital: Please see Table 6 attached.
i. Information about trading in derivative instruments: Please see Note 6(2).
j. Business relationship and significant intercompany transactions: Please see Table 7 attached.
(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 9.2 attached.
b. Upper limit on investment in Mainland China: Please see Table 9.1 and 9.2 attached.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

c. Significant transactions:

Significant direct or indirect transactions with the investees in Mainland China for the nine months ended September 30, 2020, for which intercompany transactions were eliminated upon consolidation, are disclosed in Note 13(1) “Information on significant transactions”.

(4) Information on major shareholders:

Major Shareholder	Shares	Shares
	Total Shares Owned	Ownership Percentage
Qisda	663,598,620	6.89%

14. Segment Information

Operating segment information

The Company has two operating segments: display and energy. The display segment generally is engaged in the research, development, design, manufacturing and sale of flat panel displays and most of our products are TFT-LCD panels. The energy segment primarily is engaged in the design, manufacturing and sale of ingots, solar wafers and solar modules, as well as providing technical engineering services and maintenance services for solar system projects.

Segment results are excluding non-operating income and expenses and income tax expense (benefit). There are no differences between the consolidated financial statements for the nine months ended September 30, 2020 and 2019 with the financial results received by the Company’s chief operating decision maker. The accounting policies for the operating segments are the same as those used in preparation of the consolidated financial statements of the Company. The Company uses the net revenue, profit (loss) from operations and segment profit (loss) excluding depreciation and amortization as the basis of segment performance assessment.

Three Months Ended September 30, 2020	Three Months Ended September 30, 2020	Three Months Ended September 30, 2020
Display segment 70,959,646 2,524,285 11,128,164	Energy segment (in thousands) 2,270,351 128,103 $ 270,066 $	Total segments
		73,229,997
		2,652,388 426,513
		3,078,901
		11,398,230
		394,043,508

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Three Months	Ended September 30, 2019 Energy segment Total segments (in thousands) 2,768,858 70,053,307 (259,248 ) (5,437,059) 720,472 $ (4,716,587 ) (11,630 ) 3,508,669 $ 407,290,767 Ended September 30, 2020	Ended September 30, 2019 Energy segment Total segments (in thousands) 2,768,858 70,053,307 (259,248 ) (5,437,059) 720,472 $ (4,716,587 ) (11,630 ) 3,508,669 $ 407,290,767 Ended September 30, 2020
Display segment 67,284,449 (5,177,811 ) 3,520,299 Nine Months
Display segment Energy segment Total segments (in thousands) 183,903,174 6,517,187 190,420,361 (6,213,510 ) 15,248 (6,198,262) 626,933 $ (5,571,329 ) 20,030,754 449,602 20,480,356 $ 394,043,508 Nine Months Ended September 30, 2019 Display segment Energy segment Total segments (in thousands) 197,792,801 9,030,684 206,823,485 (13,221,483 ) (736,016 ) (13,957,499) 2,054,860 $ (11,902,639 ) 13,165,913 33,284 13,199,197 $ 407,290,767		Total segments
Display segment 197,792,801 (13,221,483 ) 13,165,913	Energy segment (in thousands) 9,030,684 (736,016 ) $ 33,284 $

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Financings Provided

For the nine months ended September 30, 2020

(Amount in thousands of New Taiwan Dollars)

Table 1

No.	Financing Company	Borrowing Company	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 3)	Ending Balance (Notes 1 and 2)	Amount Actually Drawn Down (Notes 1 and 4)	Interest Rate	Nature of Financing	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Notes 1 and 5)	Limits on Financing Company’s Total Financing Amount (Notes 1 and 5)
													Item	Value
0	AUO	ACTW	Other	Yes	2,500,000	2,500,000	1,400,000	Markup rate on	Needs for	-	Operating	-	-	-	16,993,196	67,972,785
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
0	AUO	SMI	Other	Yes	30,000	30,000	-	Markup rate on	Needs for	-	Operating	-	-	-	16,993,196	67,972,785
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
0	AUO	AUKS	Other	Yes	1,300,920	-	-	Markup rate on	Needs for	-	Operating	-	-	-	16,993,196	67,972,785
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
1	AULB	AUKS	Other	Yes	10,624,180	8,553,600	7,270,560	Markup rate on	Needs for	-	Operating	-	-	-	21,645,700	21,645,700
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
2	AUXM	AUKS	Other	Yes	5,081,280	3,849,120	2,779,920	Markup rate on	Needs for	-	Operating	-	-	-	5,574,762	5,574,762
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
3	BVXM	AUKS	Other	Yes	433,640	427,680	427,680	Markup rate on	Needs for	-	Operating	-	-	-	509,840	509,840
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties

(Continued)

No.	Financing Company	Borrowing Company	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 3)	Ending Balance (Notes 1 and 2)	Amount Actually Drawn Down (Notes 1 and 4)	Interest Rate	Nature of Financing	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Notes 1 and 5)	Limits on Financing Company’s Total Financing Amount (Notes 1 and 5)
													Item	Value
4	AUSJ	A-Care	Other	Yes	86,552	42,768	-	Markup rate on	Needs for	-	Operating	-	-	-	3,846,166	3,846,166
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
4	AUSJ	UFSD	Other	Yes	216,380	213,840	-	Markup rate on	Needs for	-	Operating	-	-	-	3,846,166	3,846,166
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
4	AUSJ	AUKS	Other	Yes	1,397,352	769,824	427,680	Markup rate on	Needs for	-	Operating	-	-	-	1,538,466	1,538,466
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
4	AUSJ	UFSZ	Other	Yes	173,104	85,536	19,246	Markup rate on	Needs for	-	Operating	-	-	-	3,846,166	3,846,166
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
5	AUSZ	AUKS	Other	Yes	5,605,340	4,062,960	1,924,560	Markup rate on	Needs for	-	Operating	-	-	-	6,296,106	6,296,106
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
6	BVHF	AUKS	Other	Yes	301,826	299,376	-	Markup rate on	Needs for	-	Operating	-	-	-	318,021	318,021
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
7	DPSZ	AUKS	Other	Yes	433,640	427,680	427,680	Adjusted by	Needs for	-	Operating	-	-	-	522,140	522,140
			receivables					base lending	short-term		capital
			from related					rate of People’s	financing
			parties					Bank of China
8	DPTW	DPSK	Other	Yes	52,863	51,344	-	Adjusted by	Needs for	-	Operating	-	-	-	2,493,325	3,989,320
			receivables					average rate of	short-term		capital
			from related					short-term loans	financing
			parties
9	FTKS	AUKS	Other	Yes	433,640	-	-	Adjusted by	Needs for	-	Operating	-	-	-	544,052	544,052
			receivables					base lending	short-term		capital
			from related					rate of People’s	financing
			parties					Bank of China

(Continued)

