1934 Act Registration No. 1-14700
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of April 2004
Taiwan Semiconductor Manufacturing Company Ltd.
(Translation of Registrants Name Into English)
No. 8, Li-Hsin Rd. 6,
Hsinchu Science Park,
Taiwan
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F x |
Form 40-F ¨ |
(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
Yes ¨ |
No x |
(If Yes is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82: .)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Taiwan Semiconductor Manufacturing Company Ltd. | ||||||||||
Date: April 27, 2004 |
By |
/s/ Lora Ho | ||||||||
Lora Ho | ||||||||||
Vice President & Chief Financial Officer |
Taiwan Semiconductor Manufacturing
Company Ltd.
Financial Statements for the Three Months Ended
March 31, 2004 and 2003
Together with Independent Accountants Report
Readers are advised that the original version of these financial statements is in Chinese. This English translation is solely for the readers convenience. If there is any conflict between these financial statements and the Chinese version or any difference in the interpretation of the two versions, the Chinese-language financial statements shall prevail.
English Translation of a Report Originally Issued in Chinese
INDEPENDENT ACCOUNTANTS REPORT
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Ltd.
We have reviewed the accompanying balance sheets of Taiwan Semiconductor Manufacturing Company Ltd. as of March 31, 2004 and 2003, and the related statements of income and cash flows for the three months then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to issue a report on these financial statements based on our reviews.
We conducted our reviews in accordance with Statement on Auditing Standards No. 36 Review of Financial Statements issued by the Auditing Committee of the Accounting Research and Development Foundation of the Republic of China. A review consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the Republic of China.
April 14, 2004
Notice to Readers
The accompanying financial statements are intended only to present the financial position, results of operations 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 review such financial statements are those generally accepted and applied in the Republic of China.
- 1 -
English Translation of Financial Statements Originally Issued in Chinese
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
BALANCE SHEETS
(UNAUDITED)
MARCH 31, 2004 AND 2003
(In Thousand New Taiwan Dollars, Except Par Value)
2004 |
2003 |
|||||||||||||
Amount |
% |
Amount |
% |
|||||||||||
ASSETS |
||||||||||||||
CURRENT ASSETS |
||||||||||||||
Cash and cash equivalents (Notes 2 and 3) |
$ | 106,507,988 | 25 | $ | 67,449,389 | 18 | ||||||||
Short-term investments (Notes 2 and 4) |
19,829,168 | 5 | | | ||||||||||
Receivables from related parties (Note 18) |
16,450,646 | 4 | 11,056,070 | 3 | ||||||||||
Notes receivable |
57,225 | | 4,120 | | ||||||||||
Accounts receivable |
14,649,792 | 3 | 9,358,733 | 3 | ||||||||||
Allowance for doubtful receivables (Note 2) |
(1,014,509 | ) | | (976,864 | ) | | ||||||||
Allowance for sales returns and others (Note 2) |
(2,893,814 | ) | (1 | ) | (1,834,097 | ) | (1 | ) | ||||||
Other financial assets (Notes 2 and 21) |
1,851,305 | 1 | 749,584 | | ||||||||||
Inventoriesnet (Notes 2 and 5) |
11,014,523 | 3 | 10,178,043 | 3 | ||||||||||
Deferred income taxes assets (Notes 2 and 12) |
8,212,000 | 2 | 5,371,000 | 2 | ||||||||||
Prepaid expenses and other current assets |
1,052,581 | | 1,629,391 | | ||||||||||
Total current assets |
175,716,905 | 42 | 102,985,369 | 28 | ||||||||||
LONG-TERM INVESTMENTS (Notes 2, 6, 15, 18 and 20) |
||||||||||||||
Equity method |
37,275,028 | 9 | 33,119,011 | 9 | ||||||||||
Cost method |
432,500 | | 849,666 | | ||||||||||
Funds |
270,934 | | 238,507 | | ||||||||||
Unrealized loss on long-term investments |
| | (60,566 | ) | | |||||||||
Total long-term investments |
37,978,462 | 9 | 34,146,618 | 9 | ||||||||||
PROPERTY, PLANT, AND EQUIPMENT (Notes 2 and 7) |
||||||||||||||
Cost |
||||||||||||||
Buildings |
71,772,658 | 17 | 69,976,415 | 19 | ||||||||||
Machinery and equipment |
341,494,302 | 81 | 314,492,740 | 87 | ||||||||||
Office equipment |
6,340,506 | 1 | 5,812,295 | 2 | ||||||||||
419,607,466 | 99 | 390,281,450 | 108 | |||||||||||
Accumulated depreciation |
(261,678,445 | ) | (62 | ) | (202,845,400 | ) | (56 | ) | ||||||
Advance payments and construction in progress |
38,003,417 | 9 | 18,157,888 | 5 | ||||||||||
Net property, plant, and equipment |
195,932,438 | 46 | 205,593,938 | 57 | ||||||||||
GOODWILL (Note 2) |
2,177,439 | 1 | 2,525,829 | 1 | ||||||||||
OTHER ASSETS |
||||||||||||||
Deferred chargesnet (Notes 2, 8 and 20) |
7,502,506 | 2 | 9,198,057 | 3 | ||||||||||
Deferred income taxes assets (Notes 2 and 12) |
1,534,457 | | 7,968,768 | 2 | ||||||||||
Idle assets (Note 2) |
85,463 | | 270,152 | | ||||||||||
Assets leased to others (Note 2) |
83,622 | | 86,526 | | ||||||||||
Refundable deposits (Notes 18 and 20) |
26,229 | | 478,385 | | ||||||||||
Miscellaneous |
| | 9,250 | | ||||||||||
Total other assets |
9,232,277 | 2 | 18,011,138 | 5 | ||||||||||
TOTAL ASSETS |
$ | 421,037,521 | 100 | $ | 363,262,892 | 100 | ||||||||
2004 |
2003 | |||||||||||
Amount |
% |
Amount |
% | |||||||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||||||
CURRENT LIABILITIES |
||||||||||||
Payables to related parties (Note 18) |
$ | 4,926,011 | 1 | $ | 2,632,038 | 1 | ||||||
Accounts payable |
7,697,360 | 2 | 4,497,685 | 1 | ||||||||
Payable to contractors and equipment suppliers |
12,647,943 | 3 | 7,738,073 | 2 | ||||||||
Accrued expenses and other current liabilities (Notes 2, 10 and 21) |
7,810,028 | 2 | 5,479,353 | 1 | ||||||||
Current portion of long-term bonds payables (Note 9) |
5,000,000 | 1 | | | ||||||||
Total current liabilities |
38,081,342 | 9 | 20,347,149 | 5 | ||||||||
LONG-TERM LIABILITIES |
||||||||||||
Long-term bonds payable (Note 9) |
30,000,000 | 7 | 35,000,000 | 10 | ||||||||
Other long-term payables (Notes 10 and 20) |
2,999,977 | 1 | 4,281,200 | 1 | ||||||||
Total long-term liabilities |
32,999,977 | 8 | 39,281,200 | 11 | ||||||||
OTHER LIABILITIES |
||||||||||||
Guarantee deposits (Note 20) |
656,128 | | 1,375,672 | | ||||||||
Accrued pension cost (Notes 2 and 11) |
2,714,032 | 1 | 2,297,786 | 1 | ||||||||
Deferred gain on sale and leaseback (Note 2) |
| | 76,619 | | ||||||||
Total other liabilities |
3,370,160 | 1 | 3,750,077 | 1 | ||||||||
Total liabilities |
74,451,479 | 18 | 63,378,426 | 17 | ||||||||
SHAREHOLDERS EQUITY (Notes 2, 14, 15 and 16) |
||||||||||||
Capital stock$10 par value |
||||||||||||
Authorized: 24,600,000 thousand shares |
||||||||||||
Issued: Common20,266,619 thousand shares in 2004 and 18,622,887 thousand shares in 2003 |
202,666,189 | 48 | 186,228,867 | 51 | ||||||||
Preferred1,300,000 thousand shares |
| | 13,000,000 | 4 | ||||||||
Capital surplus |
56,860,879 | 13 | 56,839,890 | 16 | ||||||||
Retained earnings: |
||||||||||||
Appropriated as legal reserve |
20,802,137 | 5 | 18,641,108 | 5 | ||||||||
Appropriated as special reserve |
68,945 | | | | ||||||||
Unappropriated earnings |
69,018,210 | 16 | 26,508,956 | 7 | ||||||||
Others: |
||||||||||||
Unrealized loss on long-term investments |
| | (293,612 | ) | | |||||||
Cumulative translation adjustments |
(728,208 | ) | | 882,749 | | |||||||
Treasury stock (at cost)48,518 thousand shares in 2004 and 42,001 thousand shares in 2003 |
(2,102,110 | ) | | (1,923,492 | ) | | ||||||
Total shareholders equity |
346,586,042 | 82 | 299,884,466 | 83 | ||||||||
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
$ | 421,037,521 | 100 | $ | 363,262,892 | 100 | ||||||
The accompanying notes are an integral part of the financial statements.
- 2 -
English Translation of Financial Statements Originally Issued in Chinese
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(In Thousand New Taiwan Dollars, Except Earnings Per Share)
2004 |
2003 | |||||||||||
Amount |
% |
Amount |
% | |||||||||
GROSS SALES (Notes 2 and 18) |
$ | 58,785,691 | $ | 39,633,381 | ||||||||
SALES RETURNS AND ALLOWANCES (Note 2) |
(1,272,486 | ) | (308,068 | ) | ||||||||
NET SALES |
57,513,205 | 100 | 39,325,313 | 100 | ||||||||
COST OF SALES (Notes 13 and 18) |
34,783,992 | 60 | 28,939,421 | 73 | ||||||||
GROSS PROFIT |
22,729,213 | 40 | 10,385,892 | 27 | ||||||||
OPERATING EXPENSES (Notes 13 and 18) |
||||||||||||
Research and development |
2,860,983 | 5 | 2,511,843 | 6 | ||||||||
General and administrative |
2,031,122 | 4 | 1,395,451 | 4 | ||||||||
Marketing |
296,459 | | 283,933 | 1 | ||||||||
Total operating expenses |
5,188,564 | 9 | 4,191,227 | 11 | ||||||||
INCOME FROM OPERATIONS |
17,540,649 | 31 | 6,194,665 | 16 | ||||||||
NON-OPERATING INCOME AND GAINS |
||||||||||||
Investment income recognized by equity methodnet (Notes 2 and 6) |
802,676 | 1 | | | ||||||||
Interest (Notes 2 and 21) |
256,296 | 1 | 188,929 | 1 | ||||||||
Gain on sales of short-term investments (Note 2) |
94,477 | | 7,894 | | ||||||||
Insurance compensationnet |
79,797 | | 52,562 | | ||||||||
Gain on sales of property, plant, and equipment (Note 2) |
59,087 | | 5,876 | | ||||||||
Technical service income (Notes 18 and 20) |
56,983 | | 21,153 | | ||||||||
Other (Note 18) |
12,338 | | 17,393 | | ||||||||
Total non-operating income and gains |
1,361,654 | 2 | 293,807 | 1 | ||||||||
NON-OPERATING EXPENSES AND LOSSES |
||||||||||||
Interest (Notes 7 and 21) |
330,172 | 1 | 500,301 | 1 | ||||||||
Foreign exchange lossnet (Notes 2 and 21) |
122,117 | | 159,298 | 1 | ||||||||
Loss on sales of property, plant, and equipment (Note 2) |
6,749 | | 37,083 | | ||||||||
Investment loss recognized by equity methodnet (Notes 2 and 6) |
| | 1,515,850 | 4 | ||||||||
Loss on idle assets (Note 2) |
| | 63,111 | | ||||||||
Other |
7,832 | | 32,559 | | ||||||||
Total non-operating expenses and losses |
466,870 | 1 | 2,308,202 | 6 | ||||||||
- 3 -
English Translation of Financial Statements Originally Issued in Chinese
2004 |
2003 | |||||||||
Amount |
% |
Amount |
% | |||||||
INCOME BEFORE INCOME TAX |
$ | 18,435,433 | 32 | $ | 4,180,270 | 11 | ||||
INCOME TAX BENEFIT (Notes 2 and 12) |
353,769 | 1 | 177,597 | | ||||||
NET INCOME |
$ | 18,789,202 | 33 | $ | 4,357,867 | 11 | ||||
Before Income Tax |
After Income Tax |
Before Income Tax |
After Income Tax | |||||||||
EARNINGS PER SHARE (Note 17) |
||||||||||||
Basic earnings per share |
$ | 0.91 | $ | 0.93 | $ | 0.20 | $ | 0.21 | ||||
Diluted earnings per share |
$ | 0.91 | $ | 0.93 | $ | 0.20 | $ | 0.21 | ||||
The pro forma net income and earnings per share (after income tax) on the assumption that the stock of parent company held by its subsidiaries is treated as an investment instead of the treasury stock, are shown as follows (Note 16):
2004 |
2003 | |||||
NET INCOME |
$ | 18,790,578 | $ | 4,363,370 | ||
EARNINGS PER SHARE |
||||||
Basic earnings per share |
$ | 0.93 | $ | 0.21 | ||
Diluted earnings per share |
$ | 0.93 | $ | 0.21 | ||
The accompanying notes are an integral part of the financial statements. |
(Concluded) |
- 4 -
English Translation of Financial Statements Originally Issued in Chinese
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(In Thousand New Taiwan Dollars)
2004 |
2003 |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
Net income |
$ | 18,789,202 | $ | 4,357,867 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
15,088,680 | 15,360,867 | ||||||
Deferred income taxes |
(353,861 | ) | (307,201 | ) | ||||
Investment (income) loss recognized by equity methodnet |
(802,676 | ) | 1,515,850 | |||||
Loss on idle assets |
| 63,111 | ||||||
Loss (gain) on sales of property, plant and equipmentnet |
(52,338 | ) | 31,207 | |||||
Accrued pension cost |
113,781 | 87,244 | ||||||
Allowance for doubtful receivables |
(1,513 | ) | 47,000 | |||||
Allowance for sales returns and others |
767,789 | (528,970 | ) | |||||
Changes in operating assets and liabilities: |
||||||||
Decrease (increase) in: |
||||||||
Receivables from related parties |
(1,450,021 | ) | (872,582 | ) | ||||
Notes receivable |
(47,332 | ) | 56,120 | |||||
Accounts receivable |
(741,878 | ) | 136,714 | |||||
Inventoriesnet |
(107,365 | ) | 162,293 | |||||
Other financial assets |
(769,563 | ) | 220,085 | |||||
Prepaid expenses and other current assets |
539,385 | 384,970 | ||||||
Increase (decrease) in: |
||||||||
Payables to related parties |
425,871 | 165,040 | ||||||
Accounts payable |
1,613,484 | (351,549 | ) | |||||
Accrued expenses and other current liabilities |
(310,038 | ) | (399,133 | ) | ||||
Net cash provided by operating activities |
32,701,607 | 20,128,933 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
Increase in short-term investments |
(7,270,149 | ) | | |||||
Acquisitions of: |
||||||||
Long-term investments |
(167,902 | ) | (1,010,581 | ) | ||||
Property, plant, and equipment |
(16,351,217 | ) | (9,052,961 | ) | ||||
Proceeds from sales of: |
||||||||
Property, plant, and equipment |
67,672 | 41,841 | ||||||
Increase in deferred charges |
(326,944 | ) | (360,328 | ) | ||||
Decrease in refundable deposits |
151,150 | 65,084 | ||||||
Net cash used in investing activities |
(23,897,390 | ) | (10,316,945 | ) | ||||
(Continued)
- 5 -
English Translation of Financial Statements Originally Issued in Chinese
2004 |
2003 |
|||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
Purchase of treasury stock |
$ | (476,870 | ) | $ | | |||
Decrease in guarantee deposits |
(107,361 | ) | (19,394 | ) | ||||
Payments on long-term bonds payable |
| (4,000,000 | ) | |||||
Cash used in financing activities |
(584,231 | ) | (4,019,394 | ) | ||||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
8,219,986 | 5,792,594 | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD |
98,288,002 | 61,656,795 | ||||||
CASH AND CASH EQUIVALENTS, END OF THE PERIOD |
$ | 106,507,988 | $ | 67,449,389 | ||||
SUPPLEMENTAL INFORMATION |
||||||||
Interest paid (excluding the amounts capitalized of NT$51,978 thousand and NT$2,315 thousand in 2004 and 2003, respectively) |
$ | 372,684 | $ | 608,040 | ||||
Income tax paid |
$ | 92 | $ | 2,500 | ||||
Non-cash investing and financing activities: |
||||||||
Reclassification of a parent company stock held by subsidiaries from long-term investments to treasury stock |
$ | | $ | 1,923,492 | ||||
Current portion of long-term bonds payable |
$ | 5,000,000 | $ | | ||||
Current portion of other long-term payables (under accrued expenses and other current liabilities) |
$ | 1,826,065 | $ | 1,157,175 | ||||
The accompanying notes are an integral part of the financial statements. |
(Concluded) |
- 6 -
English Translation of Financial Statements Originally Issued in Chinese
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(Amounts in Thousand New Taiwan Dollars, Unless Specified Otherwise)
1. GENERAL
Taiwan Semiconductor Manufacturing Company Ltd. (the Company or TSMC), a Republic of China (R.O.C.) corporation, was incorporated as a venture among the Government of the R.O.C., acting through the Development Fund of the Executive Yuan; Koninklijke Philips Electronics N.V. and certain of its affiliates (Philips); and certain other private investors. In September 1994, its shares were listed on the Taiwan Stock Exchange (TSE). On October 8, 1997, TSMC listed its shares of stock on the New York Stock Exchange (NYSE) in the form of American Depositary Shares (ADSs).
TSMC is engaged in the manufacturing, selling, packaging, testing and designing of integrated circuits and other semiconductor devices, and the manufacturing of masks.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are presented in conformity with Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the R.O.C. Significant accounting policies are summarized as follows:
Classification of Current and Non-current Assets and Liabilities
Current assets are those expected to be converted to cash, sold or consumed within one year from the balance sheet date. Current liabilities are obligations due on demand within one year from the balance sheet date. Assets and liabilities that are not classified as current are non-current assets and liabilities, respectively.
Cash Equivalents
Government bonds under repurchase agreements acquired with maturities less than three months from the date of purchase are classified as cash equivalents.
Short-term Investments
Short-term investments consist of government bonds, bond funds, government bonds acquired under repurchase agreements and listed stocks. The investments are carried at the lower of cost or market value. Cash dividends are recorded as investment income in the current period. An allowance for decline in value is provided and is charged to current period earnings when the aggregate carrying value of the investments exceeds the aggregate market value. A reversal of the allowance is recorded for a subsequent recovery of the market value. The cost of the government bonds sold is accounted for using the specific identification method, whereas the cost of bond funds and listed stocks sold is accounted for using the weighted-average method.
The market values of government bonds are determined using the average of bid and ask prices of the government bonds. The market value of funds is determined using the net asset value of the funds, and the market value of listed stocks is determined using the average-closing price of the listed stocks for the last month of the period.
- 7 -
Allowance for Doubtful Receivables
Allowance for doubtful receivables are provided based on a review of the collectibility of accounts receivables. The Company determines the amount of allowance for doubtful accounts by examining the historical collection experience and current trends in the credit quality of its customers as well as its internal credit policies.
Revenue Recognition and Allowance for Sales Returns and Others
The Company recognizes net sales when the earnings process is complete, as evidenced by an agreement with the customer, transfer of title and acceptance, if applicable, have occurred, as well as the price is fixed or determinable and the collectibility is reasonably assured. An allowance is provided for any sales return and pricing discounts. Allowance for sales returns and pricing discounts is estimated based on historical experience and any known factors that would affect the allowance. Such provisions are deducted from sales in the year the products are sold and the estimated related costs are deducted from cost of sales.
Sales are determined using the fair value taking into account related sales discounts agreed to by the Company and its customers. Sales agreements typically provide that payment is due 30 days from invoice date for majority of the customers and 30 to 45 days after the end of the month in which the sales occur for some customers. Since the receivables from sales are collectible within one year and such transactions are frequent, the fair value of receivables is equivalent to the nominal amount of cash received.
Inventories
Inventories are stated at the lower of cost or market value. Inventories are recorded at standard cost and adjusted to the approximate weighted-average cost at the end of each period. Market value represents net realizable value for finished goods and work in process. Replacement value represents net realizable value for raw materials, supplies and spare parts. The Company assesses the impact of changing technology on its inventory on-hand and write-off inventories that are considered obsolete. Ending inventories are evaluated for estimated excess quantities and obsolescence based on demand forecast within a specific time horizon, generally 180 days or less. Scrap and slow-moving items are recognized in the allowance for losses.
Long-term Investments
Investments in companies wherein the Company exercises significant influence on the operating and financial policy decisions are accounted for using the equity method of accounting. The Companys proportionate share in the net income or net loss of investee companies is recognized as components of the investment income/loss recognized by equity methodnet account. When equity investments are made, the difference, if any, between the cost of investment and the Companys proportionate share of investees net book value is amortized using the straight-line method over five years and is recorded as a component of the investment income/loss recognized by equity methodnet account. The Company reclassify its capital stock held by its subsidiaries from long-term investments to treasury stock.
When the Company subscribes to additional investee shares at a percentage different from its existing equity interest, the resulting carrying amount of the investment in the equity investee differs from the amount of Companys proportionate share in the investees net equity. The Company records such difference as an adjustment to long-term investments with the corresponding amount charged to capital surplus. If investees functional currency is a foreign currency, cumulative translation adjustments will result from the process of translating the investees financial statements into the reporting currency of the Company.
- 8 -
Investments in companies wherein the Company does not exercise significant influence are recorded at historical cost. Cash dividends are recognized as income in the year received but are accounted for as reduction in the carrying values of the long-term investments if the dividends are received in the same year that the related investments are acquired. Stock dividends are recorded as an increase in the number of shares held and do not affect investment income or the carrying amount of the investment. An allowance is recognized for any decline in the market value of investments with readily ascertainable fair market value with the corresponding amount recorded as an unrealized loss, a component of shareholders equity. A reversal of the allowance will result from a subsequent recovery of the market value of such investments. The market value of such investment is determined using the average-closing price of the listed stocks for the last month of the period. The carrying values of investments whose fair market values are not readily ascertainable are reduced to reflect an other-than-temporary decline in their values, with the related impairment loss charged to income.
Investments in foreign mutual funds are stated at the lower of aggregate cost or net asset value. An allowance is recognized when the cost of the funds is lower than their net asset values, with the corresponding amount recorded as a reduction to shareholders equity. A reversal of the allowance will result from a subsequent recovery of the net asset value.
The costs of investments sold are determined using the weighted-average method.
If an investee company recognizes an unrealized loss on its long-term investment using the lower-of-cost-or-market method, the Company also recognizes a corresponding unrealized loss in proportion to its equity interest in the investee company and records the amount as a component of its shareholders equity.
Gains or losses on sales from the Company to investee companies accounted for using the equity method are deferred in proportion to the Companys ownership percentage in the investee companies until realized through a transaction with a third party. The entire amount of the gains or losses on sales to majority-owned subsidiaries is deferred until such gains or losses are realized through the subsequent sale of the related products to third parties.
Gains or losses on sales by investee companies to the Company are deferred in proportion to the Companys ownership percentages in the investee companies until realized through transactions with third parties.
Property, Plant and Equipment, Assets Leased to Others and Idle Assets
Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation. When an impairment is determined, the related assets are stated at the lower of fair value or book value. Idle assets are stated at the lower of book value or net realizable value. Significant additions, renewals, betterments, and interest expense incurred during the construction period are capitalized. Maintenance and repairs are expensed in the period incurred. Interest expense incurred for the project during the purchase and construction period is also capitalized.
Depreciation is computed using the straight-line method over the following estimated service lives: buildings10 to 20 years; machinery and equipment5 years; and office equipment3 to 5 years.
Upon sale or disposal of property, plant and equipment, the related cost and accumulated depreciation are removed from the corresponding accounts, with any gain or loss charged to income in the period of disposal.
Goodwill
Goodwill represents the excess of the consideration paid for acquisition over the fair market value of identifiable net assets acquired and acquisition costs. Goodwill is amortized using the straight-line method over the estimated life of 10 years.
- 9 -
Deferred Charges
Deferred charges consist of technology license fees, software and system design costs and other charges. The amounts are amortized as follows: software and system design costs3 or 5 years, technology license feesthe shorter of the estimated life of the technology or the term of the technology transfer contract.
Pension Costs
The Company records net periodic pension costs on the basis of actuarial calculations. Unrecognized net transition obligation and unrecognized net gains or losses are amortized over 25 years.
Deferred Gain on Sale and Leaseback
The gain on the sale of property that is simultaneously leased back is deferred by the Company and amortized as an adjustment of rental expenses over the term of the lease.
Income Tax
The Company uses an inter-period tax allocation method for income tax. Deferred income tax assets and liabilities are recognized for the tax effects of temporary differences, unused tax credits and net operating loss carryforwards. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified as current or non-current in accordance with the classification of its related asset or liability. However, if a deferred asset or liability does not relate to an asset or liability in the financial statements, then it is classified as either current or non-current based on the expected length of time before it is realized.
Any tax credit arising from the purchases of machinery, equipment and technology, research and development expenditures, personnel training, and investments in important technology-based enterprise are recognized using the current method.
Adjustments to prior years tax liabilities are added to or deducted from the current years tax provision.
As of January 1, 1998, income taxes on unappropriated earnings of 10% are expensed in the year of shareholder approval which is usually the year subsequent to the year incurred.
Foreign-Currency Transactions
Foreign-currency transactions are recorded in New Taiwan dollars at the current rate of exchange in effect when the transaction occurs. Exchange gains or losses derived from foreign currency transactions or monetary assets and liabilities denominated in a foreign currency are recognized in current operations. At the end of each period, assets and liabilities denominated in foreign currency are revalued at the prevailing exchange rate with the resulting gains or losses recognized in current operations.
