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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 20-F/A

(Amendment No. 1)





(Mark One)



| ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------------

OR



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2011

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from             to

OR



| ̈ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------

Date of event requiring this shell company report

Commission file number: 001-31335



LOGO

(Exact name of Registrant as specified in its charter)







|                                                |  |                                                
|----------------------------------------------- |  | -----------------------------------------------
|AU OPTRONICS CORP.                              |  | TAIWAN, REPUBLIC OF CHINA                      
|(Translation of Registrants name into English) |  | (Jurisdiction of incorporation or organization)

1 LI-HSIN ROAD 2

HSINCHU SCIENCE PARK

HSINCHU, TAIWAN

REPUBLIC OF CHINA

(Address of principal executive offices)





Andy Yang

1 Li-Hsin Road 2

Hsinchu Science Park

Hsinchu, Taiwan

Republic of China

Telephone No.: +886-3-500-8800

Facsimile No.: +886-3-564-3370

Email: IR@auo.com

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.



|                                         |  |                                          
|---------------------------------------- |  | -----------------------------------------
|Title of each class                      |  | Name of each exchange on which
registered
|Common Shares of par value NT$10.00 each |  | The New York Stock Exchange, Inc.*       



|* | Not for trading, but only in connection with the listing on the New York Stock Exchange, Inc. of American Depositary Shares representing such Common Shares
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None





Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report. 8,827,045,535 Common Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    x  Yes     ̈  No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.     ̈  Yes    x  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    x  Yes     ̈  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).     ̈  Yes     ̈  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act. Check one):

Large accelerated
filer  x    Accelerated filer   ̈    Non-accelerated filer   ̈

Indicate by check mark which basis of accounting the registrant has used to prepare the financial
statements included in this filing:



|             |  |                                                                                                          |  |         
|------------ |  | -------------------------------------------------------------------------------------------------------- |  | --------
|U.S. GAAP   ̈ |  | International Financial Reporting Standards as issued by the International Accounting Standards Board   ̈ |  | Other  x

If Other has been checked in response to the previous question, indicate by check mark which financial
statement item the registrant has elected to
follow.     ̈  Item  17    x  Item  18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).     ̈  Yes    x  No









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TABLE OF CONTENTS



|                                           |  |                                               |    |      |    | 
|------------------------------------------ |  | --------------------------------------------- | -- | ---- | -- | 
|                                           |  |                                               |    | Page |   
|EXPLANATORY NOTE                           |  |                                               | i  |     
|PART I                                     |  |                                               |    |      | 2  | 
|                                           |  |                                              
|ITEM 5                                     |  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS  |    |      | 2  | 
|                                           |  |                                              
|5.A.                                       |  | Operating Results                             |    |      | 2  | 
|5.B.                                       |  | Liquidity and Capital Resources               |    |      | 14 | 
|5.C.                                       |  | Research and Development                      |    |      | 18 | 
|5.D.                                       |  | Trend Information                             |    |      | 19 | 
|5.E.                                       |  | Off-Balance Sheet Arrangements                |    |      | 19 | 
|5.F.                                       |  | Tabular Disclosure of Contractual Obligations |    |      | 19 | 
|                                           |  |                                              
|PART III                                   |  |                                               |    |      | 21 | 
|                                           |  |                                              
|ITEM 18                                    |  | FINANCIAL STATEMENTS                          |    |      | 21 | 
|ITEM 19                                    |  | EXHIBITS                                      |    |      | 21 | 
|                                           | 
|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS |  |                                               | 23 |     



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EXPLANATORY NOTE

This Amendment on Form 20-F/A (the Amendment) amends the Annual Report on Form 20-F of AU Optronics Corp. (AUO or the
Company) for the year ended December 31, 2011, as filed with the Securities and Exchange Commission on April 27, 2012 (the Original Form 20-F). This Amendment is being filed solely for the purpose of disclosing
additional information in Item 5 regarding the Companys estimated losses related to its legal contingencies and in Note 24 and Note 26 of the Consolidated Financial Statements regarding accrual for loss contingencies and range for
possible losses.

This Amendment does not reflect events occurring after the filing of the Original Form 20-F and does not modify or update
the disclosure therein in any way other than as required to reflect the amendments described herein and reflected below. No other changes have been made to the Original Form 20-F. The filing of this Amendment should not be understood to mean that
any statements contained herein are true or complete as of any date subsequent to the date of the original filing of the Original Annual Report. Accordingly, this Amendment should be read in conjunction with our filings made with the Securities and
Exchange Commission subsequent to the filing of the Original Form 20-F.



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PART I



|ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS
|------- | --------------------------------------------

5.A. Operating Results

Our operating results are
affected by a number of factors, principally by general market conditions, operating efficiency and product mix.

General Market Conditions

The display panel industry in general has been characterized by cyclical market conditions. The industry has been subject to significant and rapid downturns as a result of imbalances between excess supply
and slowdowns in demand, resulting in declines in average selling prices. For example, on a year-to-year basis, average selling prices of our large-size panels decreased by 24.4% in 2011 compared to 2010, decreased by 0.3% in 2010 compared to 2009,
and decreased by 24.9% in 2009 compared to 2008. We expect average selling prices of panels will fluctuate from time to time due to the change of general market conditions.

Our revenues primarily depend on the average selling prices and shipment volume of our panels and are affected by fluctuations in those prices and volumes. The prices and shipment volume of our panels are
affected by numerous factors, such as raw material costs, yield rates, supply and demand, competition, our pricing strategies and transportation costs. We had a negative gross margin of 7.4% in 2011 compared to a gross margin of 7.8% in 2010,
primarily due to the decline in average selling prices and the lower capacity utilization rate caused by the global economic downturn. Our gross margin increased from 2.0% in 2009 to 7.8% in 2010 primarily due to the rise of average selling prices
in the first half of 2010.

To meet a potential future increase in demand, many display panel manufacturers, including our
company, may expand capacity. If such expansion in capacity is not matched by a comparable increase in demand, it could lead to overcapacity and declines in the average selling prices of panels in the future. In addition, we expect that, as is
typical in the display panel industry, the average selling prices for our existing product lines will gradually decrease as the cost of manufacturing display panels declines. However, the impact of such decreases may be offset through the
development of new products.

Operating Efficiency

Our results of operations have been affected by our operating efficiency. Our operating efficiency is impacted by production yield, cycle
time, capacity utilization, production capacity, and other factors.

Our manufacturing processes are highly complex and
require advanced and costly equipment. In order to maintain our competitiveness and to meet customer demand, we must routinely upgrade or expand our equipment. Upgrades and implementing new equipment to improve production yields and production
efficiency takes time and training and may require adjustments to the manufacturing process. In addition, certain of our customers have different specification requirements than other customers. Specification requests may also require adjustments to
or the use of different manufacturing processes which may accelerate or delay production. The turnaround time for production and our capacity utilization is also impacted by the availability of raw materials and components as well as the level of
demand for our products.

We measure the capacity of a fab in terms of the number of substrates and the glass area of
substrates that can be produced. For 2011, we had an annual capacity to produce approximately 25.4 million square meters of glass area of TFT-LCD panels. Our production capacity has been affected by the process of construction and the schedule
of commencement of operation of our fa bs. Once the design of a new fab is completed, it typically takes six to eight quarters before the fab commences commercial production, during which time we construct the building, install the machinery and
equipment and conduct trial production at the fab. An additional two to four quarters are required for the fab to be in a position to produce at the installed capacity and with high production yield, where production yield is the number of good
panels produced expressed as a percentage of the total number of panels produced. This process is commonly referred to as ramp-up. At the beginning of the ramp-up process, fixed costs, such as depreciation and amortization, other
overhead expenses, labor, general and administrative and other expenses, are relatively high on a per panel basis, primarily as a result of the low output. Variable costs, particularly raw materials and component costs, are also relatively high on a
per panel basis since production yield is typically low in the early stages of the ramp-up of a fab, resulting in greater waste of raw materials and components. In general, upon the completion of the ramp-up process, a fab is capable of producing at
its installed capacity, leading to lower fixed costs per panel as a result of higher output, as well as lower raw material and component costs per panel as a result of higher production yield. We typically construct our new fabs in phases in order
to allocate our aggregate capital expenditure across a greater period of time. As a result, the installed capacity in the early phases of production at a new fab is typically lower than the maximum capacity that can be installed at a fab.



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Product Mix

Our product mix affects our sales and profitability, as the prices and costs of different size panels may vary significantly. The larger
size panels command higher prices, but also have higher manufacturing costs. In 2011, an increase in demand for consumer electronics products using larger panels such as digital still camera, smart phone and automobile displays caused a shift in
product mix to more medium-sized panels being produced. Net sales of panels for computer products & TV panels represented 84.0%, 82.5% and 76.7% of our net sales in 2009, 2010 and 2011, respectively. This declining trend primarily was due
to the increase in sales of panels for consumer electronics products, which represented 13.1%, 12.1% and 16.5% of our net sales in 2009, 2010 and 2011, respectively. Moreover, a strong demand for smart phones contributed to increased net sales of
panels for consumer electronics products. We periodically review and adjust our product mix based on the demand for, and profitability of, the different panel sizes that we manufacture.

Critical Accounting Policies

Our discussion and analysis of our financial
condition and results of operations contained elsewhere in this annual report are based on our audited consolidated financial statements which have been prepared in accordance with ROC GAAP. Our reported financial condition and results of operations
are sensitive to accounting methods, assumptions and estimates that underlie the preparation of our financial statements. We base our assumptions and estimates on historical experience and on various other assumptions that we believe to be
reasonable and which form the basis for making judgments about matters that are not readily apparent from other sources. On an ongoing basis, our management evaluates its estimates. Actual results may differ from those estimates as facts,
circumstances and conditions change.

The selection of critical accounting policies, the judgments and other uncertainties
affecting application of those policies and the sensitivity of reported results to changes in conditions and assumptions are factors to be considered when reviewing our financial statements. Our principal accounting policies are set forth in detail
in Note 3 to our consolidated financial statements included elsewhere herein. We believe the following critical accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements.

Revenue Recognition

Revenue is recognized when title to the products and risk of ownership are transferred to the customers, which occurs principally at the time of shipment. We continuously evaluate whether our products
meet our inspection standards and can reliably estimate sales returns expected to result from customer inspections. Allowance and related provisions for sales returns are estimated based on historical experience, our managements judgment, and
any known factors that would significantly affect such allowance. Such provisions are deducted from sales in the same period the related revenue is recorded. There have been no changes in this policy for the last three years.

The movements of the allowance for sales returns and discounts are as follows:



|                             |  |                |            |   |      |  |            |      |  |  |            |   |  |  |         |  
|---------------------------- |  | -------------- | ---------- | - | ---- |  | ---------- | ---- |  |  | ---------- | - |  |  | ------- | -
|                             |  | 2009           |            |   | 2010 |  |            | 2011 | 
|                             |  | NT$            |            |   | NT$  |  |            | NT$  |  |  | US$        |  
|                             |  | (in thousands) |           
|Balance at beginning of year |  |                | 1,145,135  |   |      |  | 118,329    |      |  |  | 782,007    |   |  |  | 25,834  |  
|Provision charged to revenue |  |                | 623,728    |   |      |  | 2,015,341  |      |  |  | 2,474,726  |   |  |  | 81,755  |  
|Utilized                     |  |                | (1,650,534 | ) |      |  | (1,351,663 | )    |  |  | (2,805,707 | ) |  |  | (92,689 | )
|                             |  |                |            |   |      |  |            |      |  |  |            |   |  |  |         |  
|Balance at end of year       |  |                | 118,329    |   |      |  | 782,007    |      |  |  | 451,026    |   |  |  | 14,900  |  
|                             |  |                |            |   |      |  |            |      |  |  |            |   |  |  |         |  

The provision made in 2011 decreased as compared with 2010 primarily due to the decreases in sales in
2011. The provision made in 2010 increased as compared with 2009 primarily due to the increases in sales in 2010.

Long-Lived Assets, Excluding Goodwill

Under ROC and US GAAP, we review our long-lived assets, including purchased intangible assets for impairment whenever events or changes in circumstances indicate that the assets may be impaired and
the carrying amounts of these assets may not be recoverable. Our long-lived assets subject to this evaluation include property, plant and equipment and amortizable intangible assets.

Under ROC GAAP, we measure recoverability of our long-lived assets by comparing the carrying amount of an asset to the future net
discounted cash flows to be generated by the asset. If the sum of the discounted cash flows is less than the carrying value, an impairment charge is recognized for the amount that the carrying value of the assets exceeds its fair value. When
circumstances subsequent to the loss recognition indicate that the earlier carrying amount of the asset is recoverable, the amount of loss may be reversed to the extent that the resulting carrying value should not exceed the carrying value had no
impairment loss been recognized in prior years. Under US GAAP, we assess recoverability of our long-lived assets to be held and used by comparing the carrying amount of an asset to its future net undiscounted cash flows. If we consider our
assets to be impaired, the impairment we would recognize is the excess of the carrying amount over its estimated fair value derived from discounted cash flow analysis. Such impairment cannot be reversed.



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The process of evaluating the potential impairment of long-lived assets requires significant
judgment. Our cash flow assumptions are based on historical and forecasted revenue, operating costs, and other relevant factors. Due to the cyclical nature of our industry and changes in our business strategy, market requirements, or the needs of
our customers, if our estimates of future operating results change, or if there are changes to other assumptions, the estimate of the fair value of long-lived assets could change significantly. Such change could result in impairment charges in
future periods, which could have a significant impact on our consolidated financial statements. Under ROC GAAP, we recognized impairment losses on long-lived assets of nil in both 2009 and 2010 and NT$16.0 million (US$0.5 million) in 2011,
classified under non-operating expenses and losses. Under US GAAP, the impairment losses on long-lived assets were not materially different from the amounts recognized under ROC GAAP. We classify impairment losses on long-lived assets and
assets held for sale within operating expenses under US GAAP.

Business Combinations and Goodwill

When we acquire businesses, under ROC GAAP, we allocate the purchase price to tangible assets and liabilities and identifiable intangible
assets acquired. Any residual purchase price is recorded as goodwill. Under US GAAP, pursuant to FASB ASC Topic 805, Business Combinations  a replacement of Statement 141, the identifiable assets, liabilities, non-controlling
interests, and goodwill acquired in a business combination are required to be recognized and measured at full fair value. The sum of the fair value of identifiable net assets acquired less the fair value of the non-controlling interests,
if any, exceeding the sum of the fair value of the consideration transferred and the fair value of the equity interests held before the business combination is recorded as goodwill. The allocation of the purchase price requires management to make
significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets. These estimates are based on historical experience and information obtained from the management of the
acquired companies. These estimates can include, but are not limited to, the cash flows that an asset is expected to generate in the future, the appropriate weighted-average cost of capital, and the cost savings expected to be derived from acquiring
an asset. These estimates are inherently uncertain and unpredictable. In addition, unanticipated events and circumstances may occur which may affect the accuracy or validity of such estimates.

Goodwill is not amortized but is tested for impairment at least annually or more frequently if events or circumstances indicate it might
be impaired. Prior to 2010, we determined that we have one cash-generating unit, taken the enterprise as a whole, for purposes of testing goodwill for impairment. As a result of the acquisition of M. Setek in late 2009, we have two
cash-generating units, which are the display business unit and the solar business unit, for the purposes of testing goodwill for impairment in 2010 and 2011. The recoverable amount of the cash-generating unit calculated using a cash flow projection
of eight years was compared to the carrying value of the cash-generating unit. If the recoverable amount of the cash-generating unit is lower than the carrying amount of the cash-generating unit, an impairment loss is recognized. We test goodwill
for impairment annually on June 30 and when a triggering event occurs between annual impairment tests.

Under
US GAAP, we also determined that we have two reporting units for purposes of testing goodwill for impairment in 2010 and 2011. We entered the solar business with the acquisition of M. Setek in October, 2009. The acquisition resulted in the
recognition of a gain on bargain purchase under US GAAP and no additional goodwill was recognized. Therefore, there is no need to test the solar reporting unit for goodwill impairment because there is no goodwill allocated to it. Under
US GAAP, the goodwill impairment test is a two-step test. We estimated the fair value of the display and solar business reporting units by using the discounted cash flow approach, which we believed we have made reasonable estimates and
assumptions in determining the fair value. In addition, for the purpose of analyzing the reasonableness of the fair value determined by the discounted cash flow approach, we also compared the aggregate sum of the fair value measurements of our
display and solar reporting units to our market capitalization at June 30, 2011 based on the quoted market price of our shares, adjusted it by an appropriate control premium. To determine an appropriate control premium, references were made to
recent and comparable merger and acquisition transactions in the high-tech electronics industry. If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit. An
impairment loss will be recognized for any excess of the carrying amount of the reporting units goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the
reporting unit in a manner similar to a purchase price allocation, in accordance with FASB ASC Topic 805.

Under ROC GAAP,
based on managements assessment, the estimated fair values of the display and solar cash generating units significantly exceeded their respective carrying amounts at June 30, 2011. Also, under US GAAP, the estimated fair value of the
display reporting unit significantly exceeded its carrying amount at June 30, 2011. Therefore, management concluded that goodwill was not impaired.

During the second half of 2011, the quoted market price of our capital shares had sustained a further decline resulting in our market capitalization becoming substantially lower at December 31, 2011.
Consequently, management determined the need for an additional test for goodwill impairment at December 31, 2011. As a result of that additional assessment, under ROC GAAP, the estimated fair values of the display and solar cash generating
units continued to significantly exceed their respective carrying amounts

at December 31, 2011. Also, on a US GAAP basis, the
estimated fair value of the display reporting unit significantly exceeded its carrying amount at December 31, 2011. Therefore, management concluded that goodwill was not impaired and, accordingly, no impairment charge was recorded at
December 31, 2011.



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The Company performed an analysis at June 30, 2010 to evaluate the potential impairment
of our goodwill on both ROC GAAP and US GAAP basis. The valuation methodology of performing the goodwill impairment test was the same with that utilizing at June 30, 2011. Based on managements assessments, the estimated fair values
of the display and solar cash generating units significantly exceeded their respective carrying amounts at June 30, 2010 under ROC GAAP. Also, the estimated fair value of the display reporting unit exceeded its carrying amount at June 30,
2010 under US GAAP basis. Therefore, management concluded that goodwill was not impaired. In addition, no triggering events occurred between annual impairment test dates.

In 2009, we determined that we only have one cash-generating unit and one reporting unit under ROC GAAP and US GAAP, respectively, for purposes of testing goodwill for impairment, which is the
enterprise as a whole. On June 30, 2009, we compared the carrying amount of total stockholders equity consolidated on a US GAAP basis to market value based on the quoted market price of our shares on the date of assessment to
determine if goodwill is potentially impaired. We did the test again for goodwill impairment on December 31, 2009. Based on the assessments mentioned above, we concluded that goodwill was not impaired under both ROC GAAP and US GAAP.

Allowance for Doubtful Accounts Receivable

We evaluate our outstanding accounts receivables on a monthly basis for collectability purposes. Our evaluation includes an analysis of
the number of days outstanding for each outstanding accounts receivable account. When appropriate, we provide a provision that is based on the number of days for which the account has been outstanding. The provision provided on each aged account is
based on our average historical collection experience and current trends in the credit quality of our customers. We also carry accounts receivable insurance for potential defaults. There have been no changes in this policy for the last three years.

The movements of the allowance for uncollectible accounts are as follows:



|                                                  |  |                |        |   |      |  |         |      |  |  |        |   |  |  |       |  
|------------------------------------------------- |  | -------------- | ------ | - | ---- |  | ------- | ---- |  |  | ------ | - |  |  | ----- | -
|                                                  |  | 2009           |        |   | 2010 |  |         | 2011 | 
|                                                  |  | NT$            |        |   | NT$  |  |         | NT$  |  |  | US$    |  
|                                                  |  | (in thousands) |       
|Balance at beginning of year                      |  |                | 99,333 |   |      |  | 95,998  |      |  |  | 86,195 |   |  |  | 2,847 |  
|Provision charged to expense (reversed to income) |  |                | (3,335 | ) |      |  | 20,534  |      |  |  | (4,270 | ) |  |  | (141  | )
|Write-off                                         |  |                |       |   |      |  | (30,337 | )    |  |  |       |   |  |  |      |  
|                                                  |  |                |        |   |      |  |         |      |  |  |        |   |  |  |       |  
|Balance at end of year                            |  |                | 95,998 |   |      |  | 86,195  |      |  |  | 81,925 |   |  |  | 2,706 |  
|                                                  |  |                |        |   |      |  |         |      |  |  |        |   |  |  |       |  

The allowance we established for uncollectible accounts in 2010 decreased by 10.2% as compared to 2009
primarily due to the write-off of uncollectible account according to our accounting policy. The allowance we established for uncollectible accounts in 2011 decreased as compared to 2010 primarily due to the collection of several payments of overdue
accounts receivable that were previously assessed unlikely to be paid along with continuous improvement on management of accounts receivable.

Realization of Inventory

Provisions for inventory obsolescence and
devaluation are recorded when we determine that the amounts that will ultimately be realized are less than their cost basis or when we determine that inventories cannot be liquidated without price concessions, which may be affected by the number of
months inventory items remain unsold and their prevailing market prices. Additionally, our analyses of the amount we expect to ultimately realize are based partially upon forecasts of demand for our products and any change to these forecasts. There
have been no changes in this policy for the last three years.

As of December 31, 2009, 2010 and 2011, the provision for
inventory obsolescence and devaluation was NT$4,359.3 million, NT$6,046.6 million, and NT$8,584.5 million (US$283.6 million), respectively, which were classified in cost of goods sold in the consolidated statements of operations. The provision made
in 2009 decreased significantly primarily due to an increase in the average selling price in the fourth quarter of 2009. The provision made in 2010 increased significantly due to substantial decrease in average selling prices in the fourth quarter
of 2010. The provision made in 2011 increased significantly due to substantial decrease in average selling prices in 2011 compared to 2010. For the years ended December 31, 2009, 2010 and 2011, there have been no significant recoveries in
excess of adjusted carrying amounts of inventory that were previously written-down.



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Equity-Method Investments

When we have the ability to exercise significant influence over the operating and financial policies of investees (generally those in
which we own between 20% and 50% of the investees voting shares and/or have significant board and management representation) those investments are accounted for using the equity method. The difference between the acquisition cost and the
carrying amount of net equity of the investee as of the acquisition date is allocated based upon the pro rata excess of fair value over the carrying value of non-current assets. Any unallocated difference is treated as investor-level goodwill. Prior
to January 1, 2006, under ROC GAAP, the amount of unallocated difference is amortized over five years. Commencing January 1, 2006, as required by the amended ROC SFAS No. 5 Long-term Investments under Equity Method, it is
no longer amortized and the carrying value of the total investment is assessed for impairment. Under US GAAP, such difference is not amortized, but the carrying value of the total investment is assessed for impairment. The allocation of excess
basis in equity-method investments requires the use of judgments regarding, among other matters, the fair value and estimated useful lives of long lived assets. Changes in those judgments would affect the amount and timing of amounts charged to our
statement of income.

In 2011, the Companys investment in Qisda experienced significant declines in market value.
Considering primarily the length of time and the extent to which the market value (based on quoted share price) was less than the carrying amount of the investment, management concluded that this impairment was other-than-temporary at
December 31, 2011, for US GAAP purposes. As a result, the Company recognized an impairment loss of NT$1,801.9 million (US$59.5 million) related to its investment in Qisda for the year ended December 31, 2011. No impairment loss was
recognized for ROC GAAP purposes for the investment in Qisda because management believes that the recovery of the carrying amount is supported by the expected discounted cash flows from the investment.

Certain investments in which we hold less than a 20% voting interest, but are nonetheless able to exercise significant influence over the
operating and financial policies of investees through board representation or other means are also accounted for using the equity method. Significant judgment is required to assess whether we have significant influence. Factors that we consider in
making such judgment include, among other matters, participation in policymaking processes, material intercompany transactions, interchange of managerial personnel, or technological dependency.

Income Taxes Uncertainties and Realization of Deferred Tax Assets

We are subject to the continuous examination of our income tax returns by the ROC tax authorities. We regularly assess the likelihood of
adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

As of
December 31, 2011, our valuation allowances on deferred tax assets was NT$25,480.7 million (US$841.8 million) under ROC GAAP, which primarily due to investment tax credits that we believe are unlikely to be realized in the future. During 2010
and 2011, investment tax credits that expired unused amounted to NT$6,889.4 million and NT$2,305.8 million (US$76.2 million), respectively. Such investment tax credits were previously fully provided in the valuation allowance. Therefore, the
write-offs of these deferred tax assets and related valuation allowances had no impact on our income tax expense in 2010 and 2011. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and
net operating loss and investment tax credits utilized. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Under ROC GAAP, based upon projections for
future taxable income over the periods in which the deferred tax assets are deductible, we believe it is more likely than not that we will realize the benefits of these deductible differences, net operating loss and investment tax credits, net of
the existing valuation allowance as of December 31, 2011. However, under US GAAP, cumulative losses in recent years is a significant piece of negative evidence which is difficult to overcome with projections of future operating profits for
the purpose of determining the valuation allowance for deferred income tax assets. A valuation allowance is provided on deferred tax assets to the extent that it is not more likely than not that such deferred tax assets will be realized.
As a result, under US GAAP, our valuation allowances on deferred tax assets was NT$42,133.1 million (US$1,391.9 million) as of December 31, 2011.

We used estimated future taxable income for the next five years to determine the realizability of our deferred tax assets and the resulting requirement for valuation allowance. We believe that, as of
December 31, 2011, the estimated future taxable income beyond the five-year period cannot be objectively and reliably determined given the cyclical nature of the display panel industry. In addition, the five-year period is considered to be
consistent with the statutory period that the tax credit and loss carryforwards can be utilized under ROC Tax Law. Effective January 21, 2009, the statutory period during which loss carryforwards can be utilized has been extended to 10 years.

The amount of the deferred tax asset considered realizable could be reduced in the near term if estimates of future taxable
income during the carryforwards or reversal periods are reduced.



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Legal Contingencies

From time to time, we are involved in disputes that arise in the ordinary course of business, and we do not expect this to change in the
future. We are currently involved in legal proceedings discussed in Item 8.A.7. Litigation.

When the likelihood
of an unfavorable outcome from our legal proceedings is probable and our management can reasonably estimate the amount or range of such loss, we make appropriate provisions in our consolidated statement of operations. In making this assessment we
consider factors such as the nature of the litigation or claims, the progress of the case and the opinions or views of legal counsel and other advisors. In determining the appropriate amount of the accrued liability to be recognized, we develop an
estimated amount or range of such loss. When a range of estimated loss has been determined, if an amount within a range of possible losses appears at the time to be a better estimate than any other amount within the range, we will recognize that
amount as an accrued liability. When no amount within the range is a better estimate than any other amount, then we will recognize the minimum amount in the range as an accrued liability. Such estimates are based on our assessment of the facts and
circumstances at each balance sheet date and are subject to change based upon new information and intervening events. We have recognized liabilities for litigation and claims amounting to NT$13,657 million and NT$19,864 million
(US$656 million) in the consolidated balance sheets as of December 31, 2010 and 2011, respectively.

Convertible bonds

In October 2010, we issued US$800.0 million unsecured zero coupon convertible bonds, which were recorded in their entirety as a liability at fair value at the date of issuance under US GAAP. The
difference between fair value and redemption value at the date of issuance is recorded as a discount, and amortized over the redemption period using the effective interest rate method. In September 2011, we early redeemed US$100 million of the bonds
at a cost of US$78.7 million.

Under US GAAP, we concluded that the conversion features for the new overseas convertible
bonds qualified as embedded derivative instruments under FASB ASC Topic 815, as these bonds are denominated in a currency that is different from our functional currency, and therefore was required to be bifurcated from the debt hosts. We further
concluded that the call options embedded in the convertible bonds did not meet the definition of embedded derivative instrument under FASB ASC Topic 815, as they were considered to be clearly and closely related to the debt hosts. As a result, under
US GAAP, the new overseas convertible bonds were recorded at the fair value at the date of issuance without taking into account the embedded conversion options.

The reconciliation of net income determined in accordance with ROC GAAP and US GAAP for the year ended December 31, 2011 included the impact of changes in fair value of the embedded derivative
instrument liability of NT$780.6 million (US$25.8 million), which is recognized only for US GAAP purposes.

Deconsolidation of a subsidiary

Under ROC GAAP, upon the sale of equity-method investment, the difference between the selling price and carrying amount of the investment at the date of sale is recognized as an investment gain or loss.
Under US GAAP, pursuant to FASB ASC Subtopic 810-10, ConsolidationOverall, changes in a parents ownership interest while the parent retains its controlling financial interest in its subsidiary is accounted for as equity
transactions in the consolidated financial statements. However, if a change in ownership of a consolidated subsidiary results in a loss of control, that subsidiary is then deconsolidated and any retained ownership interest is re-measured at fair
value, and any gain or loss is included in the consolidated statement of operations.

On June 30, 2010, due to a change
in the composition of the board of directors of Lextar Electronics Corp. (Lextar), we no longer had a controlling financial interest in Lextar. As a result, we deconsolidated Lextar on June 30, 2010 and accounted for this investment
under the equity method of accounting. Consequently, pursuant to FASB ASC Subtopic 810-10, we recognized a non-cash gain of NT$362.8 million, representing the difference between the fair value of the investment on June 30, 2010 and its carrying
value in our US GAAP consolidated statements of operations for 2010. Under ROC GAAP, we also accounted for the investment in Lextar under the equity method of accounting upon loss of control, however no gain or loss is recognized upon
deconsolidation and the carrying value of the investment in Lextar was based on our proportion interest of the net book value of Lextar on the date of deconsolidation.

Results of Operations

The following table sets forth certain of our
results of operations information under ROC GAAP, in both real numbers and as a percentage of our net sales for the periods indicated:



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|                                      |  |                                   |           |   |      |  |       |      |  |  |           |   |  |     |       |   |   |  |           |   |  |  |       |  
|------------------------------------- |  | --------------------------------- | --------- | - | ---- |  | ----- | ---- |  |  | --------- | - |  | --- | ----- | - | - |  | --------- | - |  |  | ----- | -
|                                      |  | Year Ended December 31,           |          
|                                      |  | 2009                              |           |   | 2010 |  |       | 2011 | 
|                                      |  | NT$                               |           |   | %    |  |       | NT$  |  |  | %         |   |  | NT$ |       |   | % | 
|                                      |  | (in millions, except percentages) |          
|Net sales                             |  |                                   | 359,331.3 |   |      |  | 100.0 |      |  |  | 467,158.0 |   |  |     | 100.0 |   |   |  | 379,711.9 |   |  |  | 100.0 |  
|Cost of goods sold                    |  |                                   | 352,290.5 |   |      |  | 98.0  |      |  |  | 430,859.4 |   |  |     | 92.2  |   |   |  | 407,899.2 |   |  |  | 107.4 |  
|                                      |  |                                   |           |   |      |  |       |      |  |  |           |   |  |     |       |   |   |  |           |   |  |  |       |  
|Gross profit (loss)                   |  |                                   | 7,040.9   |   |      |  | 2.0   |      |  |  | 36,298.6  |   |  |     | 7.8   |   |   |  | (28,187.3 | ) |  |  | (7.4  | )
|                                      |  |                                   |           |   |      |  |       |      |  |  |           |   |  |     |       |   |   |  |           |   |  |  |       |  
|Operating expenses                    |  |                                   | 22,279.9  |   |      |  | 6.2   |      |  |  | 25,801.9  |   |  |     | 5.6   |   |   |  | 29,471.2  |   |  |  | 7.8   |  
|Selling                               |  |                                   | 8,000.0   |   |      |  | 2.2   |      |  |  | 8,641.5   |   |  |     | 1.9   |   |   |  | 9,636.6   |   |  |  | 2.5   |  
|General and administrative            |  |                                   | 8,094.4   |   |      |  | 2.3   |      |  |  | 10,736.9  |   |  |     | 2.3   |   |   |  | 11,208.8  |   |  |  | 3.0   |  
|Research and development              |  |                                   | 6,185.5   |   |      |  | 1.7   |      |  |  | 6,423.6   |   |  |     | 1.4   |   |   |  | 8,625.8   |   |  |  | 2.3   |  
|                                      |  |                                   |           |   |      |  |       |      |  |  |           |   |  |     |       |   |   |  |           |   |  |  |       |  
|Operating income (loss)               |  |                                   | (15,239.1 | ) |      |  | (4.2  | )    |  |  | 10,496.7  |   |  |     | 2.2   |   |   |  | (57,658.5 | ) |  |  | (15.2 | )
|                                      |  |                                   |           |   |      |  |       |      |  |  |           |   |  |     |       |   |   |  |           |   |  |  |       |  
|Net non-operating expenses and losses |  |                                   | (12,028.4 | ) |      |  | (3.4  | )    |  |  | (1,900.7  | ) |  |     | (0.4  | ) |   |  | (7,993.6  | ) |  |  | (2.1  | )
|                                      |  |                                   |           |   |      |  |       |      |  |  |           |   |  |     |       |   |   |  |           |   |  |  |       |  
|Earnings (loss) before income tax     |  |                                   | (27,267.4 | ) |      |  | (7.6  | )    |  |  | 8,596.0   |   |  |     | 1.8   |   |   |  | (65,652.1 | ) |  |  | (17.3 | )
|Income tax (expense) benefit          |  |                                   | 22.6      |   |      |  |      |      |  |  | (1,187.9  | ) |  |     | (0.2  | ) |   |  | 4,205.1   |   |  |  | 1.1   |  
|                                      |  |                                   |           |   |      |  |       |      |  |  |           |   |  |     |       |   |   |  |           |   |  |  |       |  
|Net income (loss)                     |  |                                   | (27,244.8 | ) |      |  | (7.6  | )    |  |  | 7,408.1   |   |  |     | 1.6   |   |   |  | (61,447.0 | ) |  |  | (16.2 | )
|                                      |  |                                   |           |   |      |  |       |      |  |  |           |   |  |     |       |   |   |  |           |   |  |  |       |  

In 2011, a weaker demand in the TFT-LCD industry resulting from the slowdown of the global economy
contributed to a decrease in our unit sales. As a result, we were unable to achieve higher profitability in 2011. Our gross, operating and net margins have decreased from 2010 to 2011, primarily as a result of the global economic downturn which
caused a significant decrease in end-demand and a continuing decline in average selling price of panels.

For the Years Ended
December 31, 2011 and 2010

Net sales

Net sales decreased 18.7% to NT$379,711.9 million (US$12,544.2 million) in 2011 from NT$467,158.0 million in 2010 primarily due to a 23.7%
decrease in net sales of large size panels, which was partially offset by a 14.6% increase in net sales of small- to medium-size panels.

Net sales of large-size panels decreased 23.7% to NT$303,411.3 million (US$10,023.5 million) in 2011 from NT$397,798.2 million in 2010. This decrease was primarily due to a decrease in average selling
price. The average selling price per panel of our large-size panels decreased by 24.4%, which were at NT$2,649.7 (US$87.5) in 2011 and NT$3,503.4 in 2010, respectively. Large-size panels sold slightly increased 0.8% to 114.5 million panels in
2011 from 113.5 million panels in 2010.

Net sales of small- to medium-size panels increased 14.6% to NT$50,633.1 million
(US$1,672.7 million) in 2011 from NT$44,198.7 million in 2010. The increase in net sales of small- to medium-size panels was primarily due to an increase in average selling price, which was partially offset by a decrease in unit sales. The average
selling price per panel of our small- to medium-size panels increased 35.0% to NT$270.1 (US$8.9) in 2011 from NT$200.1 in 2010, and unit sales of our small- to medium-size panels decreased 15.1% to 187.5 million panels in 2011 from
220.9 million panels in 2010, both primarily as a result of the change in our product mix.

Cost of Goods Sold

Cost of goods sold decreased 5.3% to NT$407,899.2 million (US$13,475.4 million) in 2011 from NT$430,859.4 million in
2010. This decrease was primarily due to a decrease in cost of raw material and component costs, as well as a reduction in units of products sold.

Raw material and component costs decreased 10.9% in 2011 as compared to 2010, primarily as a result of a decrease in average purchasing price especially in large-size panels. Overhead expenses, including
depreciation and amortization expenses, increased 6.4% in 2011 as compared to 2010, primarily due to an increase in electricity expenses and repair and maintenance expense, which were partially offset by less depreciation expenses and employee
profit sharing expenses and bonuses. Direct labor costs decreased 6.9% in 2011 as compared to 2010, primarily as a result of a decrease in employee profit sharing expenses and bonuses.



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Gross Profit (Loss)

Gross loss was NT$28,187.3 million (US$931.2 million) in 2011 compared to gross profit of NT$36,298.6 million in 2010. Gross margin, which
is gross profit (loss) divided by net sales, mainly fluctuates, among other factors, with our capacity utilization rate, market price change of our products and our product mix. We had a negative gross margin of 7.4% in 2011 compared to a gross
margin of 7.8% in 2010, primarily due to the decline in average selling price and the lower capacity utilization rate caused by the global economic downturn; moreover, the scale of decrease in average selling prices was greater than the scale of
decrease in cost of goods sold. As a result of a downward trend in average selling prices, net inventory devaluation write-down included in cost of goods sold increased to NT$2,735.7 million (US$90.4 million) in 2011 from NT$1,886.5 million in 2010.

Operating Expenses

Operating expenses increased 14.2% to NT$29,471.2 million (US$973.6 million) in 2011 from NT$25,801.9 million in 2010. As a percentage of net sales, operating expenses increased to 7.8% in 2011 from 5.6%
in 2010 which was primarily due to our decreased sales. The increase in operating expenses was primarily due to an increase in research and development expenses. Research and development expenses increased 34.3% to NT$8,625.8 million (US$285.0
million) in 2011 from NT$6,423.6 million in 2010 primarily due to devoting to research and development on future advanced technologies and high value-added products to remain competitive in the markets we serve. Research and development expenses as
a percentage of net sales increased to 2.3% in 2011 from 1.4% in 2010. Selling expenses increased 11.5% to NT$9,636.6 million (US$318.4 million) in 2011 from NT$8,641.5 million in 2010, primarily due to an increase in product promotion fees, which
were partially offset by a decrease in freight expense and warranty expense. Selling expenses as a percentage of net sales increased to 2.5% in 2011 from 1.9% in 2010. General and administrative expenses increased 4.4% to NT$11,208.8 million
(US$370.3 million) in 2011 from NT$10,736.9 million in 2010, primarily due to an increase in professional service expenses which were partially offset by a decrease in employee profit sharing expenses and bonuses. General and administrative expenses
as a percentage of net sales increased to 3.0% in 2011 from 2.3% in 2010.

Operating Income (Loss) and Operating Margin

As a result of the foregoing, we had operating loss of NT$57,658.5 million (US$1,904.8 million) in 2011 compared to an
operating income of NT$10,496.7 million in 2010. We had a negative operating margin of 15.2% in 2011 compared to an operating margin of 2.2% in 2010.

Under US GAAP, we had operating loss of NT$67,768.3 million (US$2,238.8 million) in 2011 compared to operating income of NT$5,399.2 million in 2010. We had a negative operating margin of 17.8% in
2011 compared to an operating margin of 1.2% in 2010.

Under ROC GAAP, the provision for the potential litigation losses and
others is usually recognized in the consolidated statement of operations as a non-operating expense. However, under US GAAP, the provision for the potential litigation losses and others is recognized in the condensed consolidated statement of
operations as an operating expense.

Net Non-Operating Expenses and Losses

We had net non-operating expenses and losses of NT$7,993.6 million (US$264.1 million) in 2011 compared to non-operating expenses and
losses of NT$1,900.7 million in 2010. We had higher net non-operating expenses and losses in 2011 compared to 2010 primarily due to (i) a decrease in net gains on valuation of financial instruments to NT$744.1 million (US$24.6 million) in 2011
from NT$3,986.1 million in 2010, resulting from our decreased financial instruments to hedge our position corresponding to our decreased sales in 2011; (ii) a net investment loss recognized by the equity method of NT$63.9 million (US$2.1
million) in 2011 compared to a net investment gain of NT$681.3 million in 2010, resulting from loss position of some of our investees; (iii) an increase in net interest expenses to NT$4,472.7 million (US$147.8 million) in 2011 from NT$3,946.3
million in 2010, primarily resulting from a full year of amortization expenses of convertible bonds being included in 2011 whereas 2010 only included amortization expenses from the date of issuance; (iv) a net foreign currency exchange loss of
NT$94.7million (US$3.1 million) in 2011 compared to a foreign exchange currency loss of NT$3,581.1 million in 2010, primarily due to a decrease in net assets position corresponding to our decreased sales in 2011; (v) an increase in net gains on
sale of investment securities to NT$3,080.7 million (US$101.8 million) in 2011 from NT$1,527.2 million in 2010; and (vi) an increase in provisions made for potential litigation losses and others to NT$8,966.3 million (US$296.2 million) in 2011
from NT$2,011.4 million in 2010.

Under US GAAP, we had net non-operating expenses and losses of NT$1,855.5 million
(US$61.3 million) in 2011 compared to net non-operating net income and gains of NT$69.2 million in 2010. We had net non-operating expenses and losses in 2011 compared to net non-operating income and gains in 2010, primarily as a result of an
increase in asset impairment loss, a decrease in net gains on valuation of financial instruments, an increase in net interest expense and an increase in net investment loss, partially offset by a decrease in net foreign currency exchange loss and an
increase in net gains on sale of investment securities. We had a loss on asset impairment of NT$2,263.0 million (US$74.8 million) in 2011 compared to nil in 2010. We had net gains on valuation of financial instruments of NT$1,667.5 million (US$55.1
million) in 2011 compared to NT$3,164.4 million in 2010. In 2011, we had a net interest expense of NT$4,609.9 million (US$152.3 million) compared to NT$3,801.7 million in 2010. We had a net investment loss of NT$26.0 million (US$0.9 million) in 2011
compared to net investment income of NT$668.5 million in 2010. In 2011, we had net foreign currency exchange loss of NT$100.0 million (US$3.3 million) in 2011 compared to NT$3,582.8 million in 2010. In 2011, we had net gains on sale of investment
securities of NT$3,030.2 million (US$100.1 million) compared to NT$1,478.4 million in 2010.



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Income Tax Benefit (Expense)

Under ROC GAAP, we recognized an income tax benefit of NT$4,205.1 million (US$138.9 million) in 2011 compared to an income tax expense of
NT$1,187.9 million in 2010. The effective tax rate decreased to 6.4% in 2011 from 13.8% in 2010 under ROC GAAP. This change was primarily due to an increase in valuation allowance for deferred income tax assets.

Under US GAAP, we recognized an income tax expense of NT$11,492.4 million (US$379.7 million) in 2011 compared to income tax expense
of NT$745.0 million in 2010. Under US GAAP, and in accordance with FASB ASC Topic 740, Income Taxes, if a valuation allowance is recognized at the acquisition date for deferred tax assets for an acquired entitys deductible
temporary differences or operating loss or tax credits, the tax benefit for those items that are first recognized subsequent to the acquisition (by elimination of the valuation allowance) are to be applied (a) first reduce to zero any goodwill
related to the acquisition, (b) second to reduce to zero other noncurrent intangible assets related to the acquisition, and (c) third to reduce income tax expense. Additionally, cumulative losses in recent years is a significant piece of
negative evidence which is difficult to overcome with projections of future operating profits for the purpose of determining the valuation allowance for deferred income tax assets. A valuation allowance is provided on deferred tax assets to the
extent that it is not more likely than not that such deferred tax assets will be realized. Accordingly, a valuation allowance of NT$42,133.1 million (US$1,391.9 million) has been recognized for these deferred tax assets, and the
effective tax rate increased to 16.5% from 13.6% in 2010 under US GAAP.

Net Income (Loss)

As a result of the foregoing, we incurred net loss of NT$61,447.0 million (US$2,030.0 million) or net loss per basic and diluted share of
NT$6.94 (US$0.23) in 2011 as compared to net income of NT$7,408.1 million or NT$ 0.76 per basic share and NT$0.70 per diluted share in 2010.

Under US GAAP, we incurred net loss attributable to stockholders of AU Optronics Corp. of NT$80,948.2 million (US$2,674.2 million) or net loss per basic and diluted share of NT$9.17 (US$0.30) in 2011
as compared to net income attributable to stockholders of AU Optronics Corp. of NT$4,244.3 million or NT$0.48 per basic and diluted share in 2010. The per share effect from tax holidays for the years ended December 31, 2010 and 2011 were
NT$0.05 and NT$0.02 (US$0.0007), respectively.

For the Years Ended December 31, 2010 and 2009

Net sales

Net sales increased 30.0% to NT$467,158.0 million in 2010 from NT$359,331.3 million in 2009 primarily due to a 26.3% increase in net sales of large-size panels and a 29.4% increase in net sales of
small-size panels.

Net sales of large-size panels increased 26.3% to NT$397,798.2 million in 2010 from NT$314,840.5 million
in 2009. This increase was primarily due to an increase in the sales volume. Large-size panels sold increased 26.7% to 113.5 million panels in 2010 from 89.7 million panels in 2009. The increase in unit sales of large-size panels was
primarily due to an increase in market demand. The average selling price per panel of our large-size panels remained stable, which were at NT$3,503.4 in 2010 and at NT$3,512.3 in 2009, respectively.

Net sales of small- to medium-size panels increased 29.4% to NT$44,198.7 million in 2010 from NT$34,168.5 million in 2009. The increase
in net sales of small- to medium-size panels was primarily due to an increase in average selling price, which was partly offset by a slight decrease in unit sales. The average selling price per panel of our small- to medium-size panels increased
33.9% to NT$200.1 in 2010 from NT$149.4 in 2009, primarily as a result of the change in our product mix. Unit sales of our small- to medium-size panels decreased 3.4% to 220.9 million panels in 2010 from 228.6 million panels in 2009. The
decrease in unit sales of small- to medium-size panels was also primarily due to the change in our product mix.

Cost of
Goods Sold

Cost of goods sold increased 22.3% to NT$430,859.4 million in 2010 from NT$352,290.5 million in 2009. This
increase was primarily due to an increase in the raw material and component costs and an increase in overhead expenses resulting from our increased sales.

Raw material and component costs increased 28.2% in 2010 as compared to 2009, primarily as a result of our increased unit sales. Overhead expenses, including depreciation and amortization expenses,
increased 11.7% in 2010 as compared to 2009, primarily due to an increase in indirect materials and electricity expenses. Direct labor costs increased 18.4% in 2010 as compared to 2009, primarily as a result of an increase in employee bonus
expenses.



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Gross Profit

Gross profit increased to NT$36,298.6 million in 2010 from NT$7,040.9 million in 2009. Gross profit margin, which is gross profit divided
by net sales, mainly fluctuates, among other factors, with our capacity utilization rate, market price change of our products, our product mix. Our gross profit margin increased to 7.8% in 2010 from 2.0% in 2009, primarily due to the rise of average
selling prices in the first half of 2010 and our improved cost control and product mix, which was partially offset by appreciation of NT dollars against US dollars and the decline of average selling prices in the fourth quarter of 2010.

Operating Expenses

Operating expenses increased 15.8% to NT$25,801.9 million in 2010 from NT$22,279.9 million in 2009. As a percentage of net sales, operating expenses decreased to 5.6% in 2010 from 6.2% in 2009 which was
primarily due to our increased sales. The increase in operating expenses was primarily due to an increase in general and administrative expenses. General and administrative expenses increased 32.6% to NT$10,736.9 million in 2010 from NT$8,094.4
million in 2009 primarily due to pre-operating expenses arising from our new plants in Japan, an increase in employee bonus and salaries, and management fees paid to the Science Based Industrial Park of the ROC, which were partially offset by less
depreciation expenses and banking fees. General and administrative expenses as a percentage of net sales remained at 2.3% in 2010 and 2009. Selling expenses increased 8.0% to NT$8,641.5 million in 2010 from NT$8,000.0 million in 2009, primarily due
to an increase in shipping expenses and warranty expenses, both resulting from an increase in sales and an increase in employee bonus expenses, which were partially offset by a decrease in royalty expenses. Selling expenses as a percentage of net
sales decreased to 1.9% in 2010 from 2.2% in 2009. Research and development expenses increased 3.8% to NT$6,423.6 million in 2010 from NT$6,185.5 million in 2009, resulting from our increased research and development activities and an increase in
employee bonus and indirect materials. Research and development expenses as a percentage of net sales decreased to 1.4% in 2010 from 1.7% in 2009.

Operating Income (Loss) and Operating Margin

As a result of the
foregoing, we had operating income of NT$10,496.7 million in 2010 compared to operating loss of NT$15,239.1 million in 2009. We had an operating margin of 2.2% in 2010 compared to a negative operating margin of 4.2% in 2009.

Under US GAAP, we had operating income of NT$5,399.2 million in 2010 compared to operating loss of NT$28,309.7 million in 2009. We
had an operating margin of 1.2% in 2010 compared to a negative operating margin of 7.9% in 2009.

Under ROC GAAP, the
provision for the potential litigation losses and others is usually recognized in the consolidated statement of operations as a non-operating expense. However, under US GAAP, the provision for the potential litigation losses and others is
recognized in the condensed consolidated statement of operations as an operating expense.

Net Non-Operating Expenses
and Losses

We had net non-operating expenses and losses of NT$1,900.7 million in 2010 compared to net non-operating
expenses and losses of NT$12,028.4 million in 2009. We had lower net non-operating expenses and losses in 2010 compared to 2009 primarily due to (i) an increase in net gains on valuation of financial instruments to NT$3,986.1 million in 2010
from NT$813.2 million in 2009, resulting from our increased financial instruments to hedge our position corresponding to our increased sales in 2010; (ii) a net foreign currency exchange loss of NT$3,581.1 million in 2010 compared to a foreign
currency exchange income of NT$236.9 million in 2009, primarily due to (1) the depreciation of US dollars against NT dollars in the second half of 2010, and (2) the appreciation of JPY against NT dollars in the second and third quarters of
2010; (iii) an increase in net gains on sale of investment securities to NT$1,527.2 million in 2010 from NT$384.2 million in 2009; (iv) an increase in net investment gains recognized by the equity method to NT$681.3 million in 2010 from
NT$139.6 million in 2009, resulting from a gain on an investee company; (v) an increase in net interest expenses to NT$3,946.3 million in 2010 from NT$3,180.6 million in 2009, resulting from amortization expenses relating to the issuance of
convertible bonds and a decrease in interest capitalization in 2010 compared to 2009 because more construction was completed in 2010; and (vi) a decrease in provisions made for potential litigation losses and others to NT$2,011.4 million in
2010 from NT$9,696.1 million in 2009, resulting from a decrease in the amount of provisions made in connection to antitrust matters in 2010 compared to 2009.

Under US GAAP, we had net non-operating income and gains of NT$69.2 million in 2010 compared to net non-operating expenses and losses of NT$1,352.7 million in 2009. We had net non-operating income
and gains in 2010 compared to net non-operating expenses and losses in 2009, primarily as a result of an increase in net gains on valuation of financial instruments, an increase in net gains on sale of investment securities, an increase in net
investment income and an increase in net other income, partially offset by an increase in net interest expense and an increase in net foreign currency exchange loss. We had net gains on valuation of financial instruments of NT$3,164.4 million in
2010 compared to net gains on valuation of financial instruments of NT$806.3 million in 2009. In 2010, we had net gains on sale of investment securities of NT$1,478.4 million compared to net gains on sale of investment securities of NT$549.2 million
in 2009. We had a net investment income of NT$668.5 million in 2010 compared to a net investment income of NT$48.6 million in 2009. In 2010, we had a net other income of NT$2,071.3 million compared to a net other income of NT$1,637.0 million in
2009. In 2010, we had a net interest expense of NT$3,801.7 million compared to a net interest expense of NT$3,187.8 million in 2009. In 2010, we had net foreign currency exchange loss of NT$3,582.8 million compared to a net foreign currency exchange
gain of NT$218.9 million in 2009.



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Income Tax Benefit (Expense)

Under ROC GAAP, we recognized an income tax expense of NT$1,187.9 million in 2010 compared to an income tax benefit of NT$22.6 million in
2009. An increase in income tax expenses primarily resulted from a substantial increase of taxable income of subsidiaries, taxes paid for dividends received from our subsidiaries located in China according to PRCs tax regulations, a decrease
of investment tax credit obtained and the effect of deferred assets caused from the change of the statutory tax rate in 2010. Therefore, the effective tax rate increased to 13.8% in 2010 from 0.1% in 2009 under ROC GAAP.

Effective from January 1, 2010, the statutory tax rate was reduced to 20% in accordance with the ROC Income Tax Act. In June 2010,
the statutory rate was reduced from 20% to 17%, effective retroactively on January 1, 2010. The effective tax rate was lower than 17% primarily due to investment tax credits and tax exemptions. While we used a portion of available tax credits
to offset our income tax payable, the amount of tax credits available to be applied in any year, except for the final year in which such tax credit expires, is limited to 50% of the income tax payable for that year. There is no limitation on the
amount of tax credits available to be applied in the final year.

Under US GAAP, we recognized an income tax expense of
NT$745.0 million in 2010 compared to an income tax benefit of NT$1,359.5 million in 2009. Under US GAAP, and in accordance with FASB ASC Topic 740, Income Taxes, if a valuation allowance is recognized at the acquisition date for
deferred tax assets for an acquired entitys deductible temporary differences or operating loss or tax credits, the tax benefit for those items that are first recognized subsequent to the acquisition (by elimination of the valuation allowance)
are to be applied (a) first reduce to zero any goodwill related to the acquisition, (b) second to reduce to zero other noncurrent intangible assets related to the acquisition, and (c) third to reduce income tax expense. The effective
tax rate increased to 13.6% in 2010 from 4.6% in 2009 under US GAAP, primarily due to the effect of the change of the statutory tax rate in 2010.

Net Income (Loss)

As a result of the foregoing, we incurred net
income of NT$7,408.1 million or NT$ 0.76 per basic share and NT$0.70 per diluted share in 2010 as compared to net loss of NT$27,244.8 million or net loss per basic and diluted share of NT$3.04 in 2009.

Under US GAAP, we incurred net income attributable to stockholders of AU Optronics Corp. of NT$4,244.3 million or NT$0.48 per basic
and diluted share in 2010 as compared to net loss attributable to stockholders of AU Optronics Corp. of NT$28,670.3 million or net loss per basic and diluted share of NT$3.26 in 2009. The per share effect from tax holidays for the years ended
December 31, 2009 and 2010 were NT$0.09 and NT$0.05, respectively.

Segment Information

General

Our business reports in two operating segments: display business and solar business. Our management monitors and evaluates the performance of both operating segments based on the information of their
sales and operating income (loss) measured under ROC GAAP. The following table sets forth our segments information for the years indicated under ROC GAAP.



|                        |  |                                 |           |   |      |  |           |      |  |  |           |   |  |  |          |  
|----------------------- |  | ------------------------------- | --------- | - | ---- |  | --------- | ---- |  |  | --------- | - |  |  | -------- | -
|                        |  | For the year ended December 31, |          
|                        |  | 2009                            |           |   | 2010 |  |           | 2011 | 
|                        |  | NT$                             |           |   | NT$  |  |           | NT$  |  |  | US$       |  
|                        |  | (in millions)                   |          
|Net sales               |  |                                 |           |   |      |  |           |      |  |  |           |   |  |  |          |  
|Display business        |  |                                 | 357,033.5 |   |      |  | 456,725.6 |      |  |  | 366,482.6 |   |  |  | 12,107.1 |  
|Solar business          |  |                                 | 2,297.8   |   |      |  | 10,432.4  |      |  |  | 13,229.3  |   |  |  | 437.1    |  
|                        |  |                                 |           |   |      |  |           |      |  |  |           |   |  |  |          |  
|Total                   |  |                                 | 359,331.3 |   |      |  | 467,158.0 |      |  |  | 379,711.9 |   |  |  | 12,544.2 |  
|                        |  |                                 |           |   |      |  |           |      |  |  |           |   |  |  |          |  
|Operating income (loss) |  |                                 |           |   |      |  |           |      |  |  |           |   |  |  |          |  
|Display business        |  |                                 | (13,949.3 | ) |      |  | 13,102.7  |      |  |  | (54,433.2 | ) |  |  | (1,798.3 | )
|Solar business          |  |                                 | (1,289.8  | ) |      |  | (2,606.0  | )    |  |  | (3,225.3  | ) |  |  | (106.5   | )
|                        |  |                                 |           |   |      |  |           |      |  |  |           |   |  |  |          |  
|Total                   |  |                                 | (15,239.1 | ) |      |  | 10,496.7  |      |  |  | (57,658.5 | ) |  |  | (1,904.8 | )
|                        |  |                                 |           |   |      |  |           |      |  |  |           |   |  |  |          |  



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Display business

Net sales from our display business segment decrease 19.8% to NT$366,482.6 million (US $12,107.1 million) in 2011 from NT$456,725.6
million in 2010, primarily due to a 23.7% decrease in net sales of large-size panels, which was partially offset by a 14.6% increase in net sales of small- to medium-size panels. Operating expenses in our display business segment increased
18.2% to NT$28,657.5 million (US$946.7 million) in 2011 from NT$24,251.6 million in 2010, primarily due to an increase in research and development expenses. The increase in research and development expenses was primarily due to higher spending in
developing future advanced technologies and high value-added products to remain competitive in the markets we serve. We had operating loss from our display business segment of NT$54,433.2 million (US$1,798.3 million) in 2011 compared to operating
income of NT$13,102.7 million in 2010, primarily due to the decline in average selling prices and lower capacity utilization rate caused by the global economic downturn; moreover, the scale of the decrease in average selling prices was greater than
the scale of the decrease in cost of goods sold. For information of the changes in sales by product category for our display business segment, see 4.B. Business Overview  Display Business.

Net sales from our display business segment increased 27.9% to NT$456,725.6 million in 2010 from NT$357,033.5 million in 2009, primarily
due to a 26.3% increase in net sales of large-size panels and a 29.4% increase in net sales of small-size panels. Operating expenses in our display business segment increased 10.6% to NT$24,251.6 million in 2010 from NT$21,933.1 million in 2009,
primarily due to an increase in general and administrative expenses. The increase in general and administrative expenses was primarily due to an increase in employee bonus and salaries and the management fees paid to the Science Based Industrial
Park of the ROC, which were partially offset by less depreciation expenses and banking fees. We had an operating income from our display business segment of NT$13,102.7 million in 2010 compared to a loss of NT$13,949.3 million in 2009.

Under US GAAP, operating loss from our display business segment was NT$64,543.0 million (US$2,132.2 million) in 2011 as compared to
an operating income of NT$8,005.2 million in 2010 and an operating loss of NT$27,019.9 million in 2009. The primary differences in segment operating results under ROC GAAP versus US GAAP are depreciation of buildings, compensated absences
expense, etc. and reclassification of provisions for potential litigation losses and others from non-operating expense to operating expense. See Note 27 to our consolidated financial statements for further discussion of these GAAP differences.

Solar business

Net sales from our solar business increased to NT$13,229.3 million (US$437.1 million) in 2011 from NT$10,432.4 million in 2010. Segment operating loss increased to NT$3,225.3 million (US$106.5 million) in
2011 from NT$2,606.0 million in 2010. The primary reason for the increase in solar segment sales was because AUO Crystal (Malaysia) Sdn. Bhd. and AUO Crystal Corp. have begun mass production since the second quarter and the third quarter in 2011,
respectively. The main reason for the operating loss of solar business segment in 2011 was primarily due to a decline in average selling price of wafers and ingots; meanwhile, the operation of M. Setek was impacted by the major earthquake in Japan
that caused a decrease in net sales during the suspension period of production. The operating results from our solar business segment under US GAAP was not materially different from the operating results under ROC GAAP.

Net sales from our solar business increased to NT$10,432.4 million in 2010 from NT$2,297.8 million in 2009. Segment operating loss
increased to NT$2,606.0 million in 2010 from NT$1,289.8 million in 2009. The primary reason of the increase in the reported segment sales and losses is because a full year of segment results was included for 2010 whereas 2009 only included the
result of M. Setek from the date of consolidation. The main reason for the operating loss of solar business segment in 2010 was because the phase II of M. Setek Soma factory was under the start-up phase in 2010. See Note 27(a)(3) to our consolidated
financial statements for information relating to the nature and effect of significant differences between ROC GAAP and US GAAP as they relate to us.

Inflation

Our most significant markets are Taiwan and the PRC. We do not
believe that inflation in Taiwan or the PRC has had a material impact on our results of operations in 2011. However, we cannot provide assurance that in the event of significant variations in the nature, extent or scope of inflation within any of
our key markets in the future would not have a material impact on our results of operations.

Taxation

In the past, we had been granted exemptions from income taxes in Taiwan for construction and capacity expansions of production facilities
according to the Science Park Administration and the ROC Statute for Upgrading Industries. The exemption period may begin at any time within four to five years following the completion of a construction or expansion. The aggregate tax saving of such
exemption were approximately nil, NT$303.7 million and nil in 2009, 2010 and 2011, respectively.



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In addition, we have enjoyed other tax incentives generally available to technology
companies in the ROC, including tax credits ranging from 30% to 50% for the research and development expenses and employee training expenses, and tax credits at 7% for the investment in automation equipment and technology and certain qualifying
investments.

The ROC Statute for Upgrading Industries expired at the end of 2009 and we are no longer entitled to enjoy the
tax benefits of investment tax credits and the five-year tax exemptions starting from January 1, 2010 in connection with our purchases of qualifying machinery and equipment and capital raising. However, we are still eligible for those unexpired
tax credits and exemptions which were approved by the related authority before the expiration of the ROC Statute for Upgrading Industries.

The corporate income tax rate in Taiwan applicable to us was 25% for 2009, 17% for both 2010 and 2011. Effective from January 1, 2010, the statutory income tax rate has been reduced to 20% in
accordance with the ROC Income Tax Act. In June 2010, the ROC government promulgated another amendment of the Income Tax Law to reduce the income tax rate from 20% to 17%, effective retroactively on January 1, 2010. Therefore, the statutory
income tax rates applicable to AUO and its subsidiaries located in the ROC are both 17% in 2011 and 2010.

Pursuant to the
Statute of Income Basic Tax Amount (the IBTA Statute) announced in late 2005, an alternative minimum tax system became effective on January 1, 2006 in the ROC. When a taxpayers income tax amount is less than the basic tax
amount (BTA), a taxpayer is required to pay the regular income tax and the difference between the BTA and the regular income tax amount. For enterprises, BTA is determined using regular taxable income plus specific add-back items applied
with a basic tax rate ranging from 10% to 12%. The add-back items include exempt capital gain from non-publicly traded security transactions and exempt income under tax holidays. Currently, the basic tax rate set by the tax authority is 10%. There
are grandfathered treatments from the tax holidays approved by the tax authorities before IBTA Statute took effect. The IBTA Statute does not have a significant impact on our financial statements.