No.	Financing Company	Borrowing Company	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 3)	Ending Balance (Notes 1 and 2)	Amount Actually Drawn Down (Notes 1 and 4)	Interest Rate	Nature of Financing	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Notes 1 and 5)	Limits on Financing Company’s Total Financing Amount (Notes 1 and 5)
													Item	Value
10	FTWJ	FHWJ	Other	Yes	65,046	64,152	64,152	Adjusted by	Needs for	-	Operating	-	-	-	1,893,566	1,893,566
			receivables					base lending	short-term		capital
			from related					rate of People’s	financing
			parties					Bank of China

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 among 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 financial statement. The total amount for lending to a company shall not exceed 10% of AUO’s net worth as stated in its latest financial statement.
b. AULB, AUSZ, AUXM, AUSJ, BVXM and BVHF: The total amount available for lending purposes shall not exceed 40% of the net worth of the lending company as stated in its latest 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 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 a company shall not exceed the net worth of the lending company as stated in its latest financial statement.
d. DPTW: The total amount available for lending purposes shall not exceed 40% of DPTW’s net worth as stated in its latest financial statement. The total amount for lending to a company shall not exceed 25% of DPTW’s net worth as stated in its latest financial statement.
e. DPSZ, FTWJ 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.
f. 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 and the total amount lendable to each of such borrowers shall not exceed the net worth of the lending company.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Endorsements/Guarantees Provided

For the nine months ended September 30, 2020

(Amount in thousands of New Taiwan Dollars)

Table 2

No.	Endorser/ Guarantor	Guaranteed Party	Guaranteed Party	Limits on Endorsement/ Guarantee Amount Provided for Each Party (Notes 4 and 5)	Maximum Endorsement/ Guarantee Balance for the Period (Note 2)	Ending Balance (Notes 3 and 4)	Amount Actually Drawn Down (Note 4)	Amount of Endorsement/ Guarantee Collateralized by Properties	Ratio of Accumulated Endorsement/ Guarantee to Net Worth per Latest Financial Statements	Maximum Endorsement/ Guarantee Amount Allowable (Notes 4 and 5)	Endorsement/ Guarantee Provided by Parent Company to Subsidiary	Endorsement/ Guarantee Provided by Subsidiary to Parent Company	Endorsement/ Guarantee Provided to Subsidiaries in Mainland China
		Name	Nature of Relationship (Note 1)
0	AUO	AUKS	2	84,965,981	15,391,064	14,281,950	9,949,347	-	8.40%	169,931,962	Yes	No	Yes
1	AUXM	AUO	3	13,936,904	6,287,780	6,201,360	-	-	44.50%	13,936,904	No	Yes	No
2	AUSZ	AUO	3	15,740,266	4,423,128	4,362,336	-	-	27.71%	15,740,266	No	Yes	No
3	DPXM	DPTW	3	1,683,811	431,180	427,680	-	-	10.16%	1,683,811	No	No	No

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

A company with which it does business.
A company in which the Company directly and indirectly holds more than 50% of the voting shares.
A company that directly and indirectly holds more than 50% of the voting shares in the Company.
Companies in which the Company holds, directly or indirectly, 90% or more of the voting shares.
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.
A company that all capital contributing shareholders make endorsements/guarantees for their jointly invested company in proportion to their shareholding percentages.
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 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 financial statement.
b. AUSZ and AUXM: 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 financial statement.
c. DPXM ： The total endorsement/guarantee amount provided and the aggregate amount of endorsement/guarantee provided to each guaranteed party both shall not exceed 40% of DPXM’s net worth as stated in its latest financial statement.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

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

September 30, 2020

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

Table 3

Name of Holder	Type and Name of Marketable Securities	Relationship with the Securities Issuer	Financial Statement Account		Ending Balance	Ending Balance
				Shares	Carrying Amount	Percentage of Ownership	Fair Value
AUO	BenQ ESCO Corp.’s stock	Related party	Financial assets at FVTPL－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTPL－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTPL－current Financial assets at FVTPL－current Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTPL－noncurrent Financial assets at FVTPL－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent	1,700	- 6,201,764 - CNY 6,250 CNY 52,529 CNY 275,922 42,123	17.00% 17.04% 2.22% 1.96% - - 1.80% 4.74% 0.52% 4.00% 2.35% 10.87% 6.24% 12.11% 16.13% 19.89%	- 6,201,764 - CNY 6,250 CNY 52,529 CNY 275,922 42,123 - 187,685 7,345 - -
AUO	Qisda’s stock	Related party		335,231
AULB	Abakus Solar AG’s stock	-		3
AUSH	T-powertek Optronics Co., Ltd.’s	-		1,293
	stock
FPWJ	Structured deposit	-		-
FTKS	Structured deposit	-		-
Konly	PlayNitride Inc.’s stock	-		609
Konly	SnapBizz CloudTech Pte. Ltd.’s	-		13	-
	stock
Konly	Qisda’s stock	Related party		10,145	187,685
Konly	Azotek Co., Ltd.’s stock	-		2,407	7,345
Konly	ChenFeng Optronics			1,500	-
	Corporation’s stock
Konly	a2peak power Co., Ltd.’s stock	-		4,000	-
Konly	IRIS Optronics Co., Ltd.	-		1,000	20,000		20,000
DPTW	WiBASE Industrial Solutions	Related party		4,700	56,400		56,400
	Inc.’s stock
DPTW	Evertrust Technology Ltd.’s stock	-		150	1,500		1,500
DPTW	Disign Incorporated’s stock	-	Financial assets at FVTOCI－noncurrent	2	10,714		10,714

(Continued)

Name of Holder	Type and Name of Marketable Securities	Relationship with the Securities Issuer	Financial Statement Account		Ending Balance	Ending Balance
				Shares	Carrying Amount	Percentage of Ownership	Fair Value
DPTW	D8AI Holdings Corporation’s	-	Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent	7,000	8,649	4.59% 10.00% 0.49%	8,649 34,968 -
	stock
DPTW	HUAI I Precision Technology Co.,	-		2,914	34,968
	Ltd.’s stock
Ronly	Exploit Technology Co., Ltd.’s	-	Financial assets at FVTPL－noncurrent	41	-
	stock

(Continued)

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 nine months ended September 30, 2020

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

Table 4

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal	Disposal	Ending Balance	Ending Balance	Note
					Shares	Amount	Shares	Amount	Shares	Amount	Carrying Amount	Gain/Loss on Disposal	Shares	Amount
AUO	ADLINK’s	Investments in	- - - - - - -	- - - - - - -	- 39,974 11 635,709 - - -	- 576,111 USD 3,863 USD 18,491 CNY 70,488 CNY 100,642 CNY 171,493	42,310 - 2 21 - - -	2,411,693 305,963 USD 10,250 USD 10,250 - CNY 51,750 CNY 376,300	- - - - - - -	- - - - CNY 71,372 CNY 101,745 CNY 276,518	- - - - CNY 71,372 CNY 101,745 CNY 276,518	- - - - - - -	42,310 39,974 13 635,730 - - -	2,320,442 844,029 USD 14,388 USD 27,889 - CNY 52,529 CNY 275,922	1 2 2 2 3 3
	stock	equity-accounted
		investees
AUO	CQIL’s stock	Investments in
		equity-accounted
		investees
CQHLD	CQUS’s stock	Investments in
		equity-accounted
		investees
CQIL	CQHLD’s	Investments in
	stock	equity-accounted
		investees
DPSZ	Structured	Financial assets
	deposit	at FVTPL－
		current
FPWJ	Structured	Financial assets
	deposit	at FVTPL－
		current
FTKS	Structured	Financial assets
	deposit	at FVTPL－
		current

Note 1: a. The acquisition amount refers to the tender offer consideration for acquiring part of ADLINK’s shares. See Note 6(6) for the relevant information.