Derivative Financial Instruments
The Company enters into foreign currency forward contracts to manage currency exposures in cash flow and in foreign currency-denominated assets and liabilities. The differences in the New Taiwan dollar amounts translated using the spot rate and the amounts translated using the contracted forward rates on the contract date are amortized over the terms of the forward contracts using the straight-line method. At the end of each period, the receivables or payables arising from forward contracts are restated using the prevailing spot rate at the balance sheet date with the resulting differences charged to income. In addition, the receivables and payables related to the forward contracts are netted with the resulting amount presented as either an asset or a liability. Any resulting gains or losses upon settlement are charged to income in the period of settlement.
- 10 -
The Company enters into interest rate swap transactions to manage its exposures to changes in interest rates on existing liabilities. These transactions are accounted for on an accrual basis, in which the cash settlement receivable or payable is recorded as an adjustment to interest income or expense.
The notional amount of foreign currency option contracts entered into for hedging purposes are not recognized as an asset or liability on the contract dates. The premiums paid or received for the call or put options are amortized and charged to income on a straight-line basis over the term of the related contract. Any resulting gains or losses upon settlement are charged to income in the period of settlement.
3. CASH AND CASH EQUIVALENTS
March 31 | ||||||
2004 |
2003 | |||||
Cash and bank deposits |
$ | 96,498,092 | $ | 63,593,271 | ||
Government bonds acquired under repurchase agreements |
10,009,896 | 3,856,118 | ||||
$ | 106,507,988 | $ | 67,449,389 | |||
4. SHORT-TERM INVESTMENTS
March 31, 2004 |
|||||
Government bonds |
$ | 9,762,665 | |||
Bond funds |
6,700,000 | ||||
Government bonds acquired under repurchase agreements |
3,355,145 | ||||
Listed stocks |
11,358 | ||||
$ | 19,829,168 | ||||
Market value |
$ | 19,905,368 | |||
5. INVENTORIESNET
March 31 |
||||||||
2004 |
2003 |
|||||||
Finished goods |
$ | 2,259,236 | $ | 1,748,237 | ||||
Work in process |
8,896,651 | 8,636,827 | ||||||
Raw materials |
632,825 | 384,315 | ||||||
Supplies and spare parts |
782,487 | 656,082 | ||||||
12,571,199 | 11,425,461 | |||||||
Allowance for losses |
(1,556,676 | ) | (1,247,418 | ) | ||||
$ | 11,014,523 | $ | 10,178,043 | |||||
- 11 -
6. LONG-TERM INVESTMENTS
March 31 | |||||||||||
2004 |
2003 | ||||||||||
Carrying Value |
% of Owner- ship |
Carrying Value |
% of Owner- ship | ||||||||
Shares of stock |
|||||||||||
Equity method: |
|||||||||||
TSMC International Investment Ltd. (TSMC International) |
$ | 22,383,406 | 100 | $ | 21,019,823 | 100 | |||||
Vanguard International Semiconductor Corporation (VIS) |
4,375,675 | 28 | 3,588,892 | 28 | |||||||
TSMC Partners Ltd. (TSMC Partners) |
4,011,311 | 100 | 3,938,938 | 100 | |||||||
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC) |
2,824,776 | 32 | 2,859,712 | 32 | |||||||
TSMC Shanghai Company Ltd. (TSMC Shanghai) |
1,819,487 | 100 | | | |||||||
Emerging Alliance Fund L.P. (Emerging Alliance) |
824,793 | 99 | 933,010 | 99 | |||||||
TSMC North America (TSMCNorth America) |
412,786 | 100 | 201,573 | 100 | |||||||
Global UniChip Corp. (GUC) |
359,454 | 47 | 388,177 | 47 | |||||||
TSMC Japan K. K. (TSMCJapan) |
104,186 | 100 | 94,062 | 100 | |||||||
VisEra Technology Company Ltd. (VisEra) |
50,499 | 25 | | | |||||||
Chi Cherng Investment Ltd. (Chi Cherng) |
43,138 | 36 | 42,636 | 36 | |||||||
Hsin Ruey Investment Ltd. (Hsin Ruey) |
42,083 | 36 | 41,666 | 36 | |||||||
Taiwan Semiconductor Manufacturing Company Europe B. V (TSMCEurope) |
23,434 | 100 | 10,522 | 100 | |||||||
37,275,028 | 33,119,011 | ||||||||||
Cost method: |
|||||||||||
Publicly traded stock |
|||||||||||
Amkor Technology |
| | 280,748 | | |||||||
Monolithic System Technology Inc. |
| | 104,289 | 2 | |||||||
Taiwan Mask Corp. |
| | 32,129 | 2 | |||||||
Non-publicly traded stock |
|||||||||||
United Gas Co., Ltd. |
193,584 | 11 | 193,584 | 11 | |||||||
Shin-Etsu Handotai Taiwan Co., Ltd. |
105,000 | 7 | 105,000 | 7 | |||||||
Hon Tung Venture Capital |
83,916 | 10 | 83,916 | 10 | |||||||
W.K. Technology Fund IV |
50,000 | 2 | 50,000 | 2 | |||||||
432,500 | 849,666 | ||||||||||
Funds |
|||||||||||
Horizon Ventures |
229,669 | | 195,452 | | |||||||
Crimson Asia Capital |
41,265 | | 43,055 | | |||||||
270,934 | 238,507 | ||||||||||
Unrealized loss on long-term investments |
| (60,566 | ) | ||||||||
$ | 37,978,462 | $ | 34,146,618 | ||||||||
In August 2003, the Company established TSMC Shanghai which is wholly owned by the Company.
In November 2003, the Company invested a 25% ownership in VisEra.
- 12 -
The carrying value of the investments accounted for using the equity method and the related investment income (losses) were determined based on the reviewed financial statements of the investees for the same period as the Company. The investment income (losses) of the investee companies consisted of the following:
Three Months Ended March 31 |
||||||||
2004 |
2003 |
|||||||
TSMC International |
$ | 365,435 | $ | (1,229,388 | ) | |||
VIS |
323,110 | (207,875 | ) | |||||
SSMC |
145,147 | (275,997 | ) | |||||
TSMC Partners |
10,596 | 185,361 | ||||||
Others |
(41,612 | ) | 12,049 | |||||
$ | 802,676 | $ | (1,515,850 | ) | ||||
The aggregate market value of the publicly traded stocks accounted for using the cost method was $356,597 thousand as of March 31, 2003.
7. PROPERTY, PLANT AND EQUIPMENT
Accumulated depreciation consisted of the following:
March 31 | ||||||
2004 |
2003 | |||||
Buildings |
$ | 30,913,778 | $ | 23,790,274 | ||
Machinery and equipment |
226,723,846 | 175,906,546 | ||||
Office equipment |
4,040,821 | 3,148,580 | ||||
$ | 261,678,445 | $ | 202,845,400 | |||
Information on the status of the expansion or construction plans of the Companys manufacturing facilities as of March 31, 2004, is as follows:
Construction/Expansion Plan |
Estimated Complete Cost |
Accumulated Expenditures |
Expected Date of | |||||
Fab 14 Phase 1 |
$ | 67,047,200 | $ | 28,671,700 | Fourth quarter of 2004 |
Interest expenses for the three months ended March 31, 2004 and 2003 were NT$382,150 thousand and NT$502,616 thousand, respectively (before deducting capitalized amounts of NT$51,978 thousand and NT$2,315 thousand for the three months ended March 31, 2004 and 2003, respectively). The interest rate used for purposes of calculating the capitalized amount was 2.80% and 5.283% for the three months ended March 31, 2004 and 2003, respectively
- 13 -
8. DEFERRED CHARGESNET
March 31 | ||||||
2004 |
2003 | |||||
Technology license fee |
$ | 4,789,827 | $ | 6,037,579 | ||
Software and system design costs |
2,589,038 | 3,076,319 | ||||
Others |
123,641 | 84,159 | ||||
$ | 7,502,506 | $ | 9,198,057 | |||
9. BONDS
March 31 | ||||||
2004 |
2003 | |||||
Domestic unsecured bonds: |
||||||
Issued in October 1999 and payable in October 2002 and 2004 in two equal payments, 5.67% and 5.95% interest payable annually, respectively |
5,000,000 | $ | 5,000,000 | |||
Issued in December 2000 and payable in December 2005 and 2007 in two equal payments, 5.25% and 5.36% interest payable annually, respectively |
15,000,000 | 15,000,000 | ||||
Issued in January 2002 and payable in January 2007, 2009 and 2012 in three equal payments, 2.60%, 2.75% and 3% interest payable annually, respectively |
15,000,000 | 15,000,000 | ||||
$ | 35,000,000 | $ | 35,000,000 | |||
As | of March 31, 2004, future principal payments for the Companys bond arrangements are as follows: |
Year of Repayment |
Amount |
|||
2004 (2nd to 4th quarter) |
$ | 5,000,000 | ||
2005 |
10,500,000 | |||
2007 |
7,000,000 | |||
2008 and thereafter |
12,500,000 | |||
35,000,000 | ||||
Less: Current portion |
(5,000,000 | ) | ||
$ | 30,000,000 | |||
- 14 -
10. OTHER LONG-TERM PAYABLES
The Company entered into several license arrangements for certain semiconductor-related patents. Future payments under the agreements as of March 31, 2004 are as follows:
Year |
Amount |
|||
2004 (2nd to 4th quarter) |
$ | 1,528,025 | ||
2005 |
1,243,072 | |||
2006 |
536,025 | |||
2007 |
462,280 | |||
2008 |
264,160 | |||
2009 and thereafter |
792,480 | |||
4,826,042 | ||||
Less: current portion (under accrued expenses and other current liabilities) |
(1,826,065 | ) | ||
$ | 2,999,977 | |||
11. PENSION PLAN
The Company has a defined benefit plan for all regular employees that provides benefits based on length of service and average monthly salary for the six-month period prior to retirement.
The Company contributes an amount equal to 2% of salaries paid every month to a Pension Fund (the Fund). The Fund is administered by a pension fund monitoring committee (the Committee) and the amounts in the Fund are deposited in the Committees name in the Central Trust of China.
For the three months ended March 31, 2004 and 2003, the changes in the Fund and accrued pension cost are summarized as follows:
Three Months Ended March 31 | ||||||
2004 |
2003 | |||||
Pension fund |
||||||
Balance, beginning of period |
$ | 1,191,702 | $ | 993,404 | ||
Contribution |
68,041 | 55,376 | ||||
Interest |
15,562 | 20,682 | ||||
Balance, end of period |
$ | 1,275,305 | $ | 1,069,462 | ||
Accrued pension cost |
||||||
Balance, beginning of period |
$ | 2,600,251 | $ | 2,210,542 | ||
Accruals |
113,781 | 87,244 | ||||
Balance, end of period |
$ | 2,714,032 | $ | 2,297,786 | ||
- 15 -
12. INCOME TAX
a. | A reconciliation of income tax expense on income before income tax at the statutory rate and current income tax expense before income tax credits is as follows: |
Three Months Ended March 31 |
||||||||
2004 |
2003 |
|||||||
Income tax expense based on income before income tax at statutory rate (25%) |
$ | (4,608,858 | ) | $ | (1,045,068 | ) | ||
Tax-exempt income |
2,774,533 | 648,750 | ||||||
Temporary and permanent differences |
(137,367 | ) | (298,137 | ) | ||||
Current income tax expense before income tax credits |
$ | (1,971,692 | ) | $ | (694,455 | ) | ||
b. | Income tax benefit consists of the following: |
Three Months Ended March 31 |
||||||||
2004 |
2003 |
|||||||
Current income tax expense before tax credits |
$ | (1,971,692 | ) | $ | (694,455 | ) | ||
Income tax credits |
1,971,692 | 694,455 | ||||||
Other income tax |
(92 | ) | (2,500 | ) | ||||
Net change in deferred income tax assets and liabilities |
||||||||
Investment tax credits |
960,679 | 1,192,419 | ||||||
Temporary differences |
807,088 | (457,260 | ) | |||||
Valuation allowance |
(1,413,906 | ) | (555,062 | ) | ||||
Income tax benefit |
$ | 353,769 | $ | 177,597 | ||||
c. | Deferred income tax assets consist of the following: |
March 31 |
||||||||
2004 |
2003 |
|||||||
Current |
||||||||
Investment tax credits |
$ | 8,212,000 | $ | 5,371,000 | ||||
Noncurrent: |
||||||||
Investment tax credits |
$ | 18,398,573 | $ | 22,389,072 | ||||
Temporary differences |
(2,678,363 | ) | (4,023,101 | ) | ||||
Valuation allowance |
(14,185,753 | ) | (10,397,203 | ) | ||||
$ | 1,534,457 | $ | 7,968,768 | |||||
d. | Integrated income tax information: |
The balances of the imputation credit account (ICA) as of March 31, 2004 and 2003 were NT$2,932 thousand and NT$98,238 thousand, respectively. |
The expected and actual creditable ratio for 2003 and 2002 was 0.01% and 0.08%, respectively. |
- 16 -
The imputation credit allocated to the shareholders is based on its balance as of the date of dividend distribution. The expected creditable ratio may be adjusted when the actual distribution of the imputation credits are made.
