TXC — AGM Information 2017

Jun 16, 2017

TXC Corporation

2017 Annual Shareholders' Meeting Procedure

• I. Call Meeting to Order

• II. Chairman's Address

III. Report Matters

• IV. Recognition Matters

• V. Discussion Matters

• VI. Special Motions

VII. Meeting Adjourned

TXC Corporation

2017 Annual Shareholders' Meeting Agenda

Time: 9:30 a.m., June 8[th] , 2017 (Thursday)

Place: No.4, KungYeh 6[th] Rd., Pingzhen Industrial District, Taoyuan City (Meeting Room)

1. Call meeting to order

2. Chairman's Address

3. Report Matters:

• (1) Report on 2016 business report

(2) Report on Audit Committee’s review of 2016 financial report

(3) Report on distributions of remunerations for directors and employees

4. Recognition Matters

(1) 2016 Business Report and Financial Statements

(2) Proposal for distribution of 2016 profits

5. Discussion Matters

• (1) Amendments to Procedures for Acquisition or Disposal of Assets

6. Special Motion

7. Meeting Adjourned

Report Matters

Report matter (1)

Subject: 2016 business updated report

Description:

1. The company's 2016 consolidated revenue was NT$9,637,101 thousand, an increase of 4.0% over the last year. Net income was NT$ 1,016,164 thousand, an increase of 8.3% over the last year.

2. Business report and related financial statements please refer to Attachment (1) and (3).

3. Looking towards 2017 performance, spreading our corporate spirit of ‘compete or perish, work hard or drop out ’ will inject the company with the willpower to accomplish our goals. As TXC rolls out the new products, we will expect business operation and profits can be further growing and outperform than the peers.

Report matter (2)

Subject: Audit Committee’s review of 2016 financial reports

Description:

1. Matters regarding the board of director passage and audit committee review of the Company's 2016 financial report and audit report submission of which the financial reports were audited by independent auditors Ms. Lin Yi Hui and Mr. Wong Bo Ren of Deloitte & Touche.

2. Request audit committee to read audit report and please refer to Attachment (2).

Report matter (3)

Subject: 2016 distributions of remunerations for directors and employees Description:

1. The 2016 pretax profit before deducting remuneration to directors and to employees is NT$1,264,685,525 and remuneration to directors is 1.5%, pursuant to Article 19 of Articles of Association and the Ration as specified in Annual Plan and the amount is NT$18,970,283 and the remuneration to employee is 9% and the amount is NT$113,821,697 and they are distributed in cash. The employees eligible to the employee’s remuneration include the full time employees of parent company and subsidiary.

2. They are no different from the expenses acknowledge in 2016.

Recognition Matters

Recognition matter (1) Proposed by the Board of Directors

Subject: To accept 2016 Business Report and Financial Statements Description:

1. Please refer to Attachment (1) and (3) for the prepared 2016 business report and financial statements.

2. The above consolidated financial statements including balance sheet, income statement, statement of changes in shareholders' equity, cash flow statement and business report passed by resolution of the board of directions and submitted for audit committee review. The financial statements were audited by independent auditors Ms. Lin Yi Hui and Mr. Wong Bo Ren of Deloitte & Touche.

3. Please accept the aforementioned.

Resolution:

Recognition matter (2) Proposed by the Board of Directors

Subject: To approve the proposal for distribution of 2016 profits Description:

1. Net profits for 2016 were NT$1,016,164,758. After the legal reserve was allocated according to law and the undistributed profit at the beginning of the year was added, the profit available for distribution is NT$2,687,489,873. In consideration of capital utilization and to avoid capital inflation, a shareholder dividend issue of NT$867,319,712 (a cash dividend of NT$ 2.8 per share) is proposed. After distribution, the undistributed profit will be NT$1,820,170,161.

2. According to distribution ratio, cash dividend was calculated up to dollar. Total amount of undistributed fractional shares would be recognized in non-operating income.

3. The total amount of common shares outstanding is subject to change and the ultimate cash dividend to be distributed to each common share will be adjusted accordingly should TXC subsequently buyback of company shares or transfer or cancellation of treasury stock or capital increase by cash, a proposal shall be made at the shareholders' meeting to authorize the board of directors to handle related matters.

4. The profit distribution proposal is listed as below. Please approve.

Resolution:

Profit Distribution of 2016

Unit ： NT$

	Unit：NT$	Unit：NT$
Item	Amount
	Sub-total	Sum
Beginning period undistributed profits	(867,319,712)	1,791,721,469 (99,646) (18,680,232) __ 1,772,941,591 1,016,164,758 (101,616,476) __ 2,687,489,873 (867,319,712) __ 1,820,170,161
Adjusted retained earnings from investments
accounted for using equity method
Remeasurement of defined employee benefit plans to
retained earnings
Adjusted undistributed profits Net profit after tax for this year Appropriate legal reserve (10%) Profits available for distribution Distribution Item: Cash Dividends (NT$2.8 per share) End period of undistributed profits

Note: (1) Allocation of 2016 undistributed profit shall be given priority for the above profit distribution.

