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Page 1 of 25 Taiwan Semiconductor Manufacturing Company (In $NT Millions) PRO FORMA FREE CASH FLOWS 2000 Revenues Cost Of Goods Sold Cost Of Goods Sold Margin Operating Expenses: Research and development General and administrative Marketing Total Operating Expenses EBIT Depreciation & Amortization EBITDA Tax Benefit (Provision) Tax Shield On Facility Loan Operating Cash Flow NetWorking Capital Capital Expenditures Free Cash Flow 166,198 (89,682) 54.0% 2001 125,885 -24.3% (92,228) 73.3% 2002 158,645 26.0% (116,229) 73.3% 2003 192,817 21.5% (141,265) 73.3% 2004 248,116 28.7% (181,779) 73.3% 2005 259,777 4.7% (187,299) 72.1% 2006 271,987 4.7% (193,111) 71.0% 2007 284,770 4.7% (197,915) 69.5% (5,132) (7,408) (2,682) (15,221) 61,295 (41,446) 102,741 1,168 103,909 (12,502) (2,107) 89,299 (10,649) (7,940) (2,290) (20,879) 12,778 (55,323) 68,101 3,741 71,842 8,297 (5,121) 75,018 (13,420) (8,599) (2,886) (24,905) 17,510 (66,941) 84,451 4,714 89,165 (4,149) (6,196) 78,821 (16,311) (9,313) (3,508) (29,131) 22,421 (76,045) 98,465 5,730 104,195 (5,601) (7,039) 91,556 (20,989) (10,086) (4,514) (35,588) 30,748 (86,387) 117,135 7,373 2 124,510 (19,004) (39,210) 66,296 (21,975) (10,923) (4,726) (37,624) 34,854 (98,135) 132,989 7,719 2 140,711 (7,537) (9,083) 124,090 (23,008) (11,829) (4,948) (39,785) 39,091 (111,138) 150,229 8,082 2 158,313 (8,072) (10,287) 139,954 (24,090) (12,811) (5,181) (42,081) 44,774 (122,586) 167,359 8,462 2 175,823 (8,758) (11,346) 155,719 Note: Chinese Manufacturing Facility Assumed To Be Fully Operational By 2005. Page 2 of 25 Taiwan Semiconductor Manufacturing Company (In $NT Millions) DISCOUNTED CASH FLOWS - CASE 1 - PRECEDENT TRANSACTIONS 2002 Free Cash Flow Terminal Value Discounted Free Cash Flows Entity Value Less: Debt Equity Value Shares Outstanding Equity Value Per Share 78,821 78,821 2003 91,556 86,960 2004 66,296 59,807 2005 124,090 106,326 2006 139,954 113,899 2007 155,719 2,040,111 1,697,340 2,143,153 (56,343) 2,086,810 18,623 112.06 PRECEDENT TRANSACTIONS COMPS: TARGET: Dallas Semiconductor Telcom Semiconductor Jumptec Industrielle Computer Max Mean Median Min ACQUIRER: Maxim Integrated Products Microchip Technology Kontron AG PP / EBITDA: 12.19x 17.94x 34.96x 34.96x 21.70x 17.94x 12.19x SENSITIVITY - DISCOUNT RATE VS. TERMINAL VALUE: 112.06 6.19x 9.19x 12.19x 15.19x 18.19x 21.19x 24.19x 3.28% 76.41 99.35 122.30 145.24 168.18 191.13 214.07 4.28% 73.32 95.18 117.05 138.91 160.77 182.64 204.50 5.28% 70.39 91.24 112.08 132.92 153.77 174.61 195.46 6.28% 67.62 87.50 107.38 127.26 147.14 167.03 186.91 7.28% 64.98 83.96 102.93 121.90 140.88 159.85 178.82 * All transactions completed after Yr. 2001 . Page 3 of 25 Taiwan Semiconductor Manufacturing Company (In $NT Millions) DISCOUNTED CASH FLOWS - CASE 2 - TECHNOLOGY INDUSTRY MULTIPLE 2002 Free Cash Flow Terminal Value Discounted Free Cash Flows Entity Value Less: Debt Equity Value Shares Outstanding Equity Value Per Share 78,821 78,821 2003 91,556 86,960 2004 66,296 59,807 2005 124,090 106,326 2006 139,954 113,899 2007 155,719 1,171,516 1,025,930 1,471,744 (56,343) 1,415,401 18,623 76.00 TECHNOLOGY INDUSTRY TERMINAL VALUE MULTIPLE: 7.00x SENSITIVITY - DISCOUNT RATE