e. | All retained earnings generated prior to December 31, 1997 had been appropriated. |
f. | As of March 31, 2004, investment tax credits consisted of the following: |
Regulation |
Items |
Total Creditable Amounts |
Remaining Creditable Amounts |
Expiry Year | ||||||
Statute for Upgrading Industries |
Purchase of machinery and equipment | $ |
3,938,319 3,790,845 4,823,691 3,559,190 597,230 |
$ |
1,966,627 3,790,845 4,823,691 3,559,190 597,230 |
2004 2005 2006 2007 2008 | ||||
$ | 16,709,275 | $ | 14,737,583 | |||||||
Statute for Upgrading Industries |
Research and development expenditures | $ |
2,258,828 3,110,922 3,322,453 2,275,560 458,750 |
$ |
2,258,828 3,110,922 3,322,453 2,275,560 458,750 |
2004 2005 2006 2007 2008 | ||||
$ | 11,426,513 | $ | 11,426,513 | |||||||
Statute for Upgrading Industries |
Personnel training | $ |
48,097 28,886 27,311 |
$ |
48,097 28,886 27,311 |
2004 2005 2006 | ||||
$ | 104,294 | $ | 104,294 | |||||||
Statute for Upgrading Industries |
Investments in important technology based enterprise | $ |
203,319 138,864 |
$ |
203,319 138,864 |
2004 2005 | ||||
$ | 342,183 | $ | 342,183 | |||||||
g. | The sales generated from the following expansion and construction of the Companys manufacturing plants are exempt from income tax. |
Tax-Exemption Period | ||
Construction of Fab 6 |
2001 to 2004 | |
Construction of Fab 8module B |
2002 to 2005 | |
Expansion of Fab 2modules A and B, Fab 3 and Fab 4, Fab 5 and Fab 6 |
2003 to 2006 |
h. | The tax authorities have examined income tax returns of the Company through 2000. However, the Company is contesting the assessment by the tax authority for 1992, 1997 and 1998. The Company believes that any additional assessment will not have a material adverse effect on the Company. |
- 17 -
13. LABOR COST, DEPRECIATION AND AMORTIZATION EXPENSE
Three Months Ended March 31, 2004 | |||||||||
Classified as Cost of Sales |
Classified as Operating Expense |
Total | |||||||
Labor cost |
|||||||||
Salary |
$ | 2,083,760 | $ | 939,102 | $ | 3,022,862 | |||
Labor and health insurance |
130,952 | 72,039 | 202,991 | ||||||
Pension |
118,317 | 65,074 | 183,391 | ||||||
Other |
80,493 | 32,324 | 112,817 | ||||||
Depreciation |
13,654,587 | 574,503 | 14,229,090 | ||||||
Amortization |
287,314 | 571,552 | 858,866 | ||||||
$ | 16,355,423 | $ | 2,254,594 | $ | 18,610,017 | ||||
Three Months Ended March 31, 2003 | |||||||||
Classified as Cost of Sales |
Classified as Operating Expense |
Total | |||||||
Labor cost |
|||||||||
Salary |
$ | 1,573,461 | $ | 674,624 | $ | 2,248,085 | |||
Labor and health insurance |
113,659 | 56,704 | 170,363 | ||||||
Pension |
94,370 | 47,156 | 141,526 | ||||||
Other |
34,413 | 19,524 | 53,937 | ||||||
Depreciation |
13,744,774 | 573,515 | 14,318,289 | ||||||
Amortization |
451,184 | 590,674 | 1,041,858 | ||||||
$ | 16,011,861 | $ | 1,962,197 | $ | 17,974,058 | ||||
14. SHAREHOLDERS EQUITY
The Company has issued 585,865 thousand ADSs which are traded on the NYSE as of March 31, 2004. The number of common shares represented by all issued ADSs is 2,929,327 thousand shares (one ADS represents five common shares).
Capital surplus can only be used to offset a deficit under the ROC Company Law. However, the components of capital surplus generated from donated capital and the excess of the issue price over the par value of capital stock (including the stock issued for new capital, mergers, convertible bonds and the purchase of treasury stock) can be transferred to capital as stock dividends.
As of March 31, 2004 and 2003, the capital surplus consisted of the following:
2004 |
2003 | |||||
From merger |
$ | 24,132,297 | $ | 24,132,297 | ||
Additional paid-in capital |
23,172,550 | 23,172,550 | ||||
From long-term investments |
90,913 | 81,320 | ||||
From convertible bonds |
9,410,632 | 9,410,632 | ||||
Donation |
55 | 55 | ||||
Treasury stock |
54,432 | 43,036 | ||||
Total |
$ | 56,860,879 | $ | 56,839,890 | ||
- 18 -
The Companys Articles of Incorporation provide that the following shall be appropriated from annual earnings to the extent that the annual earnings exceed any accumulated deficit:
a. | 10% legal reserve; until the amount of total legal reserve equals the Companys total paid-in capital; |
b. | Special reserve in accordance with relevant laws or regulations; |
c. | Remunerations to directors and supervisors and bonuses to employees equal to 0.3% and at least 1% of the remainder, respectively. Individuals eligible for the employee bonuses may include employees of affiliated companies as approved by the board of directors or a representative of the board of directors; |
d. | Dividends to holders of preferred shares at a 3.5% annual rate, based on the period which the preferred shares have been outstanding. Following the redemption of all of its issued and outstanding preferred shares in May 2003, the Company amended its Articles of Incorporation on June 3, 2003 to remove the provision for issuance of any future dividends to preferred shareholders as of that date; and |
e. | The appropriation of any remaining balance shall be approved by the shareholders. |
Dividends may be distributed in shares of common stock or a combination of cash and common stock. Distributions of profits are usually made in the form of a stock dividend. The total of cash dividends paid in any given year may not exceed 50% of total dividends distributed in that year.
Any appropriations of net income are recorded in the financial statement in the year of shareholder approval.
The appropriation for legal reserve is made until the reserve equals the aggregate par value of the Companys outstanding capital stock. The reserve can only be used to offset an accumulated deficit or be distributed as a stock dividend up to 50% of the reserve balance when the reserve balance has reached 50% of the aggregate par value of the outstanding capital stock of the Company.
A special reserve equivalent to the debit balance of any account shown in the shareholders equity section of the balance sheet (except for the recorded cost of treasury stock held by subsidiaries) shall be made from unappropriated retained earnings pursuant to existing regulations promulgated by the ROC Securities and Futures Commission (SFC). The special reserve is allowed to be appropriated when the debit balance of such account is reversed.
The appropriations of earnings for 2003 and 2002 were approved in the board of directors meeting and the shareholders meeting on February 17, 2004 and June3, 2003, respectively. The appropriations and dividends per share are as follows:
Appropriation of Earnings |
Dividend Per Share (NT$) | ||||||||||
For Fiscal Year 2003 |
For Fiscal Year 2002 |
For Fiscal Year 2003 |
For Fiscal Year 2002 | ||||||||
Legal reserve |
$ | 4,725,870 | $ | 2,161,029 | | | |||||
Special reserve |
(68,945 | ) | 68,945 | | | ||||||
Bonus paid to employeesin cash |
681,628 | | | | |||||||
Bonus paid to employeesin stock |
2,726,514 | 1,539,013 | | | |||||||
Preferred stock dividendin cash |
184,493 | 455,000 | 0.35 | 0.35 | |||||||
Common stock dividendin cash |
12,159,971 | | 0.60 | | |||||||
Common stock dividendin stock |
28,373,267 | 14,898,309 | 1.40 | 0.80 | |||||||
Remuneration to directors and supervisorsin cash |
127,805 | 58,485 | | | |||||||
$ | 48,910,603 | $ | 19,180,781 | ||||||||
- 19 -
The above appropriation of earnings for 2002 is consistent with the resolution of the meetings of board of directors on March 4, 2003. The appropriation of earnings for 2003 has not get been resolved by the shareholders. If the above employee bonus and remuneration to directors and supervisors had been paid in cash and charged against income for 2003 and 2002, the basic earnings per share for the years ended December 31, 2003 and 2002 would decrease from NT$2.33 to NT$2.15 and NT$1.14 to NT$1.05, respectively. The shares distributed as a bonus to employees represented 1.35% and 0.83% of TSMCs total outstanding common shares as of December 31, 2003 and 2002, respectively.
The above information associated with the appropriations of bonus to employees and remuneration to directors and supervisors is available at Market Observation System website.
Under the Integrated Income Tax System that became effective on January 1, 1998, ROC resident shareholders are allowed a tax credit for their proportionate share of the income tax paid by the Company on earnings generated as of January 1, 1998. An imputation credit account is maintained by the Company for such income tax and the tax credit allocated to each shareholder.
Preferred Stock
The Company issued 1,300,000 thousand shares of unlisted Series Apreferred stock to certain investors on November 29, 2000. All of the preferred stock was redeemed at par value and retired on May 29, 2003. Under the Companys Articles of Incorporation, as amended on June 3, 2003, the Company is no longer authorized to issue preferred stock.
The preferred shareholders had the following rights and related terms and conditions prior to redemption:
Preferred | shareholders |
a. | Are entitled to receive cumulative cash dividends at an annual rate of 3.5%. |
b. | Are not entitled to receive any common stock dividends (whether declared out of unappropriated earnings or capital surplus). |
c. | Have priority over the holders of common shares to the assets of the Company available for distribution to shareholders upon liquidation or dissolution; however, the pre-emptive rights to the assets shall not exceed the issue value of the shares. |
d. | Have voting rights similar to that of the holders of common shares. |
e. | Have no right to convert their shares into common shares. The preferred shares are to be redeemed within thirty months from their issuance. The preferred shareholders have the aforementioned rights and the Companys related obligations remain the same until the preferred shares are redeemed by the Company. |
- 20 -
15. STOCK-BASED COMPENSATION PLANS
On October 29, 2003 and June 25, 2002, the SFC approved The Companys Employee Stock Option Plans (the 2003 Plan and the 2002 Plan, respectively). The maximum number of units authorized to be granted under the 2003 Plan and the 2002 Plan was 120,000 thousand and 100,000 thousand, respectively, with each unit representing one common share of stock. The option rights may be granted to qualified employees of the Company, TSMCNorth America, and WaferTech, LLC, (WaferTech, an indirectly owned subsidiary of the Company). The option rights of both plans are valid for ten years and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the terms of both plans, stock option rights are granted at an exercise price equal to the closing price of the Companys common shares listed on the TSE on the date of grant. Under the 2002 Plan, there were 52,835 thousand option rights that were never been granted, or had been granted and subsequently cancelled. These un-granted or cancelled option rights expired as of March 31, 2004.
Information of outstanding stock option rights for the three months ended March 31, 2004 and 2003 under the 2003 Plan and the 2002 Plan is as follows:
Three Months Ended March 31, 2004
2003 Plan |
2002 Plan | |||||||||
Number of (In Thousands) |
Weighted- Average |
Number of (In Thousands) |
Weighted- Average | |||||||
Beginning Balance |
842 | 66.50 | 48,515 | 49.73 | ||||||
Options granted |
16 | 63.50 | | | ||||||
Options cancelled |
(24 | ) | 66.44 | (1,350 | ) | 51.33 | ||||
Ending balance |
834 | 47,165 | ||||||||
Three Months Ended March 31, 2003
2002 Plan | |||||
Number of (In Thousands) |
Weighted- Average (NT$) | ||||
Beginning Balance |
19,369 | 48.60 | |||
Options granted |
318 | 38.23 | |||
Options cancelled |
(471 | ) | 48.67 | ||
Ending balance |
19,216 | ||||
The number of outstanding option rights and exercise prices have been adjusted to reflect the issuance of stock dividends in accordance with the plans.
- 21 -
As of March 31, 2004, there are no vested stock option rights. Information on outstanding option rights is as follows:
Option Outstanding | ||||||
Range of Exercise Prices (NT$) |
Number of (In Thousands) |
Weighted-Average Remaining Contractual Life (Years) |
Weighted-Average Exercise Price (NT$) | |||
2003 Plan (63.50-66.50) |
834 | 9.89 | 63.55 | |||
2002 plan (38.23-53.76) |
47,165 | 8.84 | 49.67 | |||
Total (39.23-66.50) |
47,999 | 8.86 | 49.91 | |||
The Company uses the intrinsic value based method to evaluate compensation cost for option rights granted from January 1, 2004 subsequently. The compensation cost recognized for the three months ended March 31, 2004 was zero. If the Company had applied the Black-Scholes model to estimate the fair value of the options granted, the assumptions and pro forma results of the Company for the three months ended March 31, 2004 would be as follows:
Assumptions: |
||||
Expected dividend yield |
1.00 | % | ||
Expected volatility |
43.25 | % | ||
Risk free interest rate |
3.07 | % | ||
Expected life |
5 years | |||
Net income: |
||||
Net income as reported |
$ | 18,789,202 | ||
Pro forma net income |
18,789,189 | |||
Earnings per share (EPS) (NT$): |
||||
Basic EPS as reported |
0.93 | |||
Pro forma basic EPS |
0.93 | |||
Diluted EPS as reported |
0.93 | |||
Pro forma diluted EPS |
0.93 |
The estimated weighted average fair value for the options granted under the 2003 Plan during the three-month period ended March 31, 2004 was NT$24.49 per option.