Chairman: Paul Lin Manager: Peter Lin Accounting Supervisor: Hong Guan-wen

Resolution:

Discussion Matters

Discussion Matter 1 Proposed by the Board of Directors

Subject: To approve the amendments to the ‘’Procedures for Acquisition or Disposal of Assets’’ Description:

1. It is proposed that certain articles of TXC’s ‘’Procedures for Acquisition or Disposal of Assets’’ should be amended to comply with rule No.10600012965 issued by the Financial Supervisory Commission R.O.C (Taiwan) Securities and Futures Bureau on February 9[th] , 2017.

2. The comparison tables for the aforementioned are attached hereto as Attachment (4).

3. Please refer to Attachment (7) for TXC’s ‘’Procedures for Acquisition or Disposal of Assets’’ prior to amendments.

4. Please approve.

Resolution:

Special Motions

Meeting Adjourned

Attachment (1)

TXC Corp.

Business Report

Major shifts in the international political situation occurred in the blink of an eye in 2016. The UK voted to leave the EU and America has adopted protectionist policies. As for Taiwan, the most important development is the freeze in cross-strait relations. With regard to the economy, the global outlook still looks turbulent. Exchange rate fluctuation risks have increased. The prices of raw materials and crude oil appear to have bottomed out. In society, a new age of individualism is arising. Changes in labor laws are placing additional pressure on companies. Other factors including technology, resources, policy and population are rapidly shifting about along with overall environment, all of which have the potential to threaten the existence and development capabilities of a company. Fortunately, with the continued dedication of our employees and support from upstream and downstream companies, we have been able overcome these challenges and can say without compunction to our shareholders that we are ready to meet the next challenge arising from the business environment.

一、 2016 Operation Results

1. Consolidated revenues and after-tax profit

The results of operation of 2016 have consolidated total operation revenue of NT$9.637 billion, a 4.0% more than NT$9.266 billion of 2015, and the budget accomplishing rate is 99.8%. After tax net profit is NT$1,016 million, a 8.3% more than the NT$938 million net after tax profit of last year and over our internal budgeted target. The basic EPS is NT$3.28, increased from EPS NT$3.03, a 8.3% yoy of previous year.

2. Product Development

2016 we launched Anti-Magnetic Interference Tri-Axis Electronic Compass, Vehicle Mounted 、 Temperature Compensating Control Quartz Oscillator (ACAP TCXO) Vehicle Mounted Temperature Sensing Quarts Crystal (ACAP TSX) 、 New Generation Micro 3-in-1 Photo Sensor 、 Miniature Constant Temperature Control Quartz Crystal Oscillator (OCXO) 、 Miniature ACAP Crystal 、 Miniature ACAP CXO 、 Miniature mobile device Crystals. Besides, in accordance with R&D schedule, we continuously roll out various products to meet different customers’ application demand.

二、 2017 Management Directions and Major Policy

1. Continued upgrading to industry 4.0

2. In response to the low birth rate and rising pressing from stricter labor conditions, upgrading to industry 4.0 automation and informatization is definitely a major business strategy of TXC. Therefore, while continuing to invest in automated production equipment, our company will also continue to enter into cooperation with various companies. By upgrading to industry 4.0, TXC will further increase productivity and reduce the difficulties caused by manpower supply shortage.

3. Boosting R&D results

Simultaneously upgrading R&D capacity and product competitiveness is the key to ensuring sustainable operations. Therefore, our R&D department will focus on new product development in 2017 to swiftly enter the market, earn customer trust and opportunities for cooperation.

3. Continued capacity expansion

As market demand increases, TXC will continue to expand capacity at our three plants. Total production capacity is forecast to be increased by 20% or more to satisfy customer demand for TXC products. As a result, company sales will see a certain level of growth.

1. Corporate Governance

2. In order to allow further execution of board functions, each of the company’s newly appointed independent directors have their own dedicated area of expertise which will strengthem board operations in the future and maintain our excellent corporate governance rating. A philothranpic foundation has also been established to help fulfill our CSR commitments.

Looking towards 2017, spreading our corporate spirit of ‘compete or perish, work hard or drop out ’ will inject the company with the willpower to accomplish our goals. As TXC rolls out the new products which were developed to meet the forecast growth in network communications and automotive markets, we will take a prudent and cautious approach towards the future, moving forward one step at a time.

