· benq corporation non-consolidated balance sheets (parent company only) june 30, 2004 and 2005...

1

Q2 2005 Investor Briefing

BenQ: BBr i n g i n g EEn j o y m e n t ‘NQQu a l i t y t o LLi f e

August 18, 2005

BenQ C orp ora tion

BenQ C o nf i d ent i a l ( 2 0 0 5 / 8 / 1 8 ) 2 0 0 5 , BenQ C o r p o r a t i o n

Meeting Overview

� Q 2 F i n a n c i a l H i g h l i g h t s

� B u s i n e s s U p d a t e

� Ne w P r o d u c t L a u n c h e s

� Q 3 G u i d a n c e

� S i e m e n s M o b i l e D e v i c e s I n t e g r a t i o n B r i e f i n g

2


We have made forward-l ook i n g s t at emen t s i n t he p res en t at i on . O u r forward-l ook i n g

s t at emen t s c on t ai n i n format i on reg ardi n g , amon g ot her t hi n g s , ou r fi n an c i al

c on di t i on s , fu t u re ex p an s i on p l an s an d b u s i n es s s t rat eg i es . We have b as ed t hes e

forward-l ook i n g s t at emen t s on ou r c u rren t ex p ec t at i on s an d p roj ec t i on s ab ou t fu t u re

even t s . A l t hou g h we b el i eve t hat t hes e ex p ec t at i on s an d p roj ec t i on s are reas on ab l e,

s u c h forward-l ook i n g s t at emen t s are i n heren t l y s u b j ec t t o ri s k s , u n c ert ai n t i es , an d

as s u mp t i on s ab ou t u s .

We u n dert ak e n o ob l i g at i on t o p u b l i c l y u p dat e or revi s e an y forward-l ook i n g

s t at emen t s whet her as a res u l t of n ew i n format i on , fu t u re even t s or ot herwi s e. I n l i g ht

of t hes e ri s k s , u n c ert ai n t i es an d as s u mp t i on s , t he forward-l ook i n g even t s i n t he

c on feren c e mi g ht n ot oc c u r an d ou r ac t u al res u l t s c ou l d di ffer mat eri al l y from t hos e

an t i c i p at ed i n t hes e forward-l ook i n g s t at emen t s .

S a f e H a rb o r N o tic e

Q2 Financial Highlights

3


• Changing product mix—highe r pe rce ntage of l ow e r margin products .

• P roj e ctors coming unde r A S P pre s s ure in Q 2 ; improv ing in Q 3 .

• I ncre as e d compe tition in O D D s pace l e ading to A S P e ros ion.

• Changing product mix—highe r pe rce ntage of l ow e r margin products .

• P roj e ctors coming unde r A S P pre s s ure in Q 2 ; improv ing in Q 3 .

• I ncre as e d compe tition in O D D s pace l e ading to A S P e ros ion.

Q 2 2 0 0 5 I nc o m e S ta tem ent – Q o Q A na l y s is

Core business, Unaudited, Prepared by BenQ Corp. on a consolidated basis.

QoQ

C h a n g e %

Net Sales 3 2 . 3 3 1 0 0 . 0 % 2 9 . 6 7 1 0 0 . 0 % - 8 %

Cost of Goods Sold ( 2 8 . 6 7 ) ( 8 8 . 7 % ) ( 2 6 . 8 9 ) ( 9 0 . 6 % ) - 6 %

G r o ss P r o f i t 3 . 6 6 1 1 . 3 % 2 . 7 8 9 . 4 % - 2 4 %

O p e r a t i n g E x p e n se s ( 3 . 6 1 ) ( 1 1 . 2 % ) ( 3 . 4 2 ) ( 1 1 . 5 % ) - 5 %

O p er ati n g I n c o m e 0 . 0 5 0 . 2 % ( 0 . 6 4 ) ( 2 . 2 % ) - 1 4 0 6 %

N e t N on - op I t e m s 0 . 2 9 0 . 9 % 0 . 8 9 3 . 0 % 2 1 1 %

I n c o m e b ef o r e T ax 0 . 3 4 1 . 0 % 0 . 2 5 0 . 8 % - 2 5 %

I n c om e T a x ( 0 . 0 3 ) ( 0 . 1 % ) 0 . 2 3 0 . 8 % 8 6 6 %

Net I n c o m e 0 . 3 0 0 . 9 % 0 . 4 8 1 . 6 % 5 8 %

F u lly D i l u ted E P S ( NT $ ) 0 . 1 3 0 . 1 9

Q 1 2 0 0 5 Q 2 2 0 0 5Amount : NT$ Billion Except EPS Data


Q 2 2 0 0 5 B a l a nc e S h eet H igh l igh ts


• I nv e ntorie s gre w on changing product mix and incre as e d pane l hol dings .