VS. TERMINAL VALUE: 76.00 6.00x 6.50x 7.00x 7.50x 8.00x 8.50x 3.28% 74.96 78.78 82.61 86.43 90.25 94.08 4.28% 71.93 75.58 79.22 82.87 86.51 90.15 5.28% 69.07 72.54 76.02 79.49 82.97 86.44 6.28% 66.36 69.67 72.98 76.30 79.61 82.92 7.28% 63.78 66.95 70.11 73.27 76.43 79.59 Page 4 of 25 Taiwan Semiconductor Manufacturing Company (In $NT Millions) DISCOUNTED CASH FLOWS - CASE 3 - GORDON GROWTH MODEL 2002 Free Cash Flow Terminal Value Discounted Free Cash Flows Entity Value Less: Debt Equity Value Shares Outstanding Equity Value Per Share 78,821 78,821 2003 91,556 86,960 2004 66,296 59,807 2005 124,090 106,326 2006 139,954 113,899 2007 155,719 4,740,487 3,784,685 4,230,499 (56,343) 4,174,156 18,623 224.14 LT GROWTH ASSUMPTION: 2.00% SENSITIVITY - DISCOUNT RATE VS. LT GROWTH: 224.14 0.50% 1.00% 1.50% 2.00% 2.50% 3.28% 285.03 341.16 428.83 584.98 941.33 4.28% 207.60 234.94 272.13 325.62 409.16 5.28% 162.63 178.43 198.41 224.48 259.93 6.28% 133.28 143.38 155.60 170.67 189.73 7.28% 112.63 119.54 127.64 137.28 148.94 Page 5 of 25 Taiwan Semiconductor Manufacturing Company (In $NT Millions) WEIGHTED AVERAGE COST OF CAPITAL COST OF EQUITY - GOLDMAN INTEGRATED MODEL: US Treasury 10-Yr Bond Taiwan Government 10-Yr Bond Beta (TSMC VS S&P 500) S&P Historical Returns Cost of Equity (Taiwan) 3.96% 2.16% 0.9 8.00% 5.80% WEIGHTED AVERAGE COST OF CAPITAL: Cost of Equity Cost of Debt Debt Equity WACC 5.80% 3.06% 56,343 295,853 5.28% COST OF DEBT: Taiwan Government 10-Yr Bond Bridge Ratings Spread For AA+ Cost Of Debt Altman Z-Score: Working Capital / Total Assets (X1) Re / Total Assets (X2) EBIT / Total Assets (X3) BV / Total Liabilities (X4) Comparable Bond Rating 2.16% 0.90% 3.06% 4.52 0.10 0.10 0.03 3.11 AA+ 2002 DEBT / EQUITY PROJECTION: Yr. 2001: Debt (Incl. Minority Interest) Equity Debt / Equity Ratio Yr. 2002: Debt (Incl. Minority Interest) Equity - From Press Release * Year Over Year Debt / Equity Ratio Constant 52,789 277,190 0.19 56,343 295,853 CHINESE MANUFACTURING FACILITY COST STRUCTURE USD (898) (371) (418) (109) NTD (31,214) (12,896) (14,530) (3,789) Cost of Factory Sources of Funds: Headquarters (Cash) Loans Retained Earnings Exchange Ratio - NTD/USD Tax Shield Assumptions: Interest Rate on Loans = Cost of Debt Tax Rate 34.8 3.06% 15.00% Page 6 of 25 Taiwan Semiconductor Manufacturing Company (In $NT Millions) GROWTH ASSUMPTIONS 2002 Revenue COGS R&D Projected Expense (% of Sales) SG&A Projected Expense (% of Sales) Marketing Projected Expense (% of Sales) D&A Projected Expense (% of Sales) Working Capital Projected CAPEX Projected NM 26.0% 26.0% 8.30% 26.02% 21.00% -150.00% 21.0% 2003 NM 21.5% 21.5% 8.30% 21.54% 13.60% 35.00% 13.60% 2004 NM 28.7% 28.7% 8.30% 28.68% 13.60% 17.00% 13.60% 2005 4.70% 3.04% 4.70% 8.30% 4.70% 13.60% -58.00% 13.60% 2006 4.70% 3.10% 4.70% 8.30% 4.70% 13.25% 13.00% 13.25% 2007 4.70% 2.49% 4.70% 8.30% 4.70% 10.30% 14.00% 10.30% * Yr. 2002 - 2004 Revenue Projections Taken From Bloomberg. Yr. 2005 - 2007 Growth Rates Are Slight Modifications Of Prof. Damodaran's Industry Growth Rate. ** Yr. 2004 Working Capital Includes Cash Used For Manufacturing Facility Construction. Yrs. 2004 - 2007 Includes Interest Payments On Debt Financing For Facility. *** Yr. 2004 CAPEX