Financial Highlights

Condensed Balance Sheet

Condensed Balance Sheet from 2012 to 2014 (Consolidated)

Unit: NT$ thousands

Item	2012	2013	2014
Current Assets	250,325,436	358,486,654	626,566,787
Long-term Investments (Note 1)	65,717,240	89,183,810	30,051,544
Property, Plant and Equipment	617,562,188	792,665,913	818,198,801
Intangible Assets	10,959,569	11,490,383	13,531,510
Other Assets (Note 2)	16,790,075	11,228,217	6,785,203
Total Assets	961,354,508	1,263,054,977	1,495,133,845
Current Liabilities
Before Distribution	148,473,947	189,777,934	201,014,777
After Distribution	226,247,254	267,563,785	(Note 3)
Noncurrent Liabilities	89,786,655	225,501,958	248,443,321
Total Liabilities
Before Distribution	238,260,602	415,279,892	449,458,098
After Distribution	316,033,909	493,065,743	(Note 3)
Equity Attributable to Shareholders of the Parent
Capital Stock	259,244,357	259,286,171	259,296,624
Capital Surplus	55,675,340	55,858,626	55,989,922
Retained Earnings
Before Distribution	408,411,468	518,193,152	704,512,664
After Distribution	330,638,161	440,407,301	(Note 3)
Others	(2,780,485)	14,170,306	25,749,291
Equity Attributable to Shareholders of the Parent
Before Distribution	720,550,680	847,508,255	1,045,548,501
After Distribution	642,777,373	769,722,404	(Note 3)
Noncontrolling Interests	2,543,226	266,830	127,246
Total Equity
Before Distribution	723,093,906	847,775,085	1,045,675,747
After Distribution	645,320,599	769,989,234	(Note 3)

Note 1:	Long-term investments consist of noncurrent available-for-sale financial assets, financial assets carried at cost and investments accounted for using equity method.
Note 2:	Other assets consist of deferred income tax assets, refundable deposits, and other noncurrent assets.
Note 3:	Pending for shareholders’ approval.

Condensed Balance Sheet from 2010 to 2011 (Consolidated)－R.O.C. GAAP

Unit: NT$ thousands

Item	2010	2011
Current Assets	261,519,317	225,260,396
Long-term Investments	39,775,528	34,458,504
Fixed Assets	388,444,023	490,374,916
Other Assets	29,190,036	24,171,126
Total Assets	718,928,904	774,264,942
Current Liabilities
Before Distribution	123,191,113	117,006,687
After Distribution	200,921,349	194,755,355
Long-term Liabilities	12,050,755	20,458,493
Other Liabilities	4,982,631	4,756,211
Total Liabilities
Before Distribution	140,224,499	142,221,391
After Distribution	217,954,735	219,970,059
Capital Stock	259,100,787	259,162,226
Capital Surplus	55,698,434	55,846,357
Retained Earnings
Before Distribution	265,779,571	322,191,155
After Distribution	188,049,335	244,442,487
Cumulative Transaction Adjustments	(6,543,163)	(6,433,369)
Unrealized Gain/Loss on Financial Instruments	109,289	(1,172,855)
Equity Attributable to Shareholders of the Parent
Before Distribution	574,144,918	629,593,514
After Distribution	496,414,682	551,844,846
Minority Interests	4,559,487	2,450,037
Total Equity
Before Distribution	578,704,405	632,043,551
After Distribution	500,974,169	554,294,883

Condensed Balance Sheet from 2012 to 2014 (Unconsolidated)