Chairman: Paul Lin Manager: Peter Lin Accounting Supervisor: Hong Guan-wen

Attachment (2)

TXC Corporation Audit Committee’s Review Report

Board of Directors of the company has made business report of 2016, consolidated financial statements, the individual financial statements and proposal of earnings distribution, of which the consolidated financial statements and the individual financial statements have been audited by independent auditors Ms. Lin Yi Hui and Mr. Wong Bo Ren of Deloitte & Touche. The business report, consolidated financial statements, the individual financial statements and proposal of earnings distribution have been recognized by Audit Committee according to Article 14-4 of the Securities Exchange Act and Article 219 of the Corporate Law. Pleas examine.

2017 shareholder meeting of the company

Convener of Audit Committee Yu Shang Wu

1. 04.24

Attachment (3)

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders TXC Corporation

Opinion

We have audited the accompanying financial statements of TXC Corporation (the Company), which comprise the balance sheets as of December 31, 2016 and 2015, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2016 and 2015, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2016. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter

Inventory of the Company as of December 31, 2016 was NT$927,345 thousands, accounted for 7% of the total assets in the financial statements. The valuation of inventory is subjected to fluctuation of market demand and technology changing rapidly. It may result in the impairment of inventory. The management determines the inventory book value and the allowance for inventories at lower of cost or net realize value in accordance with IAS 2 “Inventory”. Since the value of inventory is subject to management’s judgement and significant in the financial statements, the inventory valuation is identified as a key audit matter.

Refer to note 4 for a summary of the significant accounting policies and refer to note 13 for the amount of the allowance for inventories.

Our key audit procedures performed in respects of the above area included the following:

1. Tested the net realized value of inventories on the balance sheet date. Sampled testing the price on the latest purchase order and sales order to verify whether the net realized value of inventories is reasonable.

2. Implemented computer audit in order to verify the accuracy and correctness of the net realized value

by recalculation on the balance sheet date.

1. Verified the accuracy of the inventory aging report by testing the inventory’s aging details. Obtained the list of inferior goods and spoilage to understand the slow moving inventory and evaluate whether the impairment for inventories is appropriate.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

1. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

2. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2016 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Deloitte & Touche Taipei, Taiwan Republic of China March 30, 2017

Notice to Readers

The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail. Also, as stated in Note X to the financial statements, the additional footnote disclosures that are not required under generally accepted accounting principles were not translated into English.

TXC CORPORATION

BALANCE SHEETS DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Available-for-sale financial assets - current (Notes 4 and 8) Held-to-maturity financial assets - current (Notes 4, 5 and 9) Notes receivable (Notes 4, 5 and 12) Trade receivables (Notes 4, 5 and 12) Trade receivables from related parties (Notes 4, 5, 12 and 29) Other receivables (Note 4) Other receivables from related parties (Notes 4 and 29) Inventories (Notes 4 and 13) Other financial assets - current (Note 11) Other current assets Total current assets NON-CURRENT ASSETS Available-for-sale financial assets - non-current (Notes 4 and 8) Held-to-maturity financial assets - non-current (Notes 4, 5 and 9) Financial assets measured at cost - non-current (Notes 4 and 10) Investments accounted for using equity method (Notes 4, 14 and 25) Property, plant and equipment (Notes 4 and 15) Investment properties (Notes 4 and 16) Other intangible assets (Note 4) Deferred tax assets (Notes 4, 5 and 23) Prepayment for equipment Refundable deposits (Note 4) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loans (Note 17) Financial liabilities at fair value through profit or loss - current (Notes 4 and 7) Notes payable Trade payables Trade payables to related parties (Note 29) Other payables (Note 19) Other payables to related parties (Note 29) Current tax liabilities (Notes 4 and 23) Current portion of long-term borrowings and bonds payable (Notes 17 and 18) Other current liabilities (Note 19) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 17) Deferred tax liabilities (Notes 4 and 23) Net defined benefit liabilities - non-current (Notes 4 and 20) Guarantee deposits received (Notes 4, 19 and 26) Total non-current liabilities Total liabilities EQUITY (Note 21) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translating foreign operations Unrealized gain or loss on available-for-sale financial assets Total other equity Total equity TOTAL		2016 Amount % $ 936,594 7 113,635 1 62,853 - - - 2,358 - 2,422,041 17 95,382 1 31,577 - 1,017 - 927,345 7 - - 57,954 - 4,650,756 33 1,215,050 9 46,532 - 85,520 1 5,566,535 40 2,055,749 15 163,757 1 2,638 - 25,056 - 90,383 1 2,739 - 9,253,959 67 $ 13,904,715 100 $ 20,280 - 13,445 - 756 - 605,175 4 697,253 5 580,206 4 263 - 56,378 1 562,500 4 25,391 - 2,561,647 18 1,209,375 9 331,423 2 56,311 1 26,307 - 1,623,416 12 4,185,063 30 3,097,570 22 1,665,224 12 1,151,202 8 222,793 2 2,789,106 20 4,163,101 30 (161,346) (1) 955,103 7 793,757 6 9,719,652 70 $ 13,904,715 100		2015
				Amount % $ 1,309,639 9 - - - - 47,840 1 2,919 - 2,335,359 16 97,431 1 37,655 - 1,122 - 912,022 6 32,825 - 35,381 - 4,812,193 33 1,870,976 13 50,280 - 115,520 1 5,648,430 38 1,968,448 13 186,156 1 3,832 - 19,795 - 81,647 1 2,767 - 9,947,851 67 $ 14,760,044 100 $ 51,940 1 909 - - - 477,056 3 631,533 4 414,006 3 1,325 - 50,994 - 1,005,191 7 16,549 - 2,649,503 18 1,165,625 8 129,110 1 46,607 - 29,953 - 1,371,295 9 4,020,798 27 3,097,570 21 1,662,181 11 1,057,381 7 222,793 2 2,659,935 18 3,940,109 27 249,121 2 1,790,265 12 2,039,386 14 10,739,246 73 $ 14,760,044 100