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

Note 2: The acquisition amount refers to the participation in the investees’ capital increase. The ending balance includes the recognition of investment gain (loss) and foreign currency translation differences under the equity method.

Note 3: The ending balance includes the gain/loss on valuation of the financial asset.

(Continued)

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 nine months ended September 30, 2020

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

Table 5

Company Name	Counterparty	Relationship	Transaction Details	Transaction Details	Transaction Details		Transactions with Terms Different from Others	Transactions with Terms Different from Others	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)
			Purchases /Sales	Amount (Note 2)	Percentage of Total Purchases /Sales	Credit Terms	Unit Price (Note 1)	Credit Terms (Note 1)	Ending Balance (Note 2)	Percentage of Total Notes /Accounts Receivable (Payable)
AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO	AUKS BMC Raydium Qisda AUST DPTW AUXM AUSZ Daxin RJPC QCSZ QCOS FGPC DPTW BenQ	Subsidiary of AUO Subsidiary of Qisda Associate Corporate shareholder of AUO of which accounts for AUO using the equity method Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Associate Subsidiary of SSEC Subsidiary of Qisda Subsidiary of Qisda Subsidiary of SSEC Subsidiary of AUO Subsidiary of Qisda	Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Sales Sales Sales Sales Sales Sales	14,393,967 2,877,433 651,930 6,107,868 3,558,014 2,660,483 16,828,605 26,060,723 1,738,802 (118,737) (5,107,481) (253,719) (102,152) (156,070) (2,128,043)	11% 2% - 5% 3% 2% 12% 19% 1% - (3)% - - - (1)%	EOM 30 days EOM 90 days EOM 120 days EOM 45 days EOM 45 days EOM 60 days EOM 45 days EOM 45 days EOM 120 days EOM 25 days EOM 55 days EOM 55 days EOM 25 days EOM 45 days EOM 55 days	- - - - - - - - - - - - - - -		(3,614,954) (1,062,616) (326,189) (1,546,643) (749,272) (732,495) (7,737,977) (11,537,023) (782,169) 8,833 1,090,116 55,793 - 9,844 709,011	(7)%
										(2)%
										(1)%
										(3)%

										(1)%
										(1)%
										(15)%
										(22)%
										(1)%
										-
										3%
										-
										-
										-
										2%
AUO	AUXM	Subsidiary of AUO	Sales	(512,240)	-	EOM 45 days	-		-	-

(Continued)

Company Name	Counterparty	Relationship	Transaction Details	Transaction Details	Transaction Details		Transactions with Terms Different from Others	Transactions with Terms Different from Others	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)
			Purchases /Sales	Amount (Note 2)	Percentage of Total Purchases /Sales	Credit Terms	Unit Price (Note 1)	Credit Terms (Note 1)	Ending Balance (Note 2)	Percentage of Total Notes /Accounts Receivable (Payable)
AUO AUO AUO AUO ACMK AUKS AUKS AUKS AUNL AUSH AUST AUSZ AUSZ AUSZ AUSZ AUSZ AUSZ AUSZ AUUS AUUS AUXM AUXM	AUUS AUSZ DICSZ AUNL ACTW AUSZ AUO AUO AUO AUO AUO AUO Qisda Raydium BMC DPTW AUO AUKS AUO AUO DPTW AUO	Subsidiary of AUO Subsidiary of AUO Subsidiary of Qisda Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Ultimate parent company Ultimate parent company Ultimate parent company Ultimate parent company Ultimate parent company Ultimate parent company Corporate shareholder of AUO of which accounts for AUO using the equity method Associate Subsidiary of Qisda Subsidiary of AUO Ultimate parent company Subsidiary of AUO Ultimate parent company Ultimate parent company Subsidiary of AUO Ultimate parent company	Sales Sales Sales Sales Purchases Purchases Purchases Sales Purchases Sales Sales Purchases Purchases Purchases Purchases Purchases Sales Sales Purchases Sales Purchases Purchases	(198,649) (1,115,694) (124,952) (1,170,945) USD 17,574 CNY 130,655 CNY 41,021 CNY (3,431,335) EUR 35,422 CNY (26,190) USD (119,335) CNY 287,076 CNY 389,219 CNY 448,766 CNY 190,524 CNY 161,554 CNY (6,185,636) CNY (130,629) USD 5,647 USD (4,190) CNY 142,897 CNY 82,255	- (1)% - (1)% 94% 6% 2% (100)% 100% (99)% (100)% 5% 7% 8% 4% 3% (94)% (2)% 100% (40)% 4% 2%	EOM 75 days EOM 45 days OA 45 days EOM 45 days OA 45 days EOM 60 days EOM 45 days EOM 30 days EOM 45 days End of quarter 25 days EOM 45 days EOM 45 days EOM 120 days EOM 120 days EOM 90 days EOM 120 days EOM 45 days EOM 60 days EOM 75 days EOM 30 days EOM 120 days EOM 45 days	- - - - - - - - - - - - - - - - - - - - - -		75,732 - 33,516 180,585 USD (3,046) CNY (44,016) CNY (14,845) CNY 846,877 EUR (5,255) - USD 25,703 - CNY (205,747) CNY (207,318) CNY (65,067) CNY (63,923) CNY 2,700,805 CNY 44,016 USD (2,587) - CNY (58,039) -	-
										-
										-
										-
										(93)%
										(5)%
										(2)%
										99%
										(100)%
										-

										100%
										-
										(8)%

										(8)%
										(3)%
										(3)%
										96%
										2%
										(100)%
										-
										(4)%
										-
AUXM	BMC	Subsidiary of Qisda	Purchases	CNY 120,314	3%	EOM 90 days	-		CNY (61,406)	(4)%

(Continued)