Unit: NT$ thousands

Item	2012	2013	2014
Current Assets	205,819,614	257,623,763	370,949,497
Long-term Investments (Note 1)	139,634,200	165,545,159	242,390,122
Property, Plant and Equipment	586,636,036	770,443,494	796,684,361
Intangible Assets	6,449,837	7,069,456	8,996,810
Other Assets (Note 2)	13,597,966	7,897,131	4,023,634
Total Assets	952,137,653	1,208,579,003	1,423,044,424
Current Liabilities
Before Distribution	144,528,616	187,195,744	178,261,092
After Distribution	222,301,923	264,981,595	(Note 3)
Noncurrent Liabilities	87,058,357	173,875,004	199,234,831
Total Liabilities
Before Distribution	231,586,973	361,070,748	377,495,923
After Distribution	309,360,280	438,856,599	(Note 3)
Equity
Capital Stock	259,244,357	259,286,171	259,296,624
Capital Surplus	55,675,340	55,858,626	55,989,922
Retained Earnings
Before Distribution	408,411,468	518,193,152	704,512,664
After Distribution	330,638,161	440,407,301	(Note 3)
Others	(2,780,485)	14,170,306	25,749,291
Total Equity
Before Distribution	720,550,680	847,508,255	1,045,548,501
After Distribution	642,777,373	769,722,404	(Note 3)

Note 1:	Long-term investments consist of financial assets carried at cost and investments accounted for using equity method.
Note 2:	Other assets consist of deferred income tax assets, refundable deposits, and other noncurrent assets.
Note 3:	Pending for shareholders’ approval.

Condensed Balance Sheet from 2010 to 2011 (Unconsolidated)－R.O.C. GAAP

Unit: NT$ thousands

Item	2010	2011
Current Assets	192,234,282	158,563,352
Long-term Investments	117,913,756	129,400,844
Fixed Assets	366,854,299	454,373,533
Other Assets	24,237,329	19,070,145
Total Assets	701,239,666	761,407,874
Current Liabilities
Before Distribution	118,022,260	109,514,430
After Distribution	195,752,496	187,263,098
Long-term Liabilities	4,500,000	18,000,000
Other Liabilities	4,572,488	4,299,930
Total Liabilities
Before Distribution	127,094,748	131,814,360
After Distribution	204,824,984	209,563,028
Capital Stock	259,100,787	259,162,226
Capital Surplus	55,698,434	55,846,357
Retained Earnings
Before Distribution	265,779,571	322,191,155
After Distribution	188,049,335	244,442,487
Cumulative Transaction Adjustments	(6,543,163)	(6,433,369)
Unrealized Gain/Loss on Financial Instruments	109,289	(1,172,855)
Total Equity
Before Distribution	574,144,918	629,593,514
After Distribution	496,414,682	551,844,846

Condensed Statement of Comprehensive Income/Condensed Statement of Income

Condensed Statement of Comprehensive Income from 2012 to 2014 (Consolidated)

Unit: NT$ thousands (Except EPS: NT$)

Item	2012	2013	2014
Net Revenue	506,745,234	597,024,197	762,806,465
Gross Profit	244,137,107	280,945,507	377,734,375
Income from Operations	181,176,868	209,429,363	295,890,293
Non-operating Income and Expenses	499,588	6,057,759	6,207,253
Income before Income Tax	181,676,456	215,487,122	302,097,546
Net Income	166,123,802	188,018,937	263,780,869
Other Comprehensive Income for the Year, Net of Income Tax	4,252,632	16,352,248	11,834,164
Total Comprehensive Income for the Year	170,376,434	204,371,185	275,615,033
Net Income (Loss) Attributable to:
Shareholders of the Parent	166,318,286	188,146,790	263,898,794
Noncontrolling Interests	(194,484)	(127,853)	(117,925)
Total Comprehensive Income (Loss) Attributable to:
Shareholders of the Parent	170,521,543	204,505,782	275,717,141
Noncontrolling Interests	(145,109)	(134,597)	(102,108)
Basic Earnings Per Share	6.42*	7.26*	10.18*

*Based on weighted average shares outstanding in each year

Condensed Statement of Income from 2010 to 2011 (Consolidated)－R.O.C. GAAP

Unit: NT$ thousands (Except EPS: NT$)