In 1997, the ROC Income Tax Law was amended to integrate the corporate income tax and shareholder dividend tax. Under such amendment,
after-tax earnings generated from January 1, 1998 and not distributed to shareholders as dividends in the following year will be subject to a 10% retained earnings tax. According to the amendment to the ROC Income Tax Law, which came into
effect on June 1, 2006, commencing from 2005, the undistributed retained earnings should be calculated in accordance with our earnings as determined under ROC GAAP and as reported in our audited consolidated financial statements rather than our
tax returns submitted to the ROC taxation authority. See Item 10.E. TaxationROC Tax ConsiderationsRetained Earnings Tax.

5.B. Liquidity and Capital Resources

We need cash
primarily for technology advancement, capacity expansion and working capital. Although we have historically been able to meet our working capital requirements through cash flow from operations, our ability to upgrade our technology and expand our
capacity has largely depended upon, and to a certain extent will continue to depend upon, our financing capability through the issuance of equity securities, long-term borrowings and the issuance of convertible and other debt securities. If adequate
funds are not available, whether on satisfactory terms or at all, we may be forced to curtail our growth plans including new capacity and advanced technology fabs. Our ability to meet our working capital needs from cash flow from operations will be
affected by our business conditions which in turn may be affected by several factors. Many of these factors are outside of our control, such as economic downturns and declines in the average selling prices of our products caused by oversupply in the
market. The average selling prices of our existing product lines are reasonably likely to be subject to further downward pressure in the future if oversupply occurs. To the extent that we do not generate sufficient cash flow from our operations to
meet our cash requirements, we may need to rely on external borrowings and securities offerings. Our subsidiaries must follow local regulations in order to transfer funds to us. However, such regulations have not and are not expected to have an
impact on our ability to meet our cash obligations. Other than as described below in Item 5.EOff-Balance Sheet Arrangements, we have not historically relied, and we do not plan to rely in the foreseeable future, on off-balance
sheet financing arrangements to finance our operations or expansion.

As of December 31, 2011, we had current assets of
NT$202,673.9 million (US$6,695.5 million) and current liabilities of NT$204,179.9 million (US$6,745.3 million). We expect to meet our working capital requirements as they become due and comply with current ratio covenants in our long-term loans and
facilities through cash flow from operations, supplemented as necessary by financing activities. In addition, we can drawdown on our existing long-term credit facilities.

As of December 31, 2011, we had cash and cash equivalents of NT$90,836.7 million (US$3,000.9 million). As of December 31, 2011, we had total short-term credit lines of NT$31,752.7 million
(US$1,049.0 million), of which we had borrowed NT$7,850.8 million (US$259.4 million). All of our short-term facilities are revolving with a term of one year, which may be extended for terms of one year each with lender consent. Our repayment
obligations under our short-term loans are unsecured. We believe that our existing credit lines under our short-term loans, together with cash generated from our operations, are sufficient to finance our current working capital needs.



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As of December 31, 2011, we had outstanding long-term borrowings of NT$198,957.1
million (US$6,572.7 million). The interest rates in respect of most of these long-term borrowings are variable, and as of December 31, 2011 ranged between 0.645% and 7.935% per year.

Below is a summary of our major outstanding borrowings and loans as of December 31, 2011. Please also see note 16 to our
consolidated financial statements for further information.



| |  |  | In July 2005, we entered into a NT$42.0 billion seven-year syndicated credit facility, for which the Bank of Taiwan acted as the agent bank, for the
purpose of funding the construction and purchase of machinery and equipment at our first 7.5-generation fab. The syndication agreement for this facility contains covenants that require us to maintain certain financial ratios. Our obligations under
this credit facility are secured by certain of our equipment and machinery. As of December 31, 2011, NT$8.2 billion (US$0.3 billion) was outstanding under this credit facility. We issued NT$5.0 billion secured corporate bonds under this credit
facility in March 2006. These bonds matured in March, 2011.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In August 2006, we entered into a RMB2.8 billion and US$75.0 million seven-year unsecured syndicated credit facility, for which ABN AMRO Bank acted as
the agent bank, for the purpose of funding the construction and purchase of machinery and equipment at our Suzhou and Xiamen module-assembly facilities. The syndication agreement for this facility contains covenants that require us to maintain
certain financial ratios. As of December 31, 2011, NT$4.8 billion (US$0.2 billion) was outstanding under this credit facility.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In September 2006, we entered into a NT$55.0 billion seven-year syndicated credit facility, for which Bank of Taiwan acted as the agent bank, for the
purpose of funding the construction and purchase of machinery and equipment at our second 7.5-generation fab. The syndication agreement for this facility contains covenants that require us to maintain certain financial ratios. Our obligations under
this credit facility are secured by certain of our equipment and machinery. As of December 31, 2011, NT$32.0 billion (US$1.1 billion) was outstanding under this credit facility. We issued NT$7.0 billion secured corporate bonds under this credit
facility in August 2008. As of December 31, 2011, the balance of the outstanding secured corporate bonds was NT$3.5 billion (US$0.1 billion).
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In October 2008, we entered into a NT$58.0 billion seven-year syndicated credit facility, for which the Bank of Taiwan acted as the agent bank, for the
purpose of funding the construction and purchase of machinery and equipment at our first 8.5-generation fab. The syndication agreement for this facility contains covenants that require us to maintain certain financial ratios. Our obligations under
this credit facility are secured by certain of our equipment and machinery. As of December 31, 2011, NT$58.0 billion (US$1.9 billion) was outstanding under this credit facility.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In July 2009, we entered into a NT$27.0 billion five-year syndicated credit facility, for which Mega International Commercial Bank acted as the agent
bank, for the purpose of funding medium- and long- term working capital. The syndication agreement for this facility contains covenants that require us to maintain certain financial ratios. Our obligations under this credit facility are secured by
certain of our equipment and machinery. As of December 31, 2011, NT$27.0 billion (US$0.9 billion) was outstanding under this credit facility.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In September 2010, our subsidiary, AFPD Pte., Ltd. (AFPD) entered into a US$0.36 billion five-year syndicated credit facility, for which
the Credit Agricole Corporate and Investment Bank, Singapore Branch acted as the agent bank, for the purpose of repaying AFPDs loan from Toshiba and funding working capital needs or capital expenditures. The syndication agreement for this
facility is guaranteed by us. As of December 31, 2011, US$0.36 billion was outstanding under this credit facility.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In October 2010, we issued US$0.8 billion aggregate principal amount of zero coupon convertible bonds due 2015. We used the net proceeds to fund
overseas equipment purchases. In September 2011, we early redeemed US$0.1 billion of the outstanding bonds at a cost of US$78.7 million. Please refer to note 15 to our consolidated financial statements for more detailed information. As of
December 31, 2011, the balance of the outstanding convertible bonds was US$0.7 billion.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In January 2011, we entered into a NT$45.0 billion five-year syndicated credit facility, for which the Bank of Taiwan acted as the agent bank, for the
purpose of funding medium-term working capital and repaying outstanding debts. The agreement for this syndicated facility contains covenants that require us to maintain certain financial ratios. Our obligations under this facility are secured by
certain of our equipment and machinery. As of December 31, 2011, NT$12.0 billion (US$0.4 billion) was outstanding under this credit facility.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In January 2011, our subsidiary, AUSK entered into a EUR80.0 million five-year credit facility with Unicredit Bank Slovakia A.S. for the purpose of
funding the construction and the procurement of machinery and equipment. The agreement for this credit facility has been guaranteed by us and requires us to maintain certain financial ratios. As of December 31, 2011, EUR35.0 million (US$45.4
million) was outstanding under this credit facility.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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We assumed the following outstanding bonds, credit facilities and arrangements as a
result of our merger with QDI:



| |  |  | In July 2005, QDI issued an aggregate principal amount of NT$6.0 billion of zero-coupon convertible bonds due July 2010. The initial conversion price
was NT$17.12 per share, subject to adjustment. The conversion price was adjusted to NT$44.10 per share in 2006 as a result of our merger. These bonds matured in July 2010.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In June 2006, QDI entered into a NT$27.0 billion seven-year syndicated credit facility, for which Mega International Commercial Bank acted as the agent
bank for the purpose of funding the expansion of one of our sixth generation fabs. The syndication agreement for this facility contains covenants that require us to maintain certain financial ratios. Our obligations under this credit facility are
secured by certain of our equipment and machinery. As of December 31, 2011, NT$10.8 billion (US$0.4 billion) was outstanding under this credit facility.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In July 2006, QDI entered into a NT$1.0 billion four-year credit facility with the Industrial Bank of Taiwan for working capital purposes. Our
obligations under this credit facility are secured by certain of our equipment and machinery. We fully repaid this credit facility in August 2010.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

With respect to all the syndicated credit facilities assumed by us as a result of our merger with QDI, we amended the terms of the credit facilities such that covenants made therein are the same as those
made in our syndicated credit facilities, including covenants that we maintain certain financial ratios. We completed the amendments in early 2007.

In addition, M. Setek entered into the following outstanding credit facilities after our acquisition:



| |  |  | In December 2009, M. Setek entered into a JPY21.0 billion five-year syndicated credit facility, for which Mizuho Corporate Bank acted as the agent
bank. We fully repaid this credit facility in April 2011.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In October 2010, M. Setek entered into a JPY6.0 billion five-year credit facility with the Bank of China Limited, Tokyo Branch for the purpose of
financing the second phase expansion of the Soma factory. The agreement for this credit facility has been guaranteed by us and it requires us to maintain certain financial covenants. As of December 31, 2011, JPY6.0 billion (US$0.08 billion) was
outstanding under this credit facility.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In October 2010, M. Setek entered into a JPY4.0 billion five-year credit facility with the Bank of China (Hong Kong) Limited for the purpose of
financing the second phase expansion of Soma plant and general working capital needs. The agreement for this credit facility has been guaranteed by us and requires us to maintain certain financial ratios. As of December 31, 2011, JPY4.0 billion
(US$0.05 billion) was outstanding under this credit facility.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In November 2010, M. Setek entered into a JPY10.0 billion five-year credit facility with the ING Bank N.V., Tokyo Branch for the purpose of refinancing
bank loan and financing capital expenditure needs. The agreement for this facility is guaranteed by us and requires us to maintain certain financial ratios. As of December 31, 2011, JPY10.0 billion (US$0.13 billion) was outstanding under this
credit facility.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In April 2011, M. Setek entered into a JPY55.0 billion five-year credit facility with Mizuho Corporate Bank, Ltd., for the purpose of refinancing its
syndicated loan with Mizuho Corporate Bank dated December 2009 and for funding general working capital. We have guaranteed payment and performance by M. Setek under this credit facility. Under our guaranty we are required to maintain certain
financial ratios. As of December 31, 2011, JPY 37.5 billions (US$0.48 billion) was outstanding under this credit facility.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We also assumed three other credit facilities that M. Setek entered into in December 2005 (a JPY2.0 billion five-year credit facility), March 2006 (a
JPY8.0 billion seven-year syndicated credit facility) and March 2006 (a JPY7.0 billion seven-year credit facility), respectively, under which M. Setek had breached certain financial covenants. On June 25, 2010, we repaid all outstanding
amounts of JPY8,625.0 million under the three credit facilities and we have not had any material impact on our financial position as a result of such financial covenant breach after our full repayment.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The carrying amount of our assets pledged as collateral to secure our obligations under our long-term borrowings and bonds, including
building, machinery and equipment, land and available-for-sale financial assets-noncurrent amounted to NT$255,282.4 million (US$8,433.5 million) as of December 31, 2011.

Our long-term loans and facilities contain various financial and other covenants that could trigger a requirement for early payment. Among other things, these covenants require the maintenance of certain
financial ratios, such as current ratio, indebtedness ratio, interest coverage ratio, minimum equity requirements and other technical requirements. In general, covenants in the agreements governing our existing debt, and debt we may incur in the
future, may materially restrict our operations, including our ability to incur debt, pay dividends, make certain investments and payments and encumber or dispose of assets. A default under one debt instrument may also trigger cross-defaults under
our other debt instruments. An event of default under any debt instrument, if not cured or waived, could have a material adverse effect on our liquidity, as well as our financial condition and operations. As of December 31, 2011, we were in
compliance with all financial and other covenants under our long-term loans and credit facilities.



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We also enter into reverse repurchase agreements with securities firms or banks in Taiwan
covering government and quasi-government bonds for short-term liquidity-management purposes. These bonds yielded interest at rates ranging from, 0.11% to 1.88%, 0.25% to 0.32% and 0.46% to 0.70% in 2009, 2010 and 2011, respectively. The terms of
these reverse repurchase agreements are typically less than one month. As of December 31, 2009, 2010 and 2011, we held government bonds with reverse repurchase agreements in amounts of NT$11,882.9 million, NT$18,811.6 million, and NT$16,243.7
million (US$536.6 million), respectively.

Cash Flows

Net cash provided by operating activities amounted to NT$57,041.0 million in 2009, NT$90,735.6 million in 2010 and NT$14,515.1 million
(US$479.5 million) in 2011. The decrease in net cash provided by operating activities in 2011 compared to 2010 was primarily due to decreased cash collections from our ordinary operations as a result of decreased average selling prices and weaker
market demand. Cash outflows in 2011 increased primarily for higher expenditures on developing future advanced technologies and high value-added products as well as for product promotion fees and professional service fees. The increase in net cash
provided by operating activities in 2010 compared to 2009 was primarily due to increased cash collections from the ordinary business as a result of a stronger demand in the TFT-LCD industry in 2010 compared to 2009 and an increased margin due to
higher selling prices of our product mix sold in 2010. Cash outflows in 2010 increased primarily for additional purchases of raw materials, production overheads, employee costs, and selling, general and administrative expenses mainly due to
increased production levels to meet 2010 sales demands.

Net cash used for investing activities was NT$66,616.7 million in
2009, NT$87,218.3 million in 2010 and NT$57,829.0 million (US$1,910.4 million) in 2011. Net cash used for investing activities primarily reflected capital expenditures for property, plant and equipment of NT$61,046.9 million in 2009, NT$84,621.0
million in 2010 and NT$56,919.6 million (US$1,880.4 million) in 2011. These capital expenditures were primarily funded with net cash provided by operating activities and financing activities, primarily from long-term bank borrowings.

Net cash provided by financing activities was NT$11,925.3 million in 2009, reflecting primarily an increase in proceeds from long-term
borrowings and bonds payable of NT$66,844.4 million, which was partially offset by repayment of long-term borrowings and bonds payable for NT$49,291.8 million and a decrease in short-term borrowings for NT$4,901.7 million. Net cash provided by
financing activities was NT$878.2 million in 2010, reflecting primarily an increase in proceeds from long-term borrowings, bonds payable and the proceeds from the issuance of convertible bonds for NT$62,609.9 million, which was partially offset by
the repayment of long-term borrowings and repayment of bonds payable for NT$60,610.9 million. Net cash provided by financing activities was NT$45,835.9 million (US$1,514.2 million) in 2011, reflecting primarily an increase in the proceeds from
long-term debts for NT$89,647.5 million (US$2,961.6 million), and a decrease in repayment of long-term debts for NT$47,654.6 million (US$1,574.3 million).

Capital Expenditures

We have made, and expect to continue to make,
capital expenditures in connection with technology advancement and the expansion of our production capacity. Substantially all of capital expenditures are invested in facilities located in Taiwan and the PRC. The table below sets forth our principal
capital expenditures, paid or committed, for the periods indicated.



|                            |  |               |          |  |      |  |          |      |  |  |          |  |  |  |         | 
|--------------------------- |  | ------------- | -------- |  | ---- |  | -------- | ---- |  |  | -------- |  |  |  | ------- | 
|                            |  | 2009          |          |  | 2010 |  |          | 2011 | 
|                            |  | NT$           |          |  | NT$  |  |          | NT$  |  |  | US$      | 
|                            |  | (in millions) |         
|Equipment purchases         |  |               | 49,018.0 |  |      |  | 57,240.8 |      |  |  | 45,934.4 |  |  |  | 1,517.5 | 
|Land and building purchases |  |               | 13,412.3 |  |      |  | 21,903.0 |      |  |  | 8,949.5  |  |  |  | 295.7   | 

We are sometimes required to prepay our purchases of land and equipment. Prepayments for purchases of
land are the result of a standard processing procedure by the ROC government related to the transfer of legal title. Prepayments for purchases of equipment result from contractual agreements involving down payments to suppliers when the equipment is
ordered by us. As of December 31, 2009, 2010, and 2011, prepayments for purchases of equipment amounted to NT$26,583.7 million, NT$54,266.1 million and NT$19,670.1 million (US$649.8 million), respectively.

Our capital expenditures paid for in 2011 were around NT$56.9 billion (US$1.9 billion), primarily for the installation of our second
8.5-generation fab, the enhancement of value of capacity, and the development of our solar business.

We estimate our capital
expenditures to be around NT$40.0 billion for 2012, primarily for technological upgrade and the enhancement of capacity value. We may increase or decrease our capital expenditures depending on cash flow from operations, the progress of our planned
growth, and market conditions.



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We believe that our existing cash, cash equivalents, short-term investments, expected cash
flow from operations and borrowings under our existing and future credit facilities should be sufficient to meet our present capital expenditure, working capital, cash obligations under our existing debt and lease arrangements and other
requirements. We frequently need to invest in new capacity and new technologies to improve our economies of scale, reduce our production costs and enrich our product portfolio, which may require us to raise additional capital. However, we cannot
assure you that we will be able to raise additional capital should it become necessary on terms acceptable to us or at all. See 3.D. Risk FactorsRisks Relating to Our Financial Condition, Business and IndustryIf capital resources
required for our planned growth or development are not available, we may be unable to successfully implement our business strategy.

5.C. Research and Development

We incurred research and development costs of NT$6,185.5 million, NT$6,423.6 million and
NT$8,625.8 million (US$285.0 million) in 2009, 2010, and 2011 respectively, which represented 1.7%, 1.4%, and 2.3%, respectively, of our net sales.

Our research and development activities are principally directed toward advancing our technologies in key components, manufacturing processes and product development, with the objective of improving the
features of our products and services to bring added value to our customers in addition to design products that meet their specific requirements. We have a product development team dedicated to each of our primary product categories. Each of these
teams focuses on the development of our existing and potential new products. To support our fabs, we maintain a centralized research and development team that works to improve our manufacturing processes and production yield, which includes focuses
on computer integrated manufacturing and key component vendors. In addition, we have several research and development teams to explore new design platforms for next-generation displays, such as OLED, 3D and touch technologies. Monetary incentives
are provided to our employees if research projects result in successful patents. As of December 31, 2011, we employed approximately 3,017 research and development engineers.

We established a dedicated flat panel research and development center, the AUO Technology Center, in 2002, which we believe is one of
Taiwans largest optronics research and development centers. The research activities at the AUO Technology Center initially have been divided into several general areas, including advanced technology development in new liquid crystal materials,
new system electronics, new backlight unit technologies, image and color processing, and LTPS. In addition to new product development and module processing, the AUO Technology Center also focuses on improving our current TFT-LCD panel product and
manufacturing process technologies. In 2005, we expanded the AUO Technology Center to the Central Taiwan Science Park. In 2008, we established the Advance Research Center under the AUO Technology Research Center to focus on the development of new
technologies and mid- to-long term technologies.

In 2009, we developed certain innovative technologies. We developed a
65-inch QFHD 2D/3D mixed mode ultra high resolution display which can display four programs at the same time. We also developed a 65-inch QFHD Ultra Thin 7.9 mm panel with LED backlight which features 3,840 x 2,160 resolution. It can offer a dynamic
contrast ratio up to 2,000,000:1 and power saving of 50%. We launched a 58-inch 21:9 aspect ratio ultra-wide home theater display for home use. It has 2,560x1,080 ultra-wide resolution and can display 21:9 films without black bars. The display also
features a 120Hz double frame rate, that will provide a viewing experience just like in the theater. Based on our past experience in AMVA development, we developed AMVA5 technology with a contrast ratio of 16,000:1 and 20% higher transmittance,
compared to AMVA3 technology. We also developed a series of Eco-products with LED backlight and light-weight module designs to promote environmental protection and green technology. In 2009, we also released a series of electronic paper display such
as 6-inch e-book panel with embedded touch panel and demonstrated a 20-inch electronic paper display module. In addition, we also showcased a 14-inch OLED panel with Full HD resolution with contrast ratio of 100,000:1 and 16 million colors.

In 2010, we exhibited a series of critical innovative technologies in order to prove that we are dedicated to the research
and development of products characterized by a focus on green energy and the application of new technologies. For example, we developed many products featuring new advanced 3D display technologies, including the worlds largest 71-inch 21:9 3D
home theater LCD TV panel for maximum visual enjoyment, the 65-inch naked eye QFHD 4K2K lenticular lens high resolution 3D panel, the 65-inch 3D polarized LCD TV panel with video game applications, the 15.6-inch and 10.1-inch naked eye 3D panel
suitable for use with flat panels and notebooks, the 4-inch 3D interactive touch panel used in smartphones. In addition, within the context of the growing trend toward eco-friendly products, we exhibited the worlds first 14-inch solar-powered
touch keyboard notebook panel as well as the industrys first ultra-slim 21.5-inch displayport monitor with wide viewing angles. In addition, we presented a new designthe 3.2-inch dual-side, ultra-low-power Memory in Pixel
(MIP) display. The design lowers power consumption from 420mW to 1mW, which represents a 99.8% decrease in consumption. We also extended our touch panel technology to E-board applications by introducing the industrys first 32-inch
in-cell touch panel with an optical color pen function. In terms of panels with ten touch points, we are presenting the 32-inch, 24-inch and 10-inch touch panels. Utilizing a one-glass solution, the 7-inch and 5-inch touch panels are 60% slimmer and
lighter than conventional touch panels, consume 10% less power, and boast better penetration and brightness. We have developed 6-inch flexible oxide TFT e-paper. We have also developed 2-inch to 4-inch portable e-tags that have special
specifications on low power consumption and reuse to lower large scale chain-like circuit business costs. In the OLED advanced technology, we showcased a new 14-inch 3D AMOLED TV panel with a Full HD resolution 1920x1080 pixel.



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##### Table of Contents

In 2011, following some innovative technologies developed in 2010, we extended these
technologies to a wide variety of applications in different fields. We demonstrated a 65-inch see-through LCD panel, which characterized by a FHD resolution and as high as 15% panel transmittances, is used for the front side of vending machines. We
also exhibited a prototyped 32-inch TV equipped with IGZO (In-Ga-Zn-O) TFT-driven OLED panel, which performs a high response speed of 0.01ms and a thickness of only 3 mm. In addition, we apply our unique technology in flexible substrate to OLED and
E-paper applications. A 4-inch flexible OLED, featuring by low-temperature process of amorphous IGZO TFT as driving elements, was realized through a thickness of only 0.3 mm plastic substrate. We also showcased a device, called un-plugged
flexible E-paper, which is made by attaching a flexible thin-film photovoltaic (PV) to the back of flexible electronic paper (e-paper). The flexible e-paper, whose power consumption is small, can be driven when it is exposed to direct sunlight
and does not need a rechargeable battery. In touch applications, we developed a 27-inch product by using OGS (One glass solution) technology, which allows ten-touch points at the same time. In addition, a 65-inch product with optical-pen touch
function was also developed by using technology of photo sensor in TFT array. For notebook (NB) application, we developed products with personalized privacy protection display and OGS touch function, which reduce panel weight up to 33%. For
application on public information display (PID), we demonstrated a 138-inch TV wall by using a 46-inch TV panel with ultra-slim bezel, which shortening the display gap to as low as 5 mm. Besides slim TV, we also developed an ultra high resolution
(330 dpi) of mobile display (4.46 inch) with only 1 mm bezel by using amorphous TFT driving.

5.D. Trend
Information

For trend information, see Item 4. Information on the Company  4.B. Business Overview and
Item 5. Operating and Financial Review and Prospects5.A. Operating Results.

5.E. Off-Balance
Sheet Arrangements

We have, from time to time, entered into non-derivative financial instruments, including letters of
credit, to finance or secure our purchase payment obligations. As of December 31, 2011, we had off-balance sheet outstanding letters of credit of US$6.3 million, JPY2,819.4 million, EUR 6.2 million, RMB 0.9 million and NT$10.8
million.

5.F. Tabular Disclosure of Contractual Obligations

The following tables set forth our contractual obligations and commitments with definitive payment terms which will require significant
cash outlays in the future as of December 31, 2011.



|                               |  |                        |           |  |                 |  |          |           |  |  |           |  |  |                  |          |  |  |  |         | 
|------------------------------ |  | ---------------------- | --------- |  | --------------- |  | -------- | --------- |  |  | --------- |  |  | ---------------- | -------- |  |  |  | ------- | 
|                               |  | Payments due by Period |          
|                               |  | Total                  |           |  | Less than1 year |  |          | 1-3 years |  |  | 3-5 years |  |  | More than5 years |         
|                               |  | NT$                    |           |  | NT$             |  |          | NT$       |  |  | NT$       |  |  | NT$              |         
|                               |  | (in millions)          |          
|Contractual Obligations        |  |                        |           |  |                 |  |          |           |  |  |           |  |  |                  |          |  |  |  |         | 
|Long-term debt obligations(1)  |  |                        | 224,308.6 |  |                 |  | 46,432.7 |           |  |  | 98,603.3  |  |  |                  | 79,272.6 |  |  |  |        | 
|Operating lease obligations(2) |  |                        | 6,973.3   |  |                 |  | 1,009.2  |           |  |  | 1,379.7   |  |  |                  | 506.0    |  |  |  | 4,078.4 | 
|Purchase obligations(3)        |  |                        | 36,301.5  |  |                 |  | 36,301.5 |           |  |  |          |  |  |                  |         |  |  |  |        | 
|                               |  |                        |           |  |                 |  |          |           |  |  |           |  |  |                  |          |  |  |  |         | 
|Total                          |  |                        | 267,583.4 |  |                 |  | 83,743.4 |           |  |  | 99,983.0  |  |  |                  | 79,778.6 |  |  |  | 4,078.4 | 
|                               |  |                        |           |  |                 |  |          |           |  |  |           |  |  |                  |          |  |  |  |         | 



|(1) | Includes bonds payable, convertibles bonds payable and long-term borrowings and estimated relevant interest payments in any given period in the future. The interest
rates are based on implied forward rates in the yield curve at the reporting date and managements expectations for future interest rates. See notes 14, 15 and 16 to our consolidated financial statements for further information regarding
interest rates and future repayment of long-term debts.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents our obligations to make lease payments to use the land on which our fabs and module-assembly facilities are located.
|--- | -------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes purchase orders for the machinery and equipment at our fabs. We have placed orders primarily related to the technological upgrade and the enhancement of value
of capacity.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition to the contractual obligations set forth above, we also have continuing obligations to
make cash royalty payments under our technology license agreements, the amounts of which are determined based on our use of such technology and patents. Pursuant to relevant regulatory requirements, we estimate that we will contribute approximately
NT$106.5 million to our pension fund maintained with the Bank of Taiwan in 2012.

We have not entered into any financial
guarantees or similar commitments to guarantee the payment obligations of non-affiliated third parties. Our long-term loan and lease agreements include provisions that require early payment under certain conditions. The terms of our credit
facilities for long-term borrowings also contain financial covenants, including current ratio, indebtedness ratio, interest coverage ratio, minimum equity requirements and other technical requirements. Our debt under these facilities may be
accelerated if there is a default, including defaults triggered by failure to comply with these financial covenants and other technical requirements. As of December 31, 2011, we were in compliance with all financial covenants and other
technical requirements under our credit facilities, except our subsidiary M. Setek breached certain financial covenants under three of its loan agreements in 2009. On June 25, 2010, we repaid all outstanding amounts of JPY8,625.0 million under
the three credit facilities and we have not experienced any material impact on our financial position as a result of such financial covenant breach after our full repayment. Please refer to Item 5. Operating and Financial Review and Prospect
5.B. Liquidity and Capital Resources.



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##### Table of Contents

US GAAP Reconciliation

The following table sets forth a comparison of our net income (loss) attributable to stockholders of AU Optronics Corp. and equity attributable to stockholders of AU Optronics Corp. in accordance with ROC
GAAP and US GAAP for the periods indicated.



|                                                                                        |  |                                   |           |   |      |  |           |      |  |  |           |   |  |  |          |  
|--------------------------------------------------------------------------------------- |  | --------------------------------- | --------- | - | ---- |  | --------- | ---- |  |  | --------- | - |  |  | -------- | -
|                                                                                        |  | Year Ended and as of December 31, |          
|                                                                                        |  | 2009                              |           |   | 2010 |  |           | 2011 | 
|                                                                                        |  | NT$                               |           |   | NT$  |  |           | NT$  |  |  | US$       |  
|                                                                                        |  | (in millions)                     |          
|Net income (loss) attributable to stockholders of AU Optronics Corp. in accordance with |  |                                   |           |   |      |  |           |      |  |  |           |   |  |  |          |  
|ROC GAAP                                                                                |  |                                   | (26,769.3 | ) |      |  | 6,692.7   |      |  |  | (61,263.8 | ) |  |  | (2,023.9 | )
|US GAAP                                                                                 |  |                                   | (28,670.3 | ) |      |  | 4,244.3   |      |  |  | (80,948.2 | ) |  |  | (2,674.2 | )
|Equity attributable to stockholders of AU Optronics Corp. in accordance with            |  |                                   |           |   |      |  |           |      |  |  |           |   |  |  |          |  
|ROC GAAP                                                                                |  |                                   | 262,087.1 |   |      |  | 268,160.9 |      |  |  | 205,388.7 |   |  |  | 6,785.2  |  
|US GAAP                                                                                 |  |                                   | 266,269.0 |   |      |  | 270,390.1 |      |  |  | 187,658.7 |   |  |  | 6,199.5  |  

See note 27 to our consolidated financial statements for a complete discussion of significant differences
between ROC GAAP and US GAAP.

Recent ROC GAAP Accounting Pronouncements

Pursuant to the regulation no. 0990004943 issued by the Financial Supervisory Commission (FSC), starting in 2013, companies
with shares listed on the Taiwan Stock Exchange or traded on the Taiwan GreTai Securities Market or Emerging Stock Market should prepare their financial statements in accordance with International Financial Reporting Standards, International
Accounting Standards, and the Interpretations as well as related guidances (collectively, IFRSs) translated by the Accounting Research and Development Foundation and issued by the FSC. We are currently evaluating the impact of adopting
of IFRSs on our consolidated financial position and results of operations. The change of accounting policies, resulting from the adoption of IFRSs, which may significantly impact on our results of operations commencing 2013 includes income tax,
employee benefits, convertible bonds, equity-method investment and business-combination related issues.

Recent
US GAAP Accounting Pronouncements

In May 2011, the FASB issued Accounting Standard Update No. 2011-04,
Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments that change a particular principle or requirement for measuring fair value or
disclosing information about fair value measurements include (i) measuring the fair value of financial instruments that are managed within a portfolio, (ii) application of premium and discounts in a fair value measurement; and
(iii) additional disclosures about fair value measurements including quantitative information about the unobservable inputs used in a fair value measurement that is categorized within Level 3 of the fair value hierarchy. The new guidance is
effective prospectively during interim and annual periods beginning after December 15, 2011. Management currently does not anticipate that the new guidance will have a material effect on the Companys results of operations and financial
position or cash flows.

In June and December 2011, the FASB issued Accounting Standard Update No. 2011-05 and
No. 2011-12, Comprehensive Income (Topic 220). An entity is required to present components of net income, components of other comprehensive income, and a total amount of comprehensive income either in a single continuous statement
of comprehensive income or in two separate but consecutive statements. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net
income. The new guidance should be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Management intends to present components of net income and other
comprehensive income in a single continuous condensed consolidated statement of comprehensitve income for US GAAP purposes starting 2012.

In September 2011, the FASB issued Accounting Standard Update No. 2011-08, IntangiblesGoodwill and Other (Topic 350): Testing Goodwill for Impairment. Under the amendments in this
update, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its
carrying amount. In that event, the quantitative impairment test is required. Otherwise, no further testing is required. The new guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after
December 15, 2011. The adoption of this ASU will have no impact on our financial position and results of operations but will affect our assessment procedures of goodwill for impairment commencing 2012.



20



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##### Table of Contents

PART III



|ITEM 18. | FINANCIAL STATEMENTS
|-------- | --------------------

Our
consolidated financial statements and the report thereon by our independent registered public accounting firm listed below are included herein as follows:



| | (a) | Report of Independent Registered Public Accounting Firm.
| | --- | --------------------------------------------------------



| | (b) | Consolidated Balance Sheets of AU Optronics Corp. and subsidiaries as of December 31, 2010 and 2011.
| | --- | ----------------------------------------------------------------------------------------------------



| | (c) | Consolidated Statements of Operations of AU Optronics Corp. and subsidiaries for the years ended December 31, 2009, 2010 and 2011.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------



| | (d) | Consolidated Statements of Stockholders Equity of AU Optronics Corp. and subsidiaries for the years ended December 31, 2009, 2010 and 2011.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | Consolidated Statements of Cash Flows of AU Optronics Corp. and subsidiaries for the years ended December 31, 2009, 2010 and 2011.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------



| | (f) | Notes to Consolidated Financial Statements of AU Optronics Corp. and subsidiaries.
| | --- | ----------------------------------------------------------------------------------



|ITEM 19. | EXHIBITS
|-------- | --------



|     |  |                                                                                                                                                                                     
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|12.1 |  | Certification of Shuang-Lang (Paul) Peng, President of AU Optronics Corp., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|     | 
|12.2 |  | Certification of Andy Yang, Chief Financial Officer of AU Optronics Corp., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|     | 
|13.1 |  | Certification of Shuang-Lang (Paul) Peng, President of AU Optronics Corp., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|     | 
|13.2 |  | Certification of Andy Yang, Chief Financial Officer of AU Optronics Corp., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



21



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##### Table of Contents

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.



AU OPTRONICS CORP.By:

/S/ SHUANG-LANG (PAUL) PENGName:

Shuang-Lang (Paul) PengTitle:

President


Date: September 26, 2012



22



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##### Table of Contents

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                         |  |      |      | 
|------------------------------------------------------------------------ |  | ---- | ---- | 
|                                                                         |  | Page |     
|Consolidated Financial Statements of AU Optronics Corp. and Subsidiaries |  |      |      | 
|Report of Independent Registered Public Accounting Firm                  |  |      | F-1  | 
|Consolidated Balance Sheets                                              |  |      | F-2  | 
|Consolidated Statements of Operations                                    |  |      | F-4  | 
|Consolidated Statements of Stockholders Equity                          |  |      | F-6  | 
|Consolidated Statements of Cash Flows                                    |  |      | F-9  | 
|Notes to Consolidated Financial Statements                               |  |      | F-11 | 



23



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##### Table of Contents

AU OPTRONICS CORP.

AND SUBSIDIARIES

Consolidated Financial Statements

December 31, 2009, 2010 and 2011

(With Report of Independent Registered Public Accounting Firm)

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

AU Optronics Corp.:

We have audited the accompanying consolidated balance sheets of AU Optronics Corp. and subsidiaries (the Company) as of December 31,
2010 and 2011, and the related consolidated statements of operations, stockholders equity, and cash flows for each of the years in the three-year period ended December 31, 2011. These consolidated financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of AU Optronics
Corp. and subsidiaries as of December 31, 2010 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2011, in conformity with accounting principles generally
accepted in the Republic of China.

The consolidated financial statements as of and for the year ended December 31, 2011, have been
translated into United States dollars solely for the convenience of the readers. We have audited the translation, and in our opinion, the consolidated financial statements expressed in New Taiwan dollars have been translated into United States
dollars on the basis set forth in note 3(z) to the consolidated financial statements.

Accounting principles generally accepted in the
Republic of China vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in note 27 to the consolidated
financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), AU Optronics Corp.s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), and our report dated April 27, 2012, expressed an unqualified opinion on the effectiveness of the Companys internal control over financial reporting.



|                                   
|-----------------------------------
|/s/ KPMG                           
|Hsinchu, Taiwan (Republic of China)
|April 27, 2012                     



F-1



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2010 and 2011

(Expressed in thousands of New Taiwan dollars and US dollars)



|                                                                |  |      |              |   |      |  |              |     |  |  |             |  
|--------------------------------------------------------------- |  | ---- | ------------ | - | ---- |  | ------------ | --- |  |  | ----------- | -
|                                                                |  | 2010 |              |   | 2011 | 
|                                                                |  | NT$  |              |   | NT$  |  |              | US$ | 
|Assets                                                          |  |      |              |   |      |  |              |     |  |  |             |  
|Current assets:                                                 |  |      |              |   |      |  |              |     |  |  |             |  
|Cash and cash equivalents (note 4)                              |  |      | 89,498,491   |   |      |  | 90,836,668   |     |  |  | 3,000,881   |  
|Notes and accounts receivable, net (note 8)                     |  |      | 50,595,501   |   |      |  | 44,747,926   |     |  |  | 1,478,293   |  
|Receivables from related parties, net (note 22)                 |  |      | 9,320,432    |   |      |  | 6,783,605    |     |  |  | 224,103     |  
|Other receivables from related parties (note 22)                |  |      | 72,696       |   |      |  | 191,499      |     |  |  | 6,326       |  
|Other current financial assets (note 8)                         |  |      | 587,850      |   |      |  | 1,280,078    |     |  |  | 42,289      |  
|Inventories, net (note 9)                                       |  |      | 44,568,106   |   |      |  | 47,881,948   |     |  |  | 1,581,829   |  
|Prepayments and other current assets (notes 8, 22, 23 and 24)   |  |      | 4,539,631    |   |      |  | 8,562,426    |     |  |  | 282,868     |  
|Deferred tax assetscurrent (note 19)                           |  |      | 5,375,623    |   |      |  | 2,304,158    |     |  |  | 76,120      |  
|Financial assets measured at fair valuecurrent (note 7)        |  |      | 427,265      |   |      |  | 85,621       |     |  |  | 2,829       |  
|                                                                |  |      |              |   |      |  |              |     |  |  |             |  
|Total current assets                                            |  |      | 204,985,595  |   |      |  | 202,673,929  |     |  |  | 6,695,538   |  
|                                                                |  |      |              |   |      |  |              |     |  |  |             |  
|Long-term investments:                                          |  |      |              |   |      |  |              |     |  |  |             |  
|Equity-method investments (note 10)                             |  |      | 15,540,959   |   |      |  | 15,917,335   |     |  |  | 525,845     |  
|Available-for-sale financial assetsnoncurrent (notes 5 and 23) |  |      | 1,373,687    |   |      |  | 436,774      |     |  |  | 14,429      |  
|Financial assets measured at fair valuenoncurrent (note 7)     |  |      |             |   |      |  | 175          |     |  |  | 6           |  
|Financial assets carried at costnoncurrent (notes 6 and 10)    |  |      | 896,294      |   |      |  | 1,487,795    |     |  |  | 49,151      |  
|                                                                |  |      |              |   |      |  |              |     |  |  |             |  
|Total long-term investments                                     |  |      | 17,810,940   |   |      |  | 17,842,079   |     |  |  | 589,431     |  
|                                                                |  |      |              |   |      |  |              |     |  |  |             |  
|Property, plant and equipment(notes 11, 22 and 23):             |  |      |              |   |      |  |              |     |  |  |             |  
|Land                                                            |  |      | 8,052,370    |   |      |  | 9,365,481    |     |  |  | 309,398     |  
|Buildings                                                       |  |      | 113,542,262  |   |      |  | 123,995,592  |     |  |  | 4,096,320   |  
|Machinery and equipment                                         |  |      | 661,815,861  |   |      |  | 730,389,859  |     |  |  | 24,129,166  |  
|Other equipment                                                 |  |      | 37,144,773   |   |      |  | 39,394,042   |     |  |  | 1,301,422   |  
|                                                                |  |      |              |   |      |  |              |     |  |  |             |  
|                                                                |  |      | 820,555,266  |   |      |  | 903,144,974  |     |  |  | 29,836,306  |  
|Less: accumulated depreciation                                  |  |      | (493,695,739 | ) |      |  | (572,623,757 | )   |  |  | (18,917,204 | )
|Construction in progress                                        |  |      | 2,714,407    |   |      |  | 8,259,938    |     |  |  | 272,875     |  
|Prepayments for purchases of land and equipment                 |  |      | 54,293,812   |   |      |  | 19,697,808   |     |  |  | 650,737     |  
|                                                                |  |      |              |   |      |  |              |     |  |  |             |  
|Net property, plant and equipment                               |  |      | 383,867,746  |   |      |  | 358,478,963  |     |  |  | 11,842,714  |  
|                                                                |  |      |              |   |      |  |              |     |  |  |             |  
|Intangible assets:                                              |  |      |              |   |      |  |              |     |  |  |             |  
|Goodwill (note 12)                                              |  |      | 11,454,512   |   |      |  | 11,456,176   |     |  |  | 378,466     |  
|Technology-related fees (notes 12 and 24)                       |  |      | 2,607,455    |   |      |  | 3,971,926    |     |  |  | 131,217     |  
|                                                                |  |      |              |   |      |  |              |     |  |  |             |  
|Total intangible assets                                         |  |      | 14,061,967   |   |      |  | 15,428,102   |     |  |  | 509,683     |  
|                                                                |  |      |              |   |      |  |              |     |  |  |             |  
|Other assets:                                                   |  |      |              |   |      |  |              |     |  |  |             |  
|Idle assets, net (note 11)                                      |  |      | 1,760,638    |   |      |  | 1,697,615    |     |  |  | 56,082      |  
|Refundable deposit                                              |  |      | 176,141      |   |      |  | 404,751      |     |  |  | 13,371      |  
|Deferred charges                                                |  |      | 2,593,372    |   |      |  | 3,321,469    |     |  |  | 109,728     |  
|Deferred tax assetsnoncurrent (note 19)                        |  |      | 3,379,370    |   |      |  | 11,064,101   |     |  |  | 365,514     |  
|Restricted cash in bank (note 23)                               |  |      | 162,221      |   |      |  | 158,509      |     |  |  | 5,237       |  
|Others (notes 17, 22 and 24)                                    |  |      | 517,779      |   |      |  | 1,708,626    |     |  |  | 56,446      |  
|                                                                |  |      |              |   |      |  |              |     |  |  |             |  
|Total other assets                                              |  |      | 8,589,521    |   |      |  | 18,355,071   |     |  |  | 606,378     |  
|                                                                |  |      |              |   |      |  |              |     |  |  |             |  
|Total Assets                                                    |  |      | 629,315,769  |   |      |  | 612,778,144  |     |  |  | 20,243,744  |  
|                                                                |  |      |              |   |      |  |              |     |  |  |             |  



F-2



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Balance Sheets (continued)

December 31, 2010 and 2011

(Expressed in thousands of New Taiwan
dollars and US dollars, except for par value)



|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|------------------------------------------------------------------------ |  | ---- | ----------- |  | ---- |  | ----------- | --- |  |  | ---------- | -
|                                                                         |  | 2010 |             |  | 2011 | 
|                                                                         |  | NT$  |             |  | NT$  |  |             | US$ | 
|Liabilities and Stockholders Equity                                     |  |      |             |  |      |  |             |     |  |  |            |  
|Current liabilities:                                                     |  |      |             |  |      |  |             |     |  |  |            |  
|Short-term borrowings (note 13)                                          |  |      | 1,183,248   |  |      |  | 7,850,793   |     |  |  | 259,359    |  
|Notes payable and accounts payable                                       |  |      | 73,657,842  |  |      |  | 65,244,893  |     |  |  | 2,155,431  |  
|Payables to related parties (note 22)                                    |  |      | 20,124,665  |  |      |  | 17,454,179  |     |  |  | 576,616    |  
|Accrued expenses and other current liabilities (note 10)                 |  |      | 38,233,627  |  |      |  | 48,250,072  |     |  |  | 1,593,990  |  
|Financial liabilities measured at fair valuecurrent (note 7)            |  |      | 268,827     |  |      |  | 17,523      |     |  |  | 579        |  
|Other payables to related parties (note 22)                              |  |      | 98,601      |  |      |  | 168,004     |     |  |  | 5,550      |  
|Equipment and construction in progress payable (note 22)                 |  |      | 19,881,973  |  |      |  | 18,761,731  |     |  |  | 619,813    |  
|Current installments of long-term borrowings (notes 16 and 23)           |  |      | 29,824,179  |  |      |  | 42,868,289  |     |  |  | 1,416,197  |  
|Current installments of bonds payable (notes 14 and 23)                  |  |      | 6,105,621   |  |      |  | 3,564,383   |     |  |  | 117,753    |  
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|Total current liabilities                                                |  |      | 189,378,583 |  |      |  | 204,179,867 |     |  |  | 6,745,288  |  
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|Long-term liabilities:                                                   |  |      |             |  |      |  |             |     |  |  |            |  
|Financial liabilities measured at fair valuenoncurrent (notes 7 and 15) |  |      | 230,699     |  |      |  | 914,854     |     |  |  | 30,223     |  
|Bonds payable, excluding current installments (notes 14 and 23)          |  |      | 3,561,149   |  |      |  |            |     |  |  |           |  
|Convertible bonds payable (note 15)                                      |  |      | 23,951,212  |  |      |  | 21,048,500  |     |  |  | 695,358    |  
|Long-term borrowings, excluding current installments (notes 16 and 23)   |  |      | 117,123,895 |  |      |  | 156,088,780 |     |  |  | 5,156,551  |  
|Hedging derivative financial liabilitiesnoncurrent (note 7)             |  |      | 287,706     |  |      |  | 198,360     |     |  |  | 6,553      |  
|Long-term payablesexcluding current installments                        |  |      | 1,766,626   |  |      |  | 1,290,740   |     |  |  | 42,641     |  
|Unearned revenue and others (notes 10 and 24)                            |  |      | 10,365,760  |  |      |  | 6,617,500   |     |  |  | 218,616    |  
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|Total long-term liabilities                                              |  |      | 157,287,047 |  |      |  | 186,158,734 |     |  |  | 6,149,942  |  
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|Other liabilities(note 17)                                               |  |      | 325,582     |  |      |  | 1,162,605   |     |  |  | 38,407     |  
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|Total liabilities                                                        |  |      | 346,991,212 |  |      |  | 391,501,206 |     |  |  | 12,933,637 |  
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|Stockholders equity(notes 7, 10, 15 and 18):                            |  |      |             |  |      |  |             |     |  |  |            |  
|Capital stock:                                                           |  |      |             |  |      |  |             |     |  |  |            |  
|Common stock, NT$10 par value                                            |  |      | 88,270,455  |  |      |  | 88,270,455  |     |  |  | 2,916,104  |  
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|Capital surplus                                                          |  |      | 115,947,805 |  |      |  | 117,709,063 |     |  |  | 3,888,638  |  
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|Retained earnings (Accumulative deficits):                               |  |      |             |  |      |  |             |     |  |  |            |  
|Legal reserve                                                            |  |      | 15,206,106  |  |      |  | 15,875,372  |     |  |  | 524,459    |  
|Unappropriated retained earnings (Accumulative deficits)                 |  |      | 47,116,043  |  |      |  | (18,347,855 | )   |  |  | (606,140   | )
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|                                                                         |  |      | 62,322,149  |  |      |  | (2,472,483  | )   |  |  | (81,681    | )
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|Others:                                                                  |  |      |             |  |      |  |             |     |  |  |            |  
|Cumulative translation adjustments                                       |  |      | 1,053,896   |  |      |  | 2,021,571   |     |  |  | 66,785     |  
|Minimum pension liability                                                |  |      |            |  |      |  | (1,316      | )   |  |  | (44        | )
|Unrealized gains (losses) on financial instruments                       |  |      | 566,628     |  |      |  | (138,574    | )   |  |  | (4,578     | )
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|                                                                         |  |      | 1,620,524   |  |      |  | 1,881,681   |     |  |  | 62,163     |  
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|                                                                         |  |      | 268,160,933 |  |      |  | 205,388,716 |     |  |  | 6,785,224  |  
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|Minority interests                                                       |  |      | 14,163,624  |  |      |  | 15,888,222  |     |  |  | 524,883    |  
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|Total stockholders equity                                               |  |      | 282,324,557 |  |      |  | 221,276,938 |     |  |  | 7,310,107  |  
|Commitments and contingent liabilities(note 24)                          |  |      |             |  |      |  |             |     |  |  |            |  
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  
|Total Liabilities and Stockholders Equity                               |  |      | 629,315,769 |  |      |  | 612,778,144 |     |  |  | 20,243,744 |  
|                                                                         |  |      |             |  |      |  |             |     |  |  |            |  



F-3



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Operations

Years ended December 31, 2009, 2010 and 2011

(Expressed in thousands of New Taiwan dollars and US dollars, except for per share data)



|                                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|----------------------------------------------------------------------- |  | ---- | ----------- | - | ---- |  | ----------- | ---- |  |  | ----------- | - |  |  | ---------- | -
|                                                                        |  | 2009 |             |   | 2010 |  |             | 2011 | 
|                                                                        |  | NT$  |             |   | NT$  |  |             | NT$  |  |  | US$         |  
|Net sales(note 22)                                                      |  |      | 359,331,345 |   |      |  | 467,157,964 |      |  |  | 379,711,878 |   |  |  | 12,544,165 |  
|Cost of goods sold(notes 9 and 22)                                      |  |      | 352,290,469 |   |      |  | 430,859,371 |      |  |  | 407,899,195 |   |  |  | 13,475,361 |  
|                                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Gross profit (loss)                                                     |  |      | 7,040,876   |   |      |  | 36,298,593  |      |  |  | (28,187,317 | ) |  |  | (931,196   | )
|                                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Operating expenses(note 22):                                            |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Selling                                                                 |  |      | 8,000,028   |   |      |  | 8,641,453   |      |  |  | 9,636,557   |   |  |  | 318,354    |  
|General and administrative                                              |  |      | 8,094,414   |   |      |  | 10,736,924  |      |  |  | 11,208,846  |   |  |  | 370,296    |  
|Research and development                                                |  |      | 6,185,485   |   |      |  | 6,423,552   |      |  |  | 8,625,812   |   |  |  | 284,962    |  
|                                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|                                                                        |  |      | 22,279,927  |   |      |  | 25,801,929  |      |  |  | 29,471,215  |   |  |  | 973,612    |  
|                                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Operating income (loss)                                                 |  |      | (15,239,051 | ) |      |  | 10,496,664  |      |  |  | (57,658,532 | ) |  |  | (1,904,808 | )
|                                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Non-operating income and gains:                                         |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Interest income                                                         |  |      | 265,975     |   |      |  | 286,798     |      |  |  | 403,538     |   |  |  | 13,331     |  
|Investment gains recognized by equity method, net (note 10)             |  |      | 139,635     |   |      |  | 681,331     |      |  |  |            |   |  |  |           |  
|Gains on sale of investment securities, net (note 10)                   |  |      | 384,186     |   |      |  | 1,527,229   |      |  |  | 3,080,716   |   |  |  | 101,775    |  
|Foreign currency exchange gains, net                                    |  |      | 236,909     |   |      |  |            |      |  |  |            |   |  |  |           |  
|Gains on valuation of financial instruments, net (note 7)               |  |      | 813,152     |   |      |  | 3,986,083   |      |  |  | 744,072     |   |  |  | 24,581     |  
|Gain on purchase of convertible bonds payable (note 15)                 |  |      |            |   |      |  |            |      |  |  | 686,972     |   |  |  | 22,695     |  
|Other income (note 22)                                                  |  |      | 1,569,449   |   |      |  | 2,302,755   |      |  |  | 2,575,060   |   |  |  | 85,070     |  
|                                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|                                                                        |  |      | 3,409,306   |   |      |  | 8,784,196   |      |  |  | 7,490,358   |   |  |  | 247,452    |  
|                                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Non-operating expenses and losses:                                      |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Interest expenses                                                       |  |      | 3,446,588   |   |      |  | 4,233,127   |      |  |  | 4,876,254   |   |  |  | 161,092    |  
|Foreign currency exchange losses, net                                   |  |      |            |   |      |  | 3,581,120   |      |  |  | 94,732      |   |  |  | 3,130      |  
|Depreciation of idle assets                                             |  |      | 1,102,132   |   |      |  | 859,193     |      |  |  | 1,002,771   |   |  |  | 33,128     |  
|Investment losses recognized by equity method, net (note 10)            |  |      |            |   |      |  |            |      |  |  | 63,943      |   |  |  | 2,112      |  
|Asset impairment losses (note 11)                                       |  |      | 1,192,807   |   |      |  |            |      |  |  | 479,966     |   |  |  | 15,856     |  
|Provisions for potential litigation losses and others (notes 22 and 24) |  |      | 9,696,129   |   |      |  | 2,011,439   |      |  |  | 8,966,289   |   |  |  | 296,210    |  
|                                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|                                                                        |  |      | 15,437,656  |   |      |  | 10,684,879  |      |  |  | 15,483,955  |   |  |  | 511,528    |  
|                                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Earnings (loss) before income taxes                                     |  |      | (27,267,401 | ) |      |  | 8,595,981   |      |  |  | (65,652,129 | ) |  |  | (2,168,884 | )
|Income tax (expense) benefit(note 19)                                   |  |      | 22,587      |   |      |  | (1,187,894  | )    |  |  | 4,205,079   |   |  |  | 138,919    |  
|                                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Net income (loss)                                                       |  |      | (27,244,814 | ) |      |  | 7,408,087   |      |  |  | (61,447,050 | ) |  |  | (2,029,965 | )
|                                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Attributable to:                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Equity holders of the parent company                                    |  |      | (26,769,335 | ) |      |  | 6,692,657   |      |  |  | (61,263,814 | ) |  |  | (2,023,912 | )
|Minority interest                                                       |  |      | (475,479    | ) |      |  | 715,430     |      |  |  | (183,236    | ) |  |  | (6,053     | )
|                                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Net income (loss)                                                       |  |      | (27,244,814 | ) |      |  | 7,408,087   |      |  |  | (61,447,050 | ) |  |  | (2,029,965 | )
|                                                                        |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  



F-4



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Operations (continued)

Years ended December 31, 2009, 2010 and 2011

(Expressed in
thousands of New Taiwan dollars and US dollars, except for per share data)



|                                            |  |      |       |   |      |  |      |      |  |  |       |   |  |  |       |  
|------------------------------------------- |  | ---- | ----- | - | ---- |  | ---- | ---- |  |  | ----- | - |  |  | ----- | -
|                                            |  | 2009 |       |   | 2010 |  |      | 2011 | 
|                                            |  | NT$  |       |   | NT$  |  |      | NT$  |  |  | US$   |  
|Earnings (loss) per shareBasic (note 20):  |  |      |       |   |      |  |      |      |  |  |       |   |  |  |       |  
|Basic (L) EPSnet income (loss)             |  |      | (3.04 | ) |      |  | 0.76 |      |  |  | (6.94 | ) |  |  | (0.23 | )
|                                            |  |      |       |   |      |  |      |      |  |  |       |   |  |  |       |  
|Earnings (loss) per shareDiluted(note 20): |  |      |       |   |      |  |      |      |  |  |       |   |  |  |       |  
|Diluted (L) EPSnet income (loss)           |  |      | (3.04 | ) |      |  | 0.70 |      |  |  | (6.94 | ) |  |  | (0.23 | )
|                                            |  |      |       |   |      |  |      |      |  |  |       |   |  |  |       |  



F-5



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Stockholders Equity

Years ended December 31, 2009, 2010 and 2011

(Expressed in thousands of New Taiwan dollars, US dollars and shares)



|                                                                                                                                          |  |                |           |  |                |  |            |                   |              |  |             |                                |  |                   |                                  |  |       |                         |             |   |                                                 |  |           |   |  |  |         |   |  |  |           |   |  |  |            |   |  |  |             |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | --------- |  | -------------- |  | ---------- | ----------------- | ------------ |  | ----------- | ------------------------------ |  | ----------------- | -------------------------------- |  | ----- | ----------------------- | ----------- | - | ----------------------------------------------- |  | --------- | - |  |  | ------- | - |  |  | --------- | - |  |  | ---------- | - |  |  | ----------- | -
|                                                                                                                                          |  | Capital stock  |           |  | Capitalsurplus |  |            | Retained earnings |              |  | Others      |                                |  | Minorityinterests |                                  |  | Total |                        
|                                                                                                                                          |  | Numberofshares |           |  | Amount         |  |            |                   | Legalreserve |  |             | Unappropriatedretainedearnings |  |                   | Cumulativetranslationadjustments |  |       | Minimumpensionliability |             |   | Unrealizedgains (losses)on financialinstruments |  |           |  
|Balance at January 1, 2009                                                                                                                |  |                | 8,505,720 |  |                |  | 85,057,196 |                   |              |  | 113,651,334 |                                |  |                   | 13,079,368                       |  |       |                         | 76,912,630  |   |                                                 |  | 2,330,858 |   |  |  | (40,252 | ) |  |  | (932,163  | ) |  |  | 9,199,765  |   |  |  | 299,258,736 |  
|Appropriation for legal reserve                                                                                                           |  |                |          |  |                |  |           |                   |              |  |            |                                |  |                   | 2,126,738                        |  |       |                         | (2,126,738  | ) |                                                 |  |          |   |  |  |        |   |  |  |          |   |  |  |           |   |  |  |            |  
|Cash dividends                                                                                                                            |  |                |          |  |                |  |           |                   |              |  |            |                                |  |                   |                                 |  |       |                         | (2,551,716  | ) |                                                 |  |          |   |  |  |        |   |  |  |          |   |  |  |           |   |  |  | (2,551,716  | )
|Stock dividends to shareholders                                                                                                           |  |                | 255,172   |  |                |  | 2,551,716  |                   |              |  |             |                                |  |                   |                                 |  |       |                         | (2,551,716  | ) |                                                 |  |          |   |  |  |        |   |  |  |          |   |  |  |           |   |  |  |            |  
|Capitalization of employee stock bonus                                                                                                    |  |                | 66,154    |  |                |  | 661,543    |                   |              |  | 1,348,225   |                                |  |                   |                                 |  |       |                         |            |   |                                                 |  |          |   |  |  |        |   |  |  |          |   |  |  |           |   |  |  | 2,009,768   |  
|Unrealized gains on available-for-sale financial assets, net                                                                              |  |                |          |  |                |  |           |                   |              |  |            |                                |  |                   |                                 |  |       |                         |            |   |                                                 |  |          |   |  |  |        |   |  |  | 1,637,350 |   |  |  | 135        |   |  |  | 1,637,485   |  
|Unrealized losses on cash flow hedges, net                                                                                                |  |                |          |  |                |  |           |                   |              |  |            |                                |  |                   |                                 |  |       |                         |            |   |                                                 |  |          |   |  |  |        |   |  |  | 194,145   |   |  |  | 123        |   |  |  | 194,268     |  
|Foreign currency translation adjustments                                                                                                  |  |                |          |  |                |  |           |                   |              |  |            |                                |  |                   |                                 |  |       |                         |            |   |                                                 |  | (645,125  | ) |  |  |        |   |  |  |          |   |  |  | 658,348    |   |  |  | 13,223      |  
|Adjustments to capital surplus, retained earnings and unrealized gains (losses) on financial instruments for changes in
investees equity |  |                |          |  |                |  |           |                   |              |  | (27,411     | )                              |  |                   |                                 |  |       |                         | (2,050,074  | ) |                                                 |  |          |   |  |  |        |   |  |  | 190,312   |   |  |  | (2,383,727 | ) |  |  | (4,270,900  | )
|Net loss                                                                                                                                  |  |                |          |  |                |  |           |                   |              |  |            |                                |  |                   |                                 |  |       |                         | (26,769,335 | ) |                                                 |  |          |   |  |  |        |   |  |  |          |   |  |  | (475,479   | ) |  |  | (27,244,814 | )
|Reversal of minimum pension liability                                                                                                     |  |                |          |  |                |  |           |                   |              |  |            |                                |  |                   |                                 |  |       |                         |            |   |                                                 |  |          |   |  |  | 40,252  |   |  |  |          |   |  |  |           |   |  |  | 40,252      |  
|Adjustments for changes in minority interests                                                                                             |  |                |          |  |                |  |           |                   |              |  |            |                                |  |                   |                                 |  |       |                         |            |   |                                                 |  |          |   |  |  |        |   |  |  |          |   |  |  | 5,832,690  |   |  |  | 5,832,690   |  
|                                                                                                                                          |  |                |           |  |                |  |            |                   |              |  |             |                                |  |                   |                                  |  |       |                         |             |   |                                                 |  |           |   |  |  |         |   |  |  |           |   |  |  |            |   |  |  |             |  
|Balance at December 31, 2009                                                                                                              |  |                | 8,827,046 |  |                |  | 88,270,455 |                   |              |  | 114,972,148 |                                |  |                   | 15,206,106                       |  |       |                         | 40,863,051  |   |                                                 |  | 1,685,733 |   |  |  |        |   |  |  | 1,089,644 |   |  |  | 12,831,855 |   |  |  | 274,918,992 |  
|                                                                                                                                          |  |                |           |  |                |  |            |                   |              |  |             |                                |  |                   |                                  |  |       |                         |             |   |                                                 |  |           |   |  |  |         |   |  |  |           |   |  |  |            |   |  |  |             |  

Note: Remuneration to directors of NT$57,422 thousand and employee bonuses of NT$2,871,097 thousand were deducted from
the consolidated statement of operations of 2008.