Company Name	Counterparty	Relationship	Transaction Details	Transaction Details	Transaction Details		Transactions with Terms Different from Others	Transactions with Terms Different from Others	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)
			Purchases /Sales	Amount (Note 2)	Percentage of Total Purchases /Sales	Credit Terms	Unit Price (Note 1)	Credit Terms (Note 1)	Ending Balance (Note 2)	Percentage of Total Notes /Accounts Receivable (Payable)
AUXM AUXM AUXM BVXM DPSZ DPXM DPXM DPXM FPWJ FTWJ FTWJ FTWJ M.Setek ACTW ACTW DPTW DPTW DPTW DPTW DPTW DPTW DPTW DPTW	Raydium BVXM AUO AUXM DPTW Lextar DPTW DPTW DPTW Lextar DPTW DPTW ACTW M.Setek ACMK EFOP FTWJ AUO DPXM DPSZ DPXM FPWJ AUXM	Associate Subsidiary of AUO Ultimate parent company Subsidiary of AUO Subsidiary of AUO Associate Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Associate Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Joint Venture Subsidiary of AUO Ultimate parent company Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO	Purchases Sales Sales Purchases Sales Purchases Purchases Sales Purchases Purchases Purchases Sales Sales Purchases Sales Purchases Purchases Purchases Purchases Purchases Sales Sales Sales	CNY 288,390 CNY (74,146) CNY (3,986,319) CNY 74,146 CNY (90,312) CNY 26,425 CNY 23,802 CNY (459,893) CNY 61,871 CNY 47,839 CNY 42,004 CNY (647,247) JPY (3,025,679) 840,231 (539,022) 649,777 2,750,936 155,467 1,952,823 382,862 (101,537) (261,140) (607,220)	8% (2)% (92)% 100% (70)% 3% 3% (46)% 90% 11% 10% (96)% 99% 48% (19)% 9% 38% 2% 27% 5% (1)% (3)% (8)%	EOM 120 days EOM 45 days EOM 45 days EOM 45 days EOM 90 days EOM 120 days EOM 60 days EOM 90 days EOM 60 days EOM 120 days EOM 60 days EOM 90 days EOM 45 days EOM 45 days OA 45 days Payment in advance EOM 90 days EOM 45 days EOM 90 days EOM 90 days EOM 60 days EOM 60 days EOM 120 days	- - - - - - - - - - - - - - - - - - -		CNY (153,274) - CNY 1,813,370 - CNY 44,584 CNY (12,715) CNY (1,900) CNY 200,787 CNY (30,817) CNY (23,430) CNY (284,166) CNY 650,733 JPY 1,040,539 (287,085) 88,800 (20,808) (1,190,944) (10,013) (670,670) (190,846) 19,457 131,913 248,441	(9)%
										-
										96%
										-
										77%
										(4)%
										(1)%
										49%
										(100)%
										(4)%
										(53)%
										98%
										100%
										(73)%
										17%
										(1)%

										(48)%
										-
										(27)%
										(8)%
										1%
										6%
										11%
DPTW	AUSZ	Subsidiary of AUO	Sales	(684,478)	(9)%	EOM 120 days	-		273,628	12%

(Continued)

Company Name	Counterparty	Relationship	Transaction Details	Transaction Details	Transaction Details		Transactions with Terms Different from Others	Transactions with Terms Different from Others	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)
			Purchases /Sales	Amount (Note 2)	Percentage of Total Purchases /Sales	Credit Terms	Unit Price (Note 1)	Credit Terms (Note 1)	Ending Balance (Note 2)	Percentage of Total Notes /Accounts Receivable (Payable)
DPTW DPTW	QCES AUO	Subsidiary of Qisda Ultimate parent company	Sales Sales	(136,219) (2,749,514)	(2)% (37)%	EOM 120 days EOM 60 days	- -		71,126 627,713	3%
										29%
DPTW	FTWJ	Subsidiary of AUO	Sales	(179,355)	(2)%	EOM 60 days	-		50,615	2%

Note 1: Transaction terms with related parties were similar to those with third parties, except for particular transactions with no similar transactions to compare with. For those transactions, transaction terms were determined in accordance with mutual agreements.

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Receivables from Related Parties with Amounts Exceeding NT$100 Million or 20% of the Paid-in Capital September 30, 2020

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

Table 6

					Overdue Receivables	Overdue Receivables	Amounts
Company			Ending Balance of	Turnover	Amount	Action Taken	Received in	Allowance
	Counterparty	Relationship	Receivables				Subsequent	for Bad
Name				Rate
			(Note 3)				Period	Debts
							(Note 1)
AUO	ACTW	Subsidiary of AUO	1,415,691	(Note 2)	-	-	-	-
AUO	QCSZ	Subsidiary of Qisda	1,090,116	6.74	-	-	-	-
AUO	AUNL	Subsidiary of AUO	180,585	9.86	-	-	-	-
AUO	SLEC	Subsidiary of SSEC	207,165	-	-	-	-	-
AUO	BenQ	Subsidiary of Qisda	709,011	5.12	-	-	-	-
AUKS	AUO	Ultimate parent company	CNY 846,877	6.79	CNY 7,845	Collected in subsequent period	CNY 448,509	-
AULB	AUKS	Subsidiary of AUO	USD 253,701	(Note 2)	-	-	-	-
AUSJ	AUKS	Subsidiary of AUO	CNY 101,487	(Note 2)	-	-	-	-
AUST	AUO	Ultimate parent company	USD 25,703	5.82	-	-	-	-
AUSZ	AUKS	Subsidiary of AUO	CNY 499,697	(Note 2)	CNY 9,129	Collected in subsequent period	CNY 10,514	-
AUSZ	AUO	Ultimate parent company	CNY 2,700,805	3.37	CNY 78,540	Collected in subsequent period	CNY 1,746,200	-
AUXM	AUKS	Subsidiary of AUO	CNY 662,527	(Note 2)	CNY 1,768	Will be collected in next period	-	-
AUXM	AUO	Ultimate parent company	CNY 1,813,370	2.89	CNY 20,458	Collected in subsequent period	CNY 1,118,699	-
BVXM	AUKS	Subsidiary of AUO	CNY 101,901	(Note 2)	-	-	-	-
DPSZ	AUKS	Subsidiary of AUO	CNY 103,715	(Note 2)	-	-	-	-
DPSZ	DPTW	Subsidiary of AUO	CNY 44,584	2.98	-	-	-	-
DPXM	DPTW	Subsidiary of AUO	CNY 200,787	2.10	-	-	-	-
FTWJ	DPTW	Subsidiary of AUO	CNY 650,733	1.43	-	-	-	-
M.Setek	ACTW	Subsidiary of AUO	JPY 1,040,539	5.65	JPY 321,931	Will be collected in next period	-	-

(Continued)

					Overdue Receivables	Overdue Receivables	Amounts
Company			Ending Balance of	Turnover	Amount	Action Taken	Received in	Allowance
	Counterparty	Relationship	Receivables				Subsequent	for Bad
Name				Rate
			(Note 3)				Period	Debts
							(Note 1)
ACTW	M.Setek	Subsidiary of AUO	235,471	0.01	-	-	-	-
DPTW	AUO	Ultimate parent company	627,713	4.98	23,177	Will be collected in next period	-	-
DPTW	FPWJ	Subsidiary of AUO	131,913	5.28	13,216	Will be collected in next period	-	-
DPTW	AUSZ	Subsidiary of AUO	273,628	3.24	-	-	-	-
DPTW	AUXM	Subsidiary of AUO	248,441	2.16	-	-	-	-
DPTW	FTWJ	Subsidiary of AUO	1,226,100	(Note 2)	2,436	Will be collected in next period	-	-

Note 1: Until the end of October 2020.

