The Impact of Employee Profit Sharing:
Total impact from employee profit sharing expensing (PSE) on gross margin in 4Q08 was 1.5 percentage points, down 1.1 percentage points from 3Q08, due to an overall decrease in net income. Similarly, total PSE impact on operating margin was 2.9 percentage points in 4Q08.
For full year 2008, total impacts from PSE on gross margin and operating margin were 2.3 percentage points and 4.5 percentage points, respectively.
III. Financial Condition Review
III-1. Liquidity Analysis
(Selected Balance Sheet Items)
(In NT billions) 4Q08 3Q08 4Q07
Cash & Marketable Securities 211.45 158.17 174.83
Accounts Receivable -- Trade 18.50 45.33 42.42
Inventory 14.88 21.82 23.86
Total Current Assets 252.62 232.35 249.82
Accounts Payable 14.04 17.75 19.33
Current Portion of Bonds Payable 8.00 8.00 0.00
Accrued Bonus to Employees,
Directors and Supervisors 15.37 13.46 0.00
Accrued Liabilities and Others 19.40 22.92 29.38
Total Current Liabilities 56.81 62.13 48.71
Current Ratio (x) 4.4 3.7 5.1
Net Working Capital 195.81 170.22 201.11
Liquidity Analysis:
At the end of 4Q08, total current assets increased by NT$ 20.3 billion to NT$252.6 billion, mainly due to the free cash flow of NT$52.0 billion generated in this quarter.
Total current liabilities decreased by NT$5.3 billion in 4Q08, primarily due to declines in accounts payable and in accruals due to lower levels of production activities.
Net working capital was NT$195.8 billion and current ratio increased to 4.4 at the end of this quarter.
III-2. Receivable/Inventory Days
(In Number of Days)
4Q08 3Q08 4Q07
Days of Receivable 46 43 42
Days of Inventory 40 45 48
Receivable and Inventory Days:
Sequentially, days of receivable increased by three days to 46 days in 4Q08, mainly due to a sharp decline of revenue in the quarter.
Days of inventory decreased by five days to 40 days, mostly due to a lower level of production activities resulted from continued weaker demand environment.
III-3. Debt Service
(In NT billions) 4Q08 3Q08 4Q07
Cash & Marketable Securities 211.45 158.17 174.83
Interest-Bearing Debt 23.44 23.41 23.06
Net Cash Reserves 188.01 134.76 151.77
Debt Service:
Net cash reserves -- defined as the excess of cash and short-term marketable securities over interest-bearing debt -- increased by NT$53.2 billion to NT$188.0 billion at the end of 4Q08, primarily due to free cash flow of NT$52.0 billion generated in this quarter.
IV. Cash Flow
IV-1. Cash Flow Analysis
(In NT billions) 4Q08 3Q08 4Q07
Net Income 12.45 30.57 34.49
Depreciation & Amortization 20.96 20.69 20.28
Other Operating Sources/(Uses) 29.83 4.64 4.99
Total Operating Sources/(Uses) 63.24 55.90 59.76
Capital Expenditure (11.26) (10.38) (19.78)
Marketable Financial Instruments 30.31 (18.07) 8.20
Other Investing Sources/(Uses) (1.04) 1.93 (1.08)
Net Investing Sources/(Uses) 18.01 (26.52) (12.66)
Cash Dividends 0.00 (76.78) 0.00
Employee Profit Sharing 0.00 (3.94) 0.00
Repayment of Bonds Payable 0.00 0.00 (4.50)
Purchase of Treasury Stock 0.00 (23.81) (45.41)
Other Financing Sources/(Uses) (0.30) (0.43) (0.20)
Net Financing Sources/(Uses) (0.30) (104.96) (50.11)
Net Cash Position Changes 80.95 (75.58) (3.01)
Exchange Rate Changes & Others 1.21 2.68 (0.33)
Ending Cash Balance 194.61 112.45 94.99
IV-1.2. Cash Flow Analysis
(In NT billions) 2008 2007
Net Income 99.93 109.18
Depreciation & Amortization 81.51 80.01
Other Operating Sources/(Uses) 40.05 (5.42)
Total Operating Sources/(Uses) 221.49 183.77
Capital Expenditure (59.22) (84.00)
Marketable Financial Instruments 52.35 24.68
Other Investing Sources/(Uses) (1.17) (11.37)
Net Investing Sources/(Uses) (8.04) (70.69)
Cash Dividends (76.78) (77.39)
Employee Profit Sharing (3.94) (4.57)
Repayment of Bonds Payable 0.00 (7.00)
Repurchase of Treasury Stock (33.48) (45.41)
Other Financing Sources/(Uses) (1.19) (1.04)
Net Financing Sources/(Uses) (115.39) (135.41)
Net Cash Position Changes 98.06 (22.33)
Exchange Rate Changes & Others 1.56 (0.52)
Ending Cash Balance 194.61 94.99
