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 August 2015
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: August 14, 2015 | By | /s/ Lora Ho | ||||
Lora Ho | ||||||
Senior Vice President & Chief Financial Officer |
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
Consolidated Financial Statements for the Six months Ended June 30, 2015 and 2014 and Independent Accountants Review Report |
INDEPENDENT ACCOUNTANTS REVIEW REPORT
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Limited
We have reviewed the accompanying consolidated balance sheets of Taiwan Semiconductor Manufacturing Company Limited and subsidiaries (the Company) as of June 30, 2015 and 2014 and the related consolidated statements of comprehensive income for the three months ended June 30, 2015 and 2014 and for the six months ended June 30, 2015 and 2014, as well as the consolidated statements of changes in equity and cash flows for the six months ended June 30, 2015 and 2014. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to issue a report on these consolidated 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 Standards 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 consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, Interim Financial Reporting, endorsed by the Financial Supervisory Commission of the Republic of China.
August 11, 2015
Notice to Readers
The accompanying consolidated financial statements are intended only to present the consolidated 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 consolidated financial statements are those generally accepted and applied in the Republic of China.
For the convenience of readers, the accountants review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language accountants review report and consolidated financial statements shall prevail.
- 1 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands of New Taiwan Dollars)
June 30, 2015 (Reviewed) |
December 31, 2014 (Adjusted and Audited) |
June 30, 2014 (Adjusted and Reviewed) |
January 1, 2014 (Adjusted and Audited) |
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(Note 3) | (Note 3) | (Note 3) | (Note 3) | |||||||||||||||||||||||||||||
Amount | % | Amount | % | Amount | % | Amount | % | |||||||||||||||||||||||||
ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents (Note 6) |
$ | 528,895,107 | 33 | $ | 358,449,029 | 24 | $ | 255,053,573 | 19 | $ | 242,695,447 | 19 | ||||||||||||||||||||
Financial assets at fair value through profit or loss (Note 7) |
58,535 | | 192,045 | | 158,265 | | 90,353 | | ||||||||||||||||||||||||
Available-for-sale financial assets (Note 8) |
14,216,874 | 1 | 73,797,476 | 5 | 59,082,482 | 4 | 760,793 | | ||||||||||||||||||||||||
Held-to-maturity financial assets (Note 9) |
7,180,351 | | 4,485,593 | | 299,230 | | 1,795,949 | | ||||||||||||||||||||||||
Notes and accounts receivable, net (Note 11) |
98,992,354 | 6 | 114,734,743 | 8 | 86,424,428 | 7 | 71,649,926 | 6 | ||||||||||||||||||||||||
Receivables from related parties (Note 32) |
744,707 | | 312,955 | | 462,732 | | 291,708 | | ||||||||||||||||||||||||
Other receivables from related parties (Note 32) |
3,565,341 | | 178,625 | | 2,875,842 | | 221,576 | | ||||||||||||||||||||||||
Inventories (Note 12) |
66,278,597 | 4 | 66,337,971 | 5 | 50,954,265 | 4 | 37,494,893 | 3 | ||||||||||||||||||||||||
Noncurrent assets held for sale (Note 30) |
| | 944,208 | | | | | | ||||||||||||||||||||||||
Other financial assets (Note 33) |
8,408,233 | 1 | 3,476,884 | | 957,366 | | 501,785 | | ||||||||||||||||||||||||
Other current assets (Note 17) |
3,028,691 | | 3,656,110 | | 2,931,372 | | 2,984,224 | | ||||||||||||||||||||||||
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Total current assets |
731,368,790 | 45 | 626,565,639 | 42 | 459,199,555 | 34 | 358,486,654 | 28 | ||||||||||||||||||||||||
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NONCURRENT ASSETS |
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Available-for-sale financial assets (Note 8) |
| | | | | | 58,721,959 | 5 | ||||||||||||||||||||||||
Financial assets carried at cost (Note 13) |
1,858,376 | | 1,800,542 | | 2,017,528 | | 2,145,591 | | ||||||||||||||||||||||||
Investments accounted for using equity method (Note 14) |
25,915,208 | 2 | 28,255,737 | 2 | 26,361,220 | 2 | 28,321,241 | 2 | ||||||||||||||||||||||||
Property, plant and equipment (Note 15) |
829,703,176 | 52 | 818,198,801 | 55 | 837,167,426 | 63 | 792,665,913 | 63 | ||||||||||||||||||||||||
Intangible assets (Note 16) |
12,938,507 | 1 | 13,531,510 | 1 | 11,433,307 | 1 | 11,490,383 | 1 | ||||||||||||||||||||||||
Deferred income tax assets (Note 4) |
5,342,444 | | 5,138,782 | | 4,915,991 | | 7,145,004 | 1 | ||||||||||||||||||||||||
Refundable deposits (Note 32) |
408,585 | | 356,069 | | 2,476,534 | | 2,519,031 | | ||||||||||||||||||||||||
Other noncurrent assets (Note 17) |
1,317,980 | | 1,202,006 | | 1,385,149 | | 1,469,577 | | ||||||||||||||||||||||||
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Total noncurrent assets |
877,484,276 | 55 | 868,483,447 | 58 | 885,757,155 | 66 | 904,478,699 | 72 | ||||||||||||||||||||||||
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TOTAL |
$ | 1,608,853,066 | 100 | $ | 1,495,049,086 | 100 | $ | 1,344,956,710 | 100 | $ | 1,262,965,353 | 100 | ||||||||||||||||||||
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LIABILITIES AND EQUITY |
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CURRENT LIABILITIES |
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Short-term loans (Note 18) |
$ | 5,592,600 | | $ | 36,158,520 | 2 | $ | 34,705,206 | 3 | $ | 15,645,000 | 1 | ||||||||||||||||||||
Financial liabilities at fair value through profit or loss (Note 7) |
780,721 | | 486,214 | | 19,418 | | 33,750 | | ||||||||||||||||||||||||
Hedging derivative financial liabilities (Note 10) |
2,625,763 | | 16,364,241 | 1 | 4,282,501 | | | | ||||||||||||||||||||||||
Accounts payable |
19,773,550 | 1 | 21,878,934 | 2 | 20,015,515 | 1 | 14,670,260 | 1 | ||||||||||||||||||||||||
Payables to related parties (Note 32) |
1,327,345 | | 1,491,490 | | 1,681,781 | | 1,688,456 | | ||||||||||||||||||||||||
Salary and bonus payable |
9,116,649 | 1 | 10,573,922 | 1 | 7,806,935 | 1 | 8,330,956 | 1 | ||||||||||||||||||||||||
Accrued profit sharing to employees and bonus to directors and supervisors (Notes 22 and 29) |
28,834,956 | 2 | 18,052,820 | 1 | 20,100,855 | 1 | 12,738,801 | 1 | ||||||||||||||||||||||||
Payables to contractors and equipment suppliers |
43,610,962 | 3 | 26,980,408 | 2 | 34,657,746 | 3 | 89,810,160 | 7 | ||||||||||||||||||||||||
Cash dividends payable (Note 22) |
116,683,481 | 7 | | | 77,785,851 | 6 | | | ||||||||||||||||||||||||
Income tax payable (Note 4) |
30,335,340 | 2 | 28,616,574 | 2 | 17,585,111 | 1 | 22,563,286 | 2 | ||||||||||||||||||||||||
Provisions (Note 19) |
8,593,075 | 1 | 10,445,452 | 1 | 7,709,195 | 1 | 7,603,781 | 1 | ||||||||||||||||||||||||
Liabilities directly associated with noncurrent assets held for sale (Note 30) |
| | 219,043 | | | | | | ||||||||||||||||||||||||
Long-term liabilities - current portion (Note 20) |
10,868,322 | 1 | | | | | | | ||||||||||||||||||||||||
Accrued expenses and other current liabilities (Note 21) |
31,236,977 | 2 | 29,746,011 | 2 | 20,284,963 | 1 | 16,693,484 | 1 | ||||||||||||||||||||||||
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Total current liabilities |
309,379,741 | 20 | 201,013,629 | 14 | 246,635,077 | 18 | 189,777,934 | 15 | ||||||||||||||||||||||||
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NONCURRENT LIABILITIES |
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Hedging derivative financial liabilities (Note 10) |
| | | | 1,277,058 | | 5,481,616 | | ||||||||||||||||||||||||
Bonds payable (Note 20) |
201,856,784 | 13 | 213,673,818 | 14 | 210,869,059 | 16 | 210,767,625 | 17 | ||||||||||||||||||||||||
Long-term bank loans |
37,500 | | 40,000 | | 40,000 | | 40,000 | | ||||||||||||||||||||||||
Deferred income tax liabilities (Note 4) |
232,340 | | 199,750 | | | | | | ||||||||||||||||||||||||
Obligations under finance leases |
766,836 | | 802,108 | | 745,391 | | 776,230 | | ||||||||||||||||||||||||
Net defined benefit liability (Note 4) |
6,585,747 | | 6,567,782 | | 6,810,773 | 1 | 6,801,663 | 1 | ||||||||||||||||||||||||
Guarantee deposits (Note 21) |
21,916,587 | 1 | 25,538,475 | 2 | 157,011 | | 151,660 | | ||||||||||||||||||||||||
Others (Note 19) |
1,449,976 | | 885,192 | | 771,334 | | 694,901 | | ||||||||||||||||||||||||
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Total noncurrent liabilities |
232,845,770 | 14 | 247,707,125 | 16 | 220,670,626 | 17 | 224,713,695 | 18 | ||||||||||||||||||||||||
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Total liabilities |
542,225,511 | 34 | 448,720,754 | 30 | 467,305,703 | 35 | 414,491,629 | 33 | ||||||||||||||||||||||||
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EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT |
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Capital stock (Note 22) |
259,303,805 | 16 | 259,296,624 | 17 | 259,293,750 | 19 | 259,286,171 | 21 | ||||||||||||||||||||||||
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Capital surplus (Note 22) |
56,532,959 | 4 | 55,989,922 | 4 | 56,026,837 | 4 | 55,858,626 | 4 | ||||||||||||||||||||||||
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Retained earnings (Notes 22 and 29) |
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Appropriated as legal capital reserve |
177,640,561 | 11 | 151,250,682 | 10 | 151,250,682 | 11 | 132,436,003 | 11 | ||||||||||||||||||||||||
Appropriated as special capital reserve |
| | | | | | 2,785,741 | | ||||||||||||||||||||||||
Unappropriated earnings |
569,248,657 | 35 | 553,914,592 | 37 | 397,420,475 | 30 | 383,670,168 | 30 | ||||||||||||||||||||||||
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746,889,218 | 46 | 705,165,274 | 47 | 548,671,157 | 41 | 518,891,912 | 41 | |||||||||||||||||||||||||
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Others (Note 22) |
3,854,399 | | 25,749,291 | 2 | 13,485,597 | 1 | 14,170,306 | 1 | ||||||||||||||||||||||||
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Equity attributable to shareholders of the parent |
1,066,580,381 | 66 | 1,046,201,111 | 70 | 877,477,341 | 65 | 848,207,015 | 67 | ||||||||||||||||||||||||
NONCONTROLLING INTERESTS (Note 22) |
47,174 | | 127,221 | | 173,666 | | 266,709 | | ||||||||||||||||||||||||
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Total equity |
1,066,627,555 | 66 | 1,046,328,332 | 70 | 877,651,007 | 65 | 848,473,724 | 67 | ||||||||||||||||||||||||
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TOTAL |
$ | 1,608,853,066 | 100 | $ | 1,495,049,086 | 100 | $ | 1,344,956,710 | 100 | $ | 1,262,965,353 | 100 | ||||||||||||||||||||
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The accompanying notes are an integral part of the consolidated financial statements.