Includes Manufacturing Facility Investment. Page 7 of 25 Taiwan Semiconductor Manufacturing Company Comparable Companies Analysis Price/Earnings Taiwan Semiconductor Manufacturing Winbond Electronics United Microelectronics Advanced Micro Devices Tower Seminconductor ASE Test Chartered Semiconductor ON Semiconductor Advanced Semiconductor Engineering 60.43x NM NM NM NM NM NM NM NM Price/Book 3.16x 0.94x 0.05x 0.63x 0.48x 0.49x 0.59x NM 0.21x Price/Sales 6.95x 2.59x 0.15x 0.57x 2.31x 0.98x 2.03x 0.20x 0.23x EV/EBITDA 13.06x NM 0.46x 3.01x NM 3.78x 16.56x 19.07x 4.25x Max Mean Median Min NM NM NM NM 3.16x 0.73x 0.54x 0.05x 6.95x 1.78x 0.98x 0.15x 19.07x 6.69x 4.25x 0.46x Industry Sales Growth Analysis (In $US Millions) 1999 Taiwan Semiconductor Manufacturing Winbond Electronics United Microelectronics Advanced Micro Devices Tower Seminconductor ASE Test Chartered Semiconductor ON Semiconductor Advanced Semiconductor Engineering 2,195.2 930.6 970.5 2,857.6 69.8 270.3 694.3 798.7 938.1 2000 4,781.3 1,414.2 3,325.9 4,644.2 104.8 440.3 1,134.1 2,073.9 1,464.1 2001 3,621.5 694.2 2,008.5 3,891.8 52.4 298.5 462.7 1,214.6 1,103.8 CAGR 18.16% -9.30% 27.44% 10.84% -9.14% 3.37% -12.65% 15.00% 5.57% Average 5.48% * Sales Normalized By Conversion to US Dollars. Taiwan Semiconductor Manufacturing Company Black-Scholes Options Valuation Analysis Assumptions: Current Stock Price (S) Exercise Price (E) Yrs. Till Exp. (t) 10-Yr Treasury Variance $ 7.75 7.50 0.33 3.96% 0.20% Intinsic Value of Call: Call Price d1 d2 NormDist(d1) NormDist(d2) $ 0.35 1.81 1.78 0.965 0.963 Prevailing Market Call Price $ 0.95 Formulas: a. Call Price = [S * NormDist(d1)] - [E * e(-rt) * NormDist(d2)] b. d1 = [ln(S/E) + t * (r + .5(Var))] / (Var * t).5 c. d2 = d1 - (Var * t).5 Taiwan Semiconductor Manufacturing Company Variance Analysis Date 4/8/02 4/9/02 4/10/02 4/11/02 4/12/02 4/15/02 4/16/02 4/17/02 4/18/02 4/19/02 4/22/02 4/23/02 4/24/02 4/25/02 4/26/02 4/29/02 4/30/02 5/1/02 5/2/02 5/3/02 5/6/02 5/7/02 5/8/02 5/9/02 5/10/02 5/13/02 5/14/02 5/15/02 5/16/02 5/17/02 5/20/02 5/21/02 5/22/02 5/23/02 5/24/02 5/28/02 5/29/02 Closing Price 17.80 17.42 17.05 16.72 17.27 17.45 18.36 18.73 18.23 17.85 17.58 17.61 17.36 16.82 16.32 16.11 16.09 16.55 15.70 14.95 14.68 15.16 16.67 16.01 16.24 16.36 17.14 16.68 16.68 17.14 16.54 16.09 16.00 15.87 15.81 15.71 15.32 Daily Returns NM -2.13% -2.12% -1.94% 3.29% 1.04% 5.21% 2.02% -2.67% -2.08% -1.51% 0.17% -1.42% -3.11% -2.97% -1.29% -0.12% 2.86% -5.14% -4.78% -1.81% 3.27% 9.96% -3.96% 1.44% 0.74% 4.77% -2.68% 0.00% 2.76% -3.50% -2.72% -0.56% -0.81% -0.38% -0.63% -2.48% Date 8/15/02 8/16/02 8/19/02 8/20/02 8/21/02 8/22/02 8/23/02 8/26/02 8/27/02 8/28/02 8/29/02 8/30/02 9/3/02 9/4/02 9/5/02 9/6/02 9/9/02 9/10/02 9/11/02 9/12/02 9/13/02 9/16/02 9/17/02 9/18/02 9/19/02 9/20/02 9/23/02 9/24/02 9/25/02 9/26/02 9/27/02 9/30/02 10/1/02 10/2/02 10/3/02 10/4/02 10/7/02 Closing Price 9.61 9.95 10.01 9.33 9.45 9.18 8.75 8.85 8.48 8.25 8.35 8.17 7.71 7.97 7.51 7.72 7.89 8.48 8.15 7.72 7.55 7.32 7.22 7.10 6.95 6.65 6.45 6.62 6.88 6.59 6.36 6.35 6.52 6.23 5.89 5.78 5.40 Daily Returns 3.33% 3.54% 0.60% -6.79% 1.29% -2.86% -4.68% 1.14% -4.18% -2.71% 1.21% -2.16% -5.63% 3.37% -5.77% 2.80% 2.20% 