Item	2010	2011
Net Sales	419,537,911	427,080,645
Gross Profit	207,053,591	194,069,228
Income from Operations	159,175,335	141,557,418
Non-operating Income and Gains	13,136,072	5,358,527
Non-operating Expenses and Losses	2,041,012	1,768,268
Interest Revenue	1,665,193	1,479,514
Interest Expense	425,356	626,725
Income before Income Tax	170,270,395	145,147,677
Net Income	162,281,930	134,453,260
Net Income Attributable to Shareholders of the Parent	161,605,009	134,201,279
Basic Earnings Per Share	6.24*	5.18*

*Based on weighted average shares outstanding in each year

Condensed Statement of Comprehensive Income from 2012 to 2014 (Unconsolidated)

Unit: NT$ thousands (Except EPS: NT$)

Item	2012	2013	2014
Net revenue	500,369,525	591,087,600	757,152,389
Gross Profit	234,850,311	271,644,860	366,911,703
Income from Operations	176,820,141	204,653,892	290,659,658
Non-operating Income and Expenses	6,932,246	11,062,658	10,363,505
Income before Income Tax	183,752,387	215,716,550	301,023,163
Net Income	166,318,286	188,146,790	263,898,794
Other Comprehensive Income for the Year, Net of Income Tax	4,203,257	16,358,992	11,818,347
Total Comprehensive Income for the Year	170,521,543	204,505,782	275,717,141
Basic Earnings Per Share	6.42*	7.26*	10.18*

*Based on weighted average shares outstanding in each year

Condensed Statement of Income from 2010 to 2011 (Unconsolidated)－R.O.C. GAAP

Unit: NT$ thousands (Except EPS: NT$)

Item	2010	2011
Net Sales	406,963,312	418,245,493
Gross Profit	196,989,302	185,560,865
Income from Operations	154,846,508	138,905,763
Non-operating Income and Gains	15,907,968	7,287,046
Non-operating Expenses and Losses	1,464,272	1,484,965
Interest Revenue	764,027	697,196
Interest Expense	214,641	445,887
Income before Income Tax	169,290,204	144,707,844
Net Income	161,605,009	134,201,279
Basic Earnings Per Share	6.24*	5.18*

*Based on weighted average shares outstanding in each year

Financial Analysis

Financial Analysis from 2012 to 2014 (Consolidated)

2012

2013

2014年

Capital Structure Analysis

Debts Ratio (%)

24.78

32.88

30.06

Long-term Fund to Property, Plant and Equipment (%)

131.63

135.40

158.17

Liquidity Analysis

Current Ratio (%)

168.60

188.90

311.70

Quick Ratio (%)

142.39

168.57

278.03

Times Interest Earned (Times)

177.92

82.41

94.35

Operating Performance Analysis

Average Collection Turnover (Times)

9.64

9.11

8.12

Days Sales Outstanding

37.86

40.06

44.95

Average Inventory Turnover (Times)

8.38

8.39

7.42

Average Inventory Turnover Days

43.56

43.49

49.19

Average Payment Turnover (Times)

19.38

20.01

19.39

Property, Plant and Equipment Turnover (Times)

0.91

0.85

0.95

Total Assets Turnover (Times)

0.58

0.54

0.55

Profitability Analysis

Return on Total Assets (%)

19.19

17.11

19.33

Return on Equity attributable to Shareholders of the Parent (%)

24.68

24.00

27.88

Operating Income to Paid-in Capital Ratio (%)

69.89

80.77

114.11

Pre-tax Income to Paid-in Capital Ratio (%)

70.08

83.11

116.51

Net Margin (%)

32.78

31.49

34.58

Basic Earnings Per Share (NT$)

6.42

7.26

10.18

Diluted Earnings Per Share (NT$)

6.41

7.26

10.18

Cash Flow

Cash Flow Ratio (%)

191.93

183.05

209.70

Cash Flow Adequacy Ratio (%) (Note 1)