The accompanying notes are an integral part of the financial statements.

TXC CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 2 and 29) Sales Less: Sales returns Less: Sales allowances Net operating revenue COST OF GOODS SOLD (Notes 22 and 29) GROSS PROFIT UNREALIZED INTER-COMPANY GAIN REALIZED GAIN ON INTER AFFILIATE ACCOUNTS REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 4 and 29) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Notes 4 and 22) Other gains and losses (Note 22) Finance costs (Notes 4 and 22) Share of profit of associates and joint ventures Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 23) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS)		2016 Amount % $ 7,984,017 101 21,886 - 74,362 1 7,887,769 100 6,251,634 79 1,636,135 21 (4,718) - 1,598 - 1,633,015 21 316,622 4 177,374 2 371,269 5 865,265 11 767,750 10 56,862 - (59,102) (1) (17,333) - 383,716 5 364,143 4 1,131,893 14 115,729 1 1,016,164 13		2015
				Amount % $ 7,973,106 101 18,691 - 55,720 1 7,898,695 100 6,531,490 83 1,367,205 17 (1,598) - 2,110 - 1,367,717 17 318,930 4 171,892 2 317,371 4 808,193 10 559,524 7 34,048 - 83,568 1 (31,587) - 389,604 5 475,633 6 1,035,157 13 96,954 1 938,203 12

(Continued)

TXC CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Share of the other comprehensive income of associates accounted for using the equity method Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Share of the other comprehensive income of associates accounted for using the equity method Unrealized (loss) gain on available-for-sale financial assets Other comprehensive (loss) income for the year, net of income tax TOTAL COMPREHENSIVE (LOSS) INCOME FOR THE YEAR EARNINGS PER SHARE (Note 24) From continuing and discontinued operations Basic Diluted		2016 Amount % (18,680) - (99) - (18,779) - (407,529) (5) (2,892) - (835,208) (11) (1,245,629) (16) (1,264,408) (16) $ (248,244) (3) - $ 3.28 $ 3.23		2015
				Amount % (15,645) - - - (15,645) - (93,862) (1) 1,060 - 1,789,392 22 1,696,590 21 1,680,945 21 $ 2,619,148 33 - $ 3.03 $ 2.86
		$

The accompanying notes are an integral part of the financial statements.

(Concluded)