7.48% -3.89% -5.28% -2.20% -3.05% -1.37% -1.66% -2.11% -4.32% -3.01% 2.64% 3.93% -4.22% -3.49% -0.16% 2.68% -4.45% -5.46% -1.87% -6.57% Date 12/12/02 12/13/02 12/16/02 12/30/02 12/31/02 1/2/03 1/3/03 1/6/03 1/7/03 1/8/03 1/9/03 1/10/03 1/13/03 1/14/03 1/15/03 1/16/03 1/17/03 1/21/03 1/22/03 1/23/03 1/24/03 1/27/03 1/28/03 1/29/03 1/30/03 1/31/03 2/3/03 2/4/03 2/5/03 2/6/03 2/7/03 2/10/03 2/11/03 2/12/03 2/13/03 2/14/03 2/18/03 Closing Price 8.08 7.70 7.94 6.99 7.05 7.28 7.45 7.65 7.68 7.35 7.75 8.00 8.30 8.27 8.56 8.10 7.59 7.55 7.60 8.20 7.74 7.49 7.15 7.20 6.85 6.70 6.88 6.80 7.12 6.79 6.68 6.47 6.47 6.51 6.40 6.85 7.07 Daily Returns -3.81% -4.70% 3.12% -3.59% 0.86% 3.26% 2.34% 2.68% 0.39% -4.30% 5.44% 3.23% 3.75% -0.36% 3.51% -5.37% -6.30% -0.53% 0.66% 7.89% -5.61% -3.23% -4.54% 0.70% -4.86% -2.19% 2.69% -1.16% 4.71% -4.63% -1.62% -3.14% 0.00% 0.62% -1.69% 7.03% 3.21% Taiwan Semiconductor Manufacturing Company Variance Analysis Date 5/30/02 5/31/02 6/3/02 6/4/02 6/5/02 6/6/02 6/7/02 6/10/02 6/11/02 6/12/02 6/13/02 6/14/02 6/17/02 6/18/02 6/19/02 6/20/02 6/21/02 6/24/02 6/25/02 6/26/02 6/27/02 6/28/02 7/1/02 7/2/02 7/3/02 7/5/02 7/8/02 7/9/02 7/10/02 7/11/02 7/12/02 7/15/02 7/16/02 7/17/02 7/18/02 7/19/02 7/22/02 Closing Price 15.18 15.07 14.09 13.92 13.95 13.10 13.05 13.05 12.86 13.27 13.55 13.36 13.50 13.35 12.59 12.56 12.36 12.70 12.99 12.90 12.90 13.00 12.05 11.11 12.15 13.65 13.50 12.91 12.71 13.52 13.45 13.69 13.54 13.30 12.30 11.25 11.20 Daily Returns -0.91% -0.72% -6.50% -1.21% 0.22% -6.09% -0.38% 0.00% -1.46% 3.19% 2.11% -1.40% 1.05% -1.11% -5.69% -0.24% -1.59% 2.75% 2.28% -0.69% 0.00% 0.78% -7.31% -7.80% 9.36% 12.35% -1.10% -4.37% -1.55% 6.37% -0.52% 1.78% -1.10% -1.77% -7.52% -8.54% -0.44% Date 10/8/02 10/9/02 10/10/02 10/11/02 10/14/02 10/15/02 10/16/02 10/17/02 10/18/02 10/21/02 10/22/02 10/23/02 10/24/02 10/25/02 10/28/02 10/29/02 10/30/02 12/17/02 12/18/02 12/19/02 12/20/02 12/23/02 12/24/02 12/26/02 12/27/02 10/31/02 11/1/02 11/4/02 11/5/02 11/6/02 11/7/02 11/8/02 11/11/02 11/12/02 11/13/02 11/14/02 11/15/02 Closing Price 5.50 5.35 5.70 6.01 6.06 7.24 6.89 7.35 7.35 7.48 6.95 7.76 7.67 8.02 8.06 7.67 7.95 7.78 7.35 7.34 7.44 7.45 7.38 7.42 7.25 7.82 8.09 8.85 8.44 9.31 8.85 8.68 7.83 8.20 7.85 8.40 8.54 Daily Returns 1.85% -2.73% 6.54% 5.44% 0.83% 19.47% -4.83% 6.68% 0.00% 1.77% -7.09% 11.65% -1.16% 4.56% 0.50% -4.84% 3.65% -2.02% -5.53% -0.14% 1.36% 0.13% -0.94% 0.54% -2.29% -1.64% 3.45% 9.39% -4.63% 10.31% -4.94% -1.92% -9.79% 4.73% -4.27% 7.01% 1.67% Date 2/19/03 2/20/03 2/21/03 2/24/03 2/25/03 2/26/03 2/27/03 2/28/03 3/3/03 3/4/03 3/5/03 3/6/03 3/7/03 3/10/03 3/11/03 3/12/03 3/13/03 3/14/03 3/17/03 3/18/03 3/19/03 3/20/03 3/21/03 3/24/03 3/25/03 3/26/03 3/27/03 3/28/03 3/31/03 4/1/03 4/2/03 4/3/03 4/4/03 4/7/03 Closing Price 6.98 7.41 7.47 7.27 7.20 7.06 6.99 7.09 7.27 6.98 6.77 6.84 6.96 6.86 7.01 7.17 7.72 7.70 7.87 8.21 8.19 8.31 8.49 7.95 8.09 7.58 7.65 7.40 6.84 6.90 7.46 7.50 7.49 7.75 Daily Returns -1.27% 6.16% 0.81% -2.68% -0.96% -1.94% -0.99% 1.43% 2.54% -3.99% -3.01% 1.03% 1.75% -1.44% 2.19% 2.28% 7.67% -0.26% 2.21% 4.32% -0.24% 1.47% 2.17% -6.36% 1.76% -6.30% 0.92% -3.27% -7.57% 0.88% 8.12% 0.54% -0.13% 3.47% Taiwan Semiconductor Manufacturing Company Variance Analysis