4.1. 2012-2015 Consolidated Financial Analysis – MediaTek & Subsidiaries – Based on IFRS

Changes that exceed 20% in the past two years and explanation for those changes:

(1) Long-term fund to property, plant and equipment ratio decreased by 32%: Mainly due to increase in property, plant and equipment.

(2) Times interest earned decreased by 50%: Mainly due to decrease in earnings before interest and taxes.

(3) Average collection turnover increased by 24%: Mainly due to increase in average trade receivables.

(4) Average inventory turnover decreased by 24% and average inventory turnover days increased by 31%: Mainly due to increase in average inventory

(5) Property, plant and equipment turnover decreased by 40%: Mainly due to increase in average property, plant and equipment.

(6) Return on total assets decreased by 51%, return on equity decreased by 50%, pre-tax income to paid-in capital decreased by 44%, net margin decreased by 45% and basic earnings per share decreased by 45%: Mainly due to decrease in net income before income tax and net income.

(7) Cash flow ratio decreased by 47% and cash flow reinvestment ratio decreased by 157%: Mainly due to decrease in cash provided by operating activities and increase in cash dividend.

(8) Operating leverage increased by 74%: Mainly due to decrease in operating income.

Note: 2008-2011 cash inflows from operating activities were in ROC GAAP.

4.2. 2011 Consolidated Financial Analysis – MediaTek & Subsidiaries – Based on ROC GAAP

4.3. 2012-2015 Financial Analysis – Parent Company – Based on IFRS

Changes that exceed 20% in the past two years and explanation for those changes:

(1) Debt ratio decreased by 22%: Mainly due to decrease in short-term borrowings, other payables and tax payables.

(2) Times interest earned decreased by 67%: Mainly due to decrease in earnings before interest and taxes.

(3) Average inventory turnover decreased by 37% and average inventory turnover days increased by 60%: Mainly due to increase in average inventory.

(4) Average payment turnover decreased by 21%: Mainly due to decrease in operating costs associated with lower net sales.

(5) Property, plant, and equipment turnover decreased by 43%: Mainly due to increase in property, plant and equipment.

(6) Total assets turnover decreased by 34%: Mainly due to decrease in net sales.

(7) Return on total assets decreased by 49%, return on equity decreased by 49%, pre-tax income to paid-in capital decreased by 44%, net margin decreased by 23% and basic earnings per share decreased by 45%: Mainly due to decrease in net income before income tax and net income.

(8) Cash flow ratio decreased by 81% and cash flow reinvestment ratio decreased by 154%: Mainly due to decrease in net cash provided by operating activities and increase in cash dividend.

(9) Operating leverage increased by 90%: Mainly due to decrease in operating income.

Note: 2008-2011 cash inflows from operating activities were in ROC GAAP.

4.4. 2011 Financial Analysis – Parent Company – Based on ROC 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 + non-current 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 = Operating costs / Average inventory

 (4). Average payment turnover = operating costs / Average trade payables

 (5). Average inventory turnover days = 365 / Average inventory turnover

 (6). Property, plant and equipment turnover = Net sales / Average property, plant and equipment

 (7). Total assets turnover = Net sales / total assets

4. Profitability Analysis:

 (1). Return on total assets = [Net income + Interest expenses x (1 – 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). Net margin = Net income / Net sales

 (4). 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) / Operating income

 (2). Financial leverage = Operating income / (Operating income – interest expenses)

Glossary (ROC GAAP):

1. Capital Structure Analysis:

 (1). Debt ratio = Total liabilities / Total assets

 (2). Long-term fund to fixed assets ratio = (Shareholders’ equity + long-term liabilities) / Net fixed assets

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 = Operating costs / Average inventory

 (4). Average payment turnover = operating costs / Average trade payables

 (5). Average inventory turnover days = 365 / Average inventory turnover

 (6) Fixed assets turnover = Net sales / Average net fixed assets

 (7). Total assets turnover = Net sales / Average total assets

4. Profitability Analysis:

 (1). Return on total assets = [Net income + Interest expenses x (1 – tax rate)] / Average total assets

 (2). Return on equity = Net income / Average shareholders’ equity

 (3). Net margin = Net income / Net sales

 (4). Earnings per share = (Net income– 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 fixed assets + Long-term investments + other assets + working capital)

6. Leverage:

 (1). Operating leverage = (Net sales – variable cost) / Operating income

 (2). Financial leverage = Operating income / (Operating income – interest expenses)