F-6



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Stockholders Equity (continued)

Years ended December 31, 2009, 2010 and 2011

(Expressed in thousands of New Taiwan dollars, US dollars and shares)



|                                                                                                                                          |  |                |           |  |                |  |            |                   |              |  |             |                                |  |                   |                                  |  |       |                                                 |            |   |  |  |           |   |  |  |           |   |  |  |            |   |  |  |             |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | --------- |  | -------------- |  | ---------- | ----------------- | ------------ |  | ----------- | ------------------------------ |  | ----------------- | -------------------------------- |  | ----- | ----------------------------------------------- | ---------- | - |  |  | --------- | - |  |  | --------- | - |  |  | ---------- | - |  |  | ----------- | -
|                                                                                                                                          |  | Capital stock  |           |  | Capitalsurplus |  |            | Retained earnings |              |  | Others      |                                |  | Minorityinterests |                                  |  | Total |                                                
|                                                                                                                                          |  | Numberofshares |           |  | Amount         |  |            |                   | Legalreserve |  |             | Unappropriatedretainedearnings |  |                   | Cumulativetranslationadjustments |  |       | Unrealizedgains (losses)on financialinstruments |            |   | 
|Balance at January 1, 2010                                                                                                                |  |                | 8,827,046 |  |                |  | 88,270,455 |                   |              |  | 114,972,148 |                                |  |                   | 15,206,106                       |  |       |                                                 | 40,863,051 |   |  |  | 1,685,733 |   |  |  | 1,089,644 |   |  |  | 12,831,855 |   |  |  | 274,918,992 |  
|Embedded conversion options derived from convertible bonds                                                                                |  |                |          |  |                |  |           |                   |              |  | 101,787     |                                |  |                   |                                 |  |       |                                                 |           |   |  |  |          |   |  |  |          |   |  |  |           |   |  |  | 101,787     |  
|Unrealized gains (losses) on available-for-sale financial assets, net                                                                     |  |                |          |  |                |  |           |                   |              |  |            |                                |  |                   |                                 |  |       |                                                 |           |   |  |  |          |   |  |  | (747,324  | ) |  |  | 592        |   |  |  | (746,732    | )
|Unrealized gains on cash flow hedges, net                                                                                                 |  |                |          |  |                |  |           |                   |              |  |            |                                |  |                   |                                 |  |       |                                                 |           |   |  |  |          |   |  |  | 181,415   |   |  |  | 34         |   |  |  | 181,449     |  
|Foreign currency translation adjustments                                                                                                  |  |                |          |  |                |  |           |                   |              |  |            |                                |  |                   |                                 |  |       |                                                 |           |   |  |  | (631,837  | ) |  |  |          |   |  |  | 12,458     |   |  |  | (619,379    | )
|Adjustments to capital surplus, retained earnings and unrealized gains (losses) on financial instruments for changes in
investees equity |  |                |          |  |                |  |           |                   |              |  | 873,870     |                                |  |                   |                                 |  |       |                                                 | (439,665   | ) |  |  |          |   |  |  | 42,893    |   |  |  | 701,735    |   |  |  | 1,178,833   |  
|Net income                                                                                                                                |  |                |          |  |                |  |           |                   |              |  |            |                                |  |                   |                                 |  |       |                                                 | 6,692,657  |   |  |  |          |   |  |  |          |   |  |  | 715,430    |   |  |  | 7,408,087   |  
|Adjustments for changes in minority interests                                                                                             |  |                |          |  |                |  |           |                   |              |  |            |                                |  |                   |                                 |  |       |                                                 |           |   |  |  |          |   |  |  |          |   |  |  | (98,480    | ) |  |  | (98,480     | )
|                                                                                                                                          |  |                |           |  |                |  |            |                   |              |  |             |                                |  |                   |                                  |  |       |                                                 |            |   |  |  |           |   |  |  |           |   |  |  |            |   |  |  |             |  
|Balance at December 31, 2010                                                                                                              |  |                | 8,827,046 |  |                |  | 88,270,455 |                   |              |  | 115,947,805 |                                |  |                   | 15,206,106                       |  |       |                                                 | 47,116,043 |   |  |  | 1,053,896 |   |  |  | 566,628   |   |  |  | 14,163,624 |   |  |  | 282,324,557 |  
|                                                                                                                                          |  |                |           |  |                |  |            |                   |              |  |             |                                |  |                   |                                  |  |       |                                                 |            |   |  |  |           |   |  |  |           |   |  |  |            |   |  |  |             |  



F-7



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Stockholders Equity (continued)

Years ended December 31, 2009, 2010 and 2011

(Expressed in thousands of New Taiwan dollars, US dollars and shares)



|                                                                                                                                          |  |                |           |  |                |  |            |                                          |              |  |             |                                                     |  |                   |                                  |  |       |                         |             |   |                                                 |  |           |  |  |  |        |   |  |  |          |   |  |  |            |   |  |  |             |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | --------- |  | -------------- |  | ---------- | ---------------------------------------- | ------------ |  | ----------- | --------------------------------------------------- |  | ----------------- | -------------------------------- |  | ----- | ----------------------- | ----------- | - | ----------------------------------------------- |  | --------- |  |  |  | ------ | - |  |  | -------- | - |  |  | ---------- | - |  |  | ----------- | -
|                                                                                                                                          |  | Capital stock  |           |  | Capitalsurplus |  |            | Retained earnings(Accumulative deficits) |              |  | Others      |                                                     |  | Minorityinterests |                                  |  | Total |                        
|                                                                                                                                          |  | Numberofshares |           |  | Amount         |  |            |                                          | Legalreserve |  |             | Unappropriatedretainedearnings(Accumulativedeficit) |  |                   | Cumulativetranslationadjustments |  |       | Minimumpensionliability |             |   | Unrealizedgains (losses)on financialinstruments |  |           | 
|Balance at January 1, 2011                                                                                                                |  |                | 8,827,046 |  |                |  | 88,270,455 |                                          |              |  | 115,947,805 |                                                     |  |                   | 15,206,106                       |  |       |                         | 47,116,043  |   |                                                 |  | 1,053,896 |  |  |  |       |   |  |  | 566,628  |   |  |  | 14,163,624 |   |  |  | 282,324,557 |  
|Appropriation for legal reserve                                                                                                           |  |                |          |  |                |  |           |                                          |              |  |            |                                                     |  |                   | 669,266                          |  |       |                         | (669,266    | ) |                                                 |  |          |  |  |  |       |   |  |  |         |   |  |  |           |   |  |  |            |  
|Cash dividends                                                                                                                            |  |                |          |  |                |  |           |                                          |              |  |            |                                                     |  |                   |                                 |  |       |                         | (3,530,818  | ) |                                                 |  |          |  |  |  |       |   |  |  |         |   |  |  |           |   |  |  | (3,530,818  | )
|Unrealized losses on available-for-sales financial assets, net                                                                            |  |                |          |  |                |  |           |                                          |              |  |            |                                                     |  |                   |                                 |  |       |                         |            |   |                                                 |  |          |  |  |  |       |   |  |  | (750,395 | ) |  |  | (431       | ) |  |  | (750,826    | )
|Unrealized gains on cash flow hedges, net                                                                                                 |  |                |          |  |                |  |           |                                          |              |  |            |                                                     |  |                   |                                 |  |       |                         |            |   |                                                 |  |          |  |  |  |       |   |  |  | 76,863   |   |  |  | 376        |   |  |  | 77,239      |  
|Foreign currency translation adjustments                                                                                                  |  |                |          |  |                |  |           |                                          |              |  |            |                                                     |  |                   |                                 |  |       |                         |            |   |                                                 |  | 967,675   |  |  |  |       |   |  |  |         |   |  |  | 332,925    |   |  |  | 1,300,600   |  
|Adjustments to capital surplus, minimum pension liability and unrealized losses on financial instruments for changes in
investees equity |  |                |          |  |                |  |           |                                          |              |  | 1,761,258   |                                                     |  |                   |                                 |  |       |                         |            |   |                                                 |  |          |  |  |  | (1,316 | ) |  |  | (31,670  | ) |  |  | (1,270,657 | ) |  |  | 457,615     |  
|Net loss                                                                                                                                  |  |                |          |  |                |  |           |                                          |              |  |            |                                                     |  |                   |                                 |  |       |                         | (61,263,814 | ) |                                                 |  |          |  |  |  |       |   |  |  |         |   |  |  | (183,236   | ) |  |  | (61,447,050 | )
|Adjustments for changes in minority interests                                                                                             |  |                |          |  |                |  |           |                                          |              |  |            |                                                     |  |                   |                                 |  |       |                         |            |   |                                                 |  |          |  |  |  |       |   |  |  |         |   |  |  | 2,845,621  |   |  |  | 2,845,621   |  
|                                                                                                                                          |  |                |           |  |                |  |            |                                          |              |  |             |                                                     |  |                   |                                  |  |       |                         |             |   |                                                 |  |           |  |  |  |        |   |  |  |          |   |  |  |            |   |  |  |             |  
|Balance at December 31, 2011                                                                                                              |  |                | 8,827,046 |  |                |  | 88,270,455 |                                          |              |  | 117,709,063 |                                                     |  |                   | 15,875,372                       |  |       |                         | (18,347,855 | ) |                                                 |  | 2,021,571 |  |  |  | (1,316 | ) |  |  | (138,574 | ) |  |  | 15,888,222 |   |  |  | 221,276,938 |  
|                                                                                                                                          |  |                |           |  |                |  |            |                                          |              |  |             |                                                     |  |                   |                                  |  |       |                         |             |   |                                                 |  |           |  |  |  |        |   |  |  |          |   |  |  |            |   |  |  |             |  
|Balance at December 31, 2011 (in US$)                                                                                                     |  |                |          |  |                |  | 2,916,104  |                                          |              |  | 3,888,638   |                                                     |  |                   | 524,459                          |  |       |                         | (606,140    | ) |                                                 |  | 66,785    |  |  |  | (44    | ) |  |  | (4,578   | ) |  |  | 524,883    |   |  |  | 7,310,107   |  
|                                                                                                                                          |  |                |           |  |                |  |            |                                          |              |  |             |                                                     |  |                   |                                  |  |       |                         |             |   |                                                 |  |           |  |  |  |        |   |  |  |          |   |  |  |            |   |  |  |             |  

Note: Remuneration to directors of NT$30,117 thousand and employee bonuses of NT$891,462 thousand were deducted from the consolidated
statement of operations of 2010.



F-8



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended December 31, 2009, 2010 and 2011

(Expressed in thousands of New Taiwan dollars and US dollars)



|                                                                                            |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- |  | ----------- | ---- |  |  | ----------- | - |  |  | ---------- | -
|                                                                                            |  | 2009 |             |   | 2010 |  |             | 2011 | 
|                                                                                            |  | NT$  |             |   | NT$  |  |             | NT$  |  |  | US$         |  
|Cash flows from operating activities:                                                       |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Net income (loss)                                                                           |  |      | (27,244,814 | ) |      |  | 7,408,087   |      |  |  | (61,447,050 | ) |  |  | (2,029,965 | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities:    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Depreciation                                                                                |  |      | 87,512,945  |   |      |  | 87,748,809  |      |  |  | 87,361,532  |   |  |  | 2,886,076  |  
|Amortization of intangible assets and deferred charges                                      |  |      | 2,594,666   |   |      |  | 1,386,893   |      |  |  | 1,390,901   |   |  |  | 45,950     |  
|Unrealized foreign currency exchange losses (gains), net                                    |  |      | (2,192,835  | ) |      |  | (940,903    | )    |  |  | 929,297     |   |  |  | 30,700     |  
|Asset impairment losses                                                                     |  |      | 1,192,807   |   |      |  |            |      |  |  | 479,966     |   |  |  | 15,856     |  
|Losses (gains) on valuation of financial instruments, net                                   |  |      | 1,336,469   |   |      |  | (781,930    | )    |  |  | 178,560     |   |  |  | 5,899      |  
|Investment losses (gains) recognized by equity method, net                                  |  |      | (139,635    | ) |      |  | (681,331    | )    |  |  | 63,943      |   |  |  | 2,112      |  
|Proceeds from cash dividends                                                                |  |      | 142,096     |   |      |  | 437,801     |      |  |  | 651,486     |   |  |  | 21,522     |  
|Gains on disposal of investment securities                                                  |  |      | (384,186    | ) |      |  | (1,527,229  | )    |  |  | (3,080,716  | ) |  |  | (101,775   | )
|Losses from disposal and write-off of property, plant and equipment, idle assets and others |  |      | 23,248      |   |      |  | 77,323      |      |  |  | 697,413     |   |  |  | 23,040     |  
|Gain on purchase of convertible bonds payable                                               |  |      |            |   |      |  |            |      |  |  | (686,972    | ) |  |  | (22,695    | )
|Change in operating assets and liabilities:                                                 |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Decrease (increase) in accounts and notes receivable (including related parties)            |  |      | (38,532,393 | ) |      |  | 2,061,603   |      |  |  | 8,596,428   |   |  |  | 283,992    |  
|Increase in inventories, net                                                                |  |      | (12,708,862 | ) |      |  | (6,197,038  | )    |  |  | (3,301,713  | ) |  |  | (109,075   | )
|Increase in deferred tax assets, net                                                        |  |      | (716,548    | ) |      |  | (535,267    | )    |  |  | (4,492,695  | ) |  |  | (148,421   | )
|Decrease (increase) in prepayments and other current assets                                 |  |      | 4,535,738   |   |      |  | (2,017,877  | )    |  |  | (5,814,751  | ) |  |  | (192,096   | )
|Increase (decrease) in accounts and notes payable (including related parties)               |  |      | 32,455,076  |   |      |  | 2,732,480   |      |  |  | (11,393,855 | ) |  |  | (376,407   | )
|Increase in accrued expenses and other current liabilities                                  |  |      | 10,297,563  |   |      |  | 958,950     |      |  |  | 5,198,466   |   |  |  | 171,737    |  
|Increase (decrease) in unearned revenue                                                     |  |      | (1,032,123  | ) |      |  | 671,170     |      |  |  | (704,701    | ) |  |  | (23,280    | )
|Increase in prepaid pension assets                                                          |  |      | (98,193     | ) |      |  | (65,954     | )    |  |  | (110,419    | ) |  |  | (3,648     | )
|                                                                                            |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Net cash provided by operating activities                                                   |  |      | 57,041,019  |   |      |  | 90,735,587  |      |  |  | 14,515,120  |   |  |  | 479,522    |  
|                                                                                            |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Cash flows from investing activities:                                                       |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Acquisition of property, plant and equipment, including interest capitalized                |  |      | (61,046,891 | ) |      |  | (84,620,951 | )    |  |  | (56,919,591 | ) |  |  | (1,880,396 | )
|Proceeds from disposal of property, plant and equipment, and idle assets                    |  |      | 235,562     |   |      |  | 73,958      |      |  |  | 51,268      |   |  |  | 1,694      |  
|Purchase of convertible bonds                                                               |  |      | (500,002    | ) |      |  |            |      |  |  |            |   |  |  |           |  
|Proceeds from disposal of available-for-sale financial assets                               |  |      | 854,849     |   |      |  | 716,751     |      |  |  | 135,433     |   |  |  | 4,474      |  
|Purchase of long-term investments                                                           |  |      | (5,763,950  | ) |      |  | (1,258,811  | )    |  |  | (2,467,442  | ) |  |  | (81,515    | )
|Purchase of financial assets carried at cost                                                |  |      | (40,345     | ) |      |  | (658,959    | )    |  |  | (30,000     | ) |  |  | (991       | )
|Proceeds from disposal of long-term investments                                             |  |      | 299,203     |   |      |  | 1,379,548   |      |  |  | 3,955,470   |   |  |  | 130,673    |  
|Decrease (increase) in restricted cash in bank                                              |  |      | (425,799    | ) |      |  | 429,733     |      |  |  | 3,712       |   |  |  | 123        |  
|Increase in intangible assets and deferred charges                                          |  |      | (1,121,028  | ) |      |  | (1,414,472  | )    |  |  | (2,419,657  | ) |  |  | (79,936    | )
|Decrease (increase) in refundable deposits                                                  |  |      | 52,404      |   |      |  | 18,346      |      |  |  | (224,489    | ) |  |  | (7,417     | )
|Cash increase (decrease) resulting from change in consolidated entity                       |  |      | 839,336     |   |      |  | (1,883,482  | )    |  |  | 86,262      |   |  |  | 2,850      |  
|                                                                                            |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Net cash used in investing activities                                                       |  |      | (66,616,661 | ) |      |  | (87,218,339 | )    |  |  | (57,829,034 | ) |  |  | (1,910,441 | )
|                                                                                            |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  



F-9



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (continued)

Years ended December 31, 2009, 2010 and 2011

(Expressed in
thousands of New Taiwan dollars and US dollars)





|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|----------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- |  | ----------- | ---- |  |  | ----------- | - |  |  | ---------- | -
|                                                                                    |  | 2009 |             |   | 2010 |  |             | 2011 | 
|                                                                                    |  | NT$  |             |   | NT$  |  |             | NT$  |  |  | US$         |  
|Cash flows from financing activities:                                               |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Increase (decrease) in short-term borrowings                                        |  |      | (4,901,690  | ) |      |  | (4,938,767  | )    |  |  | 3,104,515   |   |  |  | 102,561    |  
|Increase (decrease) in guarantee deposits                                           |  |      | (5,758      | ) |      |  | 164,757     |      |  |  | 915,055     |   |  |  | 30,230     |  
|Repayment of long-term borrowings, bonds payable and convertible bonds payable      |  |      | (49,291,812 | ) |      |  | (60,610,911 | )    |  |  | (47,654,567 | ) |  |  | (1,574,317 | )
|Proceeds from long-term borrowings, bonds payable and convertible bonds payable     |  |      | 66,844,430  |   |      |  | 62,609,918  |      |  |  | 89,647,542  |   |  |  | 2,961,597  |  
|Cash dividends                                                                      |  |      | (2,551,716  | ) |      |  |            |      |  |  | (3,530,818  | ) |  |  | (116,644   | )
|Proceeds from issuance of subsidiary shares to minority interests                   |  |      | 2,445,262   |   |      |  | 4,338,348   |      |  |  | 3,252,346   |   |  |  | 107,445    |  
|Cash dividends to minority interests and others                                     |  |      | (613,376    | ) |      |  | (685,129    | )    |  |  | 101,867     |   |  |  | 3,365      |  
|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Net cash provided by financing activities                                           |  |      | 11,925,340  |   |      |  | 878,216     |      |  |  | 45,835,940  |   |  |  | 1,514,237  |  
|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Effect of exchange rate change on cash                                              |  |      | (341,084    | ) |      |  | (340,284    | )    |  |  | (1,183,849  | ) |  |  | (39,110    | )
|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Net increase in cash and cash equivalents                                           |  |      | 2,008,614   |   |      |  | 4,055,180   |      |  |  | 1,338,177   |   |  |  | 44,208     |  
|Cash and cash equivalents at beginning of year                                      |  |      | 83,434,697  |   |      |  | 85,443,311  |      |  |  | 89,498,491  |   |  |  | 2,956,673  |  
|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Cash and cash equivalents at end of year                                            |  |      | 85,443,311  |   |      |  | 89,498,491  |      |  |  | 90,836,668  |   |  |  | 3,000,881  |  
|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Supplemental disclosures of cash flow information:                                  |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Cash paid for interest expense (excluding interest capitalized)                     |  |      | 3,459,032   |   |      |  | 4,260,269   |      |  |  | 4,892,384   |   |  |  | 161,625    |  
|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Cash paid for income taxes                                                          |  |      | 2,127,321   |   |      |  | 803,775     |      |  |  | 1,172,641   |   |  |  | 38,739     |  
|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Supplementary disclosure of non-cash investing and financing activities:            |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Current installments of long-term liabilities                                       |  |      | 46,844,334  |   |      |  | 35,929,800  |      |  |  | 46,432,672  |   |  |  | 1,533,950  |  
|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Conversion of convertible bonds into equity method investments                      |  |      | 618,065     |   |      |  |            |      |  |  |            |   |  |  |           |  
|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Reclassification of equity method investments from equity investments held-for-sale |  |      |            |   |      |  | 707,175     |      |  |  |            |   |  |  |           |  
|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Additions to property, plant and equipment:                                         |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Increase in property, plant and equipment                                           |  |      | 62,430,334  |   |      |  | 79,143,746  |      |  |  | 54,883,840  |   |  |  | 1,813,143  |  
|Decrease (increase) in equipment and construction-in-progress payables              |  |      | (1,383,443  | ) |      |  | 5,477,205   |      |  |  | 2,035,751   |   |  |  | 67,253     |  
|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|                                                                                    |  |      | 61,046,891  |   |      |  | 84,620,951  |      |  |  | 56,919,591  |   |  |  | 1,880,396  |  
|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Impact of change in consolidated entities:                                          |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Cash                                                                                |  |      | 839,336     |   |      |  | (1,883,482  | )    |  |  | 86,262      |   |  |  | 2,850      |  
|Non-cash assets                                                                     |  |      | 34,416,206  |   |      |  | (3,914,044  | )    |  |  | 5,810,609   |   |  |  | 191,959    |  
|Liabilities                                                                         |  |      | (30,541,846 | ) |      |  | (1,599,359  | )    |  |  | (5,845,935  | ) |  |  | (193,126   | )
|Minority interests                                                                  |  |      | (482,658    | ) |      |  | 3,982,504   |      |  |  | (50,936     | ) |  |  | (1,683     | )
|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|                                                                                    |  |      | 4,231,038   |   |      |  | (3,414,381  | )    |  |  |            |   |  |  |           |  
|                                                                                    |  |      |             |   |      |  |             |      |  |  |             |   |  |  |            |  



F-10



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

As of and for the years ended

December 31, 2009, 2010 and 2011



|1. | Organization
|-- | ------------

AU Optronics Corp. (AUO) was founded in the Hsinchu Science Park of the Republic of China on
August 12, 1996. 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,
including notebooks, desktop monitors, televisions, personal digital assistants, car televisions, digital cameras and camcorders, car navigation systems and mobile phones. In 2009, through equity acquisition of M. Setek Co., Ltd. (M.
Setek), AUO entered into the solar business. The main activities in solar business are the design, development and production of solar photovoltaic (PV) modules as well as provision of various value-added services for solar PV systems
projects. AUOs common shares have been publicly listed on the Taiwan Stock Exchange since September 2000 and its American Depositary Shares (ADSs) have been listed on the New York Stock Exchange since May 2002.

On September 1, 2001, Unipac Optoelectronics Corp. (Unipac) was merged with and into AUO in a transaction accounted for
in accordance with the pooling-of-interests method of accounting. Unipac was principally engaged in the research, development, manufacture and sale of TFT-LCD and LCD modules.

On October 1, 2006, Quanta Display Inc. (QDI) was merged with and into AUO in a transaction accounted for in accordance with the purchase method of accounting. QDI was principally engaged
in the research, development, manufacture and sale of TFT-LCD and LCD modules.

The consolidated entities were as follows:



|                     |  |                                                         |  |                                                                                      |  |                  |        |  |                  |  |        | 
|-------------------- |  | ------------------------------------------------------- |  | ------------------------------------------------------------------------------------ |  | ---------------- | ------ |  | ---------------- |  | ------ | 
|                     |  | Percentage ofOwnership(%)                               | 
|Name of Investor     |  | Subsidiary                                              |  | Main Activities                                                                      |  | December 31,2010 |        |  | December 31,2011 | 
|AUO                  |  | AU Optronics (L) Corp. (AULB)                           |  | Holding and trading company                                                          |  |                  | 100.00 |  |                  |  | 100.00 | 
|AUO                  |  | Konly Venture Corp. (Konly)                             |  | Venture capital investment                                                           |  |                  | 100.00 |  |                  |  | 100.00 | 
|AUO                  |  | Ronly Venture Corp. (Ronly)                             |  | Venture capital investment                                                           |  |                  | 100.00 |  |                  |  | 100.00 | 
|AUO                  |  | Toppan CFI (Taiwan) Co., Ltd. (Toppan CFI)              |  | Manufacturing and sale of color filters                                              |  |                  | 49.00  |  |                  |  | 49.00  | 
|AUO, Konly and Ronly |  | BriView Corp. (BVTW) (Formerly Darwin Precisions Corp.) |  | Manufacturing and sale of backlight modules.                                         |  |                  | 61.35  |  |                  |  | 68.86  | 
|AUO                  |  | BriView Electronics Corp. (Formerly BVTW)               |  | Manufacturing and sale of liquid crystal products and related parts                  |  |                  | 98.52  |  |                  |  |       | 
|AUO and Konly        |  | AUO Crystal Corp. (ACTW)                                |  | Design and installation of solar modules                                             |  |                  | 87.09  |  |                  |  | 86.40  | 
|Konly                |  | Darshin Microelectronics Inc. (DSTW)                    |  | IC design and sales                                                                  |  |                  | 66.67  |  |                  |  | 66.67  | 
|ACTW                 |  | AUO Crystal (Malaysia) Sdn. Bhd. (ACMK)                 |  | Manufacturing and sale of single crystal silicon wafers                              |  |                  | 100.00 |  |                  |  | 100.00 | 
|ACTW and AULB        |  | M. Setek Co., Ltd. (M. Setek)                           |  | Manufacturing of single crystal silicon wafers and ingots and sales of solar modules |  |                  | 95.01  |  |                  |  | 93.49  | 
|AULB                 |  | AU Optronics Corporation America (AUUS)                 |  | Sales support in the United States                                                   |  |                  | 100.00 |  |                  |  | 100.00 | 
|AULB                 |  | AU Optronics Corporation Japan (AUJP)                   |  | Sales and sales support in Japan                                                     |  |                  | 100.00 |  |                  |  | 100.00 | 
|AULB                 |  | AU Optronics Europe B.V. (AUNL)                         |  | Sales support in Europe                                                              |  |                  | 100.00 |  |                  |  | 100.00 | 
|AULB                 |  | AU Optronics Korea Ltd. (AUKR)                          |  | Sales support in South Korea                                                         |  |                  | 100.00 |  |                  |  | 100.00 | 
|AULB                 |  | AU Optronics Singapore Pte. Ltd. (AUSG)                 |  | Holding and sales support in South Asia                                              |  |                  | 100.00 |  |                  |  | 100.00 | 



F-11



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|                 |  |                                                    |  |                                                                                                        |  |                  |        |  |                  |  |        | 
|---------------- |  | -------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------ |  | ---------------- | ------ |  | ---------------- |  | ------ | 
|                 |  | Percentage ofOwnership(%)                          | 
|Name of Investor |  | Subsidiary                                         |  | Main Activities                                                                                        |  | December 31,2010 |        |  | December 31,2011 | 
|AULB             |  | AU Optronics (Czech) s.r.o. (AUCZ)                 |  | Manufacturing and repair center in Czech Republic and assembly of TFT-LCD modules and solar PV modules |  |                  | 100.00 |  |                  |  | 100.00 | 
|AULB             |  | AU Optronics (Shanghai) Co., Ltd. (AUSH)           |  | Sales support in the PRC                                                                               |  |                  | 100.00 |  |                  |  | 100.00 | 
|AULB             |  | AU Optronics (Xiamen) Corp. (AUXM)                 |  | Assembly of TFT-LCD modules in the PRC                                                                 |  |                  | 100.00 |  |                  |  | 100.00 | 
|AULB             |  | AU Optronics (Suzhou) Corp., Ltd. (AUSZ)           |  | Assembly of TFT-LCD modules in the PRC                                                                 |  |                  | 100.00 |  |                  |  | 100.00 | 
|AULB             |  | AU Optronics Manufacturing (Shanghai) Corp. (AUSJ) |  | Assembly of TFT-LCD modules in the PRC                                                                 |  |                  | 100.00 |  |                  |  | 100.00 | 
|AULB             |  | AU Optronics (Slovakia) s.r.o. (AUSK)              |  | Assembly of Optoelectronics LCD products in Slovakia and manufacturing and sale of related parts       |  |                  | 100.00 |  |                  |  | 100.00 | 
|AULB             |  | AFPD Pte., Ltd. (AUST)                             |  | Manufacturing LCD panels based on low temperature polysilicon technology                               |  |                  | 100.00 |  |                  |  | 100.00 | 
|BVTW             |  | Darwin Precisions (L) Corp. (DPLB)                 |  | Holding and trading company                                                                            |  |                  | 100.00 |  |                  |  | 100.00 | 
|AULB and BVTW    |  | BriView (L) Corp. (BVLB)                           |  | Holding and trading company                                                                            |  |                  | 100.00 |  |                  |  | 100.00 | 
|AULB             |  | BVCH Optronics (Sichuan) Corp. (BVCH)              |  | Assembly and sale of TFT-LCD modules in the PRC                                                        |  |                  | 51.00  |  |                  |  | 51.00  | 
|AULB             |  | Huizhou Bri-King Optronics Co., Ltd. (BKHZ)        |  | Assembly and sale of TFT-LCD modules in the PRC                                                        |  |                  | 51.00  |  |                  |  | 51.00  | 
|AULB             |  | AU Optronics (Kunshan) Co., Ltd. (AUKS)            |  | Manufacturing, assembly and sale of TFT-LCD panels in the PRC                                          |  |                  |       |  |                  |  | 49.00  | 
|DPLB             |  | Darwin Precisions (Hong Kong) Limited (DPHK)       |  | Holding company                                                                                        |  |                  | 100.00 |  |                  |  | 100.00 | 
|DPHK             |  | Darwin Precisions (Suzhou) Corp. (DPSZ)            |  | Manufacturing, assembly and sale of backlight modules and related components in the PRC                |  |                  | 100.00 |  |                  |  | 100.00 | 
|DPHK             |  | Darwin Precisions (Xiamen) Corp. (DPXM)            |  | Manufacturing, assembly and sale of backlight modules and related components in the PRC                |  |                  | 100.00 |  |                  |  | 100.00 | 
|DPHK             |  | Darwin Precisions (Chengdu) Corp. (DPCD)           |  | Manufacturing, assembly and sale of backlight modules and related components in the PRC                |  |                  | 100.00 |  |                  |  | 100.00 | 
|DPHK             |  | Darwin Precisions (Qingdao) Corp. (DPQD)           |  | Manufacturing, assembly and sale of backlight modules and related components in the PRC                |  |                  | 100.00 |  |                  |  | 100.00 | 



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-12 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements





|                 |  |                                           |  |                                                                                         |  |                  |        |  |                  |  |        | 
|---------------- |  | ----------------------------------------- |  | --------------------------------------------------------------------------------------- |  | ---------------- | ------ |  | ---------------- |  | ------ | 
|                 |  | Percentage ofOwnership(%)                 | 
|Name of Investor |  | Subsidiary                                |  | Main Activities                                                                         |  | December 31,2010 |        |  | December 31,2011 | 
|DPHK             |  | Darwin Precisions (Dongguan) Corp. (DPDG) |  | Manufacturing, assembly and sale of backlight modules and related components in the PRC |  |                  | 100.00 |  |                  |  | 100.00 | 
|BVLB             |  | BriView (Kunshan) Co., Ltd. (BVKS)        |  | Manufacturing and sale of liquid crystal products and related parts                     |  |                  | 100.00 |  |                  |  | 100.00 | 
|BVLB             |  | BriView (Hefei) Co., Ltd. (BVHF)          |  | Manufacturing and sale of liquid crystal products and related parts                     |  |                  | 100.00 |  |                  |  | 100.00 | 
|BVLB             |  | BriView (Xiamen) Corp. (BVXM)             |  | Manufacturing and sale of liquid crystal products and related parts                     |  |                  | 100.00 |  |                  |  | 100.00 | 
|AUSG             |  | AUO Energy (Suzhou) Corp. (AESZ)          |  | Design and installation of solar modules                                                |  |                  | 100.00 |  |                  |  | 100.00 | 
|AUSG             |  | AUO Energy (Tianjin) Corp. (AETJ)         |  | Design and installation of solar modules                                                |  |                  | 100.00 |  |                  |  | 100.00 | 
|AUSG             |  | AUO Green Energy America Corp. (AEUS)     |  | Holding and sales support in America                                                    |  |                  | 100.00 |  |                  |  | 100.00 | 
|AUSG             |  | AUO Green Energy Europe B.V. (AENL)       |  | Holding and sales support in Europe                                                     |  |                  | 100.00 |  |                  |  | 100.00 | 
|AENL             |  | AUO Green Energy Germany GmbH (AEDE)      |  | Sales support in Europe                                                                 |  |                  |       |  |                  |  | 100.00 | 

AULB is a holding company investing in foreign subsidiaries, AUUS, AUSZ, AUNL, AUKR, AUJP, AUSH, AUXM,
AUSG, AUCZ, AUSK, AUSJ, AUST, BVLB, BVCH, BKHZ, and AUKS. AUSZ, AUXM and AUSJ are engaged in the assembly of TFT-LCD module products in Mainland China. AUUS, AUJP, AUNL, AUKR and AUSG are mainly engaged in the after-sale service of TFT-LCDs in the
United States, Japan, Europe, Korea and Singapore, respectively. AUSH is engaged in the sale of TFT-LCD module products in Mainland China. AUKS is mainly engaged in manufacture and assembly of next generation TFT-LCDs in Mainland China. AUCZ is
engaged in the repair of TFT-LCD related products, the assembly of TFT-LCD module products and the assembly of solar photovoltaic (PV) modules in Czech Republic. AUSK is mainly engaged in the assembly of optoelectronics LCD products and the
manufacture and sale of related parts in Slovak Republic. AUST is mainly engaged in the manufacture of LCD panels based on low temperature polysilicon (LTPS) technology.

On September 1, 2011, BriView Electronics Corporation (Formerly BVTW) was merged with and into Darwin Precisions Corp. (DPTW), with DPTW as the surviving entity. DPTW then
renamed to BriView Corporation (BVTW). BVTW is mainly engaged in the manufacture and sale of backlight modules and sale of optoelectronics LCD products in the Republic of China. DPLB is a holding company investing in the wholly owned
foreign subsidiary, DPHK. DPSZ, DPXM, DPCD, DPDG and DPQD are wholly owned subsidiaries of DPHK and are engaged in the manufacture and assembly of backlight modules in Mainland China.

BVLB is a holding and trading company. BVXM, BVCH, BKHZ, BVKS and BVHF are mainly engaged in the manufacture and sale of optoelectronics
LCD products and related parts in Mainland China.

DSTW is mainly engaged in the manufacture and sale of Driver IC. ACTW, AESZ
and AETJ are mainly engaged in the design and installation of the solar related systems and modules.

M. Setek is mainly
engaged in the production of polysilicon, manufacture of single crystal silicon wafers and ingots and sale of solar modules in Japan.

Konly and Ronly are investment holding companies for investments in other technology companies.

AENL and AEUS are holding companies for investments in solar business and providing after-sale service in Europe and the United States. AEDE is mainly engaged in the sales support of solar photovoltaic
(PV) modules in Germany. ACMK is mainly engaged in the manufacture and sale of solar wafers.

Toppan CFI is a 49%-owned
company of AUO, which is mainly engaged in the manufacture and sale of color filters. AUO is able to exercise control over the operating, financial and personnel policies of Toppan CFI. As a result, Toppan CFI is included in the AUOs
consolidated financial statements.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-13 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



In October 2011, AULB joint ventured with Kunshan Economic and Technical Development
Zone Assets Operation Co., Ltd. to invest AUKS, with AULB owning 49% of the shareholding. AUO is able to exercise control over the operating, financial and personnel policies of AUKS. As a result, AUKS is included in the AUOs consolidated
financial statements.

In October 2011, AULB transferred all of its ownership interests in common and preferred shares of M.
Setek to ACTW due to group restructuring. After the group restructuring, ACTWs ownership interests in M.Setek increased to 93.49%.

In October 2011, due to business structure reorganization, AESZ decided to commence liquidation pursuant to the resolution of board of directors. The liquidation procedure is still in progress as of
December 31, 2011.

In November 2010, BVTWs ownership interests in DPLB increased from 75.88% to 100% when AULB
transferred 24.12% ownership interests in common shares of DPLB to BVTW due to group restructuring.

In July 2010, AULB joint
ventured with TCL King Electrical Appliance (Huizhou) Co., Ltd. (TCL Huizhou) to establish BKHZ, in which AULB held 51% ownership interests. In March, June and August 2010, DPHK established wholly owned subsidiaries, DPCD, DPQD and DPDG,
respectively.

In March, May, September and October 2010, AUSG established wholly owned subsidiaries, AESZ, AETJ, AENL and
AEUS, respectively. In October 2011, AENL established a wholly owned subsidiary, AEDE. In April 2010, BVLB established wholly owned subsidiaries, BVHF and BVKS. In November 2010, ACTW established a wholly owned subsidiary, ACMK.

In July 2010, due to business structure reorganization, the holding companies of BVXM and BVCH changed from AULB and BVLB to BVLB and
AULB, respectively.

On July 1, 2010, AULB acquired 100% ownership interests of AUST that was formerly a subsidiary of
Toshiba Mobile Display Co., Ltd. in Singapore. Effective from July 1, 2010, the operating result of AUST is included in AUOs consolidated financial statements.

On March 31, 2010, M. Setek re-elected its board of directors and Ichijos chairman was not elected. M. Setek, therefore, lost the power to control Ichijos financial, operating and
personnel policies. Consequently, Ichijo was not included into the consolidated financial statements of AUO and the investment was accounted for under the equity method as of that date.

As a result of disproportionate participation in Lextar Electronics Corp.s (Lextar) capital increase and partial
disposal of investment in April 2010, the ownership interest of AUO together with the ownership interest of its investment holding companies in Lextar decreased to 46.29%. On June 30, 2010, Lextar re-elected its board of directors so that AUO
lost the power to control Lextars financial, operating and personnel policies. Therefore, Lextar was not included into the consolidated financial statements of AUO and the investment was accounted for under the equity method as of that date.

As of December 31, 2010 and 2011, AUO and its consolidated subsidiaries had 57,396 and 60,011 employees, respectively.



|2. | Pro Forma Information
|-- | ---------------------

In June 2009, AUO made an equity investment in M. Setek through AULB and included M. Setek into AUOs consolidated
financial statements from September 1, 2009. The operating result of M. Setek was included in AUOs consolidated financial statements from that date. Additionally, on July 1, 2010, AUO acquired AUST through AULB. The operating result
of AUST was included in AUOs consolidated financial statements from July 1, 2010. The following unaudited pro forma financial information summarizes the combined results of operations as if the business combination with M. Setek and AUST
had taken place on January 1, 2009 and January 1, 2010, respectively. This unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations had the
acquisition been effected on January 1, 2009 or January 1, 2010.





|                                                                                      |  |                                           |             |   |      |  |             | 
|------------------------------------------------------------------------------------- |  | ----------------------------------------- | ----------- | - | ---- |  | ----------- | 
|                                                                                      |  | For the year endedDecember 31,            |            
|                                                                                      |  | 2009                                      |             |   | 2010 | 
|                                                                                      |  | NT$                                       |             |   | NT$  | 
|                                                                                      |  | (in thousands, except for per share data) |            
|Net sales                                                                             |  |                                           | 366,661,919 |   |      |  | 471,612,696 | 
|Consolidated net income (loss)  attributable to equity holders of the parent company |  |                                           | (29,068,924 | ) |      |  | 6,064,144   | 
|Earnings (loss) per share  basic                                                     |  |                                           | (3.31       | ) |      |  | 0.69        | 
|Earnings (loss) per share  diluted                                                   |  |                                           | (3.31       | ) |      |  | 0.67        | 

On October 14, 2011, AUO acquired AUKS through AULB. AUKS was still in the development period,
therefore, there is no significant impact on results of operations as if the acquisition of AUKS had taken place on January 1, 2011.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-14 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|3. | Summary of Significant Accounting Policies
|-- | ------------------------------------------



| | (a) | Basis of preparation, basis of presentation and consolidation policy
| | --- | --------------------------------------------------------------------

The consolidated financial statements include the accounts of AUO and the aforementioned subsidiaries, hereinafter referred to individually or collectively as the Company. The consolidated
financial statements are prepared in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the Republic of China (ROC GAAP). These consolidated
financial statements are not intended to present the financial position and the related results of operations and cash flows of the Company based on accounting principles and practices generally accepted in countries and jurisdictions other than the
Republic of China. ROC GAAP vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in note 27 to the
consolidated financial statements.

The Company includes in its consolidated financial statements the results of operations of
all entities in which it has control over the financial and operating policies, irrespective of whether or not it has a majority shareholding in such entities. All significant inter-company balances and transactions are eliminated in the
consolidated financial statements.



| | (b) | Use of estimates
| | --- | ----------------

The
preparation of the accompanying consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
consolidated financial statements, and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of
fixed assets; allowances for sales returns and discounts; realization of deferred tax assets; recovery of the carrying amounts of goodwill, fixed assets, inventory, valuation of investments, and accruals for income tax and litigation uncertainties
and other contingencies.



| | (c) | Foreign currency transactions and translation
| | --- | ---------------------------------------------

The Companys reporting currency is New Taiwan dollar. AUO and its subsidiaries record transactions in their respective functional currency. Non-derivative foreign currency transactions are recorded
at the exchange rates prevailing at the transaction date. At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are translated into functional currencies using the exchange rates on that date. The resulting
unrealized exchange gains or losses from such translations are reflected in the accompanying statements of operations. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into reporting currency at the foreign exchange rates at the date the fair value was determined.
If the non-monetary assets or liabilities are measured at fair value through profit or loss, the resulting unrealized exchange gains or losses from such translation are reflected in the accompanying statements of operations. If the non-monetary
assets or liabilities are measured at fair value through stockholders equity, the resulting unrealized exchange gains or losses from such translation are recorded as a separate component of stockholders equity.

For long-term equity investments in foreign investees which are accounted for by the equity method, their foreign currency financial
statements are translated into the Companys reporting currency. Assets and liabilities of foreign operations are translated using the exchange rates on the balance sheet date. Except that the beginning balance of retained earnings is carried
from the prior period, other accounts under the stockholders equity are translated at historical exchange rates. Dividends are translated at exchange rates on the declaration date. Revenue and expense accounts are translated using average
rates during the period. Translation adjustments resulting from the translation of foreign currency financial statements into the Companys reporting currency are accounted for as cumulative translation adjustment, a separate component of
stockholders equity.



| | (d) | Classification of current and noncurrent assets and liabilities
| | --- | ---------------------------------------------------------------

Cash or cash equivalents, trading securities, and assets that are expected to be realized into cash within twelve months are classified as current assets; assets that are not current are classified as
non-current assets. For liabilities arising from trading or being expected to be liquidated within twelve months are classified as current liabilities; liabilities that are not current are classified as non-current liabilities.



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (e) | Asset impairment
| | --- | ----------------

Management
reviews the Companys assets (an individual asset or cash-generating unit (CGU) associated with the asset, other than goodwill) for impairment at each balance sheet date. If there is any indication of impairment, management
estimates the recoverable amount of the asset. Any excess of the carrying amount of the asset over its recoverable amount is recognized as an impairment loss. If there is evidence that the accumulated impairment losses of an asset other than
goodwill in prior years no longer exist or have decreased, the amount previously recognized as impairment loss is reversed and the carrying amount of the asset is increased to the recoverable amount. The increase in the carrying amount shall not
exceed the carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized for the asset in prior years.

The CGU to which goodwill is allocated for purposes of impairment testing is reviewed for impairment annually. If the recoverable amount of the CGU is lower than the carrying amount of the CGU, an
impairment loss is recognized.

The estimate of the recoverable amount of long-lived assets and intangible assets is measured
as the higher of (a) net selling price (if determinable) and (b) value in use. Net selling price refers to the amount obtainable from the sale of an asset in an arms-length transaction after deducting any direct incremental disposal
costs. The value in use refers to the present value of estimated future cash flows expected to result from the assets remaining useful life.

In performing an impairment test, the recoverable amount of goodwill is evaluated in terms of the recorded amount of the cash-generating unit under ROC GAAP to which the goodwill has been allocated to.
Under ROC GAAP, recoverable amount is defined as the higher of (a) a cash-generating units fair value less costs to sell (if determinable), or (b) its value in use, which is defined as the present value of the
expected future cash flows generated by the assets.



| | (f) | Cash equivalents and restricted cash in bank
| | --- | --------------------------------------------

The Company considers all highly liquid investments, such as reverse repurchase agreements (RRP) with reputable securities firms or banks in Taiwan covering government and quasi-government
bonds for short-term liquidity-management purposes, to be cash equivalents.

The assets which the Company obtains control of
under the RRP agreement represent securities that serve as collateral for the Companys cash purchase until the Company resells the securities for a specified price. The sell-back dates of these securities are typically within a period of less
than one month from the purchase date. The difference between the cost and the resale price of these RRP arrangements is recorded as interest income between the purchase date and the resale date, and no capital gains or losses are recognized.

Time deposits which are provided as collateral are classified as restricted cash in bank presented under current assets or
noncurrent assets depending on the term of the obligation secured by such collateral.



| | (g) | Financial instruments
| | --- | ---------------------

The
Company uses transaction-date accounting for financial instrument transactions. At initial recognition, financial instruments are evaluated at fair value. Except for financial assets and liabilities measured at fair value through profit or loss,
acquisition cost or issuance cost is added to the originally recognized amount.

Financial instruments are classified into the
following categories in accordance with the purpose of holding or issuing of such financial instruments:



| | (1) | Financial assets and liabilities measured at fair value through profit or loss: Financial instruments are classified into this category if the purpose of acquisition is
principally for selling or repurchasing in the near term. Except for effective hedging derivative financial instruments, all financial derivatives are included in this category. Changes in fair values are charged to current operations.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Available-for-sale financial assets: These are measured at fair value, and any changes, excluding impairment loss and unrealized foreign currency exchange gain or loss,
are reported as a separate component of stockholders equity until realized. Realized gain or loss on financial instruments is charged to current operations. If there is objective evidence of impairment, an impairment loss is recognized in
profit or loss. If, in a subsequent period, events or changes in circumstances indicate that the amount of impairment loss decreases, the previously recognized impairment loss for equity securities is reversed to the extent of the decrease and
recorded as an adjustment to equity, while for debt securities, the reversal is allowed through profit or loss provided that the decrease is clearly attributable to an event which occurs after the impairment loss is recognized. Cash dividends are
recognized as investment income upon resolution of shareholders of an investee but are accounted for as a reduction to the original cost of investment if such dividends are declared prior to the purchase of the investment. Stock dividends are
recorded as an increase in the number of shares held and do not affect investment income. The cost per share is recalculated based on the new total number of shares.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (3) | Financial assets carried at cost: Financial assets that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are
carried at their original cost, which is determined by using an analysis of various factors. These factors include the private companys current operating and future expected performance (based on evaluation of the latest available financial
statements), as well as changes in the industry and market prospects (based on publicly available information). If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. A subsequent reversal of such
impairment loss is prohibited. The accounting treatment for cash dividends and stock dividends arising from financial assets carried at cost is the same that for cash and stock dividends arising from available-for-sale financial assets.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | Hedging-purpose derivative financial instruments: These are derivative instruments entered into to hedge exposure to interest rate risks and effective as hedges.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (h) | Derivative financial instruments and hedging activities
| | --- | -------------------------------------------------------

The Company uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities. In accordance with the
Companys treasury policy, the Company holds or issues derivative financial instruments for hedging purposes. When a derivative financial instrument is no longer effective as a hedge, the Company discontinues hedge accounting prospectively and
accounts for it as a financial asset (liability) measured at fair value through profit or loss.

Hedge accounting recognizes
the offsetting effects on profit or loss of changes in the fair value of the hedging instrument and the hedged item. If the hedging relationship of a cash flow hedge meets the criteria for hedge accounting, it is accounted for as follows:

Changes in the fair value of the hedging instrument designated as a cash flow hedge are recognized directly in equity. If a
hedge of a forecasted transaction subsequently results in the recognition of an asset or a liability, then the amount recognized in equity is reclassified into profit or loss in the same period or periods during which the asset acquired or liability
assumed affects profit or loss. For hedges other than those covered by the preceding statements, the associated cumulative gain or loss is removed from equity and recognized in profit or loss in the same period or periods during which the hedged
forecasted transaction affects profit or loss.



| | (i) | Accounts receivable and allowance for doubtful accounts
| | --- | -------------------------------------------------------

The allowance for doubtful accounts is based on the age, credit quality, and results of managements evaluation of collectability of the outstanding balance of accounts receivable.

As further described in Note 3(zb), commencing January 1, 2011, management reviews accounts receivable for impairment in accordance
with the third revision of ROC SFAS No. 34 Financial Instruments: Recognition and Measurement.

Impairment
loss is charged to current operations and the allowance for doubtful accounts. If, in a subsequent period, the amount of the impairment loss decreases (e.g. repayment of debts), the previously recognized impairment loss is reversed to current
operations.



| | (j) | Inventories
| | --- | -----------

The cost of
inventories includes all necessary expenditure and charges for bringing the inventory to the stable and useable condition and location. Inventories are recorded at cost, and cost is determined using the weighted-average method. The fixed production
overhead is allocated based on the capacity of the production facilities. The variable production overhead is allocated based on the actual production. At each period-end, inventories are measured at the lower of cost or net realizable value. Net
realizable value for raw materials and spare parts is based on replacement cost. Net realizable value for finished goods and work in process is calculated based on the estimated selling price less all estimated costs of completion and necessary
selling costs.



| | (k) | Equity-method investments
| | --- | -------------------------

When
the Company holds 20% or more of the investees voting shares, unless it is evident that the Company does not have significant influence over the investee; or the Company holds less than 20% of the investees voting shares but has
significant influence over the investee, the Companys equity investment therein is accounted for using the equity method. In addition, instead of proportionate consolidation method, the equity method is used to account for the Companys
interest in the jointly controlled entities.

When the investee companys financial statements are needed for the equity
method and its financial statement date is different from that of an investor company, the effects of significant transactions or events that had occurred between different financial statement dates of the investee and the investor companies should
be adjusted accordingly. Under the case of different financial statement dates of the investee and investor companies, the difference should not exceed three months.



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



Effective January 1, 2006, under the amended ROC SFAS No. 5, Long-term
Investments under Equity Method, and ROC SFAS No. 25, Business Combinations, the difference between acquisition cost and carrying amount of net equity of the investee as of the acquisition date is allocated based upon the pro
rata excess of fair value over the carrying value of noncurrent assets on the investees books. Allocated amounts are amortized based on the method used for the related assets. Any unallocated difference is treated as investor-level goodwill.
If the allocation reduces noncurrent assets to zero value, the remaining excess over acquisition cost is recognized as an extraordinary gain.

Investor-level goodwill is not amortized but tested for impairment.

Stock
dividends received from investees as a result of appropriation of net earnings and additional paid-in capital are recorded as an increase in the number of shares held and do not affect investment income. The cost per share is recalculated based on
the weighted-average method. Cash dividends are accounted for as a reduction to the original cost of investment.

Upon the sale
of equity-method investment, the difference between the selling price and carrying amount of the investment at the date of sale is recognized as an investment gain or loss. In proportion to the percentage disposed of, capital surplus and other
equity adjustment items from the long-term investment resulting from the Companys proportionate share in the net equity of the investee are recognized in profit or loss.

If an investee company issues new shares and the Company does not acquire new shares in proportion to its original ownership percentage, the Companys equity in the investees net assets will be
changed. The capital surplus and long-term investment accounts are adjusted for the change in equity interest. If the Companys capital surplus is insufficient to offset the adjustment to long-term investment, the difference is charged as a
reduction to retained earnings.

If the Company and its investees accounted for under the equity method have mutual holdings,
investment gain or loss is calculated by the treasury stock method.

Unrealized inter-company profits or losses resulting from
transactions between the Company and an investee accounted for under the equity method are deferred to the extent of the Companys ownership. Profits or losses resulting from depreciable or amortizable assets are recognized over the estimated
economic lives of such assets. Profits or losses from other assets are recognized when realized.

The Company accounts for
investments by the equity method and consolidates accounts of investees quarterly when the Company has a controlling interest in investees.

For long-term investment in a limited partnership, the distribution of profits is based on the percentage of capital contributed by each partner. The Company adjusts the carrying amount of its investment
at each fiscal year-end to recognize its share of the profit or loss. Distributed earnings and any return of capital in a limited partnership are recorded as a reduction of the carrying amount of the long-term investment.

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

The Companys share of the difference resulting from translation of the financial statements of a foreign investee accounted for under the equity method into New Taiwan dollars, net of the related
tax effect, are recorded as cumulative translation adjustments in stockholders equity.



| | (l) | Property, plant and equipment
| | --- | -----------------------------

Property, plant and equipment are stated at acquisition cost. Significant renewals and improvements are treated as capital expenditures
and are depreciated accordingly. Interest costs related to the construction of property, plant and equipment are capitalized and included in the cost of the related asset. Maintenance and repairs are charged to expense as incurred.

Excluding land, depreciation of property, plant and equipment is provided over the estimated useful lives of the respective assets using
the straight-line method less any salvage value. The range of prescribed or estimated useful lives is as follows: buildings-20 to 50 years, machinery and equipment-3 to 10 years, leasehold improvement-the shorter of 5 years or the lease term, and
other equipment-3 to 5 years. Depreciation assets still used in operation after they have reached their original estimated useful lives are further depreciated over their newly estimated useful lives. Disposal gain or loss is recorded as
non-operating gain or loss in the current period.

Property, plant and equipment not used in operations are classified as idle
assets and are stated at the lower of carrying amount or net realizable value.



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (m) | Leased assets
| | --- | -------------

Leased assets are
recorded at the lower of fair value of the asset at the reception of the lease, or present value of all required payment (excluding executive costs paid by the lesser) and bargain purchase option or guaranteed residual value. Leased assets are
depreciated over estimated useful life by using straight-line method.



| | (n) | Deferred charges
| | --- | ----------------

Deferred
charges consist of the costs of software systems, electrical facility installation charges, expense associated with syndicated loans, bond issuance costs, and land use rights. The costs of software systems, electrical facility installation charges,
and expense associated with syndicated loans are amortized over the estimated useful lives of three to seven years on a straight-line basis. Bond issuance costs are amortized using the straight-line method over the period from the issuance date to
the maturity date (five years). The amortization of issuance costs associated with loans and bonds under the straight-line method is not materially different from the amount determined using the effective interest method. In the case of early
redemption of bonds, the unamortized bond issuance cost is charged to current operations. The cost of land use rights is amortized using the straight-line method over the lease term of 50 years.



| | (o) | Goodwill and other intangible assets
| | --- | ------------------------------------

In accordance with ROC SFAS No. 37, other than intangible assets acquired by way of government grant, which are measured at the fair value, intangible assets are initially measured at cost.
Subsequent to initial recognition, intangible assets are measured at cost less any subsequent accumulated amortization and accumulated impairment losses. The depreciable amount of an intangible asset is the cost less its residual value. An
intangible asset with a finite useful life is amortized over the estimated useful life using the straight-line method from the date that the asset is made available for use. The residual value, the amortization period, and the amortization method
are reviewed at least annually at each fiscal year-end, and any changes thereof are accounted for as changes in accounting estimates.

Expenditure on research, other than goodwill and intangible assets acquired in a business combination, is charged to expense as incurred. Expenditure arising from development is capitalized as an
intangible asset when the Company demonstrates all of the following: (1) the technical feasibility of completing the intangible asset so that it will be available for use or sale; (2) its intention to complete the intangible asset and use
or sell it; (3) its ability to use or sell the intangible asset; (4) the probability that the intangible asset will generate future economic benefits; (5) the availability of adequate technical, financial and other resources to
complete the development project; and (6) its ability to measure reliably the expenditure attributable to the intangible asset during its development. Other development expenditure is charged to expense as incurred.

Goodwill is recognized when the purchase price exceeds the fair value of identifiable net assets acquired in a business combination.
Goodwill is not amortized but is tested for impairment in accordance with ROC SFAS No. 35, Impairment of Assets, at least annually or more frequently if events or circumstances indicate it might be impaired.

Technology-related fees, including purchased patents and licenses pursuant to patent licensing agreements, and core technologies acquired
in connection with the merger, are amortized using the straight-line method over their estimated useful lives ranging from three to twenty years.



| | (p) | Convertible bonds
| | --- | -----------------

Convertible
bonds assumed from business combination with QDI on October 1, 2006 which were issued before December 31, 2005 were recorded at fair value at the date of acquisition. The difference between the recorded amount and the par value of
convertible bonds is amortized and charged to current operations as interest expense using the interest method over the respective remaining redemption periods. Where a premium is payable on a puttable convertible bonds, the excess of the redemption
price over the par value is expensed as interest payable over the redemption period.

When bondholders exercise the right to
convert bonds into common stock, the number of shares to be issued is calculated based on the principal amount of the bond and conversion price applicable at the date of conversion. The par value of the shares is credited to common stock. The
difference between the carrying value of the bonds and the par value of common stock, unamortized premium or discount upon the conversion of the bonds, and related issuance cost are recorded as capital surplus.

Convertible bonds issued on or after January 1, 2006, comprise convertible notes that can be converted into share capital at the
option of the holder, and the number of shares to be issued does not vary with changes in their fair value. The liability component of a convertible bond is recognized initially at the fair value of a similar liability that does not have an equity
conversion option. The equity component is recognized initially at the difference between the fair value of the convertible bond as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to
the liability and equity components in proportion to their initial carrying amounts. Subsequent to initial recognition, the liability component of a convertible bond is measured at amortized cost using the effective interest method, unless it is
designated at fair value through profit or loss. The equity component of a convertible bond is not remeasured subsequent to initial recognition. When bonds are converted into common stock, shares to be issued are recorded based on the book value of
liability and equity components of convertible bonds.



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (q) | Retirement plans
| | --- | ----------------

Pursuant to
government regulations and the ROC Labor Standards Law (the old system), AUO and its subsidiaries located in the Republic of China establish employee noncontributory and defined benefit retirement plans covering full-time employees in
the Republic of China. Under the defined benefit plans, employees are eligible for retirement, or are required to retire, after fulfilling certain age or service requirements. Payments of retirement benefits are based on years of service and the
average salary for the six-month period before the employees retirement. Each employee earns two months of salary for the first fifteen years of service, and one month of salary for each year of service thereafter. The maximum retirement
benefit is 45 months of salary. The defined benefit plans are funded by contributions made by the Company, plus earnings thereon. On a monthly basis, AUO and Toppan CFI contribute two percent of wages and salaries to a pension fund maintained with
Bank of Taiwan. Retirement benefits are paid to eligible participants on a lump-sum basis upon retirement. For the defined benefit plans, the Company adopted ROC SFAS No. 18, Accounting for Pensions, which requires the Company to
perform an actuarial calculation on its pension obligation as of each fiscal year-end. Based on the actuarial calculation, the Company recognizes a minimum pension liability and net periodic pension costs covering the service lives of participants.
A deferred pension cost is recognized and classified under intangible assets when the additional minimum liability does not exceed the sum of unrecognized net transition obligation. The excess, which represents a net loss not yet recognized as net
periodic pension cost, is reported as a reduction of equity. The unrecognized net transition obligation, and unrecognized pension gain or loss, are amortized on a straight-line basis.

Commencing July 1, 2005, pursuant to the ROC Labor Pension Act (hereinafter referred to as the new system), employees who
elected to participate in the new system or joined the Company after July 1, 2005, are subject to a defined contribution plan under the new system. Under the defined contribution plan, the Company contributes monthly at a rate of no less than
six percent of an employees monthly salary or wages to the employees individual pension fund account at the ROC Bureau of Labor Insurance. Cash contributions are charged to current operations as pension cost.

M. Setek established its retirement plans covering all full-time employees in 2005. In accordance with the plans, the pension benefits
paid out to the employees are based on years of service, the current rate of pay and compensation. The relative rate of pay has been regulated in the retirement plans. For these defined benefit plans, M. Setek performs actuarial calculation on its
accumulated benefit obligation at each fiscal year-end. The excess of accumulated benefit obligation over the fair value of the plan assets is recognized as minimum pension liability on the balance sheet. A net pension cost comprising service cost,
transition assets, and amortization of prior service cost is also recognized. The pension fund is maintained with Asahi Mutual Life Insurance.

The Companys overseas subsidiaries have set up their retirement plans, if necessary, based on their respective local government regulations.



| | (r) | Employee bonuses and remuneration to directors
| | --- | ----------------------------------------------

Employee bonuses and remuneration to directors are estimated and charged to expense in accordance with Accounting Research and Development Foundation (ARDF) Interpretation No. 2007-052,
and included in the cost of goods sold and operating expense, as appropriate. The difference, if any, between the amount approved by stockholders in the subsequent year and the amount estimated in the current-year financial statements is accounted
for as a change in accounting estimate, and charged to profit or loss in the period during which stockholders approval is obtained.



| | (s) | Share-based payment transactions
| | --- | --------------------------------

The Company adopted ROC SFAS No. 39, Share-based Payment, for share-based payment arrangements with grant date on or
after January 1, 2008.

An equity-settled share-based payment transaction is measured based on the fair value of the award
at the grant date, and recognized as expenses over the vesting period with a corresponding increase in equity. The vesting period is estimated based on the vesting conditions under the share-based payment arrangement. Vesting conditions include
service conditions and performance conditions (including market conditions). In estimating the fair value of an equity-settled share-based award, only the effect of market conditions is taken into consideration. A cash-settled share-based payment
transaction is measured at the balance sheet date and settlement date based on the fair value of the award as of those dates and is recorded as a liability incurred for the goods and services received. Changes in fair values are charged to current
operations. The fair value of share-based award is estimated using the Black-Scholes option-pricing model, taking into account the exercise price, current market price of the underlying shares and managements best estimate of the expected
term, expected volatility, expected dividends, and risk-free interest rate.



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (t) | Revenue recognition and allowance for sales return and discounts
| | --- | ----------------------------------------------------------------

Revenue is recognized when the Company has transferred to customers the significant risks and rewards of ownership of the products. Allowance and related provisions for sales returns and discounts are
estimated based on historical experience. Such provisions are deducted from sales in the year when the products are sold.

The
Company provides a limited product quality warranty to its products against certain defects. Such product warranties range from 1 to 3 years. Estimated future warranty costs are accrued at the time that the related revenue is recognized. These
estimates are derived from historical data, trends of product reliability and costs of repairing and replacing defective products.



| | (u) | Government grants
| | --- | -----------------

Income from
government grants for research and development is recognized as non-operating income when qualifying expenditures are made and income is realizable.



| | (v) | Income taxes
| | --- | ------------

Income taxes are
accounted for under the asset and liability method. Deferred income taxes are determined based on differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect during the years in which the
differences are expected to reverse. The income tax effects resulting from taxable temporary differences are recognized as deferred income tax liabilities. The income tax effects resulting from deductible temporary differences, net operating loss
carryforwards, and income tax credits are recognized as deferred income tax assets. The realization of the deferred income tax assets is evaluated, and if it is considered more likely than not that the deferred tax assets will not be realized, a
valuation allowance is recognized accordingly.

When a change in the tax laws is enacted, the deferred tax assets or
liabilities (including items that are directly debited or credited to stockholders equity) are recalculated accordingly in the period of change. The effect of changes in the deferred tax assets or liability is reported as an adjustment to
current income tax benefit or expense.

If a valuation allowance is recognized at the acquisition date for deferred tax assets
acquired through business combination accounted for using the purchase method of accounting, the income tax benefit recognized as a result of the elimination of valuation allowance subsequent to the acquisition is to be applied first to reduce
goodwill related to the acquisition. The remaining tax benefit, if any, is applied to reduce income tax expense attributable to continuing operations.

Classification of the deferred income tax assets or liabilities as current or noncurrent is based on the classification of the related asset or liability. If the deferred income tax asset or liability is
not directly related to a specific asset or liability, then the classification is based on the expected realization date of such deferred income tax asset or liability.

According to the ROC Income Tax Act, undistributed income, if any, earned after December 31, 1997, is subject to an additional 10 percent retained earnings tax. The surtax is charged to income tax
expense after the appropriation of earnings is approved by the stockholders in the following year.