94.71

88.35

92.15

Cash Flow Reinvestment Ratio (%)

11.46

12.16

13.04

Leverage

Operating Leverage

2.32

2.40

2.15

Financial Leverage

1.01

Industry Specific Key
Performance Indicator

Billing Utilization Rate (%) (Note 2)

Advanced Technologies (28-nanometer and below) Percentage of Wafer Sales (%)

Sales Growth (%)

18.7 (Note 3)

17.82

27.77

Net Income Growth (%)

23.9 (Note 3)

13.12

40.26

Analysis of deviation of 2014 vs. 2013 over 20%:

1.	Current ratio and quick ratio increased by 65%, mainly due to increase in cash and cash equivalents, available-for-sale financial assets and notes and accounts receivable.
2.	Operating income to paid-in capital ratio increased by 41% as a result of increase in operating income.
3.	Pre-tax income to paid-in capital ratio increased by 40% as a result of increase in pre-tax income.
4.	Basic earnings per share and diluted earnings per share increased by 40% as a result of increase in net income.

Note 1: 2008-2011 operating cash flow are based on R.O.C. GAAP.
Note 2: Capacity includes wafers committed by Vanguard and SSMC.
Note 3: 2011 net sales and net income are based on R.O.C. GAAP

*Glossary

1. Capital Structure Analysis

(1)	Debt Ratio = Total Liabilities / Total Assets
(2)	Long-term Fund to Property, Plant and Equipment Ratio = (Shareholders’ Equity + Noncurrent Liabilities) / Net Property, Plant and Equipment

2. Liquidity Analysis

(1)	Current Ratio = Current Assets / Current Liabilities
(2)	Quick Ratio = (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities
(3)	Times Interest Earned = Earnings before Interest and Taxes / Interest Expenses

3. Operating Performance Analysis

(1)	Average Collection Turnover = Net Sales / Average Trade Receivables
(2)	Days Sales Outstanding = 365 / Average Collection Turnover
(3)	Average Inventory Turnover = Cost of Sales / Average Inventory
(4)	Average Inventory Turnover Days = 365 / Average Inventory Turnover
(5)	Average Payment Turnover = Cost of Sales / Average Trade Payables
(6)	Property, Plant and Equipment Turnover = Net Sales / Average Net Property, Plant and Equipment
(7)	Total Assets Turnover = Net Sales / Average Total Assets

4. Profitability Analysis

(1)	Return on Total Assets = (Net Income + Interest Expenses * (1 - Effective Tax Rate)) / Average Total Assets
(2)	Return on Equity Attributable to Shareholders of the Parent = Net Income Attributable to Shareholders of the Parent / Average Equity Attributable to Shareholders of the Parent
(3)	Operating Income to Paid-in Capital Ratio= Operating Income / Paid-in Capital
(4)	Pre-tax Income to Paid-in Capital Ratio = Income before Tax / Paid-in Capital
(5)	Net Margin = Net Income / Net Sales
(6)	Earnings Per Share = (Net Income Attributable to Shareholders of the Parent - Preferred Stock Dividend) / Weighted Average Number of Shares Outstanding

5. Cash Flow

(1)	Cash Flow Ratio = Net Cash Provided by Operating Activities / Current Liabilities
(2)	Cash Flow Adequacy Ratio = Five-year Sum of Cash from Operations / Five-year Sum of Capital Expenditures, Inventory Additions, and Cash Dividend
(3)	Cash Flow Reinvestment Ratio = (Cash Provided by Operating Activities - Cash Dividends) / (Gross Property, Plant and Equipment + Long-term Investments + Other Noncurrent Assets + Working Capital)

6. Leverage

(1)	Operating Leverage = (Net Sales - Variable Cost) / Income from Operations
(2)	Financial Leverage = Income from Operations / (Income from Operations - Interest Expenses)