• L iab il itie s incre as e d b e caus e of additions of N T $ 4 . 0 b il l ion in dome s tic

N T $ b ond & N T $ 3 . 6 b il l ion in div ide nd pay ab l e .

• I nv e ntorie s gre w on changing product mix and incre as e d pane l hol dings .

• L iab il itie s incre as e d b e caus e of additions of N T $ 4 . 0 b il l ion in dome s tic

N T $ b ond & N T $ 3 . 6 b il l ion in div ide nd pay ab l e .

Amount: NT $ Billion QoQ

C h a n g e %

C a s h & E q u i v a l e n t 1 1 . 9 3 14.1% 1 4 . 9 2 16 . 8 % 2 5 %

A c c ou n t s R e c e i v a b l e 1 6 . 7 0 19 .7 % 1 6 . 7 8 18 . 9 % 0 %

I n v e n t or i e s 1 3 . 3 4 15 .7 % 1 4 . 7 2 16 . 6 % 1 0 %

L - T I n v e s t m e n t s 2 6 . 1 0 3 0 . 8 % 2 4 . 8 4 2 8 . 0 % - 5 %

T ot a l A s s e t s 8 4 . 7 3 10 0 . 0 % 8 8 . 6 9 10 0 . 0 % 5 %

L i a b i l i t i e s 3 5 . 4 0 41.8 % 4 2 . 7 3 48 . 2 % 2 1 %

( D e b t ) 6 . 7 5 8 . 0 % 1 1 . 0 4 12 .4% 0 . 3 %

E q u i t i e s 4 9 . 3 3 5 8 . 2 % 4 5 . 9 6 5 1. 8 % - 7 %

Q1 2 0 0 5 Q2 2 0 0 5

4


K ey F ina nc ia l R a tio s


Q4 2004 Q1 2005 Q2 2005

A / R T u r n o v e r 45 d a y s 46 d a y s 48 d a y s

I n v e n t o r y T u r n o v e r 3 9 d a y s 41 d a y s 4 7 d a y s

R O A * 0. 9 % 1 . 4 % 2. 2%

R O E * 1 . 6 % 2. 4% 4. 2%

T o t a l D e b t / T o t a l A s s e t s 7 . 7 % 7 . 9 % 1 2. 4%

* Annualized

2003 2004

R O E 1 7 . 3 % 1 5 . 5 %

• Cons is te nt, b e s t-in-cl as s w ork ing capital manage me nt.

• Cas h conv e rs ion cy cl e at 2 0 day s as of Q 2 .

• Cons is te nt, b e s t-in-cl as s w ork ing capital manage me nt.

• Cas h conv e rs ion cy cl e at 2 0 day s as of Q 2 .

B u sine ss U p d ate

5


S a l es B rea k d o wn b y B u s ines s


• M ome ntum f or L CD monitor carry ing into Q 2 de s pite s e as onal ity .

• J oy b ook pos ting s trong Q oQ grow th; G re ate r China s tre ngths continue s .

• L CD T V e xpe rie ncing a s of t patch.

• M ome ntum f or L CD monitor carry ing into Q 2 de s pite s e as onal ity .

• J oy b ook pos ting s trong Q oQ grow th; G re ate r China s tre ngths continue s .

• L CD T V e xpe rie ncing a s of t patch.

56%

2 1 %

1 6%

8 %

4 9 %

2 1 %

1 6%

1 4 %

51 %

1 7 %

1 7 %

1 5%

4 7 %

1 8 %

2 2 %

1 3 %

4 8 %

2 4 %

1 5%

1 3 %

4 8 %

2 2 %

1 5%

1 5%

52 %

2 2 %

1 1 %

1 5%

56%

2 3 %

8 %

1 3 %

0%

2 0%

4 0%

6 0%

8 0%

1 00%

3 Q ' 03 4 Q ' 03 1 Q ' 04 2 Q ' 04 3 Q ' 04 4 Q ' 04 1 Q ' 05 2 Q ' 05

D i s p l a y I m a g i n g & S t o r a g e C o m m u n i c a t i o n s D i g i t a l M e d i a


S a l es B rea k d o wn b y G eo gra p h y


(a) I n c l u d i n g H K(b ) A s i a P ac i f i c , A f r i c a, an d M i d d l e E a s t

(a) (b )

China s al e s improv ing Q oQ .China s al e s improv ing Q oQ .