16. TREASURY STOCK (COMMON STOCK)
(Shares in Thousand) | ||||||||
Purpose |
Beginning Shares |
Increase |
Decrease |
Ending Shares | ||||
Three months ended March 31, 2004 |
||||||||
Reclassification of parent company stock held by subsidiaries from long-term investment |
40,597 | | 146 | 40,451 | ||||
Maintain the shareholders equity |
| 8,067 | | 8,067 | ||||
Total |
40,597 | 8,067 | 146 | 48,518 | ||||
Three months ended March 31, 2003 |
||||||||
Reclassification of parent company stock held by subsidiaries from long-term investment |
42,001 | | | 42,001 | ||||
- 22 -
Proceeds from the sale of treasury stock for the three months ended March 31, 2004 and 2003 were NT$9,364 thousand and NT$0, respectively. As of March 31, 2004 and 2003, the book value of the treasury stock was NT$1,625,240 thousand and NT$1,923,492 thousand; the market value was NT$2,512,417 thousand and NT$1,796,615 thousand, respectively. Capital stock held by a subsidiary as an investment is recorded as treasury stock with the holder having the same right as other common shareholders.
In order to maintain shareholders equity, the Company held a special meeting of the Board of Directors and approved a share buyback plan to purchase the Companys common shares listed on the TSE from its shareholders during the period from March 24, 2004 to May 23, 2004. The purchased shares will be cancelled and deducted from the Companys current outstanding common shares. The Company plans to buy back up to 300,000 thousand shares at the prices of the range from NT$38.5 to NT$95 per share. As of March 31, 2004, the Company purchased 8,067 thousand shares for a total of NT$476,870 thousand.
17. EARNINGS PER SHARE
EPS is computed as follows:
Amounts (Numerator) |
Share (Denominator) (Thousand) |
EPS (NT$) | ||||||||||||||
Before Income Tax |
After Income Tax |
Before Income Tax |
After Income Tax | |||||||||||||
Three months ended March 31, 2004 |
||||||||||||||||
Basic EPS |
||||||||||||||||
Income available to common shareholders |
$ | 18,435,433 | $ | 18,789,202 | 20,225,806 | $ | 0.91 | $ | 0.93 | |||||||
Effect of diluted securitiesstock option |
| | 10,383 | |||||||||||||
Diluted EPS |
||||||||||||||||
Income available to common shareholders |
$ | 18,435,433 | $ | 18,789,202 | 20,236,189 | $ | 0.91 | $ | 0.93 | |||||||
Three months ended March 31, 2003 |
||||||||||||||||
Net income |
$ | 4,180,270 | $ | 4,357,867 | ||||||||||||
Lesspreferred stock dividends |
(113,750 | ) | (113,750 | ) | ||||||||||||
Basic and diluted EPS |
||||||||||||||||
Income available to common shareholders |
$ | 4,066,520 | $ | 4,244,117 | 20,221,257 | $ | 0.20 | $ | 0.21 | |||||||
The potential common shares issuable under the employee stock option plans (see Note 15) are included in the denominator of the diluted EPS computation by using the treasury stock method under the Statement of Financial Accounting Statement No. 24 Earning Per Share, however, such shares resulted in a non-dilutive per share amount for the three months ended March 31, 2003. The average number of shares outstanding for EPS calculation has been adjusted retroactively for issuance of stock dividends and stock bonuses. The retroactive adjustment caused the basic EPS before income tax and after income tax for the three months ended March 31, 2003 to decrease from NT$0.22 to NT$0.20 and NT$0.23 to NT$0.21, respectively.
18. RELATED PARTY TRANSACTIONS
The Company engages in business transactions with the following related parities:
a. | Industrial Technology Research Institute (ITRI), the Chairman of the Company is one of its directors |
b. | Philips, a major shareholder of the Company |
- 23 -
c. | Subsidiaries |
TSMCNorth America
TSMCEurope
TSMCJapan
d. | Investees |
VIS
SSMC
GUC
e. | Indirect subsidiaries |
WaferTech
TSMC Technology Inc. (TSMC Technology)
The transactions with the aforementioned parties in addition to those disclosed in other notes, are summarized as follows:
Three Months Ended March 31 | ||||||||||
2004 |
2003 | |||||||||
Amount |
% |
Amount |
% | |||||||
For the period |
||||||||||
Sales |
||||||||||
TSMCNorth America |
$ | 31,648,127 | 54 | $ | 22,632,645 | 57 | ||||
Philips and its affiliates |
1,344,714 | 2 | 690,945 | 2 | ||||||
Others |
76,108 | | 149,433 | | ||||||
$ | 33,068,949 | 56 | $ | 23,473,023 | 59 | |||||
Purchases |
||||||||||
WaferTech |
$ | 3,505,826 | 35 | $ | 1,685,740 | 27 | ||||
VIS |
1,873,410 | 19 | 919,470 | 15 | ||||||
SSMC |
1,390,078 | 14 | 1,335,511 | 22 | ||||||
$ | 6,769,314 | 68 | $ | 3,940,721 | 64 | |||||
Manufacturing expensestechnical assistance fees |
||||||||||
Philips |
$ | 796,251 | 3 | $ | 758,824 | 3 | ||||
Marketing expensescommission |
||||||||||
TSMCJapan |
$ | 57,523 | 19 | $ | 46,385 | 16 | ||||
TSMCEurope |
39,849 | 13 | 36,450 | 13 | ||||||
$ | 97,372 | 32 | $ | 82,835 | 29 | |||||
Sales of property, plant and equipment |
||||||||||
VIS |
$ | 29,399 | 43 | $ | | | ||||
(Continued)
- 24 -
Three Months Ended March 31 | ||||||||||
2004 |
2003 | |||||||||
Amount |
% |
Amount |
% | |||||||
Non-operating income and gains |
||||||||||
SSMC (primarily technical service income, see Note 20e) |
$ | 56,983 | 4 | $ | 26,569 | 9 | ||||
VIS |
27,757 | 2 | | | ||||||
Others |
409 | | 409 | | ||||||
$ | 85,149 | 6 | $ | 26,978 | 9 | |||||
At end of the period |
||||||||||
Receivables |
||||||||||
TSMCNorth America |
$ | 15,195,321 | 93 | $ | 10,492,134 | 95 | ||||
Philips and its affiliates |
1,021,009 | 6 | 435,739 | 4 | ||||||
Others |
234,316 | 1 | 128,197 | 1 | ||||||
$ | 16,450,646 | 100 | $ | 11,056,070 | 100 | |||||
Guarantee depositsVIS (see Note 20h) |
$ | | | $ | 450,666 | 94 | ||||
Payables |
||||||||||
Philips and its affiliates |
$ | 1,892,900 | 39 | $ | 1,137,937 | 43 | ||||
VIS |
1,294,952 | 26 | 642,212 | 25 | ||||||
WaferTech |
1,154,689 | 24 | 443,209 | 17 | ||||||
SSMC |
528,454 | 11 | 345,825 | 13 | ||||||
Others |
55,016 | | 62,855 | 2 | ||||||
$ | 4,926,011 | 100 | $ | 2,632,038 | 100 | |||||
Sales to related parties are not significantly different from sales to third parties. For other related parties transactions, since no other similar transactions to follow, the prices are determined in accordance with the related contractual agreements.
19. SIGNIFICANT LONG-TERM LEASES
The Company leases land from the Science-Based Industrial Park Administration (SBIP) where its Fab 2 through Fab 14 manufacturing facilities reside. These agreements expire on various dates from March 2008 to December 2020 and have annual rent payments aggregating NT$230,449 thousand. The agreements can be renewed upon their expiration.
As of March 31, 2004, future remaining lease payments are as follows:
Year |
Amount | ||
2004 (2nd to 4th quarter) |
$ | 172,836 | |
2005 |
230,449 | ||
2006 |
230,449 | ||
2007 |
230,449 | ||
2008 |
206,406 | ||
2009 and thereafter |
1,586,361 | ||
$ | 2,656,950 | ||
- 25 -
20. SIGNIFICANT COMMITMENTS AND CONTINGENCIES
The significant commitments and contingencies of the Company as of March 31, 2004 are as follows:
a. | Under a Technical Cooperation Agreement with Philips, as amended on May 12, 1997, the Company shall pay technical assistance fees as a percentage of net sales, as defined in the agreement, with respect to certain products. The agreement shall remain in force through July 8, 2007 and may be automatically renewed for successive periods of three years thereafter. Under the amended agreement, starting from the fifth anniversary date of the amended agreement, the fees are subject to reduction by the amounts the Company pays to any third party for settling any licensing/infringement disputes, provided that the fees to be paid after reduction will not be below a certain percentage of the net sales of certain products. |
b. | Under a technical cooperation agreement with ITRI, the Company shall reserve and allocate up to 35% of certain of its production capacity for use by the Ministry of Economic Affairs (MOEA) or any other party designated by the MOEA. |
c. | Under several foundry agreements, the Company shall reserve a portion of its production capacity for certain major customers that have guarantee deposits with the Company. As of March 31, 2004, the Company has a total of US$19,970 thousand of guarantee deposits. |
d. | Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30, 1999, the parties formed a joint venture company, SSMC, for the purpose of constructing an integrated circuit foundry in Singapore. As of March 31, 2004, the Companys interest in SSMC was 32%. The Company and Philips are committed to buy specific percentages of the production capacity of SSMC. If any party defaults on the commitment and the capacity utilization of SSMC falls below a specific percentage of its total capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs. |
e. | The Company provides technical services to SSMC under a Technical Cooperation Agreement (the Agreement) entered into on May 12, 1999. The Company receives compensation for such services computed at a specific percentage of net selling price of certain products sold by SSMC. The Agreement shall remain in force for ten years and may be automatically renewed for successive periods of five years unless pre-terminated by either party under certain conditions. |
f. | The Company provided guarantees on loans amounting to US$60,000 thousand, US$40,000 thousand and US$440,000 thousand for TSMC Development, Inc. (TSMC Development), TSMC - North America and WaferTech, respectively. |
g. | Under a Technology Transfer Agreement (TTA) with National Semiconductor Corporation (National) entered into on June 27, 2000, the Company shall receive payments for the licensing of certain technology to National. The agreement was to remain in force for ten years and could be automatically renewed for successive periods of two years thereafter unless either party gives notice for early termination under certain conditions. In January 2003, the Company and National entered into a Termination Agreement whereby the TTA was terminated for convenience. Under the termination agreement, the Company is relieved of further obligation to transfer additional technology. In addition, the Company granted National an option to request the transfer of certain technologies under the same terms and conditions as the terminated TTA. The option will expire in January 2008. |
h. | The Company entered into a Manufacturing Agreement with VIS. VIS agreed to reserve certain production capacity for the Company and agreed to manufacture certain logic devices or other products for the Companys customers at selling prices agreed upon by the parties. The Company paid NT$1,200,000 thousand to VIS as a guarantee deposit. VIS shall return portions of the guarantee deposit without any interest to the Company upon reaching certain levels of purchase commitment by the Company. The contract will remain in force for five years. As of March 31, 2004, the total guarantee deposits held by VIS had been fully refunded. |
- 26 -
i. | Beginning in 2001, the Company entered into several licensing arrangements for certain semiconductor patents. The terms of the contracts range from five to ten years with payments to be made in the form of royalties over the term of the related contracts. The Company has recorded the related amounts as a liability with the corresponding amounts recorded as deferred charges which are amortized and charged to cost of sales on a straight-line basis over the estimated life of the technology or the term of the contract, whichever is shorter. |
j. | In November 2002, the Company entered into an Amended and Restated Joint Technology Cooperation Agreement with Philips, Motorola, Inc. and STMicroelectronics to jointly develop 90-nanometer to 65-nanometer advanced CMOS Logic and e-DRAM technologies. The Company also agreed to align 0.12 micron CMOS Logic technology to enhance its foundry business opportunities. The Company will contribute process technologies and share a portion of the costs associated with this joint development project. |