- 2 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
(Reviewed, Not Audited)
For the Three Months Ended June 30 | For the Six Months Ended June 30 | |||||||||||||||||||||||||||||||
2015 (Note 3) |
2014 (Adjusted) (Note 3) |
2015 (Note 3) |
2014 (Adjusted) (Note 3) |
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Amount | % | Amount | % | Amount | % | Amount | % | |||||||||||||||||||||||||
NET REVENUE (Notes 24, 32 and 37) |
$ | 205,439,752 | 100 | $ | 183,020,484 | 100 | $ | 427,473,896 | 100 | $ | 331,235,656 | 100 | ||||||||||||||||||||
COST OF REVENUE (Notes 12, 29 and 32) |
105,735,807 | 51 | 91,826,284 | 50 | 218,321,140 | 51 | 169,665,469 | 51 | ||||||||||||||||||||||||
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GROSS PROFIT BEFORE REALIZED (UNREALIZED) GROSS PROFIT ON SALES TO ASSOCIATES |
99,703,945 | 49 | 91,194,200 | 50 | 209,152,756 | 49 | 161,570,187 | 49 | ||||||||||||||||||||||||
REALIZED (UNREALIZED) GROSS PROFIT ON SALES TO ASSOCIATES |
1,011 | | (4,369 | ) | | (18,536 | ) | | 16,648 | | ||||||||||||||||||||||
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GROSS PROFIT |
99,704,956 | 49 | 91,189,831 | 50 | 209,134,220 | 49 | 161,586,835 | 49 | ||||||||||||||||||||||||
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OPERATING EXPENSES (Notes 29 and 32) |
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Research and development |
16,612,213 | 8 | 13,610,337 | 7 | 33,393,676 | 8 | 25,678,229 | 8 | ||||||||||||||||||||||||
General and administrative |
4,463,580 | 2 | 5,408,174 | 3 | 8,829,633 | 2 | 10,064,151 | 3 | ||||||||||||||||||||||||
Marketing |
1,479,419 | 1 | 1,234,897 | 1 | 2,870,415 | 1 | 2,387,677 | 1 | ||||||||||||||||||||||||
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Total operating expenses |
22,555,212 | 11 | 20,253,408 | 11 | 45,093,724 | 11 | 38,130,057 | 12 | ||||||||||||||||||||||||
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OTHER OPERATING INCOME AND EXPENSES, NET (Note 29) |
(80,686 | ) | | (227,251 | ) | | (345,315 | ) | | (229,992 | ) | | ||||||||||||||||||||
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INCOME FROM OPERATIONS (Note 37) |
77,069,058 | 38 | 70,709,172 | 39 | 163,695,181 | 38 | 123,226,786 | 37 | ||||||||||||||||||||||||
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NON-OPERATING INCOME AND EXPENSES |
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Share of profits of associates and joint venture |
815,749 | | 1,047,825 | | 1,950,398 | | 2,003,434 | | ||||||||||||||||||||||||
Other income |
1,544,750 | 1 | 1,316,583 | 1 | 2,426,532 | 1 | 1,930,282 | | ||||||||||||||||||||||||
Foreign exchange loss, net (Note 36) |
(292,295 | ) | | (355,207 | ) | | (244,112 | ) | | (391,608 | ) | | ||||||||||||||||||||
Finance costs (Note 25) |
(783,401 | ) | | (801,450 | ) | | (1,577,343 | ) | | (1,598,030 | ) | | ||||||||||||||||||||
Other gains and losses (Note 26) |
19,777,822 | 9 | 2,176,649 | 1 | 20,140,007 | 5 | 2,220,033 | 1 | ||||||||||||||||||||||||
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Total non-operating income and expenses |
21,062,625 | 10 | 3,384,400 | 2 | 22,695,482 | 6 | 4,164,111 | 1 | ||||||||||||||||||||||||
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INCOME BEFORE INCOME TAX |
98,131,683 | 48 | 74,093,572 | 41 | 186,390,663 | 44 | 127,390,897 | 38 | ||||||||||||||||||||||||
INCOME TAX EXPENSE (Notes 4 and 27) |
18,718,779 | 9 | 14,437,693 | 8 | 27,993,851 | 7 | 19,893,188 | 6 | ||||||||||||||||||||||||
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NET INCOME |
79,412,904 | 39 | 59,655,879 | 33 | 158,396,812 | 37 | 107,497,709 | 32 | ||||||||||||||||||||||||
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OTHER COMPREHENSIVE INCOME (LOSS) (Notes 22 and 27) |
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Items that may be reclassified subsequently to profit or loss |
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Exchange differences arising on translation of foreign operations |
(3,368,788 | ) | (2 | ) | (3,052,142 | ) | (2 | ) | (5,647,926 | ) | (1 | ) | (220,761 | ) | | |||||||||||||||||
Changes in fair value of available-for-sale financial assets |
(16,627,929 | ) | (8 | ) | (31,156 | ) | | (16,832,744 | ) | (4 | ) | (446,601 | ) | | ||||||||||||||||||
Share of other comprehensive income (loss) of associates and joint venture |
(249,353 | ) | | (1,274 | ) | | 593,810 | | (6,021 | ) | | |||||||||||||||||||||
Income tax expense related to components of other comprehensive income that may be reclassified subsequently |
(13,311 | ) | | (14,079 | ) | | (18,104 | ) | | (11,123 | ) | | ||||||||||||||||||||
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Other comprehensive loss for the period, net of income tax |
(20,259,381 | ) | (10 | ) | (3,098,651 | ) | (2 | ) | (21,904,964 | ) | (5 | ) | (684,506 | ) | | |||||||||||||||||
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TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |
$ | 59,153,523 | 29 | $ | 56,557,228 | 31 | $ | 136,491,848 | 32 | $ | 106,813,203 | 32 | ||||||||||||||||||||
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NET INCOME (LOSS) ATTRIBUTABLE TO: |
||||||||||||||||||||||||||||||||
Shareholders of the parent |
$ | 79,417,514 | 39 | $ | 59,698,303 | 33 | $ | 158,407,425 | 37 | $ | 107,565,096 | 32 | ||||||||||||||||||||
Noncontrolling interests |
(4,610 | ) | | (42,424 | ) | | (10,613 | ) | | (67,387 | ) | | ||||||||||||||||||||
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$ | 79,412,904 | 39 | $ | 59,655,879 | 33 | $ | 158,396,812 | 37 | $ | 107,497,709 | 32 | |||||||||||||||||||||
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TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: |
||||||||||||||||||||||||||||||||
Shareholders of the parent |
$ | 59,161,055 | 29 | $ | 56,600,673 | 31 | $ | 136,512,533 | 32 | $ | 106,880,387 | 32 | ||||||||||||||||||||
Noncontrolling interests |
(7,532 | ) | | (43,445 | ) | | (20,685 | ) | | (67,184 | ) | | ||||||||||||||||||||
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$ | 59,153,523 | 29 | $ | 56,557,228 | 31 | $ | 136,491,848 | 32 | $ | 106,813,203 | 32 | |||||||||||||||||||||
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For the Three Months Ended June 30 | For the Six Months Ended June 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Income Attributable to Shareholders of the Parent |
Income Attributable to Shareholders of the Parent |
Income Attributable to Shareholders of the Parent |
Income Attributable to Shareholders of the Parent |
|||||||||||||
EARNINGS PER SHARE (NT$, Note 28) |
||||||||||||||||
Basic earnings per share |
$ | 3.06 | $ | 2.30 | $ | 6.11 | $ | 4.15 | ||||||||
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Diluted earnings per share |
$ | 3.06 | $ | 2.30 | $ | 6.11 | $ | 4.15 | ||||||||
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The accompanying notes are an integral part of the consolidated financial statements.
- 3 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
(Reviewed, Not Audited)
Equity Attributable to Shareholders of the Parent | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Others | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Stock - Common Stock |
Retained Earnings |
Foreign Translation Reserve |
Unrealized Gain/Loss from Available- for-sale Financial |
Cash Hedges |
Total |
Total |
Noncontrolling Interests |
Total Equity |
||||||||||||||||||||||||||||||||||||||||||||||||
Shares (In |
Amount |
Capital |
Legal Reserve |
Special Reserve |
Unappropriated Earnings |
Total |
||||||||||||||||||||||||||||||||||||||||||||||||||
BALANCE, JANUARY 1, 2015 |
25,929,662 | $ | 259,296,624 | $ | 55,989,922 | $ | 151,250,682 | $ | | $ | 553,261,982 | $ | 704,512,664 | $ | 4,502,113 | $ | 21,247,483 | $ | (305 | ) | $ | 25,749,291 | $ | 1,045,548,501 | $ | 127,246 | $ | 1,045,675,747 | ||||||||||||||||||||||||||||
Effect of retrospective application |
| | | | | 652,610 | 652,610 | | | | | 652,610 | (25 | ) | 652,585 | |||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
ADJUSTED BALANCE, JANUARY 1, 2015 |
25,929,662 | 259,296,624 | 55,989,922 | 151,250,682 | | 553,914,592 | 705,165,274 | 4,502,113 | 21,247,483 | (305 | ) | 25,749,291 | 1,046,201,111 | 127,221 | 1,046,328,332 | |||||||||||||||||||||||||||||||||||||||||
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Appropriations of prior years earnings |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legal capital reserve |
| | | 26,389,879 | | (26,389,879 | ) | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||
Cash dividends to shareholders - NT$4.50 per share |
| | | | | (116,683,481 | ) | (116,683,481 | ) | | | | | (116,683,481 | ) | | (116,683,481 | ) | ||||||||||||||||||||||||||||||||||||||
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Total |
| | | 26,389,879 | | (143,073,360 | ) | (116,683,481 | ) | | | | | (116,683,481 | ) | | (116,683,481 | ) | ||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
Net income for the six months ended June 30, 2015 |
| | | | | 158,407,425 | 158,407,425 | | | | | 158,407,425 | (10,613 | ) | 158,396,812 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income for the six months ended June 30, 2015, net of income tax |
| | | | | | | (5,599,519 | ) | (16,295,209 | ) | (164 | ) | (21,894,892 | ) | (21,894,892 | ) | (10,072 | ) | (21,904,964 | ) | |||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
Total comprehensive income for the six months ended June 30, 2015 |
| | | | | 158,407,425 | 158,407,425 | (5,599,519 | ) | (16,295,209 | ) | (164 | ) | (21,894,892 | ) | 136,512,533 | (20,685 | ) | 136,491,848 | |||||||||||||||||||||||||||||||||||||
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Issuance of stock from exercise of employee stock options |
718 | 7,181 | 130,974 | | | | | | | | | 138,155 | | 138,155 | ||||||||||||||||||||||||||||||||||||||||||
Disposal of investments accounted for using equity method |
| | (26,537 | ) | | | | | | | | | (26,537 | ) | | (26,537 | ) | |||||||||||||||||||||||||||||||||||||||
Adjustments to share of changes in equities of associates and joint venture |
| | 464,471 | | | | | | | | | 464,471 | 126 | 464,597 | ||||||||||||||||||||||||||||||||||||||||||
From share of changes in equities of subsidiaries |
| | (25,871 | ) | | | | | | | | | (25,871 | ) | 25,871 | | ||||||||||||||||||||||||||||||||||||||||
Decrease in noncontrolling interests |
| | | | | | | | | | | | (42,719 | ) | (42,719 | ) | ||||||||||||||||||||||||||||||||||||||||
Effect of disposal of subsidiary |
| | | | | | | | | | | | (42,640 | ) | (42,640 | ) | ||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
BALANCE, JUNE 30, 2015 |
25,930,380 | $ | 259,303,805 | $ | 56,532,959 | $ | 177,640,561 | $ | | $ | 569,248,657 | $ | 746,889,218 | $ | (1,097,406 | ) | $ | 4,952,274 | $ | (469 | ) | $ | 3,854,399 | $ | 1,066,580,381 | $ | 47,174 | $ | 1,066,627,555 | |||||||||||||||||||||||||||
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BALANCE, JANUARY 1, 2014 |
25,928,617 | $ | 259,286,171 | $ | 55,858,626 | $ | 132,436,003 | $ | 2,785,741 | $ | 382,971,408 | $ | 518,193,152 | $ | (7,140,362 | ) | $ | 21,310,781 | $ | (113 | ) | $ | 14,170,306 | $ | 847,508,255 | $ | 266,830 | $ | 847,775,085 | |||||||||||||||||||||||||||
Effect of retrospective application |
| | | | | 698,760 | 698,760 | | | | | 698,760 | (121 | ) | 698,639 | |||||||||||||||||||||||||||||||||||||||||
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ADJUSTED BALANCE, JANUARY 1, 2014 |
25,928,617 | 259,286,171 | 55,858,626 | 132,436,003 | 2,785,741 | 383,670,168 | 518,891,912 | (7,140,362 | ) | 21,310,781 | (113 | ) | 14,170,306 | 848,207,015 | 266,709 | 848,473,724 | ||||||||||||||||||||||||||||||||||||||||
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Appropriations of prior years earnings |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legal capital reserve |
| | | 18,814,679 | | (18,814,679 | ) | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||
Reversal of special capital reserve |
| | | | (2,785,741 | ) | 2,785,741 | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||
Cash dividends to shareholders - NT$3.00 per share |
| | | | | (77,785,851 | ) | (77,785,851 | ) | | | | | (77,785,851 | ) | | (77,785,851 | ) | ||||||||||||||||||||||||||||||||||||||
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Total |
| | | 18,814,679 | (2,785,741 | ) | (93,814,789 | ) | (77,785,851 | ) | | | | | (77,785,851 | ) | | (77,785,851 | ) | |||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
Net income for the six months ended June 30, 2014 |
| | | | | 107,565,096 | 107,565,096 | | | | | 107,565,096 | (67,387 | ) | 107,497,709 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income for the six months ended June 30, 2014, net of income tax |
| | | | | | | (223,663 | ) | (461,136 | ) | 90 | (684,709 | ) | (684,709 | ) | 203 | (684,506 | ) | |||||||||||||||||||||||||||||||||||||
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Total comprehensive income for the six months ended June 30, 2014 |
| | | | | 107,565,096 | 107,565,096 | (223,663 | ) | (461,136 | ) | 90 | (684,709 | ) | 106,880,387 | (67,184 | ) | 106,813,203 | ||||||||||||||||||||||||||||||||||||||
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Issuance of stock from exercise of employee stock options |
758 | 7,579 | 25,908 | | | | | | | | | 33,487 | | 33,487 | ||||||||||||||||||||||||||||||||||||||||||
Disposal of investments accounted for using equity method |
| | (2,273 | ) | | | | | | | | | (2,273 | ) | | (2,273 | ) | |||||||||||||||||||||||||||||||||||||||
Adjustments to share of changes in equity of associates and joint venture |
| | 164,310 | | | | | | | | | 164,310 | (66 | ) | 164,244 | |||||||||||||||||||||||||||||||||||||||||
From share of changes in equities of subsidiaries |
| | (19,734 | ) | | | | | | | | | (19,734 | ) | 19,734 | | ||||||||||||||||||||||||||||||||||||||||
Decrease in noncontrolling interests |
| | | | | | | | | | | | (45,527 | ) | (45,527 | ) | ||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
BALANCE, JUNE 30, 2014 |
25,929,375 | $ | 259,293,750 | $ | 56,026,837 | $ | 151,250,682 | $ | | $ | 397,420,475 | $ | 548,671,157 | $ | (7,364,025 | ) | $ | 20,849,645 | $ | (23 | ) | $ | 13,485,597 | $ | 877,477,341 | $ | 173,666 | $ | 877,651,007 | |||||||||||||||||||||||||||
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The accompanying notes are an integral part of the consolidated financial statements.
- 4 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)
Six months Ended June 30 | ||||||||
2015 | 2014 (Adjusted) |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
Income before income tax |
$ | 186,390,663 | $ | 127,390,897 | ||||
Adjustments for: |
||||||||
Depreciation expense |
108,544,796 | 86,338,443 | ||||||
Amortization expense |
1,556,307 | 1,263,048 | ||||||
Finance costs |
1,577,343 | 1,598,030 | ||||||
Share of profits of associates and joint venture |
(1,950,398 | ) | (2,003,434 | ) | ||||
Interest income |
(1,817,825 | ) | (1,292,325 | ) | ||||
Loss (gain) on disposal of property, plant and equipment and intangible assets, net |
50,368 | (15,325 | ) | |||||
Impairment loss on property, plant and equipment |
31,305 | 239,864 | ||||||
Gain on disposal of available-for-sale financial assets, net |
(17,642,367 | ) | (134,020 | ) | ||||
Gain on disposal of financial assets carried at cost, net |
(70,597 | ) | (52,694 | ) | ||||
Gain on disposal of investments accounted for using equity method |
(2,305,323 | ) | (2,028,643 | ) | ||||
Unrealized (realized) gross profit on sales to associates |
18,536 | (16,648 | ) | |||||
Loss (gain) on foreign exchange, net |
(2,014,106 | ) | 1,646,248 | |||||
Dividend income |
(608,707 | ) | (637,957 | ) | ||||
Income from receipt of equity securities in settlement of trade receivables |
| (1,211 | ) | |||||
Loss from hedging instruments |
737,305 | 589,243 | ||||||
Gain arising from changes in fair value of available-for-sale financial assets in hedge effective portion |
(299,191 | ) | (78,109 | ) | ||||
Changes in operating assets and liabilities: |
||||||||
Derivative financial instruments |
428,017 | (82,244 | ) | |||||
Notes and accounts receivable, net |
14,569,490 | (14,774,504 | ) | |||||
Receivables from related parties |
(431,752 | ) | (171,024 | ) | ||||
Other receivables from related parties |
17,984 | 13,258 | ||||||
Inventories |
59,374 | (13,459,372 | ) | |||||
Other financial assets |
499,150 | (389,931 | ) | |||||
Other current assets |
731,724 | 70,323 | ||||||
Accounts payable |
(1,587,537 | ) | 5,331,172 | |||||
Payables to related parties |
(164,145 | ) | (6,675 | ) | ||||
Salary and bonus payable |
(1,457,273 | ) | (524,021 | ) | ||||
Accrued profit sharing to employees and bonus to directors and supervisors |
10,782,136 | 7,362,054 | ||||||
Accrued expenses and other current liabilities |
(232,268 | ) | 2,915,319 | |||||
Provisions |
(1,844,746 | ) | 113,564 | |||||
Net defined benefit liability |
17,965 | 9,110 | ||||||
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|||||
Cash generated from operations |
293,586,228 | 199,212,436 | ||||||
Income taxes paid |
(26,518,415 | ) | (22,602,632 | ) | ||||
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|||||
Net cash generated by operating activities |
267,067,813 | 176,609,804 | ||||||
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(Continued)
- 5 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)
Six months Ended June 30 | ||||||||
2015 | 2014 (Adjusted) |
|||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
Acquisitions of: |
||||||||
Available-for-sale financial assets |
$ | (3,628 | ) | $ | (91,592 | ) | ||
Financial assets carried at cost |
(87,321 | ) | (3,773 | ) | ||||
Held-to-maturity financial assets |
(11,766,723 | ) | (1,396,723 | ) | ||||
Property, plant and equipment |
(102,689,656 | ) | (188,233,322 | ) | ||||
Intangible assets |
(1,589,831 | ) | (1,204,154 | ) | ||||
Proceeds from disposal or redemption of: |
||||||||
Available-for-sale financial assets |
39,269,616 | 473,520 | ||||||
Held-to-maturity financial assets |
9,100,000 | 2,900,000 | ||||||
Financial assets carried at cost |
86,756 | 62,445 | ||||||
Investments accounted for using equity method |
3,962,848 | 3,471,883 | ||||||
Property, plant and equipment |
30,462 | 114,987 | ||||||
Cash received from other long-term receivables |
| 161,900 | ||||||
Costs from entering into hedging transactions |
(495,348 | ) | (520,856 | ) | ||||
Interest received |
1,764,337 | 1,248,110 | ||||||
Other dividends received |
595,980 | 629,843 | ||||||
Refundable deposits paid |
(218,253 | ) | (25,460 | ) | ||||
Refundable deposits refunded |
161,583 | 59,041 | ||||||
Net cash inflow from disposal of subsidiary (Note 30) |
601,047 | | ||||||
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|
|||||
Net cash used in investing activities |
(61,278,131 | ) | (182,354,151 | ) | ||||
|
|
|
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
Increase (decrease) in short-term loans |
(30,334,110 | ) | 19,220,278 | |||||
Interest paid |
(1,212,515 | ) | (889,467 | ) | ||||
Guarantee deposits received |
454,190 | 10,374 | ||||||
Guarantee deposits refunded |
(443,769 | ) | (3,742 | ) | ||||
Decrease in obligations under finance leases |
(29,098 | ) | (28,426 | ) | ||||
Proceeds from exercise of employee stock options |
33,891 | 33,487 | ||||||
Decrease in noncontrolling interests |
(42,719 | ) | (45,527 | ) | ||||
|
|
|
|
|||||
Net cash generated by (used in) financing activities |
(31,574,130 | ) | 18,296,977 | |||||
|
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|
|||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
(3,850,952 | ) | (194,504 | ) | ||||
|
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|
(Continued)
- 6 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)
Six months Ended June 30 | ||||||||
2015 | 2014 (Adjusted) |
|||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
$ | 170,364,600 | $ | 12,358,126 | ||||
CASH AND CASH EQUIVALENTS INCLUDED IN NONCURRENT ASSETS HELD FOR SALE, BEGINNING OF PERIOD |
81,478 | | ||||||
CASH AND CASH EQUIVALENT ON CONSOLIDATED BALANCE SHEET, BEGINNING OF PERIOD |
358,449,029 | 242,695,447 | ||||||
|
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|||||
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 528,895,107 | $ | 255,053,573 | ||||
|
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|
The accompanying notes are an integral part of the consolidated financial statements. | (Concluded) |
- 7 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2015 and 2014
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
(Reviewed, Not Audited)
1. | GENERAL |
Taiwan Semiconductor Manufacturing Company Limited (TSMC), a Republic of China (R.O.C.) corporation, was incorporated on February 21, 1987. TSMC is a dedicated foundry in the semiconductor industry which engages mainly in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of masks.