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Business Relationship and Significant Intercompany Transactions For the nine months ended September 30, 2020

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

Table 7

					Inter-company Transactions	Inter-company Transactions	Inter-company Transactions
N			Ntr f Rltinhi				Percentage of
	Company			Financial
		Cntrrt
o.	Name	ouepay	aue o eaosp	Statement	Amount	Trading Terms	Consolidated
							Net Revenue or
				Account			Total Assets

0	AUKS	AUO	Subsidiary to parent	Net revenue	CNY 3,431,335	The prices of inter-company sales are not comparable with	8%
						those of third parties. The credit term is EOM 30 days.
0	AUKS	AUO	Subsidiary to parent	Receivables from	CNY 846,877	-	1%
				related parties
1	AULB	AUKS	Subsidiary to subsidiary	Receivables from	USD 253,701	-	2%
				related parties
2	AUST	AUO	Subsidiary to parent	Net revenue	USD 119,335	The prices of inter-company sales are not comparable with	2%
						those of third parties. The credit term is EOM 45 days.
3	AUSZ	AUO	Subsidiary to parent	Net revenue	CNY 6,185,636	The prices of inter-company sales are not comparable with	14%
						those of third parties. The credit term is EOM 45 days.
3	AUSZ	AUO	Subsidiary to parent	Receivables from	CNY 2,700,805	-	3%
				related parties
3	AUSZ	AUKS	Subsidiary to subsidiary	Receivables from	CNY 499,697	-	1%
				related parties
4	AUXM	AUO	Subsidiary to parent	Net revenue	CNY 3,986,319	The prices of inter-company sales are not comparable with	9%
						those of third parties. The credit term is EOM 45 days.
4	AUXM	AUKS	Subsidiary to subsidiary	Receivables from	CNY 662,527	-	1%
				related parties
4	AUXM	AUO	Subsidiary to parent	Receivables from	CNY 1,813,370	-	2%
				related parties

(Continued)

					Inter-company Transactions	Inter-company Transactions	Inter-company Transactions
N			Ntr f Rltinhi				Percentage of
	Company			Financial
		Cntrrt
o.	Name	ouepay	aue o eaosp	Statement	Amount	Trading Terms	Consolidated
							Net Revenue or
				Account			Total Assets

5	DPXM	DPTW	Subsidiary to subsidiary	Net revenue	CNY 459,893	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 90 days.
6	FTWJ	DPTW	Subsidiary to subsidiary	Net revenue	CNY 647,247	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 90 days.
6	FTWJ	DPTW	Subsidiary to subsidiary	Receivables from	CNY 650,733	-	1%
				related parties
7	AUO	AUSZ	Parent to subsidiary	Net revenue	1,115,694	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 45 days.
7	AUO	AUNL	Parent to subsidiary	Net revenue	1,170,945	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 45 days.
8	DPTW	AUO	Subsidiary to parent	Net revenue	2,749,514	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 60 days.

Note 1: This table discloses the information on inter-company sales and receivables which are accounted for 1% or more of the consolidated net revenue or the consolidated total assets, respectively. The information of the corresponding inter-company purchases and payables is no more disclosed herein. Note 2: All inter-company transactions have been eliminated in the consolidated financial statements.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

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

For the nine months ended September 30, 2020

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

Table 8

				Original Investment Amount	Original Investment Amount	September 30, 2020	September 30, 2020	September 30, 2020		Investor’s Share
									Net Income
Investor	Investee	Location	Main Activities	September 30,	December 31,		Percentage of	Carrying Amount	(Loss) of	of Profit (Loss)	Note
Company	Company					Shares				of Investee
				2020	2019		Ownership	(Notes 1 and 2)	Investee	(Notes 1 and 2)
AUO	AULB	Malaysia	Holding and trading company	59,058,698	59,058,698	1,882,189	100.00%	54,114,251	1,705,929	1,705,929	Subsidiary
AUO	AUNL	Netherlands	Sales and sales support of TFT-LCD	24,275	24,275	50	100.00%	37,793	(516)	(516)	Subsidiary
			panels
AUO	Konly	Taiwan ROC	Venture capital investment	4,227,070	4,227,070	299,764	100.00%	5,245,057	57,438	57,438	Subsidiary
AUO	Ronly	Taiwan ROC	Venture capital investment	2,078,682	1,778,692	185,576	100.00%	2,281,723	(60,586)	(60,586)	Subsidiary
AUO	DPTW	Taiwan ROC	Design, manufacturing, and sales of TFT-	3,569,155	3,569,155	190,108	28.56%	2,848,755	(999,006)	(285,354)	Subsidiary
			LCD modules, backlight modules, TV set
			and related parts
AUO	ACTW	Taiwan ROC	Manufacturing and sales of ingots and	15,687,921	15,687,921	418,583	100.00%	2,681,413	(102,088)	(102,088)	Subsidiary
			solar wafers
AUO	SREC	Taiwan ROC	Investment	379,040	379,040	37,904	32.01%	423,681	96,203	30,798	Associate
AUO	Lextar	Taiwan ROC	Design, manufacturing, and sales of	881,076	881,076	78,418	15.23%	1,561,830	(490,968)	(74,626)	Associate
			InGaN epi wafers and chips, and light
			emitting diode packages and modules
AUO	SMI	Taiwan ROC	Sales and leasing of content management	30,000	30,000	3,000	100.00%	16,629	(1,618)	(1,618)	Subsidiary
			system and hardware
AUO	UTI	Taiwan ROC	Planning, design and development of	200,000	100,000	20,000	100.00%	158,761	(30,145)	(30,145)	Subsidiary
			construction for environmental protection
			and related project management
AUO	SSEC	Taiwan ROC	Investment	930,000	930,000	93,000	31.00%	964,842	101,153	31,357	Associate
AUO	CQIL	Israel	Holding company	1,182,621	876,659	39,974	100.00%	844,029	(30,979)	(30,979)	Subsidiary
AUO	ADLINK	Taiwan ROC	Manufacturing and sales of hardware,	2,411,693	-	42,310	19.45%	2,320,442	171,090	(16,550)	Associate
			software and peripheral devices of
			industrial computers
AUO	ADP	Taiwan ROC	Research, development and sales of TFT-	1,000	-	100	100.00%	997	(3)	(3)	Subsidiary
			LCD panels
AUO	DPGE	Taiwan ROC	Renewable energy power generation	7,000	-	700	100.00%	6,990	(10)	(10)	Subsidiary
AUO	ADHLD	Cayman	Holding company	-	-	-	70.00%	-	-	-	Subsidiary
											(Note 5)

(Continued)