TXC CORPORATION

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

Shares (In Thousands) Share Capital BALANCE AT JANUARY 1, 2015 309,757 $ 3,097,570 Appropriation of 2014 earnings Legal reserve - - Cash dividends distributed by the Company - - Net profit for the year ended December 31, 2015 - - Other comprehensive income (loss) for the year ended December 31, 2015, net of income tax - - Total comprehensive income (loss) for the year ended December 31, 2015 - - Reissuance of treasury shares - - BALANCE AT DECEMBER 31, 2015 309,757 3,097,570 Appropriation of 2015 earnings Legal reserve - - Cash dividends distributed by the Company - - Change in capital surplus from investments in associates and joint ventures accounted for by using equity method - - Net profit for the for the year ended December 31, 2016 - - Other comprehensive loss for the for the year ended December 31, 2016, net of income tax - - Total comprehensive income (loss) for the year ended December 31, 2016 - - Actual disposal or acquisition of interest in subsidiaries - - BALANCE AT DECEMBER 31, 2016 309,757 $ 3,097,570 The accompanying notes are an integral part of the financial statements.	Capital Surplus $ 1,662,181 - - - - - - 1,662,181 - - 2,712 - - - 331 $ 1,665,224	Retained Earnings Legal Reserve Special Reserve Unappropriate d Earnings $ 957,864 $ 222,793 $ 2,611,372 99,517 - (99,517) - - (774,393) - - 938,203 - - (15,645) - - 922,558 - - (85) 1,057,381 222,793 2,659,935 93,821 - (93,821) - - (774,393) - - - - - 1,016,164 - - (18,779) - - 997,385 - - - $ 1,151,202 $ 222,793 $ 2,789,106	Others Exchange Differences on Translating Unrealized Gain (Loss) on Available-for- Foreign Operations sale Financial Assets Total Equity $ 341,996 $ 800 $ 8,894,576 - - - - - (774,393) - - 938,203 (92,875) 1,789,465 1,680,945 (92,875) 1,789,465 2,619,148 - - (85) 249,121 1,790,265 10,739,246 - - - - - (774,393) - - 2,712 - - 1,016,164 (410,467) (835,162) (1,264,408) (410,467) (835,162) (248,244) - - 331 $ (161,346) $ 955,103 $ 9,719,652
		Legal Reserve $ 957,864 99,517 - - - - - 1,057,381 93,821 - - - - - - $ 1,151,202

TXC CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Depreciation expenses of investment properties Amortization expenses Impairment loss recognized on accounts receivables Net loss on fair value change of financial assets and liabilities designated as at fair value through profit or loss Finance costs Interest income Dividend income Share of profit of associates and joint ventures Gain on disposal of property, plant and equipment Gain on disposal of investment Gain on disposal of investments accounted for using equity method Impairment loss recognized on financial assets Write-down of inventories Unrealized gain on the transactions with subsidiaries, associates and joint ventures Realized gain on the transactions with subsidiaries, associates and joint ventures Changes in operating assets and liabilities: Notes receivable Trade receivables Trade receivables from related parties Other receivables Other receivables from related parties Inventories Other current assets Financial liabilities held or trading Notes payable Trade payables Trade payables to related parties Other payables Other payables to related parties Other current liabilities Accrued pension costs Cash generated from operations Interest paid Income taxes paid Net cash generated by operating activities	2016 $ 1,131,893 405,643 22,399 2,200 336 11,487 17,333 (5,849) (4,132) (383,716) (819) (13,010) (1,350) 47,152 23,693 4,718 (1,598) 564 (86,973) 2,001 3,059 105 (39,016) (22,319) (909) 756 128,119 65,720 166,241 (1,062) 8,842 (12,802) 1,468,706 (16,315) (105,209) 1,347,182	2015 $ 1,035,157 490,799 7,595 2,354 6,818 909 31,587 (13,222) (1,118) (389,604) - (3,286) (1,628) 10,210 9,192 1,598 (2,110) 13,523 26,937 27,886 (15,256) 32,009 85,775 (17,479) (12,488) - (21,014) (76,797) (28,524) 203 3,203 (12,133) 1,191,096 (14,732) (109,296) 1,067,068

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds on sale of held -to-maturity financial assets (115,449) Purchase of available-for-sale financial assets (63,545) Proceeds from sale of available-for-sale financial assets - Purchase of held-to-maturity financial assets - Proceeds from sale of held-to-maturity financial assets 50,300 Purchase of financial assets measured at cost - Proceeds from sale of financial assets measured at cost 13,010 Acquisition of investment accounted for using equity method (17,081) Net cash inflow on disposal of associates 5,185 Payments for property, plant and equipment (493,949) Proceeds from disposal of property, plant and equipment 1,824 Increase in refundable deposits - Decrease in refundable deposits 28 Payments for intangible assets (1,260) Decrease in other financial assets 32,825 Increase in other non-current assets - Increase in prepayment for equipment (8,736) Interest received 8,868 Dividend received from associates 72,392 Cash outflow due to corporate division - Net cash used in investing activities (515,588) CASH FLOWS FROM FINANCING ACTIVITIES Decrease in short-term borrowings (31,660) Repayments of bond payables (800,000) Proceeds from long-term borrowings 950,000 Repayments of long-term borrowings (550,000) Proceeds from guarantee deposits received (3,646) Dividends paid to owners of the Company (774,393) Payments for transaction costs attributable to buy-back of ordinary shares - Proceeds from reissue of treasury shares - Net cash used in financing activities (1,209,699) EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 5,060 NET(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (373,045) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 1,309,639 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 936,594 The accompanying notes are an integral part of the financial statements. (Concluded)