35%

2 0 %

2 2 %

2 3%

35%

2 4 %

1 6 %

2 5%

30 %

2 6 %

1 7 %

2 7 %

30 %

2 8 %

1 5%

2 7 %

33%

31 %

1 4 %

2 2 %

30 %

36 %

1 4 %

2 0 %

30 %

34 %

1 2 %

2 4 %

2 9 %

34 %

1 4 %

2 3%

0%

2 0%

4 0%

6 0%

8 0%

1 00%

3 Q ' 03 4 Q ' 03 1 Q ' 04 2 Q ' 04 3 Q ' 04 4 Q ' 04 1 Q ' 05 2 Q ' 05

t h e A m e r i c a s E u r o p e C h i n a A P A M

6

Communications: Mobile phones, wireless net work ing

Comp uting : persona l c om pu t er, c om pu t er d ispla y , c om pu t er periphera ls

Consume r E l e ctr onics:D ig it a l P roj ec t ors, L C D T V , P ersona l A V , D ig it a l C a m era s

3C Product Portfolio

Computing

Communic a tions

Cool B r a nd

Consume r

E l e c tr onic s

Cr y sta l

New, Streamlined Organization

Effective Q3, BenQ is re-o rg a niz ing its b u siness into th ree

b u siness g ro u p s:

New Product Launches

7



DC E520

The DC E520 digital camera is aimed at young professionals on-the-go. The feature-pack ed DC E520 incorporates a P entax

S uper-M ulti-Coating lens technology, 5 mega pix el CCD, 3 x

optical z oom, high-resolution, large-ov ersiz ed 2.5" L TP S L CD screen, V G A mov ie recording and ex tra long b attery life all in a

thin 21 mm pack age.

The DC E51 0 features P entax S uper-M ulti-Coating lens

technology, a large 2.0" L TP S L CD touch screen and creativ e

functions such as the screw l, frame and stamp function and

P ictB ridge.

DC E51 0



The B enQ S 8 0 is the smallest 3 G phone. Eq uipped w ith a 3 8 4

k b ps transmit rate, as w ell as a dual camera for the v ideo telephony, users can speak face-to-face w ith family and friends.

The S 8 0 w as recently aw arded for the 2005 CES Design &

Engineering S how case H onors.

S 8 0

8



The new 1 7 -inch L CD monitor F P 7 2V is specifically designed for

family use, accommodating ev eryday activ ities such as music, v ideos, learning, instant messaging and communicating w ith

friends. The F P 7 2V prov ides sev eral features that address the

needs of the w hole family, including usage time controller, automatic b rightness adj ustment, and protectiv e film, detachab le

w eb camera for flex ib le placement, flex ib le height settings, and

w ide v iew ing angles for sharing content.

F P 7 2V

The new 1 9 -inch F P 9 1 V is eq uipped w ith A M A technology and

offers ultra-fast 4 ms gray to gray response time for applications that req uire superior display performance. The F P 9 1 V features

b uilt-in speak ers w ith S R S surround sound and comes standard

w ith D-S ub and DV I -D inputs.

F P 9 1 V


B enQ ’s P B 8 26 0 w ireless proj ector b rings calib er-performance and v ersatility to any b oardroom tab le.

W ireless flex ib ility and a user friendly set-up mak es it the

presentation tool-of-choice for corporate b oardrooms, conference halls, class rooms and large open v enues.

Effortlessly sw ap presenters and noteb ook s w irelessly

through an 8 02.1 1 b netw ork – you’ll nev er touch another

cab le again!

P B 8 26 0

B enQ P B 6 24 0 w eighs 2.9 k g. This compact proj ector

achiev es b est b rightness in this w eight class w ith 2, 7 00

A N S I -lumens. The B enQ P B 6 24 0 also prov ides b est color performance w ith uniq ue Color M atching Technology and

easy-to-use functions, including passw ord protection and

high altitude mode.

P B 6 24 0


9



The new J oyb ook S 53 / S 53 W is a 1 3 ” w ide-screen laptop w ith

200 nits b rightness that prov ides the most ideal v isual enj oyment. The S 53 / S 53 W is also eq uipped w ith a specially-designed

k eyb oard for additional user comfort and an emb edded S R S audio chip to prov ide an optimal 3 6 0 degree listening ex perience.

The J oyb ook S 53 / S 53 W is av ailab le in tw o colors: b lack and

w hite.

J o y b o o k S 53 / S 53 W


Eq uipped w ith B enQ ’s proprietary S olidB urn Technology,

the EW 1 6 4 B DV D R eW riter prov ides users w ith superior

optical w riting that enab les a faster b urning speed w hile maintaining an ex cellent b urning q uality. The EW 1 6 4 B

DV D R eW riter not only prov ides faster b urning speeds, ov er-speed b urning is also made possib le. U sers can choose

to activ ate or deactiv ate the S olidB urn Technology and

O v er S peed B urning feature through the Q S uite 2.0

application interface.

EW 1 6 4 B


1 0

Q 3 G ui dance


2 0 0 5 Q 3 G u idanc e

� Mobile Business Group

guidance unchanging quarter-o n-quarter. S iem ens M o b il e D ev ices integratio n p l anning o n track .