				Original Investment Amount	Original Investment Amount	September 30, 2020	September 30, 2020	September 30, 2020		Investor’s Share
									Net Income
Investor	Investee	Location	Main Activities	September 30,	December 31,		Percentage of	Carrying Amount	(Loss) of	of Profit (Loss)	Note
Company	Company					Shares				of Investee
				2020	2019		Ownership	(Notes 1 and 2)	Investee	(Notes 1 and 2)
AUO	ADCM	Cayman	Holding company	-	-	-	100.00%	-	-	-	Subsidiary
											(Note 5)
AUO	AHTW	Taiwan ROC	Manufacturing, development and sales of	5,000	-	500	100.00%	5,000	-	-	Subsidiary
			medical equipments
Konly	DPTW	Taiwan ROC	Design, manufacturing, and sales of TFT-	703,795	703,795	42,598	6.40%	638,329	(999,006)	(63,940)	Subsidiary Associate Associate Associate Associate Associate Associate Associate Associate Associate Subsidiary
			LCD modules, backlight modules, TV set
			and related parts
Konly	SREC	Taiwan ROC	Investment	17,760	17,760	1,776	1.50%	19,852	96,203	1,443
Konly	Raydium	Taiwan ROC	IC design	175,857	175,857	11,454	17.11%	736,751	443,969	75,951
Konly	Daxin	Taiwan ROC	Research, manufacturing and sales of	154,748	154,748	19,114	18.61%	512,198	483,410	89,955
			display related chemicals
Konly	Lextar	Taiwan ROC	Design, manufacturing, and sales of	450,674	450,674	26,133	5.08%	520,474	(490,968)	(24,869)
			InGaN epi wafers and chips, and light
			emitting diode packages and modules
Konly	Ubitech Inc.	Taiwan ROC	Development and sales of software for	27,000	27,000	357	24.41%	2,020	(4,519)	(1,174)
			POS system
Konly	SSEC	Taiwan ROC	Investment	60,000	60,000	6,000	2.00%	62,248	101,153	2,023
Konly	WishMobile,	Taiwan ROC	Developing and providing CRM APP	15,000	15,000	2,500	12.50%	5,818	1,781	223
	Inc.
Konly	SkyREC	BVI	Data consulting service for retail	46,016	46,016	188	16.12%	2,646	(10,332)	(1,666)
	Ltd.
Konly	ADLINK	Taiwan ROC	Manufacturing and sales of hardware,	80,542	-	1,191	0.55%	24,435	171,090	(56,042)
			software and peripheral devices of
			industrial computers
Ronly	DPTW	Taiwan ROC	Design, manufacturing, and sales of TFT-	845,510	845,510	40,509	6.09%	607,025	(999,006)	(60,805)
			LCD modules, backlight modules, TV set
			and related parts
Ronly	Daxin	Taiwan ROC	Research, manufacturing and sales of	70,021	70,021	6,312	6.15%	169,147	483,410	29,706	Associate
			display related chemicals
Ronly	Lextar	Taiwan ROC	Design, manufacturing, and sales of	323,431	323,431	34,338	6.67%	683,904	(490,968)	(32,678)	Associate
			InGaN epi wafers and chips, and light
			emitting diode packages and modules
DPTW	BVLB	Malaysia	Holding company	1,051,289	1,051,289	36,000	29.71%	236,704	(13,561)	(4,029)	Subsidiary Subsidiary Subsidiary Subsidiary Joint Venture
DPTW	DPLB	Malaysia	Holding company	4,362,627	4,362,627	92,267	100.00%	5,475,365	(233,788)	(219,873)
DPTW	FHVI	BVI	Holding company	2,362,321	2,362,321	22,006	100.00%	3,840,561	(122,488)	(130,734)
DPTW	FFMI	Mauritius	Holding company	274,700	274,700	653	100.00%	97,954	4,933	4,805
DPTW	EFOP	Taiwan ROC	Manufacturing and sales of polymer	338,729	338,729	33,873	49.00%	183,038	8,814	4,319
			plasticized raw materials

(Continued)

				Original Investment Amount	Original Investment Amount	September 30, 2020	September 30, 2020	September 30, 2020		Investor’s Share
									Net Income
Investor	Investee	Location	Main Activities	September 30,	December 31,		Percentage of	Carrying Amount	(Loss) of	of Profit (Loss)	Note
Company	Company					Shares				of Investee
				2020	2019		Ownership	(Notes 1 and 2)	Investee	(Notes 1 and 2)
DPTW	Darwin Summit Corporation Ltd.	Thailand	International trade	3,740	3,740	40	40.00%	10,206	1,742	697	Associate
ACTW	ACMK	Malaysia	Manufacturing and sales of solar wafers	449,975	449,975	46,196	100.00%	461,301	(15,171)	(15,171)	Subsidiary
ACTW	SDMC	Taiwan ROC	Holding company	1,988,488	1,988,488	116,836	100.00%	1,947,649	137,986	171,955	Subsidiary
SDMC	M.Setek	Japan	Manufacturing and sales of ingots	23,596,398	23,596,398	11,404,184	99.9991%	1,888,559	138,274	138,273	Subsidiary
ADCM	ADHLD	Cayman	Holding company	-	-	-	30%	-	-	-	Subsidiary
											(Note 5)
AULB	AUUS	United States	Sales and sales support of TFT-LCD	USD 1,000	USD 1,000	1,000	100.00%	USD 2,321	USD 258	USD 258	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary
			panels
AULB	AUJP	Japan	Sales support of TFT-LCD panels	USD 276	USD 276	1	100.00%	USD 1,900	USD 80	USD 80
AULB	AUKR	South Korea	Sales support of TFT-LCD panels	USD 155	USD 155	-	100.00%	USD 1,052	USD 46	USD 46
AULB	AUCZ	Czech Republic	Assembly of solar modules	USD 20,531	USD 20,531	-	100.00%	USD 10,326	-	-
AULB	AUSK	Slovakia	Repairing of TFT-LCD modules	USD 1,359	USD 1,359	-	100.00%	USD 24,221	USD 218	USD 218
		Republic
AULB	AUST	Singapore	Manufacturing TFT-LCD panels based on	USD 276,543	USD 276,543	907,114	100.00%	USD 143,048	USD 3,742	USD 3,742
			low temperature polysilicon technology
AULB	AUVI	United States	Research and development and IP related	USD 5,000	USD 5,000	5,000	100.00%	USD 5,486	USD (389)	USD (389)
			business
AULB	BVLB	Malaysia	Holding company	USD 85,171	USD 85,171	85,171	70.29%	USD 19,211	USD (454)	USD (319)
AULB	AUSG	Singapore	Holding company and sales support of	USD 48,321	USD 48,321	266,268	100.00%	USD 35,031	USD 574	USD 574	Subsidiary
			TFT-LCD panels
AUSG	AEUS	United States	Sales support of solar-related products	USD 3,510	USD 3,510	9,510	100.00%	USD 1,145	USD 331	USD 331	Subsidiary
AUSG	ADPNL	Netherlands	Sales support of solar-related products;	USD 45	USD 45	-	100.00%	USD 183	USD 1	USD 1	Subsidiary
			sales and sales support of TFT-LCD
			panels
DPLB	DPHK	Hong Kong	Holding company	USD 103,785	USD 103,785	10	100.00%	USD 189,183	USD (7,011)	USD (7,011)	Subsidiary
											(Note 4)
DPLB	DPSK	Slovakia	Manufacturing and sales of automotive	USD 4,216	USD 4,216	-	100.00%	USD 1,811	USD (824)	USD (824)	Subsidiary
		Republic	parts
FHVI	FTMI	Mauritius	Holding company	USD 6,503	USD 6,503	6,503	100.00%	USD 72,340	USD (5,143)	USD (5,143)	Subsidiary
FHVI	FWSA	Samoa	Holding company	USD 19,000	USD 19,000	19,000	100.00%	USD 15,037	USD 322	USD 322	Subsidiary
FHVI	PMSA	Samoa	Holding company	USD 39,673	USD 39,673	31,993	100.00%	USD 46,658	USD 716	USD 716	Subsidiary
M.Setek	Ichijo	Japan	Manufacturing of semiconductor	JPY 5,000	JPY 5,000	-	38.46%	-	-	-	Associate
	Seisakusyo		equipment and related parts								(Note 3)
	Co., Ltd.