- (130,819) 154,104 (50,280) - (50,000) - (100) 6,101 (152,859) 372 (1,706) - - 20,419 (3,764) (34,089) 11,508 6,618 (20,000) (244,495) (99,837) - 1,150,000 (928,125) - (774,393) (806) 721 (652,440) - 170,133 1,139,506 $ 1,309,639

CONSOLIDATION AUDITORS’ REPORT

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders TXC Corporation

Opinion

We have audited the accompanying consolidated financial statements of TXC Corporation and its subsidiaries (the Group), which comprise the consolidated balance sheets as of December 31, 2016 and 2015, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2016 and 2015, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2016. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s consolidated financial statements for the year ended December 31, 2016 are stated as follows:

Key Audit Matter

Inventory of the Group as of December 31, 2016 was NT$1,520,049 thousands, accounted for 10% of the total assets in the consolidated financial statements. The valuation of inventory is subjected to fluctuation of market demand and technology changing rapidly. It may result in the impairment of inventory. The management determines the inventory book value and the allowance for inventories at

lower of cost or net realize value in accordance with IAS 2 “Inventory”. Since the value of inventory is subject to management’s judgement and significant in the consolidated financial statements, the inventory valuation is identified as a key audit matter.

Refer to note 4 for a summary of the significant accounting policies and refer to note 13 for the amount of the allowance for inventories.

Our key audit procedures performed in respects of the above area included the following:

1. Tested the net realized value of inventories on the balance sheet date. Sampled testing the price on the latest purchase order and sales order to verify whether the net realized value of inventories is reasonable.

2. Implemented computer audit in order to verify the accuracy and correctness of the net realized value by recalculation on the balance sheet date.

3. Verified the accuracy of the inventory aging report by testing the inventory’s aging details. Obtained the list of inferior goods and spoilage to understand the slow moving inventory and evaluate whether the impairment for inventories is appropriate.

Other Matter

We have audited the accompanying financial statements of TXC Corporation as of December 31, 2016 and 2015 on which we have issued an unmodified opinion.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could

reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended

December 31, 2016 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Deloitte & Touche Taipei, Taiwan Republic of China

March 30, 2017

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail. Also, as stated in Note X to the financial statements, the additional footnote disclosures that are not required under generally accepted accounting principles were not translated into English.

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2016 AND 2015

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Note 7) Available-for-sale financial assets - current (Note 8) Held-to-maturity financial assets - current (Note 9) Notes receivable (Note 12) Trade receivables (Note 12) Trade receivables from related parties (Notes 12 and 30) Other receivables Other receivables from related parties (Note 30) Inventories (Note 13) Prepayment for lease (Note 18) Other financial assets - current (Note 11) Other current assets Total current assets NON-CURRENT ASSETS Available-for-sale financial assets - non-current (Note 8) Held-to-maturity financial assets - non-current (Note 9) Financial assets measured at cost - non-current (Note 10) Investments accounted for using equity method (Note 15) Property, plant and equipment (Note 16) Investment properties (Note 17) Other intangible assets Deferred tax assets (Note 25) Prepayment for equipment Long-term prepayment for lease (Note 18) Other noncurrent assets Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loans (Note 19) Financial liabilities at fair value through profit or loss - current (Note 7) Notes payable Trade payables Trade payables to related parties (Note 30) Other payables (Note 21) Other payables to related parties (Note 30) Current tax liabilities (Note 25) Current portion of long-term borrowings and bonds payable (Notes 19 and 20) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 19) Deferred income tax liabilities (Note 25) Net defined benefit liabilities - non-current (Note 22) Guarantee deposits received Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT (Note 23) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translating foreign operations Unrealized loss on available-for-sale financial assets Total other equity Total equity attributable to owners of the company NON-CONTROLLING INTERESTS Total equity TOTAL		2016 Amount % $ 2,092,897 14 1,890,100 13 62,853 1 - - 51,236 - 3,023,659 20 9,612 - 48,761 - 709 - 1,520,049 10 2,416 - - - 115,838 1 8,818,130 59 1,215,050 8 46,532 - 85,520 1 65,228 1 4,277,905 29 61,723 - 10,798 - 31,136 - 107,596 1 102,431 1 19,919 - 6,023,838 41 $ 14,841,968 100 $ 20,280 - 25,525 - 756 - 1,395,657 9 1,602 - 875,356 6 972 - 67,061 1 723,896 5 45,000 - 3,156,105 21 1,483,749 10 331,428 2 56,311 1 41,193 - 1,912,681 13 5,068,786 34 3,097,570 21 1,665,224 11 1,151,202 8 222,793 1 2,789,106 19 4,163,101 28 (161,346) (1) 955,103 7 793,757 6 9,719,652 66 53,530 - 9,773,182 66 $ 14,841,968 100		2015
				Amount % $ 2,727,944 18 1,122,680 7 - - 47,840 - 46,422 - 2,873,093 18 4,910 - 96,159 1 646 - 1,534,026 10 2,637 - 32,825 - 84,625 1 8,573,807 55 1,870,976 12 50,280 - 115,520 1 65,032 - 4,570,352 29 67,412 1 11,921 - 25,718 - 83,859 1 113,887 1 31,651 - 7,006,608 45 $ 15,580,415 100 $ 252,283 2 4,978 - - - 1,110,954 7 1,503 - 635,512 4 1,364 - 57,983 - 1,349,855 9 30,122 - 3,444,554 22 1,165,625 8 129,115 1 46,607 - 55,268 - 1,396,615 9 4,841,169 31 3,097,570 20 1,662,181 11 1,057,381 7 222,793 1 2,659,935 17 3,940,109 25 249,121 2 1,790,265 11 2,039,386 13 10,739,246 69 - - 10,739,246 69 $ 15,580,415 100