Financial Analysis from 2010 to 2011 (Consolidated)－R.O.C. GAAP

		2010	2011
Capital Structure Analysis	Debts Ratio (%)	19.50	18.37
Capital Structure Analysis	Long-term Fund to Fixed Assets (%)	152.08	133.06
Liquidity Analysis	Current Ratio (%)	212.29	192.52
	Quick Ratio (%)	187.57	170.06
	Times Interest Earned (Times)	401.30	229.27
Operating Performance Analysis	Average Collection Turnover (Times)	10.57	10.06
	Days Sales Outstanding	34.54	36.29
	Average Inventory Turnover (Times)	8.62	8.75
	Average Inventory Turnover Days	42.36	41.70
	Average Payment Turnover (Times)	17.23	18.77
	Fixed Assets Turnover (Times)	1.27	0.97
	Total Assets Turnover (Times)	0.64	0.57
Profitability Analysis	Return on Total Assets (%)	24.77	18.08
	Return on Equity (%)	30.23	22.30
	Operating Income to Paid-in Capital Ratio (%)	61.43	54.62
	Pre-tax Income to Paid-in Capital Ratio (%)	65.72	56.01
	Net Margin (%)	38.68	31.48
	Basic Earnings Per Share (NT$)	6.24	5.18
	Diluted Earnings Per Share (NT$)	6.23	5.18
Cash Flow	Cash Flow Ratio (%)	186.28	211.60
	Cash Flow Adequacy Ratio (%)	113.91	101.93
	Cash Flow Reinvestment Ratio (%)	11.13	11.12
Leverage	Operating Leverage	2.12	2.50
Leverage	Financial Leverage	1.00	1.00
Industry Specific Key Performance Indicator	Billing Utilization Rate (%) (Note)	101	91
	Advanced Technologies (28-nanometer and below) Percentage of Wafer Sales (%)	-	1
	Sales Growth (%)	41.9	1.8
	Net Income Growth (%)	81.1	-17.0

Note: Capacity includes wafers committed by Vanguard and SSMC.

*Glossary

1. Capital Structure Analysis

(1)	Debt Ratio = Total Liabilities / Total Assets
(2)	Long-term Fund to Property, Plant and Equipment Ratio = (Shareholders’ Equity + Noncurrent Liabilities) / Net Property, Plant and Equipment

2. Liquidity Analysis

(1)	Current Ratio = Current Assets / Current Liabilities
(2)	Quick Ratio = (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities
(3)	Times Interest Earned = Earnings before Interest and Taxes / Interest Expenses

3. Operating Performance Analysis

(1)	Average Collection Turnover = Net Sales / Average Trade Receivables
(2)	Days Sales Outstanding = 365 / Average Collection Turnover
(3)	Average Inventory Turnover = Cost of Sales / Average Inventory
(4)	Average Inventory Turnover Days = 365 / Average Inventory Turnover
(5)	Average Payment Turnover = Cost of Sales / Average Trade Payables
(6)	Property, Plant and Equipment Turnover = Net Sales / Average Net Property, Plant and Equipment
(7)	Total Assets Turnover = Net Sales / Average Total Assets

4. Profitability Analysis

(1)	Return on Total Assets = (Net Income + Interest Expenses * (1 - Effective Tax Rate)) / Average Total Assets
(2)	Return on Equity Attributable to Shareholders of the Parent = Net Income Attributable to Shareholders of the Parent / Average Equity Attributable to Shareholders of the Parent
(3)	Operating Income to Paid-in Capital Ratio= Operating Income / Paid-in Capital
(4)	Pre-tax Income to Paid-in Capital Ratio = Income before Tax / Paid-in Capital
(5)	Net Margin = Net Income / Net Sales
(6)	Earnings Per Share = (Net Income Attributable to Shareholders of the Parent - Preferred Stock Dividend) / Weighted Average Number of Shares Outstanding