Income taxes of the Company
are calculated based on tax laws of the various countries and jurisdictions where the respective subsidiary companies were incorporated. Income tax returns are filed by each entity separately and not on a combined basis. Income tax expense of the
Company is the sum of income tax expenses of AUO and consolidated subsidiary companies.



| | (w) | Investment tax credits
| | --- | ----------------------

Investment tax credits arising from the purchase of equipment and machinery, research and development expenditures, and employee training
expenditures are recognized using the flow-through method.



| | (x) | Earnings (loss) per common share ((L) EPS)
| | --- | --------------------------------------------

Basic (L) EPS are computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the year. The Companys convertible bonds, employee stock options, and
employee stock bonuses to be issued after January 1, 2009 are potential common share. In computing diluted EPS, net income and the weighted-average number of common shares outstanding during the year are adjusted for the effects of dilutive
potential common stock, assuming dilutive shares equivalents had been issued. The weighted-average outstanding shares are retroactively adjusted for the effects of stock dividends transferred from retained earnings and capital surplus to common
stock, and employee stock bonuses issued prior to January 1, 2009. Effective January 1, 2009, EPS are not retroactively adjusted for employee stock bonuses.



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (y) | Operating segments
| | --- | ------------------

Effective
January 1, 2011, the Company adopted ROC SFAS No. 41 Operating Segments which superseded ROC SFAS No. 20 Segment Reporting. An operating segment under ROC SFAS No. 41 is a component of an entity that: 1)
engages in business activities from which it may earn revenue and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), 2) the segments operating results are reviewed regularly by
the entitys chief operating decision maker (CODM) to make decisions pertaining to the allocation of the resources to the segment and to assess its performance, and 3) for which discrete financial information is available. The
initial adoption of ROC SFAS No. 41 had no impact on how management determined the Companys operating segments. Segment profit and loss is determined on a basis that is consistent with how the Company reports operating income (loss) on an
ROC GAAP basis in its consolidated statements of operations. Operating income (loss) excludes income taxes, interest income and expense, foreign currency transactions gains and losses, equity in the earnings (losses) of affiliates, deprecation of
idle assets, asset impairment losses, provisions for potential litigation losses, gains and losses on valuations of financial instruments and sales of investment securities, gains from bond redemption, and other income and expenses. The accounting
policies for the operating segments are the same as those described in Note 3. The CODM reviews the consolidated total assets information but does not receive asset information by operating segment. Consequently, no operating segment asset
information is disclosed. Geographic net sales information is based upon the location of customers placing orders. The additional disclosures required by ROC SFAS No. 41 for all years presented are included in Note 25.



| | (z) | Convenience translation into U.S. dollars
| | --- | -----------------------------------------

The consolidated financial statements are stated in New Taiwan dollars. Translation of the 2011 New Taiwan dollar amounts into U.S. dollar amounts is included solely for the convenience of the reader
using the noon buying rate of the Federal Reserve Bank in New York on December 30, 2011, of NT$30.27 to US$1. The convenience translations should not be construed as representations that the New Taiwan dollar amounts have been, could have been,
or could in the future be, converted into U.S. dollars at this rate or any other rate of exchange.



| | (za) | Reclassifications
| | ---- | -----------------

Certain
reclassifications have been made to prior years financial statements to conform to the current years presentation.



| | (zb) | Accounting change
| | ---- | -----------------

Effective
January 1, 2011, the Company adopted the third revision of ROC SFAS No. 34 Financial Instruments: Recognition and Measurement to evaluate impairment of accounts receivable. Impairment loss is charged to current operations and
the allowance for doubtful accounts. The impact on net loss and basic (L) EPS for the year ended December 31, 2011, resulting from the adoption of ROC SFAS No. 34 was immaterial.



|4. | Cash and Cash Equivalents
|-- | -------------------------



|                                                  |  |                |            |  |      |  |            |     |  |  |           | 
|------------------------------------------------- |  | -------------- | ---------- |  | ---- |  | ---------- | --- |  |  | --------- | 
|                                                  |  | December 31,   |           
|                                                  |  | 2010           |            |  | 2011 | 
|                                                  |  | NT$            |            |  | NT$  |  |            | US$ | 
|                                                  |  | (in thousands) |           
|Cash and bank deposits                            |  |                | 70,686,923 |  |      |  | 74,592,942 |     |  |  | 2,464,253 | 
|Government bonds with reverse purchase agreements |  |                | 18,811,568 |  |      |  | 16,243,726 |     |  |  | 536,628   | 
|                                                  |  |                |            |  |      |  |            |     |  |  |           | 
|                                                  |  |                | 89,498,491 |  |      |  | 90,836,668 |     |  |  | 3,000,881 | 
|                                                  |  |                |            |  |      |  |            |     |  |  |           | 

The Company entered into reverse repurchase agreements (RRP) with reputable securities firms
or banks in Taiwan covering government and quasi-government bonds with sell-back dates typically within a period of less than three months from the purchase date. These bonds yielded interest at rates ranging from 0.25% to 0.32% and 0.46% to 0.70%
in 2010 and 2011, respectively.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-22 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|5. | Available-for-sale Financial Assetsnoncurrent
|-- | ----------------------------------------------



|                              |  |                |           |  |      |  |         |     |  |  |        | 
|----------------------------- |  | -------------- | --------- |  | ---- |  | ------- | --- |  |  | ------ | 
|                              |  | December 31,   |          
|                              |  | 2010           |           |  | 2011 | 
|                              |  | NT$            |           |  | NT$  |  |         | US$ | 
|                              |  | (in thousands) |          
|Publicly listed equity shares |  |                | 1,373,687 |  |      |  | 436,774 |     |  |  | 14,429 | 
|                              |  |                |           |  |      |  |         |     |  |  |        | 

Gains (losses) on valuation of available-for-sale financial assets resulting from the change in fair
value, based on publicly quoted market prices, were NT$1,637,485 thousand, NT$(746,732) thousand and NT$(750,826) (US$24,804) thousand for the years ended December 31, 2009, 2010 and 2011, respectively, and were accounted for as a separate
component of stockholders equity.

Certain available-for-sale financial assets-noncurrent were pledged as collateral;
see note 23.



|6. | Financial Assets Carried at Costnoncurrent
|-- | -------------------------------------------





|                           |  |                |         |  |      |  |           |     |  |  |        | 
|-------------------------- |  | -------------- | ------- |  | ---- |  | --------- | --- |  |  | ------ | 
|                           |  | December 31,   |        
|                           |  | 2010           |         |  | 2011 | 
|                           |  | NT$            |         |  | NT$  |  |           | US$ | 
|                           |  | (in thousands) |        
|Non-publicly listed stocks |  |                | 896,294 |  |      |  | 1,487,795 |     |  |  | 49,151 | 
|                           |  |                |         |  |      |  |           |     |  |  |        | 



|7. | Derivative Financial Instruments and Hedging Policy
|-- | ---------------------------------------------------



| | (a) | Derivative financial instruments
| | --- | --------------------------------





|                                                         |  |                |         |  |      |  |         |     |  |  |       | 
|-------------------------------------------------------- |  | -------------- | ------- |  | ---- |  | ------- | --- |  |  | ----- | 
|                                                         |  | December 31,   |        
|                                                         |  | 2010           |         |  | 2011 | 
|                                                         |  | NT$            |         |  | NT$  |  |         | US$ | 
|                                                         |  | (in thousands) |        
|Financial assets measured at fair valuecurrent:         |  |                |         |  |      |  |         |     |  |  |       | 
|Foreign currency forward contracts                       |  |                | 425,443 |  |      |  | 85,621  |     |  |  | 2,829 | 
|Options contracts                                        |  |                | 1,822   |  |      |  |        |     |  |  |      | 
|                                                         |  |                |         |  |      |  |         |     |  |  |       | 
|                                                         |  |                | 427,265 |  |      |  | 85,621  |     |  |  | 2,829 | 
|                                                         |  |                |         |  |      |  |         |     |  |  |       | 
|Financial assets measured at fair valuenoncurrent:      |  |                |         |  |      |  |         |     |  |  |       | 
|Interest rate swap contracts                             |  |                |        |  |      |  | 3       |     |  |  |      | 
|Options contracts                                        |  |                |        |  |      |  | 172     |     |  |  | 6     | 
|                                                         |  |                |         |  |      |  |         |     |  |  |       | 
|                                                         |  |                |        |  |      |  | 175     |     |  |  | 6     | 
|                                                         |  |                |         |  |      |  |         |     |  |  |       | 
|Financial liabilities measured at fair valuecurrent:    |  |                |         |  |      |  |         |     |  |  |       | 
|Options contracts                                        |  |                | 180,020 |  |      |  |        |     |  |  |      | 
|Foreign currency forward contracts                       |  |                | 88,779  |  |      |  | 17,523  |     |  |  | 579   | 
|Interest rate swap contracts                             |  |                | 28      |  |      |  |        |     |  |  |      | 
|                                                         |  |                |         |  |      |  |         |     |  |  |       | 
|                                                         |  |                | 268,827 |  |      |  | 17,523  |     |  |  | 579   | 
|                                                         |  |                |         |  |      |  |         |     |  |  |       | 
|Financial liabilities measured at fair valuenoncurrent: |  |                |         |  |      |  |         |     |  |  |       | 
|Interest rate swap contracts                             |  |                | 74,155  |  |      |  | 41      |     |  |  | 1     | 
|Options contracts                                        |  |                |        |  |      |  | 176,185 |     |  |  | 5,821 | 
|Foreign currency forward contracts                       |  |                | 13,676  |  |      |  |        |     |  |  |      | 
|                                                         |  |                |         |  |      |  |         |     |  |  |       | 
|                                                         |  |                | 87,831  |  |      |  | 176,226 |     |  |  | 5,822 | 
|                                                         |  |                |         |  |      |  |         |     |  |  |       | 
|Hedging derivative financial liabilitiesnoncurrent:     |  |                |         |  |      |  |         |     |  |  |       | 
|Interest rate swap contracts                             |  |                | 287,706 |  |      |  | 198,360 |     |  |  | 5,822 | 
|                                                         |  |                |         |  |      |  |         |     |  |  |       | 



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-23 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



As of December 31, 2010 and 2011, outstanding options contracts were as follows:



|                              |  |                 |  |                           |  |                 |                       | 
|----------------------------- |  | --------------- |  | ------------------------- |  | --------------- | --------------------- | 
|December 31,
2010             | 
|Contract item                 |  | Notional amount |  | Exercise rate/Price range |  | Exercise period |                      
|                              |  | (in thousands)  |  |                           |  |                 |                      
|Interest rate options         |  | JPY 1,800,000   |  | 1.00%                     |  |                 | Jan. 2011  Sep. 2011 | 
|Foreign currency call options |  | USD 9,050       |  | JPY 95.53  109.75        |  |                 | May 2011  Nov. 2013  | 
|Foreign currency put options  |  | USD 18,100      |  | JPY 95.53  109.75        |  |                 | Jan. 2011  Nov. 2013 | 



|                              |  |                |            |  |                           |  |            |                 |  |  |                       | 
|----------------------------- |  | -------------- | ---------- |  | ------------------------- |  | ---------- | --------------- |  |  | --------------------- | 
|December 31,
2011             | 
|Contract item                 |  | Notionalamount |            |  | Exercise rate/Price range |  |            | Exercise period | 
|                              |  | (in thousands) |            |  |                           |  |            |                 | 
|Foreign currency call options |  |                | USD 6,900  |  |                           |  | JPY 109.75 |                 |  |  | Jan. 2012  Nov. 2013 | 
|Foreign currency put options  |  |                | USD 13,800 |  |                           |  | JPY 109.75 |                 |  |  | Jan. 2012  Nov. 2013 | 

As of December 31, 2010 and 2011, outstanding foreign currency forward contracts were as follows:



|                   |  |                       |  |                           
|------------------ |  | --------------------- |  | --------------------------
|December 31,
2010 
|Contract item      |  | Maturity date         |  | Contract amount           
|                   |  |                       |  | (in thousands)            
|Sell USD / Buy NTD |  | Jan. 2011  Feb. 2011 |  | USD203,000 / NTD6,092,923 
|Sell USD / Buy JPY |  | Jan. 2011  Feb. 2011 |  | USD379,000 / JPY31,601,485
|Sell NTD / Buy JPY |  | Jan. 2011  Feb. 2011 |  | NTD203,922 / JPY546,442   
|Sell NTD / Buy USD |  | Jan. 2011  Mar. 2011 |  | NTD12,117,800 / USD400,000
|Sell USD / Buy CNY |  | Jan. 2011             |  | USD11,000 / CNY73,023     
|Sell CNY / Buy USD |  | Jan. 2011             |  | CNY19,886 / USD3,000      
|Sell JPY / Buy USD |  | Jan. 2011  Dec. 2011 |  | JPY594,265 / USD5,500     
|Sell EUR / Buy JPY |  | Jan. 2011  Mar. 2011 |  | EUR173,000 / JPY19,249,930
|Sell CZK / Buy JPY |  | Feb. 2011             |  | CZK12,405 / JPY53,960     
|Sell CZK / Buy EUR |  | Jan. 2011             |  | CZK162,240 / EUR6,500     



|                   |  |                       |  |                          
|------------------ |  | --------------------- |  | -------------------------
|December 31,
2011 
|Contract item      |  | Maturity date         |  | Contract amount          
|                   |  |                       |  | (in thousands)           
|Sell USD / Buy NTD |  | Jan. 2012             |  | USD39,500/NTD1,195,430   
|Sell USD / Buy JPY |  | Jan. 2012  Mar. 2012 |  | USD310,846/ JPY24,166,935
|Sell NTD / Buy JPY |  | Jan. 2012  Mar. 2012 |  | NTD392,175/ JPY1,010,306 
|Sell NTD / Buy USD |  | Jan. 2012             |  | NTD181,677/USD6,000      
|Sell USD / Buy CNY |  | Jan. 2012  Mar. 2012 |  | USD71,500/ CNY454,268    
|Sell JPY / Buy USD |  | Jan. 2012             |  | JPY32,925/ USD600        
|Sell EUR / Buy JPY |  | Jan. 2012  Mar. 2012 |  | EUR72,000/ JPY7,344,025  
|Sell CZK / Buy EUR |  | Jan. 2012             |  | CZK47,747/ EUR1,900      
|Sell USD / Buy SGD |  | Feb. 2012             |  | USD6,000 / SGD7,803      

The Company entered into foreign exchange forward contracts and options contracts with several banks to
manage foreign currency exchange risk resulting from business operations and investment activities. Net gain arising from foreign exchange forward contract for the years ended December 31, 2009, 2010 and 2011 were NT$640,250 thousand (including
valuation loss of NT$(1,395,121) thousand and realized settlement gain of NT$2,035,371 thousand), NT$4,049,932 thousand (including valuation gain of NT$845,779 thousand and realized settlement gain of NT$3,204,153 thousand) and NT$669,917
(US$22,131) thousand (including valuation loss of NT$(252,715) (US$(8,349)) thousand and realized settlement gain of NT$922,632 (US$30,480) thousand), respectively.

The Company entered into interest rate swap contracts with several banks to manage interest risk exposure arising from the Companys financing activities. As of December 31, 2010 and 2011,
AUOs total notional amount of outstanding interest rate swap contracts amounted to NT$43,111,111 thousand and NT$24,777,778 (US$818,559) thousand, respectively, of which, NT$35,333,333 thousand and NT$24,777,778 (US$818,559) thousand,
respectively, were related to effective hedges. Additionally, as of December 31, 2010 and 2011, AUSJs total notional amount of outstanding interest rate swap contracts amounted to US$33,600 thousand and US$16,800 thousand, respectively,
and all of which were related to effective hedges. As of December 31, 2010 and 2011, M. Seteks total notional amount of outstanding interest rate swap contracts amounted to JPY575,000 thousand and JPY190,000 thousand, respectively, of
which, JPY125,000 thousand and JPY0, respectively ,were related to effective hedges.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-24 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



For the years ended December 31, 2009, 2010 and 2011, the Companys unrealized
gains (losses) resulting from change in fair value of derivative contracts recognized in earnings amounted to NT$58,652 thousand, NT$(63,849) thousand and NT$74,155 (US$2,450) thousand, respectively.

Please refer to (b) for the financial results related to effective hedges.

During the period from April to July 2009, BVTW held convertible bond which was a hybrid instrument consisting of a host contract and an
embedded derivative instrument, therefore, BVTW recognized financial assets measured at fair value  conversion rights of the embedded derivative instrument. For the year ended December 31, 2009, the valuation gains recognized in earnings
resulting from changes in fair value of conversion rights of convertible bond amounted to NT$114,250 thousand.

For the years
ended December 31, 2009, 2010 and 2011, gains (losses) on valuation of financial instruments were reconciled to the line item of the consolidated statement of operations as follows:



|                                                                             |  |                                 |         |  |      |  |           |      |  |  |         |  |  |  |        | 
|---------------------------------------------------------------------------- |  | ------------------------------- | ------- |  | ---- |  | --------- | ---- |  |  | ------- |  |  |  | ------ | 
|                                                                             |  | For the year ended December 31, |        
|                                                                             |  | 2009                            |         |  | 2010 |  |           | 2011 | 
|                                                                             |  | NT$                             |         |  | NT$  |  |           | NT$  |  |  | US$     | 
|                                                                             |  | (in thousands)                  |        
|Net gain arising from foreign exchange forward contract and options contract |  |                                 | 640,250 |  |      |  | 4,049,932 |      |  |  | 669,917 |  |  |  | 22,131 | 
|Net gain (loss) arising from interest rate swap contracts                    |  |                                 | 58,652  |  |      |  | (63,849   | )    |  |  | 74,155  |  |  |  | 2,450  | 
|Gain arising from embedded derivative instrument                             |  |                                 | 114,250 |  |      |  |          |      |  |  |        |  |  |  |       | 
|                                                                             |  |                                 |         |  |      |  |           |      |  |  |         |  |  |  |        | 
|                                                                             |  |                                 | 813,152 |  |      |  | 3,986,083 |      |  |  | 744,072 |  |  |  | 24,581 | 
|                                                                             |  |                                 |         |  |      |  |           |      |  |  |         |  |  |  |        | 



| | (b) | Hedge accounting
| | --- | ----------------

The Company
entered into plain vanilla type interest rate swap contracts as the primary hedging instrument. The Company paid interest based on fixed rate and receives market floating-rate from the counterparty. The aforementioned hedging contracts are intended
to protect the Company from the risk of future cash flow fluctuation of debt bearing floating interest rate. These contracts are designated as cash flow hedge and met the criteria for hedge accounting.

As of December 31, 2010 and 2011, details of hedged items designated as cash flow hedges and their respective hedging derivative
financial instruments were as follows:



|                                                 |  |                              |  |                                |          |   |                             |  |                     |                                         |  |  |                     | 
|------------------------------------------------ |  | ---------------------------- |  | ------------------------------ | -------- | - | --------------------------- |  | ------------------- | --------------------------------------- |  |  | ------------------- | 
|December 31,
2010                                | 
|Hedged item                                      |  | Hedging instrument           |  | Fair value ofhedginginstrument |          |   | Expectedperiod ofcashflows  |  |                     | Expectedperiod ofrecognitionin earnings | 
|                                                 |  |                              |  | NT$                            |          |   |                             |  |                     |                                         | 
|                                                 |  |                              |  | (in thousands)                 |          |   |                             |  |                     |                                         | 
|Long-term borrowings with floating interest rate |  | Interest rate swap contracts |  |                                | (287,706 | ) |                             |  | Jan. 2011Sep. 2014 |                                         |  |  | Jan. 2011Sep. 2014 | 
|                                                
|December 31,
2011                                | 
|Hedged item                                      |  | Hedging instrument           |  | Fair value ofhedginginstrument |          |   | Expectedperiod ofcash flows |  |                     | Expectedperiod ofrecognition
inearnings | 
|                                                 |  |                              |  | NT$                            |          |   |                             |  |                     |                                         | 
|                                                 |  |                              |  | (in thousands)                 |          |   |                             |  |                     |                                         | 
|Long-term borrowings with floating interest rate |  | Interest rate swap contracts |  |                                | (198,360 | ) |                             |  | Jan. 2012Sep. 2014 |                                         |  |  | Jan. 2012Sep. 2014 | 

Unrealized gains on derivative financial instruments effective as cash flow hedges were NT$194,268
thousand, NT$181,449 thousand and NT$77,239 (US$2,552) thousand for the years ended December 31, 2009, 2010 and 2011, respectively, which were recognized as a separate component of stockholders equity.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-25 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|8. | Notes and accounts receivable, net
|-- | ----------------------------------



|                                          |  |              |            |   |                |  |            |     |  |  |           |  
|----------------------------------------- |  | ------------ | ---------- | - | -------------- |  | ---------- | --- |  |  | --------- | -
|                                          |  | December 31, |           
|                                          |  | 2010         |            |   | 2011           | 
|                                          |  | NT$          |            |   | NT$            |  |            | US$ | 
|                                          |  |              |            |   | (in thousands) |  |            |     | 
|Notes receivable                          |  |              | 262        |   |                |  | 122,361    |     |  |  | 4,042     |  
|Accounts receivable                       |  |              | 51,368,871 |   |                |  | 44,917,212 |     |  |  | 1,483,885 |  
|Less: allowance for doubtful accounts     |  |              | (84,644    | ) |                |  | (81,925    | )   |  |  | (2,706    | )
|allowance for sales returns and discounts |  |              | (688,988   | ) |                |  | (209,722   | )   |  |  | (6,928    | )
|                                          |  |              |            |   |                |  |            |     |  |  |           |  
|                                          |  |              | 50,595,501 |   |                |  | 44,747,926 |     |  |  | 1,478,293 |  
|                                          |  |              |            |   |                |  |            |     |  |  |           |  

In 2010 and 2011, the Company entered into financing facilities with banks to sell certain of its
accounts receivable, details of which were as follows:



|                                     |  |                 |             |  |                |  |             |                            |  |  |                |  |  |                             |           |  |  |  |      | 
|------------------------------------ |  | --------------- | ----------- |  | -------------- |  | ----------- | -------------------------- |  |  | -------------- |  |  | --------------------------- | --------- |  |  |  | ---- | 
|For the year ended December 31,
2010 | 
|Underwriting bank                    |  | Factoringlimit  |             |  | Amountadvanced |  |             | Amountsold andderecognized |  |  | Principleterms |  |  | Promissorynote ascollateral |          
|                                     |  |                 |             |  | (in thousands) |  |             |                            |  |  |                |  |  |                             |          
|Taipei Fubon Bank                    |  |                 | USD 25,000  |  |                |  |            |                            |  |  | USD 4,193      |  |  |                             | See below |  |  |  | None | 
|China Trust Commercial Bank          |  |                 | USD 35,000  |  |                |  |            |                            |  |  | USD 6,929      |  |  |                             | See below |  |  |  | None | 
|First Commercial Bank                |  |                 | USD 170,000 |  |                |  | USD 139,787 |                            |  |  | USD 139,787    |  |  |                             | See below |  |  |  | None | 
|Standard Chartered Bank              |  |                 | USD 190,000 |  |                |  |            |                            |  |  |               |  |  |                             | See below |  |  |  | None | 
|China Construction Bank              |  |                 | CNY140,000  |  |                |  |            |                            |  |  |               |  |  |                             | See below |  |  |  | None | 
|                                    
|For the year ended December 31,
2011 | 
|Underwriting bank                    |  | Factoring limit |             |  | Amountadvanced |  |             | Amountsold andderecognized |  |  | Principleterms |  |  | Promissorynote ascollateral |          
|                                     |  |                 |             |  | (in thousands) |  |             |                            |  |  |                |  |  |                             |          
|Taipei Fubon Bank                    |  |                 | USD 48,000  |  |                |  |            |                            |  |  | USD 14,604     |  |  |                             | See below |  |  |  | None | 
|China Trust Commercial Bank          |  |                 | USD 65,000  |  |                |  |            |                            |  |  | USD 17,740     |  |  |                             | See below |  |  |  | None | 
|Mizuho Corporate Bank                |  |                 | USD 500,000 |  |                |  | USD 65,002  |                            |  |  | USD 65,002     |  |  |                             | See below |  |  |  | None | 
|The Export-Import Bank               |  |                 | USD 11,000  |  |                |  | USD 5,296   |                            |  |  | USD 5,951      |  |  |                             | See below |  |  |  | None | 
|First Commercial Bank                |  |                 | USD 250,000 |  |                |  | USD 189,019 |                            |  |  | USD 189,019    |  |  |                             | See below |  |  |  | None | 
|China Construction Bank              |  |                 | CNY100,000  |  |                |  |            |                            |  |  |               |  |  |                             | See below |  |  |  | None | 



|          |  |                                                                                                                                                                                                                                                                                                                                                                
|--------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|          | 
|Note (a): |  | Under these facilities, the Company, irrevocably and without recourse, transferred accounts receivable to the respective underwriting banks.                                                                                                                                                                                                                   
|          | 
|Note (b): |  | To the extent of the amount sold to the underwriting banks, risks of non-collection or default by customers in the event of financial difficulties 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 recovering these receivables.
|          | 
|Note (c): |  | The Company informed its customers subject to the facilities to make payment directly to the respective underwriting banks.                                                                                                                                                                                                                                    
|          | 
|Note (d): |  | The aforementioned terms are applicable to the respective underwriting banks, except that the First Commercial Bank underwrites the accounts receivable without recourse, and the
Company takes all risks other than credit risk.                                                                                                                              
|          | 
|Note (e): |  | As of December 31, 2010 and 2011, total outstanding receivables resulting from the above transactions, net of fees charged by underwriting banks, of NT$336,072 thousand and
NT$999,517 (US$33,020) thousand, respectively, were classified under other current financial assets.                                                                              



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-26 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|9. | Inventories
|-- | -----------



|                                |  |                |            |   |      |  |            |     |  |  |           |  
|------------------------------- |  | -------------- | ---------- | - | ---- |  | ---------- | --- |  |  | --------- | -
|                                |  | December 31,   |           
|                                |  | 2010           |            |   | 2011 | 
|                                |  | NT$            |            |   | NT$  |  |            | US$ | 
|                                |  | (in thousands) |           
|Finished goods                  |  |                | 20,355,490 |   |      |  | 23,462,981 |     |  |  | 775,123   |  
|Work-in-progress                |  |                | 21,631,505 |   |      |  | 23,962,075 |     |  |  | 791,612   |  
|Raw materials and spare parts   |  |                | 8,627,715  |   |      |  | 9,041,363  |     |  |  | 298,691   |  
|Less: allowance for devaluation |  |                | (6,046,604 | ) |      |  | (8,584,471 | )   |  |  | (283,597  | )
|                                |  |                |            |   |      |  |            |     |  |  |           |  
|                                |  |                | 44,568,106 |   |      |  | 47,881,948 |     |  |  | 1,581,829 |  
|                                |  |                |            |   |      |  |            |     |  |  |           |  

For the year ended December 31, 2009, there was net reversal of inventory write-downs of
NT$5,521,522 thousand. For the years ended December 31, 2010 and 2011, net inventory devaluation write-downs included in cost of goods sold were NT$1,886,525 thousand and NT$2,735,721 (US$90,377) thousand, respectively.



|10. | Equity-Method Investments
|--- | -------------------------



|                                                     |  |                   |    |  |        |  |            |                   |  |  |        |  |  |     |            |  |  |  |         | 
|---------------------------------------------------- |  | ----------------- | -- |  | ------ |  | ---------- | ----------------- |  |  | ------ |  |  | --- | ---------- |  |  |  | ------- | 
|                                                     |  | December 31,      |   
|                                                     |  | 2010              |    |  | 2011   | 
|                                                     |  | Ownershipinterest |    |  | Amount |  |            | Ownershipinterest |  |  | Amount | 
|                                                     |  | %                 |    |  | NT$    |  |            | %                 |  |  | NT$    |  |  | US$ |           
|                                                     |  | (in thousands)    |   
|AUO SunPower Sdn. Bhd. (AUSP)                      |  |                   | 50 |  |        |  | 1,619,293  |                   |  |  | 50     |  |  |     | 3,894,560  |  |  |  | 128,661 | 
|Lextar                                               |  |                   | 46 |  |        |  | 3,638,618  |                   |  |  | 43     |  |  |     | 3,409,067  |  |  |  | 112,622 | 
|Qisda Corporation (Qisda)                          |  |                   | 10 |  |        |  | 3,015,606  |                   |  |  | 10     |  |  |     | 3,326,423  |  |  |  | 109,892 | 
|Forhouse Corporation (FH)                          |  |                   | 23 |  |        |  | 2,738,620  |                   |  |  | 26     |  |  |     | 2,808,039  |  |  |  | 92,766  | 
|Sipix Technology Inc. (STI)                        |  |                   | 28 |  |        |  | 825,144    |                   |  |  | 28     |  |  |     | 621,808    |  |  |  | 20,542  | 
|Raydium Semiconductor Corp. (Raydium)              |  |                   | 15 |  |        |  | 498,524    |                   |  |  | 15     |  |  |     | 515,827    |  |  |  | 17,041  | 
|Wellypower Optronics Corporation Ltd. (Wellypower) |  |                   | 9  |  |        |  | 485,415    |                   |  |  | 9      |  |  |     | 413,470    |  |  |  | 13,659  | 
|Daxin Materials Corp. (Daxin)                      |  |                   | 31 |  |        |  | 332,419    |                   |  |  | 28     |  |  |     | 360,358    |  |  |  | 11,905  | 
|Cando Corporation Ltd. (Cando)                     |  |                   | 18 |  |        |  | 910,745    |                   |  |  |       |  |  |     |           |  |  |  |        | 
|Others                                               |  |                   |    |  |        |  | 1,439,575  |                   |  |  |        |  |  |     | 567,783    |  |  |  | 18,757  | 
|                                                     |  |                   |    |  |        |  |            |                   |  |  |        |  |  |     |            |  |  |  |         | 
|                                                     |  |                   |    |  |        |  | 15,503,959 |                   |  |  |        |  |  |     | 15,917,335 |  |  |  | 525,845 | 
|Prepaid investment                                   |  |                   |    |  |        |  | 37,000     |                   |  |  |        |  |  |     |           |  |  |  |        | 
|                                                     |  |                   |    |  |        |  |            |                   |  |  |        |  |  |     |            |  |  |  |         | 
|                                                     |  |                   |    |  |        |  | 15,540,959 |                   |  |  |        |  |  |     | 15,917,335 |  |  |  | 525,845 | 
|                                                     |  |                   |    |  |        |  |            |                   |  |  |        |  |  |     |            |  |  |  |         | 

For the Companys investment in Qisda, the Company determined that it is able to exercise
significant influence over the operating and financial policies of Qisda, and therefore, the Company accounts for its investment in Qisda under the equity method of accounting.

Light House Technology Co., Ltd. (LHTC) was merged with and into Lextar on March 15, 2010, with Lextar as the surviving entity. Therefore, the Companys equity shareholdings in LHTC
were converted to shares of Lextar.

Taiwan Nano Electro-Optical Technology Co., Ltd. (Nano) was merged with and
into FH on September 15, 2010, with FH as the surviving entity. Therefore, the Companys equity shareholdings in Nano were converted to shares of FH.

For the years ended December 31, 2010 and 2011, the Company recognized unrealized valuation gains (losses) of NT$42,893 thousand and NT$(31,670) (US$(1,046)) thousand under stockholders equity,
respectively, on investments accounted for under the equity method. For the years ended December 31, 2009, 2010 and 2011, the Company recognized investment gains (losses) of NT$139,635 thousand, NT$681,331 thousand and NT$(63,943) (US$(2,112))
thousand, respectively, under the equity method.

On June 30, 2011, the Company sold most of its equity shareholdings in
Cando to TPK Universal Solutions Limited for cash consideration. The selling price and related gain on the sale amounted to NT$3,791,672 (US$125,262) thousand and NT$2,989,335 (US$98,756) thousand, respectively. As of December 31, 2011, the
Companys remaining equity investment in Cando was accounted as financial assets carried at cost  noncurrent.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-27 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



On March 12, 2010, the Company entered into a joint venture agreement with TPV
Technology Limited and through its subsidiary AULB to invest BTLB in Malaysia in September 2010. BriVictory Display Technology (Poland) Co., Ltd. (BTPL) is invested by BTLB and is mainly engaged in original equipment manufacture of
TFT-LCD modules and TV sets. In accordance with the joint venture agreement, AUO indirectly holds a 51% equity interest with a 50% voting interest in BTLB through AULB. As of December 31, 2011, the Companys investment in BTLB amounted to
US$8,160 thousand.

On May 27, 2010, the Company, through its subsidiary AUSG, entered into a joint venture agreement with
SunPower Technology, Ltd. (SPTL), which at that time was wholly-owned by SunPower Corporation whereby the Company and SPTL will each own 50% of the joint venture AUSP (formerly named SunPower Malaysia Manufacturing Sdn. Bhd.), which is
mainly engaged in the manufacture and sale of solar modules. In accordance with the joint venture agreement, the Company acquired its 50% ownership interests of AUSP on July 5, 2010 (co-investment date) by contributing technology with an
estimated fair value of US$30,000 thousand (which classified under equity-method investments and deferred credit) and a cash payment of US$108,069 thousand, and will continue to contribute additional cash over time so that the total cash
contributions made by each shareholder equals US$350 million in the aggregate, or such lesser amounts as the parties may mutually agree. In addition, AUSP shall retain the financing loan of RM1,000,000 thousand that was provided by the government of
Malaysia. The Company shall make best efforts to ensure that, subject to (a) the necessary cooperation of the AUSP, (b) the lenders necessary legal due diligence of the AUSP, (c) the written consent or approval of SPTL, and
(d) the written consent or approval of the Malaysia Ministry of Finance, additional debt financing from a third-party lender is available to be drawn upon. If such additional debt financing is not made available to the AUSP, the Company is
obliged to secure for AUSP or provide AUSP with reasonable and necessary transitional financing until AUSP obtains debt financing from a third party. As of April 27, 2012, with the assistance of the Company, AUSP has entered into a US$300
million syndicated credit facility with banks. The Company initially recognized deferred revenue in the amount of NT$966,600 (equivalent to US$30,000) thousand for its contribution of technology to AUSP, of which NT$34,521 thousand has been
amortized into income in 2010 and NT$138,086 (US$4,562) thousand has been amortized into income in 2011. The remaining NT$793,993 (US$26,230) thousand will be recognized into earnings on a straight-line basis of the expected estimate remaining
useful life of the technology.

On September 1, 2010, the Company entered into a joint venture agreement with Wistron
Corporation and, through its subsidiary AULB, invested BriVision Optronics (L) Corp. (BWLB) in Malaysia in March 2011, with AUO indirectly owning 51% of the shareholding. BriVision Optronics (Zhongshan) Corp. (BWCS) is
invested by BWLB and is mainly engaged in the manufacture of TFT-LCD TV panel modules in Mainland China.

In accordance with
ROC SFAS No. 31 Interest in Joint Ventures, the Companys share in the accounts of AUSP, BTLB and BWLB were as follows:



|                        |  |              |           |  |                |  |            |     |  |  |         | 
|----------------------- |  | ------------ | --------- |  | -------------- |  | ---------- | --- |  |  | ------- | 
|                        |  | December 31, |          
|                        |  | 2010         |           |  | 2011           | 
|                        |  | NT$          |           |  | NT$            |  |            | US$ | 
|                        |  |              |           |  | (in thousands) |  |            |     | 
|Current assets          |  |              | 2,558,611 |  |                |  | 4,412,015  |     |  |  | 145,755 | 
|Non-current assets      |  |              | 5,359,086 |  |                |  | 10,999,893 |     |  |  | 363,393 | 
|Current liabilities     |  |              | 2,074,404 |  |                |  | 2,254,953  |     |  |  | 74,495  | 
|Non-current liabilities |  |              | 5,056,766 |  |                |  | 9,588,185  |     |  |  | 316,755 | 
|Revenues                |  |              | 335,417   |  |                |  | 4,522,873  |     |  |  | 149,418 | 
|Expenses                |  |              | 639,480   |  |                |  | 4,808,604  |     |  |  | 158,857 | 

The Company accounted for its share of AUSPs net income or loss on the basis of a quarterly lag.

As of December 31, 2010 and 2011, market values of the Companys equity-method investments in publicly listed
companies, determined based on quoted market price at year-end, were as follows:



|           |  |              |           |  |                |  |           |     |  |  |         | 
|---------- |  | ------------ | --------- |  | -------------- |  | --------- | --- |  |  | ------- | 
|           |  | December 31, |          
|           |  | 2010         |           |  | 2011           | 
|           |  | NT$          |           |  | NT$            |  |           | US$ | 
|           |  |              |           |  | (in thousands) |  |           |     | 
|Lextar     |  |              |          |  |                |  | 3,664,269 |     |  |  | 121,053 | 
|FH         |  |              | 3,682,768 |  |                |  | 2,043,905 |     |  |  | 67,522  | 
|Qisda      |  |              | 3,658,256 |  |                |  | 1,170,054 |     |  |  | 38,654  | 
|Wellypower |  |              | 485,085   |  |                |  | 224,237   |     |  |  | 7,408   | 
|           |  |              |           |  |                |  |           |     |  |  |         | 
|           |  |              | 7,826,109 |  |                |  | 7,102,465 |     |  |  | 234,637 | 
|           |  |              |           |  |                |  |           |     |  |  |         | 



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-28 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



In 2010 and 2011, components of the difference between acquisition cost and fair value
of net assets acquired were as follows:



|                   |  |                                      |           |   |                       |  |           |                |  |  |                           |  |  |               |         |   |  |  |           | 
|------------------ |  | ------------------------------------ | --------- | - | --------------------- |  | --------- | -------------- |  |  | ------------------------- |  |  | ------------- | ------- | - |  |  | --------- | 
|                   |  | For the year ended December 31, 2010 |          
|                   |  | Beginningbalance                     |           |   | Additionsordeductions |  |           | Adjustments    |  |  | Amortizationorrealization |  |  | Endingbalance |        
|                   |  | NT$                                  |           |   | NT$                   |  |           | NT$            |  |  | NT$                       |  |  | NT$           |        
|                   |  |                                      |           |   |                       |  |           | (in thousands) |  |  |                           |  |  |               |        
|Amortizable assets |  |                                      | (279,100  | ) |                       |  | 823,532   |                |  |  | 39,689                    |  |  |               | (9,329  | ) |  |  | 574,792   | 
|Goodwill           |  |                                      | 1,127,659 |   |                       |  | 556,661   |                |  |  |                          |  |  |               | (76,784 | ) |  |  | 1,607,536 | 
|Other assets       |  |                                      | 154,329   |   |                       |  |          |                |  |  | 3,836                     |  |  |               |        |   |  |  | 158,165   | 
|                   |  |                                      |           |   |                       |  |           |                |  |  |                           |  |  |               |         |   |  |  |           | 
|                   |  |                                      | 1,002,888 |   |                       |  | 1,380,193 |                |  |  | 43,525                    |  |  |               | (86,113 | ) |  |  | 2,340,493 | 
|                   |  |                                      |           |   |                       |  |           |                |  |  |                           |  |  |               |         |   |  |  |           | 



|                   |  |                                      |           |  |                       |  |       |                |  |  |                           |   |  |                |          |   |     |  |           |  |  |  |        | 
|------------------ |  | ------------------------------------ | --------- |  | --------------------- |  | ----- | -------------- |  |  | ------------------------- | - |  | -------------- | -------- | - | --- |  | --------- |  |  |  | ------ | 
|                   |  | For the year ended December 31, 2011 |          
|                   |  | Beginningbalance                     |           |  | Additionsordeductions |  |       | Adjustments    |  |  | Amortizationorrealization |   |  | Ending balance |         
|                   |  | NT$                                  |           |  | NT$                   |  |       | NT$            |  |  | NT$                       |   |  | NT$            |          |   | US$ | 
|                   |  |                                      |           |  |                       |  |       | (in thousands) |  |  |                           |   |  |                |         
|Amortizable assets |  |                                      | 574,792   |  |                       |  |      |                |  |  | 10,533                    |   |  |                | (116,035 | ) |     |  | 469,290   |  |  |  | 15,504 | 
|Goodwill           |  |                                      | 1,607,536 |  |                       |  | 2,638 |                |  |  | (17,298                   | ) |  |                |         |   |     |  | 1,592,876 |  |  |  | 52,622 | 
|Other assets       |  |                                      | 158,165   |  |                       |  |      |                |  |  | 19,670                    |   |  |                |         |   |     |  | 177,835   |  |  |  | 5,875  | 
|                   |  |                                      |           |  |                       |  |       |                |  |  |                           |   |  |                |          |   |     |  |           |  |  |  |        | 
|                   |  |                                      | 2,340,493 |  |                       |  | 2,638 |                |  |  | 12,905                    |   |  |                | (116,035 | ) |     |  | 2,240,001 |  |  |  | 74,001 | 
|                   |  |                                      |           |  |                       |  |       |                |  |  |                           |   |  |                |          |   |     |  |           |  |  |  |        | 



|11. | Property, Plant and Equipment, and Idle Assets
|--- | ----------------------------------------------

Interest capitalized and included in property, plant and equipment for the years ended December 31, 2009, 2010 and
2011, consisted of the following:



|                        |  |                                  |           |  |      |  |         |      |  |  |         |  |  |  |        | 
|----------------------- |  | -------------------------------- | --------- |  | ---- |  | ------- | ---- |  |  | ------- |  |  |  | ------ | 
|                        |  | For the years ended December 31, |          
|                        |  | 2009                             |           |  | 2010 |  |         | 2011 | 
|                        |  | NT$                              |           |  | NT$  |  |         | NT$  |  |  | US$     | 
|                        |  | (in thousands)                   |          
|Buildings               |  |                                  | 185,281   |  |      |  | 288,879 |      |  |  | 30,232  |  |  |  | 999    | 
|Machinery and equipment |  |                                  | 1,021,530 |  |      |  | 604,173 |      |  |  | 474,529 |  |  |  | 15,676 | 
|                        |  |                                  |           |  |      |  |         |      |  |  |         |  |  |  |        | 
|                        |  |                                  | 1,206,811 |  |      |  | 893,052 |      |  |  | 504,761 |  |  |  | 16,675 | 
|                        |  |                                  |           |  |      |  |         |      |  |  |         |  |  |  |        | 

The interest rates applied for the capitalization ranged from 0.49% to 7.24%, 0.69% to 5.76%, and 0.66%
to 8.28% in 2009, 2010 and 2011, respectively.

Certain property, plant and equipment were pledged as collateral; see note 23.

Idle assets as of December 31, 2010 and 2011, consisted of the following:



|                                               |  |                |             |   |      |  |             |     |  |  |          |  
|---------------------------------------------- |  | -------------- | ----------- | - | ---- |  | ----------- | --- |  |  | -------- | -
|                                               |  | December 31,   |            
|                                               |  | 2010           |             |   | 2011 | 
|                                               |  | NT$            |             |   | NT$  |  |             | US$ | 
|                                               |  | (in thousands) |            
|Cost:                                          |  |                |             |   |      |  |             |    
|Land                                           |  |                | 478,214     |   |      |  | 478,214     |     |  |  | 15,798   |  
|Buildings                                      |  |                | 545,231     |   |      |  | 545,231     |     |  |  | 18,012   |  
|Machinery                                      |  |                | 12,673,146  |   |      |  | 17,251,275  |     |  |  | 569,914  |  
|Other equipment                                |  |                | 359,712     |   |      |  | 1,432,618   |     |  |  | 47,328   |  
|                                               |  |                |             |   |      |  |             |     |  |  |          |  
|                                               |  |                | 14,056,303  |   |      |  | 19,707,338  |     |  |  | 651,052  |  
|Less: accumulated depreciation                 |  |                | (11,628,231 | ) |      |  | (17,253,478 | )   |  |  | (569,986 | )
|                                               |  |                |             |   |      |  |             |     |  |  |          |  
|                                               |  |                | 2,428,072   |   |      |  | 2,453,860   |     |  |  | 81,066   |  
|Less: allowance for devaluation of idle assets |  |                | (667,434    | ) |      |  | (756,245    | )   |  |  | (24,984  | )
|                                               |  |                |             |   |      |  |             |     |  |  |          |  
|                                               |  |                | 1,760,638   |   |      |  | 1,697,615   |     |  |  | 56,082   |  
|                                               |  |                |             |   |      |  |             |     |  |  |          |  



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-29 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|12. | Intangible Assets
|--- | -----------------

Intangible assets as of December 31, 2010 and 2011 consisted of the following:



|                        |  |                                      |            |  |           |  |         |             |  |  |              |   |  |               |          |   |  |  |            | 
|----------------------- |  | ------------------------------------ | ---------- |  | --------- |  | ------- | ----------- |  |  | ------------ | - |  | ------------- | -------- | - |  |  | ---------- | 
|                        |  | For the year ended December 31, 2010 |           
|                        |  | Beginningbalance                     |            |  | Additions |  |         | Adjustments |  |  | Amortization |   |  | Endingbalance |         
|                        |  | NT$                                  |            |  | NT$       |  |         | NT$         |  |  | NT$          |   |  | NT$           |         
|                        |  | (in thousands)                       |           
|Goodwill                |  |                                      | 11,464,947 |  |           |  | 12,072  |             |  |  | (22,507      | ) |  |               |         |   |  |  | 11,454,512 | 
|Core technologies       |  |                                      |           |  |           |  | 17,083  |             |  |  | (15,120      | ) |  |               | (1,963   | ) |  |  |           | 
|Technology-related fees |  |                                      | 2,828,307  |  |           |  | 516,892 |             |  |  | (57,881      | ) |  |               | (679,863 | ) |  |  | 2,607,455  | 
|                        |  |                                      |            |  |           |  |         |             |  |  |              |   |  |               |          |   |  |  |            | 
|                        |  |                                      | 14,293,254 |  |           |  | 546,047 |             |  |  | (95,508      | ) |  |               | (681,826 | ) |  |  | 14,061,967 | 
|                        |  |                                      |            |  |           |  |         |             |  |  |              |   |  |               |          |   |  |  |            | 



|                        |  |                                      |            |  |           |  |           |             |  |  |              |   |  |                |          |   |     |  |            |  |  |  |         | 
|----------------------- |  | ------------------------------------ | ---------- |  | --------- |  | --------- | ----------- |  |  | ------------ | - |  | -------------- | -------- | - | --- |  | ---------- |  |  |  | ------- | 
|                        |  | For the year ended December 31, 2011 |           
|                        |  | Beginningbalance                     |            |  | Additions |  |           | Adjustments |  |  | Amortization |   |  | Ending balance |         
|                        |  | NT$                                  |            |  | NT$       |  |           | NT$         |  |  | NT$          |   |  | NT$            |          |   | US$ | 
|                        |  | (in thousands)                       |           
|Goodwill                |  |                                      | 11,454,512 |  |           |  |          |             |  |  | 1,664        |   |  |                |         |   |     |  | 11,456,176 |  |  |  | 378,466 | 
|Technology-related fees |  |                                      | 2,607,455  |  |           |  | 1,944,361 |             |  |  | (3,211       | ) |  |                | (576,679 | ) |     |  | 3,971,926  |  |  |  | 131,217 | 
|                        |  |                                      |            |  |           |  |           |             |  |  |              |   |  |                |          |   |     |  |            |  |  |  |         | 
|                        |  |                                      | 14,061,967 |  |           |  | 1,944,361 |             |  |  | (1,547       | ) |  |                | (576,679 | ) |     |  | 15,428,102 |  |  |  | 509,683 | 
|                        |  |                                      |            |  |           |  |           |             |  |  |              |   |  |                |          |   |     |  |            |  |  |  |         | 

Goodwill and other intangible assets arising from Lextars merger of LHTC were derecognized owing to
the Company lost control of Lextar as Lextar re-elected its board directors on June 30, 2010.



|13. | Short-term Borrowings
|--- | ---------------------

Short-term borrowings as of December 31, 2010 and 2011 consisted of the following:



|                      |  |                |            |  |      |  |            |     |  |  |         | 
|--------------------- |  | -------------- | ---------- |  | ---- |  | ---------- | --- |  |  | ------- | 
|                      |  | December 31,   |           
|                      |  | 2010           |            |  | 2011 | 
|                      |  | NT$            |            |  | NT$  |  |            | US$ | 
|                      |  | (in thousands) |           
|Short-term borrowings |  |                | 1,183,248  |  |      |  | 7,850,793  |     |  |  | 259,359 | 
|                      |  |                |            |  |      |  |            |     |  |  |         | 
|Unused facility       |  |                | 28,742,102 |  |      |  | 23,901,952 |     |  |  | 789,625 | 
|                      |  |                |            |  |      |  |            |     |  |  |         | 

Interest rates on short-term borrowings outstanding as of December 31, 2010 and 2011, ranged from
1.14% to 4.78% and 1.2% to 7.93%, respectively.



|14. | Bonds Payable
|--- | -------------

Bonds payable as of December 31, 2010 and 2011, consisted of the following:



|                        |  |                |            |   |      |  |            |     |  |  |          |  
|----------------------- |  | -------------- | ---------- | - | ---- |  | ---------- | --- |  |  | -------- | -
|                        |  | December 31,   |           
|                        |  | 2010           |            |   | 2011 | 
|                        |  | NT$            |            |   | NT$  |  |            | US$ | 
|                        |  | (in thousands) |           
|Unsecured bonds payable |  |                | 166,770    |   |      |  | 64,383     |     |  |  | 2,127    |  
|Secured bonds payable   |  |                | 9,500,000  |   |      |  | 3,500,000  |     |  |  | 115,626  |  
|Less: current portion   |  |                | (6,105,621 | ) |      |  | (3,564,383 | )   |  |  | (117,753 | )
|                        |  |                |            |   |      |  |            |     |  |  |          |  
|                        |  |                | 3,561,149  |   |      |  |           |     |  |  |         |  
|                        |  |                |            |   |      |  |            |     |  |  |          |  
|Interest payable        |  |                | 684,557    |   |      |  | 36,695     |     |  |  | 1,212    |  
|                        |  |                |            |   |      |  |            |     |  |  |          |  



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| |  | ---- |  | -----------
| |  | F-30 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



The significant terms of secured bonds payable were as follows:



|                             |  |                                           |  |                                            
|---------------------------- |  | ----------------------------------------- |  | -------------------------------------------
|                             |  | Secured Bond 3                            |  | Secured Bond 4                             
|Issuer                       |  | AUO                                       |  | AUO                                        
|Par value                    |  | NT$5,000,000 thousand                     |  | NT$7,000,000 thousand                      
|Issue date                   |  | Mar. 21, 2006                             |  | Aug. 22, 2008                              
|Issue price                  |  | At par value                              |  | At par value                               
|Coupon rate                  |  | Fixed rate 1.948%                         |  | Fixed rate 2.90%                           
|Duration                     |  | Mar. 21, 2006 Mar. 21, 2011              |  | Aug. 22, 2008 Aug. 22, 2012               
|Bank that provided guarantee |  | Mizuho Corporate Bank and six other banks |  | Mizuho Corporate Bank and three other banks
|Redemption                   |  | As stated below                           |  | As stated below                            

Secured Bond 3 is calculated based on simple interest. AUO is obliged to pay annual interest for the
bond. The bond is payable in two equal installments at the end of years 4 and 5 from its issuance date.

Secured Bond 4 is
calculated based on simple interest. AUO is obliged to pay annual interest for the bond. The bond is payable in two equal installments at the end of years 3 and 4 from its issuance date.

The significant terms of unsecured bonds payable were as follows:



|                             |  |                               |  |                              
|---------------------------- |  | ----------------------------- |  | -----------------------------
|                             |  | Unsecured Bond 2              |  | Unsecured Bond 3             
|Issuer                       |  | M. Setek                      |  | M. Setek                     
|Par value                    |  | JPY900,000 thousand           |  | JPY900,000 thousand          
|Issue date                   |  | Apr. 28, 2005                 |  | Sep. 30, 2005                
|Issue price                  |  | At par value                  |  | At par value                 
|Coupon rate                  |  | Floating interest             |  | Fixed rate 1.01%             
|Duration                     |  | Apr. 28, 2005  Apr. 25, 2012 |  | Sep. 30, 2005  Sep. 28, 2012
|Bank that provided guarantee |  | Mizuho Corporate Bank         |  | Mizuho Corporate Bank        
|Redemption                   |  | As stated below               |  | As stated below              

Unsecured Bond 2 is calculated based on floating interest and M. Setek is obliged to pay interest
semi-annually from the date of issuance. The bond is payable in twelve installments which started from October 2005.

Unsecured Bond 3 is calculated based on simple interest and M. Setek is obliged to pay interest payment semi-annually from the date of
issuance. The bond is payable in fourteen installments starting from March 2006. Each installment is payable at JPY67,500 thousand and the remaining balance is payable at final installment.

All of the aforementioned bonds are secured by bank guarantees through a syndicated bank guarantee facility. Based on financial covenants
under the syndicate agreement for the bond guarantee, AUO is obliged to maintain certain defined level of current ratio (defined as current assets divided by current liabilities excluding current portion of long-term debts), debt ratio, interest
coverage ratio, and tangible net worth. AUO complied with the aforementioned financial covenants in 2010 and 2011.

Certain of
the Companys assets are pledged to secure the bonds payable; see note 23.



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| |  | ---- |  | -----------
| |  | F-31 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|15. | Convertible Bonds Payable
|--- | -------------------------

AUO issued unsecured overseas convertible corporate bond (hereinafter referred to as ECB 4) on
October 13, 2010 with par value of US$800,000 thousand and coupon rate at 0%. The duration period is five years commencing from the issuance date. On September 23, 2011, AUO early redeemed the outstanding ECB 4 at the redemption amount of
US$100,000 thousand. ECB 4 was purchased at the cost of US$78,667 thousand, which was allocated to its equity and liability component in accordance with ROC SFAS No. 36. Therefore, AUO recognized a redemption gain from ECB 4 of NT$686,972
(US$22,695) thousand and additional paid-in capital of NT$12,723 (US$420) thousand. The balance of outstanding convertible bonds was US$700,000 thousand as of December 31, 2011.

As of December 31, 2010 and 2011, outstanding convertible bonds payable consisted of the following:



|                          |  |                |            |  |       |  |            |     |  |  |         | 
|------------------------- |  | -------------- | ---------- |  | ----- |  | ---------- | --- |  |  | ------- | 
|                          |  | December 31,   |           
|                          |  | 2010           |            |  | 2011  | 
|                          |  | ECB 4          |            |  | ECB 4 | 
|                          |  | NT$            |            |  | NT$   |  |            | US$ | 
|                          |  | (in thousands) |           
|Convertible bonds payable |  |                | 23,951,212 |  |       |  | 21,048,500 |     |  |  | 695,358 | 
|                          |  |                |            |  |       |  |            |     |  |  |         | 

Significant terms of the aforementioned convertible bonds payable were as follows:



|                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Par value            |  | US$800,000 thousand                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                     | 
|Original issue date  |  | October 13, 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                     | 
|Original issue price |  | US$792,322 thousand                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                     | 
|Coupon rate          |  | 0%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                     | 
|Maturity date        |  | October 13, 2015                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                     | 
|Collateral           |  | None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                     | 
|Conversion method    |  | Bondholders may, at any time from 41 days after issuance to the 10 days before maturity, convert bonds into AUOs common shares or certificates exchangeable for common
stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                     | 
|Conversion price     |  | Original price at NT$40.74. The conversion price was adjusted to NT$39.90 as a result of earnings distributions, as approved by shareholders on June 10, 2011. For purposes of
determining the number of converted shares, a fixed exchange rate of US$1=NT$30.778 is used.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                     | 
|Put right            |  | Bondholders bear the right to request AUO to repurchase the bonds on October 13, 2013, at par value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                     | 
|Redemption terms     |  | (a)    Unless previously redeemed, purchased and cancelled, or converted,
bonds are redeemable on maturity at a redemption price equal to 115.34% of the unpaid principal amount thereof. 
(b)    Effective from the third anniversary of issuance, AUO may, redeem the outstanding
bonds at the early redemption amount, in whole or in part, if the closing price (translated into U.S. dollars at the prevailing rate) of its common shares on the Taiwan Stock Exchange is at least 130% of the conversion price for a period of 20 out
of 30 consecutive trading days. 
(c)    AUO may redeem the total amount of outstanding bonds in whole at the early redemption
amount in the event that 90% of the bonds have been previously redeemed, converted, or purchased and cancelled.



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| |  | ---- |  | -----------
| |  | F-32 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 
| |  | (d)    AUO may redeem the total amount of outstanding bonds in whole at the
early redemption amount if as a result of certain changes relating to the tax laws in the ROC or such other jurisdiction in which AUO is then organized, AUO is required to pay additional amounts.
 (e)    Bondholders bear
the right to request AUO to repurchase bonds, in whole or in part, at the early redemption amount in the event that AUOs common shares cease to be listed or admitted to trading on the Taiwan Stock Exchange (for the avoidance of doubt,
temporary suspension of trading of AUOs common shares on the Taiwan Stock Exchange in accordance with the regulations of the Taiwan Stock Exchange is excluded.) 
(f)     Bondholders bear the right to request AUO to repurchase bonds, in whole or in
part, at the early redemption amount when there is a change of control with respect to AUO change of control occurs when one or more persons, acting in concert, acquire legal or beneficial ownership of over 50% of AUOs capital stock. A
person aforementioned does not include AUOs directors and AUOs majority-owned direct or indirect subsidiaries.

AUO bifurcated the conversion right from the host debt of ECB 4 in accordance with ROC SFAS No. 36
and recognized it as an equity (additional paid-in-capital conversion right). As of December 31, 2010 and 2011, the host debt of ECB 4 was recorded under equity amounting to NT$101,787 thousand and NT$89,064 (US$2,942) thousand,
respectively, and the noncurrent portion of financial liabilities measured at fair value, amounting to NT$142,868 thousand and NT$738,628 (US$24,401) thousand, respectively. The amortization expense of discount on bonds and the interest expense
recognized in 2010 and 2011 were NT$154,485 thousand and NT$702,964 (US$23,223) thousand, respectively; both of which were recorded under interest expenses.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-33 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|16. | Long-term Borrowings
|--- | --------------------



|                                                                                    |  |                                   |  |              |             |     |                |  |             |     |  |  |            |  
|----------------------------------------------------------------------------------- |  | --------------------------------- |  | ------------ | ----------- | --- | -------------- |  | ----------- | --- |  |  | ---------- | -
|                                                                                    |  |                                   |  | December 31, |            
|Bank or agent bank                                                                  |  | Durations                         |  | 2010         |             |     | 2011           | 
|                                                                                    |  |                                   |  | NT$          |             |     | NT$            |  |             | US$ | 
|                                                                                    |  |                                   |  |              |             |     | (in thousands) | 
|Bank of Taiwan and twenty-two other banks                                           |  | From Dec. 29,2009 to Dec.29, 2016 |  |              | 15,000,000  |     |                |  | 58,000,000  |     |  |  | 1,916,089  |  
|Bank of Taiwan and thirty-five other banks                                          |  | From Sep. 13,2006 to Sep.13, 2014 |  |              | 42,662,400  |     |                |  | 31,996,800  |     |  |  | 1,057,047  |  
|Mega International Commercial Bank and fifteen other banks                          |  | From Jan. 19,2010 to Jan.19, 2015 |  |              | 17,000,000  |     |                |  | 27,000,000  |     |  |  | 891,972    |  
|Bank of Taiwan and twenty-eight other banks                                         |  | From Sep. 30,2011 to Sep.30, 2016 |  |              |            |     |                |  | 12,000,000  |     |  |  | 396,432    |  
|Credit Agricole Corporate and Investment Bank (Formerly Calyon) and ten other banks |  | From Nov.2010 to Nov.2015         |  |              | 5,136,890   |     |                |  | 10,904,400  |     |  |  | 360,238    |  
|Mega International Commercial Bank and twenty-one other banks                       |  | From Jul. 14,2006 to Jul.14, 2013 |  |              | 16,200,000  |     |                |  | 10,800,000  |     |  |  | 356,789    |  
|Bank of Taiwan and twenty-seven other banks                                         |  | From Dec. 29,2005 to Dec.29, 2012 |  |              | 16,442,800  |     |                |  | 8,221,400   |     |  |  | 271,602    |  
|Mizuho Corporate Bank and eight other banks                                         |  | From Jun. 27,2011 to Jun.27, 2016 |  |              |            |     |                |  | 7,804,000   |     |  |  | 257,813    |  
|Mizuho Corporate Bank and seven other banks                                         |  | From Jun. 27,2011 to Jun.27, 2016 |  |              |            |     |                |  | 6,828,500   |     |  |  | 225,586    |  
|ABN-AMRO Bank and twenty-one other banks                                            |  | From Aug. 2,2006 to Aug.2, 2013   |  |              | 6,567,163   |     |                |  | 4,779,194   |     |  |  | 157,886    |  
|Mizuho Corporate Bank and twelve other banks                                        |  | From Dec. 25,2009 to Dec.25, 2014 |  |              | 7,782,600   |     |                |  |            |     |  |  |           |  
|Unsecured loans                                                                     |  | From Mar.2007 to Nov.23, 2016     |  |              | 14,344,253  |     |                |  | 14,214,885  |     |  |  | 469,603    |  
|Mortgage loans                                                                      |  | From Feb. 28,2006 to Jan.2016     |  |              | 5,811,968   |     |                |  | 6,407,890   |     |  |  | 211,691    |  
|                                                                                    |  |                                   |  |              |             |     |                |  |             |     |  |  |            |  
|                                                                                    |  |                                   |  |              | 146,948,074 |     |                |  | 198,957,069 |     |  |  | 6,572,748  |  
|Less: current portion                                                               |  |                                   |  |              | (29,824,179 | )   |                |  | (42,868,289 | )   |  |  | (1,416,197 | )
|                                                                                    |  |                                   |  |              |             |     |                |  |             |     |  |  |            |  
|                                                                                    |  |                                   |  |              | 117,123,895 |     |                |  | 156,088,780 |     |  |  | 5,156,551  |  
|                                                                                    |  |                                   |  |              |             |     |                |  |             |     |  |  |            |  
|Unused credit facility                                                              |  |                                   |  |              | 64,226,937  |     |                |  | 45,881,909  |     |  |  | 1,515,755  |  
|                                                                                    |  |                                   |  |              |             |     |                |  |             |     |  |  |            |  
|Interest rate range                                                                 |  |                                   |  |              | 0.035.53    | %~% |                |  | 0.6457.935  | %~% |  |  |            |  



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| |  | ---- |  | -----------
| |  | F-34 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



As of December 31, 2011, future principal repayments were as follows:



|           |  |                |             |  |     |  |           | 
|---------- |  | -------------- | ----------- |  | --- |  | --------- | 
|           |  | NT$            |             |  | US$ | 
|           |  | (in thousands) |            
|2012       |  |                | 42,868,289  |  |     |  | 1,416,197 | 
|2013       |  |                | 47,495,661  |  |     |  | 1,569,067 | 
|2014       |  |                | 51,107,608  |  |     |  | 1,688,392 | 
|2015       |  |                | 33,622,286  |  |     |  | 1,110,746 | 
|Thereafter |  |                | 23,863,225  |  |     |  | 788,346   | 
|           |  |                |             |  |     |  |           | 
|Total      |  |                | 198,957,069 |  |     |  | 6,572,748 | 
|           |  |                |             |  |     |  |           | 

The Company entered into the aforementioned long-term loan arrangements with banks and financial
institutions to finance capital expenditures on construction projects and the purchase of machinery and equipment. A commitment fee is charged per annum and payable quarterly based on the committed-to-withdraw but unused balance, if any. No
commitment fees were paid for the years ended December 31, 2009, 2010 and 2011. These credit facilities contain covenants that require the Company to maintain certain financial ratios such as current ratio (defined as current assets divided by
current liabilities excluding (a) current portion of long-term debt or (b) current portion of long-term debt and accounts payable which are related to the equipment payment), debt-equity ratio, interest coverage ratio, tangible net worth
and others as specified in the loan agreements. The Company complied with the aforementioned financial covenants in 2009, 2010 and 2011, except for the matter described below.