On September 5, 1994, TSMCs shares were listed on the Taiwan Stock Exchange (TWSE). On October 8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form of American Depositary Shares (ADSs).
The address of its registered office and principal place of business is No. 8, Li-Hsin Rd. 6, Hsinchu Science Park, Taiwan. The principal operating activities and operating segments information of TSMC and its subsidiaries (collectively as the Company) are described in Notes 4 and 37.
2. | THE AUTHORIZATION OF FINANCIAL STATEMENTS |
The accompanying consolidated financial statements were reported to the Board of Directors and issued on August 11, 2015.
3. | APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS |
a. | Initial application of the amendments to the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and the 2013 version of the International Financial Reporting Standards, International Accounting Standards (IASs), Interpretations of International Financial Reporting Standards (IFRIC), and Interpretations of IASs (SIC) (collectively, IFRSs) endorsed by the Financial Supervisory Commission (FSC) (collectively, 2013 Taiwan-IFRSs version) |
According to Rule No. 1030029342 and Rule No. 1030010325 issued by the FSC, the 2013 Taiwan-IFRSs version and the related amendments to the Guidelines Governing the Preparation of Financial Reports by Securities Issuers should be adopted by the Company starting 2015.
The Company believes that as a result of the adoption of aforementioned 2013 Taiwan-IFRSs version and the related amendments to the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the following items have impacted the Companys consolidated financial statements.
1) | IFRS 12, Disclosure of Interests in Other Entities |
IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 for the Companys annual consolidated financial statements are more extensive than in the previous standards.
- 8 -
2) | IFRS 13, Fair Value Measurement |
IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. It defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The disclosure requirements in IFRS 13 are more extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments only are extended by IFRS 13 to cover all assets and liabilities within its scope.
The measurement requirements of IFRS 13 shall be applied prospectively from January 1, 2015. Please refer to Note 31 for related disclosures.
3) | Amendments to IAS 1, Presentation of Items of Other Comprehensive Income |
According to the amendments to IAS 1, the items of other comprehensive income will be grouped into two categories: (a) items that may not be reclassified subsequently to profit or loss; and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. In addition, income tax on items of other comprehensive income is also required to be allocated on the same basis.
The items that may not be reclassified subsequently to profit or loss include actuarial gains or losses from defined benefit plans, the share of actuarial gains or losses from defined benefit plans of associates and joint venture as well as the related income tax on such items. Items that may be reclassified subsequently to profit or loss include exchange differences arising on translation of foreign operations, changes in fair value of available-for-sale financial assets, cash flow hedges, the share of other comprehensive income of associates and joint venture as well as the related income tax on items of other comprehensive income.
4) | Amendments to IAS 19, Employee Benefits |
The amendments to IAS 19 require the Company to calculate a net interest amount by applying the discount rate to the net defined benefit liability or asset to replace the interest cost and expected return on planned assets used in current IAS 19. In addition, the amendments eliminate the accounting treatment of either corridor approach or the immediate recognition of actuarial gains and losses to profit or loss when it incurs, and instead, require to recognize all actuarial gains and losses immediately through other comprehensive income. The past service cost, on the other hand, will be expensed immediately when it incurs and no longer be amortized over the average period before vested on a straight-line basis. In addition, the amendments also require a broader disclosure in defined benefit plans.
The impact on the current period is summarized as follows:
Impact on Assets, Liabilities and Equity | June 30, 2015 |
|||
Increase in investments accounted for using equity method |
$ | 327 | ||
Increase in deferred income tax assets |
1,374 | |||
|
|
|||
Increase in assets |
$ | 1,701 | ||
|
|
|||
Increase in net defined benefit liability |
$ | 11,446 | ||
|
|
|||
Increase in liabilities |
$ | 11,446 | ||
|
|
|||
Decrease in retained earnings |
$ | (9,745 | ) | |
|
|
|||
Decrease in equity |
$ | (9,745 | ) | |
|
|
- 9 -
Impact on Total Comprehensive Income | Three Months Ended June 30, 2015 |
Six Months Ended June 30, 2015 |
||||||||||
Increase in cost of revenue |
|
$ | (3,676 | ) | $ | (7,363 | ) | |||||
Increase in operating expense |
|
(2,047 | ) | (4,083 | ) | |||||||
Increase in share of profit of associate and joint venture |
|
160 | 327 | |||||||||
Decrease in income tax expense |
|
687 | 1,374 | |||||||||
|
|
|
|
|||||||||
Decrease in net income and other comprehensive income attributable to shareholders of the parent |
|
$ | (4,876 | ) | $ | (9,745 | ) | |||||
|
|
|
|
|||||||||
The impact on the prior reporting periods is summarized as follows: | ||||||||||||
Impact on Assets, Liabilities and Equity | As Originally Stated |
Adjustments Arising from Initial Application |
Adjusted | |||||||||
December 31, 2014 |
||||||||||||
Noncurrent assets held for sale |
$ | 945,356 | $ | (1,148 | ) | $ | 944,208 | |||||
Investments accounted for using equity method |
28,251,002 | 4,735 | 28,255,737 | |||||||||
Deferred income tax assets |
5,227,128 | (88,346 | ) | 5,138,782 | ||||||||
|
|
|||||||||||
Total effect on assets |
$ | (84,759 | ) | |||||||||
|
|
|||||||||||
Liabilities directly associated with noncurrent assets held for sale |
220,191 | $ | (1,148 | ) | 219,043 | |||||||
Net defined benefit liability |
7,303,978 | (736,196 | ) | 6,567,782 | ||||||||
|
|
|||||||||||
Total effect on liabilities |
$ | (737,344 | ) | |||||||||
|
|
|||||||||||
Retained earnings |
704,512,664 | $ | 652,610 | 705,165,274 | ||||||||
Noncontrolling interests |
127,246 | (25 | ) | 127,221 | ||||||||
|
|
|||||||||||
Total effect on equity |
$ | 652,585 | ||||||||||
|
|
|||||||||||
June 30, 2014 |
||||||||||||
Investments accounted for using the equity method |
26,355,811 | $ | 5,409 | 26,361,220 | ||||||||
Deferred income tax assets |
5,009,457 | (93,466 | ) | 4,915,991 | ||||||||
|
|
|||||||||||
Total effect on assets |
$ | (88,057 | ) | |||||||||
|
|
|||||||||||
Net defined benefit liability |
7,589,543 | $ | (778,770 | ) | 6,810,773 | |||||||
|
|
|||||||||||
Total effect on liabilities |
$ | (778,770 | ) | |||||||||
|
|
|||||||||||
Retained earnings |
547,980,330 | $ | 690,827 | 548,671,157 | ||||||||
Noncontrolling interests |
173,780 | (114 | ) | 173,666 | ||||||||
|
|
|||||||||||
Total effect on equity |
$ | 690,713 | ||||||||||
|
|
(Continued)
- 10 -
Impact on Assets, Liabilities and Equity | As Originally Stated |
Adjustments Arising from Initial Application |
Adjusted | |||||||||
January 1, 2014 |
||||||||||||
Investments accounted for using the equity method |
$ | 28,316,260 | $ | 4,981 | $ | 28,321,241 | ||||||
Deferred income tax assets |
7,239,609 | (94,605 | ) | 7,145,004 | ||||||||
|
|
|||||||||||
Total effect on assets |
$ | (89,624 | ) | |||||||||
|
|
|||||||||||
Net defined benefit liability |
7,589,926 | $ | (788,263 | ) | 6,801,663 | |||||||
|
|
|||||||||||
Total effect on liabilities |
$ | (788,263 | ) | |||||||||
|
|
|||||||||||
Retained earnings |
518,193,152 | $ | 698,760 | 518,891,912 | ||||||||
Noncontrolling interests |
266,830 | (121 | ) | 266,709 | ||||||||
|
|
|||||||||||
Total effect on equity |
$ | 698,639 | ||||||||||
|
|
|||||||||||
(Concluded) | ||||||||||||
Impact on Total Comprehensive Income | As Originally Stated |
Adjustments Arising from Initial Application |
Adjusted | |||||||||
Three months ended June 30, 2014 |
||||||||||||
Cost of revenue |
$ | (91,823,190 | ) | $ | (3,094 | ) | $ | (91,826,284 | ) | |||
Operating expense |
(20,251,755 | ) | (1,653 | ) | (20,253,408 | ) | ||||||
Share of the profit or loss of associates and joint ventures |
1,047,626 | 199 | 1,047,825 | |||||||||
Income tax expense |
(14,438,263 | ) | 570 | (14,437,693 | ) | |||||||
|
|
|||||||||||
Impact on net income for the period |
$ | (3,978 | ) | |||||||||
|
|
|||||||||||
Impact on net income attributable to: |
||||||||||||
Shareholders of the parent |
$ | 59,702,284 | $ | (3,981 | ) | $ | 59,698,303 | |||||
Noncontrolling interests |
(42,427 | ) | 3 | (42,424 | ) | |||||||
|
|
|
|
|
|
|||||||
$ | 59,659,857 | $ | (3,978 | ) | $ | 59,655,879 | ||||||
|
|
|
|
|
|
|||||||
Impact on total comprehensive income attributable to: |
||||||||||||
Shareholders of the parent |
$ | 56,604,654 | $ | (3,981 | ) | $ | 56,600,673 | |||||
Noncontrolling interests |
(43,448 | ) | 3 | (43,445 | ) | |||||||
|
|
|
|
|
|
|||||||
$ | 56,561,206 | $ | (3,978 | ) | $ | 56,557,228 | ||||||
|
|
|
|
|
|
(Continued)
- 11 -
Impact on Total Comprehensive Income | As Originally Stated |
Adjustments Arising from Initial Application |
Adjusted | |||||||||
Six months ended June 30, 2014 |
||||||||||||
Cost of revenue |
$ | (169,659,283 | ) | $ | (6,186 | ) | $ | (169,665,469 | ) | |||
Operating expense |
(38,126,750 | ) | (3,307 | ) | (38,130,057 | ) | ||||||
Share of the profit or loss of associates and joint ventures |
2,003,006 | 428 | 2,003,434 | |||||||||
Income tax expense |
(19,894,327 | ) | 1,139 | (19,893,188 | ) | |||||||
|
|
|||||||||||
Impact on net income for the period |
$ | (7,926 | ) | |||||||||
|
|
|||||||||||
Impact on net income attributable to: |
||||||||||||
Shareholders of the parent |
$ | 107,573,029 | $ | (7,933 | ) | $ | 107,565,096 | |||||
Noncontrolling interests |
(67,394 | ) | 7 | (67,387 | ) | |||||||
|
|
|
|
|
|
|||||||
$ | 107,505,635 | $ | (7,926 | ) | $ | 107,497,709 | ||||||
|
|
|
|
|
|
|||||||
Impact on total comprehensive income attributable to: |
||||||||||||
Shareholders of the parent |
$ | 106,888,320 | $ | (7,933 | ) | $ | 106,880,387 | |||||
Noncontrolling interests |
(67,191 | ) | 7 | (67,184 | ) | |||||||
|
|
|
|
|
|
|||||||
$ | 106,821,129 | $ | (7,926 | ) | $ | 106,813,203 | ||||||
|
|
|
|
|
|
(Concluded)
b. | The IFRSs issued by IASB but not endorsed by FSC |
The Company has not applied the following IFRSs issued by the IASB but not endorsed by the FSC. As of the date that the consolidated financial statements were issued, the initial adoption to the following standards and interpretations is still subject to the effective date to be published by the FSC.