k. | In December 2003, the Company entered into a Technology Development and License Agreement with Motorola Inc. to jointly develop 65nm SOI (silicon on insulator) technology. The Company will also license related 90nm SOI technology from Motorola. Any intellectual properties arising out of the co-development project shall be jointly owned by the parties. In accordance with the agreement, the Company will pay royalty to Motorola, Inc. and will share a portion of the costs associated with the joint development project. |
l. | In December 2003, the Company filed a lawsuit in the US District Court of Northern California against Semiconductor Manufacturing International Corporation and certain of its subsidiaries for patent infringement and trade secret misappropriation. The suit also asks for injunctive relief along with monetary damages. The case is in the process of being reviewed by the court. The probable outcome cannot be reasonably estimated. |
m. | Amounts available under unused letters of credit as of March 31, 2004 were NT$6,480 thousand, EUR21 thousand and SGD 85 thousand. |
21. ADDITIONAL DISCLOSURES
Following are the additional disclosures required by the SFC for the Company and its investees:
a. | Financing provided: Please see Table 1 attached; |
b. | Endorsement/guarantee provided: Please see Table 2 attached; |
c. | Marketable securities held: Please see Table 3 attached; |
d. | Marketable securities acquired or disposed of at costs or prices of at least NT$100 million or 20% of the paid-in capital: Please see Table 4 attached; |
e. | Acquisition of individual real estate properties at costs of at least NT$100 million or 20% of the paid-in capital: None; |
f. | Disposal of individual real estate properties at prices of at least NT$100 million or 20% of the paid-in capital: None; |
g. | Total purchases from or sales to related parties of at least NT$100 million or 20% of the capital: Please see Table 5 attached; |
h. | Receivable from related parties amounting to at least NT$100 million or 20% of the capital: Please see Table 6 attached; |
- 27 -
i. | Names, locations, and related information of investee on which the Company exercises significant influence: Please see Table 7 attached; |
j. | Financial instrument transactions: |
1) | Derivative financial instruments |
The Company entered into derivative financial instrument transactions in the first quarter of 2004 to manage exposures related to foreign-currency denominated receivables or payables, and interest rate fluctuations. Certain information on these contracts is as follows: |
a) | Outstanding forward exchange contracts as of March 31, 2004 |
Financial Instruments |
Maturity Period |
Contract Amount (Nominal) (In Thousand) | ||||
Sell |
April 2004 to September 2004 | US$ 1,755,000 | (US$/NT$) | |||
Buy |
April 2004 | EUR 16,000 | (EUR/US$) | |||
Buy |
April 2004 | JPY 528,225 | (JPYUS$) |
As of March 31, 2004, receivables from forward exchange contracts (included in the other financial assets account) aggregate to NT$ 906,882 thousand. Net exchange gains for the three months ended March 31, 2004 was NT$1,586,064 thousand. |
b) | Interest rate swaps |
The Company entered into interest rate swap contracts to manage related interest rates on its long-term loans. Net interest income on these transactions for the three months ended March 31, 2004 was NT$9,292 thousand. |
Outstanding contracts as of March 31, 2004 were as follows: |
Contract Date |
Period |
Contract (In Thousand) | |||
July 1, 1999 |
July 1, 1999 to June 28, 2004 | US$ | 2,857 | ||
September 19, 2003 |
September 22, 2003 to December 15, 2005 | NT$ | 500,000 | ||
October 16, 2003 |
October 20, 2003 to December 15, 2005 | NT$ | 500,000 | ||
October 16, 2003 |
October 20, 2003 to December 15, 2005 | NT$ | 500,000 | ||
October 17, 2003 |
October 21, 2003 to December 15, 2005 | NT$ | 500,000 | ||
October 17, 2003 |
October 20, 2003 to December 15, 2005 | NT$ | 500,000 | ||
November 7, 2003 |
November 11, 2003 to December 15, 2005 | NT$ | 500,000 |
c) | Transaction risk |
i) | Credit risk. Credit risk represents the positive net settlement amount of those contracts with positive fair values at the balance sheet date. The positive net settlement amount represents the loss incurred by the Company if the counter-parties breached the contracts. The banks, which are the counter-parties to the foregoing derivative financial instruments, are reputable financial institutions. Management believes its exposures related to the potential default by those counter-parties are low. |
- 28 -
ii) | Market price risk. All derivative financial instruments are intended as hedges for fluctuations in currency exchange rates on the Companys foreign currency denominated receivables or payables and interest rate fluctuations on its floating rate long-term loans. Gains or losses from forward exchange contracts are likely to be offset by gains or losses from the hedged receivables and payables. Interest rate risks are also controlled as the expected cost of capital is fixed. Thus, market price risks are believed to be minimal. |
iii) | Liquidity and cash flow risk and uncertainty of amount and term of future cash demand |
As of March 31, 2004, the Companys future cash demands for outstanding forward exchange contracts, interest rate swaps and option contracts are as follows:
Forward Exchange Contracts | ||||||
Term |
Inflow |
Outflow | ||||
(In Thousand) | (In Thousand) | |||||
Within one year |
NT$ | 58,850,211 | US$ | 1,779,510 | ||
EUR | 16,000 | | ||||
JPY | 528,225 | |
The Company has sufficient operating capital to meet the above cash demands. The interest rate of the interest rate swaps has taken the Companys cost of capital into account. In addition, the exchange rate of forward foreign exchange contracts and option contracts have been fixed. Therefore, there is no material fund raising risk and cash flow risk.
2) Fair value of financial instruments:
March 31, 2004 |
March 31, 2003 |
|||||||||||||
Carrying Amount |
Fair Value |
Carrying Amount |
Fair Value |
|||||||||||
Non-derivative financial instruments |
||||||||||||||
Assets |
||||||||||||||
Cash and cash equivalents |
$ | 106,507,988 | $ | 106,507,988 | $ | 67,449,389 | $ | 67,449,389 | ||||||
Short-term investments |
19,829,168 | 19,905,368 | | | ||||||||||
Receivables from related parties |
16,450,646 | 16,450,646 | 11,056,070 | 11,056,070 | ||||||||||
Notes and accounts receivable |
14,707,017 | 14,707,017 | 9,362,853 | 9,362,853 | ||||||||||
Other financial assets |
1,851,305 | 1,851,305 | 749,584 | 749,584 | ||||||||||
Long-term investments |
37,978,462 | 46,364,420 | 34,146,618 | 38,497,568 | ||||||||||
Refundable deposits |
26,229 | 26,229 | 478,385 | 478,385 | ||||||||||
Liabilities |
||||||||||||||
Payable to related parties |
4,926,011 | 4,926,011 | 2,632,038 | 2,632,038 | ||||||||||
Accounts payable |
7,697,360 | 7,697,360 | 4,497,685 | 4,497,685 | ||||||||||
Payables to contractors and equipment suppliers |
12,647,943 | 12,647,943 | 7,738,073 | 7,738,073 | ||||||||||
Bonds payable (including current portion) |
35,000,000 | 35,758,784 | 35,000,000 | 35,568,192 | ||||||||||
Other long-term payables (including current portion) |
4,826,042 | 4,826,042 | 5,438,375 | 5,438,375 | ||||||||||
Guarantee deposits |
656,128 | 656,128 | 1,375,672 | 1,375,672 | ||||||||||
Derivative financial instruments |
||||||||||||||
Forward exchange contracts (sell) |
900,111 | 961,743 | (65,342 | ) | (52,840 | ) | ||||||||
Forward exchange contracts (buy) |
6,771 | 318 | (9,006 | ) | (26,791 | ) | ||||||||
Interest rate swaps |
13,954 | 36,038 | (11,009 | ) | (101,640 | ) | ||||||||
Option |
| | | (298,144 | ) |
- 29 -
Fair values of financial instruments were determined as follows:
a) | The carrying amounts reported in the balance sheets for cash and cash equivalents, notes and accounts receivable, other financial assets, accounts payable, payables to contractors and equipment suppliers are approximate to their fair values. |
b) | Fair value of short-term and long-term investments is based on quoted market prices. If quoted market prices are unavailable, fair value is based on net worth or book value. |
c) | Fair value of refundable deposits and guarantee deposits is based on carrying values. |
d) | The fair value of bonds payable is the quoted market value. Fair value of other long-term payables approximates the carrying value. |
e) | Fair value of derivative financial instruments is the estimated net receivable or (payable) if those contracts are terminated on the relevant balance sheet date. |
The fair values of some financial and non-financial instruments are not included in the fair values disclosed above. Accordingly, the sum of the fair values of the financial instruments listed above does not represent the fair value of the Company as a whole.
3) | Investment in Mainland China: |
The Company filed an investment project with the Investment Commission of MOEA to establish a foundry in Mainland China. On February 27, 2003, the authority approved phase one of the aforementioned project and permitted direct investment in mainland China. Subsequently, the Company entered into an investment related agreement with Shanghai Songjiang District Peoples Government on June 8, 2003. On August 4, 2003, TSMC Shanghai, a wholly-owned subsidiary of the Company, was established. TSMC Shanghai is engaged mainly in the manufacturing and selling of integrated circuits. The Company made a capital investment in TSMC Shanghai in the amount of US$56,000 thousand on October 8, 2003. |
- 30 -
TABLE 1
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
FINANCING PROVIDED
FOR THE THREE MONTHS ENDED MARCH 31, 2004
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
No. |
Financing Name |
Counter-party |
Financial Statement |
Maximum (US$ in |
Ending (US$ in |
Interest Rate |
Transaction Amounts |
Reasons for Short-term |
Allowance for Bad |
Collateral |
Financing Limit for Each Borrowing Company |
Financing (US$ in |
||||||||||||||||||||||||
Item |
Value |
|||||||||||||||||||||||||||||||||||
1 |
TSMC International | TSMC Technology | Other receivables | $ US$ |
330,200 (10,000 |
) |
$ US$ |
330,200 (10,000 |
) |
4.00 | % | $ | | Operating capital | $ | | | $ | | N/A | $ US$ |
32,622,711 (987,968 (Note 1 |
) ) | |||||||||||||
TSMC Development | Other receivables | US$ |
1,981,200 (60,000 |
) |
US$ |
1,981,200 (60,000 |
) |
1.50 | % | | Operating capital | | | | ||||||||||||||||||||||
2 |
TSMC Partners | TSMC Development | Other receivables | US$ |
2,641,600 (80,000 |
) |
US$ |
2,641,600 (80,000 |
) |
1.50 | % | | Operating capital | | | | N/A | (Note 2 | ) |
Note 1: Not exceeding the issued capital of the Company.
Note 2: Generally not exceeding the issued capital of the Company, unless approved by all members of the board.
- 31 -
TABLE 2
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
ENDORSEMENT/GUARANTEE PROVIDED
FOR THE THREE MONTHS ENDED MARCH 31, 2004
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
No. |
Endorsement/ Guarantee |
Counter-party |
Limits on Each Counter-partys Guarantee |
Maximum Balance for the Period (US$ in |
Ending Balance (US$ in Thousand) |
Value of Collateral Plant and |
Ratio of Accumulated Collateral to Net Equity of the Latest Financial |
Maximum Guarantee (Note 1) | |||||||||||||||||
Name |
Nature of (Note 2) |
||||||||||||||||||||||||
0 |
The Company | TSMC Development TSMCNorth America WaferTech |
3 2 3 |
Not exceed 10% of the net worth of the Company, and also limiting to the total capital issued of the endorsement/guarantee company, unless otherwise approved by Board of Directors. |
$ US$ US$ US$ |
1,981,200 (600,000 1,320,800 (40,000 14,528,800 (440,000 |
) ) ) |
$ US$ US$ US$ |
1,981,200 (60,000 1,320,800 (40,000 14,528,800 (440,000 |
) ) ) |
$ |
|
0.57 0.38 4.19 |
% % % |
$ | 86,646,511 |
Note | 1: 25% of the net worth of the Company as of March 31, 2004. |
Note | 2: The No. 2 represents a subsidiary in which the Company holds directly over 50% of the equity interest. |
The No. 3 represents an investee in which the Company holds directly and indirectly over 50% of the equity interest.