In 2009, M. Setek had breached one financial covenant under its loan agreements, which may require an early repayment of a borrowing of JPY6,750,000 thousand. Such borrowing for which a financial covenant
was breached matured over one year and had been reclassified into current liabilities in 2009 and was fully paid in 2010.

Refer to note 23 for assets pledged as collateral to secure the aforementioned long-term borrowings.



|17. | Retirement Plans
|--- | ----------------

The following table sets forth the defined benefit obligation and the amounts recognized related to AUO and Toppan
CFIs retirement plans.



|                                                    |  |                |            |   |      |  |            |     |  |  |         |  
|--------------------------------------------------- |  | -------------- | ---------- | - | ---- |  | ---------- | --- |  |  | ------- | -
|                                                    |  | December 31,   |           
|                                                    |  | 2010           |            |   | 2011 | 
|                                                    |  | NT$            |            |   | NT$  |  |            | US$ | 
|                                                    |  | (in thousands) |           
|Benefit obligation:                                 |  |                |            |   |      |  |            |     |  |  |         |  
|Vested benefit obligation                           |  |                | (11,387    | ) |      |  | (15,137    | )   |  |  | (500    | )
|Non-vested benefit obligation                       |  |                | (778,122   | ) |      |  | (862,317   | )   |  |  | (28,488 | )
|                                                    |  |                |            |   |      |  |            |     |  |  |         |  
|Accumulated benefit obligation                      |  |                | (789,509   | ) |      |  | (877,454   | )   |  |  | (28,988 | )
|Additional benefits based on future salary increase |  |                | (904,769   | ) |      |  | (968,612   | )   |  |  | (31,999 | )
|                                                    |  |                |            |   |      |  |            |     |  |  |         |  
|Projected benefit obligation                        |  |                | (1,694,278 | ) |      |  | (1,846,066 | )   |  |  | (60,987 | )
|Fair value of plan assets                           |  |                | 1,386,818  |   |      |  | 1,500,839  |     |  |  | 49,582  |  
|                                                    |  |                |            |   |      |  |            |     |  |  |         |  
|Funded status                                       |  |                | (307,460   | ) |      |  | (345,227   | )   |  |  | (11,405 | )
|Unrecognized net transition obligation              |  |                | 6,589      |   |      |  | 5,630      |     |  |  | 186     |  
|Unrecognized pension loss                           |  |                | 776,922    |   |      |  | 872,502    |     |  |  | 28,824  |  
|                                                    |  |                |            |   |      |  |            |     |  |  |         |  
|Prepaid pension assets                              |  |                | 476,051    |   |      |  | 532,905    |     |  |  | 17,605  |  
|                                                    |  |                |            |   |      |  |            |     |  |  |         |  



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-35 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



The following table sets forth the defined benefit obligation and the amounts recognized
related to M. Seteks retirement plans.



|                                                    |  |                |          |   |      |  |          |     |  |  |        |  
|--------------------------------------------------- |  | -------------- | -------- | - | ---- |  | -------- | --- |  |  | ------ | -
|                                                    |  | December 31,   |         
|                                                    |  | 2010           |          |   | 2011 | 
|                                                    |  | NT$            |          |   | NT$  |  |          | US$ | 
|                                                    |  | (in thousands) |         
|Benefit obligation:                                 |  |                |          |   |      |  |          |     |  |  |        |  
|Vested benefit obligation                           |  |                | (135,093 | ) |      |  | (92,690  | )   |  |  | (3,062 | )
|Non-vested benefit obligation                       |  |                | (50,150  | ) |      |  | (17,433  | )   |  |  | (576   | )
|                                                    |  |                |          |   |      |  |          |     |  |  |        |  
|Accumulated benefit obligation                      |  |                | (185,243 | ) |      |  | (110,123 | )   |  |  | (3,638 | )
|Additional benefits based on future salary increase |  |                |         |   |      |  |         |     |  |  |       |  
|                                                    |  |                |          |   |      |  |          |     |  |  |        |  
|Projected benefit obligation                        |  |                | (185,243 | ) |      |  | (110,123 | )   |  |  | (3,638 | )
|Fair value of plan assets                           |  |                | 36,965   |   |      |  |         |     |  |  |       |  
|                                                    |  |                |          |   |      |  |          |     |  |  |        |  
|Funded status                                       |  |                | (148,278 | ) |      |  | (110,123 | )   |  |  | (3,638 | )
|                                                    |  |                |          |   |      |  |          |     |  |  |        |  
|Pension liabilities                                 |  |                | (148,278 | ) |      |  | (110,123 | )   |  |  | (3,638 | )
|                                                    |  |                |          |   |      |  |          |     |  |  |        |  

The components of AUO, Toppan CFI and M. Seteks net periodic pension costs consisted of the
following:



|                               |  |                                 |         |   |      |  |         |      |  |  |         |   |  |  |       |  
|------------------------------ |  | ------------------------------- | ------- | - | ---- |  | ------- | ---- |  |  | ------- | - |  |  | ----- | -
|                               |  | For the year ended December 31, |        
|                               |  | 2009                            |         |   | 2010 |  |         | 2011 | 
|                               |  | NT$                             |         |   | NT$  |  |         | NT$  |  |  | US$     |  
|                               |  | (in thousands)                  |        
|Defined benefit pension plan:  |  |                                 |         |   |      |  |         |      |  |  |         |   |  |  |       |  
|Service cost                   |  |                                 | (958    | ) |      |  | 33,148  |      |  |  | 32,126  |   |  |  | 1,061 |  
|Interest cost                  |  |                                 | 23,793  |   |      |  | 31,996  |      |  |  | 37,475  |   |  |  | 1,238 |  
|Expected return on plan assets |  |                                 | (27,669 | ) |      |  | (28,435 | )    |  |  | (28,459 | ) |  |  | (940  | )
|Amortization                   |  |                                 | 9,406   |   |      |  | 18,594  |      |  |  | 34,526  |   |  |  | 1,141 |  
|                               |  |                                 |         |   |      |  |         |      |  |  |         |   |  |  |       |  
|Net periodic pension cost      |  |                                 | 4,572   |   |      |  | 55,303  |      |  |  | 75,668  |   |  |  | 2,500 |  
|                               |  |                                 |         |   |      |  |         |      |  |  |         |   |  |  |       |  

Significant weighted-average actuarial assumptions used for the pension plans of AUO, Toppan CFI and M.
Setek were as follows:



|                                                 |  |               |  |               |  |              
|------------------------------------------------ |  | ------------- |  | ------------- |  | -------------
|                                                 |  | December 31, 
|                                                 |  | 2009          |  | 2010          |  | 2011         
|Discount rate                                    |  | 2.00%  2.25% |  | 2.00%  2.25% |  | 1.75%  2.00%
|Rate of increase in future compensation levels   |  | 1.20%  3.00% |  | 1.20%  5.55% |  | 1.20%  5.55%
|Expected long-term rate of return on plan assets |  | 0.75%  2.25% |  | 0.75%  2.00% |  | 0.75%  2.00%

AUO, Toppan CFI, Konly, Lextar, BVTW and DSTW have set up defined contribution plans in accordance with
the ROC Labor Pension Act. For the years ended December 31, 2009, 2010 and 2011, the Company recognized total benefit costs thereon of NT$641,120 thousand, NT$774,540 thousand and NT$721,909 (US$23,849) thousand, respectively. In addition to
the aforementioned companies, total benefit costs recognized by other subsidiary companies related to defined contribution plans in accordance with local regulations amounted to NT$359,358 thousand, NT$549,656 thousand and NT$632,726 (US$20,903)
thousand for the years ended December 31, 2009, 2010 and 2011, respectively.



|18. | Stockholders Equity
|--- | --------------------



| | (a) | Common stock
| | --- | ------------

Based on
resolution of the stockholders meeting on June 19, 2009, AUO increased its common stock by NT$4,561,484 thousand, with 321,326 thousand shares through the capitalization of retained earnings and employee bonuses of NT$2,551,716
thousand and NT$2,009,768 thousand, respectively. The issuance of the aforementioned shares of common stock was authorized by and registered with the government authorities. The employee bonuses of NT$2,009,768 thousand was securitized into
66,154 thousand common shares based on the closing price of NT$30.38 on the day before the resolution of the stockholders meeting.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-36 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



AUOs authorized common stock, with par value of NT$10 per share, both amounted to
NT$100,000,000 thousand as of December 31, 2010 and 2011. AUOs issued and outstanding common stock, with par value of NT$10 per share, both amounted to NT$88,270,455 thousand as of December 31, 2010 and 2011.

AUOs ADSs were listed on the New York Stock Exchange. Each ADS represents the right to receive 10 shares of common stock. As of
December 31, 2011, AUO had issued 96,485 thousand ADSs, which represented 964,852 thousand shares of its common stock.



| | (b) | Capital surplus
| | --- | ---------------

According to
the Republic of China Company Act, capital surplus, including premium from stock issuing and donations received, shall be applied to offset accumulated deficits before it can be used to increase common stock or distribution cash dividends. Pursuant
to 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) | Legal reserve
| | --- | -------------

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



| | (d) | Distribution of earnings and dividend policy
| | --- | --------------------------------------------

According to AUOs articles of incorporation, 10 percent of the annual earnings, after payment of income taxes due and offsetting accumulated deficits, if any, shall be set aside as a legal reserve.
In addition, a special reserve in accordance with applicable laws and regulations shall also be set aside. The remaining earnings may be distributed as follows:



| | (1) | at least 5 percent as employee bonuses;
| | --- | ---------------------------------------



| | (2) | at most 1 percent as remuneration to directors; and
| | --- | ---------------------------------------------------



| | (3) | the remaining portion, in whole or in part, as dividends to common stockholders.
| | --- | --------------------------------------------------------------------------------

Pursuant to regulations promulgated by the Financial Supervisory Commission, and effective from the distribution of earnings for fiscal year 1999 onwards, a special reserve equivalent to the total amount
of items that are accounted for as deductions to the stockholders equity shall be set aside from current earnings, and not distributed. The special reserve shall be made available for appropriation to the extent of reversal of deductions to
stockholders equity in subsequent periods.

The appropriation of AUOs net earnings may be distributed by way of
cash dividend, stock dividend, or a combination of cash and stock dividends. The policy for dividend distribution considers factors such as the current and future investment environment, fund requirements, domestic and international competition,
capital budgets, the benefits to stockholders, equalization of dividends, and long-term financial planning. Earnings distribution is proposed by the board of directors and approved at the stockholders meeting. Pursuant to the articles of
incorporation, the cash dividend shall not be less than 10 percent of the total dividends.

The distributions of earnings as
dividends per share, employee bonuses and remuneration to directors for 2010, as approved by stockholders on June 10, 2011 were as follows:



|                          |  |                                          |         | 
|------------------------- |  | ---------------------------------------- | ------- | 
|                          |  | 2010                                     |        
|                          |  | NT$                                      |        
|                          |  | (in thousands, exceptfor per share data) |        
|Dividends per share       |  |                                          |         | 
|Cash                      |  |                                          | 0.40    | 
|                          |  |                                          |         | 
|Employee bonuses  cash   |  |                                          | 891,462 | 
|Remuneration to directors |  |                                          | 30,117  | 
|                          |  |                                          |         | 
|                          |  |                                          | 921,579 | 
|                          |  |                                          |         | 

The aforementioned distribution of earnings for 2010 was consistent with the resolutions in the board of
directors meetings.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-37 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



According to the resolution of AUOs annual shareholders meeting on
June 18, 2010, AUO offsetted its net loss arising from 2009 with its prior year unappropriated retained earnings. In addition, on February 22, 2012, AUOs board of directors proposed not to distribute any dividend for 2011 due to net
loss for the year ended December 31, 2011. The appropriation of net loss of 2011, however, will finally be subject to the resolution of AUOs annual shareholders meeting, which is scheduled for June 13, 2012. AUO did not award a
bonus to directors and profit sharing to employees due to net loss for the year ended December 31, 2011.



| | (e) | Employee stock option plans
| | --- | ---------------------------

AUO
assumed the Employee Stock Option (ESO) Plans from the merger with QDI. The ESO Plans entitle option holders to subscribe for one share of common stock per unit thereof. Options are granted to eligible employees of QDI and its
subsidiaries, both domestic and overseas, in which QDI held directly and indirectly more than 50% ownership interest and had a controlling interest. Options granted expire six years after the date of grant, and holders may exercise options vested,
effective from two years after date of grant, in accordance with the vesting schedule. Options were granted at an exercise price equal to the closing price of the common stock of QDI on the Taiwan Stock Exchange on the grant date. On the date of
acquisition, the exercise price and units issued were adjusted in accordance with the share conversion ratio between QDI and AUO share.

Details of the ESO Plans were as follows:



|              |  |             |               |  |             |  |       |               |  |                              |  |                             
|------------- |  | ----------- | ------------- |  | ----------- |  | ----- | ------------- |  | ---------------------------- |  | ----------------------------
|Plan          |  | Issuingdate |               |  | Unitsissued |  |       | Term of
grant |  | Option exercising
term      
|              |  |             |               | 
|2003 ESO Plan |  |             | Dec. 31, 2003 |  |             |  | 5,631 |               |  | Dec. 31, 2003 Dec. 30, 2009 |  | Dec. 31, 2005 Dec. 30, 2009

The details of ESO Plans, and changes during the year ended December 31, 2009 were as follows:



|                                                   |  |                |        |   |                                |  |       | 
|-------------------------------------------------- |  | -------------- | ------ | - | ------------------------------ |  | ----- | 
|                                                   |  | Unit           |        |   | Weighted-averageexercise price | 
|                                                   |  | (in thousands) |        |   | NT$                            | 
|Balance at January 1, 2009                         |  |                | 2,797  |   |                                |  | 46.00 | 
|Units exercised                                    |  |                |       |   |                                |  |      | 
|Units increased due to issuance of stock dividends |  |                | 102    |   |                                |  | 44.30 | 
|Units cancelled                                    |  |                | (2,899 | ) |                                |  | 45.90 | 
|                                                   |  |                |        |   |                                |  |       | 
|Balance at December 31, 2009                       |  |                |       |   |                                |  |      | 
|                                                   |  |                |        |   |                                |  |       | 

Assumptions used to estimate the fair value of the aforementioned ESO Plans were as follows:



|                           |  |               |           |  
|-------------------------- |  | ------------- | --------- | -
|                           |  | 2003 ESO Plan |          
|Dividend yield             |  |               | 2.4       | %
|Expected volatility        |  |               | 43.7      | %
|Risk-free interest rate    |  |               | 1.7       | %
|Expected continuing period |  |               | 1.9 years |  

As of December 31, 2009, the above mentioned options all expired. As of December 31, 2010 and
2011, there were no outstanding employee stock options.



|19. | Income Taxes
|--- | ------------

The Company cannot file a consolidated tax return under local regulations. Therefore, AUO and its subsidiaries
calculate their income tax liabilities individually in accordance with their respective statutory tax rates.



| | (a) | Pursuant to the Statute for Upgrading Industries, AUO (including the extinguished QDI) is entitled to elect appropriate tax incentives, such as tax exemption, based on
initial investments and subsequent capital increases for the purpose of purchasing qualified TFT-LCD production equipment and machinery.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

AUO was entitled to the following tax exemptions:



|                   |  |                                                      |  |                              
|------------------ |  | ---------------------------------------------------- |  | -----------------------------
|Year of investment |  | Tax incentive chosen                                 |  | Tax exemption period         
|2002               |  | Exemption from corporate income taxes for five years |  | Jan. 1, 2007  Dec. 31, 2011 
|2003               |  | Exemption from corporate income taxes for five years |  | Jan. 1, 2008  Dec. 31, 2012 
|2004               |  | Exemption from corporate income taxes for five years |  | Jun. 25, 2007  Jun. 24, 2012
|2004               |  | Exemption from corporate income taxes for five years |  | Sep. 29, 2007  Sep. 28, 2012
|2004               |  | Exemption from corporate income taxes for five years |  | Nov. 3, 2007  Nov. 2, 2012  
|2005, 2006         |  | Exemption from corporate income taxes for five years |  | Jan. 1, 2010  Dec. 31, 2014 
|2007, 2008         |  | Exemption from corporate income taxes for five years |  | Pending designation          



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-38 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (b) | The components of income tax expense (benefit) were as follows:
| | --- | ---------------------------------------------------------------



|                            |  |                                 |          |   |      |  |           |      |  |  |            |   |  |  |          |  
|--------------------------- |  | ------------------------------- | -------- | - | ---- |  | --------- | ---- |  |  | ---------- | - |  |  | -------- | -
|                            |  | For the year ended December 31, |         
|                            |  | 2009                            |          |   | 2010 |  |           | 2011 | 
|                            |  | NT$                             |          |   | NT$  |  |           | NT$  |  |  | US$        |  
|                            |  | (in thousands)                  |         
|Current income tax expense  |  |                                 | 684,697  |   |      |  | 1,732,649 |      |  |  | 680,686    |   |  |  | 22,487   |  
|Deferred income tax benefit |  |                                 | (707,284 | ) |      |  | (544,755  | )    |  |  | (4,885,765 | ) |  |  | (161,406 | )
|                            |  |                                 |          |   |      |  |           |      |  |  |            |   |  |  |          |  
|                            |  |                                 | (22,587  | ) |      |  | 1,187,894 |      |  |  | (4,205,079 | ) |  |  | (138,919 | )
|                            |  |                                 |          |   |      |  |           |      |  |  |            |   |  |  |          |  

For AUO and its subsidiaries located in the Republic of China, an alternative minimum tax
(AMT) in accordance with the Income Basic Tax Act (IBTA) is calculated. Other foreign subsidiary companies calculated income tax in accordance with local tax law and regulations. In May 2009, the Republic of China government
promulgated an amendment of the Income Tax Law. According to the amendment, the income tax rate of Taiwan profit-seeking enterprises will be reduced from 25% to 20%, effective in 2010. In June 2010, the Republic of China government promulgated
another amendment of the Income Tax Law to reduce the income tax rate from 20% to 17%, effective retroactively on January 1, 2010. Therefore, the statutory income tax rate applicable to AUO and its subsidiaries located in the Republic of China
are both 17% in 2010 and 2011. AUO and its domestic subsidiaries had recalculated their deferred tax assets and liabilities in accordance with the amended Law and adjusted the resulting difference as income tax benefit or expense.

The expected income tax expense (benefit) calculated based on the Republic of China statutory income tax rate was reconciled with the
income tax expense (benefit) as reported in the consolidated statements of operations for the years ended December 31, 2009, 2010 and 2011, as follows:



|                                                                                                     |  |                                 |            |   |      |  |            |      |  |  |             |   |  |  |          |  
|---------------------------------------------------------------------------------------------------- |  | ------------------------------- | ---------- | - | ---- |  | ---------- | ---- |  |  | ----------- | - |  |  | -------- | -
|                                                                                                     |  | For the year ended December 31, |           
|                                                                                                     |  | 2009                            |            |   | 2010 |  |            | 2011 | 
|                                                                                                     |  | NT$                             |            |   | NT$  |  |            | NT$  |  |  | US$         |  
|                                                                                                     |  | (in thousands)                  |           
|Expected income tax expense (benefit)                                                                |  |                                 | (6,816,850 | ) |      |  | 1,461,317  |      |  |  | (11,160,862 | ) |  |  | (368,710 | )
|Tax exemption                                                                                        |  |                                 |           |   |      |  | (303,655   | )    |  |  |            |   |  |  |         |  
|Decrease in investment tax credits, including impact of amounts that expired unused (see Note 19(d)) |  |                                 | 3,387,963  |   |      |  | 4,250,789  |      |  |  | 752,041     |   |  |  | 24,844   |  
|Effect of different tax rate of subsidiary                                                           |  |                                 | (387,926   | ) |      |  | 82,732     |      |  |  | (2,040,199  | ) |  |  | (67,400  | )
|Tax on undistributed retained earnings                                                               |  |                                 | 1,404,104  |   |      |  | 63,852     |      |  |  | 65,656      |   |  |  | 2,169    |  
|Increase (decrease) in valuation allowance                                                           |  |                                 | 1,007,152  |   |      |  | (5,063,222 | )    |  |  | 7,867,649   |   |  |  | 259,916  |  
|Effect of changes in statutory income tax rate                                                       |  |                                 | 1,872,338  |   |      |  | 1,176,427  |      |  |  | 544,351     |   |  |  | 17,983   |  
|Permanent differences                                                                                |  |                                 | (380,862   | ) |      |  | (761,324   | )    |  |  | (319,475    | ) |  |  | (10,554  | )
|Others                                                                                               |  |                                 | (108,506   | ) |      |  | 280,978    |      |  |  | 85,760      |   |  |  | 2,833    |  
|                                                                                                     |  |                                 |            |   |      |  |            |      |  |  |             |   |  |  |          |  
|Income tax expense (benefit)                                                                         |  |                                 | (22,587    | ) |      |  | 1,187,894  |      |  |  | (4,205,079  | ) |  |  | (138,919 | )
|                                                                                                     |  |                                 |            |   |      |  |            |      |  |  |             |   |  |  |          |  



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-39 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (c) | The components of deferred income tax assets (liabilities) were as follows:
| | --- | ---------------------------------------------------------------------------



|                                                                               |  |                |             |   |      |  |             |     |  |  |           |  
|------------------------------------------------------------------------------ |  | -------------- | ----------- | - | ---- |  | ----------- | --- |  |  | --------- | -
|                                                                               |  | December 31,   |            
|                                                                               |  | 2010           |             |   | 2011 | 
|                                                                               |  | NT$            |             |   | NT$  |  |             | US$ | 
|                                                                               |  | (in thousands) |            
|Current:                                                                       |  |                |             |   |      |  |             |     |  |  |           |  
|Investment tax credits                                                         |  |                | 2,308,078   |   |      |  | 6,705,473   |     |  |  | 221,522   |  
|Net operating loss carryforwards                                               |  |                | 172,656     |   |      |  | 51,174      |     |  |  | 1,691     |  
|Unrealized losses and expenses                                                 |  |                | 2,801,995   |   |      |  | 3,895,491   |     |  |  | 128,691   |  
|Timing differences of revenue recognition between accounting and tax reporting |  |                | 214,941     |   |      |  | 364,694     |     |  |  | 12,048    |  
|Inventories devaluation                                                        |  |                | 1,042,378   |   |      |  | 1,196,603   |     |  |  | 39,531    |  
|Unrealized gains on financial assets                                           |  |                | (38,862     | ) |      |  | (8,811      | )   |  |  | (291      | )
|Others                                                                         |  |                | 258,697     |   |      |  | 426,175     |     |  |  | 14,079    |  
|                                                                               |  |                |             |   |      |  |             |     |  |  |           |  
|                                                                               |  |                | 6,759,883   |   |      |  | 12,630,799  |     |  |  | 417,271   |  
|Valuation allowance                                                            |  |                | (1,384,260  | ) |      |  | (10,326,641 | )   |  |  | (341,151  | )
|                                                                               |  |                |             |   |      |  |             |     |  |  |           |  
|Net deferred tax assetscurrent                                                |  |                | 5,375,623   |   |      |  | 2,304,158   |     |  |  | 76,120    |  
|                                                                               |  |                |             |   |      |  |             |     |  |  |           |  
|Noncurrent:                                                                    |  |                |             |   |      |  |             |     |  |  |           |  
|Investment tax credits                                                         |  |                | 12,023,328  |   |      |  | 6,863,058   |     |  |  | 226,728   |  
|Net operating loss carryforwards                                               |  |                | 6,536,379   |   |      |  | 17,917,187  |     |  |  | 591,912   |  
|Foreign investment gains under the equity method                               |  |                | (1,687,155  | ) |      |  | (265,375    | )   |  |  | (8,767    | )
|Goodwill                                                                       |  |                | (865,881    | ) |      |  | (1,042,495  | )   |  |  | (34,440   | )
|Others                                                                         |  |                | 3,328,363   |   |      |  | 2,745,749   |     |  |  | 90,709    |  
|                                                                               |  |                |             |   |      |  |             |     |  |  |           |  
|                                                                               |  |                | 19,335,034  |   |      |  | 26,218,124  |     |  |  | 866,142   |  
|Valuation allowance                                                            |  |                | (15,955,664 | ) |      |  | (15,154,023 | )   |  |  | (500,628  | )
|                                                                               |  |                |             |   |      |  |             |     |  |  |           |  
|Net deferred tax assetsnoncurrent                                             |  |                | 3,379,370   |   |      |  | 11,064,101  |     |  |  | 365,514   |  
|                                                                               |  |                |             |   |      |  |             |     |  |  |           |  
|Total gross deferred tax assets                                                |  |                | 29,098,786  |   |      |  | 40,708,712  |     |  |  | 1,344,853 |  
|Total gross deferred tax liabilities                                           |  |                | (3,003,869  | ) |      |  | (1,859,789  | )   |  |  | (61,440   | )
|Total valuation allowance                                                      |  |                | (17,339,924 | ) |      |  | (25,480,664 | )   |  |  | (841,779  | )
|                                                                               |  |                |             |   |      |  |             |     |  |  |           |  
|                                                                               |  |                | 8,754,993   |   |      |  | 13,368,259  |     |  |  | 441,634   |  
|                                                                               |  |                |             |   |      |  |             |     |  |  |           |  



| | (d) | Investment tax credits
| | --- | ----------------------

Pursuant
to the Statute for Upgrading Industries, investment tax credits may be applied over a period of five years to offset income tax payable. The amount of investment tax credits available to be applied in any year is limited to 50% of the income tax
payable for that year, except for the final year when such investment tax credit expires.

Pursuant to the Business Mergers and
Acquisition Act, AUO is entitled to investment tax credits accumulated by QDI prior to the date of acquisition. As of December 31, 2011, there are no unused investment tax credits available to AUO. For the years ended December 31, 2009,
2010 and 2011, investment tax credits that expired unused amount to NT$6,680,020 thousand, NT$6,889,389 thousand and NT$2,305,758 (US$76,173) thousand, respectively. Valuation allowances had previously been recognized for these deferred tax assets.
Consequently, the subsequent write-off of these investment tax credits and the related reversals of the deferred tax asset valuation allowances had no impact on income tax expense in the period these investments tax credits expired unused.

As of December 31, 2011, unused investment tax credits of AUO, Toppan CFI, and Ronly, and their respective years of
expiration were as follows:



|                   |  |                               |            |  |                 |  |         |  |  |  |      | 
|------------------ |  | ----------------------------- | ---------- |  | --------------- |  | ------- |  |  |  | ---- | 
|Year of assessment |  | Unused investment tax credits |            |  | Expiration year | 
|                   |  | NT$                           |            |  | US$             |  |         |  | 
|                   |  | (in thousands)                |            |  |                 | 
|2008               |  |                               | 6,705,473  |  |                 |  | 221,522 |  |  |  | 2012 | 
|2009               |  |                               | 2,697,883  |  |                 |  | 89,127  |  |  |  | 2013 | 
|2010               |  |                               | 2,710,925  |  |                 |  | 89,558  |  |  |  | 2014 | 
|2011(estimated)    |  |                               | 73,517     |  |                 |  | 2,429   |  |  |  | 2015 | 
|                   |  |                               |            |  |                 |  |         |  |  |  |      | 
|                   |  |                               | 12,187,798 |  |                 |  | 402,636 |  |  |  |      | 
|                   |  |                               |            |  |                 |  |         |  |  |  |      | 



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-40 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



As of December 31, 2011, unused tax credits of AUOs subsidiary located in
Singapore amounted to NT$1,380,733 (US$45,614) thousand can be applied to any year in the future in accordance with local statutory rules. A valuation allowance has been provided for substantially all of the investment tax credits at
December 31, 2011 because management does not expect AUO to realize these tax benefits before they expire.



| | (e) | Net operating loss carryforwards
| | --- | --------------------------------

Pursuant to the Taiwan Income Tax Act, as amended on January 21, 2009, the period within which unused net operating loss
(NOL) assessed by the tax authorities can be carried forward to offset future taxable income has been extended from five years to ten years. Certain foreign subsidiaries are also entitled to enjoy NOL in accordance with respective local
tax law and regulations.

As of December 31, 2011, unused NOL sustained by AUO, Toppan CFI, ACTW, DSTW and foreign
subsidiaries were as follows:



|                   |  |                |            |  |                |  |           |  |  |  |           | 
|------------------ |  | -------------- | ---------- |  | -------------- |  | --------- |  |  |  | --------- | 
|Year of assessment |  | Unused NOL     |            |  | Expirationyear | 
|                   |  | NT$            |            |  | US$            |  |           |  | 
|                   |  | (in thousands) |            |  |                | 
|2006               |  |                | 527,828    |  |                |  | 17,437    |  |  |  | 2016      | 
|2007               |  |                | 193,745    |  |                |  | 6,401     |  |  |  | 2017      | 
|2008               |  |                | 64,151     |  |                |  | 2,119     |  |  |  | 2018      | 
|2009               |  |                | 30,778,510 |  |                |  | 1,016,799 |  |  |  | 2014~2019 | 
|2010               |  |                | 2,751,611  |  |                |  | 90,903    |  |  |  | 2017~2020 | 
|2011 (estimated)   |  |                | 58,762,008 |  |                |  | 1,941,262 |  |  |  | 2018~2021 | 
|                   |  |                |            |  |                |  |           |  |  |  |           | 
|                   |  |                | 93,077,853 |  |                |  | 3,074,921 |  |  |  |           | 
|                   |  |                |            |  |                |  |           |  |  |  |           | 

As of December 31, 2011, unused loss carryforwards of AUOs subsidiary located in Singapore
amounted to NT$1,968,762 (US$65,040) thousand can be applied to any year in the future in accordance with local statutory rules. A valuation allowance has been provided at December 31, 2011 for certain of these deferred tax assets because
management does not believe the tax benefits of certain NOLs will be realized before they expire.



| | (f) | Assessments by the tax authorities
| | --- | ----------------------------------

As of December 31, 2011, the tax authorities had completed the examination of income tax returns of AUO and Toppan CFI through 2008, and of Konly, Ronly, ACTW and BVTW through 2009.



| | (g) | The integrated income tax system
| | --- | --------------------------------

Information related to the imputation credit account (ICA) of AUO was summarized below:



|                                                |  |                |            |  |      |  |             |     |  |  |          |  
|----------------------------------------------- |  | -------------- | ---------- |  | ---- |  | ----------- | --- |  |  | -------- | -
|                                                |  | December 31,   |           
|                                                |  | 2010           |            |  | 2011 | 
|                                                |  | NT$            |            |  | NT$  |  |             | US$ | 
|                                                |  | (in thousands) |           
|Unappropriated earnings (accumulated deficits): |  |                |            |  |      |  |             |     |  |  |          |  
|Earned in 1998 and thereafter                   |  |                | 47,116,043 |  |      |  | (18,347,855 | )   |  |  | (606,140 | )
|                                                |  |                |            |  |      |  |             |     |  |  |          |  
|ICA balance                                     |  |                | 5,160,950  |  |      |  | 5,148,354   |     |  |  | 170,081  |  
|                                                |  |                |            |  |      |  |             |     |  |  |          |  



|                                                                                      |  |                                 |       |   |             |  |   | 
|------------------------------------------------------------------------------------- |  | ------------------------------- | ----- | - | ----------- |  | - | 
|                                                                                      |  | For the year ended December 31, |      
|                                                                                      |  | 2010                            |       |   | 2011        | 
|                                                                                      |  | (actual)                        |       |   | (estimated) | 
|Creditable ratio for earnings distribution to Republic of China resident stockholders |  |                                 | 11.80 | % |             |  |  | 
|                                                                                      |  |                                 |       |   |             |  |   | 

The imputation credit to be allocated to stockholders is computed based on the ICA balance at the date of
earnings distribution. The estimated creditable ratio may differ from the actual distribution.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-41 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|20. | Earnings (loss) per Share ((L) EPS)
|--- | -------------------------------------

Basic (L) EPS for the years ended December 31, 2009, 2010 and 2011 were computed as follows:





|                                                                        |  |                                           |             |   |           |  |             |         |  |  |           |  |  |         |           |  |           |  |             |   |  |  |             |  
|----------------------------------------------------------------------- |  | ----------------------------------------- | ----------- | - | --------- |  | ----------- | ------- |  |  | --------- |  |  | ------- | --------- |  | --------- |  | ----------- | - |  |  | ----------- | -
|                                                                        |  | For the year ended December 31,           |            
|                                                                        |  | 2009                                      |             |   | 2010      |  |             | 2011    | 
|                                                                        |  | Pre-tax                                   |             |   | After tax |  |             | Pre-tax |  |  | After tax |  |  | Pre-tax |           |  | After tax | 
|                                                                        |  | NT$                                       |             |   | NT$       |  |             | NT$     |  |  | NT$       |  |  | NT$     |           |  | NT$       | 
|                                                                        |  | (in thousands, except for per share data) |            
|Net income (loss) attributable to equity holders of the parent company: |  |                                           |             |   |           |  |             |         |  |  |           |  |  |         |           |  |           |  |             |   |  |  |             |  
|Net income (loss)                                                       |  |                                           | (26,668,094 | ) |           |  | (26,769,335 | )       |  |  | 7,447,409 |  |  |         | 6,692,657 |  |           |  | (65,585,890 | ) |  |  | (61,263,814 | )
|                                                                        |  |                                           |             |   |           |  |             |         |  |  |           |  |  |         |           |  |           |  |             |   |  |  |             |  
|Weighted-average number of shares outstanding during the year           |  |                                           | 8,796,725   |   |           |  | 8,796,725   |         |  |  | 8,827,046 |  |  |         | 8,827,046 |  |           |  | 8,827,046   |   |  |  | 8,827,046   |  
|                                                                        |  |                                           |             |   |           |  |             |         |  |  |           |  |  |         |           |  |           |  |             |   |  |  |             |  
|Basic (L)EPS (NT$):                                                     |  |                                           |             |   |           |  |             |         |  |  |           |  |  |         |           |  |           |  |             |   |  |  |             |  
|Basic (L)EPSnet income (loss)                                          |  |                                           | (3.03       | ) |           |  | (3.04       | )       |  |  | 0.84      |  |  |         | 0.76      |  |           |  | (7.43       | ) |  |  | (6.94       | )
|                                                                        |  |                                           |             |   |           |  |             |         |  |  |           |  |  |         |           |  |           |  |             |   |  |  |             |  

Diluted EPS for years ended December 31, 2009, 2010 and 2011 were computed as follows:



|                                                                                                                          |  |                                           |             |   |           |  |             |         |  |  |           |   |  |         |           |   |           |  |             |   |  |  |             |  
|------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------- | ----------- | - | --------- |  | ----------- | ------- |  |  | --------- | - |  | ------- | --------- | - | --------- |  | ----------- | - |  |  | ----------- | -
|                                                                                                                          |  | For the year ended December 31,           |            
|                                                                                                                          |  | 2009                                      |             |   | 2010      |  |             | 2011    | 
|                                                                                                                          |  | Pre-tax                                   |             |   | After tax |  |             | Pre-tax |  |  | After tax |   |  | Pre-tax |           |   | After tax | 
|                                                                                                                          |  | NT$                                       |             |   | NT$       |  |             | NT$     |  |  | NT$       |   |  | NT$     |           |   | NT$       | 
|                                                                                                                          |  | (in thousands, except for per share data) |            
|Net income attributable to equity holders of the parent company (including the effect of dilutive potential common
stock) |  |                                           |             |   |           |  |             |         |  |  |           |   |  |         |           |   |           |  |             |   |  |  |             |  
|Net income (loss) attributable to equity holders of the parent company                                                    |  |                                           | (26,668,094 | ) |           |  | (26,769,335 | )       |  |  | 7,447,409 |   |  |         | 6,692,657 |   |           |  | (65,585,890 | ) |  |  | (61,263,814 | )
|Effects of potential common stock:                                                                                        |  |                                           |             |   |           |  |             |         |  |  |           |   |  |         |           |   |           |  |             |   |  |  |             |  
|Convertible bonds payable                                                                                                 |  |                                           |            |   |           |  |            |         |  |  | (507,514  | ) |  |         | (421,237  | ) |           |  |            |   |  |  |            |  
|                                                                                                                          |  |                                           |             |   |           |  |             |         |  |  |           |   |  |         |           |   |           |  |             |   |  |  |             |  
|                                                                                                                          |  |                                           | (26,668,094 | ) |           |  | (26,769,335 | )       |  |  | 6,939,895 |   |  |         | 6,271,420 |   |           |  | (65,585,890 | ) |  |  | (61,263,814 | )
|                                                                                                                          |  |                                           |             |   |           |  |             |         |  |  |           |   |  |         |           |   |           |  |             |   |  |  |             |  
|Weighted-average number of shares outstanding during the year (including the effect of dilutive potential common
stock):  |  |                                           |             |   |           |  |             |         |  |  |           |   |  |         |           |   |           |  |             |   |  |  |             |  
|Weighted-average number of shares outstanding during the year                                                             |  |                                           | 8,796,725   |   |           |  | 8,796,725   |         |  |  | 8,827,046 |   |  |         | 8,827,046 |   |           |  | 8,827,046   |   |  |  | 8,827,046   |  
|Effects of potential common stock:                                                                                        |  |                                           |             |   |           |  |             |         |  |  |           |   |  |         |           |   |           |  |             |   |  |  |             |  
|Convertible bonds payable                                                                                                 |  |                                           |            |   |           |  |            |         |  |  | 132,467   |   |  |         | 132,467   |   |           |  |            |   |  |  |            |  
|Employee bonuses                                                                                                          |  |                                           |            |   |           |  |            |         |  |  | 31,027    |   |  |         | 31,027    |   |           |  |            |   |  |  |            |  
|                                                                                                                          |  |                                           |             |   |           |  |             |         |  |  |           |   |  |         |           |   |           |  |             |   |  |  |             |  
|                                                                                                                          |  |                                           | 8,796,725   |   |           |  | 8,796,725   |         |  |  | 8,990,540 |   |  |         | 8,990,540 |   |           |  | 8,827,046   |   |  |  | 8,827,046   |  
|                                                                                                                          |  |                                           |             |   |           |  |             |         |  |  |           |   |  |         |           |   |           |  |             |   |  |  |             |  
|Diluted EPS (NT$)                                                                                                         |  |                                           | (3.03       | ) |           |  | (3.04       | )       |  |  | 0.77      |   |  |         | 0.70      |   |           |  | (7.43       | ) |  |  | (6.94       | )
|                                                                                                                          |  |                                           |             |   |           |  |             |         |  |  |           |   |  |         |           |   |           |  |             |   |  |  |             |  

Note: Diluted earnings per share in 2009 and 2011 were not calculated due to the anti-dilutive effect.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-42 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|21. | Additional Disclosure on Financial Instruments
|--- | ----------------------------------------------



| | (a) | Fair value information
| | --- | ----------------------

The
carrying amount of cash and cash equivalents, receivables/payables (including related parties), other current financial assets, restricted assets, short-term borrowings, and equipment and construction-in-progress payables approximates their fair
value due to their short-term nature. Except for aforementioned financial instruments, the carrying amount and fair value of other financial instruments of the Company as of December 31, 2010 and 2011 were as follows:



|                                                 |  |                   |             |  |            |  |             | 
|------------------------------------------------ |  | ----------------- | ----------- |  | ---------- |  | ----------- | 
|                                                 |  | December 31, 2010 |            
|                                                 |  | Carryingamount    |             |  | Fair value | 
|                                                 |  | NT$               |             |  | NT$        | 
|                                                 |  | (in thousands)    |            
|Financial assets:                                |  |                   |             |  |            |  |             | 
|Foreign currency forward contracts               |  |                   | 425,443     |  |            |  | 425,443     | 
|Options contracts                                |  |                   | 1,822       |  |            |  | 1,822       | 
|Available-for-sale financial assetsnoncurrent   |  |                   | 1,373,687   |  |            |  | 1,373,687   | 
|Refundable deposits                              |  |                   | 176,141     |  |            |  | 176,141     | 
|Financial liabilities:                           |  |                   |             |  |            |  |             | 
|Long-term borrowings (including current portion) |  |                   | 146,948,074 |  |            |  | 146,948,074 | 
|Convertible bonds payable (*)                    |  |                   | 24,094,080  |  |            |  | 24,094,080  | 
|Bonds payable (including current portion)        |  |                   | 9,666,770   |  |            |  | 9,935,142   | 
|Foreign currency forward contracts               |  |                   | 102,455     |  |            |  | 102,455     | 
|Interest rate swap contracts                     |  |                   | 361,889     |  |            |  | 361,889     | 
|Options contracts                                |  |                   | 180,020     |  |            |  | 180,020     | 



|                                                 |  |                   |             |  |            |  |           |     |  |  |             |  |  |  |           | 
|------------------------------------------------ |  | ----------------- | ----------- |  | ---------- |  | --------- | --- |  |  | ----------- |  |  |  | --------- | 
|                                                 |  | December 31, 2011 |            
|                                                 |  | Carrying amount   |             |  | Fair value | 
|                                                 |  | NT$               |             |  | US$        |  |           | NT$ |  |  | US$         | 
|                                                 |  | (in thousands)    |            
|Financial assets:                                |  |                   |             |  |            |  |           |     |  |  |             |  |  |  |           | 
|Foreign currency forward contracts               |  |                   | 85,621      |  |            |  | 2,829     |     |  |  | 85,621      |  |  |  | 2,829     | 
|Options contracts                                |  |                   | 172         |  |            |  | 6         |     |  |  | 172         |  |  |  | 6         | 
|Available-for-sale financial assets  noncurrent |  |                   | 436,774     |  |            |  | 14,429    |     |  |  | 436,774     |  |  |  | 14,429    | 
|Interest rate swap contracts                     |  |                   | 3           |  |            |  |          |     |  |  | 3           |  |  |  |          | 
|Refundable deposits                              |  |                   | 404,751     |  |            |  | 13,371    |     |  |  | 404,751     |  |  |  | 13,371    | 
|Financial liabilities:                           |  |                   |             |  |            |  |           |     |  |  |             |  |  |  |           | 
|Long-term borrowings (including current portion) |  |                   | 198,957,069 |  |            |  | 6,572,748 |     |  |  | 198,957,069 |  |  |  | 6,572,748 | 
|Convertible bonds payable (*)                    |  |                   | 21,787,128  |  |            |  | 719,760   |     |  |  | 21,787,128  |  |  |  | 719,760   | 
|Bonds payable (including current portion)        |  |                   | 3,564,383   |  |            |  | 117,753   |     |  |  | 3,638,651   |  |  |  | 120,207   | 
|Foreign currency forward contracts               |  |                   | 17,523      |  |            |  | 579       |     |  |  | 17,523      |  |  |  | 579       | 
|Interest rate swap contracts                     |  |                   | 198,401     |  |            |  | 6,554     |     |  |  | 198,401     |  |  |  | 6,554     | 
|Options contracts                                |  |                   | 176,185     |  |            |  | 5,820     |     |  |  | 176,185     |  |  |  | 5,820     | 



|* | Include financial liabilities measured at fair value  convertible bonds payable
|- | --------------------------------------------------------------------------------



| | (b) | The following methods and assumptions are used to estimate the fair values of the Companys financial instruments:
| | --- | ------------------------------------------------------------------------------------------------------------------



| | (1) | The fair value of financial instruments other than financial assets carried at cost is based on quoted market prices, if available, in active markets. The fair value of
derivative financial instruments is based on the amount the Company expects to receive (positive) or to pay (negative) assuming that the contracts are settled in advance at the balance sheet date.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The fair value of foreign currency forward contracts is computed based on the spot rate and swap points provided by Reuters quotes
system. The fair value of interest rate swap is estimated based on market price provided by financial institutions. Financial institutions use the evaluation models and assumptions to estimate the market price of the individual contract.



| | (2) | The fair value of refundable deposits with no fixed maturity is based on carrying amount.
| | --- | -----------------------------------------------------------------------------------------



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-43 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (3) | The carrying value of the floating-rate long-term borrowings approximates fair value since the interest rates paid are based on short-term maturities and recent quoted
rates from financial institutions. Thus the fair value of these instruments approximates to their carrying value.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | The fair value of fixed-rate long-term borrowings is estimated based on the present value of future discounted cash flows based on prevailing market interest rates for
similar debt instruments of comparable maturities and credit standing of the borrower.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The discount rate
adopted by the Company is the rate of return of a similar financial instrument in the market; the factors include the debtors credit rating and the remaining period for principal repayment, etc. The Company uses a discount rate of 0.6% to 1.9%
and 1.1808% as of December 31, 2010 and 2011, respectively. The fair value of convertible bonds payable is estimated based on Monte Carlo Simulation.



| | (5) | If the fair value of aforementioned financial instruments is denominated in foreign currency, the Company estimates the fair value based on the spot exchange rate
provided by Reuters quotes system. The spot exchange rate is based on the buying rate and adopted consistently, except for the US dollar, which is based on the closing price.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | The fair values of the Companys financial assets and liabilities determined by publicly quoted market price, if available, or determined using a valuation
technique were as follows:
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                 |  |                              |           |  |                                        |  |             | 
|------------------------------------------------ |  | ---------------------------- | --------- |  | -------------------------------------- |  | ----------- | 
|                                                 |  | December 31, 2010            |          
|                                                 |  | Publicly quotedmarket prices |           |  | Fair value based onvaluation technique | 
|                                                 |  | NT$                          |           |  | NT$                                    | 
|                                                 |  | (in thousands)               |          
|Financial assets:                                |  |                              |           |  |                                        |  |             | 
|Foreign currency forward contracts               |  |                              |          |  |                                        |  | 425,443     | 
|Option contracts                                 |  |                              |           |  |                                        |  | 1,822       | 
|Available-for-sale financial assetsnoncurrent   |  |                              | 1,373,687 |  |                                        |  |            | 
|Refundable deposits                              |  |                              |          |  |                                        |  | 176,141     | 
|Financial liabilities:                           |  |                              |           |  |                                        |  |             | 
|Long-term borrowings (including current portion) |  |                              |          |  |                                        |  | 146,948,074 | 
|Convertible bonds payable (*)                    |  |                              |          |  |                                        |  | 24,094,080  | 
|Bonds payable (including current portion)        |  |                              |          |  |                                        |  | 9,935,142   | 
|Foreign currency forward contracts               |  |                              |          |  |                                        |  | 102,455     | 
|Interest rate swap contracts                     |  |                              |          |  |                                        |  | 361,889     | 
|Option contracts                                 |  |                              |          |  |                                        |  | 180,020     | 



|                                                 |  |                              |         |  |                                        |  |        |     |  |  |             |  |  |  |           | 
|------------------------------------------------ |  | ---------------------------- | ------- |  | -------------------------------------- |  | ------ | --- |  |  | ----------- |  |  |  | --------- | 
|                                                 |  | December 31, 2011            |        
|                                                 |  | Publicly quotedmarket prices |         |  | Fair value based on valuationtechnique | 
|                                                 |  | NT$                          |         |  | US$                                    |  |        | NT$ |  |  | US$         | 
|                                                 |  | (in thousands)               |        
|Financial assets:                                |  |                              |         |  |                                        |  |        |     |  |  |             |  |  |  |           | 
|Foreign currency forward contracts               |  |                              |        |  |                                        |  |       |     |  |  | 85,621      |  |  |  | 2,829     | 
|Option contracts                                 |  |                              |        |  |                                        |  |       |     |  |  | 172         |  |  |  | 6         | 
|Available-for-sale financial assets  noncurrent |  |                              | 436,774 |  |                                        |  | 14,429 |     |  |  |            |  |  |  |          | 
|Interest rate swap contracts                     |  |                              |        |  |                                        |  |       |     |  |  | 3           |  |  |  |          | 
|Refundable deposits                              |  |                              |        |  |                                        |  |       |     |  |  | 404,751     |  |  |  | 13,371    | 
|Financial liabilities:                           |  |                              |         |  |                                        |  |        |     |  |  |             |  |  |  |           | 
|Long-term borrowings (including current portion) |  |                              |        |  |                                        |  |       |     |  |  | 198,957,069 |  |  |  | 6,572,748 | 
|Convertible bonds payable (*)                    |  |                              |        |  |                                        |  |       |     |  |  | 21,787,128  |  |  |  | 719,760   | 
|Bonds payable (including current portion)        |  |                              |        |  |                                        |  |       |     |  |  | 3,638,651   |  |  |  | 120,207   | 
|Foreign currency forward contracts               |  |                              |        |  |                                        |  |       |     |  |  | 17,523      |  |  |  | 579       | 
|Interest rate swap contracts                     |  |                              |        |  |                                        |  |       |     |  |  | 198,401     |  |  |  | 6,554     | 
|Option contracts                                 |  |                              |        |  |                                        |  |       |     |  |  | 176,185     |  |  |  | 5,820     | 



|* | Include financial liabilities measured at fair value  convertible bonds payable
|- | --------------------------------------------------------------------------------



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-44 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (d) | The Company pledged certain of its financial assets to secure long-term borrowings and bonds payable, see note 23.
| | --- | ------------------------------------------------------------------------------------------------------------------



| | (e) | Gains on valuation of financial instruments resulting from the change in fair value, determined using valuation techniques, were NT$813,152 thousand, NT$3,986,083
thousand and NT$744,072 (US$24,581) thousand for the years ended December 31, 2009, 2010 and 2011, respectively.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (f) | Financial liabilities exposed to cash flow risk resulting from change in interest rates were NT$108,005,572 thousand and NT$181,521,211 (US$5,996,736) thousand as of
December 31, 2010 and 2011, respectively.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (g) | Financial risks relating to financial instruments
| | --- | -------------------------------------------------



| | (1) | Market risk
| | --- | -----------

The Company holds
equity securities which are classified as available-for-sale financial assets. Equity securities are valued at fair value and are exposed to the risk of price changes in the securities market.

The foreign currency forward contracts and interest rate swap contracts entered into by the Company are, in economic substance, for
hedging purposes. Gains or losses from these financial instruments are expected to substantially offset gain or loss from hedged items. Therefore, management believes that there is no significant market risk from the fluctuations of foreign currency
or interest rates.



| | (2) | Credit risk
| | --- | -----------

The Companys
potential credit risk is derived primarily from cash in bank, cash equivalents and accounts receivable. The Company maintains its cash and cash equivalent investments with various reputable financial institutions of high credit quality. The majority
of these financial institutions are located in the ROC. Management performs periodic evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any one institution. Management believes
that there is a limited concentration of credit risk in cash and cash equivalent investments.

The majority of the
Companys customers are in the computer, consumer electronics and LCD TV industries. Management continuously evaluates the credit quality and financial strength of its customers. If necessary, the Company will request collateral from its
customers. In 2009, 2010 and 2011, the Companys five largest customers accounted for 37.3%, 39.02% and 36.03%, respectively, of the consolidated net sales.



| | (3) | Liquidity risk
| | --- | --------------

At
December 31, 2011, the Companys current assets exceed its current liabilities. Management believes the Companys existing credit lines under its long-term loan agreements, together with net cash expected to be generated from its
operations, will be sufficient to fulfill its payment obligations over the next twelve months. Therefore, management believes that the Company does not have significant liquidity risk.

As of December 31, 2011, the Companys future cash flows for the outstanding forward exchange contracts were as follows:



|                               |  |                |                                  |  |                |  |                                                 | 
|------------------------------ |  | -------------- | -------------------------------- |  | -------------- |  | ----------------------------------------------- | 
|Forward Exchange Contract Term |  | Outflow        |                                  |  | Inflow         | 
|                               |  | (in thousands) |                                  |  | (in thousands) | 
|                               |  |               
|From Jan. 2012 to Mar. 2012    |  |                | USD 421,246EUR 70,100
CZK 47,747 |  |                |  | JPY 32,488,341NTD 621,578
SGD 7,803 CNY
454,268 | 

In addition, the exchange rates for settling these forward exchange contracts are fixed. Therefore,
there is no material cash flow risk.



| | (4) | Cash flow risk resulting from change in interest rates
| | --- | ------------------------------------------------------

The Companys long-term borrowings are primarily borrowings bearing floating-interest-rate. As a result, the Company is exposed to fluctuation in interest rates that affect cash flows for interest
payments on these borrowings. At December 31, 2011, if the market interest rates on the Companys floating-interest-rate borrowings had been 25 basis points higher with all other variables held constant, the future annual interest expense
would have been NT$453,803 (US$14,992) thousand higher.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-45 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|22. | Related-party Transactions
|--- | --------------------------

Except as disclosed in the consolidated financial statements and other footnotes, the significant related party
transactions were as follows:



| | (a) | Names and relationships of related parties
| | --- | ------------------------------------------



|                                                                           |  |                                                                                                                                                                                    
|-------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name of related party                                                      |  | Relationship with the Company                                                                                                                                                      
|Cando                                                                      |  | Investee of AUO and Konly; see note (i) below                                                                                                                                      
|Raydium                                                                    |  | Investee of Konly                                                                                                                                                                  
|Wellypower                                                                 |  | Investee of Konly                                                                                                                                                                  
|Qisda                                                                      |  | Shareholder represented on AUOs board of directors; investee of AUO and Konly                                                                                                     
|BenQ Corporation (BenQ)                                                  |  | Subsidiary of Qisda                                                                                                                                                                
|Qisda Optronics (Suzhou) Co., Ltd. (QCOS)                                |  | Subsidiary of Qisda                                                                                                                                                                
|Qisda Co., Ltd. Suzhou (QCSZ)                                            |  | Subsidiary of Qisda                                                                                                                                                                
|BenQ Material Corp. (BMC)                                                |  | Subsidiary of Qisda                                                                                                                                                                
|Nano                                                                       |  | Investee of Konly and Ronly; see note (ii) below                                                                                                                                   
|FH                                                                         |  | Investee of Konly, Ronly and BVTW                                                                                                                                                  
|Forhouse International Holding Ltd. (FHBVI)                              |  | Subsidiary of FH                                                                                                                                                                   
|Fortech International Corp. (Fortech)                                    |  | Subsidiary of FH                                                                                                                                                                   
|Fortress Optronics International Corporation (Fortress)                  |  | Subsidiary of FH                                                                                                                                                                   
|Fortech Optronics (Xiamen) Co., Ltd. (FHSSXM)                            |  | Subsidiary of FH                                                                                                                                                                   
|Fortech Optronics (Kunshan) Co., Ltd. (FHSSKS) (Formerly Nano-Kunshan) |  | Subsidiary of FH; see note (ii)                                                                                                                                                    
|Changhong Electrics (Sichuan) Co., Ltd. (Changhong Electrics)            |  | Joint investor of BVCH                                                                                                                                                             
|Changhong (Hongkong) Trading Ltd. (Changhong Trading)                    |  | Substantive related party of BVCH                                                                                                                                                  
|TCL Huizhou                                                                |  | Joint investor of BKHZ                                                                                                                                                             
|TCL Corporation (TCL)                                                    |  | Related party of BKHZ; see note (iii) below                                                                                                                                        
|TCL Electrics (Hongkong) Co., Ltd. (TCL (HK))                              |  | Related party of BKHZ; see note (iii) below                                                                                                                                        
|BTPL                                                                       |  | Subsidiary of BTLB                                                                                                                                                                 
|AUSP                                                                       |  | Investee of AUSG                                                                                                                                                                   
|Abakus Solar AG (Abakus)                                                 |  | Investee of AULB                                                                                                                                                                   
|Sichuan Changhong LCM CO., Ltd. (Changhong LCM)                          |  | Substantive related party of BVCH                                                                                                                                                  
|Others                                                                     |  | Directors, supervisors, president, vice-presidents of the Company, and entities that the Company has significant influence but with which the Company had no material
transactions.



|            |  |                                                                                                                                                                                                                                                                    
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            | 
|Note (i):   |  | On June 30, 2011, the Company disposed most of its equity shareholdings in Cando, and resigned from the director position. Accordingly, transactions with Cando have been
disclosed as related-party transactions through June 30, 2011.                           
|            | 
|Note (ii):  |  | On September 15, 2010, Nano was merged into FH, with FH as the surviving entity. Accordingly, transactions with Nano have been disclosed as related-party transactions through
September 15, 2010.                                                                 
|            | 
|Note (iii): |  | On July 27, 2010, the Company jointly invested in BKHZ with TCL Huizhou through AULB. Accordingly, TCL Huizhou and its related parties are considered as a related party of the
Company, and related-party transactions were disclosed starting from July 27, 2010.



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| |  | ---- |  | -----------
| |  | F-46 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (b) | Significant transactions with related parties
| | --- | ---------------------------------------------



| | (1) | Sales
| | --- | -----

Net sales to related
parties were as follows:



|                    |  |                                 |            |  |      |  |            |      |  |  |            |  |  |  |           | 
|------------------- |  | ------------------------------- | ---------- |  | ---- |  | ---------- | ---- |  |  | ---------- |  |  |  | --------- | 
|                    |  | For the year ended December 31, |           
|                    |  | 2009                            |            |  | 2010 |  |            | 2011 | 
|                    |  | NT$                             |            |  | NT$  |  |            | NT$  |  |  | US$        | 
|                    |  | (in thousands)                  |           
|TCL Huizhou         |  |                                 |           |  |      |  | 6,284,825  |      |  |  | 10,292,276 |  |  |  | 340,016   | 
|Changhong Electrics |  |                                 | 6,827,504  |  |      |  | 15,676,929 |      |  |  | 7,377,695  |  |  |  | 243,730   | 
|BenQ                |  |                                 | 8,945,171  |  |      |  | 9,750,242  |      |  |  | 6,400,096  |  |  |  | 211,434   | 
|Changhong Trading   |  |                                 |           |  |      |  | 245,940    |      |  |  | 4,761,272  |  |  |  | 157,293   | 
|QCSZ                |  |                                 | 1,887,418  |  |      |  | 3,260,601  |      |  |  | 2,628,576  |  |  |  | 86,838    | 
|AUSP                |  |                                 |           |  |      |  | 76,623     |      |  |  | 2,568,666  |  |  |  | 84,858    | 
|TCL (HK)            |  |                                 |           |  |      |  | 2,572,268  |      |  |  | 2,152,528  |  |  |  | 71,111    | 
|TCL                 |  |                                 |           |  |      |  | 2,998,896  |      |  |  | 486,003    |  |  |  | 16,055    | 
|Others              |  |                                 | 3,225,511  |  |      |  | 5,583,365  |      |  |  | 5,309,187  |  |  |  | 175,394   | 
|                    |  |                                 |            |  |      |  |            |      |  |  |            |  |  |  |           | 
|                    |  |                                 | 20,885,604 |  |      |  | 46,449,689 |      |  |  | 41,976,299 |  |  |  | 1,386,729 | 
|                    |  |                                 |            |  |      |  |            |      |  |  |            |  |  |  |           | 

The collection terms for sales to related parties were month-end 30 to 45 days, and average collection
days for the years ended December 31, 2009, 2010 and 2011, were 60 days, 50 days and 70 days, respectively. The collection terms for sales to unrelated customers were month-end 30 to 60 days, and average collection days for the years ended
December 31, 2009, 2010 and 2011, were 48 days, 48 days and 52 days, respectively. The pricing and other terms for sales to related parties were not materially different from those with unrelated customers.

As of December 31, 2010 and 2011, receivables resulting from the above transactions were as follows:



|                                                |  |                |           |   |      |  |           |     |  |  |         |  
|----------------------------------------------- |  | -------------- | --------- | - | ---- |  | --------- | --- |  |  | ------- | -
|                                                |  | December 31,   |          
|                                                |  | 2010           |           |   | 2011 | 
|                                                |  | NT$            |           |   | NT$  |  |           | US$ | 
|                                                |  | (in thousands) |          
|Changhong LCM                                   |  |                |          |   |      |  | 1,467,690 |     |  |  | 48,487  |  
|BenQ                                            |  |                | 1,211,755 |   |      |  | 1,052,761 |     |  |  | 34,779  |  
|QCSZ                                            |  |                | 717,827   |   |      |  | 828,581   |     |  |  | 27,373  |  
|AUSP                                            |  |                | 76,869    |   |      |  | 770,705   |     |  |  | 25,461  |  
|TCL Huizhou                                     |  |                | 2,228,630 |   |      |  | 725,488   |     |  |  | 23,967  |  
|Changhong Trading                               |  |                |          |   |      |  | 558,702   |     |  |  | 18,457  |  
|Changhong Electrics                             |  |                | 3,004,963 |   |      |  | 544,697   |     |  |  | 17,995  |  
|TCL                                             |  |                | 895,806   |   |      |  | 68,929    |     |  |  | 2,277   |  
|Others                                          |  |                | 1,279,152 |   |      |  | 1,007,356 |     |  |  | 33,279  |  
|Less: allowance for doubtful accounts           |  |                | (1,551    | ) |      |  |          |     |  |  |        |  
|Less: allowance for sales returns and discounts |  |                | (93,019   | ) |      |  | (241,304  | )   |  |  | (7,972  | )
|                                                |  |                |           |   |      |  |           |     |  |  |         |  
|                                                |  |                | 9,320,432 |   |      |  | 6,783,605 |     |  |  | 224,103 |  
|                                                |  |                |           |   |      |  |           |     |  |  |         |  



| | (2) | Disposal of property, plant and equipment, operating leases, and others
| | --- | -----------------------------------------------------------------------

The Company leased portion of its facilities to related parties. Total rental income for the years ended December 31, 2009, 2010 and 2011, amounted to NT$83,862 thousand, NT$118,169 thousand and
NT$141,615 (US$4,678) thousand, respectively. The collection term was quarter-end 15 days, and the pricing was not materially different from that with unrelated parties.

In 2009, 2010 and 2011, the Company sold property, plant and equipment to related parties for NT$128,252 thousand, NT$15,471 thousand and NT$16,128 (US$533) thousand, respectively. Gains (losses) on
disposals for the years ended December 31, 2009, 2010 and 2011, amounted to NT$(4,469) thousand, NT$9,568 thousand and NT$523 (US$17) thousand, respectively. The collection term was month-end 30 to 45 days and the pricing for sales to related
parties was not materially different from that with unrelated parties.