New, Revised or Amended Standards and Interpretations |
Effective Date Issued by IASB (Note 1) | |
Annual Improvements to IFRSs 2010 - 2012 Cycle |
July 1, 2014 or transactions on or after July 1, 2014 | |
Annual Improvements to IFRSs 2011 - 2013 Cycle |
July 1, 2014 | |
Annual Improvements to IFRSs 2012 - 2014 Cycle |
January 1, 2016 (Note 2) | |
IFRS 9 Financial Instruments |
January 1, 2018 | |
Amendments to IFRS 9 and IFRS 7 Mandatory Effective Date of IFRS 9 and Transition Disclosure |
January 1, 2018 | |
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture |
Prospectively applicable to transactions beginning on or after January 1, 2016 | |
Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception |
January 1, 2016 | |
Amendment to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations |
January 1, 2016 |
(Continued)
- 12 -
New, Revised or Amended Standards and Interpretations |
Effective Date Issued by IASB (Note 1) | |
IFRS 15 Revenue from Contracts with Customers |
January 1, 2017 | |
Amendment to IAS 1 Disclosure Initiative |
January 1, 2016 | |
Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortization |
January 1, 2016 | |
Amendment to IAS 19 Defined Benefit Plans: Employee Contributions |
July 1, 2014 | |
Amendment to IAS 27 Equity Method in Separate Financial Statements |
January 1, 2016 | |
Amendment to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets |
January 1, 2014 | |
Amendment to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting |
January 1, 2014 |
(Concluded)
Note 1: | The aforementioned new, revised or amended standards or interpretations are effective after fiscal year beginning on or after the effective dates, unless specified otherwise. |
Note 2: | The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that occur in annual periods beginning on or after January 1, 2016; the remaining amendments are effective for annual periods beginning on or after January 1, 2016. |
Except for the following, the initial application of the above new standards and interpretations has not had any material impact on the Companys accounting policies:
1) | IFRS 9, Financial Instruments |
All recognized financial assets currently in the scope of IAS 39, Financial Instruments: Recognition and Measurement, will be subsequently measured at either the amortized cost or the fair value. The classification and measurement requirements in IFRS 9 are stated as follows:
For the debt instruments invested by the Company, if the contractual cash flows that are solely for payments of principal and interest on the principal amount outstanding, the classification and measurement requirements are stated as follows:
a) | If the objective of the Companys business model is to hold the financial asset to collect the contractual cash flows, such assets are measured at the amortized cost. Interest revenue should be recognized in profit or loss by using the effective interest method, continuously assessed for impairment and the impairment loss or reversal of impairment loss should be recognized in profit and loss. |
b) | If the objective of the Companys business model is to hold the financial asset both to collect the contractual cash flows and to sell the financial assets, such assets are measured at fair value through other comprehensive income and are continuously assessed for impairment. Interest revenue should be recognized in profit or loss by using the effective interest method. A gain or loss on a financial asset measured at fair value through other comprehensive income should be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When such financial asset is derecognized or reclassified, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. |
The other financial assets which do not meet the aforementioned criteria should be measured at the fair value through profit or loss. However, the Company may irrevocably designate an investment in equity instruments that is not held for trading as measured at fair value through other comprehensive income. All relevant gains and losses shall be recognized in other comprehensive income, except for dividends which are recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative gain or loss previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss.
- 13 -
IFRS 9 adds a new expected loss impairment model to measure the impairment of financial assets. A loss allowance for expected credit losses should be recognized on financial assets measured at amortized cost and financial assets mandatorily measured at fair value through other comprehensive income. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company should measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. If the credit risk on a financial instrument has increased significantly since initial recognition and is not deemed to be a low credit risk, the Company should measure the loss allowance for that financial instrument at an amount equal to the lifetime expected credit losses. The Company should always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables.
The main change in IFRS 9 is the increase of the eligibility of hedge accounting. It allows reporters to reflect risk management activities in the financial statements more closely as it provides more opportunities to apply hedge accounting. A fundamental difference to IAS 39 is that IFRS 9 (a) increases the scope of hedged items eligible for hedge accounting. For example, the risk components of non-financial items may be designated as hedging accounting; (b) revises a new way to account for the gain or loss recognition arising from hedging derivative financial instruments, which results in a less volatility in profit or loss; and (c) is necessary for there to be an economic relationship between the hedged item and hedging instrument instead of performing the retrospective hedge effectiveness testing.
2) | IFRS 15, Revenue from Contracts with Customers |
IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and will supersede IAS 18, Revenue, IAS 11, Construction Contracts, and a number of revenue-related interpretations.
When applying IFRS 15, the Company shall recognize revenue by applying the following steps:
| Identify the contract with the customer; |
| Identify the performance obligations in the contract; |
| Determine the transaction price; |
| Allocate the transaction price to the performance obligations in the contracts; and |
| Recognize revenue when the entity satisfies a performance obligation. |
When IFRS 15 is effective, the Company may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this Standard recognized at the date of initial application.
3) | Amendments to IAS 36, Recoverable Amount Disclosures for Non-Financial Assets |
The amendments to IAS 36 clarify that the Company is only required to disclose the recoverable amount in the period of impairment accrual or reversal. Moreover, if the recoverable amount of impaired assets is based on fair value less costs of disposal, the Company should also disclose the discount rate used. The Company expects the aforementioned amendments will result in a broader disclosure of recoverable amount for non-financial assets.
Except for the aforementioned impact, as of the date that the accompanying consolidated financial statements were issued, the Company continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the other standards or interpretations. The related impact will be disclosed when the Company completes the evaluation.
- 14 -
4. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Except for the following, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2014.
For the convenience of readers, the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the R.O.C. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language consolidated financial statements shall prevail.
Statement of Compliance
The accompanying consolidated financial statements have been prepared in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and IAS 34, Interim Financial Reporting, endorsed by the FSC. The consolidated financial statements do not present all the disclosures required for a complete set of annual consolidated financial statements prepared under Taiwan-IFRSs.
Basis of Consolidation
The basis for the consolidated financial statements
The basis for the consolidated financial statements applied in these consolidated financial statements is consistent with those applied in the consolidated financial statements for the year ended December 31, 2014.
The subsidiaries in the consolidated financial statements
The detail information of the subsidiaries at the end of reporting period was as follows:
Establishment | Percentage of Ownership | |||||||||||||||||||
Name of Investor | Name of Investee | Main Businesses and Products | and Operating Location |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
Note | |||||||||||||
TSMC |
TSMC North America |
Selling and marketing of integrated circuits and semiconductor devices |
San Jose, California, U.S.A. |
100 | % | 100 | % | 100 | % | | ||||||||||
TSMC Japan Limited (TSMC Japan) |
Marketing activities |
Yokohama, Japan |
100 | % | 100 | % | 100 | % | a) | |||||||||||
TSMC Partners, Ltd. (TSMC Partners) |
Investing in companies involved in the design, manufacture, and other related business in the semiconductor industry |
Tortola, British Virgin Islands |
100 | % | 100 | % | 100 | % | a) | |||||||||||
TSMC Korea Limited (TSMC Korea) |
Customer service and technical supporting activities |
Seoul, Korea |
100 | % | 100 | % | 100 | % | a) | |||||||||||
TSMC Europe B.V. (TSMC Europe) |
Marketing and engineering supporting activities |
Amsterdam, the Netherlands |
100 | % | 100 | % | 100 | % | a) | |||||||||||
TSMC Global, Ltd. (TSMC Global) |
Investment activities |
Tortola, British Virgin Islands |
100 | % | 100 | % | 100 | % | | |||||||||||
TSMC China Company Limited (TSMC China) |
Manufacturing and selling of integrated circuits at the order of and pursuant to product design specifications provided by customers |
Shanghai, China |
100 | % | 100 | % | 100 | % | | |||||||||||
VentureTech Alliance Fund III, L.P. (VTAF III) |
Investing in new start-up technology companies |
Cayman Islands |
98 | % | 98 | % | 98 | % | a) | |||||||||||
VentureTech Alliance Fund II, L.P. (VTAF II) |
Investing in new start-up technology companies |
Cayman Islands |
98 | % | 98 | % | 98 | % | a) | |||||||||||
Emerging Alliance Fund, L.P. (Emerging Alliance) |
Investing in new start-up technology companies |
Cayman Islands |
99.5 | % | 99.5 | % | 99.5 | % | a) | |||||||||||
TSMC Solid State Lighting Ltd. (TSMC SSL) |
Engaged in researching, developing, designing, manufacturing and selling solid state lighting devices and related applications products and systems |
Hsin-Chu, Taiwan |
| 92 | % | 92 | % | b) |
(Continued)
- 15 -
Establishment | Percentage of Ownership | |||||||||||||||||||
Name of Investor | Name of Investee | Main Businesses and Products | and Operating Location |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
Note | |||||||||||||
TSMC |
TSMC Solar Ltd. (TSMC Solar) |
Engaged in researching, developing, designing, manufacturing and selling renewable energy and saving related technologies and products |
Tai-Chung, Taiwan |
99 | % | 99 | % | 99 | % | TSMC and TSMC GN aggregately have a 99.8% controlling interest of in TSMC Solar. | ||||||||||
TSMC Guang Neng Investment, Ltd. (TSMC GN) |
Investment activities |
Taipei, Taiwan |
100 | % | 100 | % | 100 | % | a) | |||||||||||
TSMC Partners |
TSMC Design Technology Canada Inc. (TSMC Canada) |
Engineering support activities |
Ontario, Canada |
100 | % | 100 | % | 100 | % | a) | ||||||||||
TSMC Technology, Inc. (TSMC Technology) |
Engineering support activities |
Delaware, U.S.A. |
100 | % | 100 | % | 100 | % | a) | |||||||||||
TSMC Development, Inc. (TSMC Development) |
Investment activities |
Delaware, U.S.A. |
100 | % | 100 | % | 100 | % | | |||||||||||
InveStar Semiconductor Development Fund, Inc. (ISDF) |
Investing in new start-up technology companies |
Cayman Islands |
97 | % | 97 | % | 97 | % | a) | |||||||||||
InveStar Semiconductor Development Fund, Inc. (II) LDC. (ISDF II) |
Investing in new start-up technology companies |
Cayman Islands |
97 | % | 97 | % | 97 | % | a) | |||||||||||
TSMC Development |
WaferTech, LLC (WaferTech) |
Manufacturing, selling, testing and computer-aided designing of integrated circuits and other semiconductor devices |
Washington, U.S.A. |
100 | % | 100 | % | 100 | % | | ||||||||||
VTAF III |
Mutual-Pak Technology Co., Ltd. (Mutual-Pak) |
Manufacturing and selling of electronic parts and researching, developing, and testing of RFID |
New Taipei, Taiwan |
58 | % | 58 | % | 58 | % | a) | ||||||||||
Growth Fund Limited (Growth Fund) |
Investing in new start-up technology companies |
Cayman Islands |
100 | % | 100 | % | 100 | % | a) | |||||||||||
VTAF III, VTAF II and Emerging Alliance |
VentureTech Alliance Holdings, LLC (VTA Holdings) |
Investing in new start-up technology companies |
Delaware, U.S.A. |
100 | % | 100 | % | 100 | % | a) | ||||||||||
TSMC SSL |
TSMC Lighting North America, Inc. (TSMC Lighting NA) |
Selling and marketing of solid state lighting related products |
Delaware, U.S.A. |
| | 100 | % | a), c) | ||||||||||||
TSMC Solar |
TSMC Solar North America, Inc. (TSMC Solar NA) |
Selling and marketing of solar related products |
Delaware, U.S.A. |
100 | % | 100 | % | 100 | % | a) | ||||||||||
TSMC Solar Europe B.V. (TSMC Solar Europe) |
Investing in solar related business |
Amsterdam, the Netherlands |
| 100 | % | 100 | % | a), d) | ||||||||||||
TSMC Solar Europe GmbH |
Selling of solar related products and providing customer service |
Hamburg, Germany |
100 | % | | | a), d) | |||||||||||||
TSMC Solar Europe |
TSMC Solar Europe GmbH |
Selling of solar related products and providing customer service |
Hamburg, Germany |
| 100 | % | 100 | % | a), d) |
(Concluded)
Note a: | This is an immaterial subsidiary for which the consolidated financial statements are not reviewed by the Companys independent accountants. |
Note b: | TSMC and TSMC GN aggregately have a controlling interest of 94% in TSMC SSL as of December 31, 2014 and June 30, 2014. TSMC and TSMC GN have completed the disposal of TSMC SSL in February 2015. Please refer to Note 30. |
Note c: | To simplify overseas investment structure, in the second quarter of 2014, the Board of Directors of TSMC SSL approved to file for the liquidation of TSMC Lighting NA. The liquidation procedure has been completed in the third quarter of 2014. |
Note d: | To simplify overseas investments structure, in the second quarter of 2014, the Board of Directors of TSMC Solar approved to file for the liquidation of TSMC Solar Europe After the liquidation, TSMC Solar Europe GmbH, the 100% owned subsidiary of TSMC Solar Europe, will be held directly by TSMC Solar. The liquidation procedure has been completed in the second quarter of 2015. |
Retirement Benefits
Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the Projected Unit Credit Method. Service cost (including current service cost), and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.
Net defined benefit liability (asset) represents the actual deficit (surplus) in the Companys defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.
Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year.
- 16 -
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax. The interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the pre-tax income of the interim period.
5. | CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY |
The same critical accounting judgments and key sources of estimates and uncertainty have been followed in these consolidated financial statements as were applied in the preparation of the Companys consolidated financial statements for the year ended December 31, 2014.
6. | CASH AND CASH EQUIVALENTS |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Cash and deposits in banks |
$ | 522,994,073 | $ | 352,761,240 | $ | 243,638,487 | ||||||
Repurchase agreements collateralized by corporate bonds |
4,155,782 | 3,920,562 | 3,613,365 | |||||||||
Repurchase agreements collateralized by short-term commercial paper |
898,859 | 449,180 | 1,708,393 | |||||||||
Repurchase agreements collateralized by government bonds |
546,526 | 158,722 | 1,056,695 | |||||||||
Commercial paper |
299,867 | 1,159,325 | 5,036,633 | |||||||||
|
|
|
|
|
|
|||||||
$ | 528,895,107 | $ | 358,449,029 | $ | 255,053,573 | |||||||
|
|
|
|
|
|
Deposits in banks consisted of highly liquid time deposits that were readily convertible to known amounts of cash and were subject to an insignificant risk of changes in value.
7. | FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Derivative financial assets |
||||||||||||
Forward exchange contracts |
$ | 31,580 | $ | 73,117 | $ | 63,907 | ||||||
Cross currency swap contracts |
26,955 | 118,928 | 94,358 | |||||||||
|
|
|
|
|
|
|||||||
$ | 58,535 | $ | 192,045 | $ | 158,265 | |||||||
|
|
|
|
|
|
|||||||
Derivative financial liabilities |
||||||||||||
Forward exchange contracts |
$ | 780,721 | $ | 126,607 | $ | 8,667 | ||||||
Cross currency swap contracts |
| 359,607 | 10,751 | |||||||||
|
|
|
|
|
|
|||||||
$ | 780,721 | $ | 486,214 | $ | 19,418 | |||||||
|
|
|
|
|
|
- 17 -
The Company entered into derivative contracts to manage exposures due to fluctuations of foreign exchange rates. The derivative contracts entered into by the Company did not meet the criteria for hedge accounting. Therefore, the Company did not apply hedge accounting treatment for derivative contracts.