5. Cash Flow

(1)	Cash Flow Ratio = Net Cash Provided by Operating Activities / Current Liabilities
(2)	Cash Flow Adequacy Ratio = Five-year Sum of Cash from Operations / Five-year Sum of Capital Expenditures, Inventory Additions, and Cash Dividend
(3)	Cash Flow Reinvestment Ratio = (Cash Provided by Operating Activities - Cash Dividends) / (Gross Property, Plant and Equipment + Long-term Investments + Other Noncurrent Assets + Working Capital)

6. Leverage

(1)	Operating Leverage = (Net Sales - Variable Cost) / Income from Operations
(2)	Financial Leverage = Income from Operations / (Income from Operations - Interest Expenses)

Financial Analysis from 2012 to 2014 (Unconsolidated)

2012

2013

2014

Capital Structure Analysis

Debt Ratio (%)

24.32

29.88

26.53

Long-term Fund to Property, Plant and Equipment Ratio (%)

137.67

132.57

156.25

Liquidity Analysis

Current Ratio (%)

142.41

137.62

208.09

Quick Ratio (%)

117.49

118.35

171.82

Times Interest Earned (Times)

195.42

104.10

120.82

Operating Performance Analysis

Average Collection Turnover (Times)

9.87

9.26

8.29

Days Sales Outstanding

36.98

39.40

44.02

Average Inventory Turnover (Times)

9.13

9.06

7.90

Average Inventory Turnover Days

39.97

40.30

46.19

Average Payment Turnover (Times)

18.22

18.55

18.64

Property, Plant and Equipment Turnover (Times)

0.96

0.87

0.97

Total Assets Turnover (Times)

0.58

0.55

0.58

Profitability Analysis

Return on Total Assets (%)

19.45

17.58

20.22

Return on Equity (%)

24.68

24.00

27.88

Operating Income to Paid-in Capital Ratio (%)

68.21

78.93

112.10

Pre-tax Income to Paid-in Capital Ratio (%)

70.88

83.20

116.09

Net Margin (%)

33.24

31.83

34.85

Basic Earnings Per Share (NT$)

6.42

7.26

10.18

Diluted Earnings Per Share (NT$)

6.41

7.26

10.18

Cash Flow

Cash Flow Ratio (%)

189.88

179.11

230.29

Cash Flow Adequacy Ratio (%) (Note)

93.23

86.78

90.72

Cash Flow Reinvestment Ratio (%)

11.36

12.32

13.29

Leverage

Operating Leverage

2.37

2.46

2.19

Financial Leverage

1.01

Analysis of deviation of 2014 vs. 2013 over 20%:

1.	Current ratio increased by 51%, mainly due to increase in cash and cash equivalents, receivables from related parties and inventories.
2.	Quick ratio increased by 45%, mainly due to increase in cash and cash equivalents, receivables from related parties and inventories.
3.	Operating income to paid-in capital ratio increased by 42% as a result of increase in operating income.
4.	Pre-tax income to paid-in capital ratio increased by 40% as a result of increase in pre-tax income.
5.	Basic earnings per share and diluted earnings per share increased by 40% as a result of increase in net income.
6.	Cash flow ratio increased by 29% as a result of increase in cash provided by operating activities.

Note: 2008-2011 operating cash flow are based on R.O.C. GAAP.

*Glossary

1. Capital Structure Analysis

(1)	Debt Ratio = Total Liabilities / Total Assets
(2)	Long-term Fund to Property, Plant and Equipment Ratio = (Shareholders’ Equity + Noncurrent Liabilities) / Net Property, Plant and Equipment

2. Liquidity Analysis

(1)	Current Ratio = Current Assets / Current Liabilities
(2)	Quick Ratio = (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities
(3)	Times Interest Earned = Earnings before Interest and Taxes / Interest Expenses