� C om put ing P rod uc t sL C D m o nito r unit s hip m ent trending up Q o Q w ith A S P s trengthening.

O p tical D is k D riv e p ro ducts to s ee s eas o nal gro w th.

J o y b o o k m o m entum co ntinuing in Q 3 .

� D ig it a l Med ia

L C D T V b etter p o s itio ned w ith intro ductio n o f indus try -l eading 3 7 ” and 4 6 ”m o del s equip p ed w ith B enQ ’s S ens ey eT M techno l o gy .

P ro j ecto r to s ee s tro ng gro w th driv en b y new p ro duct intro ductio n.

� Q 3 rev enue t o see g row t h a bov e 1 0 % Q oQ ; bet t er ec onom ies of sc a le seen a c ross a num ber of prod uc t lines.

1 1

S i em ens M ob i l e D ev i ces

I nteg rati on B ri ef i ng


� Joint product roadmaps in final stages of discussions in progress

� F iv e 3 G h andset models b y y ear-end, 2 0 0 6

� P roducts targeting different geograph y confirmed A u gu st 3 1

� A steering committee ov erseeing integration formed

� W ork sh op sessions ensuring smooth transition in progress

� N ew corporate entities b eing incorporated glob ally S ept em b er 1 5

� R egional h eads already appointed; country managers

appointed for th e most part

� R etention program implemented w / k ey personnel

Integration

T as k F orc e

O rganiz ation /

H R

B enQ E G M

Siemens M ob ile D ev ic es - I ntegration B rief ing

P rod u c tion

P rod u c t

D ev el op m ent &

R & D

Status/Timing

� C ompleted w ith all resolutions approv ed J u l y 2 8

� F ul l y l e v e r aging in-h o use c ap ac ity by closing

�

�

�

BenQ Corporation.

Unaudited Core business Consolidated Balance Sheet

JUN. 30, 2005

UNIT : NT$K

Assets Liabilities & stockholders' equity

Current assets : Liabilities

Cash & cash equivalent 14,216,055 16.0% Short term borrowings 2,798,238 3.2%

Short term investment 705,986 0.8% N/P & A/P 19,688,228 22.2%

Net notes and accounts receivable 14,535,402 16.4% N/P & A/P to related partie 6,499,151 7.3%

N/R & A/R from related parties 2,242,651 2.5% Bond payable 0 0.0%

Net inventories 14,724,276 16.6% Acurred exp. & other current liab. 5,224,133 5.9%

Prepaid expenses & other current assets 2,907,811 3.3% Total current liabilities 34,209,750 38.6%

Total current assets 49,332,181 55.6% Long term loan 6,051 0.0%

Long term investments 24,837,013 28.0% Bond payable 8,238,641 9.3%

Fixed assets : 18,611,640 21.0% Other liabilities 270,878 0.3%

Less : Accumulated depreciation (6,490,423) 7.3% Total liabilities 42,725,321 48.2%

Total fixed assets 12,121,217 13.7% Stockholder' equities 0

Other assets 2,397,342 2.7% Common stock 24,679,983 27.8%

Treasury stock (77,125) -0.1%

Capital surplus 14,509,617 16.4%

Legal reserve 4,016,353 4.5%

Retained earnings 2,890,831 3.3%

Translation adjustment -57,226 -0.1%

Total stockholder' equities 45,962,432 51.8%

Total Assets 88,687,753$ 100.0% Total Liabilities & stockholders' equity 88,687,753$ 100.0%

BenQ Corporation.

Unaudited Core business Consolidated Income Statement

JUN. 30, 2005

UNIT : NT$K

Net sales 62,014,623$ 100.0%

Cost of goods sold (55,572,616) -89.6%

Gross profit 6,442,007 10.4%

Operating expense : 0

S & M (4,312,354) -7.0%

G & A (997,287) -1.6%

R & D (1,729,296) -2.8%

Total Operating expense (7,038,937) -11.4%

Operating income (loss) (596,930) -1.0%

Non-operating in net income(loss) 1,181,098 1.9%

Earning Before income tax 584,168 0.9%

Income tax 199,632 0.3%

Minority interest in net income (loss) 0 0.0%

Profit after tax 783,799$ 1.3%

BenQ Corporation Non-consolidated Balance Sheets (Parent Company Only)

June 30, 2004 and 2005 (expressed in thousands of New Taiwan dollars)

2005.6.30 2004.6.30 Assets NT$ NT$

Current assets:

Cash and cash equivalents 10,103,885 564,047 Short-term investments 682,790 307,774 Notes and accounts receivable, net 3,926,770 9,259,179 Receivables from related parties 20,440,859 21,046,007 Other financial assets－current 427,994 302,623 Inventories, net 3,869,257 5,739,783 Prepaid expenses and other current assets 236,535 364,776 Deferred income tax assets-current 624,290 1,173,493