Outstanding forward exchange contracts consisted of the following:
Contract Amount | ||||
Maturity Date | (In Thousands) | |||
June 30, 2015 |
||||
Sell EUR/Buy US$ |
July 2015 | EUR3,400/US$3,834 | ||
Sell NT$/Buy US$ |
July 2015 | NT$1,868,845/US$60,500 | ||
Sell US$/Buy EUR |
July 2015 | US$10,153/EUR9,079 | ||
Sell US$/Buy JPY |
July 2015 | US$40,000/JPY4,947,990 | ||
Sell US$/Buy NT$ |
July 2015 to August 2015 | US$2,345,000/NT$72,072,355 | ||
Sell US$/Buy RMB |
July 2015 | US$90,000/RMB559,832 | ||
December 31, 2014 |
||||
Sell EUR/Buy US$ |
January 2015 | EUR4,550/US$5,561 | ||
Sell NT$/Buy US$ |
January 2015 | NT$1,632,401/US$51,900 | ||
Sell US$/Buy EUR |
January 2015 | US$29,450/EUR24,100 | ||
Sell US$/Buy JPY |
January 2015 | US$226,003/JPY27,150,983 | ||
Sell US$/Buy NT$ |
January 2015 | US$170,000/NT$5,276,500 | ||
Sell US$/Buy RMB |
January 2015 | US$181,000/RMB1,129,243 | ||
June 30, 2014 |
||||
Sell EUR/Buy US$ |
July 2014 | EUR2,130/ US$2,900 | ||
Sell NT$/Buy JPY |
July 2014 | NT$190,637/JPY650,000 | ||
Sell NT$/Buy US$ |
July 2014 | NT$1,291,583/ US$43,100 | ||
Sell US$/Buy EUR |
July 2014 | US$81,794/EUR60,000 | ||
Sell US$/Buy JPY |
July 2014 | US$407,388/JPY41,429,419 | ||
Sell US$/Buy NT$ |
July 2014 | US$60,000/NT$1,801,440 | ||
Sell US$/Buy RMB |
July 2014 to August 2014 | US$132,000/RMB823,267 |
Outstanding cross currency swap contracts consisted of the following:
Maturity Date | Contract Amount (In Thousands) |
Range of Interest Rates |
Range of Interest Rates | |||
June 30, 2015 |
||||||
July 2015 |
NT$3,033,613/US$98,500 | | 0.10% | |||
December 31, 2014 |
||||||
January 2015 |
NT$2,511,905/US$80,080 | | 0.05%-0.13% | |||
January 2015 |
US$1,460,000/NT$45,974,755 | 0.16%-1.92% | | |||
June 30, 2014 |
||||||
July 2014 |
NT$2,461,848/US$82,080 | | 0.20%-0.48% | |||
July 2014 to August 2014 |
US$870,000/NT$26,093,255 | 0.25%-1.92% | |
- 18 -
8. | AVAILABLE-FOR-SALE FINANCIAL ASSETS |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Publicly traded stocks |
$ | 14,216,491 | $ | 73,797,085 | $ | 59,082,115 | ||||||
Money market funds |
383 | 391 | 367 | |||||||||
|
|
|
|
|
|
|||||||
$ | 14,216,874 | $ | 73,797,476 | $ | 59,082,482 | |||||||
|
|
|
|
|
|
In the second quarter of 2014, the Company reclassified some publicly traded stocks from non-current asset to current asset since the lock-up period will end within a year.
9. | HELD-TO-MATURITY FINANCIAL ASSETS |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Commercial paper |
$ | 7,180,351 | $ | 4,485,593 | $ | 299,230 | ||||||
|
|
|
|
|
|
10. | HEDGING DERIVATIVE FINANCIAL INSTRUMENTS |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Financial liabilities- current |
||||||||||||
Fair value hedges |
||||||||||||
Stock forward contracts |
$ | 2,625,763 | $ | 16,364,241 | $ | 4,282,501 | ||||||
|
|
|
|
|
|
|||||||
Financial liabilities- noncurrent |
||||||||||||
Fair value hedges |
||||||||||||
Stock forward contracts |
$ | | $ | | $ | 1,277,058 | ||||||
|
|
|
|
|
|
The Companys investments in publicly traded stocks are exposed to the risk of market price fluctuations. Accordingly, the Company entered into stock forward contracts to sell shares at a contracted price determined by specific percentage of the spot price on the trade date in a specific future period in order to hedge the fair value risk caused by changes in equity prices.
The outstanding stock forward contracts consisted of the following:
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Contract amount (US$ in thousands) |
$ | 10,575,328 | $ | 56,172,570 | $ | 52,874,969 | ||||||
(US$ | 340,371 | ) | (US$ | 1,771,000 | ) | (US$ | 1,771,000 | ) |
- 19 -
11. | NOTES AND ACCOUNTS RECEIVABLE, NET |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Notes and accounts receivable |
$ | 99,479,058 | $ | 115,221,473 | $ | 86,911,018 | ||||||
Allowance for doubtful receivables |
(486,704 | ) | (486,730 | ) | (486,590 | ) | ||||||
|
|
|
|
|
|
|||||||
Notes and accounts receivable, net |
$ | 98,992,354 | $ | 114,734,743 | $ | 86,424,428 | ||||||
|
|
|
|
|
|
In principle, the payment term granted to customers is due 30 days from the invoice date or 30 days from the end of the month of when the invoice is issued. The allowance for doubtful receivables is assessed by reference to the collectability of receivables by performing the account aging analysis, historical experience and current financial condition of customers.
Except for those impaired, for the rest of the notes and accounts receivable, the account aging analysis at the end of the reporting period is summarized in the following table. Notes and accounts receivable include amounts that are past due but for which the Company has not recognized a specific allowance for doubtful receivables after the assessment since there has not been a significant change in the credit quality of its customers and the amounts are still considered recoverable.
Aging analysis of notes and accounts receivable, net
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Neither past due nor impaired |
$ | 84,924,664 | $ | 102,692,871 | $ | 78,140,966 | ||||||
Past due but not impaired |
||||||||||||
Past due within 30 days |
12,393,941 | 12,041,872 | 8,283,462 | |||||||||
Past due 31-60 days |
1,466,102 | | | |||||||||
Past due 61-120 days |
207,647 | | | |||||||||
|
|
|
|
|
|
|||||||
$ | 98,992,354 | $ | 114,734,743 | $ | 86,424,428 | |||||||
|
|
|
|
|
|
Movements of the allowance for doubtful receivables
Individually Assessed for Impairment |
Collectively Assessed for Impairment |
Total | ||||||||||
Balance at January 1, 2015 |
$ | 8,093 | $ | 478,637 | $ | 486,730 | ||||||
Provision |
10,861 | 597 | 11,458 | |||||||||
Reversal |
| (11,383 | ) | (11,383 | ) | |||||||
Effect of exchange rate changes |
| (101 | ) | (101 | ) | |||||||
|
|
|
|
|
|
|||||||
Balance at June 30, 2015 |
$ | 18,954 | $ | 467,750 | $ | 486,704 | ||||||
|
|
|
|
|
|
|||||||
Balance at January 1, 2014 |
$ | 8,058 | $ | 478,530 | $ | 486,588 | ||||||
Provision |
17,220 | 4,495 | 21,715 | |||||||||
Reversal |
| (21,715 | ) | (21,715 | ) | |||||||
Effect of exchange rate changes |
| 2 | 2 | |||||||||
|
|
|
|
|
|
|||||||
Balance at June 30, 2014 |
$ | 25,278 | $ | 461,312 | $ | 486,590 | ||||||
|
|
|
|
|
|
- 20 -
Aging analysis of accounts receivable that is individually determined as impaired
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Not past due |
$ | 4,984 | $ | | $ | | ||||||
Past due 1-30 days |
4,387 | | 17,326 | |||||||||
Past due 31-60 days |
1,656 | | 334 | |||||||||
Past due over 121 days |
7,927 | 8,093 | 7,618 | |||||||||
|
|
|
|
|
|
|||||||
$ | 18,954 | $ | 8,093 | $ | 25,278 | |||||||
|
|
|
|
|
|
12. | INVENTORIES |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Finished goods |
$ | 14,418,570 | $ | 9,972,024 | $ | 5,379,673 | ||||||
Work in process |
45,538,445 | 51,027,892 | 40,510,250 | |||||||||
Raw materials |
4,146,095 | 3,222,523 | 3,152,079 | |||||||||
Supplies and spare parts |
2,175,487 | 2,115,532 | 1,912,263 | |||||||||
|
|
|
|
|
|
|||||||
$ | 66,278,597 | $ | 66,337,971 | $ | 50,954,265 | |||||||
|
|
|
|
|
|
Write-down of inventories to net realizable value or reversal of the reserve for inventory write-downs resulting from the increase in net realizable value was included in the cost of revenue, which were as follows:
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Inventory losses |
$ | (401,637 | ) | $ | 933,574 | $ | 1,367,721 | $ | 1,523,608 | |||||||
|
|
|
|
|
|
|
|
13. | FINANCIAL ASSETS CARRIED AT COST |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Non-publicly traded stocks |
$ | 1,580,737 | $ | 1,606,659 | $ | 1,736,734 | ||||||
Mutual funds |
277,639 | 193,883 | 280,794 | |||||||||
|
|
|
|
|
|
|||||||
$ | 1,858,376 | $ | 1,800,542 | $ | 2,017,528 | |||||||
|
|
|
|
|
|
Since there is a wide range of estimated fair values of the Companys investments in non-publicly traded stocks, the Company concludes that the fair value cannot be reliably measured and therefore should be measured at the cost less any impairment.
The common stock of Alchip Technologies, Ltd. was listed on the Taiwan Stock Exchange Corporation in October 2014. Thus, the Company reclassified the aforementioned investments from financial assets carried at cost to available-for-sale financial assets.
- 21 -
14. | INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD |
Investments accounted for using the equity method consisted of the following:
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Associates |
$ | 22,446,195 | $ | 24,968,071 | $ | 22,790,705 | ||||||
Joint venture |
3,469,013 | 3,287,666 | 3,570,515 | |||||||||
|
|
|
|
|
|
|||||||
$ | 25,915,208 | $ | 28,255,737 | $ | 26,361,220 | |||||||
|
|
|
|
|
|
a. | Investments in associates |
Associates consisted of the following:
Place of Incorporation |
Carrying Amount | % of Ownership and Voting Rights Held by the Company |
||||||||||||||||||||||||||
Name of Associate | Principal Activities |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
|||||||||||||||||||||
Vanguard International Semiconductor Corporation (VIS) |
Research, design, development, manufacture, packaging, testing and sale of memory integrated circuits, LSI, VLSI and related parts |
Hsinchu, Taiwan | $ | 8,196,482 | $ | 10,105,485 | $ | 9,210,729 | 28 | % | 33 | % | 33 | % | ||||||||||||||
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC) |
Fabrication and supply of integrated circuits |
Singapore | 7,831,408 | 8,296,955 | 6,940,820 | 39 | % | 39 | % | 39 | % | |||||||||||||||||
Motech Industries, Inc. (Motech) |
Manufacturing and sales of solar cells, crystalline silicon solar cell, and test and measurement instruments and design and construction of solar power systems |
New Taipei, Taiwan | 3,154,231 | 3,408,945 | 3,741,837 | 18 | % | 20 | % | 20 | % | |||||||||||||||||
Xintec Inc. (Xintec) |
Wafer level chip size packaging service |
Taoyuan, Taiwan | 2,250,809 | 2,053,982 | 1,875,214 | 35 | % | 40 | % | 40 | % | |||||||||||||||||
Global Unichip Corporation (GUC) |
Researching, developing, manufacturing, testing and marketing of integrated circuits |
Hsinchu, Taiwan | 1,013,265 | 1,102,704 | 1,022,105 | 35 | % | 35 | % | 35 | % | |||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||
$ | 22,446,195 | $ | 24,968,071 | $ | 22,790,705 | |||||||||||||||||||||||
|
|
|
|
|
|
In March 2015, Xintec listed its shares on the R.O.C. Over-the-Counter (Taipei Exchange). Consequently, TSMCs percentage of ownership over Xintec was diluted to approximately 35.4%. In April 2015, TSMC sold 2,172 thousand common shares of Xintec and recognized a disposal gain of NT$43,017 thousand in the second quarter of 2015. After the sale, TSMC owned approximately 34.6% of the equity interest in Xintec.
In both of the second quarters of 2015 and 2014, the Company sold 82,000 thousand common shares of VIS and respectively recognized a disposal gain of NT$2,263,539 thousand and NT$2,028,643 thousand. After the sale, the Company owned approximately 28.3% and 33.7% of the equity interest in VIS.
In June 2015, Motech merged with Tpcell Solar International Co., Ltd (TSi) with exchange of shares. As a result, the Companys percentage of ownership over Motech decreased to 18.0%. Motech continues to be accounted for using equity method as the Company still retains significant influence over Motech.
- 22 -
The market prices of the investments accounted for using the equity method in publicly traded stocks calculated by the closing price at the end of the reporting period are summarized as follow. The closing price represents the quoted price in active markets, the level 1 fair value measurement.
Name of Associate | June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
|||||||||
VIS |
$ | 22,932,641 | $ | 28,567,489 | $ | 26,191,416 | ||||||
|
|
|
|
|
|
|||||||
Motech |
$ | 3,201,760 | $ | 4,242,769 | $ | 4,172,786 | ||||||
|
|
|
|
|
|
|||||||
GUC |
$ | 3,571,621 | $ | 4,327,965 | $ | 4,341,971 | ||||||
|
|
|
|
|
|
|||||||
Xintec |
$ | 4,082,245 | ||||||||||
|
|
b. | Investments in joint venture |
Joint venture consisted of the following:
Place of Incorporation |
Carrying Amount | % of Ownership and Voting Rights Held by the Company |
||||||||||||||||||||||||||
Name of Joint Venture | Principal Activities |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
|||||||||||||||||||||
VisEra Holding Company (VisEra Holding) |
Investing in companies involved in the design, manufacturing and other related businesses in the semiconductor industry |
Cayman Islands |
$ | 3,469,013 | $ 3,287,666 | $ | 3,570,515 | 49 | % | 49 | % | 49 | % |
In August 2015, the Board of Directors of TSMC approved the acquisition of OmniVision Technologies, Inc.s (OVTs) 49.1% ownership in VisEra Holding and 100% ownership in Taiwan OmniVision Investment Holding Co. Inc., at an amount not more than US$126 million. The acquisition of shares is conditional on related governments (including the Unites States) approving a Chinese consortiums acquisition of OVT.