3. Operating Performance Analysis

(1)	Average Collection Turnover = Net Sales / Average Trade Receivables
(2)	Days Sales Outstanding = 365 / Average Collection Turnover
(3)	Average Inventory Turnover = Cost of Sales / Average Inventory
(4)	Average Inventory Turnover Days = 365 / Average Inventory Turnover
(5)	Average Payment Turnover = Cost of Sales / Average Trade Payables
(6)	Property, Plant and Equipment Turnover = Net Sales / Average Net Property, Plant and Equipment
(7)	Total Assets Turnover = Net Sales / Average Total Assets

4. Profitability Analysis

(1)	Return on Total Assets = (Net Income + Interest Expenses * (1 - Effective Tax Rate)) / Average Total Assets
(2)	Return on Equity Attributable to Shareholders of the Parent = Net Income Attributable to Shareholders of the Parent / Average Equity Attributable to Shareholders of the Parent
(3)	Operating Income to Paid-in Capital Ratio= Operating Income / Paid-in Capital
(4)	Pre-tax Income to Paid-in Capital Ratio = Income before Tax / Paid-in Capital
(5)	Net Margin = Net Income / Net Sales
(6)	Earnings Per Share = (Net Income Attributable to Shareholders of the Parent - Preferred Stock Dividend) / Weighted Average Number of Shares Outstanding

5. Cash Flow

(1)	Cash Flow Ratio = Net Cash Provided by Operating Activities / Current Liabilities
(2)	Cash Flow Adequacy Ratio = Five-year Sum of Cash from Operations / Five-year Sum of Capital Expenditures, Inventory Additions, and Cash Dividend
(3)	Cash Flow Reinvestment Ratio = (Cash Provided by Operating Activities - Cash Dividends) / (Gross Property, Plant and Equipment + Long-term Investments + Other Noncurrent Assets + Working Capital)

6. Leverage

(1)	Operating Leverage = (Net Sales - Variable Cost) / Income from Operations
(2)	Financial Leverage = Income from Operations / (Income from Operations - Interest Expenses)

Financial Analysis from 2010 to 2011 (Unconsolidated)－R.O.C. GAAP

		2010	2011
Capital Structure Analysis	Debt Ratio (%)	18.12	17.31
Capital Structure Analysis	Long-term Fund to Fixed Assets Ratio (%)	157.73	142.52
Liquidity Analysis	Current Ratio (%)	162.88	144.79
	Quick Ratio (%)	140.07	122.41
	Times Interest Earned (Times)	789.71	325.54
Operating Performance Analysis	Average Collection Turnover (Times)	10.93	10.40
	Days Sales Outstanding	33.40	35.09
	Average Inventory Turnover (Times)	9.44	9.61
	Average Inventory Turnover Days	38.67	37.97
	Average Payment Turnover (Times)	16.89	18.17
	Fixed Assets Turnover (Times)	1.31	1.02
	Total Assets Turnover (Times)	0.64	0.57
Profitability Analysis	Return on Total Assets (%)	25.31	18.40
	Return on Equity (%)	30.23	22.30
	Operating Income to Paid-in Capital Ratio (%)	59.76	53.60
	Pre-tax Income to Paid-in Capital Ratio (%)	65.34	55.84
	Net Margin (%)	39.71	32.09
	Basic Earnings Per Share (NT$)	6.24	5.18
	Diluted Earnings Per Share (NT$)	6.23	5.18
Cash Flow	Cash Flow Ratio (%)	188.12	217.99
	Cash Flow Adequacy Ratio (%)	109.98	99.13
	Cash Flow Reinvestment Ratio (%)	11.20	11.07
Leverage	Operating Leverage	2.17	2.54
Leverage	Financial Leverage	1.00	1.00

*Glossary

1. Capital Structure Analysis

(1)	Debt Ratio = Total Liabilities / Total Assets
(2)	Long-term Fund to Property, Plant and Equipment Ratio = (Shareholders’ Equity + Noncurrent Liabilities) / Net Property, Plant and Equipment