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| |  | ---- |  | -----------
| |  | F-47 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



In 2010 and 2011, the Company received administration income of NT$ 4,408 thousand
and NT$8,786 (US$290) thousand from related parties.

In 2009, 2010 and 2011, the Company received compensation income of
NT$17,886 thousand, NT$1,974 thousand and NT$6,662 (US$220) thousand, respectively, from related parties due to product quality issues.

In 2009, 2010 and 2011, the Company received other income of NT$1,543 thousand, NT$12,473 thousand and NT$133,134 (US$4,398) thousand, respectively, from related parties.

In 2009, 2010 and 2011, the Company received total cash dividends of NT$142,096 thousand, NT$437,801 thousand and NT$651,486 (US$21,522)
thousand, respectively, from its investees.

As of December 31, 2010 and 2011, receivables from above-mentioned
transactions amounted to NT$72,696 thousand and NT$191,499 (US$6,326) thousand, respectively.



| | (3) | Purchases
| | --- | ---------

Net purchases from
related parties were as follows:



|           |  |                                 |            |  |      |  |            |      |  |  |            |  |  |  |           | 
|---------- |  | ------------------------------- | ---------- |  | ---- |  | ---------- | ---- |  |  | ---------- |  |  |  | --------- | 
|           |  | For the year ended December 31, |           
|           |  | 2009                            |            |  | 2010 |  |            | 2011 | 
|           |  | NT$                             |            |  | NT$  |  |            | NT$  |  |  | US$        | 
|           |  | (in thousands)                  |           
|FH         |  |                                 | 7,911,643  |  |      |  | 23,277,026 |      |  |  | 19,294,675 |  |  |  | 637,419   | 
|BMC        |  |                                 | 11,136,574 |  |      |  | 13,995,913 |      |  |  | 14,453,146 |  |  |  | 477,474   | 
|Raydium    |  |                                 | 7,534,212  |  |      |  | 8,488,130  |      |  |  | 8,350,319  |  |  |  | 275,861   | 
|Cando      |  |                                 | 3,179,766  |  |      |  | 2,513,395  |      |  |  | 2,347,424  |  |  |  | 77,550    | 
|Wellypower |  |                                 | 2,861,898  |  |      |  | 1,793,100  |      |  |  | 1,608,649  |  |  |  | 53,144    | 
|FHSSKS     |  |                                 | 2,865,743  |  |      |  | 2,175,339  |      |  |  | 1,001      |  |  |  | 33        | 
|Fortech    |  |                                 | 6,057,071  |  |      |  | 467,437    |      |  |  |           |  |  |  |          | 
|Fortress   |  |                                 | 4,360,141  |  |      |  | 446,513    |      |  |  |           |  |  |  |          | 
|Others     |  |                                 | 10,414,681 |  |      |  | 19,296,062 |      |  |  | 22,436,129 |  |  |  | 741,200   | 
|           |  |                                 |            |  |      |  |            |      |  |  |            |  |  |  |           | 
|           |  |                                 | 56,321,729 |  |      |  | 72,452,915 |      |  |  | 68,491,343 |  |  |  | 2,262,681 | 
|           |  |                                 |            |  |      |  |            |      |  |  |            |  |  |  |           | 

The pricing and payment terms with related parties were not materially different from those with
unrelated vendors. The payment terms were 30 to 120 days for the years ended 2009, 2010 and 2011.

As of December 31,
2010 and 2011, payables resulting from the above purchases were as follows:



|        |  |                |            |  |      |  |            |     |  |  |         | 
|------- |  | -------------- | ---------- |  | ---- |  | ---------- | --- |  |  | ------- | 
|        |  | December 31,   |           
|        |  | 2010           |            |  | 2011 | 
|        |  | NT$            |            |  | NT$  |  |            | US$ | 
|        |  | (in thousands) |           
|FH      |  |                | 5,639,312  |  |      |  | 6,207,655  |     |  |  | 205,076 | 
|BMC     |  |                | 4,046,153  |  |      |  | 3,385,151  |     |  |  | 111,832 | 
|Raydium |  |                | 2,954,675  |  |      |  | 3,048,366  |     |  |  | 100,706 | 
|QCSZ    |  |                | 976,586    |  |      |  | 1,253,681  |     |  |  | 41,416  | 
|TCL     |  |                | 1,013,679  |  |      |  | 84,686     |     |  |  | 2,798   | 
|FHBVI   |  |                | 1,245,426  |  |      |  |           |     |  |  |        | 
|Others  |  |                | 4,248,834  |  |      |  | 3,474,640  |     |  |  | 114,788 | 
|        |  |                |            |  |      |  |            |     |  |  |         | 
|        |  |                | 20,124,665 |  |      |  | 17,454,179 |     |  |  | 576,616 | 
|        |  |                |            |  |      |  |            |     |  |  |         | 

Transactions with FH and other related parties are reversed in order not to double count the sales and
purchase, if unrealized gain or losses is not realized though transactions with third parties. However, related accounts receivable and inventory are not reversed. The Company recognizes revenue upon the completion of transactions with third
parties.



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| |  | ---- |  | -----------
| |  | F-48 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (4) | Acquisition of property, plant and equipment and others
| | --- | -------------------------------------------------------

In 2009, 2010 and 2011, the Company acquired property, plant, and equipment from related parties for a total consideration of NT$59,326 thousand, NT$36,212 thousand and NT$33,818 (US$1,117) thousand,
respectively.

In 2009, 2010 and 2011, the Company paid other expenses, which consists mainly of rental and other expenses, of
NT$386,237 thousand, NT$468,205 thousand and NT$528,710 (US$17,466) thousand, respectively, to related parties.

As of
December 31, 2010 and 2011, amounts due to related parties as a result of the aforementioned transactions amounted to NT$98,601 thousand and NT$168,004 (US$5,550) thousand, respectively.



| | (5) | Compensation to executive officers
| | --- | ----------------------------------

In 2010 and 2011, compensation paid to the Companys executive officers including directors, supervisors, president and vice-presidents was as follows:



|                 |  |                                 |         |  |                |  |         |     |  |  |       | 
|---------------- |  | ------------------------------- | ------- |  | -------------- |  | ------- | --- |  |  | ----- | 
|                 |  | For the year ended December 31, |        
|                 |  | 2010                            |         |  | 2011           | 
|                 |  | NT$                             |         |  | NT$            |  |         | US$ | 
|                 |  |                                 |         |  | (in thousands) | 
|Salaries         |  |                                 | 155,504 |  |                |  | 143,208 |     |  |  | 4,731 | 
|Compensation     |  |                                 | 68,216  |  |                |  | 85,143  |     |  |  | 2,813 | 
|Service charges  |  |                                 | 23,270  |  |                |  | 14,735  |     |  |  | 487   | 
|Employee bonuses |  |                                 | 41,878  |  |                |  | 15,900  |     |  |  | 525   | 

For the 2010 compensation included in the accruals for remuneration to directors and employee bonuses;
refer to section stockholders equity for further details.



|23. | Pledged Assets
|--- | --------------



|                                    |  |                                                                               |  |              |             |  |                |  |             |     |  |  |           | 
|----------------------------------- |  | ----------------------------------------------------------------------------- |  | ------------ | ----------- |  | -------------- |  | ----------- | --- |  |  | --------- | 
|                                    |  |                                                                               |  | December 31, |            
|Pledged assets                      |  | Pledged to secure                                                             |  | 2010         |             |  | 2011           | 
|                                    |  |                                                                               |  | NT$          |             |  | NT$            |  |             | US$ | 
|                                    |  |                                                                               |  |              |             |  | (in thousands) | 
|Restricted cash in banks            |  | R&D project, oil purchases, customs duties and guarantees for foreign workers |  |              | 162,221     |  |                |  | 158,509     |     |  |  | 5,237     | 
|Secured deposit                     |  | Guarantees for lawsuit                                                        |  |              |            |  |                |  | 4,778,288   |     |  |  | 157,856   | 
|Land and building                   |  | Long-term borrowings                                                          |  |              | 62,802,899  |  |                |  | 92,496,496  |     |  |  | 3,055,715 | 
|Machinery and equipment             |  | Long-term borrowings and bonds payable                                        |  |              | 162,851,942 |  |                |  | 162,782,620 |     |  |  | 5,377,688 | 
|Available-for-sale financial assets |  | Long-term borrowings                                                          |  |              | 5,142       |  |                |  | 3,309       |     |  |  | 109       | 
|                                    |  |                                                                               |  |              |             |  |                |  |             |     |  |  |           | 
|                                    |  |                                                                               |  |              | 225,822,204 |  |                |  | 260,219,222 |     |  |  | 8,596,605 | 
|                                    |  |                                                                               |  |              |             |  |                |  |             |     |  |  |           | 



|24. | Commitments and Contingencies
|--- | -----------------------------

The significant commitments and contingencies of the Company as of December 31, 2011, in addition to those
disclosed in the aforementioned notes to the financial statements, were as follows:



| | (a) | Outstanding letters of credit
| | --- | -----------------------------

As of December 31, 2010 and 2011, the Company had the following outstanding letters of credit for the purpose of purchasing machinery
and equipment and materials from foreign suppliers:



|         |  |                |           |  |      |  |           | 
|-------- |  | -------------- | --------- |  | ---- |  | --------- | 
|         |  | December 31,   |          
|Currency |  | 2010           |           |  | 2011 | 
|         |  | (in thousands) |          
|USD      |  |                | 2,337     |  |      |  | 6,273     | 
|JPY      |  |                | 3,570,203 |  |      |  | 2,819,360 | 
|EUR      |  |                |          |  |      |  | 6,173     | 
|CNY      |  |                | 18,725    |  |      |  | 900       | 
|NTD      |  |                |          |  |      |  | 10,800    | 

The letters of credit are irrevocable and will expire upon the Companys payment of the related
obligations.



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| |  | F-49 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (b) | Technology licensing agreements
| | --- | -------------------------------

Starting 1998, AUO has entered into technical collaboration, patent licensing, and/or patent cross licensing agreements with Fujitsu
Display Technologies Corp. (subsequently assumed by Fujitsu Limited), Toppan Printing Co., Ltd. (Toppan Printing), Semiconductor Energy Laboratory Co., Ltd. (SEL), Hitachi Displays Ltd., IPS Alpha Technology, Ltd., Guardian
Industries Corp., Honeywell International Inc., Honeywell Intellectual Properties Inc., Fergason Patent Properties LLC, Toshiba Mobile Display Co., Ltd., Sharp Corporation, LG Display Co., Ltd. and others. The Company believes that it is in
compliance with the terms and conditions of the aforementioned agreements.



| | (c) | Purchase commitments
| | --- | --------------------

On
March 31, 2011, AUO signed a long-term materials supply agreement with Corning Display Technologies Taiwan Co. Ltd. (Corning Taiwan), under which, AUO and Corning Taiwan agreed on the supply of certain TFT-LCD and color filters
glass substrates at negotiated quantity. The contract is effective from March 30, 2011 to December 31, 2013.

In
April 2011, AUO signed a long-term materials supply agreement with Korean OCI Company Ltd. (OCI), under which, AUO and OCI agreed on the supply of certain polysilicon. AUO paid proportionate prepayments in three installments to OCI in
2011. The contract is effective from April 15, 2011 to December 31, 2018.

On January 25, 2011, AUO signed a
long-term materials supply agreement with Sunrise Global Solar Energy (Sunrise), under which, AUO and Sunrise agreed on the supply of certain single crystalline silicon solar cells. The contract is effective from January 25, 2011 to
January 15, 2013.

As of December 31, 2010 and 2011, significant outstanding purchase commitments for construction in
progress, property, plant and equipment totaled NT$31,891,984 thousand and NT$36,301,499 (US$1,199,257) thousand, respectively.

On April 11, 2008, Toppan CFI and Allied Material Technology Corporation entered into an agreement for purchase and sale of real
property located in the Kaohsiung Lujhu Science Park for a total consideration of NT$1,500,000 thousand. On August 31, 2011, the registration of ownership transfer was completely processed. As of September 5, 2011, all payments were fully
paid.



| | (d) | Operating lease agreements
| | --- | --------------------------

AUO
entered into various operating lease agreements for operating facilities and land with the Science Park Administration Bureaus for periods from March 1, 1994, to December 31, 2027. In addition, the Companys subsidiary companies,
including Toppan CFI, AUCZ, ACTW and M. Setek, also entered into operating lease agreements for operating facilities and land for periods from April 13, 2009, to December 31, 2030. Future minimum lease commitments as of December 31,
2011, under existing non-cancelable agreements were as follows:



|           |  |                           |           |  |     |  |         | 
|---------- |  | ------------------------- | --------- |  | --- |  | ------- | 
|Year       |  | Minimum lease commitments |          
|           |  | NT$                       |           |  | US$ | 
|           |  | (in thousands)            |          
|2012       |  |                           | 1,009,189 |  |     |  | 33,340  | 
|2013       |  |                           | 806,461   |  |     |  | 26,642  | 
|2014       |  |                           | 573,220   |  |     |  | 18,937  | 
|2015       |  |                           | 505,986   |  |     |  | 16,716  | 
|Thereafter |  |                           | 4,078,436 |  |     |  | 134,735 | 

Rental expense for operating leases amounted to NT$526,232 thousand, NT$972,931 thousand, and NT$1,325,238
(US$43,781) thousand in 2009, 2010 and 2011, respectively.



| | (e) | Litigation
| | --- | ----------



| | (1) | Alleged patent infringements
| | --- | ----------------------------

In December 2006, LG Display Co., Ltd. (LGD) filed a lawsuit in the United States District Court for the District of Delaware
against AUO and other TFT-LCD manufacturers claiming patent infringement. AUO retained legal counsel to handle this matter. LGD sought, among other things, monetary damages for willful infringement and an injunction against future infringement. In
March 2007, AUO filed a suit in the United States District Court for the Western District of Wisconsin against LGD and LGD America, claiming infringement of certain of our patents in the United States relating to the manufacturing of TFT-LCD
products. AUO sought, among other things, monetary damages and enhanced damage for willful infringement and an injunction against future infringement. The claims against the Company and the counterclaims filed by AUO were consolidated in June 2007
in the United States District Court for the District of Delaware (the Delaware Court). Trial for this case was held in June 2009. In February 2010, the Delaware Court found that LGD and LGD America have infringed AUOs four patents
asserted at trial and in April 2010, the Delaware Court further found that AUO did not infringe any of LGDs patents as asserted at trial. In August 2011, AUO and LGD have entered into a Settlement and Patent Cross License Agreement and both
parties agreed to dismiss all pending legal actions that have been filed against each other .



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| |  | ---- |  | -----------
| |  | F-50 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



In February 2007, Anvik Corporation (Anvik) filed a lawsuit in the United
States District Court for the Southern District of New York against AUO and other TFT-LCD manufacturers, claiming infringement of certain of Anviks patents in the United States relating to the use of photo-masking equipment manufactured by
Nikon Corporation in the manufacturing of TFT-LCD panels. AUO has retained legal counsel to handle the related matters. Anvik is seeking, among other things, unspecified monetary damages for past infringement and an injunction against future
infringement. In April 2012, the court invalidated Anviks patents. AUO expects Anvik to appeal. Management is reviewing the merits of this suit on an on-going basis.

In September 2008, Apeldyn Corporation (Apeldyn) filed a lawsuit in the Delaware Court against AUO and other TFT-LCD manufacturers, claiming infringement of certain of Apeldyns patents
in the United States relating to the manufacturing of TFT-LCD panels. In the complaint, Apeldyn is seeking, among other things, unspecified monetary damages for past infringement and an injunction against future infringement. The court granted
summary judgment of non-infringement of AUO in December 2011. Apeldyn has sought an extension of time to file the appeal. While management intends to defend the suit vigorously, the ultimate outcome of the matter is uncertain, and the amount of
possible loss, if any, is currently not estimable. Management is reviewing the merits of this lawsuit on an on-going basis.

On October 13, 2010, Thomson Licensing SAS and Thomson Licensing LLC (together, Thomson) filed a lawsuit in the Delaware
Court against AUO, AU Optronics America (AUUS), AUOs customers and other corporations, claiming infringement of certain of Thomsons patents in the United States relating to the manufacturing of TFT-LCD panels. This case is
stayed. On October 25, 2010, Thomson filed a complaint seeking an investigation by the United States International Trade Commission (ITC) of our alleged patent infringement. The ITC Judges preliminary determination made in
January 2012 found that none of the patents asserted by Thomson against AUO were infringed by AUO. The full commission is now reviewing the decision. While management intends to defend the suit vigorously, the ultimate outcome of the matter is
uncertain, and the amount of possible loss, if any, is currently not estimable. Management is reviewing the merits of this lawsuit on an on-going basis.

In January 2011, Sharp Corporation (Sharp) filed a complaint against AUO AUUS and AUOs customers, seeking an investigation by the ITC of alleged patent infringement. On the same day,
Sharp also filed a lawsuit in the Delaware Court against AUO and AUUS claiming infringement of Sharps patents asserted in the ITC relating to the manufacturing of TFT-LCD panels. Sharp sought, among other things, monetary damages for willful
infringement and injunction against future infringement. In March 2011, AUO and AUUS filed two complaints against Japans Sharp and Sharp Electronics Corporation (together Sharp) for patent infringement in the United States District
Court in Delaware and in the United States Central District Court of California. AUO sought, among other things, monetary damages for willful infringement and injunction against future infringement. In April 2011, AUO and Sharp entered into a
Settlement Agreement and Patent Cross License Agreement, and both parties agreed to dismiss all pending legal actions that have been filed against each other.

In January 2011, Advanced Display Technologies of Texas, LLC (ADTT) filed a lawsuit in the United States District Court for the Eastern District of Texas Tyler Division (the Eastern
Texas Court) against AUO, AUUS and other electronic devices companies, claiming infringement of certain of ADTTs patents in the United States. ADTT is seeking, among other things, unspecified monetary damages for past infringement and an
injunction against future infringement. While management intends to defend the suit vigorously, the ultimate outcome of the matter is uncertain, and the amount of possible loss, if any, is currently not estimable. Management is reviewing the merits
of this lawsuit on an on-going basis.

On April 25, 2011, Eidos Display, LLC and Eidos III, LLC. (together
Eidos) filed a lawsuit in the Eastern Texas Court against AUO, AUUS and other Taiwanese TFT-LCD manufacturers, claiming infringement of certain of Eidos patents in the United States. Eidos is seeking, among other things,
unspecified monetary damages for past infringement and an injunction against future infringement. While management intends to defend the suit vigorously, the ultimate outcome of the matter is uncertain, and the amount of possible loss, if any, is
currently not estimable. Management is reviewing the merits of this lawsuit on an on-going basis.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-51 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



On June 1, 2011, Samsung Electronics Co., Ltd. (Samsung) filed a
complaint against AUO, AUUS and certain of AUOs customers, seeking an investigation by the United States International Trade Commission (ITC) of alleged patent infringement. On the same day, Samsung also filed a lawsuit in the
Delaware Court and the United States District Court for the Northern District of California (the Northern California Court) against AUO, AUUS and certain of AUOs customers claiming infringement of certain of Samsungs patents
relating to the manufacturing of TFT-LCD panels. Samsung sought, among other things, monetary damages for willful infringement and injunction against future infringement. On June 24, 2011, AUO and AUUS filed a complaint against Samsung, Samsung
Electronics America, Inc., and certain of Samsungs customers in the ITC of alleged patent infringement and on the same day also filed a complaint against Samsung, Samsung Electronics America, Inc., and certain of Samsungs customers for
patent infringement in the United States District Court in Delaware and in the United States District Court for the Northern District of California. AUO sought, among other things, monetary damages for willful infringement and injunction against
future infringement. In January 2012, AUO and Samsung entered into a Settlement and Patent Cross License Agreement and both parties agreed to dismiss all pending legal actions that have been filed against each other.



| | (2) | Investigation for alleged violation of antitrust and competition laws
| | --- | ---------------------------------------------------------------------

AUO and certain of its subsidiaries, along with various competitors in the TFT-LCD industry, are under investigation for alleged violation of antitrust and competition laws of certain jurisdictions
including but not limited to the following: Since December 2006, AUO and certain of its overseas subsidiaries have become involved in antitrust investigations by the United States Department of Justice (the U.S. DOJ), the European
Commission Directorate-General for Competition (the DG COMP), the Canada Competition Bureau, the Taiwan Fair Trade Commission, the Korea Fair Trade Commission and the Japan Fair Trade Commission, concerning the allegations of price
fixing by manufacturers of TFT-LCD panels. In January 2009, the Taiwan Fair Trade Commission visited AUOs office in Taiwan and requested certain information from AUO as part of its investigations into the TFT-LCD industry. In November 2009,
the Taiwan Fair Trade Commission notified AUO of the termination of its investigation. In February 2012, the Canada Competition Bureau notified AUO of the discontinuance of its investigation. The Japan Fair Trade Commission and the Korea Fair Trade
Commission also requested certain information from AUO as part of their respective investigations in 2007 and 2009, respectively. In December 2011, AUO was in receipt of a written decision made by the Korea Fair Trade Commission (KFTC)
alleging the violation of competition rules in Korea conducted by a number of LCD manufacturers, including AUO and imposed fines on a number of LCD manufacturers, including AUO. The fine imposed by KFTC against the Company is 28,442,000,000 Korean
won. AUO paid the full amount of fine and filed a complaint for objection in the KFTC and also filed an appeal in the Seoul High Court. In February, AUO was notified by the KFTC of a 30% reduction of the fine. In March, KFTC refunded the reduced
fine to AUO. In 2009, the DG COMP issued a Statement of Objections to a number of LCD manufacturers, including AUO, alleging anti-competitive activities. AUO received DG COMPs Statement of Objections in May 2009 and submitted
AUOs reply in July 2009. AUO and certain LCD manufacturers attended the hearing held by the DG COMP regarding its investigation in September 2009. In December 2010, DG COMP announced the imposition of fines on five LCD manufacturers, including
EUR116.8 million on AUO. AUO paid the full amount of the fine in March 2011 in compliance with the applicable rules and regulations for filing an appeal to the General Court to vigorously defend itself. The ultimate outcome of this case is still
pending and it is anticipated to take at least two years. In November 2011, the DG COMP advised AUO that they had begun an investigation of competitor contact regarding small size panels during 1998 to 2006. No determination has been made and AUO
does not know when the investigation may be concluded. As with the prior EU investigation, AUO is cooperating with DG COMP and AUO intends to continue to cooperate as warranted as part of AUOs ongoing defense of this matter. Management is
reviewing the merits of this lawsuit on an on-going basis.

In June 2010, AUO, AUUS and six of its current and former officers
and employees were indicted in the United States District Court for the Northern District of California ( the Northern California Court) for an alleged one count violation of Section 1 of the Sherman Act, which carries a maximum
penalty of ten years in prison and a $1 million fine for individuals and a $100 million fine for corporations. The maximum fines may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either of those
amounts is greater than the Sherman Act maximum fines. The superseding indictment alleges that AUO, AUUS and their alleged coconspirators derived gross gains of at least US$500 million, and persons other than the defendants and their alleged
coconspirators suffered gross losses of at least US$500 million. Arraignment hearings in relation to bail for five of the six indicted individuals were held in July and August 2010. On August 13, 2010, the Northern California Court ruled that
Mr. HB Chen, our Vice Chairman and Dr. LJ Chen, our then President, must surrender their passports and are barred from leaving the Northern District of California without the Northern California Courts permission. Mr. Chen and
Dr. Chen retained counsel to deal with this issue. AUO initiated its deputy system and its business has not been materially affected due to Mr. Chen and Dr. Chen remain in Northern California; however, if AUO and its subsidiary are
found to have violated antitrust and/or competition laws in the applicable jurisdictions, AUO and its subsidiaries will likely have to pay a fine or penalty. Trial for the criminal case started from January 9, 2012 and the jury began
deliberations from March 1, 2012. It is also possible that certain of AUOs executive officers, senior management and/or other employees, current and/or former, may be held criminally liable and subject to imprisonment and/or fines. AUO
and its subsidiaries may also agree to pay a fine or penalty as part of any plea bargain and/or settlement. To AUO managements knowledge, other competitors that pled guilty and entered into plea bargain agreements with the U.S. DOJ have agreed
to pay fines from US$35 million to US$400 million. While AUO management does not know all the facts and circumstances that led each of the competitors to enter into these pleas, AUO is aware of the outcome of those plea bargain agreements, which may
or may not be the amounts which the court may decide to consider in relation to AUOs case.



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| |  | F-52 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



AUO has made certain provisions for certain antitrust matters in certain jurisdictions
as the management deems appropriate. Management will re-assess the appropriateness of the recorded provisions each reporting period and will make any necessary adjustments as deemed appropriate. The ultimate outcome of the pending antitrust
investigations cannot be predicted with certainty. Any penalties, fines or settlements made in connection with these investigations and/or lawsuits may have a material adverse effect on the Companys business, results of operation and future
prospects.



| | (3) | Antitrust civil actions lawsuits in the United States and Canada
| | --- | ----------------------------------------------------------------

There are also over 100 civil lawsuits filed against AUO and/or its subsidiaries in the United States and several civil lawsuits in Canada alleging, among other things, antitrust violations. The putative
antitrust class actions filed in the United States have been consolidated for discovery in the United States District Court for the Northern District of California. In the amended consolidated complaints, the plaintiffs are seeking, among other
things, unspecified monetary damages and an enjoinment from the alleged antitrust conspiracy. The Court has issued an order certifying two types of classes that may proceed against AUO and other TFT-LCD companies: direct purchasers and indirect
purchasers. The civil class actions are expected to be tried in and after May 2012 unless a settlement is reached. Also, the first track of plaintiffs that have opted out of the class cases are set for trial in November 2012. While the management
intends to defend certain suits vigorously, the ultimate outcome of the matter is uncertain, and the amount of possible loss, if any, of certain suits is currently not estimable. Management is reviewing the merits of this lawsuit on an on-going
basis.

Since the fourth quarter of 2009, AT&T Corp and its affiliates (collectively, AT&T), Motorola Inc.
(Motorola), Tracfone, Best Buy, Nokia Corporation (Nokia), Target Corp., Kmart Corp, Costco Wholesale Corp, HP, Dell Sony, CompuCom Systems, Inc., TechData Corporation and other various business entities, filed civil lawsuits
against a number of LCD manufacturers including AUO in the United States and, in the case of Nokia, in both the United States and the United Kingdom, claiming among other things, unspecified monetary damages and an enjoinment from the alleged
antitrust conspiracy. The US Court has stayed Nokias claim against AUO and AUUS and ordered Nokia to arbitrate those claims. Nokia has not yet commenced arbitration proceedings. The Court has stayed some of Dells claims against AUO and
AUUS and ordered Dell to arbitrate those claims. Dell has not yet commenced arbitration proceedings. Certain of Dells claims against AUO and AUUS remains pending in the federal court lawsuit. AUO intends to defend these lawsuits vigorously,
and at this stage, the final outcome of these matters is uncertain, and the amount of possible loss, if any, is currently not estimable.

Since August 2010, a number of states in the U.S, such as New York State, Illinois State, Florida State, Oregon State, Wisconsin State, Missouri State, Arkansas State, Michigan State, Washington State,
West Virginia State, California State, South Carolina State, Mississippi State, Oklahoma State and several retailers and distributors also filed lawsuits against a number of LCD manufacturers including AUO. AUO has retained counsel to handle the
related matters. AUO intends to defend these lawsuits vigorously, and at this stage, the final outcome of these matters is uncertain, and the amount of possible loss, if any, of certain of these lawsuits is currently not estimable. Management is
reviewing the merits of these civil lawsuits on an on-going basis.

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 is not involved 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.

The Company has made provisions (net of reversals, if any) of
NT$9,673,060 thousand, NT$511,251 thousand and NT$6,115,540 (US$202,033) thousand in 2009, 2010 and 2011, respectively, with respect to litigation and claims in which management has concluded that the likelihood of an unfavorable outcome is probable
and the amount of loss is reasonably estimable. The accrued liabilities for those contingencies as of December 31, 2010 and 2011 were NT$13,657,361 thousand and NT$19,863,888 (US$656,224) thousand, respectively. An estimate for the total
exposure, which by its nature is uncertain and may be materially higher or lower than estimated, to loss in excess of amount accrued for these matters was US$323 million as of December 31, 2011. For the matters described above, management will
continue to evaluate the appropriateness of the amounts recorded and will make adjustments to such recorded amounts as deemed necessary. Any penalties, fines, damages or settlements made in connection with these legal proceedings and/or lawsuits may
have a material adverse effect on our business, results of operation and future prospects.



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| |  | F-53 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (f) | Sales agreements
| | --- | ----------------

Since 2006, M.
Setek entered into long-term sales agreements with five customers. The agreements provide that, from 2006 to 2015, M. Setek will sell certain silicon materials or wafers to these customers at certain quantities and prices, with the proportionate
installment prepayments made to M. Setek. These customers may request M. Setek to terminate the agreements and to reimburse the remaining prepayments, if delivery schedule is not met. As of December 31, 2011, the remaining unearned revenue
amounted to US$217,932 thousand.



| | (g) | Others
| | --- | ------

On January 21,
2010, the Taiwan Supreme Administrative Court dismissed an appeal by the Environmental Protection Administration of the Executive Yuan of Taiwan relating to the development of Central Taiwan Science Park located in Seven Star Farm. The Seven Star
Farm is the location where the Company is building its new 8.5 generation manufacturing plants. As a result of the dismissal, the Central Taiwan Science Park Development Office (CTSP) was required to make supplemental submission of its
environmental assessment for the construction of Seven Star Farm of the Central Taiwan Science Park. In response, on August 31, an updated environmental impact assessment was further reviewed and approved by the Environmental Protection Agency
of the ROC Executive Yuan (EPA). The EPA issued its official announcement of the approval of such updated environmental impact assessment in favor of the continued development of the third phase expansion. On September 6, 2010, the
Central Taiwan Science Park Development Office has received the new development approval from the National Science Council of the Executive Yuan to allow the third phase to continue. Certain individuals filed several lawsuits against the National
Science Council of the ROC Executive Yuan (NSC), CTSP and the EPA for preliminary injunction, ceasing enforcing development approval, revoking development approval and revoking the updated environmental impact assessment in the
Administrative Court. Among the administrative lawsuits, certain administrative lawsuits are in favor of NSC, CTSP and the EPA and the others remain pending in the Administrative Court. At present, the Company does not believe this event to have a
material adverse effect on the Companys operations under the preliminary presumption of administrative trust-protection principle between the government and people since the Company has obtained the development approval issued by the
governmental authorities in due course.

On March 11, 2011, a major earthquake, measuring over 9.0 on the Richter
magnitude scale, occurred off the coast of Miyagi, Japan. The earthquake also created a large tsunami which caused extensive damage along Japans Pacific coast (including coast along Tokyo), where, in addition to the Sendai fab, M. Setek
operates fabs in Soma. Production at these facilities was suspended, but resumed later in 2011 as the local infrastructure has recovered. As of December 31, 2011, expenses resulting from property damage losses and asset impairments have been
recognized, and the amount did not have a material impact on the Companys results of operations for the year ended December 31, 2011.



|25. | Segment and Geographic Information
|--- | ----------------------------------



| | (a) | Operating segment information
| | --- | -----------------------------

The Company has two operating segments: Display and Solar. The display segment generally is engaged in the design, development,
production, assembly and marketing flat panel displays. The solar segment primarily is engaged in the design, manufacturing and sale of single crystal silicon wafers, ingots and solar modules, as well as providing technical engineering services in
clean energy business.

The CODM assesses the performance of the operating segments based on segment sales and segment profit
and loss. The accounting policies for the operating segments are the same as those described in Note 3. Intersegment sales are accounted for in a manner similar to sales to third parties and at current market prices. Segment profit and loss is
determined on a basis that is consistent with how the Company reports operating income (loss) on an ROC GAAP basis in its consolidated statements of operations. Operating income (loss) excludes income taxes, interest income and expenses, foreign
currency transaction gains and losses, equity in the income (losses) of affiliates, depreciation of idle assets, asset impairment losses, provisions for potential litigation losses, gains and losses on valuations of financial instruments and sales
of investment securities, gains from bond redemption, and other income and expenses.



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| |  | F-54 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



|                                       |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  |             |  
|-------------------------------------- |  | ------------------------------------ | ----------- | - | ----- |  | ---------- | ------------------------- |  |  | ----------------- | - |  |  | ----------- | -
|                                       |  | For the year ended December 31, 2009 |            
|                                       |  | Display                              |             |   | Solar |  |            | Adjustmentandeliminations |  |  | ConsolidatedTotal |  
|                                       |  | NT$                                  |             |   | NT$   |  |            | NT$                       |  |  | NT$               |  
|                                       |  | (in thousands)                       |            
|Net sales from external customers      |  |                                      | 357,033,516 |   |       |  | 2,297,829  |                           |  |  |                  |   |  |  | 359,331,345 |  
|Intersegment sales                     |  |                                      |            |   |       |  | 33,799     |                           |  |  | (33,799           | ) |  |  |            |  
|                                       |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  |             |  
|Total segment sales                    |  |                                      | 357,033,516 |   |       |  | 2,331,628  |                           |  |  | (33,799           | ) |  |  | 359,331,345 |  
|                                       |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  |             |  
|Operating loss (Note)                  |  |                                      | (13,949,232 | ) |       |  | (1,296,278 | )                         |  |  | 6,459             |   |  |  | (15,239,051 | )
|                                       |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  |             |  
|Non-operating expenses and losses, net |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  | (12,028,350 | )
|                                       |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  |             |  
|Loss before income tax                 |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  | (27,267,401 | )
|                                       |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  |             |  
|Depreciation and amortization          |  |                                      | 88,590,459  |   |       |  | 1,517,152  |                           |  |  |                  |   |  |  | 90,107,611  |  
|                                       |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  |             |  



|                                       |  |                                      |             |  |       |  |            |                           |  |  |                   |   |  |  |             |  
|-------------------------------------- |  | ------------------------------------ | ----------- |  | ----- |  | ---------- | ------------------------- |  |  | ----------------- | - |  |  | ----------- | -
|                                       |  | For the year ended December 31, 2010 |            
|                                       |  | Display                              |             |  | Solar |  |            | Adjustmentandeliminations |  |  | ConsolidatedTotal |  
|                                       |  | NT$                                  |             |  | NT$   |  |            | NT$                       |  |  | NT$               |  
|                                       |  | (in thousands)                       |            
|Net sales from external customers      |  |                                      | 456,725,565 |  |       |  | 10,432,399 |                           |  |  |                  |   |  |  | 467,157,964 |  
|Intersegment sales                     |  |                                      |            |  |       |  | 233,402    |                           |  |  | (233,402          | ) |  |  |            |  
|                                       |  |                                      |             |  |       |  |            |                           |  |  |                   |   |  |  |             |  
|Total segment sales                    |  |                                      | 456,725,565 |  |       |  | 10,665,801 |                           |  |  | (233,402          | ) |  |  | 467,157,964 |  
|                                       |  |                                      |             |  |       |  |            |                           |  |  |                   |   |  |  |             |  
|Operating profit (loss) (Note)         |  |                                      | 13,102,670  |  |       |  | (2,612,622 | )                         |  |  | 6,616             |   |  |  | 10,496,664  |  
|                                       |  |                                      |             |  |       |  |            |                           |  |  |                   |   |  |  |             |  
|Non-operating expenses and losses, net |  |                                      |             |  |       |  |            |                           |  |  |                   |   |  |  | (1,900,683  | )
|                                       |  |                                      |             |  |       |  |            |                           |  |  |                   |   |  |  |             |  
|Income before income tax               |  |                                      |             |  |       |  |            |                           |  |  |                   |   |  |  | 8,595,981   |  
|                                       |  |                                      |             |  |       |  |            |                           |  |  |                   |   |  |  |             |  
|Depreciation and amortization          |  |                                      | 86,656,429  |  |       |  | 2,479,273  |                           |  |  |                  |   |  |  | 89,135,702  |  
|                                       |  |                                      |             |  |       |  |            |                           |  |  |                   |   |  |  |             |  



|                                       |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  |             |  
|-------------------------------------- |  | ------------------------------------ | ----------- | - | ----- |  | ---------- | ------------------------- |  |  | ----------------- | - |  |  | ----------- | -
|                                       |  | For the year ended December 31, 2011 |            
|                                       |  | Display                              |             |   | Solar |  |            | Adjustmentandeliminations |  |  | ConsolidatedTotal |  
|                                       |  | NT$                                  |             |   | NT$   |  |            | NT$                       |  |  | NT$               |  
|                                       |  | (in thousands)                       |            
|Net sales from external customers      |  |                                      | 366,482,597 |   |       |  | 13,229,281 |                           |  |  |                  |   |  |  | 379,711,878 |  
|Intersegment sales                     |  |                                      |            |   |       |  | 38,887     |                           |  |  | (38,887           | ) |  |  |            |  
|                                       |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  |             |  
|Total segment sales                    |  |                                      | 366,482,597 |   |       |  | 13,268,168 |                           |  |  | (38,887           | ) |  |  | 379,711,878 |  
|                                       |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  |             |  
|Operating loss (Note)                  |  |                                      | (54,433,233 | ) |       |  | (3,220,521 | )                         |  |  | (4,778            | ) |  |  | (57,658,532 | )
|                                       |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  |             |  
|Non-operating expenses and losses, net |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  | (7,993,597  | )
|                                       |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  |             |  
|Loss before income tax                 |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  | (65,652,129 | )
|                                       |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  |             |  
|Depreciation and amortization          |  |                                      | 84,999,490  |   |       |  | 3,752,943  |                           |  |  |                  |   |  |  | 88,752,433  |  
|                                       |  |                                      |             |   |       |  |            |                           |  |  |                   |   |  |  |             |  

Note: The adjustment and eliminations of operating profit (loss) resulted from the intersegment transactions of solar
reporting unit.



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| |  | ---- |  | -----------
| |  | F-55 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (b) | Geographic information
| | --- | ----------------------

A
geographical breakdown as of and for the years ended December 31, 2009, 2010 and 2011, is as follows:

(1)
Consolidated net sales (Note 1)



|                        |  |                                 |             |  |      |  |             |      |  |  |             |  |  |  |            | 
|----------------------- |  | ------------------------------- | ----------- |  | ---- |  | ----------- | ---- |  |  | ----------- |  |  |  | ---------- | 
|                        |  | For the year ended December 31, |            
|                        |  | 2009                            |             |  | 2010 |  |             | 2011 | 
|                        |  | NT$                             |             |  | NT$  |  |             | NT$  |  |  | US$         | 
|                        |  | (in thousands)                  |             |  |      | 
|Taiwan                  |  |                                 | 153,643,468 |  |      |  | 178,396,594 |      |  |  | 145,497,812 |  |  |  | 4,806,667  | 
|PRC                     |  |                                 | 98,430,471  |  |      |  | 147,491,931 |      |  |  | 107,117,722 |  |  |  | 3,538,742  | 
|Korea                   |  |                                 | 26,032,848  |  |      |  | 45,300,140  |      |  |  | 30,797,262  |  |  |  | 1,017,419  | 
|Other foreign countries |  |                                 | 81,224,558  |  |      |  | 95,969,299  |      |  |  | 96,299,082  |  |  |  | 3,181,337  | 
|                        |  |                                 |             |  |      |  |             |      |  |  |             |  |  |  |            | 
|Consolidated net sales  |  |                                 | 359,331,345 |  |      |  | 467,157,964 |      |  |  | 379,711,878 |  |  |  | 12,544,165 | 
|                        |  |                                 |             |  |      |  |             |      |  |  |             |  |  |  |            | 

(2) Consolidated non-current assets (Note 2)



|                                      |  |                |             |  |      |  |             |      |  |  |             |  |  |  |            | 
|------------------------------------- |  | -------------- | ----------- |  | ---- |  | ----------- | ---- |  |  | ----------- |  |  |  | ---------- | 
|                                      |  | December 31,   |            
|                                      |  | 2009           |             |  | 2010 |  |             | 2011 | 
|                                      |  | NT$            |             |  | NT$  |  |             | NT$  |  |  | US$         | 
|                                      |  | (in thousands) |             |  |      | 
|Taiwan                                |  |                | 347,266,765 |  |      |  | 327,784,022 |      |  |  | 290,196,184 |  |  |  | 9,586,924  | 
|PRC                                   |  |                | 33,703,986  |  |      |  | 34,608,643  |      |  |  | 40,874,169  |  |  |  | 1,350,319  | 
|Other foreign countries               |  |                | 29,531,381  |  |      |  | 40,271,148  |      |  |  | 49,594,776  |  |  |  | 1,638,414  | 
|                                      |  |                |             |  |      |  |             |      |  |  |             |  |  |  |            | 
|Total consolidated non-current assets |  |                | 410,502,132 |  |      |  | 402,663,813 |      |  |  | 380,665,129 |  |  |  | 12,575,657 | 
|                                      |  |                |             |  |      |  |             |      |  |  |             |  |  |  |            | 

(3) Consolidated tangible long-lived assets



|                                              |  |                |             |  |      |  |             |      |  |  |             |  |  |  |            | 
|--------------------------------------------- |  | -------------- | ----------- |  | ---- |  | ----------- | ---- |  |  | ----------- |  |  |  | ---------- | 
|                                              |  | December 31,   |            
|                                              |  | 2009           |             |  | 2010 |  |             | 2011 | 
|                                              |  | NT$            |             |  | NT$  |  |             | NT$  |  |  | US$         | 
|                                              |  | (in thousands) |             |  |      | 
|Taiwan                                        |  |                | 332,233,758 |  |      |  | 313,306,181 |      |  |  | 273,047,594 |  |  |  | 9,020,403  | 
|PRC                                           |  |                | 31,328,059  |  |      |  | 31,883,762  |      |  |  | 37,612,226  |  |  |  | 1,242,558  | 
|Other foreign countries                       |  |                | 28,985,411  |  |      |  | 40,438,441  |      |  |  | 49,516,758  |  |  |  | 1,635,836  | 
|                                              |  |                |             |  |      |  |             |      |  |  |             |  |  |  |            | 
|Total consolidated tangible long-lived assets |  |                | 392,547,228 |  |      |  | 385,628,384 |      |  |  | 360,176,578 |  |  |  | 11,898,797 | 
|                                              |  |                |             |  |      |  |             |      |  |  |             |  |  |  |            | 



|Note | 1: Sales are attributed to countries based upon the location of customers placing orders.
|---- | -----------------------------------------------------------------------------------------

|Note | 2: Non-current assets are not inclusive of financial instruments, deferred tax assets, and pension-related assets.
|---- | ------------------------------------------------------------------------------------------------------------------



| | (c) | Major customer information
| | --- | --------------------------

For
the years ended December 31, 2009, 2010 and 2011, sales to individual customers representing greater than 10% of consolidated net sales were as follows:



|           |  |                                 |            |  |      |  |    |        |  |  |                |  |  |        |    |  |     |  |            |  |  |  |           |  |  |  |    | 
|---------- |  | ------------------------------- | ---------- |  | ---- |  | -- | ------ |  |  | -------------- |  |  | ------ | -- |  | --- |  | ---------- |  |  |  | --------- |  |  |  | -- | 
|           |  | For the year ended December 31, |           
|           |  | 2009                            |            |  | 2010 |  |    | 2011   | 
|           |  | Amount                          |            |  | %    |  |    | Amount |  |  | %              |  |  | Amount |    |  | %   | 
|           |  | NT$                             |            |  |      |  |    | NT$    |  |  |                |  |  | NT$    |    |  | US$ |  |            |  | 
|           |  |                                 |            |  |      |  |    |        |  |  | (in thousands) |  |  |        |    |  |     | 
|Customer A |  |                                 | 60,553,035 |  |      |  | 17 |        |  |  | 71,227,688     |  |  |        | 15 |  |     |  | 50,400,074 |  |  |  | 1,665,017 |  |  |  | 13 | 
|           |  |                                 |            |  |      |  |    |        |  |  |                |  |  |        |    |  |     |  |            |  |  |  |           |  |  |  |    | 



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| |  | F-56 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (d) | The sales for principal products comprised the follows:
| | --- | -------------------------------------------------------



|                                         |  |                                 |         |  |      |  |         |      |  |  |         |  |  |  |        | 
|---------------------------------------- |  | ------------------------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- |  |  |  | ------ | 
|                                         |  | For the year ended December 31, |        
|                                         |  | 2009                            |         |  | 2010 |  |         | 2011 | 
|                                         |  | NT$                             |         |  | NT$  |  |         | NT$  |  |  | US$     | 
|                                         |  | (in millions)                   |        
|Panels for computer products:            |  |                                 |         |  |      |  |         |      |  |  |         |  |  |  |        | 
|Panels for notebook computers            |  |                                 | 60,432  |  |      |  | 70,390  |      |  |  | 67,530  |  |  |  | 2,231  | 
|Panels for desktop monitors              |  |                                 | 68,431  |  |      |  | 77,942  |      |  |  | 58,407  |  |  |  | 1,929  | 
|                                         |  |                                 |         |  |      |  |         |      |  |  |         |  |  |  |        | 
|Total panels for computer products       |  |                                 | 128,863 |  |      |  | 148,332 |      |  |  | 125,937 |  |  |  | 4,160  | 
|                                         |  |                                 |         |  |      |  |         |      |  |  |         |  |  |  |        | 
|Panels for LCD televisions               |  |                                 | 173,145 |  |      |  | 237,263 |      |  |  | 165,275 |  |  |  | 5,460  | 
|                                         |  |                                 |         |  |      |  |         |      |  |  |         |  |  |  |        | 
|Panels for consumer electronics products |  |                                 | 46,940  |  |      |  | 56,402  |      |  |  | 62,832  |  |  |  | 2,076  | 
|                                         |  |                                 |         |  |      |  |         |      |  |  |         |  |  |  |        | 
|Others(1)                                |  |                                 | 10,383  |  |      |  | 25,161  |      |  |  | 25,668  |  |  |  | 848    | 
|                                         |  |                                 |         |  |      |  |         |      |  |  |         |  |  |  |        | 
|Total                                    |  |                                 | 359,331 |  |      |  | 467,158 |      |  |  | 379,712 |  |  |  | 12,544 | 
|                                         |  |                                 |         |  |      |  |         |      |  |  |         |  |  |  |        | 



|(1) | Includes sales generated from panels for solar modules, from sales of raw materials, components, single crystal silicon wafers and ingots, and from service charges.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|26. | Subsequent Events
|--- | -----------------

On March 14, 2012 (Taiwan time), a jury reached its verdicts for charges made by the US DOJ against AUO, AUUS and
certain of its executive, as previously described in Note 24(e)(2) to these consolidated financial statements. The jury acquitted Dr. LJ Chen and Mr. Hubert Lee and could not reach a decision with respect to Mr. Steven Leung and,
therefore, a mistrial was declared in his case. However, a guilty verdict was returned against AUO and AUUS, and individuals Mr. HB Chen and Dr. Hui Hsiung. The Northern California District Court is expected to issue a fine against the AUO
and AUUS within the next few months. The court has the discretion to impose a fine in any amount up to US$1 billion, which statute allows a maximum penalty equal to twice the amount of the calculated gains derived from the alleged conspiracy. AUO
and AUUS intend to appeal the verdict and any fine. The ultimate outcome of the appeal is uncertain. While there are a number of alternative ways the amount of the fine can be determined, as a result of this subsequent event management has made its
assessment of the amount of the estimated fine after consulting with counsel, and re-evaluated the appropriateness of the previously recorded provision. Based on such consultation and the various unknown factors and uncertainties, management has
determined that the estimated range of loss likely to be incurred as a result of this jury verdict was US$253 million to US$600 million. Management concluded that no amount within this range of possible loss was the best estimate of the actual loss.
Therefore, management concluded that the accrued liability should be based on the low end of this range of possible loss. Because this amount was not significantly different from the US$277 million previously accrued, management concluded that it
was not necessary to adjust the accrued liability for the March 14, 2012 jury verdict. Management will continue to re-assess the appropriateness of the recorded accrued liability for this matter each reporting period and will make any
adjustments to the Companys financial statements as deemed necessary. However, the actual amount of the fine as determined by the court could be materially different from the accrued liability recognized as of December 31, 2011.



|27. | Summary of Significant Differences between Accounting Principles Generally Accepted in the Republic of China and Accounting Principles Generally Accepted in the
United States of America
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying consolidated financial statements have been prepared in conformity with ROC GAAP, which differ in
certain significant respects from accounting principles generally accepted in the United States of America (US GAAP). A discussion of the significant differences between US GAAP and ROC GAAP as they apply to the Company is as
follows:



| | (a) | Business combinations
| | --- | ---------------------



| | (1) | Merger with Unipac
| | --- | ------------------

AUO
completed the merger with Unipac on September 1, 2001. Under the applicable ROC GAAP, the merger was accounted for using the pooling-of-interests method, and accordingly, the assets and liabilities of Unipac were recorded based on the carrying
value at the date of the merger. Under US GAAP, the merger was accounted for as the acquisition of Unipac by AUO using the purchase method of accounting. Under purchase accounting, the purchase price was calculated based on the market value of
the shares issued, and such amount was allocated to the assets acquired and liabilities assumed based on their respective fair values. The difference between the purchase price and the fair value of the assets acquired, including identifiable
intangible assets, and liabilities assumed of Unipac was recorded as goodwill.



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| |  | F-57 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



In 2009, the Company disposed of all of its investments in available-for-sale
securities that were originally acquired in connection with the merger with Unipac. The adjustment of NT$136,731 thousand to net income determined in accordance with US GAAP represented the difference between Unipacs original cost basis
and the fair value of such available-for-sale securities at the date of acquisition.



| | (2) | Merger with QDI
| | --- | ---------------

AUO completed
the merger with QDI on October 1, 2006. Under ROC GAAP, the merger was accounted for in accordance with ROC SFAS No. 25 using the purchase method of accounting. Under US GAAP, the merger was accounted for in accordance with FASB
Accounting Standards Codification (ASC) Topic 805, Business combinations using the purchase method of accounting. Under purchase accounting, the aggregate purchase price was determined based on the market value of shares
issued, direct transaction costs incurred, and the fair value of outstanding vested QDI employee stock options assumed as of the acquisition date. The aggregate purchase price was allocated to QDIs net tangible and intangible assets and
liabilities based upon their estimated fair value as of October 1, 2006. The excess purchase price over the value of the net identifiable tangible and intangible assets was recorded as goodwill. There were no material differences identified in
the accounting for the merger with QDI.



| | (3) | Acquisition of M. Setek
| | --- | -----------------------

In
June 2009, the Company made an initial equity investment in M. Setek, which was established in February 1978 and is a major polysilicon and solar wafer manufacturer in Japan. M. Setek is principally engaged in the research, development, manufacture
and sale of solar wafer. This will mark a major step forward for AUOs endeavor in energy business. By taking an equity investment in M. Setek, AUO expects to be able to secure key materials in the solar industry and strengthen its strategic
position in energy business.

Initially, the Company purchased 31,241 shares of (representing a 15.07% interest) common stock
of M. Setek for US$16,000 (equivalent to NT$526,072) thousand and 64,435 shares of M. Setek convertible preferred stock series B for US$33,000 (equivalent to NT$1,085,031) thousand. From July to September 2009, the Company additionally purchased
60,530 shares of M. Setek convertible preferred stock series B for US$31,000 (equivalent to NT$1,020,515) thousand, 87,866 shares of M. Setek convertible preferred stock series C for US$45,000 (equivalent to NT$1,477,790) thousand and 201,138 shares
of M. Setek convertible preferred stock series D for US$65,000 (equivalent to NT$2,128,617) thousand. On October 1, 2009, the Company converted all convertible preferred stock series B and C into 212,831 shares of common stock, and combined
with its previously held common shares in M. Setek, had attained a 58.10% ownership interest in M. Setek. Consequently, effective from October 1, 2009, management determined that the Company had a controlling financial interest in M. Setek, and
therefore M. Setek is included in the Companys consolidated financial statements from October 1, 2009 for US GAAP purposes. The acquisition of the controlling financial interest in M. Setek was accounted for in accordance with FASB
ASC Topic 805 using the acquisition method of accounting. Prior to October 1, 2009, the Company accounted for its 15.07% ownership interest in the common stock of M. Setek using the equity method of accounting for US GAAP purposes and its
investment in the series B and series C convertible preferred shares as financial assets measured at cost under US GAAP and ROC GAAP.

Under ROC GAAP, and in accordance with ROC SFAS No. 7, Consolidated Financial Statements, paragraph 17, the effect of potential voting rights is considered in assessing whether a company
can control an investee. On August 31, 2009, taking into account the potential voting rights related to the convertible preferred stock B and C, management determined that combined M. Seteks actual and potential voting rights (including
the shares held by others), the Company would result in a majority voting interest (51.00%) in M. Setek. Consequently, the Company was required to consolidate M. Setek in the Companys consolidated financial statements from August 31,
2009 for ROC GAAP purposes. The difference in the date of consolidation of M. Setek had no effect on the consolidated net loss attributable to the equity holders of AUO in 2009 under both ROC GAAP and US GAAP. However, the primary difference
resulted in one more month of operating results and cash flow activity for M. Setek in the Companys ROC GAAP financial statements. The most significant impact was revenue reported under ROC GAAP which was higher by NT$598,542 thousand compared
to revenue reported under US GAAP.

Pursuant to FASB ASC Topic 805, the identifiable assets acquired, the liabilities assumed,
and noncontrolling interests in M. Setek, were recognized and measured at acquisition-date fair values.



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| |  | ---- |  | -----------
| |  | F-58 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



The following table summarizes the consideration paid for M. Setek and the amounts of
estimated fair value of the assets acquired and liabilities assumed recognized at the acquisition date (October 1, 2009), as well as the fair value at the acquisition date of the noncontrolling interests in M. Setek:



|                                                                                                                                                       |  |               |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | ------- | -
|                                                                                                                                                       |  | NT$           |        
|                                                                                                                                                       |  | (in millions) |        
|Consideration                                                                                                                                          |  |               |         |  
|Fair value of the Series B and Series C preferred stock converted by the Company into common shares of M. Setek                                        |  |               | 2,424   |  
|Fair value of the Companys equity interest in Series D convertible preferred stock held before the business
combination                               |  |               | 1,944   |  
|Fair value of the Companys equity interest in the common shares of M. Setek held before the business
combination                                      |  |               | 218     |  
|                                                                                                                                                       |  |               |         |  
|                                                                                                                                                       |  |               | 4,586   |  
|                                                                                                                                                       |  |               |         |  
|Acquisition-related costs (including in operating expenses in the condensed consolidated statement of
operations for the year ended December 31, 2009) |  |               | 5       |  
|                                                                                                                                                       |  |               |         |  
|Recognized amounts of identifiable assets acquired and liabilities assumed:                                                                            |  |               |         |  
|Current assets                                                                                                                                         |  |               | 4,769   |  
|Property and equipment                                                                                                                                 |  |               | 30,905  |  
|Other non-current assets                                                                                                                               |  |               | 1,037   |  
|Current liabilities                                                                                                                                    |  |               | (11,870 | )
|Long-term debt                                                                                                                                         |  |               | (18,320 | )
|                                                                                                                                                       |  |               |         |  
|Total identifiable net assets                                                                                                                          |  |               | 6,521   |  
|Noncontrolling interests in M. Setek                                                                                                                   |  |               | (1,763  | )
|Effect of foreign exchange                                                                                                                             |  |               | (9      | )
|Gain on bargain purchase of 58.1% interest                                                                                                             |  |               | (163    | )
|                                                                                                                                                       |  |               |         |  
|                                                                                                                                                       |  |               | 4,586   |  
|                                                                                                                                                       |  |               |         |  

The sum of the fair value of identifiable net assets acquired less the fair value of the noncontrolling
interests exceeded the sum of the fair value of the consideration transferred and the fair value of the Companys equity interests held in M. Setek before the business combination. Consequently, management reassessed whether it had correctly
identified all of the assets acquired and all of the liabilities assumed. Further, management reviewed the procedures used to measure the fair values of the identifiable assets acquired and liabilities assumed, the noncontrolling interests in M.
Setek, the Companys previously held equity interests in M. Setek and the consideration transferred. Management concluded that all acquired assets and all liabilities assumed were properly identified and that the valuation procedures and
resulting fair value measures were appropriate. As a result, the Company recognized a bargain purchase gain of NT$163 million at the acquisition date for US GAAP purposes. Under ROC GAAP, the Companys acquisition of M. Setek through
acquiring newly issued shares was recognized as equity transactions. Further, ROC GAAP does not permit the re-measurement of previously held interests or fair value measurement either on August 31, 2009 or October 1, 2009.

The estimated fair values of common shares and the Series B and C preferred shares of M. Setek at October 1, 2009 were determined
using an income approach and validated internally by a market approach. As M. Setek is a private company, a discount for lack of marketability (DLOM) was taken into consideration when estimating the fair values of M. Seteks common and
preferred shares. The fair value measurement is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement as defined in the FASB ASC Topic 820, Fair value measurements and disclosures.
The fair value estimates are based on (a) a discount rate 16%, (b) long-term sustainable growth rate 1%, (c) financial multiples of companies in the same industry as M. Setek, (d) DLOM of 30%, and (e) a control premium of
24%. The control premium was only applied to the fair value determination of the Series B and C preferred shares, as it was the conversion of these preferred shares into common shares that resulted in the Company obtaining a controlling financial
interest in M. Setek.

The AICPA Enterprise Value Allocation Model (the EVA Model), a compensation option model
for privately-held-company equity securities, was adopted to value preferred stock A, which is considered as part of the total non-controlling interests, and preferred stock D. The fair value is based on risk free rate of 0.73% and volatility rate
of 72.11%.



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



The fair value of the current assets acquired includes trade receivables with a fair
value of NT$449 million. The gross amount due is NT$453 million, of which NT$4 million is expected to be uncollected.

The
other assets acquired included certain investments accounted for using the equity method, the fair value of which was less than the carrying amount at October 1, 2009. Pursuant to FASB ASC Topic 805, the investments were measured at its
acquisition-date fair value. Due to the Companys ownership interest in M. Setek at the different fair-value-measurement date under ROC GAAP and US GAAP is 15.07% and 58.10%, respectively, the difference under US GAAP between the
carrying amount and the fair value of the above-mentioned equity-method investments, which is attributable to the parent company, is NT$653,609 thousand greater than that under ROC GAAP. As a result, while the difference was realized in December
2009, the Company reversed the amount of NT$653,609 thousand under US GAAP.

There were no intangible assets identified by
management in the purchase price allocation process.

Under the acquisition method of accounting, as the acquisition was
achieved in stages, the Company re-measured the fair value of its equity interests in M. Setek held before the business combination. This included the Series B and Series C convertible preferred stocks (whose fair values were determined as
previously described above), as well as the Series D convertible preferred stock and the 15.07% equity interest in the common stock of M. Setek. As a result of this re-measurement, the Company recognized a net re-measurement loss of NT$
1,445,660 thousand in non-operating expenses in the condensed consolidated statement of operations under US GAAP in 2009. The re-measurement is not permitted under ROC GAAP, and therefore no such re-measurement loss has been recognized in
the Companys ROC GAAP consolidated financial statements.

The amounts of net sales and losses of M. Setek included in
the Companys condensed consolidated statements of operations of 2009 for US GAAP purposes from the acquisition date to the period ended December 31, 2009 were as follows:



|                                                          |  |                |           |  
|--------------------------------------------------------- |  | -------------- | --------- | -
|                                                          |  | NT$            |          
|                                                          |  | (in thousands) |          
|Net sales                                                 |  |                | 1,510,710 |  
|Loss attributable to equity holders of AU Optronics Corp. |  |                | (708,571  | )

The following unaudited pro forma financial information summarizes the combined results of operations as
though the business combination with M. Setek had taken place on January 1, 2009. This unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations had the
acquisition been effected on January 1, 2009.

|                                                                   |  |                                |             |  
|------------------------------------------------------------------ |  | ------------------------------ | ----------- | -
|                                                                   |  | For the year endedDecember 31, |            
|                                                                   |  | 2009                           |            
|                                                                   |  | NT$                            |            
|                                                                   |  | (in thousands)                 |            
|Net sales                                                          |  |                                | 366,661,919 |  
|Income (loss) attributable to equity holders of AU Optronics Corp. |  |                                | (31,380,060 | )



| | (4) | Acquisition of AUST
| | --- | -------------------

On
July 1, 2010, the Company acquired 100% of the outstanding common shares of AFPD Pte., Ltd. (AUST), a Singapore company originally held by Toshiba Mobile Display Co., Ltd., for total cash consideration of an equivalent amount of
NT$1,289 million. The results of AUSTs operations have been included in the Companys consolidated financial statements since that date. AUST specializes in the production of low-temperature polysilicon (LTPS) TFT-LCD. The acquisition of
AUST is expected to strengthen the Companys competitiveness in the LTPS TFT-LCD market and the Companys diversity into new applications such as high-end notebooks, smart phones, and tablet PC panels. The acquisition is also expected to
help the Company in its development of the next generation of OLED display technology as LTPS production lines are more suitable for conversion into OLED production lines. The purchase agreement includes no contingent consideration arrangements.



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| |  | F-60 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



The Company accounted for this purchase using the acquisition method. The Company
allocated purchase price to the acquired assets and liabilities based on the estimated fair value at the acquisition date as summarized in the following table.





|                                 |  |               |       |  
|-------------------------------- |  | ------------- | ----- | -
|                                 |  | NT$           |      
|                                 |  | (in millions) |      
|Identifiable net assets acquired |  |               | 1,300 |  
|Gain on bargain purchase         |  |               | (11   | )
|                                 |  |               |       |  
|Total purchase consideration     |  |               | 1,289 |  
|                                 |  |               |       |  

The sum of the fair value of identifiable net assets acquired exceeded the purchase price. Consequently,
management reassessed whether it had correctly identified all of the assets acquired and all of the liabilities assumed. Further, management reviewed the procedures used to measure the fair values of the identifiable assets acquired and liabilities
assumed. Management concluded that all acquired assets and all liabilities assumed were properly identified and that the valuation procedures and resulting fair value measures were appropriate.

Consequently, the Company recognized a bargain purchase gain of NT$10,515 thousand at the acquisition date for US GAAP purposes.
Under ROC GAAP, the bargain purchase gain is further deducted from the carrying amount of non-current assets.