(Continued)

				Original Investment Amount	Original Investment Amount	September 30, 2020	September 30, 2020	September 30, 2020		Investor’s Share
									Net Income
Investor	Investee	Location	Main Activities	September 30,	December 31,		Percentage of	Carrying Amount	(Loss) of	of Profit (Loss)	Note
Company	Company					Shares				of Investee
				2020	2019		Ownership	(Notes 1 and 2)	Investee	(Notes 1 and 2)
CQIL	CQHLD	United	Holding company	USD 29,118	USD 18,868	635,730	100.00%	USD 27,889	USD (26)	USD (26)	Subsidiary
		Kingdom

CQHLD	CQUK	United	Sales and sales support of content	GBP 1,874	GBP 1,874	-	100.00%	USD 133	USD 4	USD 4	Subsidiary
		Kingdom	management system
CQHLD	CQUS	United States	Sales of content management system and	USD 25,857	USD 15,607	13	100.00%	USD 14,388	USD (1,211)	USD (1,211)	Subsidiary
			hardware
CQHLD	CQCA	Canada	Research and development of content	CAD 1,310	CAD 1,310	-	100.00%	USD 628	USD 93	USD 93	Subsidiary
			management system
CQUS	JRUK	United	Development and sales of content	USD 1,500	-	1	100.00%	USD 1,507	USD 56	USD 56	Subsidiary
		Kingdom	management system and sales of related
			hardware
CQUS	JRUS	United States	Development and sales of content	USD 8,000	-	18	100.00%	USD 8,022	USD 22	USD 22	Subsidiary
			management system and sales of related
			hardware

Note 1: All inter-company transactions among 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: The registration of the alteration of DPHK’s common stock has not been completed.

Note 5: ADCM and ADHLD are new subsidiaries founded in August 2020. As of September 2020, no capital injection has been made for these companies.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Information on Investment in Mainland China

For the nine months ended September 30, 2020

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

Table 9

1. AUO ：

(1) Related information on investment in Mainland China

		Ttl Amnt			Investment	Investment	Accumulated			Investor’s
				Accumulated Outflow of
					Flows		Outflow of		%		Carrying	Accumulated
Investee		oa ou of Paid-in	Method of	Investment			Investment from Taiwan	Net Income (Loss) of	Ownership through	Share of Profit	Amount of the Investment as	Inward Remittance of
Company	Main Activities	Capital	Investment	from Taiwan as f			as of	Investee	Direct or	(Loss) of I	of September	Earnings as of	Note
		(Note 2)		o January 1, 2020	Outflow	Inflow	September	(Notes 4 and 5)	Indirect	nvestee (Notes 4 and 5)	30, 2020	September 30,
				(Note 2)			30, 2020 (Note 2)		Investment		(Note 2)	2020

A-Care	Design, development and sales of	64,152	(Note 1)	-	-	-	-	(22,521)	100%	(22,521)	16,611	-
	software and hardware for health
	care industry
AUKS	Manufacturing and sales of TFT-	28,014,111	(Note 1)	14,287,197	-	-	14,287,197	(658,261)	51%	(335,713)	4,604,583	-
	LCD panels
AUSH	Sales support of TFT-LCD panels	87,453	(Note 1)	29,151	-	-	29,151	(70,418)	100%	(70,418)	342,679	-
AUSJ	Manufacturing and assembly of	3,148,308	(Note 1)	2,332,080	-	-	2,332,080	96,095	100%	96,095	3,846,166	-
	TFT-LCD modules; leasing
AUSZ	Manufacturing, assembly and sales	8,103,978	(Note 1)	5,830,200	-	-	5,830,200	1,152,733	100%	1,152,733	15,740,266	-
	of TFT-LCD modules
AUXM	Manufacturing, assembly and sales	7,287,750	(Note 1)	7,287,750	-	-	7,287,750	656,420	100%	656,420	13,936,904	-
	of TFT-LCD modules
BVHF	Manufacturing and sales of liquid	2,141,141	(Note 1)	-	-	-	-	(13,375)	100%	(13,375)	795,053	-	Note 6
	crystal products and related parts
BVXM	Manufacturing and sales of liquid	2,566,080	(Note 1)	-	-	-	-	12,990	100%	12,990	1,274,601	-
	crystal products and related parts
EDT	Design and sales of software and	21,384	(Note 1)	-	-	-	-	(5,407)	100%	(5,407)	11,288	-
	hardware integration system and
	equipment relating to intelligent
	manufacturing

(Continued)

		Ttl At			Investment	Investment	Accumulated			Investor’s
				Accumulated Outflow of
					Flows		Outflow of		%		Carrying	Accumulated
Investee		oa moun of Paid-in	Method of	Investment			Investment from Taiwan	Net Income (Loss) of	Ownership through	Share of Profit	Amount of the Investment as	Inward Remittance of
Company	Main Activities	Capital	Investment	from Taiwan as f			as of	Investee	Direct or	(Loss) of I	of September	Earnings as of	Note
		(Note 2)		o January 1, 2020	Outflow	Inflow	September	(Notes 4 and 5)	Indirect	nvestee (Notes 4 and 5)	30, 2020	September 30,
				(Note 2)			30, 2020 (Note 2)		Investment		(Note 2)	2020

MIS	Development and licensing of	42,768	(Note 1)	-	-	-	-	(35,198)	100%	(35,198)	(5,333)	-
	software relating to intelligent
	manufacturing, and related
	consulting services
TYSZ	Design, manufacturing and sales of	213,840	(Note 1)	-	-	-	-	(18,951)	50%	(9,475)	97,418	-
	large-size touch LCD modules
UFSD	Planning, design and development	8,554	(Note 1)	-	-	-	-	(3,512)	100%	(3,512)	2,227	-
	of construction project for
	environmental protection and
	related project management
UFSZ	Planning, design and development	25,661	(Note 1)	-	-	-	-	(12,691)	100%	(12,691)	5,613	-
	of construction project for
	environmental protection and
	related project management

(2) Upper limit on investment in Mainland China

(2) Upper limit on investment in Mainland China
Accumulated Investment in Mainland China as of September 30, 2020 (Note 2)	Investment Amounts Authorized by the Investment Commission, MOEA (Note 2)	Upper Limit on Investment Stipulated by the Investment Commission, MOEA (Note 3)
29,766,378 (USD 1,021,110)	39,142,357 (USD 1,335,003 and HKD 60,000)	108,141,108

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’ reviewed financial statements except for TYSZ.
Note 5: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the average exchange rates for the nine months ended September 30, 2020.