The accompanying notes are an integral part of the consolidated financial statements.

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

SALES COST OF GOODS SOLD (Note 24) GROSS PROFIT OPERATING EXPENSES (Note 24) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Note 24) Other gains and losses (Note 24) Finance costs (Note 24) Share of profits of associates and joint venture (Note 15) Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 25) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) Item that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Share of the other comprehensive income of associates accounted for using the equity method Item that maybe reclassified subsequently to profit or loss:		2016 Amount % $ 9,637,101 100 (7,083,032) (74) 2,554,069 26 509,182 5 391,987 4 538,506 6 1,439,675 15 1,114,394 11 99,083 1 252 - (28,062) - 6,605 - 77,878 1 1,192,272 12 (178,580) (2) 1,013,692 10 (18,680) - (99) - (18,779) -		2015
				Amount % $ 9,265,656 100 (7,030,481) (76) 2,235,175 24 497,711 5 373,594 4 455,535 5 1,326,840 14 908,335 10 79,237 1 133,547 1 (43,324) - 9,815 - 179,275 2 1,087,610 12 (149,407) (2) 938,203 10 (15,645) - - - (15,645) - (Continued)

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Exchange differences on translating foreign operations Unrealized (loss) gain on available-for-sale financial assets Share of the other comprehensive income of associates accounted for using the equity method Other comprehensive (loss) income for the year, net of income tax TOTAL COMPREHENSIVE (LOSS) INCOME FOR THE YEAR NET PROFIT ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Company Non-controlling interests EARNINGS PER SHARE (Note 26) From continuing and discounted operations Basic Diluted		2016 Amount % (407,529) (4) (835,208) (9) (2,892) - (1,245,629) (13) (1,264,408) (13) $ (250,716) (3) $ 1,016,164 11 (2,472) - $ 1,013,692 11 $ (248,244) (3) (2,472) - $ (250,716) (3) $3.28 $3.23		2015
				Amount % (93,862) (1) 1,789,392 19 1,060 - 1,696,590 18 1,680,945 18 $ 2,619,148 28 $ 938,203 10 - - $ 938,203 10 $ 2,619,148 28 - - $ 2,619,148 28 $3.03 $2.86

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2015 Appropriation of 2014 earnings Legal reserve Cash dividends distributed by the company Net profit for the year ended December 31, 2015 Other comprehensive income (loss) for the year ended December 31, 2015, net of income tax Total comprehensive income (loss) for the year ended December 31, 2015 Reissuance of treasury stock BALANCE AT DECEMBER 31, 2015 Appropriation of 2015 earnings Legal reserve Cash dividends distributed by the company Net profit for the for the year ended December 31, 2016 Other comprehensive loss for the for the year ended December 31, 2016, net of income tax Total comprehensive income (loss) for the for the year ended December 31, 2016 Other changes in capital surplus Actual disposal or acquisition of interest in subsidiaries Change in capital surplus from investments in associates and joint ventures accounted for by using equity method Additional non-controlling interest recognized on equity BALANCE AT DECEMBER 31, 2016				Equity Attributable to Owners of the Parent		Total Non-controlling Interests $ 8,894,576 $ - - - (774,393) - 938,203 - 1,680,945 - 2,619,148 - (85) - 10,739,246 - - - (774,393) - 1,016,164 (2,472) (1,264,408) - (248,244) (2,472) - - 331 (331) 2,712 - - 56,333 $ 9,719,652 $ 53,530	Total Equity $ 8,894,576 - (774,393) 938,203 1,680,945 2,619,148 (85) 10,739,246 - (774,393) 1,013,692 (1,264,408) (250,716) - - 2,712 56,333 $ 9,773,182
	Shares (In Thousands) 309,757 - - - - - - 309,757 - - - - - - - - - 309,757	Share Capital Capital Surplus $ 3,097,570 $ 1,662,181 - - - - - - - - - - - - 3,097,570 1,662,181 - - - - - - - - - - - - - 331 - 2,712 - - $ 3,097,570 $ 1,665,224		Retained Earnings Legal Reserve Special Reserve Unappropriated Earnings $ 957,864 $ 222,793 $ 2,611,372 99,517 - (99,517) - - (774,393) - - 938,203 - - (15,645) - - 922,558 - - (85) 1,057,381 222,793 2,659,935 93,821 - (93,821) - - (774,393) - - 1,016,164 - - (18,779) - - 997,385 - - - - - - - - - - - - $ 1,151,202 $ 222,793 $ 2,789,106	Others Exchange Differences on Unrealized Gain (Loss) on Available-for- Translation Foreign Operations sale Financial Assets $ 341,996 $ 800 - - - - - - (92,875) 1,789,465 (92,875) 1,789,465 - - 249,121 1,790,265 - - - - - - (410,467) (835,162) (410,467) (835,162) - - - - - - - - $ (161,346) $ 955,103