- 32 -
TABLE 3
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
MARKETABLE SECURITIES HELD
MARCH 31, 2004
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Held Company Name |
Marketable Securities Type and Name |
Relationship with the Company |
Financial Statement Account |
March 31, 2004 |
Note | |||||||||||||
Shares/Units (In Thousand) |
Carrying Value (US$ in |
Percentage of |
Market Value or Net Asset (US$ in |
|||||||||||||||
The Company |
Government bonds | |||||||||||||||||
2003 Government Bond Series A | | Short-term investment | | $ | 1,207,409 | N/A | $ | 1,209,443 | ||||||||||
2003 Government Bond Series I | | Short-term investment | | 3,418,984 | N/A | 3,400,604 | ||||||||||||
2002 Government Bond Series E | | Short-term investment | | 3,113,066 | N/A | 3,130,913 | ||||||||||||
2002 Government Bond Series J | | Short-terminvestment | | 2,023,206 | N/A | 2,027,586 | ||||||||||||
Bonds with Repurchase Agreement | | Short-term investment | | 3,355,145 | N/A | 3,366,815 | ||||||||||||
Bond funds | ||||||||||||||||||
JF Taiwan Bond Fund | | Short-term investment | 102,364 | 1,500,000 | N/A | 1,505,672 | ||||||||||||
ABN AMRO Bond Fund | | Short-term investment | 186,363 | 2,700,000 | N/A | 2,706,156 | ||||||||||||
JF First Bond Fund | | Short-term investment | 110,580 | 1,500,000 | N/A | 1,500,264 | ||||||||||||
INVESCO GT Bond A Fund | | Short-term investment | 69,692 | 1,000,000 | N/A | 1,000,216 | ||||||||||||
Stock | ||||||||||||||||||
Taiwan Mask Corp. | | Short-term investment | 3,109 | 11,358 | 1 | 57,699 | ||||||||||||
TSMCNorth America | Subsidiary | Long-term investment | 11,000 | 412,786 | 100 | 1,119,950 | Treasury stock of NT$ 707,164 thousand is deducted from the carrying value. | |||||||||||
TSMCEurope | Subsidiary | Long-term investment | | 23,434 | 100 | 23,434 | ||||||||||||
TSMCJapan | Subsidiary | Long-term investment | 6 | 104,186 | 100 | 104,186 | ||||||||||||
VIS | Investee | Long-term investment | 787,016 | 4,375,675 | 28 | 10,963,129 | ||||||||||||
TSMC International | Subsidiary | Long-term investment | 987,968 | 22,383,406 | 100 | 22,383,406 | ||||||||||||
TSMC Partners | Subsidiary | Long-term investment | 300 | 4,011,311 | 100 | 4,011,311 | ||||||||||||
SSMC | Investee | Long-term investment | 382 | 2,824,776 | 32 | 2,824,776 | ||||||||||||
Emerging Alliance | Subsidiary | Long-term investment | | 824,793 | 99 | 824,793 | ||||||||||||
GUC | Investee | Long-term investment | 39,040 | 359,454 | 47 | 392,762 | ||||||||||||
VisEra | Investee | Long-term investment | 5,100 | 50,499 | 25 | 50,499 | ||||||||||||
United Gas Co., Ltd. | | Long-term investment | 16,783 | 193,584 | 11 | 297,292 | ||||||||||||
Shin-Etsu Handotai Taiwan Co., Ltd. | | Long-term investment | 10,500 | 105,000 | 7 | 155,001 | ||||||||||||
W.K. Technology Fund IV | | Long-term investment | 5,000 | 50,000 | 2 | 57,794 | ||||||||||||
Hon Tung Ventures Capital | | Long-term investment | 8,392 | 83,916 | 10 | 62,369 |
(Continued)
- 33 -
Held Company Name |
Marketable Securities Type and Name |
Relationship with the Company |
Financial Statement Account |
March 31, 2004 |
Note | |||||||||||||||
Shares/Units (In Thousand) |
Carrying Value (US$ in |
Percentage of Ownership |
Market (US$ in |
|||||||||||||||||
Certificate | ||||||||||||||||||||
Chi Cherng | Investee | Long-term investment | | $ | 43,138 | 36 | $ | 501,702 | Treasury stock of NT$458,564 thousand is deducted from the carrying value. | |||||||||||
Hsin Ruey | Investee | Long-term investment | | 42,083 | 36 | 501,595 | Treasury stock of NT$459,512 thousand is deducted from the carrying value. | |||||||||||||
Equity | ||||||||||||||||||||
Crimson Asia Capital |
| Long-term investment | N/A | 41,265 | N/A | 41,265 | ||||||||||||||
Horizon Ventures |
| Long-term investment | N/A | 229,669 | N/A | 229,669 | ||||||||||||||
TSMCNorth America |
Stock | |||||||||||||||||||
TSMC | Parent company | Short-term investment | 12,955 | 707,164 | | 804,598 | ||||||||||||||
Chi Cherng |
Stock | |||||||||||||||||||
TSMC | Parent company | Short-term investment | 13,735 | 458,564 | | 853,110 | ||||||||||||||
Certificate | ||||||||||||||||||||
Hsin Ruey | Major shareholder | Long-term investment | | 902,549 | 64 | 902,549 | ||||||||||||||
Hsin Ruey |
Stock | |||||||||||||||||||
TSMC | Parent company | Short-term investment | 13,761 | 459,512 | | 854,709 | ||||||||||||||
Certificate | ||||||||||||||||||||
Chi Cherng | Major shareholder | Long-term investment | | 903,087 | 64 | 903,087 | ||||||||||||||
TSMC International |
Stock | |||||||||||||||||||
InveStar | Subsidiary | Long-term investment | 45,000 | US$ | 50,803 | 97 | US$ | 50,803 | ||||||||||||
InveStar II | Subsidiary | Long-term investment | 51,300 | US$ | 37,415 | 97 | US$ | 37,415 | ||||||||||||
TSMC Development |
Subsidiary | Long-term investment | 1 | US$ | 543,674 | 100 | US$ | 543,674 | ||||||||||||
TSMC Technology |
Subsidiary | Long-term investment | 1 | US$ | (7,966 | ) | 100 | US$ | (7,966 | ) | ||||||||||
3DFX Interactive Inc. |
| Long-term investment | 68 | | | | ||||||||||||||
Money market fund |
||||||||||||||||||||
BOA Fund | | Short-term investment | 30,300 | US$ | 30,300 | N/A | US$ | 30,300 | ||||||||||||
TSMC Development |
Stock | |||||||||||||||||||
WaferTech | Subsidiary | Long-term investment | | US$ | 366,728 | 99 | US$ | 366,728 | ||||||||||||
InveStar |
Common stock | |||||||||||||||||||
PLX Technology, Inc. |
| Short-term investment | 43 | US$ | 117 | | US$ | 445 | ||||||||||||
RichTek Technology Corp. |
| Short-term investment | 839 | US$ | 107 | 2 | US$ | 5,076 | ||||||||||||
Atheros Communications, Inc. |
| Short-term investment | 1,205 | US$ | 3,593 | | US$ | 20,907 | ||||||||||||
Incentia Design Systems, Inc. |
| Long-term investment | 365 | US$ | 92 | 1 | US$ | 92 | ||||||||||||
Programmable Microelectronics (Taiwan), Corp. |
| Long-term investment | 575 | US$ | 208 | 1 | US$ | 208 | ||||||||||||
Global Testing Corp. |
| Long-term investment | 13,268 | US$ | 5,446 | 9 | US$ | 5,446 |
(Continued)
- 34 -
Held Name |
Marketable Type and Name |
Relationship with |
Financial Statement |
March 31, 2004 |
Note | |||||||||||||
Shares/Units (In Thousand) |
Carrying Value (US$in |
Percentage of Ownership |
Market Value or (US$in |
|||||||||||||||
Chipstrate Technology, Inc. |
| Long-term investment | 1,332 | US$ | 316 | 9 | US$ | 316 | ||||||||||
Signia Technologies, Inc. |
| Long-term investment | 701 | US$ | 212 | 4 | US$ | 212 | ||||||||||
Advanced Power Electronics Corp. |
| Long-term investment | 2,915 | US$ | 1,416 | 5 | US$ | 1,416 | ||||||||||
RichTek Technology Corp. |
| Long-term investment | 1,053 | US$ | 132 | | US$ | 6,367 | ||||||||||
Capella Microsystems (Taiwan), Inc. |
| Long-term investment | 530 | US$ | 161 | 4 | US$ | 161 | ||||||||||
Preferred stock | ||||||||||||||||||
Integrated Memory Logic, Inc. |
| Long-term investment | 1,831 | US$ | 1,221 | 12 | US$ | 1,221 | ||||||||||
SiRF Technology Holdings, Inc. |
| Long-term investment | 306 | US$ | 1,333 | 1 | US$ | 1,333 | ||||||||||
Sensory, Inc. |
| Long-term investment | 1,404 | US$ | 312 | 5 | US$ | 312 | ||||||||||
LightSpeed Semiconductor Corp. |
| Long-term investment | 2,252 | US$ | 329 | 2 | US$ | 329 | ||||||||||
Tropian, Inc. |
| Long-term investment | 1,758 | US$ | 1,418 | 3 | US$ | 1,418 | ||||||||||
Sonics, Inc. |
| Long-term investment | 2,686 | US$ | 3,530 | 4 | US$ | 3,530 | ||||||||||
NanoAmp Solutions, Inc. |
| Long-term investment | 541 | US$ | 853 | 3 | US$ | 853 | ||||||||||
Monolithic Power Systems, Inc. |
| Long-term investment | 2,521 | US$ | 2,000 | 11 | US$ | 2,000 | ||||||||||
Memsic, Inc. |
| Long-term investment | 2,727 | US$ | 1,500 | 12 | US$ | 1,500 | ||||||||||
Reflectivity, Inc. |
| Long-term investment | 1,064 | US$ | 741 | 3 | US$ | 741 | ||||||||||
Match Lab, Inc. |
| Long-term investment | 1,875 | US$ | 375 | 9 | US$ | 375 | ||||||||||
Oridus, Inc. (CreOsys, Inc.) |
| Long-term investment | 1,500 | US$ | 300 | 8 | US$ | 300 | ||||||||||
IP Unity, Inc. |
| Long-term investment | 1,008 | US$ | 494 | 2 | US$ | 494 | ||||||||||
InveStar II |
Common stock | |||||||||||||||||
RichTek Technology Corp. |
| Short-term investment | 300 | US$ | 223 | 1 | US$ | 1,817 | ||||||||||
eChannel Option Holding, Inc. |
| Long-term investment | 358 | US$ | 251 | 6 | US$ | 251 | ||||||||||
eLCOS Microdisplay Technology, Ltd. |
| Long-term investment | 270 | US$ | 27 | 2 | US$ | 27 | ||||||||||
Procoat Technology, Inc. |
| Long-term investment | 4,165 | US$ | 1,940 | 10 | US$ | 1,940 | ||||||||||
Programmable Microelectronics (Taiwan), Inc. |
| Long-term investment | 177 | US$ | 50 | | US$ | 50 | ||||||||||
Auden Technology MFG. Co., Ltd. |
| Long-term investment | 953 | US$ | 738 | 4 | US$ | 738 | ||||||||||
GeoVision, Inc. |
| Long-term investment | 287 | US$ | 132 | 1 | US$ | 132 | ||||||||||
EoNEX Technologies, Inc. |
| Long-term investment | 55 | US$ | 3,048 | 6 | US$ | 3,048 | ||||||||||
Conwise Technology Corporation, Ltd. |
| Long-term investment | 2,800 | US$ | 979 | 14 | US$ | 979 | ||||||||||
EON Technology, Corp. |
| Long-term investment | 3,276 | US$ | 1,179 | 8 | US$ | 1,179 | ||||||||||
Goya Technology, Corp. |
| Long-term investment | 2,088 | US$ | 545 | 8 | US$ | 545 | ||||||||||
Trendchip Technologies Corp. |
| Long-term investment | 2,000 | US$ | 861 | 5 | US$ | 861 | ||||||||||
Ralink Technology (Taiwan), Inc. |
| Long-term investment | 1,833 | US$ | 791 | 4 | US$ | 791 | ||||||||||
Signia Technologies (Taiwan), Inc. |
| Long-term investment | 351 | US$ | 101 | 2 | US$ | 101 | ||||||||||
RichTek Technology Corp. |
| Long-term investment | 494 | US$ | 367 | 1 | US$ | 2,988 | ||||||||||
Silicon Data, Inc. |
| Long-term investment | 2,000 | US$ | 500 | 5 | US$ | 500 | ||||||||||
Capella Microsystems (Taiwan), Inc. |
| Long-term investment | 419 | US$ | 122 | 3 | US$ | 122 | ||||||||||
Preferred stock | ||||||||||||||||||
Memsic, Inc. |
| Long-term investment | 2,289 | US$ | 1,560 | 10 | US$ | 1,560 | ||||||||||
OEpic, Inc. |
| Long-term investment | 4,997 | US$ | 1,317 | 8 | US$ | 1,317 | ||||||||||
NanoAmp Solutions, Inc. |
| Long-term investment | 250 | US$ | 1,000 | 1 | US$ | 1,000 | ||||||||||
Advanced Analogic Technology, Inc. |
| Long-term investment | 948 | US$ | 1,261 | 2 | US$ | 1,261 |
(Continued)
- 35 -
Held Company Name |
Marketable Securities |
Relationship with the Company |
Financial Statement Account |
March 31, 2004 |
Note | |||||||||||||
Shares/Units (In Thousand) |
Carrying Value (US$ in Thousand) |
Percentage of Ownership |
Market Value or (US$ in |
|||||||||||||||
Monolithic Power Systems, Inc. | | Long-term investment | 804 | US$ | 1,946 | 4 | US$ | 1,946 | ||||||||||
Sonics, Inc. | | Long-term investment | 3,082 | US$ | 3,082 | 5 | US$ | 3,082 | ||||||||||
Newport Opticom, Inc. | | Long-term investment | 1,157 | US$ | 241 | 9 | US$ | 241 | ||||||||||
Reflectivity, Inc. | | Long-term investment | 4,255 | US$ | 2,205 | 9 | US$ | 2,205 | ||||||||||
Angstron Systems, Inc. | | Long-term investment | 1,567 | US$ | 500 | 6 | US$ | 500 | ||||||||||
Tropian, Inc. | | Long-term investment | 1,464 | US$ | 1,181 | 2 | US$ | 1,181 | ||||||||||