Date 7/23/02 7/24/02 7/25/02 7/26/02 7/29/02 7/30/02 7/31/02 8/1/02 8/2/02 8/5/02 8/6/02 8/7/02 8/8/02 8/9/02 8/12/02 8/13/02 8/14/02 Closing Price 10.71 11.14 9.08 8.85 9.15 9.10 9.12 8.86 8.35 7.10 8.21 8.45 8.80 9.12 8.83 8.89 9.30 Daily Returns -4.37% 4.01% -18.49% -2.53% 3.39% -0.55% 0.22% -2.85% -5.76% -14.97% 15.63% 2.92% 4.14% 3.64% -3.18% 0.68% 4.61% Date 11/18/02 11/19/02 11/20/02 11/21/02 11/22/02 11/25/02 11/26/02 11/27/02 11/29/02 12/2/02 12/3/02 12/4/02 12/5/02 12/6/02 12/9/02 12/10/02 12/11/02 Closing Price 8.38 8.00 8.32 8.80 8.98 8.86 8.50 9.09 9.25 9.44 9.14 8.98 8.67 8.80 8.45 8.55 8.40 Daily Returns -1.87% -4.53% 4.00% 5.77% 2.05% -1.34% -4.06% 6.94% 1.76% 2.05% -3.18% -1.75% -3.45% 1.50% -3.98% 1.18% -1.75% Date Closing Price Daily Returns Std. Dev. Variance 4.44% 0.20% Taiwan Semiconductor Manufacturing Company Earnings Per Share Analysis (In $NT Millions) EARNINGS PER SHARE PRICE/EARNINGS PRICE 1998 1.35 21.68 29.28 1999 2.21 38.37 84.72 2000 5.71 8.93 50.97 2001 0.86 92.45 79.55 2002 (E) 1.25 33.97 42.60 2003 (E) 1.72 26.86 46.20 Earnings Per Share Analysis $6.00 100.00x 90.00x $5.00 80.00x 70.00x $4.00 60.00x $3.00 50.00x 40.00x $2.00 30.00x 20.00x 10.00x $1.00 $0.00 0.00x 1998 1999 2000 2001 2002 (E) 2003 (E) 2004 (E) Enterprise Value/EBITDA 25.00x 20.00x 15.00x 10.00x 5.00x 0.00x 1999 2000 2001 Enterprise Value EBITDA Enterprise Value/EBITDA Shares Outstanding 674783 47467.9 14.2156 7670.88 611110 102741 5.94808 11689.4 1352864 68100.8 19.8656 16832.6 mpany 2004 (E) 3.15 14.66 Price/Earnings Analysis 100.00x 90.00x 80.00x 70.00x 60.00x 50.00x 40.00x 30.00x 20.00x 10.00x 0.00x 1998 1999 2000 2001 2002 (E) 2003 (E) 2004 (E) Taiwan Semiconductor Manufacturing Company Comparable Ratio Analyses TSMC 2000 1.965 1.389 2.531 8.232 44.338 9.018 40.475 16.188 22.547 0.216 0.293 24.519 1.015 0.882 UMC 2000 2.298 1.955 1.572 9.147 39.902 8.291 21.862 3.177 114.890 0.183 0.260 21.757 1.168 0.770 1999 RISK RATIOS: Current Ratio Quick Ratio Operating Cash Flow to Current Liabilities Ratio Accounts Receivable Turnover Days Receiveable Outstanding Inventory Turnover Days Inventory Outstanding Accounts Payable Turnover Days Payable Outstanding Debt/Equity Ratio Liabilities Assets Ratio Interest Coverage Ratio Operating Cash Flow to Total Liabilities Ratio Operating Cash Flow to Capital Expenditures Ratio 2.261 1.623 1.810 7.603 48.007 9.342 39.070 18.818 19.396 0.363 0.320 9.535 0.758 0.736 2001 2.124 1.620 1.878 5.787 63.075 8.157 44.748 18.024 20.251 0.190 0.243 4.431 0.766 1.007 1999 0.893 0.734 0.655 8.135 44.869 8.037 45.415 N/A N/A 0.301 0.459 0.599 0.344 0.383 2001 2.919 2.522 1.038 4.857 75.149 7.338 49.740 3.015 121.052 0.259 0.286 -0.104 0.984 0.919 PROFITABILITY RATIOS: Profit Margin Total Asset Turnover Return On Assets Capital Structure Leverage Ratio Return On Common Equity Selling and Administrative Expenses Accounts Receivable Turnover Inventory Turnover Fixed Asset Turnover 0.339 0.470 0.159 1.584 0.230 0.037 7.603 9.342 0.696 0.404 0.548 0.222 1.463 0.314 0.045 8.232 9.018 0.842 0.133 0.341 0.046 1.368 0.054 0.063 5.787 8.157 0.508 0.659 0.272 0.179 1.423 0.120 0.500 8.135 8.037 0.976 0.469 0.505 0.237 1.096 0.243 0.038 9.147 8.291 1.116 -0.023 0.221 -0.005 1.112 -0.011 0.096 4.857 7.338 0.420 Taiwan Semiconductor Manufacturing Company Consolidated Balance Sheet (In $NT Millions) Year Ended December 31, 1999 2000 2001 CURRENT ASSETS: Cash and Cash Equivalents Pledged time deposits Short-term investments Receivables - net Receivable from related parties Inventories - net Deferred income tax assets - net Prepaid expenses and other current assets Total Current Assets Long-term investments Property, plant and equipment - net Goodwill OTHER ASSETS: Rental Assets Deferred income tax assets - net Deferred charges - net Refundable deposits Assests leased to others Miscellaneous Total Other Assets TOTAL ASSETS 29,517.7 3,161.0 965.4 13,322.0 340.9 7,104.0 2,616.6 2,630.0 59,657.6 16,164.7 150,059.9 - 38,840.2 2,351.6 27,055.5 948.7 12,785.7 8,178.0 3,034.6 93,194.3 9,814.3 244,747.9 11,531.0 37,556.3 1,398.1 16,452.2 494.7 9,828.3 2,350.1 2,721.4 70,801.1 11,599.2 251,287.6 11,437.6 7,006.7 2,380.8 59.4 106.4 9,553.3 235,435.5 625.6 6,629.8 3,335.7 979.1 28.3 11,598.5 370,886.0 16,245.8 3,769.8 784.1 555.1 37.4 21,392.2 366,517.7 Taiwan Semiconductor Manufacturing Company Consolidated Balance Sheet (In $NT Millions) CURRENT LIABILITIES: Short-term bank loans Commercial paper payable Accounts payable Payable to related parties Income tax payable Payables to contractors and equipment suppliers Current portion of long-term liabilities Accrued expenses and other current liabilities Total Current Liabilities LONG-TERM LIABILITIES: Long-term bank loans Long-term bonds payable Total Long-term liabilities OTHER LIABILITIES: Accrued pension cost Deferred gain on sale - leaseback Lease obligation payable Guarantee deposits Others Total Other Liabilities TOTAL LIABILITIES 5,026.6 94.8 3,273.9 1,036.4 155.1 12,593.7 1.0 4,208.9 26,390.4 3,833.8 8,507.8 2,606.3 3.3 25,550.3 51.1 6,872.4 47,425.0 6,269.2 1,397.9 1,048.3 12,867.2 5,000.0 6,746.4 33,329.0 22,743.5 20,000.0 42,743.5 23,339.4 29,000.0 52,339.4 22,399.3 24,000.0 46,399.3 1,013.8 4.4 5,188.7 6,206.9 75,340.8 1,511.3 434.2 3.3 7,097.4 9,046.2 108,810.6 1,856.6 268.2 7,212.7 141.5 9,479.0 89,207.3 Taiwan Semiconductor Manufacturing Company Consolidated Balance Sheet (In $NT Millions) MINORITY INTEREST IN SUBSIDIARIES SHAREHOLDERS' EQUITY: Capital Stock - $10 par value Issued Preferred Issued Common Suscribed Capital Capital Surplus Retained Earnings Unrealized loss on long-term investments Cumulative translation adjustments Total Shareholders' Equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 7,524.2 321.7 120.2 85,208.8 13,118.0 23,951.4 31,382.4 (1,090.1) 152,570.5 235,435.5 13,000.0 116,893.7 57,089.0 75,121.0 (71.6) (278.4) 261,753.7 370,886.0 13,000.0 168,325.6 57,128.4 37,507.5 1,228.7 277,190.2 366,517.7 Taiwan Semiconductor Manufacturing Company Consolidated Statements of Income (In $NT Millions) 1998 NET SALES COST OF SALES GROSS PROFIT OPERATING EXPENSES Research and development General and administrative Marketing Total Operating Expenses INCOME FROM OPERATIONS NON-OPERATING INCOME Gain on sales of short-term investments - net Interest Royalty Income Insurance compensation - net Premium income-net Gain on sales of long-term investments - net Technical service income Gain on sales