15. | PROPERTY, PLANT AND EQUIPMENT |
Land and Land Improvements |
Buildings | Machinery and Equipment |
Office Equipment | Assets under Finance Leases |
Equipment under Installation and Construction in Progress |
Total | ||||||||||||||||||||||
Cost |
||||||||||||||||||||||||||||
Balance at January 1, 2015 |
$ | 4,036,785 | $ | 269,163,850 | $ | 1,754,170,227 | $ | 27,960,835 | $ | 841,154 | $ | 109,334,736 | $ | 2,165,507,587 | ||||||||||||||
Additions |
| 4,968,013 | 77,365,235 | 1,628,622 | | 36,568,389 | 120,530,259 | |||||||||||||||||||||
Disposals or retirements |
| | (949,684 | ) | (709,966 | ) | | | (1,659,650 | ) | ||||||||||||||||||
Effect of exchange rate changes |
(16,849 | ) | (460,203 | ) | (1,096,526 | ) | (58,461 | ) | (16,785 | ) | (69,523 | ) | (1,718,347 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at June 30, 2015 |
$ | 4,019,936 | $ | 273,671,660 | $ | 1,829,489,252 | $ | 28,821,030 | $ | 824,369 | $ | 145,833,602 | $ | 2,282,659,849 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Accumulated depreciation and impairment |
||||||||||||||||||||||||||||
Balance at January 1, 2015 |
$ | 459,140 | $ | 141,245,913 | $ | 1,188,388,402 | $ | 16,767,934 | $ | 447,397 | $ | | $ | 1,347,308,786 | ||||||||||||||
Additions |
14,224 | 7,833,137 | 98,831,428 | 1,844,552 | 21,455 | | 108,544,796 | |||||||||||||||||||||
Disposals or retirements |
| | (912,589 | ) | (666,231 | ) | | | (1,578,820 | ) | ||||||||||||||||||
Impairment |
| | 31,305 | | | | 31,305 | |||||||||||||||||||||
Effect of exchange rate changes |
(9,433 | ) | (325,663 | ) | (957,574 | ) | (47,778 | ) | (8,946 | ) | | (1,349,394 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at June 30, 2015 |
$ | 463,931 | $ | 148,753,387 | $ | 1,285,380,972 | $ | 17,898,477 | $ | 459,906 | $ | | $ | 1,452,956,673 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Carrying amounts at January 1, 2015 |
$ | 3,577,645 | $ | 127,917,937 | $ | 565,781,825 | $ | 11,192,901 | $ | 393,757 | $ | 109,334,736 | $ | 818,198,801 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Carrying amounts at June 30, 2015 |
$ | 3,556,005 | $ | 124,918,273 | $ | 544,108,280 | $ | 10,922,553 | $ | 364,463 | $ | 145,833,602 | $ | 829,703,176 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cost |
||||||||||||||||||||||||||||
Balance at January 1, 2014 |
$ | 3,986,909 | $ | 229,182,736 | $ | 1,413,919,794 | $ | 22,062,032 | $ | 804,430 | $ | 272,173,793 | $ | 1,942,129,694 | ||||||||||||||
Additions |
| 21,992,818 | 243,696,287 | 4,269,496 | | (138,669,929 | ) | 131,288,672 | ||||||||||||||||||||
Disposals or retirements |
| | (739,238 | ) | (426,337 | ) | | | (1,165,575 | ) | ||||||||||||||||||
Reclassification |
| (1,996 | ) | 1,996 | | | | | ||||||||||||||||||||
Effect of exchange rate changes |
1,457 | (224,902 | ) | (395,235 | ) | (8,766 | ) | (12,782 | ) | (2,013 | ) | (642,241 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at June 30, 2014 |
$ | 3,988,366 | $ | 250,948,656 | $ | 1,656,483,604 | $ | 25,896,425 | $ | 791,648 | $ | 133,501,851 | $ | 2,071,610,550 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Accumulated depreciation and impairment |
||||||||||||||||||||||||||||
Balance at January 1, 2014 |
$ | 404,192 | $ | 125,234,166 | $ | 1,009,213,689 | $ | 14,225,771 | $ | 385,963 | $ | | $ | 1,149,463,781 | ||||||||||||||
Additions |
13,767 | 7,328,768 | 77,587,232 | 1,387,716 | 20,960 | | 86,338,443 | |||||||||||||||||||||
Disposals or retirements |
| | (680,321 | ) | (426,259 | ) | | | (1,106,580 | ) | ||||||||||||||||||
Impairment |
| | 239,864 | | | | 239,864 | |||||||||||||||||||||
Reclassification |
| (532 | ) | 532 | | | | | ||||||||||||||||||||
Effect of exchange rate changes |
610 | (135,642 | ) | (343,389 | ) | (7,518 | ) | (6,445 | ) | | (492,384 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at June 30, 2014 |
$ | 418,569 | $ | 132,426,760 | $ | 1,086,017,607 | $ | 15,179,710 | $ | 400,478 | $ | | $ | 1,234,443,124 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Carrying amounts at June 30, 2014 |
$ | 3,569,797 | $ | 118,521,896 | $ | 570,465,997 | $ | 10,716,715 | $ | 391,170 | $ | 133,501,851 | $ | 837,167,426 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 23 -
The significant part of the Companys buildings includes main plants, mechanical and electrical power equipment and clean rooms, and the related depreciation is calculated using the estimated useful lives of 20 years, 10 years and 10 years, respectively.
In the second quarter of 2014, the Company recognized impairment losses of NT$239,864 thousand under other operating segments since the carrying amount of some of machinery and equipment was expected to be unrecoverable. Such impairment losses were included in other operating income and expenses for the six months ended June 30, 2014.
16. | INTANGIBLE ASSETS |
Goodwill | Technology License Fees |
Software and System Design Costs |
Patent and Others |
Total | ||||||||||||||||
Cost |
||||||||||||||||||||
Balance at January 1, 2015 |
$ | 5,888,813 | $ | 6,350,253 | $ | 18,697,098 | $ | 4,292,555 | $ | 35,228,719 | ||||||||||
Additions |
| 540,027 | 202,818 | 311,139 | 1,053,984 | |||||||||||||||
Retirements |
| | (91,578 | ) | | (91,578 | ) | |||||||||||||
Effect of exchange rate changes |
(88,279 | ) | (5,354 | ) | (3,165 | ) | (2,802 | ) | (99,600 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at June 30, 2015 |
$ | 5,800,534 | $ | 6,884,926 | $ | 18,805,173 | $ | 4,600,892 | $ | 36,091,525 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Accumulated amortization |
||||||||||||||||||||
Balance at January 1, 2015 |
$ | | $ | 3,778,912 | $ | 14,861,146 | $ | 3,057,151 | $ | 21,697,209 | ||||||||||
Additions |
| 445,742 | 830,478 | 280,087 | 1,556,307 | |||||||||||||||
Retirements |
| | (91,578 | ) | | (91,578 | ) | |||||||||||||
Effect of exchange rate changes |
| (5,354 | ) | (2,978 | ) | (588 | ) | (8,920 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at June 30, 2015 |
$ | | $ | 4,219,300 | $ | 15,597,068 | $ | 3,336,650 | $ | 23,153,018 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Carrying amounts at January 1, 2015 |
$ | 5,888,813 | $ | 2,571,341 | $ | 3,835,952 | $ | 1,235,404 | $ | 13,531,510 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Carrying amounts at June 30, 2015 |
$ | 5,800,534 | $ | 2,665,626 | $ | 3,208,105 | $ | 1,264,242 | $ | 12,938,507 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cost |
||||||||||||||||||||
Balance at January 1, 2014 |
$ | 5,627,517 | $ | 4,444,828 | $ | 17,086,805 | $ | 3,729,396 | $ | 30,888,546 | ||||||||||
Additions |
| 501,134 | 74,638 | 624,465 | 1,200,237 | |||||||||||||||
Retirements |
| | (23,315 | ) | | (23,315 | ) | |||||||||||||
Effect of exchange rate changes |
7,629 | | (2,070 | ) | (2,153 | ) | 3,406 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at June 30, 2014 |
$ | 5,635,146 | $ | 4,945,962 | $ | 17,136,058 | $ | 4,351,708 | $ | 32,068,874 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Accumulated amortization |
||||||||||||||||||||
Balance at January 1, 2014 |
$ | | $ | 3,341,667 | $ | 13,439,135 | $ | 2,617,361 | $ | 19,398,163 | ||||||||||
Additions |
| 207,843 | 731,718 | 323,487 | 1,263,048 | |||||||||||||||
Retirements |
| | (23,315 | ) | | (23,315 | ) | |||||||||||||
Effect of exchange rate changes |
| | (1,922 | ) | (407 | ) | (2,329 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at June 30, 2014 |
$ | | $ | 3,549,510 | $ | 14,145,616 | $ | 2,940,441 | $ | 20,635,567 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Carrying amounts at June 30, 2014 |
$ | 5,635,146 | $ | 1,396,452 | $ | 2,990,442 | $ | 1,411,267 | $ | 11,433,307 | ||||||||||
|
|
|
|
|
|
|
|
|
|
The Companys goodwill has been tested for impairment at the end of the annual reporting period and the recoverable amount is determined based on the value in use. The value in use was calculated based on the cash flow forecast from the financial budgets covering the future five-year period, and the Company used annual discount rate of 8.40% and 8.50% in its test of impairment as of December 31, 2014 and 2013, respectively, to reflect the relevant specific risk in the cash-generating unit.
- 24 -
17. | OTHER ASSETS |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Tax receivable |
$ | 1,795,457 | $ | 2,187,136 | $ | 1,835,877 | ||||||
Prepaid expenses |
1,171,189 | 1,399,810 | 1,120,915 | |||||||||
Long-term receivable |
347,000 | 385,700 | 652,000 | |||||||||
Others |
1,033,025 | 885,470 | 707,729 | |||||||||
|
|
|
|
|
|
|||||||
$ | 4,346,671 | $ | 4,858,116 | $ | 4,316,521 | |||||||
|
|
|
|
|
|
|||||||
Current portion |
$ | 3,028,691 | $ | 3,656,110 | $ | 2,931,372 | ||||||
Noncurrent portion |
1,317,980 | 1,202,006 | 1,385,149 | |||||||||
|
|
|
|
|
|
|||||||
$ | 4,346,671 | $ | 4,858,116 | $ | 4,316,521 | |||||||
|
|
|
|
|
|
18. | SHORT-TERM LOANS |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Unsecured loans |
||||||||||||
Amount |
$ | 5,592,600 | $ | 36,158,520 | $ | 34,705,206 | ||||||
|
|
|
|
|
|
|||||||
Original loan content |
||||||||||||
US$ (in thousands) |
$ | 180,000 | $ | 1,140,000 | $ | 1,101,000 | ||||||
EUR (in thousands) |
| | 45,000 | |||||||||
Annual interest rate |
0.38%-0.44% | 0.38%-0.50% | 0.38%-0.51% | |||||||||
Maturity date |
|
Due in July 2015 |
|
|
Due in January 2015 |
|
|
Due by August 2014 |
|
19. | PROVISIONS |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Sales returns and allowances |
$ | 8,593,075 | $ | 10,445,452 | $ | 7,709,195 | ||||||
Warranties |
16,756 | 19,828 | 14,741 | |||||||||
|
|
|
|
|
|
|||||||
$ | 8,609,831 | $ | 10,465,280 | $ | 7,723,936 | |||||||
|
|
|
|
|
|
|||||||
Current portion |
$ | 8,593,075 | $ | 10,445,452 | $ | 7,709,195 | ||||||
Noncurrent portion (classified under other noncurrent liabilities) |
16,756 | 19,828 | 14,741 | |||||||||
|
|
|
|
|
|
|||||||
$ | 8,609,831 | $ | 10,465,280 | $ | 7,723,936 | |||||||
|
|
|
|
|
|
- 25 -
Sales Returns and Allowances |
Warranties | Total | ||||||||||
Six months ended June 30, 2015 |
||||||||||||
Balance, beginning of period |
$ | 10,445,452 | $ | 19,828 | $ | 10,465,280 | ||||||
Provision |
6,353,637 | 6,071 | 6,359,708 | |||||||||
Payment |
(8,196,055 | ) | (8,399 | ) | (8,204,454 | ) | ||||||
Effect of exchange rate changes |
(9,959 | ) | (744 | ) | (10,703 | ) | ||||||
|
|
|
|
|
|
|||||||
Balance, end of period |
$ | 8,593,075 | $ | 16,756 | $ | 8,609,831 | ||||||
|
|
|
|
|
|
|||||||
Six months ended June 30, 2014 |
||||||||||||
Balance, beginning of period |
$ | 7,603,781 | $ | 10,452 | $ | 7,614,233 | ||||||
Provision |
3,504,209 | 5,549 | 3,509,758 | |||||||||
Payment |
(3,395,000 | ) | (1,194 | ) | (3,396,194 | ) | ||||||
Effect of exchange rate changes |
(3,795 | ) | (66 | ) | (3,861 | ) | ||||||
|
|
|
|
|
|
|||||||
Balance, end of period |
$ | 7,709,195 | $ | 14,741 | $ | 7,723,936 | ||||||
|
|
|
|
|
|
Provisions for sales returns and allowances are estimated based on historical experience, management judgment, and any known factors that would significantly affect the returns and allowances, and are recognized as a reduction of revenue in the same period of the related product sales.
The provision for warranties represents the present value of the Companys best estimate of the future outflow of the economic benefits that will be required under the Companys obligations for warranties. The estimate has been made on the basis of historical warranty trends of business and may vary as a result of new materials, altered manufacturing processes or other events affecting product quality.
20. | BONDS PAYABLE |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Domestic unsecured bonds |
$ | 166,200,000 | $ | 166,200,000 | $ | 166,200,000 | ||||||
Overseas unsecured bonds |
46,605,000 | 47,577,000 | 44,784,000 | |||||||||
|
|
|
|
|
|
|||||||
212,805,000 | 213,777,000 | 210,984,000 | ||||||||||
Less: Discounts on bonds payable |
(82,394 | ) | (103,182 | ) | (114,941 | ) | ||||||
Less: Current portion |
(10,865,822 | ) | | | ||||||||
|
|
|
|
|
|
|||||||
$ | 201,856,784 | $ | 213,673,818 | $ | 210,869,059 | |||||||
|
|
|
|
|
|
The major terms of overseas unsecured bonds are as follows:
Issuance Period | Total Amount in Thousands) |
Coupon Rate | Repayment and Interest Payment | |||||||
April 2013 to April 2016 |
$ | 350,000 | 0.95 | % | Bullet repayment; interest payable semi-annually | |||||
April 2013 to April 2018 |
1,150,000 | 1.625 | % | The same as above |
- 26 -
21. | GUARANTEE DEPOSITS |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Capacity guarantee |
$ | 28,351,375 | $ | 30,132,100 | $ | | ||||||
Others |
167,587 | 164,075 | 157,011 | |||||||||
|
|
|
|
|
|
|||||||
$ | 28,518,962 | $ | 30,296,175 | $ | 157,011 | |||||||
|
|
|
|
|
|
|||||||
Current portion (classified under accrued expenses and other current liabilities) |
$ | 6,602,375 | $ | 4,757,700 | $ | | ||||||
Noncurrent portion |
21,916,587 | 25,538,475 | 157,011 | |||||||||
|
|
|
|
|
|
|||||||
$ | 28,518,962 | $ | 30,296,175 | $ | 157,011 | |||||||
|
|
|
|
|
|
Some of guarantee deposits were refunded to customers by offsetting related accounts receivable during the three months ended June 30, 2015.
22. | EQUITY |
a. | Capital stock |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Authorized shares (in thousands) |
28,050,000 | 28,050,000 | 28,050,000 | |||||||||
|
|
|
|
|
|
|||||||
Authorized capital |
$ | 280,500,000 | $ | 280,500,000 | $ | 280,500,000 | ||||||
|
|
|
|
|
|
|||||||
Issued and paid shares (in thousands) |
25,930,380 | 25,929,662 | 25,929,375 | |||||||||
|
|
|
|
|
|
|||||||
Issued capital |
$ | 259,303,805 | $ | 259,296,624 | $ | 259,293,750 | ||||||
|
|
|
|
|
|
A holder of issued common shares with par value of NT$10 per share is entitled to vote and to receive dividends.
The authorized shares include 500,000 thousand shares allocated for the exercise of employee stock options.