SiRF Technology Holdings, Inc. | | Long-term investment | 20 | US$ | 131 | | US$ | 131 | ||||||||||
LeadTONE Wireless, Inc. | | Long-term investment | 434 | US$ | 65 | 6 | US$ | 65 | ||||||||||
Match Lab, Inc. | | Long-term investment | 313 | US$ | 63 | 2 | US$ | 63 | ||||||||||
Kilopass Technology, Inc. | | Long-term investment | 3,887 | US$ | 2,000 | 19 | US$ | 2,000 | ||||||||||
FangTek, Inc. | | Long-term investment | 5,556 | US$ | 2,000 | 44 | US$ | 2,000 | ||||||||||
Alchip Technologies, Ltd. | | Long-term investment | 2,125 | US$ | 1,700 | 23 | US$ | 1,700 | ||||||||||
eLCOS Microdisplay Technology, Ltd. | | Long-term investment | 2,667 | US$ | 3,500 | 16 | US$ | 3,500 | ||||||||||
Emerging Alliance |
Stock | |||||||||||||||||
Global Investment Holding, Inc. | | Long-term investment | 10,000 | 100,000 | 6 | 100,000 | ||||||||||||
RichWave Technology Corp. | | Long-term investment | 2,340 | US$ | 704 | 12 | US$ | 704 | ||||||||||
Preferred stock | ||||||||||||||||||
Quake Technologies, Inc. | | Long-term investment | 601 | US$ | 450 | 1 | US$ | 450 | ||||||||||
Pixim, Inc. | | Long-term investment | 1,721 | US$ | 2,382 | 3 | US$ | 2,382 | ||||||||||
Newport Opticom, Inc. | | Long-term investment | 962 | US$ | 250 | 6 | US$ | 250 | ||||||||||
NetLogic Microsystems, Inc. | | Long-term investment | 602 | US$ | 1,850 | 1 | US$ | 1,850 | ||||||||||
Ikanos Communication, Inc. | | Long-term investment | 7,446 | US$ | 3,125 | 3 | US$ | 3,125 | ||||||||||
Quicksilver Technology, Inc. | | Long-term investment | 1,049 | US$ | 2,699 | 4 | US$ | 2,699 | ||||||||||
Mosaic Systems, Inc. | | Long-term investment | 2,481 | US$ | 12 | 6 | US$ | 12 | ||||||||||
Accelerant Networks, Inc. | | Long-term investment | 441 | US$ | 460 | 1 | US$ | 460 | ||||||||||
Zenesis Technologies, Inc. | | Long-term investment | 861 | US$ | 500 | 4 | US$ | 500 | ||||||||||
Reflectivity, Inc. | | Long-term investment | 4,848 | US$ | 2,479 | 6 | US$ | 2,479 | ||||||||||
Iridigm Display, Co. | | Long-term investment | 254 | US$ | 500 | 1 | US$ | 500 | ||||||||||
Miriadia, Inc. (formerly XHP Microsystems, Inc.) | | Long-term investment | 2,280 | US$ | 750 | 6 | US$ | 750 | ||||||||||
Axiom Microdevices, Inc. | | Long-term investment | 1,000 | US$ | 1,000 | 5 | US$ | 1,000 | ||||||||||
Optichron, Inc. | | Long-term investment | 714 | US$ | 1,000 | 6 | US$ | 1,000 | ||||||||||
Audience, Inc. | | Long-term investment | 1,654 | US$ | 250 | 2 | US$ | 250 | ||||||||||
Next IO, Inc. | | Long-term investment | 800 | US$ | 500 | 3 | US$ | 500 | ||||||||||
NuCORE Technology Inc. | | Long-term investment | 1,821 | US$ | 1,000 | 2 | US$ | 1,000 | ||||||||||
Centrality Communications, Inc. | | Long-term investment | 809 | US$ | 1,000 | 2 | US$ | 1,000 | ||||||||||
GUC |
Bond funds | |||||||||||||||||
Entrust KIRIN | | Short-term investment | 2,106 | 22,324 | N/A | 22,429 | ||||||||||||
Entrust Phoenix | | Short-term investment | 1,399 | 20,207 | N/A | 20,302 | ||||||||||||
TISC | | Short-term investment | 2,210 | 30,000 | N/A | 30,132 | ||||||||||||
Ta-Hua | | Short-term investment | 2,412 | 30,003 | N/A | 30,128 | ||||||||||||
E. Sun New Era | | Short-term investment | 1,920 | 20,000 | N/A | 20,062 | ||||||||||||
Shenghua 1699 | | Short-term investment | 1,009 | 12,000 | N/A | 12,059 |
(Continued)
- 36 -
Held Company |
Marketable Securities Type and |
Relationship with the Company |
Financial Statement |
March 31, 2004 |
Note | |||||||||||||
Shares/Units (In Thousand) |
Carrying Value (US$ in |
Percentage of Ownership |
Market Value or (US$ in |
|||||||||||||||
Jihsun | | Short-term investment | 764 | $ | 10,000 | N/A | $ | 10,043 | ||||||||||
Shenghua 5599 | | Short-term investment | 931 | 10,000 | N/A | 10,047 | ||||||||||||
Mega Diamond | | Short-term investment | 377 | 4,151 | N/A | 4,169 | ||||||||||||
Polaris | | Short-term investment | 694 | 7,072 | N/A | 7,101 | ||||||||||||
Ta-Hua GC Dollar | | Short-term investment | 39 | 13,691 | N/A | 13,436 | ||||||||||||
Taiwan Security Overseas Fund |
| Short-term investment | 22 | 102,694 | N/A | 101,571 | ||||||||||||
Stock funds | ||||||||||||||||||
Polaris High- performance Fund | | Short-term investment | 269 | 5,000 | N/A | 5,342 | ||||||||||||
Tisc Dollar | | Short-term investment | 302 | 5,000 | N/A | 5,330 |
- 37 -
TABLE 4
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 2004
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Company |
Marketable and Name |
Financial |
Counter- |
Nature of |
Beginning Balance |
Acquisition |
Disposal |
Ending Balance | |||||||||||||||||||||||||||||
Shares/ Units (Thousand) |
Amount (US$ in Thousand) |
Shares/ Units (Thousand) |
Amount (US$ in Thousand) |
Shares/ Units (Thousand) |
Amount (US$ in Thousand) |
Carrying (US$ in Thousand) |
Gain (US$ in Thousand) |
Shares/ Units (Thousand) |
Amount (US$ in (Note 1) | ||||||||||||||||||||||||||||
The Company |
Money market funds | ||||||||||||||||||||||||||||||||||||
BOA Fund | Short-term investment |
BOA | | 40,000 | $ US$ |
1,359,120 (40,000 |
) |
| $ | | 40,000 | $ US$ |
1,359,120 (40,000 |
) |
$ US$ |
1,359,120 (40,000 |
) |
$ | | | $ | | |||||||||||||||
GS Fund | Short-term investment |
Goldman Sachs | | 20,000 | US$ |
679,560 (20,000 |
) |
| | 20,000 | US$ |
679,560 (20,000 |
) |
US$ |
679,560 (20,000 |
) |
| | | ||||||||||||||||||
Bond funds | |||||||||||||||||||||||||||||||||||||
JF Taiwan Bond Fund | Short-term investment |
JF Asset Management (Taiwan) Ltd. | | 34,343 | 500,000 | 68,021 | 1,000,000 | | | | | 102,364 | 1,500,000 | ||||||||||||||||||||||||
ABN AMRO Bond Fund | Short-term investment |
ABN AMRO | | 34,794 | 500,000 | 151,569 | 2,200,000 | | | | | 186,363 | 2,700,000 | ||||||||||||||||||||||||
JF First Bond Fund | Short-term investment |
JF Asset Management (Taiwan) Ltd. | | | | 110,580 | 1,500,000 | | | | | 110,580 | 1,500,000 | ||||||||||||||||||||||||
INVESCO GT Bond A Fund | Short-term investment |
INVESCO Asset Management Taiwan |
| | | 69,692 | 1,000,000 | | | | | 69,692 | 1,000,000 | ||||||||||||||||||||||||
Government bonds | |||||||||||||||||||||||||||||||||||||
Bonds with Repurchase Agreement | Short-term investment |
Chung Shing Bills Finance Corp. and several financial institutions |
| | 1,800,000 | | 2,577,163 | | 1,022,018 | 1,022,018 | | | 3,355,145 | ||||||||||||||||||||||||
2003 Government Bond Series A | Short-term investment |
BNP and several financial institutions | | | | | 1,207,409 | | | | | | 1,207,409 | ||||||||||||||||||||||||
2003 Government Bond Series I | Short-term investment |
FCB and several financial institutions | | | | | 3,418,984 | | | | | | 3,418,984 | ||||||||||||||||||||||||
2002 Government Bond Series A | Short-term investment |
BNP and several financial institutions | | | 3,157,331 | | | | 3,169,750 | 3,157,331 | 12,419 | | | ||||||||||||||||||||||||
2002 Government Bond Series J | Short-term investment |
BNP and several financial institutions | | | | | 2,023,206 | | | | | | 2,023,206 | ||||||||||||||||||||||||
1994 Government Bond Series C | Short-term investment |
Chung Shing Bills Finance Corp. and several financial institutions | | | 1,422,197 | | | | 1,427,762 | 1,422,197 | 5,565 | | | ||||||||||||||||||||||||
Stock | |||||||||||||||||||||||||||||||||||||
Emerging Alliance | Long-term investment |
Emerging Alliance | Subsidiary | | 704,744 | | 167,583 | | | | | | 824,793 | ||||||||||||||||||||||||
InveStar |
Common stock | ||||||||||||||||||||||||||||||||||||
RichTek Technology Corp. | Short-term investment |
| | 947 | US$ | 121 | | | 726 | US$ | 4,393 | US$ | 92 | US$ | 4,301 | 221 | US$ | 29 | |||||||||||||||||||
InveStar II |
Common stock | ||||||||||||||||||||||||||||||||||||
RichTek Technology Corp. | Short-term investment |
| | 465 | US$ | 346 | | | 455 | US$ | 2,781 | US$ | 338 | US$ | 2,443 | 10 | US$ | 8 |
Note | 1: The ending balance included the recognition of the investment income (loss) by the equity method, the cumulative translation adjustments and unrealized loss on long-term investments recognized in proportion to the Companys ownership percentage in investees. |
- 38 -
TABLE 5
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
TOTAL PURCHASE FROM OR SALE TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 2004
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Company |
Related Party |
Nature |
Transaction Details |
Abnormal Transaction |
Note/Accounts Payable or Receivable |
Note | |||||||||||||||||||
Purchase/ Sale |
Amount |
% to Total |
Payment Terms |
Unit Price |
Payment Terms |
Ending Balance |
% to Total |
||||||||||||||||||
The Company |
TSMCNorth America | Subsidiary | Sales | $ | 31,648,127 | 54 | Net 30 days from invoice date | None | None | $ | 15,195,321 | 49 | | ||||||||||||
Philips and its affiliates | Major shareholder | Sales | 1,344,714 | 2 | Net 30 days from invoice date | None | None | 1,021,009 | 3 | | |||||||||||||||
WaferTech | Subsidiary | Purchases | 3,505,826 | 35 | Net 30 days from invoice date | None | None | (1,154,689 | ) | 9 | | ||||||||||||||
VIS | Investee | Purchases | 1,873,410 | 19 | Net 30 days from invoice date | None | None | (1,294,952 | ) | 10 | | ||||||||||||||
SSMC | Investee | Purchases | 1,390,078 | 14 | Net 30 days from invoice date | None | None | (528,454 | ) | 4 | |
- 39 -
TABLE 6
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
MARCH 31, 2004
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Company Name |
Related Party |
Nature of Relationship |
Ending Balance |
Turnover Rate |
Overdue |
Amounts Received in Subsequent Period |
Allowance for Bad Debts | |||||||||||||
Amount |
Action Taken |
|||||||||||||||||||
The Company |
TSMCNorth America |
Subsidiary | $ | 15,195,321 | 42 days |
$ | 3,917,721 | Accelerate demand on account receivables |
$ | 5,077,735 | $ | | ||||||||
Philips and its affiliates |
Major shareholder |
1,021,009 | 65 days |
203,866 | Accelerate demand on account receivables |
19,224 | | |||||||||||||
VIS | Investee | 180,829 | Note | 21,322 | Accelerate demand on account receivables |
| |
Note: | Receivables are mainly from the sales of machinery and equipment to VIS. Therefore, the computation of the turnover rate is not applicable. |
- 40 -
TABLE 7
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE
MARCH 31, 2004
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Investor Company |
Investee Company |
Location |
Main Businesses and |
Original Investment Amount |
Balance as of March 31, 2004 |
Net Income (Loss) of the Investee |
Investment (Note 2) |
Note | |||||||||||||||||||||
March 31, 2004 |
March 31, 2003 |
Shares (Thousand) |
Percentage of Ownership |
Carrying Value (Note 1) |
|||||||||||||||||||||||||
The Company |
TSMCNorth America | San Jose, California, U.S.A. |
Marketing and engineering support |
$ | 333,178 | $ | 333,178 | 11,000 | 100 | $ | 412,786 | $ | 19,141 | $ | 17,765 | Subsidiary | |||||||||||||
TSMCEurope | Amsterdam, The Netherlands |
Marketing and engineering support |
15,749 | 15,749 | | 100 | 23,434 | 44 | 44 | Subsidiary | |||||||||||||||||||
TSMCJapan | Yokohama, Japan | Marketing and engineering support |
83,760 | 83,760 | 6 | 100 | 104,186 | 2,296 | 2,296 | Subsidiary | |||||||||||||||||||
TSMC Shanghai | Shanghai, China | IC and other wafer equipment manufacturing and marketing |