The accompanying notes are an integral part of the consolidated financial statements.

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Depreciation expenses of investment properties Amortization expenses Amortization of prepayments for lease Recognition (reversal) of provisions Finance costs Interest income Dividend income Share of profit of associates and joint ventures Loss on disposal of property, plant and equipment Gain on disposal of investment Gain on disposal of investments accounted for using equity method Impairment loss recognized on financial assets Net gain on fair value change of financial assets and liabilities at fair value through profit or loss Write-down of inventories Impairment loss recognized on property, plant and equipment Changes in operating assets and liabilities Financial asset held for trading Notes receivable Trade receivables Trade receivables from related parties Other receivables Other receivables from related parties Inventories Other current assets Financial liabilities held or trading Notes payable Trade payables Trade payables to related parties Other payables Other payables to related parties Other current liabilities Net defined benefit liabilities Cash generated from operations Interest paid Income tax paid Net cash generated from operating activities	2016 $ 1,192,272 911,332 4,403 3,686 2,523 (320) 28,062 (14,411) (4,132) (6,605) 9,080 (13,010) (1,350) 47,152 (33,609) 28,658 1,414 158,048 (4,811) (149,954) (4,750) 44,379 (63) (14,006) (30,958) (4,821) 756 284,703 99 239,887 (392) 14,878 (12,802) 2,675,338 (27,046) (164,523) 2,483,769	2015 $ 1,087,610 974,009 3,467 3,163 2,637 8,723 43,324 (33,527) (1,118) (9,815) 12,245 (3,286) (1,628) 10,210 (52,314) 12,125 440 213,877 (3,357) 36,461 1,971 (35,323) (18) 111,567 44,911 (15,300) - 42,823 1,182 28,354 225 (32,327) (12,133) 2,439,178 (26,285) (172,192) 2,240,701

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at fair value through profit or loss Proceeds from sale of financial assets at fair value through profit or loss Purchase of available-for-sale financial assets Proceeds from sale of available-for-sale financial assets Purchase of held-to-maturity financial assets Proceeds from sale of held-to-maturity financial assets Purchase of financial assets measured at cost Proceeds from sale of financial assets measured at cost Purchase of investment accounted for using equity method Proceeds from sale of investment accounted for using equity method Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Payments for intangible assets Decrease in other financial assets Decrease in other noncurrent assets Increase in prepayment for equipment Interest received Dividend received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayments of short-term borrowings Repayments of bond payables Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds from guarantee deposits received Refund of guarantee deposits received Dividends paid to owners of the Company Payments for transaction costs attributable to buy-back of ordinary shares Proceeds from reissue of treasury shares Increase in non-controlling Net cash used in financing activities EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	2016 (2,905,352) 1,913,560 (63,545) - - 50,300 - 13,010 (2,364) 5,185 (825,686) 24,312 (3,104) 32,825 11,732 (23,737) 17,430 8,792 (1,746,642) (129,596) (800,000) 950,000 (550,000) - (14,075) (774,393) - - 56,333 (1,261,731) (110,443) (635,047)	2015 (1,272,720) 1,116,410 (130,819) 154,104 (50,280) - (50,000) - - 6,101 (388,953) 3,462 (7,561) 20,419 4,410 (33,224) 31,813 6,618 (590,220) (173,302) - 1,150,000 (928,125) 24,402 - (774,393) (806) 721 - (701,503) 10,562 959,540

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 2,727,944 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 2,092,897 The accompanying notes are an integral part of the consolidated financial statements.	1,768,404 $ 2,727,944 (Concluded)