As of June 30, 2015, 1,073,071 thousand ADSs of TSMC were traded on the NYSE. The number of common shares represented by the ADSs was 5,365,357 thousand shares (one ADS represents five common shares).
b. | Capital surplus |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Additional paid-in capital |
$ | 24,184,939 | $ | 24,053,965 | $ | 24,043,271 | ||||||
From merger |
22,804,510 | 22,804,510 | 22,804,510 | |||||||||
From convertible bonds |
8,892,847 | 8,892,847 | 8,892,847 | |||||||||
From share of changes in equities of subsidiaries |
78,464 | 104,335 | 81,093 | |||||||||
From share of changes in equities of associates and joint venture |
572,144 | 134,210 | 205,061 | |||||||||
Donations |
55 | 55 | 55 | |||||||||
|
|
|
|
|
|
|||||||
$ | 56,532,959 | $ | 55,989,922 | $ | 56,026,837 | |||||||
|
|
|
|
|
|
- 27 -
Under the Company Law, the capital surplus generated from donations and the excess of the issuance price over the par value of capital stock (including the stock issued for new capital, mergers, convertible bonds, the surplus from treasury stock transactions and the differences between equity purchase price and carrying amount arising from actual acquisition or disposal of subsidiaries) may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or stock dividends up to a certain percentage of TSMCs paid-in capital. The capital surplus from share of changes in equities of subsidiaries may be used to offset a deficit.
c. | Retained earnings and dividend policy |
TSMCs Articles of Incorporation provide that, when allocating the net profits for each fiscal year, TSMC shall first offset its losses in previous years and then set aside the following items accordingly:
1) | Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve equals TSMCs paid-in capital; |
2) | Special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge; |
3) | Bonus to directors and profit sharing to employees of TSMC of not more than 0.3% and not less than 1% of the remainder, respectively. Directors who also serve as executive officers of TSMC are not entitled to receive the bonus to directors. TSMC may issue profit sharing to employees in stock of an affiliated company meeting the conditions set by the Board of Directors or, by the person duly authorized by the Board of Directors; |
4) | Any balance left over shall be allocated according to the resolution of the shareholders meeting. |
TSMCs Articles of Incorporation also provide that profits of TSMC may be distributed by way of cash dividend and/or stock dividend. However, distribution of profits shall be made preferably by way of cash dividend. Distribution of profits may also be made by way of stock dividend; provided that the ratio for stock dividend shall not exceed 50% of the total distribution.
Any appropriations of the profits are subject to shareholders approval in the following year.
In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. Accordingly, the Company expects to make amendments to the Companys Articles of Incorporation to be approved during the 2016 annual shareholders meeting. For information about the accrual basis of employee remuneration or profit sharing to employees and bonus to directors for the three months ended June 30, 2015 and 2014, and the six months ended June 30, 2015 and 2014, and the actual appropriations for the years ended December 31, 2014 and 2013, please refer to Employee benefits expense in Note 29.
The appropriation for legal capital reserve shall be made until the reserve equals the Companys paid-in capital. The reserve may be used to offset a deficit, or be distributed as dividends in cash or stocks for the portion in excess of 25% of the paid-in capital if the Company incurs no loss.
Pursuant to existing regulations, the Company is required to set aside additional special capital reserve equivalent to the net debit balance of the other components of stockholders equity, such as the accumulated balance of foreign currency translation reserve, unrealized valuation gain/loss from available-for-sale financial assets, gain/loss from changes in fair value of hedging instruments in cash flow hedges, etc. For the subsequent decrease in the deduction amount to stockholders equity, any special reserve appropriated may be reversed to the extent that the net debit balance reverses.
- 28 -
The appropriations of 2014 and 2013 earnings have been approved by TSMCs shareholders in its meeting held on June 9, 2015 and on June 24, 2014, respectively. The appropriations and dividends per share were as follows:
Appropriation of Earnings | Dividends Per Share (NT$) |
|||||||||||||||
For Fiscal | For Fiscal | For Fiscal | For Fiscal | |||||||||||||
Year 2014 | Year 2013 | Year 2014 | Year 2013 | |||||||||||||
Legal capital reserve |
$ | 26,389,879 | $ | 18,814,679 | ||||||||||||
Special capital reserve |
| (2,785,741 | ) | |||||||||||||
Cash dividends to shareholders |
116,683,481 | 77,785,851 | $ | 4.50 | $ | 3.00 | ||||||||||
|
|
|
|
|||||||||||||
$ | 143,073,360 | $ | 93,814,789 | |||||||||||||
|
|
|
|
Under the Integrated Income Tax System that became effective on January 1, 1998, the R.O.C. resident shareholders are allowed a tax credit for their proportionate share of the income tax paid by TSMC on earnings generated since January 1, 1998.
d. | Others |
Changes in others were as follows:
Six months Ended June 30, 2015 | ||||||||||||||||
Foreign Currency Translation Reserve |
Unrealized Gain/Loss from Available-for- sale Financial Assets |
Cash Flow Hedges Reserve |
Total | |||||||||||||
Balance, beginning of period |
$ | 4,502,113 | $ | 21,247,483 | $ | (305 | ) | $ | 25,749,291 | |||||||
Exchange differences arising on translation of foreign operations |
(4,654,336 | ) | | | (4,654,336 | ) | ||||||||||
Changes in fair value of available-for-sale financial assets |
| (174,880 | ) | | (174,880 | ) | ||||||||||
Cumulative (gain)/loss reclassified to profit or loss upon disposal of available-for-sale financial assets |
(993,026 | ) | (16,649,252 | ) | | (17,642,278 | ) | |||||||||
Share of other comprehensive income of associates and joint venture |
43,487 | 544,976 | (175 | ) | 588,288 | |||||||||||
The proportionate share of other comprehensive income/losses reclassified to profit or loss upon partial disposal of associates |
4,356 | 2,051 | 11 | 6,418 | ||||||||||||
Income tax effect |
| (18,104 | ) | | (18,104 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of period |
$ | (1,097,406 | ) | $ | 4,952,274 | $ | (469 | ) | $ | 3,854,399 | ||||||
|
|
|
|
|
|
|
|
- 29 -
Six months Ended June 30, 2014 | ||||||||||||||||
Foreign Currency Translation Reserve |
Unrealized Gain/Loss from Available-for- sale Financial Assets |
Cash Flow Hedges Reserve |
Total | |||||||||||||
Balance, beginning of period |
$ | (7,140,362 | ) | $ | 21,310,781 | $ | (113 | ) | $ | 14,170,306 | ||||||
Exchange differences arising on translation of foreign operations |
(220,808 | ) | | | (220,808 | ) | ||||||||||
Changes in fair value of available-for-sale financial assets |
| (313,697 | ) | | (313,697 | ) | ||||||||||
Cumulative (gain)/loss reclassified to profit or loss upon disposal of available-for-sale financial assets |
| (133,160 | ) | | (133,160 | ) | ||||||||||
Share of other comprehensive income of associates and joint venture |
(5,872 | ) | (236 | ) | 90 | (6,018 | ) | |||||||||
The proportionate share of other comprehensive income/losses reclassified to profit or loss upon partial disposal of associates |
3,017 | (2,920 | ) | | 97 | |||||||||||
Income tax effect |
| (11,123 | ) | | (11,123 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of period |
$ | (7,364,025 | ) | $ | 20,849,645 | $ | (23 | ) | $ | 13,485,597 | ||||||
|
|
|
|
|
|
|
|
The exchange differences arising on translation of foreign operations net assets from its functional currency to TSMCs presentation currency are recognized directly in other comprehensive income and also accumulated in the foreign currency translation reserve.
Unrealized gain/loss on available-for-sale financial assets represents the cumulative gains or losses arising from the fair value measurement on available-for-sale financial assets that are recognized in other comprehensive income, excluding the amounts recognized in profit or loss for the effective portion from changes in fair value of the hedging instruments. When those available-for-sale financial assets have been disposed of or are determined to be impaired subsequently, the related cumulative gains or losses in other comprehensive income are reclassified to profit or loss.
The cash flow hedges reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of the hedging instruments entered into as cash flow hedges. The cumulative gains or losses arising on changes in fair value of the hedging instruments that are recognized and accumulated in cash flow hedges reserve will be reclassified to profit or loss only when the hedge transaction affects profit or loss.
- 30 -
e. | Noncontrolling interests |
Six months Ended June 30 | ||||||||
2015 | 2014 | |||||||
Balance, beginning of period |
$ | 127,221 | $ | 266,709 | ||||
Share of noncontrolling interests |
||||||||
Net loss |
(10,613 | ) | (67,387 | ) | ||||
Exchange differences arising on translation of foreign operations |
(564 | ) | 47 | |||||
Changes in fair value of available-for-sale financial assets |
(8,523 | ) | 1,116 | |||||
Cumulative (gain)/loss reclassified to profit or loss upon disposal of available-for-sale financial assets |
(89 | ) | (860 | ) | ||||
Share of other comprehensive income of associates and joint venture |
(899 | ) | (100 | ) | ||||
The proportionate share of other comprehensive income/losses reclassified to profit or loss upon partial disposal of associates |
3 | | ||||||
Adjustments to share of changes in equities of associates and joint venture |
126 | (66 | ) | |||||
From share of changes in equities of subsidiaries |
25,871 | 19,734 | ||||||
Decrease in noncontrolling interests |
(42,719 | ) | (45,527 | ) | ||||
Effect of disposal of subsidiary |
(42,640 | ) | | |||||
|
|
|
|
|||||
Balance, end of period |
$ | 47,174 | $ | 173,666 | ||||
|
|
|
|
23. | SHARE-BASED PAYMENT |
The Company did not issue employee stock option plans for six months ended June 30, 2015 and 2014. TSMC elected to take the optional exemption for its issued employee stock options from applying IFRS 2 Share-based Payment. The related information is as follows:
Number of Options (In Thousands) |
Weighted- average Exercise Price (NT$) |
|||||||
Six months ended June 30, 2015 |
||||||||
Balance, beginning of period |
718 | $ | 47.2 | |||||
Options exercised |
(718 | ) | 47.2 | |||||
|
|
|||||||
Balance, end of period |
| | ||||||
|
|
|||||||
Balance exercisable, end of period |
| | ||||||
|
|
|||||||
Six months ended June 30, 2014 |
||||||||
Balance, beginning of period |
1,763 | $ | 45.9 | |||||
Options exercised |
(758 | ) | 44.2 | |||||
|
|
|||||||
Balance, end of period |
1,005 | 47.2 | ||||||
|
|
|||||||
Balance exercisable, end of period |
1,005 | 47.2 | ||||||
|
|
The numbers of outstanding stock options and exercise prices have been adjusted to reflect the distribution of earnings by TSMC in accordance with the plans.
- 31 -
The employee stock options have been fully exercised in the second quarter of 2015.
Information about TSMCs outstanding stock options was as follows:
December 31, 2014 | June 30, 2014 | |||||||||||||
Range of Exercise Price (NT$) |
Weighted-average Remaining Contractual Life (Years) |
Range of Exercise Price (NT$) |
Weighted-average Remaining Contractual Life (Years) |
|||||||||||
$ | 47.2 | 0.4 | $ | 47.2 | 0.9 |
24. | NET REVENUE |
The analysis of the Companys net revenue was as follows:
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net revenue from sale of goods |
$ | 205,306,861 | $ | 182,882,159 | $ | 427,206,385 | $ | 330,879,781 | ||||||||
Net revenue from royalties |
132,891 | 138,325 | 267,511 | 355,875 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 205,439,752 | $ | 183,020,484 | $ | 427,473,896 | $ | 331,235,656 | |||||||||
|
|
|
|
|
|
|
|
25. | FINANCE COSTS |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Interest expense |
||||||||||||||||
Corporate bonds |
$ | 774,417 | $ | 770,126 | $ | 1,538,335 | $ | 1,540,103 | ||||||||
Bank loans |
4,003 | 26,379 | 28,958 | 48,007 | ||||||||||||
Finance leases |
4,922 | 4,841 | 9,929 | 9,810 | ||||||||||||
Others |
59 | 104 | 121 | 110 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 783,401 | $ | 801,450 | $ | 1,577,343 | $ | 1,598,030 | |||||||||
|
|
|
|
|
|
|
|
26. | OTHER GAINS AND LOSSES |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Gain on disposal of financial assets, net |
||||||||||||||||
Available-for-sale financial assets |
$ | 17,639,406 | $ | 113,033 | $ | 17,642,367 | $ | 134,020 | ||||||||
Financial assets carried at cost |
28,354 | 28,936 | 70,597 | 52,694 | ||||||||||||
Gain on disposal of investments accounted for using equity method |
2,305,323 | 2,028,643 | 2,305,323 | 2,028,643 | ||||||||||||
Other gains |
11,240 | 66,911 | 27,409 | 114,524 |
(Continued)
- 32 -
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net gain on financial instruments at FVTPL |
||||||||||||||||
Held for trading |
$ | 243,123 | $ | 450,728 | $ | 560,678 | $ | 554,838 | ||||||||
Fair value hedges |
||||||||||||||||
Loss from hedging instruments |
(5,329,381 | ) | (914,921 | ) | (737,305 | ) | (589,243 | ) | ||||||||
Gain arising from changes in fair value of available-for-sale financial assets in hedge effective portion |
4,901,475 | 406,070 | 299,191 | 78,109 | ||||||||||||
Other losses |
(21,718 | ) | (2,751 | ) | (28,253 | ) | (153,552 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 19,777,822 | $ | 2,176,649 | $ | 20,140,007 | $ | 2,220,033 | |||||||||
|
|
|
|
|
|
|
|
(Concluded)
27. | INCOME TAX |
a. | Income tax expense recognized in profit or loss |
Income tax expense consisted of the following:
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Current income tax expense |
||||||||||||||||
Current tax expense recognized in the current period |
$ | 18,461,370 | $ | 11,103,041 | $ | 28,865,330 | $ | 17,122,994 | ||||||||
Income tax adjustments on prior years |
(793,673 | ) | 404,566 | (793,673 | ) | 404,566 | ||||||||||
Other income tax adjustments |
107,473 | 111,171 | 149,512 | 138,167 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
17,775,170 | 11,618,778 | 28,221,169 | 17,665,727 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Deferred income tax expense (benefit) |
||||||||||||||||
Temporary differences |
(230,930 | ) | 619,252 | (414,198 | ) | (55,187 | ) | |||||||||
Investment tax credits and loss carryforward |
1,174,539 | 2,199,663 | 186,880 | 2,282,648 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
943,609 | 2,818,915 | (227,318 | ) | 2,227,461 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income tax expense recognized in profit or loss |
$ | 18,718,779 | $ | 14,437,693 | $ | 27,993,851 | $ | 19,893,188 | ||||||||
|
|
|
|
|
|
|
|
- 33 -
b. | Income tax expense recognized in other comprehensive income |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Deferred income tax expense |
||||||||||||||||
Related to unrealized gain/loss on available-for-sale financial assets |
$ | 13,311 | $ | 14,079 | $ | 18,104 | $ | 11,123 | ||||||||
|
|
|
|
|
|
|
|
c. | Integrated income tax information |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||
Balance of the Imputation Credit Account - TSMC |
$ | 61,581,277 | $ | 35,353,150 | $ | 37,461,918 | ||||||
|
|
|
|
|
|
The estimated creditable ratio for distribution of TSMCs earnings of 2014 was 11.13%; however, effective from January 1, 2015, the creditable ratio for individual shareholders residing in the Republic of China will be half of the original creditable ratio according to the revised Article 66-6 of the Income Tax Law.
The actual creditable ratio for distribution of TSMCs earnings of 2013 was 9.78%, which is calculated based on the Rule No.10204562810 issued by the Ministry of Finance to include the adjustments to retained earnings from the effect of transition to Taiwan-IFRSs in the accumulated unappropriated earnings in the year of first-time adoption of Taiwan-IFRSs.