of property, plant, and equipment Reversal of allowance for losses on shoter-term investment - net Foreign exchange gain - net Other Total Non-Operating Income 50,524.5 33,009.3 17,515.2 Year Ended December 31, 1999 2000 76,305.1 46,237.4 30,067.7 166,197.6 89,681.7 76,515.9 2001 125,884.9 92,228.1 33,656.8 2,314.0 2,128.2 767.5 5,209.7 12,305.5 3,090.8 2,845.3 1,861.6 7,797.7 22,270.0 5,131.5 7,408.1 2,681.6 15,221.2 61,294.7 10,649.0 7,939.9 2,290.1 20,879.0 12,777.8 11.9 1,111.9 8.3 781.6 3.3 59.6 1,976.6 48.6 1,114.5 184.6 63.8 67.8 4.0 140.1 58.9 1,682.3 1,060.9 1,679.7 1,623.8 640.5 15.1 138.5 62.9 0.7 828.0 177.8 6,227.9 1,619.1 1,486.7 1,301.6 860.8 234.7 105.4 55.1 52.4 759.8 6,475.6 Taiwan Semiconductor Manufacturing Company Consolidated Statements of Income (In $NT Millions) NON-OPERATING EXPENSES Investments loss recognized by equity method - net Interest Foreign exchange loss - net Loss on sales of property, plant, and equipment Amortization of issuance costs of bonds Premium expenses - net Permanent loss on long-term investments Provision for loss in short-term investments Other Total Non-Operating Expenses INCOME BEFORE INCOME TAX INCOME TAX BENEFIT INCOME BEFORE MINORITY INTEREST MINORITY INTEREST IN LOSS (INCOME) OF SUBSIDIARIES NET INCOME 1,400.0 1,191.7 259.5 4.4 143.7 5.8 121.9 99.9 3,226.9 11,055.2 2,318.4 13,373.6 1,015.6 14,389.2 288.5 2,417.0 119.1 164.4 114.8 86.8 31.6 101.8 3,324.0 20,628.3 2,382.8 23,011.1 515.9 23,527.0 187.2 2,717.0 114.7 32.7 108.1 461.4 3,621.1 63,901.5 1,167.9 65,069.4 36.8 65,106.2 3,959.0 3,144.1 695.6 235.6 12.5 420.1 8,466.9 10,786.5 3,740.7 14,527.2 (44.0) 14,483.2 EARNINGS PER SHARE EARNINGS PER EQUIVALENT ADS WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING WEIGHTED AVERAGE NUMBER OF EQUIVALENT ADS OUTSTANDING 1.35 6.75 10,656.0 2,131.2 2.21 11.04 10,656.0 2,131.2 5.71 28.55 11,400.9 2,280.2 0.86 4.17 16,832.6 3,473.2 Taiwan Semiconductor Manufacturing Company Consolidated Statement Of Cash Flows (In $NT Millions) 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income Adjustments To Reconcile Net Income To Cash: Depreciation and amortization Deferred income tax Investment loss recognized by equity method - net Gain on sale of long term investments Loss on sale of properties - net Reversal of provision for losses on short-term investments - net Permanent loss on long term investments Accretion in redemption value of bonds Accrued pension cost Allowance for doubtful receivables Allowance for sales returns and others Transfer property into expenses Minority interest in loss of subsidiaries Changes In Operating Assets and Liabilities: Short-term investments Forward exchange contract receivable Receivables Receivables from related parties Inventories Prepaid expenses and other current liabilities Accounts payables Payables to related parties Income tax payable Forward exchange contract payable Accrued expenses and other current liabilities Net Cash Provided By Operating Activities Year Ended December 31, 1999 2000 2001 14,389.2 15,522.0 (3,007.9) 1,400.0 (781.6) 1.1 5.8 875.8 264.3 (10.0) (93.2) (1,015.6) (124.8) 1,640.5 215.6 537.5 221.8 (929.0) (46.8) 746.8 318.4 30,129.9 23,527.0 25,197.9 (2,481.8) 288.5 (67.8) 