2. Liquidity Analysis

(1)	Current Ratio = Current Assets / Current Liabilities
(2)	Quick Ratio = (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities
(3)	Times Interest Earned = Earnings before Interest and Taxes / Interest Expenses

3. Operating Performance Analysis

(1)	Average Collection Turnover = Net Sales / Average Trade Receivables
(2)	Days Sales Outstanding = 365 / Average Collection Turnover
(3)	Average Inventory Turnover = Cost of Sales / Average Inventory
(4)	Average Inventory Turnover Days = 365 / Average Inventory Turnover
(5)	Average Payment Turnover = Cost of Sales / Average Trade Payables
(6)	Property, Plant and Equipment Turnover = Net Sales / Average Net Property, Plant and Equipment
(7)	Total Assets Turnover = Net Sales / Average Total Assets

4. Profitability Analysis

(1)	Return on Total Assets = (Net Income + Interest Expenses * (1 - Effective Tax Rate)) / Average Total Assets
(2)	Return on Equity Attributable to Shareholders of the Parent = Net Income Attributable to Shareholders of the Parent / Average Equity Attributable to Shareholders of the Parent
(3)	Operating Income to Paid-in Capital Ratio= Operating Income / Paid-in Capital
(4)	Pre-tax Income to Paid-in Capital Ratio = Income before Tax / Paid-in Capital
(5)	Net Margin = Net Income / Net Sales
(6)	Earnings Per Share = (Net Income Attributable to Shareholders of the Parent - Preferred Stock Dividend) / Weighted Average Number of Shares Outstanding

5. Cash Flow

(1)	Cash Flow Ratio = Net Cash Provided by Operating Activities / Current Liabilities
(2)	Cash Flow Adequacy Ratio = Five-year Sum of Cash from Operations / Five-year Sum of Capital Expenditures, Inventory Additions, and Cash Dividend
(3)	Cash Flow Reinvestment Ratio = (Cash Provided by Operating Activities - Cash Dividends) / (Gross Property, Plant and Equipment + Long-term Investments + Other Noncurrent Assets + Working Capital)

6. Leverage

(1)	Operating Leverage = (Net Sales - Variable Cost) / Income from Operations
(2)	Financial Leverage = Income from Operations / (Income from Operations - Interest Expenses)

Auditors’ Opinions from 2010 to 2014

Year	CPA	Audit Opinion
2010	Hung-Peng Lin, Shu-Chieh Huang	An Unqualified Opinion
2011	Hung-Peng Lin, Shu-Chieh Huang	An Unqualified Opinion
2012	Hung-Peng Lin, Shu-Chieh Huang	An Unqualified Opinion
2013	Yi-Hsin Kao, Hung-Wen Huang	An Unqualified Opinion
2014	Yi-Hsin Kao, Hung-Wen Huang	An Unqualified Opinion

Deloitte & Touche

12F, No. 156, Sec. 3, Min-Sheng E. Rd., Taipei, Taiwan, R.O.C.

Tel: 886-2-2545-9988

Audit Committee’s Review Report

The Board of Directors has prepared the Company’s 2014 Business Report, Financial Statements, and proposal for allocation of profits. The CPA firm of Deloitte & Touche was retained to audit TSMC’s Financial Statements and has issued an audit report relating to the Financial Statements. The Business Report, Financial Statements, and profit allocation proposal have been reviewed and determined to be correct and accurate by the Audit Committee members of Taiwan Semiconductor Manufacturing Company Limited. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Law, we hereby submit this report.

Taiwan Semiconductor Manufacturing Company Limited

Chairman of the Audit Committee: Sir Peter Leahy Bonfield

February 10, 2015

Financial Difficulties

The Company should disclose the financial impact to the Company if the Company and its affiliated companies have incurred any financial or cash flow difficulties in 2014 and as of the date of this Annual Report: None

Consolidated Financial Statements and Independent Auditors’ Report along with Parent Company Only Financial Statements and Independent Auditors’ Report

Please refer to Annual Report section (II), Financial Statements.