The acquisition
of AUST was not material to the Companys consolidated balance sheet or consolidated statements of operations. As such, the pro forma financial information has not been disclosed.



| | (5) | Acquisition of AUKS
| | --- | -------------------

On
October 14, 2011, the Company joint ventured with Kunshan Economic and Technical Development Zone Assets Operation Co., Ltd., to invest AU Optronics (Kunshan) Co., Ltd. (AUKS) through AULB, in which AULB held 49% ownership
interests. Because the Company has a majority voting interest, AUKS has been included in the Companys consolidated financial statements since that date. AUKS is mainly engaged in manufacture and assembly of next generation TFT-LCDs in Mainland
China. The acquisition of AUKS is expected to strengthen the Companys competitiveness in the LCD TV market and to fulfill the wide demand of TV market in Mainland China.

The Company accounted for this purchase using the acquisition method. Total cash consideration was an equivalent amount of NT$2,435 (US$80) million. The Company allocated purchase price to the acquired
assets and liabilities based on the estimated fair value at the acquisition date as summarized in the following table.



|                                         |  |               |        |  
|---------------------------------------- |  | ------------- | ------ | -
|                                         |  | NT$           |       
|                                         |  | (in millions) |       
|Identifiable net assets acquired         |  |               | 5,008  |  
|Noncontrolling interests in AUKS         |  |               | (2,534 | )
|Gain on bargain purchase of 49% interest |  |               | (38    | )
|Effect of foreign exchange               |  |               | (1     | )
|                                         |  |               |        |  
|Total purchase consideration             |  |               | 2,435  |  
|                                         |  |               |        |  

The sum of the fair value of identifiable net assets acquired exceeded the purchase price. As a result,
management reassessed whether it had correctly identified all of the assets acquired and all of the liabilities assumed. Further, management reviewed the procedures used to measure the fair values of the identifiable assets acquired, the liabilities
assumed and the noncontrolling interests in AUKS. Management concluded that all acquired assets and all liabilities assumed were properly identified and that the valuation procedures and resulting fair value measures were appropriate.

Consequently, the Company recognized a bargain purchase gain of NT$37,875 (US$1,251) thousand at the acquisition date for US GAAP
purposes. Under ROC GAAP, the bargain purchase gain is further deducted from the carrying amount of non-current assets.

AUKS
was still in the development period, therefore, there is no significant impact on results of operations as if the acquisition of AUKS had taken place on January 1, 2011. As such, the pro forma financial information has not been disclosed.



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| |  | F-61 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (b) | Noncontrolling interests
| | --- | ------------------------

On
January 1, 2009, the Company adopted FASB ASC Subtopic 810-10 which requires certain changes to the presentation of the financial statements. This amendment requires noncontrolling interests (previously referred to as minority
interest) to be classified in the consolidated statements of operations as part of consolidated net earnings and to include the accumulated amount of noncontrolling interests in the consolidated balance sheets as part of shareholders
equity. Changes in a parents ownership interest while the parent retains its controlling financial interest in its subsidiary will be accounted for as equity transactions in the consolidated financial statements. However, if a change in
ownership of a consolidated subsidiary results in loss of control and deconsolidation, any retained ownership interests are re-measured with the gain or loss reported in net earnings.

Under ROC GAAP, upon the sale of equity-method investment, the difference between the selling price and carrying amount of the investment
at the date of sale is recognized as an investment gain or loss.

In November 2009, the Company disposed of 6.79% of its
investments in BVTW and recognized a disposal loss of NT$28,323 thousand under ROC GAAP. The decrease in equity interests did not result in a loss of control or deconsolidation as of December 31, 2009. As a result, and pursuant to FASB ASC
Subtopic 810-10, the disposal was accounted for as an equity transaction and the loss was reversed under US GAAP.

In March
2010, the Company disposed partial holdings of its investments in BVTW and Lextar, respectively, and recognized a disposal gain of NT$124,845 thousand under ROC GAAP. The decrease in equity interests did not result in a loss of control or
deconsolidation as of that time. As a result, and pursuant to FASB ASC Subtopic 810-10, the disposal was accounted for as an equity transaction and the gain was reversed under US GAAP. On June 30, 2010, Lextar re-elected its board of directors
so that the Company lost the power to control Lextars financial, operating and personnel policies. Consequently, Lextar was deconsolidated as of that date. See further discussion at note 27(d).

Changes from net income (loss) attributable to AU Optronics Corp. and transfers (to) from noncontrolling interest:





|                                                                                                                 |  |                                 |             |   |      |  |           |      |  |  |             |   |  |  |            |  
|---------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ----------- | - | ---- |  | --------- | ---- |  |  | ----------- | - |  |  | ---------- | -
|                                                                                                                 |  | For the year ended December 31, |            
|                                                                                                                 |  | 2009                            |             |   | 2010 |  |           | 2011 | 
|                                                                                                                 |  | NT$                             |             |   | NT$  |  |           | NT$  |  |  | US$         |  
|                                                                                                                 |  | (in thousands)                  |            
|Net income (loss) attributable to AU Optronics Corp., US GAAP                                                    |  |                                 | (28,670,321 | ) |      |  | 4,244,323 |      |  |  | (80,948,225 | ) |  |  | (2,674,206 | )
|                                                                                                                 |  |                                 |             |   |      |  |           |      |  |  |             |   |  |  |            |  
|Transfer (to) from noncontrolling interest                                                                       |  |                                 |             |   |      |  |           |      |  |  |             |   |  |  |            |  
|Decrease in AUOs paid-in capital due to purchase of common shares of BVTW and Lextar                            |  |                                 | (8,445      | ) |      |  |          |      |  |  |            |   |  |  |           |  
|Decrease in AUOs paid-in capital due to purchase of common shares of former BVTW                                |  |                                 |            |   |      |  | (17,961   | )    |  |  |            |   |  |  |           |  
|Decrease in AUOs paid-in capital due to purchase of common shares of ACTW                                       |  |                                 |            |   |      |  |          |      |  |  | (480,250    | ) |  |  | (15,865    | )
|Increase (decrease) in AUOs paid-in capital for sale of BVTWs common shares                                    |  |                                 | (28,323     | ) |      |  | 17,497    |      |  |  |            |   |  |  |           |  
|Increase in AUOs paid-in capital for sale of Lextars common shares                                             |  |                                 |            |   |      |  | 107,348   |      |  |  |            |   |  |  |           |  
|Increase in AUOs paid-in capital for disproportionate participation in Lextars capital increase                |  |                                 | 76,039      |   |      |  | 1,234,361 |      |  |  |            |   |  |  |           |  
|Increase (decrease) in AUOs paid-in capital for disproportionate participation in BVTWs capital
increase       |  |                                 | (8,039      | ) |      |  | 562,689   |      |  |  | 214,119     |   |  |  | 7,074      |  
|Decrease in AUOs paid-in capital for disproportionate participation in former BVTWs capital increase           |  |                                 |            |   |      |  | (66,424   | )    |  |  |            |   |  |  |           |  
|Increase in AUOs paid-in capital for disproportionate participation in ACTWs capital increase                  |  |                                 |            |   |      |  | 9,111     |      |  |  | 402,394     |   |  |  | 13,293     |  
|Decrease in AUOs paid-in capital for disproportionate participation in M. Seteks capital increase              |  |                                 |            |   |      |  | (703,387  | )    |  |  | 943,314     |   |  |  | 31,163     |  
|                                                                                                                 |  |                                 |             |   |      |  |           |      |  |  |             |   |  |  |            |  
|Net transfer (to) from noncontrolling interest                                                                   |  |                                 | 31,232      |   |      |  | 1,143,234 |      |  |  | 1,079,577   |   |  |  | 35,665     |  
|                                                                                                                 |  |                                 |             |   |      |  |           |      |  |  |             |   |  |  |            |  
|Change from net income (loss) attributable to AU Optronics Corp. and transfers (to) from noncontrolling
interest |  |                                 | (28,639,089 | ) |      |  | 5,387,557 |      |  |  | (79,868,648 | ) |  |  | (2,638,541 | )
|                                                                                                                 |  |                                 |             |   |      |  |           |      |  |  |             |   |  |  |            |  



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| |  | F-62 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (c) | CompensationEmployee bonuses
| | --- | -----------------------------

Under ROC GAAP, prior to January 1, 2008, employee bonuses were appropriated from retained earnings in the period stockholders approval was obtained. If such employee bonuses were settled
through the issuance of stock, the amount charged against retained earnings was based on the par value of the common shares issued. Under US GAAP, employee bonuses are charged to expense in the year when the related services are provided. The
total amount of these bonuses is initially accrued based on the minimum cash value to be paid, with an adjustment in the subsequent year after stockholders approval. Any difference between the amount initially accrued and fair value of bonuses
settled by the issuance of stock is recognized at the grant date.

Under ROC GAAP, effective January 1, 2008, employee
bonuses are estimated and charged to expense in the year when the related services are provided; see note 3(r). Accordingly, the difference related to retained earnings appropriation and expensing through profit or loss has been eliminated
prospectively. However, a difference continues to exist related to the true-up adjustment in the subsequent year upon stockholders approval.



| | (d) | Equity-method investments and other-than-temporary impairment
| | --- | -------------------------------------------------------------

If an investee company issues new shares and an investor company does not acquire new shares in proportion to its original ownership percentage, the investor companys equity in the investee
companys net assets will be changed. Under ROC GAAP, the change in the equity interest is adjusted to capital surplus and long-term investment. If the investor companys capital surplus is insufficient to offset the adjustment to
long-term investment, the difference is charged to retained earnings. Under US GAAP, subsequent investment is treated as a step acquisition, and additional consideration is allocated to the incremental pro rata share of the fair value of assets
and liabilities acquired. When the investor company does not acquire new shares in proportion to its original ownership percentage, any gain or loss resulting from the change in the investee companys equity is recognized directly in equity as
a equity transaction in accordance with the Securities and Exchange Commission Staff Accounting Bulletin (SAB) No. 51, Accounting for Sales of Stock by a Subsidiary. This policy has been consistently applied before
December 31, 2008 and continued to be applied for the equity investment in non-subsidiary afterward. Starting 2009, as FASB ASC Subtopic 810-10 to be in effect, changes in a parents ownership interest while the parent retains its
controlling financial interest in its subsidiary are accounted for as equity transactions. Therefore, no gain or loss is recognized in consolidated net income or comprehensive income. The carrying amount of the noncontrolling interest is adjusted to
reflect the change in its ownership interest in the subsidiary. Any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted is recognized in equity attributable to the
parent.

Under ROC GAAP, in accordance with ROC SFAS No. 35, an equity-method investment is considered to be impaired if
there is objective evidence of impairment as a result of one or more events that had occurred as of the balance sheet date indicating that the recoverable amount is below the carrying amount of the investment. Impairment is assessed at the
individual security level. The recoverable amount is determined based on one of the two following approaches: (1) the discounted expected future net cash flows from the investee company; or (2) the combination of expected cash dividends
from the investee company and the discounted cash flows from the ultimate disposal of the investment. The impairment loss is recorded in profit or loss. If the recoverable amount increases in the future period, the amount previously recognized as
impairment loss could be reversed and recognized as a gain in profit or loss.

Under US GAAP, impairment of an
equity-method investment is recognized if such impairment is other-than-temporary. The amount of the impairment loss is calculated by reference to the excess of the carrying value of the equity-method investment over its fair value. For
equity-method investments in publicly traded equity securities, fair value is determined by reference to the quoted market price at the measurement date. In addition, an impairment loss that is recognized cannot be reversed subsequently.

In 2011, the Companys investment in Qisda experienced significant declines in market value. Considering primarily the length of time
and the extent to which the market value (based on quoted share price) was less than the carrying amount of the investment, management concluded that this impairment was other-than-temporary at December 31, 2011, for US GAAP purposes. As a
result, the Company recognized an impairment loss of NT$1,801,856 (US$59,526) thousand related to its investment in Qisda for the year ended December 31, 2011. No impairment loss was recognized for ROC GAAP purposes for the investment in Qisda
because management believes that the recovery of the carrying amount is supported by the expected discounted cash flows from the investment.

The Company held 68.43% ownership interest of Lextar as of December 31 2009. As a result of disproportionate participation in Lextars capital increase and partial disposal investment in April
2010, the ownership interest of the Company in Lextar decreased to 46.29%. On June 30, 2010, due to a change in the composition of Lextars board of directors, the Company no longer had a controlling financial interest in Lextar. As a
result, the Company deconsolidated Lextar on June 30, 2010 and now accounts for its investment under the equity method of accounting. Consequently, the Company recognized a non-cash gain of NT$ 362,842 thousand, representing the difference
between the initial fair value of the investment and its carrying value, in its US GAAP consolidated income statement for 2010 owing to deconsolidating Lextar on June 30, 2010 pursuant to FASB Topic 810-10. Under the deconsolidation
accounting guidelines, an investors opening investment is recorded at fair value on the date of deconsolidation. Under ROC GAAP, the Company also accounts for its investment in Lextar under the equity method of accounting upon loss of control,
however no gain or loss is recognized upon deconsolidation and the carrying value of the investment in Lextar is based on the Companys proportion interest of the net book value of Lextar on the date of deconsolidation.



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| |  | F-63 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



The Company initially recognized deferred revenue in the amount of NT$966,600
(equivalent to US$30,000) thousand for its contribution of technology to AUSP; see note 10. Under US GAAP, the remaining NT$793,993 (US$26,230) thousand as of December 31, 2011 was reclassified as a reduction to the carrying amount of the
equity-method investment in AUSP. This remaining amount will continue to be amortized into income.



| | (e) | Convertible bonds
| | --- | -----------------

The Company
issued unsecured overseas convertible bonds in October 2010, namely ECB 4, which was recorded in its entirety as a liability at fair value at the date of issuance under US GAAP. The difference between fair value and redemption value at the date of
issuance is recorded as a discount, and amortized over the redemption period using the effective interest rate method.

Under
US GAAP, management concluded that the conversion features for the overseas convertible bonds qualified as embedded derivative instruments under FASB ASC Topic 815, as these bonds are denominated in a currency that is different from AUOs
functional currency, and therefore was required to be bifurcated from the debt hosts. Management further concluded that the call options embedded in the convertible bonds did not meet the definition of embedded derivative instrument under FASB ASC
Topic 815, as they were considered to be clearly and closely related to the debt hosts. As a result, under US GAAP, ECB 4 was recorded at the fair value at the date of issuance without taking into account the embedded conversion options. The
relative issuance terms of ECB 4 was described at note 15.

The reconciliation of net income determined in accordance with ROC
GAAP and US GAAP for the year ended December 31, 2010 and 2011, included the impact of changes in the fair value of the embedded derivative instrument liability of NT$(678,777) thousand, and NT$780,564 (US$25,787) thousand, respectively,
which is recognized only for US GAAP purposes.



| | (f) | Shareholders stock dividends
| | --- | -----------------------------

Under ROC GAAP, shareholders stock dividends paid are recorded at par value, with a charge to retained earnings. Under US GAAP, generally, if the ratio of distribution is less than 25% of the
same class of shares outstanding, the fair value of the shares issued should be charged to retained earnings. The stock dividends issued in 2009 decreased retained earnings and increased capital surplus by NT$5,486,189 thousand.



| | (g) | Defined pension benefits
| | --- | ------------------------

Effective January 1, 1998, the Company adopted ROC SFAS No. 18, which is not materially different from FASB ASC Topic 715,
CompensationRetirement Benefits, with the exception of the accounting upon adoption. Pension expense under ROC GAAP differs with US GAAP primarily as a result of unrecognized prior service cost.

In 2006, the Company adopted FASB ASC Topic 715, which requires the recognition of the funded status of a defined benefit plan on the
balance sheet and the recognition of changes in funded status in the year in which the changes occur through comprehensive income. The adoption of FASB ASC Topic 715 had no effect on the statements of operations for the periods presented. Previously
unrecognized items such as gains or losses, prior service costs and the transition asset or liability are required to be recognized in other comprehensive income and subsequently recognized through net periodic benefit cost. Under ROC GAAP, it is
not required to recognize such previously unrecognized items.



| | (h) | Depreciation of buildings
| | --- | -------------------------

Under
ROC GAAP, the Company depreciates buildings over 20 to 50 years in accordance with the relevant provisions of the ROC Internal Revenue Code. Under US GAAP, buildings are depreciated over their estimated useful lives.



| | (i) | Hedging derivative financial instruments
| | --- | ----------------------------------------

Upon the adoption of ROC SFAS No. 34 on January 1, 2006, there was no material difference between the accounting under ROC GAAP and US GAAP for hedging derivative financial instruments
executed on or after January 1, 2006, except that ROC SFAS No. 34 permits the designation of derivatives entered into before the date of initial adoption on January 1, 2006, as effective hedge. In 2009, derivative financial
instruments executed before January 1, 2006 and designated by the Company as cash flow hedges upon the adoption of ROC SFAS No. 34 were fully closed and settled in the current year.



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| |  | F-64 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (j) | Compensated absences
| | --- | --------------------

Under ROC
GAAP, the Company is not required to accrue for earned but unused vacation at the end of each year. Under US GAAP, earned but unused vacation that can be carried over to subsequent periods is accrued at each balance sheet date.



| | (k) | Research and development expense
| | --- | --------------------------------

Under ROC GAAP, the amortization of patent and licensing fees for product and process technology is included in the research and
development expense. Under US GAAP, the amortization expense is included in the cost of goods sold.



| | (l) | Operating leases
| | --- | ----------------

The Company
entered into certain non-cancelable lease agreements with rental payments subject to escalation adjustments of 5% each year. Under ROC GAAP, fixed escalation of rental payment is recognized as it becomes payable. Under US GAAP, fixed escalation
of rental payments is recognized on a straight-line basis over the lease term.



| | (m) | Income taxes
| | --- | ------------

The statutory
income tax rate in the Republic of China is 25% before 2009. In May 2009, the ROC Income Tax Act was revised to reduce the statutory tax rate to 20% effective from 2010. In June 2010, the Republic of China government promulgated another amendment of
the Income Tax Law to reduce the income tax rate from 20% to 17%, effective retroactively on January 1, 2010. In addition, an additional 10% corporation income tax is imposed but only to the extent that earnings is not distributed before the
end of the subsequent year. The additional income tax, or the undistributed earnings surtax, is determined in the subsequent year when the distribution plan relating to earnings attributable to the preceding year is approved by the Companys
stockholders. The actual payment of the undistributed earnings surtax will then become due and payable in the year following the finalization of the distribution plan.

Once the 10% tax is determined, the Company will not be entitled to any additional credit or refund, even if the current years undistributed earnings on which such tax was based are distributed in
future years, in which case the shareholders, but not the Company, can claim an income tax credit.

Under ROC GAAP, the
undistributed earnings surtax is recorded as tax expense in the period during which the stockholders approve the amount of the earnings distribution. For US GAAP purposes, the 10% tax on unappropriated earnings is accrued during the period the
earnings arise and adjusted to the extent that distributions are approved by the shareholders in the following years. For US GAAP purpose, the tax rate used by the Company to measure its income tax expenses by using effective rate was 27.2% for
the year of 2009, and 24.47% for the years from and after 2010.

Under US GAAP, management considered that the cumulative
losses in recent years is a significant piece of negative evidence that could not be overcome. Consequently, a valuation allowance was recognized for substantially all of the deferred tax assets at December 31, 2011.



| | (n) | Earnings (loss) per common share
| | --- | --------------------------------

Under ROC GAAP, basic (L)EPS are computed by dividing net income (loss) by the weighted-average number of common shares outstanding during
the year. Diluted EPS are computed by taking into account the basic (L)EPS and additional common shares that would have been outstanding if the potential dilutive share equivalents had been issued. The net income (loss) is also adjusted for the
interest and other income or expense derived from any underlying dilutive share equivalents. The weighted-average outstanding shares are retroactively adjusted for the effects of stock dividends transferred from retained earnings and capital surplus
to common stock, and employee stock bonuses issued prior to January 1, 2009. Effective January 1, 2009, and under ROC GAAP, EPS are not restated for employee stock bonuses.

Under ROC GAAP, the weighted-average number of common shares outstanding during the year in computing diluted EPS is adjusted to include
the effects of dilutive potential common stock related to employee bonuses, assuming the employee bonuses were to be distributed entirely by way of stock bonuses. Under US GAAP, the employee bonuses are estimated based on the minimum cash value
to be paid, as management is unable to estimate the fair value of the stock award, if any, if the arrangement requires the payment in shares. Due to the contingent nature of employee stock bonuses, they are not included in the diluted EPS
calculation.



| | (o) | Principles of consolidation
| | --- | ---------------------------

As
described in note 1, AUO purchased a 49% ownership interest in Toppan CFI and has an agreement in place. Under ROC GAAP, the Company consolidated Toppan CFI in accordance with ROC SFAS No. 7. Under US GAAP, AUO determined that Toppan CFI
is a variable interest entity (VIE) under FASB ASC Subtopic 810-10, ConsolidationOverall, and AUO is considered the primary beneficiary. Therefore, the Company consolidated Toppan CFI in accordance with FASB ASC
Subtopic 810-10 starting from fiscal year 2007. Under FASB ASC Subtopic 810-10, the assets and liabilities of the VIE are recorded at fair value (including the portion attributable to noncontrolling interests). Under ROC GAAP, when the
acquirers interest in the acquiree is less than 100 percent, assets and liabilities are adjusted to reflect fair value only to the extent of the acquirers interest in the acquiree.



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| |  | F-65 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (p) | Impairment of long-lived assets
| | --- | -------------------------------

Under ROC GAAP and US GAAP, long-lived assets (excluding goodwill and other indefinite lived assets) are evaluated for impairment
whenever events and changes in circumstances indicate that an asset or asset group may be impaired and the carrying amounts of these assets may not be recoverable. An asset or asset group is based on the lowest level of identifiable cash flows.
Under ROC GAAP, the Company determines whether an asset or asset group is impaired by comparing the carrying amount of the asset or asset group to its recoverable amount, which is the higher of the assets net fair value or the value in use
determined by the future discounted cash flows to be generated by the asset or asset group and recognize an impairment loss, if any, to the extent that its carrying amount exceeds its recoverable amount. If there is evidence that impairment losses
recognized previously no longer exists, or has diminished, and the recoverable amount of the long-lived assets increases because of an increase in the assets estimated service potential, the amount of loss may be reversed to the extent that
the resulting carrying value should not exceed the carrying value had no impairment loss been recognized in prior years. Under US GAAP, the Company compares the carrying amount of an asset or asset group with its undiscounted cash flows to
evaluate whether the asset or asset group is impaired and recognize an impairment loss equal to the excess of the carrying amount over its estimated fair value derived from discounted cash flows analysis. Such impairment cannot be reversed. Based on
management assessments, under US GAAP, the Company had no impairment charges on long-lived assets for the year ended December 31, 2009, 2010 and 2011.



| | (q) | Goodwill
| | --- | --------

Goodwill is subject to
an annual impairment test or more frequently whenever events and circumstances change indicating the goodwill may be impaired. Under ROC GAAP, managements assessment of impairment includes identifying the cash generating unit
(CGU), determining the recoverable amount of the CGU and comparing the recoverable amount with the carrying value of CGU. The recoverable amount is the higher of the value in use (discounted entity specific future cash flows) and the
fair value less costs to sell. If the recoverable amount of the CGU is lower than the carrying amount of the CGU, an impairment loss is recognized for goodwill first until it is reduced to zero. Any remaining impairment is then allocated to other
long-lived assets

The Company has determined that it has two CGUs under ROC GAAP, and two reporting units under US GAAP,
which are display business unit and solar business unit, for purposes of testing goodwill for impairment. Under US GAAP, pursuant to FASB ASC Topic 350, IntangiblesGoodwill and others, impairment is the condition that exists
when the carrying amount of goodwill exceeds its implied fair value. Under US GAAP, the goodwill impairment test is a two-step test.

The first step, the Company compares the fair value of each reporting unit with its carrying amount on a US GAAP basis on the impairment evaluation date to determine if goodwill is potentially
impaired. If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit, and the Company proceeds to perform step two of the impairment test (i.e., measurement). Under
step two, an impairment loss is recognized for any excess of the carrying amount of the reporting units goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the
reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Unlike ROC GAAP, a value in use type of measurement in not
acceptable in determining fair value of the report unit. Under US GAAP, fair value of the reporting unit is the price that would be received to sell the reporting unit in an orderly transaction between market participants at the measurement
based on market participant assumptions utilizing observable inputs to the extent possible. The Company determines the fair value under US GAAP of the reporting unit using a discounted cash flow approach based on market participant assumptions.
If the fair value of the reporting unit exceeds its carrying value, goodwill of the reporting unit is considered not impaired; therefore, step two test is unnecessary. The Company performs its annual impairment review of goodwill at June 30 and
when a triggering event occurs between annual impairment test dates.

The Company entered the solar business with its
acquisition of M. Setek in October, 2009. The acquisition resulted in the recognition of a gain on bargain purchase under US GAAP and no goodwill was recognized. Therefore, there is no need to test the solar reporting unit for goodwill
impairment because there is no goodwill allocated to it.



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| |  | F-66 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



The Company performed its annual goodwill impairment test at June 30, 2011 to
evaluate the potential impairment of the goodwill of the display reporting unit. The Company estimated the fair value of the display and solar business reporting units by using the discounted cash flow approach. In addition, for the purpose of
analyzing the reasonableness of the fair value deriving from the discounted cash flow approach, the Company also compared the aggregate sum of the fair value measurements of its display and solar reporting units to its market capitalization at
June 30, 2011 based on the quoted

market price of the Companys shares, adjusted it by an appropriate control
premium. Management believes the control premium represents the additional amount that a buyer would be willing to pay to obtain a controlling voting interest in the Company as a result of the ability to take advantage of synergies and other
benefits. To determine an appropriate control premium, references were made to recent and comparable merger and acquisition transactions in the high-tech electronics industry. Based on managements assessments, the estimated fair value of the
display reporting unit exceeded its carrying amount at June 30, 2011. Therefore, management concluded that goodwill was not impaired for the display reporting unit, and step two of the goodwill impairment test under FASB ASC Topic 350 was not
necessary.

During the second half of 2011, the quoted market price of our capital shares had sustained a further decline
resulting in our market capitalization becoming substantially lower at December 31, 2011. Consequently, management determined the need for an additional test for goodwill impairment at December 31, 2011. As a result of that additional
assessment, the estimated fair value of the display reporting unit exceeded its carrying amount at December 31, 2011. Therefore, management concluded that goodwill was not impaired for the display reporting unit and, accordingly, no impairment
charge was recorded at December 31, 2011.

The Company performed an analysis at June 30, 2010 to evaluate the
potential impairment of the goodwill of the display reporting unit. The valuation methodology of performing the goodwill impairment test was the same with that utilizing at June 30, 2011. Based on managements assessments, under the first
step, the estimated fair value of the display reporting unit exceeded its carrying amount at June 30, 2010. Therefore, management concluded that goodwill was not impaired, and step two of the goodwill impairment test was not necessary. In
addition, no triggering events occurred between annual impairment test dates.

In 2009, Under US GAAP, management
determined that the Company in essence only has one reporting unit for purposes of testing goodwill for impairment, which is the enterprise as a whole. On June 30, 2009, management compared the carrying amount of total stockholders equity
consolidated on a US GAAP basis to market value based on the quoted market price of the Companys shares on the date of assessment to determine if goodwill is potentially impaired. Management did the test again for goodwill impairment on
December 31, 2009. Based on the assessments mentioned above, management concluded that goodwill was not impaired under both ROC GAAP and US GAAP.



| | (r) | Potential antitrust loss
| | --- | ------------------------

Under
ROC GAAP, the provision for potential antitrust losses is usually recognized in the consolidated statement of operations as a non-operating expense.

Under US GAAP, the provision for potential antitrust losses is recognized in the condensed consolidated statement of operations as an operating expense.



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| |  | F-67 |  | (Continued)



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##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (s) | US GAAP reconciliations
| | --- | -----------------------



| | (1) | Reconciliation of consolidated net income (loss) attributable to the stockholders of AU Optronics Corp.
| | --- | -------------------------------------------------------------------------------------------------------



|                                                                                           |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|------------------------------------------------------------------------------------------ |  | ----------------------------------------- | ----------- | - | ---- |  | ---------- | ---- |  |  | ----------- | - |  |  | ---------- | -
|                                                                                           |  | For the year ended December 31,           |            
|                                                                                           |  | 2009                                      |             |   | 2010 |  |            | 2011 | 
|                                                                                           |  | NT$                                       |             |   | NT$  |  |            | NT$  |  |  | US$         |  
|                                                                                           |  | (in thousands, except for per share data) |            
|Net income (loss) attributable to stockholders of AU Optronics Corp., ROC GAAP             |  |                                           | (26,769,335 | ) |      |  | 6,692,657  |      |  |  | (61,263,814 | ) |  |  | (2,023,912 | )
|US GAAP adjustments:                                                                       |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|a)      Purchase method of accounting for acquisition of Unipac                            |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|- Depreciation                                                                             |  |                                           | (79,663     | ) |      |  | (36,311    | )    |  |  | (59,405     | ) |  |  | (1,963     | )
|- Disposals of available-for-sale securities                                               |  |                                           | 136,731     |   |      |  |           |      |  |  |            |   |  |  |           |  
|Acquisition method of accounting for acquisition of M. Setek                               |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|- Impairment loss                                                                          |  |                                           | 653,609     |   |      |  |           |      |  |  |            |   |  |  |           |  
|- Re-measurement loss                                                                      |  |                                           | (1,445,660  | ) |      |  |           |      |  |  |            |   |  |  |           |  
|- Gain on bargain purchase                                                                 |  |                                           | 162,682     |   |      |  |           |      |  |  |            |   |  |  |           |  
|Acquisition method of accounting for others                                                |  |                                           | 41,099      |   |      |  | 10,515     |      |  |  | 37,875      |   |  |  | 1,251      |  
|b)      Noncontrolling interests                                                           |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|- Decrease in ownership not resulting in loss of control                                   |  |                                           | 28,323      |   |      |  | (124,845   | )    |  |  |            |   |  |  |           |  
|c)      Compensation                                                                       |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|- Employee bonuses                                                                         |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|- Adjustment to fair value                                                                 |  |                                           | (216,324    | ) |      |  |           |      |  |  |            |   |  |  |           |  
|d)      Long-term equity investments                                                       |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|- Investment losses                                                                        |  |                                           | (36,241     | ) |      |  | 30,426     |      |  |  | (17,494     | ) |  |  | (578       | )
|- Disposal gain                                                                            |  |                                           |            |   |      |  |           |      |  |  | 31,189      |   |  |  | 1,030      |  
|- Impairment loss                                                                          |  |                                           |            |   |      |  |           |      |  |  | (1,801,856  | ) |  |  | (59,526    | )
|d)      Deconsolidation of subsidiary                                                      |  |                                           |            |   |      |  | 362,842    |      |  |  |            |   |  |  |           |  
|e)      Convertible bonds                                                                  |  |                                           |            |   |      |  | (678,777   | )    |  |  | 780,564     |   |  |  | 25,787     |  
|g)      Pension expense                                                                    |  |                                           | 1,979       |   |      |  | 1,707      |      |  |  | 1,466       |   |  |  | 49         |  
|h)      Depreciation of buildings                                                          |  |                                           | (2,209,816  | ) |      |  | (2,367,968 | )    |  |  | (2,835,733  | ) |  |  | (93,681    | )
|i)       Hedging derivative financial instruments                                          |  |                                           | (32,625     | ) |      |  |           |      |  |  |            |   |  |  |           |  
|j)       Compensated absences expense                                                      |  |                                           | (230,102    | ) |      |  | (41,294    | )    |  |  | (31,974     | ) |  |  | (1,056     | )
|k)      Escalation adjustment of rent expense                                              |  |                                           | 2,129       |   |      |  | 2,129      |      |  |  | 2,129       |   |  |  | 70         |  
|l)       Tax effect of the above US GAAP adjustments                                       |  |                                           | 1,031,220   |   |      |  | 920,039    |      |  |  | 536,560     |   |  |  | 17,726     |  
|m)    Valuation allowance for deferred tax assets related to the above US GAAP
adjustments |  |                                           | (96,163     | ) |      |  | (54,527    | )    |  |  | (16,368,774 | ) |  |  | (540,759   | )
|n)      10% surtax on undistributed retained earnings and others                           |  |                                           | 387,836     |   |      |  | (472,270   | )    |  |  | 41,042      |   |  |  | 1,356      |  
|                                                                                           |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|Net income (loss) attributable to stockholders of AU Optronics Corp., US GAAP              |  |                                           | (28,670,321 | ) |      |  | 4,244,323  |      |  |  | (80,948,225 | ) |  |  | (2,674,206 | )
|                                                                                           |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|Earnings (loss) per share:                                                                 |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|Basic                                                                                      |  |                                           | (3.26       | ) |      |  | 0.48       |      |  |  | (9.17       | ) |  |  | (0.30      | )
|                                                                                           |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|Diluted                                                                                    |  |                                           | (3.26       | ) |      |  | 0.48       |      |  |  | (9.17       | ) |  |  | (0.30      | )
|                                                                                           |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|Weighted-average number of shares outstanding (in thousands):                              |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|Basic                                                                                      |  |                                           | 8,785,178   |   |      |  | 8,827,046  |      |  |  | 8,827,046   |   |  |  |            |  
|                                                                                           |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|Diluted                                                                                    |  |                                           | 8,785,178   |   |      |  | 8,827,046  |      |  |  | 8,827,046   |   |  |  |            |  
|                                                                                           |  |                                           |             |   |      |  |            |      |  |  |             |   |  |  |            |  



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-68 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (2) | Reconciliation of consolidated equity attributable to the stockholders of AU Optronics Corp.:
| | --- | ---------------------------------------------------------------------------------------------



|                                                                    |  |                |             |   |      |  |             |     |  |  |           |  
|------------------------------------------------------------------- |  | -------------- | ----------- | - | ---- |  | ----------- | --- |  |  | --------- | -
|                                                                    |  | December 31,   |            
|                                                                    |  | 2010           |             |   | 2011 | 
|                                                                    |  | NT$            |             |   | NT$  |  |             | US$ | 
|                                                                    |  | (in thousands) |            
|Equity attributable to stockholders of AU Optronics Corp., ROC GAAP |  |                | 268,160,933 |   |      |  | 205,388,716 |     |  |  | 6,785,224 |  
|a)      Purchase method of accounting for acquisition of Unipac     |  |                |             |   |      |  |             |     |  |  |           |  
|- Goodwill                                                          |  |                | 10,946,732  |   |      |  | 10,946,732  |     |  |  | 361,636   |  
|- Other assets                                                      |  |                | (143,200    | ) |      |  | (202,605    | )   |  |  | (6,693    | )
|Acquisition method of accounting for acquisition of
M. Setek        |  |                |             |   |      |  |             |     |  |  |           |  
|- Impairment loss                                                   |  |                | 653,609     |   |      |  | 653,609     |     |  |  | 21,593    |  
|- Re-measurement loss                                               |  |                | (1,445,660  | ) |      |  | (1,445,660  | )   |  |  | (47,759   | )
|- Gain on bargain purchase                                          |  |                | 162,682     |   |      |  | 162,682     |     |  |  | 5,374     |  
|Acquisition method of accounting for other                          |  |                | 51,614      |   |      |  | 89,489      |     |  |  | 2,956     |  
|d)      Subsidiaries and long-term equity investments               |  |                |             |   |      |  |             |     |  |  |           |  
|-Adjustment for changes in investees equity                        |  |                | 3,469,074   |   |      |  | 3,313,811   |     |  |  | 109,475   |  
|-Deconsolidation of subsidiary                                      |  |                | 359,902     |   |      |  | 359,902     |     |  |  | 11,890    |  
|-Impairment of equity investee                                      |  |                | (1,928,709  | ) |      |  | (3,730,565  | )   |  |  | (123,243  | )
|d)      Cumulative translation adjustments                          |  |                | 38,346      |   |      |  | (4,161      | )   |  |  | (137      | )
|e)      Convertible bonds                                           |  |                | (780,564    | ) |      |  |            |     |  |  |          |  
|g)      Defined benefit plan                                        |  |                |             |   |      |  |             |     |  |  |           |  
|- Accrued pension cost                                              |  |                | (19,002     | ) |      |  | (17,546     | )   |  |  | (580      | )
|- Recognition of funded status under FASB ASC Subtopic 715-60       |  |                | (756,028    | ) |      |  | (852,552    | )   |  |  | (28,165   | )
|h)      Accumulated depreciation of buildings                       |  |                | (10,857,477 | ) |      |  | (13,693,210 | )   |  |  | (452,369  | )
|j)       Accrued compensated absences                               |  |                | (433,102    | ) |      |  | (465,076    | )   |  |  | (15,364   | )
|l)       Accrued rental expense and adjustment to land cost         |  |                | (94,410     | ) |      |  | (92,281     | )   |  |  | (3,049    | )
|m)    Deferred income tax assets and liabilities                    |  |                | 3,005,319   |   |      |  | (12,752,604 | )   |  |  | (421,295  | )
|                                                                    |  |                |             |   |      |  |             |     |  |  |           |  
|Equity attributable to stockholders of AU Optronics Corp., US GAAP  |  |                | 270,390,059 |   |      |  | 187,658,681 |     |  |  | 6,199,494 |  
|                                                                    |  |                |             |   |      |  |             |     |  |  |           |  

| | (t) | US GAAP condensed consolidated financial statements
| | --- | ---------------------------------------------------



| | (1) | Condensed consolidated balance sheets
| | --- | -------------------------------------



|                                                          |  |                |             |  |      |  |             |     |  |  |            | 
|--------------------------------------------------------- |  | -------------- | ----------- |  | ---- |  | ----------- | --- |  |  | ---------- | 
|                                                          |  | December 31,   |            
|                                                          |  | 2010           |             |  | 2011 | 
|                                                          |  | NT$            |             |  | NT$  |  |             | US$ | 
|                                                          |  | (in thousands) |            
|Assets                                                    |  |                |             |  |      |  |             |     |  |  |            | 
|Current assets                                            |  |                | 205,289,002 |  |      |  | 200,534,190 |     |  |  | 6,624,849  | 
|Long-term investments                                     |  |                | 17,063,593  |  |      |  | 15,314,850  |     |  |  | 505,942    | 
|Property, plant and equipment, net                        |  |                | 376,453,239 |  |      |  | 348,452,734 |     |  |  | 11,511,488 | 
|Goodwill and intangible assets                            |  |                | 24,834,781  |  |      |  | 26,199,253  |     |  |  | 865,519    | 
|Other assets                                              |  |                | 7,481,711   |  |      |  | 4,559,681   |     |  |  | 150,633    | 
|                                                          |  |                |             |  |      |  |             |     |  |  |            | 
|Total Assets                                              |  |                | 631,122,326 |  |      |  | 595,060,708 |     |  |  | 19,658,431 | 
|                                                          |  |                |             |  |      |  |             |     |  |  |            | 
|Liabilities and Equity                                    |  |                |             |  |      |  |             |     |  |  |            | 
|Current liabilities                                       |  |                | 190,887,914 |  |      |  | 205,026,818 |     |  |  | 6,773,268  | 
|Long-term liabilities                                     |  |                | 156,860,672 |  |      |  | 187,559,221 |     |  |  | 6,196,208  | 
|Equity attributable to stockholders of AU Optronics Corp. |  |                | 270,390,059 |  |      |  | 187,658,681 |     |  |  | 6,199,494  | 
|Noncontrolling interests                                  |  |                | 12,983,681  |  |      |  | 14,815,988  |     |  |  | 489,461    | 
|                                                          |  |                |             |  |      |  |             |     |  |  |            | 
|Total Liabilities and Equity                              |  |                | 631,122,326 |  |      |  | 595,060,708 |     |  |  | 19,658,431 | 
|                                                          |  |                |             |  |      |  |             |     |  |  |            | 



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-69 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (2) | Condensed consolidated statements of operations
| | --- | -----------------------------------------------



|                                                                     |  |                                 |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|-------------------------------------------------------------------- |  | ------------------------------- | ----------- | - | ---- |  | ----------- | ---- |  |  | ----------- | - |  |  | ---------- | -
|                                                                     |  | For the year ended December 31, |            
|                                                                     |  | 2009                            |             |   | 2010 |  |             | 2011 | 
|                                                                     |  | NT$                             |             |   | NT$  |  |             | NT$  |  |  | US$         |  
|                                                                     |  | (in thousands)                  |            
|Net sales                                                            |  |                                 | 358,732,803 |   |      |  | 467,157,964 |      |  |  | 379,711,877 |   |  |  | 12,544,165 |  
|Cost of goods sold                                                   |  |                                 | 357,966,412 |   |      |  | 435,549,584 |      |  |  | 414,029,624 |   |  |  | 13,677,886 |  
|                                                                     |  |                                 |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Gross profit (loss)                                                  |  |                                 | 766,391     |   |      |  | 31,608,380  |      |  |  | (34,317,747 | ) |  |  | (1,133,721 | )
|Operating expenses                                                   |  |                                 | 29,076,075  |   |      |  | 26,209,188  |      |  |  | 33,450,570  |   |  |  | 1,105,074  |  
|                                                                     |  |                                 |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Operating income (loss)                                              |  |                                 | (28,309,684 | ) |      |  | 5,399,192   |      |  |  | (67,768,317 | ) |  |  | (2,238,795 | )
|Non-operating income (expenses), net                                 |  |                                 | (1,352,661  | ) |      |  | 69,188      |      |  |  | (1,855,493  | ) |  |  | (61,298    | )
|                                                                     |  |                                 |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Income (loss) before income taxes                                    |  |                                 | (29,662,345 | ) |      |  | 5,468,380   |      |  |  | (69,623,810 | ) |  |  | (2,300,093 | )
|Income tax expense (benefit)                                         |  |                                 | (1,359,533  | ) |      |  | 745,015     |      |  |  | 11,492,354  |   |  |  | 379,661    |  
|                                                                     |  |                                 |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Net income (loss)                                                    |  |                                 | (28,302,812 | ) |      |  | 4,723,365   |      |  |  | (81,116,164 | ) |  |  | (2,679,754 | )
|Less net income (loss) attributable to noncontrolling interests      |  |                                 | 367,509     |   |      |  | 479,042     |      |  |  | (167,939    | ) |  |  | (5,548     | )
|                                                                     |  |                                 |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Net income (loss) attributable to stockholders of AU Optronics Corp. |  |                                 | (28,670,321 | ) |      |  | 4,244,323   |      |  |  | (80,948,225 | ) |  |  | (2,674,206 | )
|                                                                     |  |                                 |             |   |      |  |             |      |  |  |             |   |  |  |            |  



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-70 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (3) | Condensed consolidated statements of comprehensive income (loss) under US GAAP
| | --- | ------------------------------------------------------------------------------



|                                                                               |  |                                 |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|------------------------------------------------------------------------------ |  | ------------------------------- | ----------- | - | ---- |  | ---------- | ---- |  |  | ----------- | - |  |  | ---------- | -
|                                                                               |  | For the year ended December 31, |            
|                                                                               |  | 2009                            |             |   | 2010 |  |            | 2011 | 
|                                                                               |  | NT$                             |             |   | NT$  |  |            | NT$  |  |  | US$         |  
|                                                                               |  | (in thousands)                  |            
|Net income (loss) attributable to stockholders of AU Optronics Corp.           |  |                                 | (28,670,321 | ) |      |  | 4,244,323  |      |  |  | (80,948,225 | ) |  |  | (2,674,206 | )
|                                                                               |  |                                 |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|Other comprehensive income (loss), net of tax:                                 |  |                                 |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|Derivative and hedging activities                                              |  |                                 | 226,874     |   |      |  | 186,593    |      |  |  | 64,742      |   |  |  | 2,139      |  
|Unrealized gains (losses) on securities                                        |  |                                 | 1,680,476   |   |      |  | (725,095   | )    |  |  | (769,843    | ) |  |  | (25,432    | )
|Cumulative translation adjustments                                             |  |                                 | (611,237    | ) |      |  | (634,165   | )    |  |  | 934,722     |   |  |  | 30,879     |  
|Defined benefit plan                                                           |  |                                 | (120,856    | ) |      |  | (298,456   | )    |  |  | (63,557     | ) |  |  | (2,100     | )
|                                                                               |  |                                 |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|Other comprehensive income (loss), net of tax                                  |  |                                 | 1,175,257   |   |      |  | (1,471,123 | )    |  |  | 166,064     |   |  |  | 5,486      |  
|                                                                               |  |                                 |             |   |      |  |            |      |  |  |             |   |  |  |            |  
|Comprehensive income (loss) attributable to stockholders of AU Optronics Corp. |  |                                 | (27,495,064 | ) |      |  | 2,773,200  |      |  |  | (80,782,161 | ) |  |  | (2,668,720 | )
|                                                                               |  |                                 |             |   |      |  |            |      |  |  |             |   |  |  |            |  



|                                                              |  |                                 |         |   |      |  |         |      |  |  |          |   |  |  |        |  
|------------------------------------------------------------- |  | ------------------------------- | ------- | - | ---- |  | ------- | ---- |  |  | -------- | - |  |  | ------ | -
|                                                              |  | For the year ended December 31, |        
|                                                              |  | 2009                            |         |   | 2010 |  |         | 2011 | 
|                                                              |  | NT$                             |         |   | NT$  |  |         | NT$  |  |  | US$      |  
|                                                              |  | (in thousands)                  |        
|Net income (loss) attributable to noncontrolling interests    |  |                                 | 367,509 |   |      |  | 479,042 |      |  |  | (167,939 | ) |  |  | (5,548 | )
|                                                              |  |                                 |         |   |      |  |         |      |  |  |          |   |  |  |        |  
|Other comprehensive income (loss), net of tax:                |  |                                 |         |   |      |  |         |      |  |  |          |   |  |  |        |  
|Derivative and hedging activities                             |  |                                 | 123     |   |      |  | 34      |      |  |  | 411      |   |  |  | 14     |  
|Unrealized gains on securities                                |  |                                 | 135     |   |      |  | 592     |      |  |  | 815      |   |  |  | 27     |  
|Cumulative translation adjustments                            |  |                                 | (73,534 | ) |      |  | 33,342  |      |  |  | 334,696  |   |  |  | 11,057 |  
|Defined benefit plan                                          |  |                                 | (2,269  | ) |      |  | (3,965  | )    |  |  | 435      |   |  |  | 14     |  
|                                                              |  |                                 |         |   |      |  |         |      |  |  |          |   |  |  |        |  
|Other comprehensive income (loss), net of tax                 |  |                                 | (75,545 | ) |      |  | 30,003  |      |  |  | 336,357  |   |  |  | 11,112 |  
|                                                              |  |                                 |         |   |      |  |         |      |  |  |          |   |  |  |        |  
|Comprehensive income attributable to noncontrolling interests |  |                                 | 291,964 |   |      |  | 509,045 |      |  |  | 168,418  |   |  |  | 5,564  |  
|                                                              |  |                                 |         |   |      |  |         |      |  |  |          |   |  |  |        |  



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-71 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (4) | Changes in equity attributable to AU Optronics Corp., noncontrolling interests and total equity under US GAAP
| | --- | -------------------------------------------------------------------------------------------------------------



|                                                       |  |                                              |             |   |                         |  |            |             |  |  |             |  
|------------------------------------------------------ |  | -------------------------------------------- | ----------- | - | ----------------------- |  | ---------- | ----------- |  |  | ----------- | -
|                                                       |  | Years ended December 31, 2009, 2010 and 2011 |            
|                                                       |  | Equityattributable toAU OptronicsCorp.       |             |   | Noncontrollinginterests |  |            | Totalequity | 
|                                                       |  | (in thousands)                               |            
|Balance at January 1, 2009                             |  |                                              | 293,391,868 |   |                         |  | 7,737,213  |             |  |  | 301,129,081 |  
|Employees profit sharingcash                         |  |                                              | 2,226,093   |   |                         |  |           |             |  |  | 2,226,093   |  
|Cash dividends                                         |  |                                              | (2,551,716  | ) |                         |  |           |             |  |  | (2,551,716  | )
|Net transfer from noncontrolling interest              |  |                                              | 31,232      |   |                         |  | (31,232    | )           |  |  |            |  
|Proceeds from subsidiaries capital increase            |  |                                              |            |   |                         |  | 2,445,262  |             |  |  | 2,445,262   |  
|Effect of inclusion of newly consolidated subsidiaries |  |                                              |            |   |                         |  | 1,762,956  |             |  |  | 1,762,956   |  
|Other changes in equity                                |  |                                              | 666,569     |   |                         |  | (458,651   | )           |  |  | 207,918     |  
|Comprehensive income (loss):                           |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Net income (loss)                                      |  |                                              | (28,670,321 | ) |                         |  | 367,509    |             |  |  | (28,302,812 | )
|Other comprehensive income, net of tax:                |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Derivative and hedging activities                      |  |                                              | 226,874     |   |                         |  | 123        |             |  |  | 226,997     |  
|Unrealized gains on securities                         |  |                                              | 1,680,476   |   |                         |  | 135        |             |  |  | 1,680,611   |  
|Cumulative translation adjustments                     |  |                                              | (611,237    | ) |                         |  | (73,534    | )           |  |  | (684,771    | )
|Defined benefit plan                                   |  |                                              | (120,856    | ) |                         |  | (2,269     | )           |  |  | (123,125    | )
|                                                       |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Comprehensive income (loss)                            |  |                                              | (27,495,064 | ) |                         |  | 291,964    |             |  |  | (27,203,100 | )
|                                                       |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Balance at December 31, 2009                           |  |                                              | 266,268,982 |   |                         |  | 11,747,512 |             |  |  | 278,016,494 |  
|                                                       |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Cash dividends                                         |  |                                              |            |   |                         |  | (238,860   | )           |  |  | (238,860    | )
|Net transfer from noncontrolling interest              |  |                                              | 1,143,234   |   |                         |  | (1,143,234 | )           |  |  |            |  
|Proceeds from subsidiaries capital increase            |  |                                              |            |   |                         |  | 4,338,348  |             |  |  | 4,338,348   |  
|Effect of deconsolidation of subsidiary                |  |                                              | (2,940      | ) |                         |  | (3,870,141 | )           |  |  | (3,873,081  | )
|Other changes in equity                                |  |                                              | 207,583     |   |                         |  | 1,641,011  |             |  |  | 1,848,594   |  
|Comprehensive income (loss):                           |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Net income                                             |  |                                              | 4,244,323   |   |                         |  | 479,042    |             |  |  | 4,723,365   |  
|Other comprehensive income, net of tax:                |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Derivative and hedging activities                      |  |                                              | 186,593     |   |                         |  | 34         |             |  |  | 186,627     |  
|Unrealized gains (losses) on securities                |  |                                              | (725,095    | ) |                         |  | 592        |             |  |  | (724,503    | )
|Cumulative translation adjustments                     |  |                                              | (634,165    | ) |                         |  | 33,342     |             |  |  | (600,823    | )
|Defined benefit plan                                   |  |                                              | (298,456    | ) |                         |  | (3,965     | )           |  |  | (302,421    | )
|                                                       |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Comprehensive income                                   |  |                                              | 2,773,200   |   |                         |  | 509,045    |             |  |  | 3,282,245   |  
|                                                       |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Balance at December 31, 2010                           |  |                                              | 270,390,059 |   |                         |  | 12,983,681 |             |  |  | 283,373,740 |  
|                                                       |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Cash dividends                                         |  |                                              | (3,530,818  | ) |                         |  | (406,427   | )           |  |  | (3,937,245  | )
|Net transfer from noncontrolling interes               |  |                                              | 1,079,577   |   |                         |  | (1,079,577 | )           |  |  |            |  
|Proceeds from subsidiaries capital increase            |  |                                              |            |   |                         |  | 3,230,026  |             |  |  | 3,230,026   |  
|Other changes in equity                                |  |                                              | 502,024     |   |                         |  | (80,133    | )           |  |  | 421,891     |  
|Comprehensive income (loss):                           |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Net loss                                               |  |                                              | (80,948,225 | ) |                         |  | (167,939   | )           |  |  | (81,116,164 | )
|Other comprehensive income, net of tax:                |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Derivative and hedging activities                      |  |                                              | 64,742      |   |                         |  | 411        |             |  |  | 65,153      |  
|Unrealized gains (losses) on securities                |  |                                              | (769,843    | ) |                         |  | 815        |             |  |  | (769,028    | )
|Cumulative translation adjustments                     |  |                                              | 934,722     |   |                         |  | 334,696    |             |  |  | 1,269,418   |  
|Defined benefit plan                                   |  |                                              | (63,557     | ) |                         |  | 435        |             |  |  | (63,122     | )
|                                                       |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Comprehensive income (loss)                            |  |                                              | (80,782,161 | ) |                         |  | 168,418    |             |  |  | (80,613,743 | )
|                                                       |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Balance at December 31, 2011                           |  |                                              | 187,658,681 |   |                         |  | 14,815,988 |             |  |  | 202,474,669 |  
|                                                       |  |                                              |             |   |                         |  |            |             |  |  |             |  
|Balance at December 31, 2011 (in US$)                  |  |                                              | 6,199,494   |   |                         |  | 489,461    |             |  |  | 6,688,955   |  
|                                                       |  |                                              |             |   |                         |  |            |             |  |  |             |  



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-72 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (5) | Condensed consolidated statements of cash flows
| | --- | -----------------------------------------------



|                                                            |  |                                 |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|----------------------------------------------------------- |  | ------------------------------- | ----------- | - | ---- |  | ----------- | ---- |  |  | ----------- | - |  |  | ---------- | -
|                                                            |  | For the year ended December 31, |            
|                                                            |  | 2009                            |             |   | 2010 |  |             | 2011 | 
|                                                            |  | NT$                             |             |   | NT$  |  |             | NT$  |  |  | US$         |  
|                                                            |  | (in thousands)                  |            
|Net cash provided by (used in):                             |  |                                 |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Operating activities                                        |  |                                 | 58,566,108  |   |      |  | 90,852,162  |      |  |  | 14,429,301  |   |  |  | 476,687    |  
|Investing activities                                        |  |                                 | (68,550,309 | ) |      |  | (87,866,077 | )    |  |  | (58,072,742 | ) |  |  | (1,918,492 | )
|Financing activities                                        |  |                                 | 11,467,617  |   |      |  | 1,393,867   |      |  |  | 45,849,997  |   |  |  | 1,514,701  |  
|Effect of exchange rate change on cash and cash equivalents |  |                                 | 525,198     |   |      |  | (327,772    | )    |  |  | (868,379    | ) |  |  | (28,688    | )
|                                                            |  |                                 |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Net change in cash and cash equivalents                     |  |                                 | 2,008,614   |   |      |  | 4,052,180   |      |  |  | 1,338,177   |   |  |  | 44,208     |  
|Cash and cash equivalents at beginning of year              |  |                                 | 83,434,697  |   |      |  | 85,443,311  |      |  |  | 89,495,491  |   |  |  | 2,956,574  |  
|                                                            |  |                                 |             |   |      |  |             |      |  |  |             |   |  |  |            |  
|Cash and cash equivalents at end of year                    |  |                                 | 85,443,311  |   |      |  | 89,495,491  |      |  |  | 90,833,668  |   |  |  | 3,000,782  |  
|                                                            |  |                                 |             |   |      |  |             |      |  |  |             |   |  |  |            |  



|(u) | Additional US GAAP disclosure
|--- | -----------------------------



| | (1) | Available-for-sale securities
| | --- | -----------------------------

The Company holds marketable securities that are classified as available-for-sale securities. Information on available-for-sale securities
held at each balance sheet date is as follows:



|                        |  |       |         |  |                |  |           |                 |  |  |                 |  |  |  |         | 
|----------------------- |  | ----- | ------- |  | -------------- |  | --------- | --------------- |  |  | --------------- |  |  |  | ------- | 
|                        |  |       |         |  |                |  |           | Totalunrealized |  |  | Totalunrealized | 
|                        |  | Cost* |         |  | Fair value     |  |           | gains           |  |  | losses          | 
|                        |  | NT$   |         |  | NT$            |  |           | NT$             |  |  | NT$             | 
|                        |  |       |         |  | (in thousands) |  |           |                 | 
|Long-term investments:  |  |       |         |  |                |  |           |                 |  |  |                 |  |  |  |         | 
|As of December 31, 2010 |  |       | 633,807 |  |                |  | 1,373,687 |                 |  |  | 761,964         |  |  |  | 22,084  | 
|As of December 31, 2011 |  |       | 447,318 |  |                |  | 436,774   |                 |  |  | 124,913         |  |  |  | 135,457 | 



|* | Cost basis as of December 31, 2011, reflects the impact of the other-than-temporary impairment loss of NT$60,307 (US$1,992) thousand, which resulted in a new cost
basis of the related available-for-sale securities.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Gross unrealized losses on available-for-sale securities for
which other-than-temporary impairment has not been recognized at December 31, 2010 and 2011, relate to investments that had been in a continuous unrealized loss position for less than 12 months.

Information on the sale of available-for-sale securities for the years ended December 31, 2009, 2010 and 2011, is summarized as
follows. The costs of the securities sold were determined on a weighted-average basis.



|                                     |  |                |         |  |               |  |         |               |  |  |        | 
|------------------------------------ |  | -------------- | ------- |  | ------------- |  | ------- | ------------- |  |  | ------ | 
|                                     |  | Proceeds       |         |  | Grossrealized |  |         | Grossrealized | 
|                                     |  | from sales     |         |  | gains         |  |         | losses        | 
|                                     |  | NT$            |         |  | NT$           |  |         | NT$           | 
|                                     |  | (in thousands) |        
|For the year ended December 31, 2009 |  |                | 939,158 |  |               |  | 374,372 |               |  |  |       | 
|For the year ended December 31, 2010 |  |                | 716,751 |  |               |  | 547,892 |               |  |  |       | 
|For the year ended December 31, 2011 |  |                | 135,433 |  |               |  | 54,317  |               |  |  | 12,008 | 



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-73 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (2) | Allowance for doubtful accounts, sales returns and discounts (including related parties) and accrued warranty liability
| | --- | -----------------------------------------------------------------------------------------------------------------------

A roll-forward of the allowance for doubtful accounts, and sales returns and discounts is as follows:



|                               |  |                                 |            |   |      |  |            |      |  |  |            |   |  |  |         |  
|------------------------------ |  | ------------------------------- | ---------- | - | ---- |  | ---------- | ---- |  |  | ---------- | - |  |  | ------- | -
|                               |  | For the year ended December 31, |           
|                               |  | 2009                            |            |   | 2010 |  |            | 2011 | 
|                               |  | NT$                             |            |   | NT$  |  |            | NT$  |  |  | US$        |  
|                               |  | (in thousands)                  |           
|Balance at beginning of year   |  |                                 | 1,244,468  |   |      |  | 214,327    |      |  |  | 868,202    |   |  |  | 28,682  |  
|Provisions charged to earnings |  |                                 | 620,393    |   |      |  | 2,035,875  |      |  |  | 2,362,481  |   |  |  | 78,047  |  
|Write-offs                     |  |                                 | (1,650,534 | ) |      |  | (1,382,000 | )    |  |  | (2,697,732 | ) |  |  | (89,122 | )
|                               |  |                                 |            |   |      |  |            |      |  |  |            |   |  |  |         |  
|Balance at end of year         |  |                                 | 214,327    |   |      |  | 868,202    |      |  |  | 532,951    |   |  |  | 17,607  |  
|                               |  |                                 |            |   |      |  |            |      |  |  |            |   |  |  |         |  

A roll-forward of the accrued warranty is as follows:



|                               |  |                                 |           |   |      |  |           |      |  |  |           |   |  |  |         |  
|------------------------------ |  | ------------------------------- | --------- | - | ---- |  | --------- | ---- |  |  | --------- | - |  |  | ------- | -
|                               |  | For the year ended December 31, |          
|                               |  | 2009                            |           |   | 2010 |  |           | 2011 | 
|                               |  | NT$                             |           |   | NT$  |  |           | NT$  |  |  | US$       |  
|                               |  | (in thousands)                  |          
|Balance at beginning of year   |  |                                 | 1,915,016 |   |      |  | 2,313,590 |      |  |  | 2,870,895 |   |  |  | 94,843  |  
|Provisions charged to earnings |  |                                 | 578,645   |   |      |  | 651,953   |      |  |  | 289,179   |   |  |  | 9,553   |  
|Utilization                    |  |                                 | (180,071  | ) |      |  | (94,648   | )    |  |  | (474,737  | ) |  |  | (15,683 | )
|                               |  |                                 |           |   |      |  |           |      |  |  |           |   |  |  |         |  
|Balance at end of year         |  |                                 | 2,313,590 |   |      |  | 2,870,895 |      |  |  | 2,685,337 |   |  |  | 88,713  |  
|                               |  |                                 |           |   |      |  |           |      |  |  |           |   |  |  |         |  



| | (3) | Pension-related benefits
| | --- | ------------------------



| | (i) | Defined benefit pension plans in Taiwan
| | --- | ---------------------------------------

AUO and Toppan CFI have established defined benefit pension plans covering their full-time employees in the Republic of China who joined the Company before July 1, 2005, and elected to participate in
the plans.

One of the principal assumptions used to calculate net periodic benefit cost is the expected long-term rate of
return on plan assets. The expected long-term rate of return on plan assets may result in recognized returns that are greater or less than the actual returns on those plan assets in any given year. Over time, however, the expected long-term rate of
return on plan assets is designed to approximate the actual long-term returns.

The discount rate assumptions used to account
for pension plans reflect the rates available on high-quality, fixed-income debt instruments on December 31 of each year. The rate of increase in compensation levels is another significant assumption used for pension accounting and is
determined by AUO and Toppan CFI based upon annual review.

Net periodic benefit cost for AUOs and Toppan CFIs
defined benefit pension plans amounted to NT$14,409 thousand, NT$24,773 thousand and NT$48,204 (US$1,592) thousand for the years ended December 31, 2009, 2010 and 2011, respectively.

AUO and Toppan CFI use a measurement date of December 31 for their plans.

The following table sets forth the change in benefit obligations for the pension plans:



|                                                  |  |                |           |  |      |  |           |     |  |  |        |  
|------------------------------------------------- |  | -------------- | --------- |  | ---- |  | --------- | --- |  |  | ------ | -
|                                                  |  | December 31,   |          
|                                                  |  | 2010           |           |  | 2011 | 
|                                                  |  | NT$            |           |  | NT$  |  |           | US$ | 
|                                                  |  | (in thousands) |          
|Projected benefit obligation at beginning of year |  |                | 1,265,483 |  |      |  | 1,694,278 |     |  |  | 55,972 |  
|Service cost                                      |  |                | 7,596     |  |      |  | 8,954     |     |  |  | 296    |  
|Interest cost                                     |  |                | 28,473    |  |      |  | 33,938    |     |  |  | 1,121  |  
|Actuarial loss                                    |  |                | 392,726   |  |      |  | 114,537   |     |  |  | 3,784  |  
|Benefit paid                                      |  |                |          |  |      |  | (5,641    | )   |  |  | (186   | )
|                                                  |  |                |           |  |      |  |           |     |  |  |        |  
|Projected benefit obligation at end of year       |  |                | 1,694,278 |  |      |  | 1,846,066 |     |  |  | 60,987 |  
|                                                  |  |                |           |  |      |  |           |     |  |  |        |  



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-74 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



The accumulated benefit obligation for the pension plans was NT$789,509 thousand and
NT$877,453 (US$28,988) thousand at December 31, 2010 and 2011, respectively.