160.4 31.6 585.6 260.4 148.6 402.1 39.1 (515.9) 5,049.7 (6,391.8) (273.2) (2,765.2) (1,278.1) 985.9 878.4 (622.3) 6.1 2,137.2 45,302.4 65,106.2 41,446.1 (956.1) 187.2 (15.1) 51.8 370.3 524.5 1,679.3 (36.8) (1,373.6) (113.7) (15,428.2) (737.1) (4,033.8) 352.0 3,170.7 2,334.2 (151.8) (987.6) 2,024.1 93,412.6 14,483.2 55,323.0 (3,788.1) 3,959.0 (105.4) 183.2 (13.2) 345.3 153.8 123.3 44.0 49.5 10,326.2 454.0 2,957.4 202.3 (7,109.9) (1,558.0) 218.1 (430.0) 75,817.7 Taiwan Semiconductor Manufacturing Company Consolidated Statement Of Cash Flows (In $NT Millions) CASH FLOWS FROM INVESTING ACTIVITIES: Decrease (Increase) in short-term investments Acquisitions Of: Long-term investments Properties Proceeds From Sales Of: Long-term investments Properties Decrease (Increase) in restricted cash Decrease (Increase) in pledge time deposits Increase in deferred charges Decrease (Increase) In refundable deposits Decrease (Increase) in other assets - miscellaneous Decrease in minority interest in subsidiaries Increase in goodwill Cash of TASMC as of July 1, 2000 Net Cash Used In Investing Activites CASH FLOWS FROM FINANCING ACTIVITIES Proceeds From Issuance Of: Short-term bank borrowings Commercial paper Long-term bonds Long-term bank borrowings Capital Stock Payments On: Short-term bank borrowings Commercial paper Short-term notes Long-term bank borrowings Increase (Decrease) in guarantee deposits and other liabilities Issuance costs of financing Cash dividends paid on preferred shares Bonus to directors and supervisors Net Cash Provided By Financing Activites Effects Of Changes In Foreign Exchange Rate (1,555.8) (55,780.5) 1,523.5 3.5 (7.3) (209.6) (1,187.5) (9.7) (0.8) (86.6) (57,310.8) (10,057.9) (51,459.1) 150.0 413.1 7.2 (2,290.0) (1,179.3) 61.4 13.5 (1,660.8) (66,001.9) (2,107.3) (103,761.9) 49.4 364.9 3,161.7 (1,793.2) (915.6) 77.4 (15,386.9) 736.6 (119,574.9) 117.1 (5,120.6) (70,201.2) 559.1 301.4 (1,805.2) 195.0 (9.1) (249.2) (1,019.2) (77,231.9) 2,109.2 98.2 9,772.5 6,903.8 530.0 (2,318.9) (78.3) (161.6) 16,854.9 (657.6) 2,917.4 9,450.6 7,997.6 20,618.0 (253.4) (1,010.4) (63.3) (138.1) 39,518.4 (173.1) 9,000.0 39,204.5 (8,592.8) (4,241.0) (2,648.9) 2,977.9 (118.3) (215.1) 35,366.3 118.5 2,435.4 (940.1) 75.0 (47.7) (41.1) (584.3) 897.2 (766.9) Taiwan Semiconductor Manufacturing Company Consolidated Statement Of Cash Flows (In $NT Millions) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS BEGINNING BALANCE - CASH AND CASH EQUIVALENTS ENDING BALANCE - CASH AND CASH EQUIVALENTS (10,983.6) 21,855.5 10,871.9 18,645.8 10,871.9 29,517.7 9,322.5 29,517.7 38,840.2 (1,283.9) 38,840.2 37,556.3 TSMC Taiwanese Market Volume 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 TSMC United States Market Volume 35,000,000 30,000,000 25,000,000 Volume 20,000,000 15,000,000 10,000,000 Date 1/2/98 1/5/98 1/6/98 1/7/98 1/8/98 1/9/98 1/12/98 1/13/98 1/14/98 1/15/98 1/16/98 1/16/98 1/19/98 1/20/98 1/21/98 1/22/98 2/2/98 2/3/98 2/4/98 2/5/98 2/6/98 2/6/98 2/9/98 2/10/98 2/11/98 Jan-03 2/12/98 2/13/98 2/16/98 2/17/98 2/18/98 2/19/98 2/20/98 2/20/98 2/23/98 2/24/98 2/25/98 2/26/98 2/27/98 3/2/98 3/3/98 3/4/98 3/5/98 3/6/98 3/6/98 3/9/98 3/10/98 3/11/98 Volume

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