Total current assets 40,312,380 38,757,682 Long-term equity investments:

Equity method 28,759,501 30,740,813 Cost or lower-of-cost-or-market method 1,436,243 2,144,978 30,195,744 32,885,791

Property, plant and equipment:

Land 2,136,213 2,356,164 Buildings 3,552,462 3,926,269 Machinery and equipment 2,531,045 2,350,245 Furniture and fixtures 143,406 139,995 Miscellaneous equipment 69,941 67,262 Prepayments for plant and equipment 228,674 230,468 8,661,741 9,070,403 Less: accumulated depreciation (2,721,589) (2,338,412)

Net property, plant and equipment 5,940,152 6,731,991 Other assets：

Assets for lease 1,004,201 512,463 Refundable deposits 8,142 7,093 Deferred assets 277,811 95,537 Deferred income tax assets-noncurrent 992,910 56,499

Total other assets 2,283,064 671,592

Total assets 78,731,340 79,047,056

2005.6.30 2004.6.30 Liabilities and Stockholders’ Equity NT$ NT$

Current liabilities:

Short-term borrowings - 151,988 Notes and accounts payable 3,752,560 7,750,340 Payables to related parties 14,098,322 15,535,440 Bonds payable - 1,400 Accrued expenses and other current liabilities 6,104,979 4,318,224 Income tax payable - 468,563 Deferred inter-company profit 229,799 331,462

Total current liabilities 24,185,660 28,557,417 Bonds payable 8,238,641 2,258,891 Other liabilities 344,606 462,156

Total liabilities 32,768,907 31,278,464 Stockholders’ equity:

Common stock:

Common stock 24,679,983 23,148,990

Capital surplus:

Additional paid-in capital in excess of the common stock’s par value

5,152,848 5,152,848

Convertible bonds converted in excess of the common stock’s par value

7,134,246 7,104,453

Capital surplus from treasury stock transactions 12,432 134 Capital surplus from long-term equity investments 2,128,336 2,194,672 14,427,862 14,452,107

Legal reserves 4,016,353 3,254,424 Retained earnings 2,890,831 6,569,397 Special reserves 81,754 - Translation adjustment (57,225) 422,693 Treasury stock (77,125) (79,019)

Total stockholders’ equity 45,962,433 47,768,592

Total liabilities and stockholders’ equity 78,731,340 79,047,056

BenQ Corporation

Non-consolidated Statements of Income (Parent Company Only) For the six-month periods ended June 30, 2004 and 2005

(expressed in thousands of New Taiwan dollars, expect earnings per share)

2005 2004 NT$ NT$

Net sales 53,536,906 78,700,901

Cost of goods sold (50,162,510) (71,497,121)

3,274,396 7,203,780

Change in unrealized inter-company profits (224,421) (163,902)

Gross profit 3,149,975 7,039,878

Operating expenses: Selling (1,201,922) (1,874,435) Administrative (455,964) (494,163) Research and development (1,632,112) (1,819,336)

(3,289,998) (4,187,934) Operating income (loss) (140,023) 2,851,944

Non-operating income: Interest income 6,101 2,644 Investment income - 3,375,682 Dividend income 82,681 170,711 Gain on disposal of property, plant and equipment 1,049 1,149 Gain on disposal of investments, net 1,745,781 57,945 Foreign exchange gain, net 93,067 132,536 Others 162,796 84,374

2,091,475 3,825,041

Non-operating expenses: Interest expense (186,725) (65,749) Investment loss (1,051,510) - Permanent decline in the long-term equity

investment’s value (149,307)

(250,000)

Loss on disposal of property, plant and equipment (98) (2,867) Impairment loss (18,598) - Others (22,841) (2,937)

(1,429,079) (321,553)

Net income before income tax expense 522,373 6,355,432

Income tax benefit (expense) 261,426 (310,855)

Net income 783,799 6,044,577

Earnings per share:

Basic earnings per share 0.32 2.46

Diluted earnings per share 0.32 2.44

BenQ Corporation

Non-consolidated Statements of Changes in Stockholders’ Equity For the six-month periods ended June 30, 2004 and 2005

(expressed in thousands of New Taiwan dollars, expect earnings per share)

Common

Stock

Convertible Bonds Appliedfor Conversion

Capital Surplus

Legal

Reserves

Special

Reserves

Retained Earnings

Foreign Currency

TranslationAdjustment

Treasury Stock

Total

NT$ NT$ NT$ NT$ NT$ NT$ NT$ NT$ NT$ Balance at January 1, 2004 20,838,612 13,436 13,578,276 2,504,415 - 8,931,983 476,861 (881,619) 45,461,964 Net income for the six-month period ended June 30, 2004 - - - - - 6,044,577 - - 6,044,577 Appropriation of earnings and capital surplus:

Legal reserves - - - 750,009 - (750,009) - - - Retained earnings transferred to common stock 2,517,592 - - - - (2,517,592) - - - Cash dividends - - - - - (4,123,924) - - (4,123,924) Employee bonus in cash - - - - - (50,626) - - (50,626) Directors’ and supervisors’ remuneration - - - - - (67,501) - - (67,501)

Convertible bonds converted to common stock and capital surplus

137,356 (13,436) 298,926 - - - - - 422,846

Treasury stock acquired by the Company - - - - - - (651,354) (651,354) Treasury stock retired (344,570) - (211,698) - (897,511) - 1,453,779 - Change in treasury stock held by subsidiaries - - - - - - - 175 175 Cash dividends paid to subsidiaries which hold the Company’s share - - 134 -

- - -

- 134

Adjustments of net equity of investee companies - - 786,469 - - - - - 786,469 Change in foreign currency translation adjustment - - - - - - (54,168) - (54,168) Balance at June 30, 2004 23,148,990 - 14,452,107 3,254,424 - 6,569,397 422,693 (79,019) 47,768,592 Balance at January 1, 2005 23,150,141 - 14,688,280 3,254,424 - 8,144,108 (81,754) (77,336) 49,077,863 Net income for six-month period ended June 30, 2005 - - - - - 783,799 - - 783,799 Appropriation of earnings and capital surplus:

Legal reserves - - - 761,929 - (761,929) - - - Special reserves - - - - 81,754 (81,754) Retained earnings transferred to common stock 1,513,755 - - - - (1,513,755) - - - Cash dividends - - - - - (3,473,263) - - (3,473,263) Employee bonus in cash - - - - - (152,170) - - (152,170) Directors’ and supervisors’ remuneration - - - - - (54,205) - - (54,205)


16,087 - 27,382 - - - - - 43,469

Change in treasury stock held by subsidiaries - - - - - - - 211 211 Cash dividends paid to subsidiaries which hold the Company’s shares

- - 5,620 - - - - - 5,620

Adjustments of net equity of investee companies - - (293,420) - - - - - (293,420) Change in foreign currency translation adjustment - - - - - - 24,529 - 24,529 Balance at June 30, 2005 24,679,983 - 14,427,862 4,016,353 81,754 2,890,831 (57,225) (77,125) 45,962,433

BenQ Corporation

Non-consolidated Statements of Cash Flows (Parent Company Only)

For the six-month periods ended June 30, 2004 and 2005 (expressed in thousands of New Taiwan dollars)

2005 2004 NT$ NT$ Cash flows from operating activities:

Net income 783,799 6,044,577Adjustments to reconcile net income to net cash provided by (used in) operating

activities: Depreciation 249,252 289,037Amortization 68,379 39,169Change in provision for bad debt (32,507) 22,616Change in provision for inventory obsolescence (46,949) (15,942)Investment loss (income) on long-term equity investments, net 1,051,510 (3,375,682)Cash dividends received from investees accounted for by equity method 24,400 -Gain on disposal of short-term investments (1,745,781) (69,920)Loss on disposal of long-term investments - 11,975Impairment loss on long-term investment 149,307 250,000Loss (gain) on disposal of property, plant and equipment (951) 1,718Unrealized foreign exchange gain on overseas convertible bonds (2,134) (9,279)Reversal for redemption of overseas convertible bonds (3,612) (6,334)Impairment loss 18,598 - Amortization of bond issuance cost 633 533Differences in accounts in the accompanying balance sheets:

Notes and accounts receivable 1,569,100 (979,206)Receivables from related parties 1,231,074 (296,027)Inventories 37,587 (259,336)Other financial assets-current (311,975) (203,003)Prepaid expenses and other current assets 70,169 (65,625)Notes and accounts payable (2,123,097) 786,884Payables to related parties 758,994 (591,472)Deferred inter-company profit 224,421 163,902Accrued expenses and other current liabilities (1,151,408) (356,830)Income tax payables (251,707) 407,199Deferred income tax assets (277,634) (224,759)Other liabilities (9,552) (9,552)

Net cash provided by operating activities 279,916 1,554,643

Cash flows from investing activities: Additions to long-term investments (953,052) (296,131)Decrease in short-term investments 6,494,025 3,242,667Additions to property, plant and equipment (112,092) (214,364)Proceeds from disposal of property, plant and equipment 2,238 7,850Increase in refundable deposits and deferred assets (214,635) (5,247)Receipt from investees’ capital reduction 9,428 26,147

Net cash provided by investing activities 5,225,912 2,760,922

Cash flows from financing activities: Increase in short-term borrowings - 151,988Redemption of convertible bonds (1,400) (200,300)Acquisition of treasury stock - (651,354)Directors’ and supervisors’ remuneration - (67,501)Issuance of bonds 4,000,000 -Payment of cash dividends - (4,123,924)