Note 6: BVHF is 100% owned by BVLB, a jointly-owned subsidiary of AUO and DPTW.

(Continued)

2. DPTW:

(1) Related information on investment in Mainland China

		Ttl At			Investment	Investment	Accumulated			Investor’s
				Accumulated Outflow of								Accumulated Inward
					Flows		Outflow of		%		Carrying
Investee		oa moun of Paid-in	Method of	Investment			Investment from Taiwan	Net Income (Loss) of	Ownership through	Share of	Amount of the Investment as	Remittance of
Company	Main Activities	Capital	Investment	from Taiwan as f J	Outflow	Inflow	as of	Investee	Direct or	Profit (Loss) f It	of September	Earnings as of Stb 30	Note
		(Note 4)		o anuary 1, 2020	(Note 4)	(Note 4)	September 30 2020	(Notes 2 and 6)	Indirect Itt	o nvesee (Notes 2 and 6)	30, 2020 Nt 4	epemer , 2020
				(Note 4)			, (Note 4)		nvesmen		(oe )	(Note 4)

BVHF	Manufacturing and sales of liquid	2,141,141	(Note 1)	466,416	-	-	466,416	(13,375)	29.71%	(13,375)	795,053	-	Note 5
	crystal products and related parts
DPSZ	Manufacturing and sales of	728,775	(Note 1)	437,265	-	-	437,265	(30,278)	100%	(30,278)	1,305,350	1,339,021	Note 9
	backlight modules and related parts
DPXM	Manufacturing and sales of	2,040,570	(Note 1)	2,040,570	-	-	2,040,570	(172,882)	100%	(172,882)	4,209,529	1,508,565
	backlight modules and related parts
FHWJ	Manufacturing of motorized	189,482	(Note 1)	239,038	-	-	239,038	4,933	100%	4,933	47,866	-
	treadmills
FPWJ	Manufacturing and sales of	845,379	(Note 1)	553,869	-	-	553,869	14,662	100%	14,662	653,535	-	Note 8
	precision plastic parts
FTKS	Manufacturing and sales of	1,049,436	(Note 1)	1,049,436	-	-	1,049,436	21,380	100%	21,380	1,360,130	-
	backlight modules and related parts
FTWJ	Manufacturing and sales of	1,020,285	(Note 1)	189,482	-	-	189,482	(158,531)	100%	(158,531)	1,893,566	410,287	Note 7
	backlight modules and related parts

(2) Upper limit on investment in Mainland China

Accumulated Investment in Mainland China as of September 30, 2020 (Note 4)	Investment Amounts Authorized by the Investment Commission, MOEA (Note 4)	Upper Limit on Investment Stipulated by the Investment Commission, MOEA (Note 3) 5,983,980
4,976,076 (USD 170,700)	5,121,393 (USD 175,685)

Note 1: Indirect investments in Mainland China through companies registered in a third region.
Note 2: Amounts were recognized based on the investees’ reviewed 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”).

(Continued)

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 September 30, 2020 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 nine months ended September 30, 2020.
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 amount of paid-in capital includes the capital injection of USD10,000 thousand from the offshore holding company, which was originally from FTWJ’s appropriation of earnings.
Note 9: 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.

September 30, 2020 Carrying Amount Fair Value Financial assets: Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL $ 1,485,597 1,485,597 Financial assets at FVTOCI 6,597,877 6,597,877 Financial assets at amortized cost: Long-term receivables 1,749 1,749 Refundable deposits 505,024 505,024 Financial liabilities: Financial liabilities at FVTPL: Financial liabilities held for trading 39,726 39,726 Financial liabilities at amortized cost: Long-term borrowings (including current installments) 119,292,384 119,292,384 Guarantee deposits 793,997 793,997 Long-term payables 154,950 154,950	September 30, 2020	September 30, 2020	December 31, 2019	December 31, 2019	September 30, 2019	September 30, 2019
	Carrying Amount	Fair Value	Carrying Amount	Fair Value	Carrying Amount	Fair Value
		1,485,597 6,597,877 1,749 505,024 39,726 119,292,384 793,997 154,950			1,554,539 7,490,600 5,987 720,280 69,972 106,391,271 797,449 309,963	1,554,539 7,490,600 5,987 720,280 69,972 106,391,271 797,449 309,963

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AUO — Interim / Quarterly Report 2020

52062_rns_2020-12-29_6f90b684-948a-442a-896e-1c4449d8bf1d.pdf

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Financial Statements With Independent Auditors’ Review Report

Independent Auditors’ Review Report

Introduction

Scope of Review

Conclusion

KPMG

Notice to Readers

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

September 30, 2020, December 31, 2019 and September 30, 2019 (Expressed in thousands of New Taiwan dollars)

Reviewed only, not audited in accordance with generally accepted auditing standards

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the Three and Nine Months Ended September 30, 2020 and 2019 (Expressed in thousands of New Taiwan dollars, except for earnings (loss) per share)

Reviewed only, not audited in accordance with generally accepted auditing standards AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

Reviewed only, not audited in accordance with generally accepted auditing standards AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2020 and 2019 (Expressed in thousands of New Taiwan dollars)

Reviewed only, not audited in accordance with generally accepted auditing standards AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

For the Nine Months Ended September 30, 2020 and 2019 (Expressed in thousands of New Taiwan dollars)

Notes to Consolidated Financial Statements

1. Organization

2. The Authorization of Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

4. Summary of Significant Accounting Policies

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(3) Leases

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(4) Employee benefits

(5) Income taxes

5. Critical Accounting Judgments and Key Sources of Estimations and Assumptions Uncertainty

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

6. Description of Significant Accounts

(1) Cash and Cash Equivalents

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

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

(4) Notes and Accounts Receivable, net (Including Related and Unrelated Parties)

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(5) Inventories

(6) Investments in Equity-accounted Investees

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

a. Associates

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

b. Joint ventures

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(7) Acquisition of Business

AU OPTRONICS CORP. AND SUBSIDIARIES

AUO Interim / Quarterly Report 2020