The following table sets forth the change in
the fair value of plan assets for the pension plans:



|                                               |  |                |           |  |      |  |           |     |  |  |        |  
|---------------------------------------------- |  | -------------- | --------- |  | ---- |  | --------- | --- |  |  | ------ | -
|                                               |  | December 31,   |          
|                                               |  | 2010           |           |  | 2011 | 
|                                               |  | NT$            |           |  | NT$  |  |           | US$ | 
|                                               |  | (in thousands) |          
|Fair value of plan assets at beginning of year |  |                | 1,254,680 |  |      |  | 1,386,818 |     |  |  | 45,815 |  
|Actual return on plan assets                   |  |                | 19,429    |  |      |  | 13,126    |     |  |  | 434    |  
|Actual contributions                           |  |                | 112,709   |  |      |  | 106,536   |     |  |  | 3,519  |  
|Benefit paid                                   |  |                |          |  |      |  | (5,641    | )   |  |  | (186   | )
|                                               |  |                |           |  |      |  |           |     |  |  |        |  
|Fair value of plan assets at end of year       |  |                | 1,386,818 |  |      |  | 1,500,839 |     |  |  | 49,582 |  
|                                               |  |                |           |  |      |  |           |     |  |  |        |  

Plan assets only contain a pension fund (the Fund), as mandated by the ROC Labor Standards
Law. AUO and Toppan CFI contribute an amount equal to 2% of salaries paid every month to the Fund as required by the law. The Fund is administered by a pension fund monitoring committee (the Committee) and is deposited in the
Committees name with Bank of Taiwan. According to applicable regulations in the Republic of China, the minimum return on the plan assets should not be lower than the market interest rate on two-year time deposits. The government is not only
responsible for the determination of the investment strategies and policies, but also for any shortfall in the event that the rate of return is less than the required rate of return. Due to AUO and Toppan CFI have no authority on investment
decisions made for the required contributions to the fund; therefore, the Company is unable to provide the required fair value disclosures related to pension plan assets. Additional contributions may be required in the future in order to provide for
unfunded obligations.

The Companys pension fund is managed by a government-established institution with minimum return
guaranteed by government and the fund asset is treated as cash category.

The following table sets forth the amounts recognized
related to AUOs and Toppan CFIs pension plans in the condensed consolidated balance sheets for US GAAP purposes:



|                                                        |  |                |          |   |      |  |          |     |  |  |         |  
|------------------------------------------------------- |  | -------------- | -------- | - | ---- |  | -------- | --- |  |  | ------- | -
|                                                        |  | December 31,   |         
|                                                        |  | 2010           |          |   | 2011 | 
|                                                        |  | NT$            |          |   | NT$  |  |          | US$ | 
|                                                        |  | (in thousands) |         
|Funded statusplan assets less than benefit obligations |  |                | (307,460 | ) |      |  | (345,227 | )   |  |  | (11,405 | )
|                                                        |  |                |          |   |      |  |          |     |  |  |         |  
|Accrued liability                                       |  |                | (307,460 | ) |      |  | (345,227 | )   |  |  | (11,405 | )
|                                                        |  |                |          |   |      |  |          |     |  |  |         |  



|                                                              |  |                |          |   |      |  |          |     |  |  |         |  
|------------------------------------------------------------- |  | -------------- | -------- | - | ---- |  | -------- | --- |  |  | ------- | -
|                                                              |  | December 31,   |         
|                                                              |  | 2010           |          |   | 2011 | 
|                                                              |  | NT$            |          |   | NT$  |  |          | US$ | 
|                                                              |  | (in thousands) |         
|Prepaid pension cost (accrued liability) at beginning of year |  |                | (10,803  | ) |      |  | (307,460 | )   |  |  | (10,157 | )
|Net periodic benefit cost                                     |  |                | (24,773  | ) |      |  | (48,204  | )   |  |  | (1,592  | )
|Actual contributions                                          |  |                | 112,709  |   |      |  | 106,536  |     |  |  | 3,519   |  
|Pension liability adjustments under FASB Topic 715-60         |  |                | (384,593 | ) |      |  | (96,099  | )   |  |  | (3,175  | )
|                                                              |  |                |          |   |      |  |          |     |  |  |         |  
|Accrued liability at end of year                              |  |                | (307,460 | ) |      |  | (345,227 | )   |  |  | (11,405 | )
|                                                              |  |                |          |   |      |  |          |     |  |  |         |  



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-75 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



Net periodic benefit cost for the defined benefit pension plans consisted of the
following:



|                                    |  |                                 |         |   |      |  |         |      |  |  |         |   |  |  |       |  
|----------------------------------- |  | ------------------------------- | ------- | - | ---- |  | ------- | ---- |  |  | ------- | - |  |  | ----- | -
|                                    |  | For the year ended December 31, |        
|                                    |  | 2009                            |         |   | 2010 |  |         | 2011 | 
|                                    |  | NT$                             |         |   | NT$  |  |         | NT$  |  |  | US$     |  
|                                    |  | (in thousands)                  |        
|Service cost                        |  |                                 | 8,077   |   |      |  | 7,596   |      |  |  | 8,954   |   |  |  | 296   |  
|Interest cost                       |  |                                 | 26,435  |   |      |  | 28,473  |      |  |  | 33,938  |   |  |  | 1,121 |  
|Expected return on plan assets      |  |                                 | (27,881 | ) |      |  | (28,172 | )    |  |  | (27,736 | ) |  |  | (916  | )
|Amortization of net transition cost |  |                                 | 323     |   |      |  | 323     |      |  |  | 323     |   |  |  | 11    |  
|Amortization of net loss            |  |                                 |        |   |      |  | 83      |      |  |  | 378     |   |  |  | 12    |  
|Recognized net actuarial loss       |  |                                 | 7,455   |   |      |  | 16,470  |      |  |  | 32,347  |   |  |  | 1,068 |  
|                                    |  |                                 |         |   |      |  |         |      |  |  |         |   |  |  |       |  
|Net periodic benefit cost           |  |                                 | 14,409  |   |      |  | 24,773  |      |  |  | 48,204  |   |  |  | 1,592 |  
|                                    |  |                                 |         |   |      |  |         |      |  |  |         |   |  |  |       |  

The weighted-average assumptions used in computing the benefit obligations were as follows:



|                                        |  |              |  |               |  |              
|--------------------------------------- |  | ------------ |  | ------------- |  | -------------
|                                        |  | December 31,
|                                        |  | 2009         |  | 2010          |  | 2011         
|Discount rate                           |  | 2.25%        |  | 2.00%  2.25% |  | 1.75%  2.00%
|Rate of increase in compensation levels |  | 3.00%        |  | 3.00%  4.00% |  | 2.00%  3.00%

The weighted-average assumptions used in computing net periodic benefit cost were as follows:



|                                                 |  |                                 |  |       |  |              
|------------------------------------------------ |  | ------------------------------- |  | ----- |  | -------------
|                                                 |  | For the year ended December 31,
|                                                 |  | 2009                            |  | 2010  |  | 2011         
|Discount rate                                    |  | 2.50%                           |  | 2.25% |  | 2.00%  2.25%
|Rate of increase in compensation levels          |  | 2.50%  3.00%                   |  | 3.00% |  | 3.00%  4.00%
|Expected long-term rate of return on plan assets |  | 2.25%  2.50%                   |  | 2.00% |  | 2.00%        

AUO and Toppan CFI contributed NT$106,536 (US$3,520) thousand to the pension plans in 2011, and anticipate
contributing NT$ 106,500 thousand to the plans in 2012.

The benefits expected to be paid in each of the next five fiscal
years, and in the aggregate for the five fiscal years thereafter are summarized as follows:



|          |  |                            |         |  |     |  |        | 
|--------- |  | -------------------------- | ------- |  | --- |  | ------ | 
|Year      |  | Retirement benefitpayments |        
|          |  | NT$                        |         |  | US$ | 
|          |  | (in thousands)             |        
|2012      |  |                            | 22,226  |  |     |  | 734    | 
|2013      |  |                            | 4,799   |  |     |  | 159    | 
|2014      |  |                            | 51,935  |  |     |  | 1,716  | 
|2015      |  |                            | 26,724  |  |     |  | 883    | 
|2016      |  |                            | 18,850  |  |     |  | 623    | 
|2017-2020 |  |                            | 376,407 |  |     |  | 12,435 | 

The expected benefits are estimated based on the same assumptions used to measure the Companys
benefit obligation on December 31, 2011 and include estimated future employee service.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-76 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (ii) | Defined benefit pension plans in Japan
| | ---- | --------------------------------------

The following table sets forth the change in benefit obligations for the pension plans:



|                                                  |  |                |         |   |      |  |          |     |  |  |        |  
|------------------------------------------------- |  | -------------- | ------- | - | ---- |  | -------- | --- |  |  | ------ | -
|                                                  |  | December 31,   |        
|                                                  |  | 2010           |         |   | 2011 | 
|                                                  |  | NT$            |         |   | NT$  |  |          | US$ | 
|                                                  |  | (in thousands) |        
|Projected benefit obligation at beginning of year |  |                | 163,842 |   |      |  | 185,243  |     |  |  | 6,120  |  
|Service cost                                      |  |                | 25,552  |   |      |  | 24,397   |     |  |  | 806    |  
|Interest cost                                     |  |                | 3,522   |   |      |  | 3,725    |     |  |  | 123    |  
|Actuarial loss                                    |  |                | (2,772  | ) |      |  | 19,288   |     |  |  | 637    |  
|Benefit paid                                      |  |                | (17,160 | ) |      |  | (132,327 | )   |  |  | (4,372 | )
|Effect of exchange rate                           |  |                | 12,259  |   |      |  | 9,797    |     |  |  | 324    |  
|                                                  |  |                |         |   |      |  |          |     |  |  |        |  
|Projected benefit obligation at end of year       |  |                | 185,243 |   |      |  | 110,123  |     |  |  | 3,638  |  
|                                                  |  |                |         |   |      |  |          |     |  |  |        |  

The accumulated benefit obligation for the pension plans was NT$161,539 thousand and NT$93,074 (US$3,075)
thousand on December 31, 2010 and 2011, respectively.

The following table sets forth the change in the fair value of plan
assets for the pension plans:



|                                               |  |                |        |   |      |  |         |     |  |  |        |  
|---------------------------------------------- |  | -------------- | ------ | - | ---- |  | ------- | --- |  |  | ------ | -
|                                               |  | December 31,   |       
|                                               |  | 2010           |        |   | 2011 | 
|                                               |  | NT$            |        |   | NT$  |  |         | US$ | 
|                                               |  | (in thousands) |       
|Fair value of plan assets at beginning of year |  |                | 32,635 |   |      |  | 36,966  |     |  |  | 1,221  |  
|Actual return on plan assets                   |  |                | 929    |   |      |  | (1,469  | )   |  |  | (49    | )
|Actual contributions                           |  |                | 4,994  |   |      |  | 24,573  |     |  |  | 812    |  
|Benefit paid                                   |  |                | (4,035 | ) |      |  | (62,025 | )   |  |  | (2,049 | )
|Effect of exchange rate                        |  |                | 2,443  |   |      |  | 1,955   |     |  |  | 65     |  
|                                               |  |                |        |   |      |  |         |     |  |  |        |  
|Fair value of plan assets at end of year       |  |                | 36,966 |   |      |  |        |     |  |  |       |  
|                                               |  |                |        |   |      |  |         |     |  |  |        |  

Under the defined benefit plans in Japan, the pension fund is maintained with Asahi Mutual Life Insurance
with a fixed yield rate. M. Setek does not have authority on how investment allocation decisions are made, but is eligible for getting a fixed yield back. The Asahi Mutual Life Insurance is responsible for any shortfall in the event that the rate of
return is less than the agreed yield rate in the contract.

The following table sets forth the amounts recognized related to M.
Seteks pension plans in the condensed consolidated balance sheets for US GAAP purposes:





|                                                        |  |                |          |   |      |  |          |     |  |  |        |  
|------------------------------------------------------- |  | -------------- | -------- | - | ---- |  | -------- | --- |  |  | ------ | -
|                                                        |  | December 31,   |         
|                                                        |  | 2010           |          |   | 2011 | 
|                                                        |  | NT$            |          |   | NT$  |  |          | US$ | 
|                                                        |  | (in thousands) |         
|Funded statusplan assets less than benefit obligations |  |                | (148,278 | ) |      |  | (110,123 | )   |  |  | (3,638 | )
|                                                        |  |                |          |   |      |  |          |     |  |  |        |  
|Accrued liability                                       |  |                | (148,278 | ) |      |  | (110,123 | )   |  |  | (3,638 | )
|                                                        |  |                |          |   |      |  |          |     |  |  |        |  



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-77 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements





|                                                      |  |                |          |   |      |  |          |     |  |  |        |  
|----------------------------------------------------- |  | -------------- | -------- | - | ---- |  | -------- | --- |  |  | ------ | -
|                                                      |  | December 31,   |         
|                                                      |  | 2010           |          |   | 2011 | 
|                                                      |  | NT$            |          |   | NT$  |  |          | US$ | 
|                                                      |  | (in thousands) |         
|Accrued liability at beginning of year                |  |                | (131,207 | ) |      |  | (148,278 | )   |  |  | (4,898 | )
|Net periodic benefit cost                             |  |                | (28,811  | ) |      |  | (27,878  | )   |  |  | (921   | )
|Benefit paid                                          |  |                | 13,126   |   |      |  | 70,302   |     |  |  | 2,322  |  
|Actual contributions                                  |  |                | 4,994    |   |      |  | 24,573   |     |  |  | 812    |  
|Pension liability adjustments under FASB Topic 715-60 |  |                | 3,438    |   |      |  | (20,999  | )   |  |  | (694   | )
|Effect of exchange rate                               |  |                | (9,818   | ) |      |  | (7,843   | )   |  |  | (259   | )
|                                                      |  |                |          |   |      |  |          |     |  |  |        |  
|Accrued liability at end of year                      |  |                | (148,278 | ) |      |  | (110,123 | )   |  |  | (3,638 | )
|                                                      |  |                |          |   |      |  |          |     |  |  |        |  

Net periodic benefit cost for the defined benefit pension plans consisted of the following:



|                               |  |                                 |        |   |      |  |        |     |  |  |     |  
|------------------------------ |  | ------------------------------- | ------ | - | ---- |  | ------ | --- |  |  | --- | -
|                               |  | For the year ended December 31, |       
|                               |  | 2010                            |        |   | 2011 | 
|                               |  | NT$                             |        |   | NT$  |  |        | US$ | 
|                               |  | (in thousands)                  |       
|Service cost                   |  |                                 | 25,552 |   |      |  | 24,397 |     |  |  | 806 |  
|Interest cost                  |  |                                 | 3,522  |   |      |  | 3,725  |     |  |  | 123 |  
|Expected return on plan assets |  |                                 | (263   | ) |      |  | (243   | )   |  |  | (8  | )
|Gain on settlement             |  |                                 |       |   |      |  | (518   | )   |  |  | (17 | )
|                               |  |                                 |        |   |      |  |        |     |  |  |     |  
|Net periodic benefit cost      |  |                                 | 28,811 |   |      |  | 27,361 |     |  |  | 904 |  
|                               |  |                                 |        |   |      |  |        |     |  |  |     |  

The weighted-average assumptions used in computing the benefit obligations were as follows:



|                                        |  |              |  |             
|--------------------------------------- |  | ------------ |  | ------------
|                                        |  | December 31,
|                                        |  | 2010         |  | 2011        
|Discount rate                           |  | 2.0%         |  | 2.0%        
|Rate of increase in compensation levels |  | 1.2%  5.55% |  | 1.2%  5.55%

The weighted-average assumptions used in computing net periodic benefit cost were as follows:



|                                                 |  |                                |  |             
|------------------------------------------------ |  | ------------------------------ |  | ------------
|                                                 |  | For the year endedDecember 31,
|                                                 |  | 2010                           |  | 2011        
|Discount rate                                    |  | 2.0%                           |  | 2.0%        
|Rate of increase in compensation levels          |  | 1.2%  5.55%                   |  | 1.2%  5.55%
|Expected long-term rate of return on plan assets |  | 0.75%                          |  | 0.75%       

M. Setek contributed NT$24,397 (US$806) thousand to the pension plans during the year of 2011, and
anticipates no contribution to the plans in 2012.

The benefits expected to be paid in each of the next five fiscal years, and
in the aggregate for the five fiscal years thereafter are summarized as follows:



|          |  |                             |        |  |     |  |     | 
|--------- |  | --------------------------- | ------ |  | --- |  | --- | 
|Year      |  | Retirement benefit payments |       
|          |  | NT$                         |        |  | US$ | 
|          |  | (in thousands)              |       
|2012      |  |                             | 1,293  |  |     |  | 43  | 
|2013      |  |                             | 1,429  |  |     |  | 47  | 
|2014      |  |                             | 1,565  |  |     |  | 52  | 
|2015      |  |                             | 10,348 |  |     |  | 342 | 
|2016      |  |                             | 1,705  |  |     |  | 56  | 
|2017-2021 |  |                             | 25,177 |  |     |  | 832 | 

The expected benefits are estimated based on the same assumptions used to measure M. Seteks benefit
obligation at December 31, 2011 and include estimated future employee service.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-78 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (4) | Income taxes
| | --- | ------------



| | (i) | The sources of income (loss) before taxes are summarized as follows:
| | --- | --------------------------------------------------------------------



|                    |  |                                 |             |   |      |  |           |      |  |  |             |   |  |  |            |  
|------------------- |  | ------------------------------- | ----------- | - | ---- |  | --------- | ---- |  |  | ----------- | - |  |  | ---------- | -
|                    |  | For the year ended December 31, |            
|                    |  | 2009                            |             |   | 2010 |  |           | 2011 | 
|                    |  | NT$                             |             |   | NT$  |  |           | NT$  |  |  | US$         |  
|                    |  | (in thousands)                  |            
|Domestic operations |  |                                 | (34,957,294 | ) |      |  | 5,104,098 |      |  |  | (60,223,738 | ) |  |  | (1,989,552 | )
|Foreign operations  |  |                                 | 5,294,949   |   |      |  | 364,282   |      |  |  | (9,400,072  | ) |  |  | (310,541   | )
|                    |  |                                 |             |   |      |  |           |      |  |  |             |   |  |  |            |  
|                    |  |                                 | (29,662,345 | ) |      |  | 5,468,380 |      |  |  | (69,623,810 | ) |  |  | (2,300,093 | )
|                    |  |                                 |             |   |      |  |           |      |  |  |             |   |  |  |            |  

The components of the provision for income tax expense (benefit) are summarized as follows:



|                                      |  |                                 |            |   |      |  |           |      |  |  |            |   |  |  |         |  
|------------------------------------- |  | ------------------------------- | ---------- | - | ---- |  | --------- | ---- |  |  | ---------- | - |  |  | ------- | -
|                                      |  | For the year ended December 31, |           
|                                      |  | 2009                            |            |   | 2010 |  |           | 2011 | 
|                                      |  | NT$                             |            |   | NT$  |  |           | NT$  |  |  | US$        |  
|                                      |  | (in thousands)                  |           
|Current income tax expense (benefit): |  |                                 |            |   |      |  |           |      |  |  |            |   |  |  |         |  
|Domestic                              |  |                                 | (13,453    | ) |      |  | 1,092,315 |      |  |  | 86,284     |   |  |  | 2,850   |  
|Foreign                               |  |                                 | 698,484    |   |      |  | 809,077   |      |  |  | 323,408    |   |  |  | 10,684  |  
|Deferred income tax benefit:          |  |                                 |            |   |      |  |           |      |  |  |            |   |  |  |         |  
|Domestic                              |  |                                 | (1,816,893 | ) |      |  | (749,520  | )    |  |  | 11,222,137 |   |  |  | 370,735 |  
|Foreign                               |  |                                 | (227,671   | ) |      |  | (406,857  | )    |  |  | (139,475   | ) |  |  | (4,607  | )
|                                      |  |                                 |            |   |      |  |           |      |  |  |            |   |  |  |         |  
|Income tax expense (benefit)          |  |                                 | (1,359,533 | ) |      |  | 745,015   |      |  |  | 11,492,354 |   |  |  | 379,662 |  
|                                      |  |                                 |            |   |      |  |           |      |  |  |            |   |  |  |         |  

A reconciliation of the expected income tax expense (benefit) to the actual income tax expense (benefit)
as reported under US GAAP for 2009, 2010 and 2011 was as follows:



|                                                                                         |  |                                 |            |   |      |  |            |      |  |  |             |   |  |  |          |  
|---------------------------------------------------------------------------------------- |  | ------------------------------- | ---------- | - | ---- |  | ---------- | ---- |  |  | ----------- | - |  |  | -------- | -
|                                                                                         |  | For the year ended December 31, |           
|                                                                                         |  | 2009                            |            |   | 2010 |  |            | 2011 | 
|                                                                                         |  | NT$                             |            |   | NT$  |  |            | NT$  |  |  | US$         |  
|                                                                                         |  | (in thousands)                  |           
|Expected income tax expense (benefit)                                                    |  |                                 | (7,415,586 | ) |      |  | 929,624    |      |  |  | (11,836,048 | ) |  |  | (391,015 | )
|Decrease (increase) in investment tax credits, including amounts that expired unused (a) |  |                                 | 2,664,946  |   |      |  | 3,581,523  |      |  |  | 752,040     |   |  |  | 24,845   |  
|Increase (decrease) in valuation allowance (a)                                           |  |                                 | 2,259,473  |   |      |  | (5,010,968 | )    |  |  | 24,262,500  |   |  |  | 801,536  |  
|Tax exemption                                                                            |  |                                 |           |   |      |  | (303,655   | )    |  |  |            |   |  |  |         |  
|Tax on undistributed retained earnings                                                   |  |                                 | 667        |   |      |  | 876,762    |      |  |  | 1,343       |   |  |  | 44       |  
|Effect of changes in statutory income tax rate                                           |  |                                 | 2,321,716  |   |      |  | 1,552,898  |      |  |  | 544,351     |   |  |  | 17,983   |  
|Effect of different subsidiary income tax rate                                           |  |                                 | 341,515    |   |      |  | 555,907    |      |  |  | (1,770,110  | ) |  |  | (58,477  | )
|Tax holiday (b)                                                                          |  |                                 | (832,894   | ) |      |  | (477,400   | )    |  |  | (196,860    | ) |  |  | (6,504   | )
|Permanent differences                                                                    |  |                                 | (284,628   | ) |      |  | (481,927   | )    |  |  | 15,209      |   |  |  | 503      |  
|Others                                                                                   |  |                                 | (414,742   | ) |      |  | (477,749   | )    |  |  | (280,071    | ) |  |  | (9,253   | )
|                                                                                         |  |                                 |            |   |      |  |            |      |  |  |             |   |  |  |          |  
|Income tax expense (benefit)                                                             |  |                                 | (1,359,533 | ) |      |  | 745,015    |      |  |  | 11,492,354  |   |  |  | 379,662  |  
|                                                                                         |  |                                 |            |   |      |  |            |      |  |  |             |   |  |  |          |  



| | (a) | For the years ended December 31, 2009, 2010 and 2011, investment tax credits that expired unused amount to NT$6,680,020 thousand, NT$6,220,123 thousand and
NT$2,308,078 (US$76,250) thousand, respectively. Valuation allowances had previously been recognized for these deferred tax assets. Consequently, the subsequent write-off of these investment tax credits and the related reversals of the deferred tax
asset valuation allowances had no impact on income tax expense in the period these investments tax credits expired unused.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Under preferential tax policies previously available to foreign-invested enterprises and foreign enterprises in China, some subsidiaries located in China were entitled
to tax holidays. The Company will no longer be eligible for the abovementioned income tax holidays starting from 2013. The per share effect of the tax holidays for the years ended December 31, 2009, 2010 and 2011 were NT$0.09, NT$0.05 and
NT$0.02 (US$0.0007), respectively.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-79 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (ii) | The components of deferred income tax assets and liabilities were as follows:
| | ---- | -----------------------------------------------------------------------------



|                                   |  |                |             |   |      |  |             |     |  |  |            |  
|---------------------------------- |  | -------------- | ----------- | - | ---- |  | ----------- | --- |  |  | ---------- | -
|                                   |  | December 31,   |            
|                                   |  | 2010           |             |   | 2011 | 
|                                   |  | NT$            |             |   | NT$  |  |             | US$ | 
|                                   |  | (in thousands) |            
|Deferred tax assets:               |  |                |             |   |      |  |             |     |  |  |            |  
|Inventories                        |  |                | 1,042,378   |   |      |  | 1,196,603   |     |  |  | 39,531     |  
|Unrealized loss and expenses       |  |                | 3,159,902   |   |      |  | 4,138,775   |     |  |  | 136,729    |  
|Other current liabilities          |  |                | 492,195     |   |      |  | 577,308     |     |  |  | 19,072     |  
|Investment tax credits             |  |                | 14,331,405  |   |      |  | 13,568,531  |     |  |  | 448,250    |  
|Net operating loss carryforwards   |  |                | 6,709,035   |   |      |  | 17,987,690  |     |  |  | 594,242    |  
|Convertible bonds                  |  |                | 217,709     |   |      |  | 131,770     |     |  |  | 4,353      |  
|Property, plant and equipment      |  |                | 4,846,254   |   |      |  | 5,793,902   |     |  |  | 191,407    |  
|Others                             |  |                | 1,594,440   |   |      |  | 1,182,694   |     |  |  | 39,071     |  
|                                   |  |                |             |   |      |  |             |     |  |  |            |  
|Gross deferred tax assets          |  |                | 32,393,318  |   |      |  | 44,577,273  |     |  |  | 1,472,655  |  
|Valuation allowance                |  |                | (17,588,929 | ) |      |  | (42,133,096 | )   |  |  | (1,391,909 | )
|                                   |  |                |             |   |      |  |             |     |  |  |            |  
|Net deferred tax assets            |  |                | 14,804,389  |   |      |  | 2,444,177   |     |  |  | 80,746     |  
|                                   |  |                |             |   |      |  |             |     |  |  |            |  
|Deferred tax liabilities:          |  |                |             |   |      |  |             |     |  |  |            |  
|Long-term investmentequity method |  |                | (1,560,617  | ) |      |  | (135,255    | )   |  |  | (4,468     | )
|Goodwill                           |  |                | (865,881    | ) |      |  | (1,042,495  | )   |  |  | (34,440    | )
|Property, plant and equipment      |  |                | (1,087,019  | ) |      |  | (875,354    | )   |  |  | (28,918    | )
|Cumulative translation adjustments |  |                | (264,676    | ) |      |  | (542,961    | )   |  |  | (17,937    | )
|Others                             |  |                | (505,190    | ) |      |  | (448,133    | )   |  |  | (14,805    | )
|                                   |  |                |             |   |      |  |             |     |  |  |            |  
|Total deferred tax liabilities     |  |                | (4,283,383  | ) |      |  | (3,044,198  | )   |  |  | (100,568   | )
|                                   |  |                |             |   |      |  |             |     |  |  |            |  
|Net deferred tax assets            |  |                | 10,521,006  |   |      |  | (600,021    | )   |  |  | (19,822    | )
|                                   |  |                |             |   |      |  |             |     |  |  |            |  

In assessing the realizability of deferred tax assets in accordance with US GAAP, management
considers whether it is more likely than not that some portion or most of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible and net operating losses and investment tax credits are utilized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that
the Company will realize the benefits of these deductible differences and carryforwards, net of the existing valuation allowance on December 31, 2011. The amount of the deferred tax asset considered realizable, however, could be reduced in the
near term if estimates of future taxable income during the carryforward or reversal periods are reduced.

The valuation
allowance on December 31, 2011, represented the amount of tax benefits related to investment tax credit carryforwards which management determined are not more likely than not to be realized due, in part, to projections of future taxable income.
As of December 31, 2009, 2010 and 2011, the increase (decrease) in valuation allowance amounted to NT$3,230,638 thousand, NT$(2,266,558) thousand and NT$24,544,167 (US$810,841) thousand, respectively.

Under US GAAP, cumulative losses in recent years is a significant piece of nagative evidence which is difficult to overcome with
projections of future operating profits for the purpose of determing the valuation allowance for deferred income tax assets. As a result, as of December 31, 2011, AUO recorded full valuation allowances against its net deferred tax assets in the
amount of NT$33,758,246 (US$1,115,238) thousand.

Pursuant to the Business Mergers and Acquisition Act, the Company is entitled
to net operating loss carryforwards of NT$1,014,035 thousand and investment tax credits of NT$9,410,776 thousand sustained by QDI prior to the date of acquisition. As of October 1, 2006, the Company recognized a valuation allowance of
NT$9,410,776 thousand on the unused investment tax credits because management believes that it is more likely than not that the Company will not realize the benefits of those deferred tax assets based on expected future earnings. As of
December 31, 2010 and 2011, NT$640,750 thousand and nil of such investment tax credits have expired unutilized. Any further subsequent recognition of tax benefit related to valuation allowance for deferred tax assets will be recorded in the
consolidated statements of operations under FASB ASC Topic 805.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-80 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



Similar to ROC GAAP, deferred tax assets and liabilities under US GAAP would be
classified as current or noncurrent based on the classification of the related asset or liability, and the valuation allowance is allocated on a pro rata basis between current and noncurrent deferred tax assets for the relevant jurisdiction. As of
December 31, 2010 and 2011, deferred tax assets and liabilities under US GAAP were as follows:



|                                      |  |                |            |   |      |  |            |     |  |  |          |  
|------------------------------------- |  | -------------- | ---------- | - | ---- |  | ---------- | --- |  |  | -------- | -
|                                      |  | December 31,   |           
|                                      |  | 2010           |            |   | 2011 | 
|                                      |  | NT$            |            |   | NT$  |  |            | US$ | 
|                                      |  | (in thousands) |           
|Deferred tax assets  current         |  |                | 5,909,322  |   |      |  | 190,116    |     |  |  | 6,281    |  
|Deferred tax assets  noncurrent      |  |                | 8,705,191  |   |      |  | 2,358,761  |     |  |  | 77,924   |  
|Deferred tax liabilities  current    |  |                | (219,309   | ) |      |  | (30,079    | )   |  |  | (994     | )
|Deferred tax liabilities  noncurrent |  |                | (3,874,198 | ) |      |  | (3,118,819 | )   |  |  | (103,033 | )
|                                      |  |                |            |   |      |  |            |     |  |  |          |  
|                                      |  |                | 10,521,006 |   |      |  | (600,021   | )   |  |  | (19,822  | )
|                                      |  |                |            |   |      |  |            |     |  |  |          |  



| | (iii) | Summary of total income taxes (benefit):
| | ----- | ----------------------------------------

In 2009, 2010 and 2011, the total income taxes (benefit) were allocated as follows:



|                                                        |  |                                 |            |   |      |  |         |      |  |  |            |  |  |  |         | 
|------------------------------------------------------- |  | ------------------------------- | ---------- | - | ---- |  | ------- | ---- |  |  | ---------- |  |  |  | ------- | 
|                                                        |  | For the year ended December 31, |           
|                                                        |  | 2009                            |            |   | 2010 |  |         | 2011 | 
|                                                        |  | NT$                             |            |   | NT$  |  |         | NT$  |  |  | US$        | 
|                                                        |  | (in thousands)                  |           
|Income tax expense (benefit) from continuing operations |  |                                 | (1,359,533 | ) |      |  | 745,015 |      |  |  | 11,492,354 |  |  |  | 379,662 | 
|Other comprehensive income                              |  |                                 | (179,004   | ) |      |  | (91,798 | )    |  |  | 184,554    |  |  |  | 6,097   | 
|                                                        |  |                                 |            |   |      |  |         |      |  |  |            |  |  |  |         | 
|Total income tax expense (benefit)                      |  |                                 | (1,538,537 | ) |      |  | 653,217 |      |  |  | 11,676,908 |  |  |  | 385,759 | 
|                                                        |  |                                 |            |   |      |  |         |      |  |  |            |  |  |  |         | 



| | (iv) | Accounting for uncertainty in income taxes:
| | ---- | -------------------------------------------

A reconciliation of the beginning and ending amounts of unrecognized tax benefits was as follows:



|                                             |  |                                 |       |  |      |  |        |      |  |  |         |   |  |  |      |  
|-------------------------------------------- |  | ------------------------------- | ----- |  | ---- |  | ------ | ---- |  |  | ------- | - |  |  | ---- | -
|                                             |  | For the year ended December 31, |      
|                                             |  | 2009                            |       |  | 2010 |  |        | 2011 | 
|                                             |  | NT$                             |       |  | NT$  |  |        | NT$  |  |  | US$     |  
|                                             |  | (in thousands)                  |      
|Balance at beginning of year                 |  |                                 |      |  |      |  | 3,368  |      |  |  | 11,270  |   |  |  | 372  |  
|Increase related to prior-year tax positions |  |                                 | 3,368 |  |      |  | 11,270 |      |  |  |        |   |  |  |     |  
|Decrease related to prior-year tax positions |  |                                 |      |  |      |  |       |      |  |  |        |   |  |  |     |  
|Settlements                                  |  |                                 |      |  |      |  | (3,368 | )    |  |  | (11,270 | ) |  |  | (372 | )
|                                             |  |                                 |       |  |      |  |        |      |  |  |         |   |  |  |      |  
|Balance at end of year                       |  |                                 | 3,368 |  |      |  | 11,270 |      |  |  |        |   |  |  |     |  
|                                             |  |                                 |       |  |      |  |        |      |  |  |         |   |  |  |      |  

In 2009 and 2010, the income tax authorities in Taiwan completed the examination of AUOs income tax
returns for 2007 and 2008, respectively. As a result of the examination, the Company increased the accrued liability for unrecognized tax benefits related to prior-year tax positions for an amount of NT$3,368 thousand and NT$11,270 thousand,
respectively. As of December 31, 2011, the Company did not have significant unrecognized tax benefits and does not expect any significant change in the unrecognized tax benefits within the next 12 months.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-81 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (5) | Property, plant and equipment
| | --- | -----------------------------

As of December 31, 2010 and 2011, the components of property, plant and equipment were as follows:



|                                                |  |                   |             |  |                         |  |              |                |  |  |             | 
|----------------------------------------------- |  | ----------------- | ----------- |  | ----------------------- |  | ------------ | -------------- |  |  | ----------- | 
|                                                |  | December 31, 2010 |            
|                                                |  | Cost              |             |  | Accumulateddepreciation |  |              | Carryingamount | 
|                                                |  | NT$               |             |  | NT$                     |  |              | NT$            | 
|                                                |  |                   |             |  | (in thousands)          |  |              |                | 
|Land                                            |  |                   | 8,071,084   |  |                         |  |             |                |  |  | 8,071,084   | 
|Buildings                                       |  |                   | 112,993,562 |  |                         |  | (27,428,557  | )              |  |  | 85,565,005  | 
|Machinery and equipment                         |  |                   | 659,723,809 |  |                         |  | (442,656,492 | )              |  |  | 217,067,317 | 
|Other equipment and general assets              |  |                   | 54,108,133  |  |                         |  | (45,352,643  | )              |  |  | 8,755,490   | 
|Construction in progress                        |  |                   | 2,718,857   |  |                         |  |             |                |  |  | 2,718,857   | 
|Prepayments for purchases of land and equipment |  |                   | 54,275,486  |  |                         |  |             |                |  |  | 54,275,486  | 
|                                                |  |                   |             |  |                         |  |              |                |  |  |             | 
|                                                |  |                   | 891,890,931 |  |                         |  | (515,437,692 | )              |  |  | 376,453,239 | 
|                                                |  |                   |             |  |                         |  |              |                |  |  |             | 



|                                                |  |                   |             |  |                         |  |              |                |  |  |             | 
|----------------------------------------------- |  | ----------------- | ----------- |  | ----------------------- |  | ------------ | -------------- |  |  | ----------- | 
|                                                |  | December 31, 2011 |            
|                                                |  | Cost              |             |  | Accumulateddepreciation |  |              | Carryingamount | 
|                                                |  | NT$               |             |  | NT$                     |  |              | NT$            | 
|                                                |  |                   |             |  | (in thousands)          |  |              |                | 
|Land                                            |  |                   | 9,385,200   |  |                         |  |             |                |  |  | 9,385,200   | 
|Buildings                                       |  |                   | 123,369,332 |  |                         |  | (34,948,752  | )              |  |  | 88,420,580  | 
|Machinery and equipment                         |  |                   | 728,308,445 |  |                         |  | (512,883,397 | )              |  |  | 215,425,048 | 
|Other equipment and general assets              |  |                   | 61,679,902  |  |                         |  | (54,723,053  | )              |  |  | 6,956,849   | 
|Construction in progress                        |  |                   | 8,279,012   |  |                         |  |             |                |  |  | 8,279,012   | 
|Prepayments for purchases of land and equipment |  |                   | 19,986,045  |  |                         |  |             |                |  |  | 19,986,045  | 
|                                                |  |                   |             |  |                         |  |              |                |  |  |             | 
|                                                |  |                   | 951,007,936 |  |                         |  | (602,555,202 | )              |  |  | 348,452,734 | 
|                                                |  |                   |             |  |                         |  |              |                |  |  |             | 



| | (6) | The changes in the components of accumulated other comprehensive income (loss) attributable to AU Optronics Corp. were as follows:
| | --- | ----------------------------------------------------------------------------------------------------------------------------------



|                             |  |                                |          |   |                                      |  |           |                                  |  |  |                    |   |  |                                            |          |   |  |  |            |  
|---------------------------- |  | ------------------------------ | -------- | - | ------------------------------------ |  | --------- | -------------------------------- |  |  | ------------------ | - |  | ------------------------------------------ | -------- | - |  |  | ---------- | -
|                             |  | Derivativeandhedgingactivities |          |   | Unrealizedgains(losses) onsecurities |  |           | Cumulativetranslationadjustments |  |  | Definedbenefitplan |   |  | Accumulatedothercomprehensiveincome (loss) |         
|                             |  | NT$                            |          |   | NT$                                  |  |           | NT$                              |  |  | NT$                |   |  | NT$                                        |         
|                             |  | (in thousands)                 |         
|Balance at December 31, 2008 |  |                                | (542,090 | ) |                                      |  | (111,009  | )                                |  |  | 2,323,297          |   |  |                                            | (142,067 | ) |  |  | 1,528,131  |  
|Net current-period change    |  |                                | 226,874  |   |                                      |  | 1,680,476 |                                  |  |  | (611,237           | ) |  |                                            | (120,856 | ) |  |  | 1,175,257  |  
|                             |  |                                |          |   |                                      |  |           |                                  |  |  |                    |   |  |                                            |          |   |  |  |            |  
|Balance at December 31, 2009 |  |                                | (315,216 | ) |                                      |  | 1,569,467 |                                  |  |  | 1,712,060          |   |  |                                            | (262,923 | ) |  |  | 2,703,388  |  
|Net current-period change    |  |                                | 186,593  |   |                                      |  | (725,095  | )                                |  |  | (634,165           | ) |  |                                            | (298,456 | ) |  |  | (1,471,123 | )
|                             |  |                                |          |   |                                      |  |           |                                  |  |  |                    |   |  |                                            |          |   |  |  |            |  
|Balance at December 31, 2010 |  |                                | (128,623 | ) |                                      |  | 844,372   |                                  |  |  | 1,077,895          |   |  |                                            | (561,379 | ) |  |  | 1,232,265  |  
|Net current-period change    |  |                                | 64,742   |   |                                      |  | (769,843  | )                                |  |  | 934,722            |   |  |                                            | (63,557  | ) |  |  | 166,064    |  
|                             |  |                                |          |   |                                      |  |           |                                  |  |  |                    |   |  |                                            |          |   |  |  |            |  
|Balance at December 31, 2011 |  |                                | (63,881  | ) |                                      |  | 74,529    |                                  |  |  | 2,012,617          |   |  |                                            | (624,936 | ) |  |  | 1,398,329  |  
|                             |  |                                |          |   |                                      |  |           |                                  |  |  |                    |   |  |                                            |          |   |  |  |            |  



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-82 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



The related income tax effects allocated to each component of other comprehensive income (loss)
attributable to AU Optronics Corp. were as follows:



|                                                               |  |                                      |           |   |                     |  |         |                  |  |  |           |  
|-------------------------------------------------------------- |  | ------------------------------------ | --------- | - | ------------------- |  | ------- | ---------------- |  |  | --------- | -
|                                                               |  | For the year ended December 31, 2009 |          
|                                                               |  | Beforetaxamount                      |           |   | Tax(expense)benefit |  |         | Net-of-taxamount | 
|                                                               |  | NT$                                  |           |   | NT$                 |  |         | NT$              | 
|Derivative and hedging activities                              |  |                                      | 299,014   |   |                     |  | (72,140 | )                |  |  | 226,874   |  
|Unrealized losses on securities                                |  |                                      | 2,054,848 |   |                     |  |        |                  |  |  | 2,054,848 |  
|Less: reclassification adjustment for gains realized in income |  |                                      | (374,372  | ) |                     |  |        |                  |  |  | (374,372  | )
|Cumulative translation adjustments                             |  |                                      | (809,581  | ) |                     |  | 198,344 |                  |  |  | (611,237  | )
|Defined benefit plan                                           |  |                                      | (173,656  | ) |                     |  | 52,800  |                  |  |  | (120,856  | )
|                                                               |  |                                      |           |   |                     |  |         |                  |  |  |           |  
|Net current-period changes                                     |  |                                      | 996,253   |   |                     |  | 179,004 |                  |  |  | 1,175,257 |  
|                                                               |  |                                      |           |   |                     |  |         |                  |  |  |           |  



|                                                               |  |                                      |            |   |                     |  |         |                  |  |  |            |  
|-------------------------------------------------------------- |  | ------------------------------------ | ---------- | - | ------------------- |  | ------- | ---------------- |  |  | ---------- | -
|                                                               |  | For the year ended December 31, 2010 |           
|                                                               |  | Beforetaxamount                      |            |   | Tax(expense)benefit |  |         | Net-of-taxamount | 
|                                                               |  | NT$                                  |            |   | NT$                 |  |         | NT$              | 
|Derivative and hedging activities                              |  |                                      | 218,750    |   |                     |  | (32,157 | )                |  |  | 186,593    |  
|Unrealized gains on securities                                 |  |                                      | (177,203   | ) |                     |  |        |                  |  |  | (177,203   | )
|Less: reclassification adjustment for gains realized in income |  |                                      | (547,892   | ) |                     |  |        |                  |  |  | (547,892   | )
|Cumulative translation adjustments                             |  |                                      | (655,625   | ) |                     |  | 21,460  |                  |  |  | (634,165   | )
|Defined benefit plan                                           |  |                                      | (400,951   | ) |                     |  | 102,495 |                  |  |  | (298,456   | )
|                                                               |  |                                      |            |   |                     |  |         |                  |  |  |            |  
|Net current-period changes                                     |  |                                      | (1,562,921 | ) |                     |  | 91,798  |                  |  |  | (1,471,123 | )
|                                                               |  |                                      |            |   |                     |  |         |                  |  |  |            |  



|                                                               |  |                                      |           |   |                     |  |          |                  |  |  |          |  
|-------------------------------------------------------------- |  | ------------------------------------ | --------- | - | ------------------- |  | -------- | ---------------- |  |  | -------- | -
|                                                               |  | For the year ended December 31, 2011 |          
|                                                               |  | Beforetaxamount                      |           |   | Tax(expense)benefit |  |          | Net-of-taxamount | 
|                                                               |  | NT$                                  |           |   | NT$                 |  |          | NT$              | 
|Derivative and hedging activities                              |  |                                      | 78,002    |   |                     |  | (13,260  | )                |  |  | 64,742   |  
|Unrealized gains on securities                                 |  |                                      | (877,898  | ) |                     |  |         |                  |  |  | (877,898 | )
|Less: reclassification adjustment for gains realized in income |  |                                      | 108,055   |   |                     |  |         |                  |  |  | 108,055  |  
|Cumulative translation adjustments                             |  |                                      | 1,129,739 |   |                     |  | (195,017 | )                |  |  | 934,722  |  
|Defined benefit plan                                           |  |                                      | (87,281   | ) |                     |  | 23,724   |                  |  |  | (63,557  | )
|                                                               |  |                                      |           |   |                     |  |          |                  |  |  |          |  
|Net current-period changes                                     |  |                                      | 350,617   |   |                     |  | (184,553 | )                |  |  | 166,064  |  
|                                                               |  |                                      |           |   |                     |  |          |                  |  |  |          |  

There are no tax effects from realized or unrealized gains (losses) on available-for-sale securities since capital gains
(losses) on Republic of China securities are not taxable (deductible) in Taiwan.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-83 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (7) | Basic and diluted (loss) earnings per share
| | --- | -------------------------------------------

Basic (loss) earnings per share for years 2009, 2010 and 2011 were computed as follows:



|                                                                                      |  |                                           |             |   |      |  |           |      |  |  |             |  
|------------------------------------------------------------------------------------- |  | ----------------------------------------- | ----------- | - | ---- |  | --------- | ---- |  |  | ----------- | -
|                                                                                      |  | For the year ended December 31,           |            
|                                                                                      |  | 2009                                      |             |   | 2010 |  |           | 2011 | 
|                                                                                      |  | NT$                                       |             |   | NT$  |  |           | NT$  | 
|                                                                                      |  | (in thousands, except for per share data) |            
|Net income (loss) attributable to stockholders of AU Optronics Corp.                  |  |                                           | (28,670,321 | ) |      |  | 4,244,323 |      |  |  | (80,948,225 | )
|                                                                                      |  |                                           |             |   |      |  |           |      |  |  |             |  
|Weighted-average number of shares outstanding during the yearretroactively adjusted: |  |                                           |             |   |      |  |           |      |  |  |             |  
|Shares of common stock at beginning of year                                           |  |                                           | 8,505,720   |   |      |  | 8,827,046 |      |  |  | 8,827,046   |  
|Issuance of shareholders stock dividends and employee stock bonus                    |  |                                           | 279,458     |   |      |  |          |      |  |  |            |  
|                                                                                      |  |                                           |             |   |      |  |           |      |  |  |             |  
|                                                                                      |  |                                           | 8,785,178   |   |      |  | 8,827,046 |      |  |  | 8,827,046   |  
|                                                                                      |  |                                           |             |   |      |  |           |      |  |  |             |  
|Basic (loss) earnings per share:                                                      |  |                                           |             |   |      |  |           |      |  |  |             |  
|Net income (loss)                                                                     |  |                                           | (3.26       | ) |      |  | 0.48      |      |  |  | (9.17       | )
|                                                                                      |  |                                           |             |   |      |  |           |      |  |  |             |  

Diluted (loss) earnings per share for years 2009, 2010 and 2011 were computed as follows:



|                                                                                                                                                |  |                                           |             |   |      |  |           |      |  |  |             |  
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------- | ----------- | - | ---- |  | --------- | ---- |  |  | ----------- | -
|                                                                                                                                                |  | For the year ended December 31,           |            
|                                                                                                                                                |  | 2009                                      |             |   | 2010 |  |           | 2011 | 
|                                                                                                                                                |  | NT$                                       |             |   | NT$  |  |           | NT$  | 
|                                                                                                                                                |  | (in thousands, except for per share data) |            
|Net income (loss) attributable to stockholders of AU Optronics Corp. for computing diluted (loss) earnings per
share:                           |  |                                           |             |   |      |  |           |      |  |  |             |  
|Net income (loss)                                                                                                                               |  |                                           | (28,670,321 | ) |      |  | 4,244,323 |      |  |  | (80,948,225 | )
|                                                                                                                                                |  |                                           |             |   |      |  |           |      |  |  |             |  
|Weighted-average number of shares outstanding during the yearretroactively adjusted (including the effect of dilutive
potential common stock): |  |                                           |             |   |      |  |           |      |  |  |             |  
|Shares of common stock at beginning of year                                                                                                     |  |                                           | 8,505,720   |   |      |  | 8,827,046 |      |  |  | 8,827,046   |  
|Issuance of shareholders stock dividends and employee stock bonus                                                                              |  |                                           | 279,458     |   |      |  |          |      |  |  |            |  
|                                                                                                                                                |  |                                           |             |   |      |  |           |      |  |  |             |  
|                                                                                                                                                |  |                                           | 8,785,178   |   |      |  | 8,827,046 |      |  |  | 8,827,046   |  
|                                                                                                                                                |  |                                           |             |   |      |  |           |      |  |  |             |  
|Diluted (loss) earnings per share:                                                                                                              |  |                                           |             |   |      |  |           |      |  |  |             |  
|Net income (loss)                                                                                                                               |  |                                           | (3.26       | ) |      |  | 0.48      |      |  |  | (9.17       | )
|                                                                                                                                                |  |                                           |             |   |      |  |           |      |  |  |             |  

As of December 31, 2010 and 2011, the zero coupon convertible bond with a principal amount of NT$24,622,400 thousand
and NT$23,779,167 (US$785,569) thousand, respectively, which can be converted to 132,467 thousand shares, and 583,681 thousand shares, respectively, was not included in the computation of diluted earnings per share due to its anti-dilutive
effect.



| | (8) | Goodwill and other intangible assets
| | --- | ------------------------------------



| | (i) | Goodwill
| | --- | --------

There is no change in
the carrying amount of goodwill for the years ended December 31, 2010 and 2011.

As of December 31, 2010 and 2011,
the carrying amount of goodwill both amounted to NT$22,227,327 (US$734,302) thousand.



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-84 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (ii) | Other intangible assets
| | ---- | -----------------------

Details of the other intangible assets were as follows:



|                               |  |                   |            |  |                         |  |            |                |  |  |           | 
|------------------------------ |  | ----------------- | ---------- |  | ----------------------- |  | ---------- | -------------- |  |  | --------- | 
|                               |  | December 31, 2010 |           
|                               |  | Cost              |            |  | Accumulatedamortization |  |            | Carryingamount | 
|                               |  | NT$               |            |  | NT$                     |  |            | NT$            | 
|                               |  | (in thousands)    |           
|Amortizable intangible assets: |  |                   |            |  |                         |  |            |                |  |  |           | 
|Patents and licensing fees     |  |                   | 23,563,620 |  |                         |  | 20,956,166 |                |  |  | 2,607,454 | 
|Core technologies              |  |                   | 3,675,700  |  |                         |  | 3,675,700  |                |  |  |          | 
|                               |  |                   |            |  |                         |  |            |                |  |  |           | 
|                               |  |                   | 27,239,320 |  |                         |  | 24,631,866 |                |  |  | 2,607,454 | 
|                               |  |                   |            |  |                         |  |            |                |  |  |           | 



|                               |  |                   |            |  |                         |  |            |                 |  |  |           |  |  |  |         | 
|------------------------------ |  | ----------------- | ---------- |  | ----------------------- |  | ---------- | --------------- |  |  | --------- |  |  |  | ------- | 
|                               |  | December 31, 2011 |           
|                               |  | Cost              |            |  | Accumulatedamortization |  |            | Carrying amount | 
|                               |  | NT$               |            |  | NT$                     |  |            | NT$             |  |  | US$       | 
|                               |  | (in thousands)    |           
|Amortizable intangible assets: |  |                   |            |  |                         |  |            |                 |  |  |           |  |  |  |         | 
|Patents and licensing fees     |  |                   | 25,505,115 |  |                         |  | 21,533,189 |                 |  |  | 3,971,926 |  |  |  | 131,217 | 
|Core technologies              |  |                   | 3,675,700  |  |                         |  | 3,675,700  |                 |  |  |          |  |  |  |        | 
|                               |  |                   |            |  |                         |  |            |                 |  |  |           |  |  |  |         | 
|                               |  |                   | 29,180,815 |  |                         |  | 25,208,889 |                 |  |  | 3,971,926 |  |  |  | 131,217 | 
|                               |  |                   |            |  |                         |  |            |                 |  |  |           |  |  |  |         | 

Patents and licensing fees have a weighted-average amortization period of approximately eight years. Core
technologies have a weighted-average useful life of three years.

Amortization expense on intangible assets amounted to
NT$1,630,962 thousand, NT$654,525 thousand and NT$576,679 (US$19,051) thousand for the years ended December 31, 2009, 2010 and 2011, respectively.

As of December 31, 2011, the Companys estimated aggregate amortization expense for each of the five succeeding fiscal years and thereafter is as follows:



|           |  |                |           |  |     |  |         | 
|---------- |  | -------------- | --------- |  | --- |  | ------- | 
|Year       |  | NT$            |           |  | US$ | 
|           |  | (in thousands) |          
|2012       |  |                | 743,019   |  |     |  | 24,546  | 
|2013       |  |                | 671,826   |  |     |  | 22,194  | 
|2014       |  |                | 570,950   |  |     |  | 18,862  | 
|2015       |  |                | 548,184   |  |     |  | 18,110  | 
|2016       |  |                | 538,882   |  |     |  | 17,803  | 
|Thereafter |  |                | 899,065   |  |     |  | 29,702  | 
|           |  |                |           |  |     |  |         | 
|Total      |  |                | 3,971,926 |  |     |  | 131,217 | 
|           |  |                |           |  |     |  |         | 



| | (9) | Fair value measurements
| | --- | -----------------------

The
Company adopted FASB ASC Topic 820 on January 1, 2008 for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the
financial statements on a recurring basis. On January 1, 2009, the Company adopted the provisions of FASB ASC Topic 820 for fair value measurements of nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair
value in the financial statements on a nonrecurring basis. FASB ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (i.e., Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (i.e., Level 3 measurements). The three levels of the fair value
hierarchy are as follows:



| | (i) | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Assets utilizing Level 1 inputs include available-for-sale securities that are actively traded.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-85 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



| | (ii) | Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Assets and
liabilities utilizing Level 2 inputs include interest rate swap contracts, foreign currency forward contracts and embedded derivative financial instruments.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | Level 3 inputs are unobservable inputs for the asset or liability.
| | ----- | ------------------------------------------------------------------

Fair value is a market-based measure considered from the perspective of a market participant who holds the assets or owes the liability rather than an entity-specific measure. Therefore, even when market
assumptions are not readily available, the Companys own assumptions are the same as those that market participants would use in pricing the asset or liability at the measurement date. The Company uses inputs that are current as of the
measurement date, including during periods when the market may be abnormally high or abnormally low. Accordingly, fair value measurement can be volatile based on various factors that may or may not be within the Companys control.

The following table presents assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2010 and
2011.



|                                               |  |                  |           |  |                                                            |  |           |                                           |  |  |                                        |  |  |  |   | 
|---------------------------------------------- |  | ---------------- | --------- |  | ---------------------------------------------------------- |  | --------- | ----------------------------------------- |  |  | -------------------------------------- |  |  |  | - | 
|                                               |  |                  |           |  | Fair value measurements at reporting date using            | 
|                                               |  | December 31,2010 |           |  | Quoted pricesin active market foridentical assets(Level 1) |  |           | Significantotherobservableinputs(Level 2) |  |  | Significantunobservableinputs(Level 3) | 
|                                               |  | NT$              |           |  | NT$                                                        |  |           | NT$                                       |  |  | NT$                                    | 
|                                               |  | (in thousands)   |          
|Assets:                                        |  |                  |           |  |                                                            |  |           |                                           |  |  |                                        |  |  |  |   | 
|Foreign currency forward contracts             |  |                  | 425,443   |  |                                                            |  |          |                                           |  |  | 425,443                                |  |  |  |  | 
|Options contracts                              |  |                  | 1,822     |  |                                                            |  |          |                                           |  |  | 1,822                                  |  |  |  |  | 
|Available-for-sale financial assetsnoncurrent |  |                  | 1,373,687 |  |                                                            |  | 1,373,687 |                                           |  |  |                                       |  |  |  |  | 
|Liabilities:                                   |  |                  |           |  |                                                            |  |           |                                           |  |  |                                        |  |  |  |   | 
|Foreign currency forward contracts             |  |                  | 102,455   |  |                                                            |  |          |                                           |  |  | 102,455                                |  |  |  |  | 
|Interest rate swap contracts                   |  |                  | 361,889   |  |                                                            |  |          |                                           |  |  | 361,889                                |  |  |  |  | 
|Options contracts                              |  |                  | 180,020   |  |                                                            |  |          |                                           |  |  | 180,020                                |  |  |  |  | 



|                                               |  |                  |         |  |                                                            |  |         |                                           |  |  |                                        |  |  |  |   | 
|---------------------------------------------- |  | ---------------- | ------- |  | ---------------------------------------------------------- |  | ------- | ----------------------------------------- |  |  | -------------------------------------- |  |  |  | - | 
|                                               |  |                  |         |  | Fair value measurements at reporting date using            | 
|                                               |  | December 31,2011 |         |  | Quoted pricesin active market foridentical assets(Level 1) |  |         | Significantotherobservableinputs(Level 2) |  |  | Significantunobservableinputs(Level 3) | 
|                                               |  | NT$              |         |  | NT$                                                        |  |         | NT$                                       |  |  | NT$                                    | 
|                                               |  | (in thousands)   |        
|Assets:                                        |  |                  |         |  |                                                            |  |         |                                           |  |  |                                        |  |  |  |   | 
|Foreign currency forward contracts             |  |                  | 85,621  |  |                                                            |  |        |                                           |  |  | 85,621                                 |  |  |  |  | 
|Options contracts                              |  |                  | 172     |  |                                                            |  |        |                                           |  |  | 172                                    |  |  |  |  | 
|Interest rate swap contracts                   |  |                  | 3       |  |                                                            |  |        |                                           |  |  | 3                                      |  |  |  |  | 
|Available-for-sale financial assetsnoncurrent |  |                  | 436,774 |  |                                                            |  | 436,774 |                                           |  |  |                                       |  |  |  |  | 
|Liabilities:                                   |  |                  |         |  |                                                            |  |         |                                           |  |  |                                        |  |  |  |   | 
|Foreign currency forward contracts             |  |                  | 17,523  |  |                                                            |  |        |                                           |  |  | 17,523                                 |  |  |  |  | 
|Interest rate swap contracts                   |  |                  | 198,401 |  |                                                            |  |        |                                           |  |  | 198,401                                |  |  |  |  | 
|Options contracts                              |  |                  | 176,185 |  |                                                            |  |        |                                           |  |  | 176,185                                |  |  |  |  | 



| |  |      |  |            
| |  | ---- |  | -----------
| |  | F-86 |  | (Continued)



---

##### Table of Contents

AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements



The following table presents the balances for those assets that are measured at fair
value on a nonrecurring basis and the associated losses recognized during the years ended December 31, 2010 and 2011.





|                                              |  |                  |           |  |                                                           |  |           |                                           |  |  |                                        |  |  |                                                 |           |  |  |  |           | 
|--------------------------------------------- |  | ---------------- | --------- |  | --------------------------------------------------------- |  | --------- | ----------------------------------------- |  |  | -------------------------------------- |  |  | ----------------------------------------------- | --------- |  |  |  | --------- | 
|                                              |  |                  |           |  | Fair value measurements at reporting date using           | 
|                                              |  | December 31,2010 |           |  | Quoted pricesin active market foridenticalassets(Level 1) |  |           | Significantotherobservableinputs(Level 2) |  |  | Significantunobservableinputs(Level 3) |  |  | For the YearEndedDecember 31,2010ImpairmentLoss |          
|                                              |  | NT$              |           |  | NT$                                                       |  |           | NT$                                       |  |  | NT$                                    |  |  | NT$                                             |          
|                                              |  | (in thousands)   |           |  |                                                           | 
|Assets:                                       |  |                  |           |  |                                                           |  |           |                                           |  |  |                                        |  |  |                                                 |           |  |  |  |           | 
|Financial assets carried at cost  noncurrent |  |                  | 896,294   |  |                                                           |  |          |                                           |  |  |                                       |  |  |                                                 | 896,294   |  |  |  |          | 
|                                              |  |                 
|                                              |  |                  |           |  | Fair value measurements at reporting date using           | 
|                                              |  | December 31,2011 |           |  | Quoted pricesin active market foridenticalassets(Level 1) |  |           | Significantotherobservableinputs(Level 2) |  |  | Significantunobservableinputs(Level 3) |  |  | For the YearEndedDecember 31,2011ImpairmentLoss |          
|                                              |  | NT$              |           |  | NT$                                                       |  |           | NT$                                       |  |  | NT$                                    |  |  | NT$                                             |          
|                                              |  | (in thousands)   |           |  |                                                           | 
|Assets:                                       |  |                  |           |  |                                                           |  |           |                                           |  |  |                                        |  |  |                                                 |           |  |  |  |           | 
|Financial assets carried at cost  noncurrent |  |                  | 1,481,390 |  |                                                           |  |          |                                           |  |  |                                       |  |  |                                                 | 1,481,390 |  |  |  | 43,759    | 
|Equity-method investment                      |  |                  | 1,185,244 |  |                                                           |  | 1,185,244 |                                           |  |  |                                       |  |  |                                                 |          |  |  |  | 2,161,723 | 

Financial assets carried at cost consist primarily of non-publicly listed stocks. Due to the absence of
quoted market prices in an active market, the fair value measurement of the Companys non-publicly listed stocks is determined by using an analysis of various factors. These factors include the private companys current operating and
future expected performance (based on evaluation of the latest available financial statements), as well as changes in the industry and market prospects (based on publicly available information).

The fair value of the equity method investment that was impaired was based on quoted market price.

The following table reconciles the Companys Level 3 fair value measurement from December 31, 2009 to December 31, 2011:





|                                            |  |                    |           |  
|------------------------------------------- |  | ------------------ | --------- | -
|                                            |  | Assets             |          
|                                            |  | NT$ (in thousands) |          
|Financial asset carried at cost-noncurrent: |  |                    |           |  
|Balance at December 31, 2009                |  |                    | 484,009   |  
|Purchases                                   |  |                    | 658,959   |  
|Sales                                       |  |                    | (445      | )
|Transfer out                                |  |                    | (246,229  | )
|                                            |  |                    |           |  
|Balance at December 31, 2010                |  |                    | 896,294   |  
|Total realized and unrealized losses        |  |                    | (45,338   | )
|Purchases                                   |  |                    | 30,000    |  
|Transfer in                                 |  |                    | 600,434   |  
|                                            |  |                    |           |  
|Balance at December 31, 2011                |  |                    | 1,481,390 |  
|                                            |  |                    |           |  

Investment in securities with a fair value of $285,431 thousand were transferred from Level 3 to Level 1
during the year of 2010 as a result of increased activity in the market for securities that were not being actively traded in the prior year.



| |  |      |  | 
| |  | ---- |  | 
| |  | F-87 |  |