Net cash provided by (used in) financing activities 3,998,600 (4,891,091)

Net increase (decrease) in cash and cash equivalents 9,504,428 (575,526)

Cash and cash equivalents at beginning of period 599,457 1,139,573

Cash and cash equivalents at end of period 10,103,885 564,047

Additional disclosure of cash flow information: Cash paid during the period for:

Interest, excluding capitalized interest 147,024 49,372Income taxes 269,619 128,416

Supplemental disclosure of non-cash investing and financial activities: Unpaid cash dividends reported as accrued expenses 3,473,263 -Unpaid employee bonus reported as accrued expenses 152,170 50,626Increase (decrease) in capital surplus from long-term equity investments (293,420) 786,469Increase (decrease) in translation adjustment 24,529 (54,168)Convertible bonds converted to common stock and capital surplus 43,469 422,846Unreceivable cash dividends reported as receivables from related parties 1,143,379 -

BenQ Corporation and Subsidiaries Consolidated Balance Sheets

June 30, 2005 (expressed in thousands of New Taiwan dollars)

Unaudited

2005.6.30 Assets NT$ %

Current assets:

Cash and cash equivalents 15,513,950 15 Short-term investments 1,574,844 2 Notes and accounts receivable 16,372,396 16 Receivables from related parties 2,397,096 2 Other financial assets－current 1,685,477 2 Inventories 17,661,421 17 Prepaid expenses and other current assets 1,640,187 1 Deferred income tax assets-current 756,345 -

Total current assets 57,601,716 55 Long-term equity investments:

Equity method 17,802,246 17 Cost or lower-of-cost-or-market method 2,103,608 2 19,905,854 19

Property, plant and equipment:

Land 3,325,793 3 Buildings 8,894,542 9 Machinery and equipment 16,085,790 15 Furniture and fixtures 926,700 1 Miscellaneous equipment 994,529 1 Leasehold improvements 558,783 1 Prepayments for plant and equipment 3,340,095 3 34,126,232 33 Less: accumulated depreciation (10,805,322) (10)

Net property, plant and equipment 23,320,910 23 Other assets：

Refundable deposits 118,644 - Deferred expense and other assets 1,913,950 2 Deferred income tax assets-noncurrent 1,505,494 1

Total other assets 3,538,088 3

Total assets 104,366,568 100

2005.6.30 Liabilities and Stockholders’ Equity NT$ %

Current liabilities:

Short-term borrowings 4,047,484 4 Current portion of long-term debt 606,995 - Accounts payable 19,309,359 19 Payables to related parties 6,576,706 6 Bonds payable 100,000 - Accrued expenses and other current liabilities 10,867,031 11

Total current liabilities 41,507,575 40 Bonds payable 8,438,641 8 Long-term debt 5,451,614 5

Long-term liabilities 13,890,255 13 Other liabilities 107,706 -

Total liabilities 55,505,536 53 Stockholders’ equity:

Common stock:

Common stock 24,679,983 23

Capital surplus:

Additional paid-in capital in excess of the common stock’s par value

5,152,848 5

Convertible bonds converted in excess of the common stock’s par value

7,134,246 7

Capital surplus from treasury stock transactions 12,432 - Capital surplus from long-term equity investments 2,128,336 2 14,427,862 14

Legal reserves 4,016,353 4 Retained earnings 2,890,831 3 Special Reserve 81,754 - Translation adjustment (57,225) - Treasury stock (77,125) - Special reserves 45,962,433 44 Minority interest 2,898,599 3

Total stockholders’ equity 48,861,032 47

Total liabilities and stockholders’ equity 104,366,568 100

BenQ Corporation and Subsidiaries

Consolidated Statements of Income For the six-month periods ended June 30, 2005

(expressed in thousands of New Taiwan dollars, expect earnings per share) Unaudited

2005

NT$ % Net sales 67,734,146 100

Cost of goods sold (60,679,233) (90)

Gross profit 7,054,913 10

Operating expenses:

Selling (4,644,886) (7) Administrative (1,484,296) (2) Research and development (2,072,988) (3)

(8,202,170) (12) Operating income (1,147,257) (2)

Non-operating income:

Interest income 36,763 - Dividend income 119,755 - Gain on disposal of investments, net 1,839,384 3 Foreign currency exchange gain, net 29,303 - Others 221,546 -

2,246,751 3

Non-operating expense:

Interest expense (347,704) - Impairment loss on long-term equity investment (149,307) - Investment loss recorded under the equity method,

net (259,471)-

Loss on disposal of Property, plant and equipment - - Impairment loss on deferred expenses (18,598) - Others (39,480) -

(814,560) -

Net income before income tax expense 284,934 1

Income tax benefit 260,070 -

Net income before minority interest 545,004 1

Minority interesting in net loss of subsidiaries 238,795 -

Net income 783,799 1

Earnings per share:

Basic earnings per share 0.32

Diluted earnings per share 0.32


Consolidated Statements of Changes in Stockholders’ Equity

Years ended June 30, 2005 (expressed in thousands of New Taiwan dollars)

Unaudited

Common

Stock

Capital Surplus

Legal

Reserves

Special Reserve

Retained Earnings

TranslationAdjustment

Treasury

Stock

Minority interest

Total NT$ NT$ NT$ NT$ NT$ NT$ NT$ NT$ NT$ Balance at January 1, 2005 23,150,141 14,688,280 3,254,424 - 8,144,108 (81,754) (77,336) 2,532,751 51,610,614

Net income for the six-month period ended June 30,2005

- - - 783,799 - - (238,795) 545,004

Appropriation of earnings and capital surplus:

Legal reserves - - 761,929- (761,929)- - - - Sepecial reserves - 81,754 (81,754) Retained earnings transferred to common stock

1,513,755 - - (1,513,755) - - -

Cash dividends - - - (3,473,263) - - (3,473,263)Employee bonus in cash - - - (152,170) - - (152,170)Directors’ and supervisors’ remuneration

- - - (54,205) - - (1,267) (55,472)


16,087 27,382 - - - - 43,469

Change in treasury stock held by subsidiaries

- - - - - 211 (5) 206

Cash dividends paid to subsidiaries which hold the Company’s shares

- 5,620 - - - - 5,620

Adjustments of net equity of investee companies

- (293,420) - - - - 11,475 (281,945)

Change in foreign currency translation adjustment

- - - - 24,529 - (10,948) 13,581

Effect of newly consolidated subsidiaries

605,388 605,388

Balance at June 30, 2005 24,679,983 14,427,862 4,016,353 81,754 2,890,831 (57,225) (77,125) 2,898,599 48,861,032


Consolidated Statements of Cash Flows

For the six-month periods ended June 30, 2005 (expressed in thousands of New Taiwan dollars)

Unaudited

2005 NT$ Cash flows from operating activities:

Net income 783,799 Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Minority interest in net loss of subsidiaries (238,795)Depreciation 1,582,575 Amortization 114,505 Impairment loss 18,598 Loss on disposal of property, plant and equipment 296 Fixed assets transferred to expenses 9,058 Gain on disposal of short-term investment (1,752,238)Gain on disposal of long-term investments (87,146)Impairment loss on long-term equity investment 149,307 Investment income on long-term equity investments, net 259,471 Cash dividends received from investees accounted for by equity method 1,143,378Unrealized foreign exchange gain on overseas convertible bonds (2,134)Reversal for redemption of overseas convertible bonds (3,612)Amortization of bond issuance cost 633 Differences in accounts in the accompanying balance sheets:

Notes and accounts receivable 2,778,865 Receivables from related parties 557,378 Inventories (185,688)Other financial assets-current (126,266)Prepaid expenses and other current assets (411,830)Deferred income tax assets (343,086)Notes and accounts payable (1,333,712)Payables to related parties 327,667 Accrued expenses and other current liabilities (683,533)Other liabilities (29,651)Deferred income tax liabilities (341)

Net cash provided by operating activities 2,527,498

Cash flows from investing activities: Proceeds from disposal of property, plant and equipment 338,395 Additions to property, plant and equipment (3,135,167)Increase in refundable deposits and deferred assets (920,452)Proceeds from disposal of long-term equity investments 135,407 Additions to long-term investments (30,558)Receipt from investees’ capital reduction 9,428 Decrease in short-term investments 6,532,531

Net cash provided by investing activities 2,929,584

Cash flows from financing activities: Increase in short-term borrowings 637,167 Increase in long-term debt 787,765 Issuance of bonds 4,000,000 Redemption of convertible bonds (1,400)Decrease in minority interest (1,232)

Net cash provided by financing activities 5,422,300

Effect of newly consolidated subsidiaries 1,244,386

Effect of exchange rate changes on cash and cash equivalents 172,041

Net increase in cash and cash equivalents 12,295,809

Cash and cash equivalents at beginning of period 3,218,141

Cash and cash equivalents at end of period 15,513,950

Additional disclosure of cash flow information: Cash paid during the period for:

Interest, excluding capitalized interest 270,025 Income taxes 298,255

Supplemental disclosure of noncash investing and financial activities: Unpaid cash dividends reported as accrued expenses 3,473,263 Unpaid employee bonus reported as accrued expenses 152,170 Increase in translation adjustment 24,529 Convertible bonds transferred to common stock and capital surplus 43,469

· benq corporation non-consolidated balance sheets (parent company only) june 30, 2004 and 2005...

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