The imputation credit allocated to shareholders is based on its balance as of the date of the dividend distribution. The estimated creditable ratio may change when the actual distribution of the imputation credit is made.
All of TSMCs earnings generated prior to December 31, 1997 have been appropriated.
d. | Income tax examination |
The tax authorities have examined income tax returns of TSMC through 2011. All investment tax credit adjustments assessed by the tax authorities have been recognized accordingly.
28. | EARNINGS PER SHARE |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Basic EPS |
$ | 3.06 | $ | 2.30 | $ | 6.11 | $ | 4.15 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted EPS |
$ | 3.06 | $ | 2.30 | $ | 6.11 | $ | 4.15 | ||||||||
|
|
|
|
|
|
|
|
- 34 -
EPS is computed as follows:
Amounts (Numerator) |
Number of Shares (Denominator) (In Thousands) |
EPS (NT$) |
||||||||||
Three months ended June 30, 2015 |
||||||||||||
Basic EPS |
||||||||||||
Net income available to common shareholders of the parent |
$ | 79,417,514 | 25,930,375 | $ | 3.06 | |||||||
|
|
|||||||||||
Effect of dilutive potential common shares |
| 5 | ||||||||||
|
|
|
|
|||||||||
Diluted EPS |
||||||||||||
Net income available to common shareholders of the parent (including effect of dilutive potential common shares) |
$ | 79,417,514 | 25,930,380 | $ | 3.06 | |||||||
|
|
|
|
|
|
|||||||
Three months ended June 30, 2014 |
||||||||||||
Basic EPS |
||||||||||||
Net income available to common shareholders of the parent |
$ | 59,698,303 | 25,929,328 | $ | 2.30 | |||||||
|
|
|||||||||||
Effect of dilutive potential common shares |
| 662 | ||||||||||
|
|
|
|
|||||||||
Diluted EPS |
||||||||||||
Net income available to common shareholders of the parent (including effect of dilutive potential common shares) |
$ | 59,698,303 | 25,929,990 | $ | 2.30 | |||||||
|
|
|
|
|
|
|||||||
Six months ended June 30, 2015 |
||||||||||||
Basic EPS |
||||||||||||
Net income available to common shareholders of the parent |
$ | 158,407,425 | 25,930,194 | $ | 6.11 | |||||||
|
|
|||||||||||
Effect of dilutive potential common shares |
| 186 | ||||||||||
|
|
|
|
|||||||||
Diluted EPS |
||||||||||||
Net income available to common shareholders of the parent (including effect of dilutive potential common shares) |
$ | 158,407,425 | 25,930,380 | $ | 6.11 | |||||||
|
|
|
|
|
|
|||||||
Six months ended June 30, 2014 |
||||||||||||
Basic EPS |
||||||||||||
Net income available to common shareholders of the parent |
$ | 107,565,096 | 25,929,089 | $ | 4.15 | |||||||
|
|
|||||||||||
Effect of dilutive potential common shares |
| 880 | ||||||||||
|
|
|
|
|||||||||
Diluted EPS |
||||||||||||
Net income available to common shareholders of the parent (including effect of dilutive potential common shares) |
$ | 107,565,096 | 25,929,969 | $ | 4.15 | |||||||
|
|
|
|
|
|
- 35 -
If the Company may settle the obligation by cash, by issuing shares, or in combination of both cash and shares, employee remuneration or profit sharing to employees which will be settled in shares should be included in the weighted average number of shares outstanding in calculation of diluted EPS, if the shares have a dilutive effect. The number of shares is estimated by dividing the amount of employee remuneration or profit sharing to employees in stock by the closing price (after considering the dilutive effect of dividends) of the common shares at the end of the reporting period. Such dilutive effect of the potential shares needs to be included in the calculation of diluted EPS until employee remuneration or profit sharing to employees to be settled in the form of common stocks are approved in the following year.
29. | ADDITIONAL INFORMATION OF EXPENSES BY NATURE |
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||
a. |
Depreciation of property, plant and equipment |
|||||||||||||||||
Recognized in cost of revenue |
$ | 50,147,268 | $ | 41,804,816 | $ | 101,188,982 | $ | 79,262,241 | ||||||||||
Recognized in operating expenses |
3,685,080 | 3,541,464 | 7,343,371 | 7,063,759 | ||||||||||||||
Recognized in other operating income and expenses |
6,221 | 6,221 | 12,443 | 12,443 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
$ | 53,838,569 | $ | 45,352,501 | $ | 108,544,796 | $ | 86,338,443 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||||
b. |
Amortization of intangible assets |
|||||||||||||||||
Recognized in cost of revenue |
$ | 404,092 | $ | 320,331 | $ | 811,842 | $ | 653,798 | ||||||||||
Recognized in operating expenses |
380,446 | 306,282 | 744,465 | 609,250 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
$ | 784,538 | $ | 626,613 | $ | 1,556,307 | $ | 1,263,048 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||||
c. |
Research and development costs expensed as incurred |
$ | 16,612,213 | $ | 13,610,337 | $ | 33,393,676 | $ | 25,678,229 | |||||||||
|
|
|
|
|
|
|
|
|||||||||||
d. |
Employee benefits expenses |
|||||||||||||||||
Post-employment benefits |
||||||||||||||||||
Defined contribution plans |
$ | 501,747 | $ | 430,816 | $ | 977,573 | $ | 843,268 | ||||||||||
Defined benefit plans |
79,591 | 63,832 | 147,719 | 152,874 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
581,338 | 494,648 | 1,125,292 | 996,142 | |||||||||||||||
Other employee benefits |
22,918,891 | 19,025,491 | 45,163,630 | 35,856,007 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
$ | 23,500,229 | $ | 19,520,139 | $ | 46,288,922 | $ | 36,852,149 | |||||||||||
|
|
|
|
|
|
|
|
(Continued)
- 36 -
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||
Employee benefits expense summarized by function |
||||||||||||||||||
Recognized in cost of revenue |
$ | 13,576,089 | $ | 11,592,250 | $ | 26,870,583 | $ | 22,004,321 | ||||||||||
Recognized in operating expenses |
9,924,140 | 7,927,889 | 19,418,339 | 14,847,828 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
$ | 23,500,229 | $ | 19,520,139 | $ | 46,288,922 | $ | 36,852,149 | |||||||||||
|
|
|
|
|
|
|
|
(Concluded)
Under the Company Act as amended in May 2015, the Companys Articles of Incorporation should stipulate a fixed amount or ratio of annual profit to be distributed as employee remuneration. The Company expects to make amendments to the Companys Articles of Incorporation to be approved during the 2016 annual shareholders meeting.
TSMC accrued employee remuneration or profit sharing to employees based on certain percentage of net income during the period, which amounted to NT$5,338,604 thousand and NT$3,992,231 thousand for the three months ended June 30, 2015 and 2014, respectively; and NT$10,621,290 thousand and NT$7,192,947 thousand for the six months ended June 30, 2015 and 2014, respectively. Bonuses to members of the Board of Directors were expensed based on estimated amount payable. If there is a change in the proposed amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in accounting estimate.
TSMCs profit sharing to employees and bonus to directors in the amounts of NT$17,645,966 thousand and NT$406,854 thousand in cash for 2014, respectively, and profit sharing to employees and bonus to directors in the amounts of NT$12,634,665 thousand and NT$104,136 thousand in cash for 2013, respectively, had been approved by the shareholders in its meeting held on June 9, 2015 and June 24, 2014, respectively. The aforementioned approved amount has no difference with the one approved by the Board of Directors in its meetings held on February 10, 2015 and February 18, 2014 and the same amount had been charged against earnings of 2014 and 2013, respectively.
The information about the appropriations of TSMCs profit sharing to employees and bonus to members of the Board of Directors is available at the Market Observation Post System website.
30. | DISPOSAL OF SUBSIDIARY |
In January 2015, the Board of Directors of TSMC approved a sale of TSMC SSL common shares of 565,480 thousand held by TSMC and TSMC Guang Neng to Epistar Corporation (EPISTAR). Accordingly, the Company reclassified TSMC SSL as a disposal group held for sale in its consolidated balance sheet as of December 31, 2014. The expected fair value less costs to sell is substantially lower than the carrying amount of the related net assets of TSMC SSL; as such, impairment losses of NT$734,467 thousand were recognized under other operating gains and losses in the Companys consolidated statement of comprehensive income for the year ended December 31, 2014. The transaction was completed in February 2015. For the major classes of assets and liabilities classified as held for sale, please refer to Note 13 to the consolidated financial statements for the year ended December 31, 2014.
- 37 -
a. | Consideration received from the disposal |
Total consideration received |
$ | 825,000 | ||
Expenditure associated with consideration received |
(142,475 | ) | ||
|
|
|||
Net consideration received |
$ | 682,525 | ||
|
|
b. | Analysis of assets and liabilities over which the control was lost |
Assets |
||||
Cash and cash equivalents |
$ | 81,478 | ||
Inventories |
28,519 | |||
Other current assets |
91,331 | |||
Property, plant and equipment |
643,699 | |||
Intangible assets |
47,373 | |||
Others |
51,808 | |||
Liabilities |
||||
Salary and bonus payable |
(38,151 | ) | ||
Accrued expenses and other current liabilities |
(68,132 | ) | ||
Net defined benefit liability |
(35,845 | ) | ||
Others |
(76,915 | ) | ||
|
|
|||
Net assets disposed of |
$ | 725,165 | ||
|
|
c. | Gain/loss on disposal of subsidiary |
Net consideration received |
$ | 682,525 | ||
Net assets disposed of |
(725,165 | ) | ||
Noncontrolling interests |
42,640 | |||
|
|
|||
Gain/loss on disposal of subsidiary |
$ | | ||
|
|
d. | Net cash inflow arising from disposal of subsidiary |
Net consideration received |
$ | 682,525 | ||
Less: balance of cash and cash equivalents disposed of |
81,478 | |||
|
|
|||
$ | 601,047 | |||
|
|
31. | FINANCIAL INSTRUMENTS |
a. | Categories of financial instruments |
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||||
Financial assets |
||||||||||||||
FVTPL |
||||||||||||||
Held for trading derivatives |
a) | $ | 58,535 | $ | 200,364 | $ | 158,265 | |||||||
Available-for-sale financial assets |
b) | 16,075,250 | 75,598,018 | 61,100,010 | ||||||||||
Held-to-maturity financial assets |
| 7,180,351 | 4,485,593 | 299,230 |
(Continued)
- 38 -
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||||
Loans and receivables |
||||||||||||||
Cash and cash equivalents |
a) | $ | 528,895,107 | $ | 358,530,507 | $ | 255,053,573 | |||||||
Notes and accounts receivables (including related parties) |
a) | 99,737,061 | 115,057,965 | 86,887,160 | ||||||||||
Other receivables |
a) | 12,320,574 | 4,051,452 | 4,364,503 | ||||||||||
Refundable deposits |
a) | 408,585 | 356,582 | 2,476,534 | ||||||||||
|
|
|
|
|
|
|||||||||
$ | 664,675,463 | $ | 558,280,481 | $ | 410,339,275 | |||||||||
|
|
|
|
|
|
|||||||||
Financial liabilities |
||||||||||||||
FVTPL |
||||||||||||||
Held for trading derivatives |
a) | $ | 780,721 | $ | 486,614 | $ | 19,418 | |||||||
Derivative financial instruments in designated hedge accounting relationships |
| 2,625,763 | 16,364,241 | 5,559,559 | ||||||||||
Amortized cost |
||||||||||||||
Short-term loans |
| 5,592,600 | 36,158,520 | 34,705,206 | ||||||||||
Accounts payable (including related parties) |
a) | 21,100,895 | 23,379,762 | 21,697,296 | ||||||||||
Payables to contractors and equipment suppliers |
a) | 43,610,962 | 26,983,424 | 34,657,746 | ||||||||||
Cash dividends payable |
| 116,683,481 | | 77,785,851 | ||||||||||
Accrued expenses and other current liabilities |
a) | 21,890,115 | 22,248,135 | 17,572,283 | ||||||||||
Bonds payable (including long-term liabilities - current portion) |
| 212,722,606 | 213,673,818 | 210,869,059 | ||||||||||
Long-term bank loans (including long-term liabilities - current portion) |
| 40,000 | 40,000 | 40,000 | ||||||||||
Other long-term payables (classified under accrued expenses and other current liabilities and other noncurrent liabilities) |
| 18,000 | 36,000 | 54,000 | ||||||||||
Guarantee deposits (including those classified under accrued expenses and other current liabilities) |
a) | 28,518,962 | 30,297,600 | 157,011 | ||||||||||
|
|
|
|
|
|
|||||||||
$ | 453,584,105 | $ | 369,668,114 | $ | 403,117,429 | |||||||||
|
|
|
|
|
|
(Concluded)
Note a: | Including those classified to noncurrent assets held for sale or liabilities directly associated with noncurrent assets held for sale as of December 31, 2014. |
Note b: | Including financial assets carried at cost. |
- 39 -
b. | Financial risk management objectives |
The Company seeks to ensure sufficient cost-efficient funding readily available when needed. The Company manages its exposure to foreign currency risk, interest rate risk, equity price risk, credit risk and liquidity risk with the objective to reduce the potentially adverse effects the market uncertainties may have on its financial performance.
The plans for material treasury activities are reviewed by Audit Committees and/or Board of Directors in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, Corporate Treasury function must comply with certain treasury procedures that provide guiding principles for overall financial risk management and segregation of duties.
c. | Market risk |
The Company is exposed to the market risks arising from changes in foreign exchange rates, interest rates and the prices in equity investments, and utilizes some derivative financial instruments to reduce the related risks.
Foreign currency risk
Most of the Companys operating activities are denominated in foreign currencies. Consequently, the Company is exposed to foreign currency risk. To protect against reductions in value and the volatility of future cash flows caused by changes in foreign exchange rates, the Company utilizes derivative financial instruments, including currency forward contracts and cross currency swaps, to hedge its currency exposure. These instruments help to reduce, but do not eliminate, the impact of foreign currency exchange rate movements.
The Company also holds short-term borrowings in foreign currencies in proportion to its expected future cash flows. This allows foreign-currency-denominated borrowings to be serviced with expected future cash flows and provides a partial hedge against transaction translation exposure.
The Companys sensitivity analysis to foreign currency risk mainly focuses on the foreign currency monetary items at the end of the reporting period. Assuming an unfavorable 10% movement in the levels of foreign exchanges against the New Taiwan dollar, the net income for the six months ended June 30, 2015 and 2014 would have decreased by NT$1,618,369 thousand and NT$686,238 thousand, respectively, after taking into consideration of the hedging contracts and the hedged items.
Interest rate risk
The Company is exposed to interest rate risk arising from borrowing at both fixed and floating interest rates. All of the Companys long-term bonds have fixed interest rates and are measured at amortized cost. As such, changes in interest rates would not affect the future cash flows. On the other hand, because interest rates of the Companys long-term bank loans are floating, changes in interest rates would affect the future cash flows but not the fair value.
Assuming the amount of floating interest rate bank loans at the end of the reporting period had been outstanding for the entire period and all other variables were held constant, a hypothetical increase in interest rates of 100 basis point (1%) would have resulted in an increase in the interest expense, net of tax, by approximately NT$166 thousand for both six months ended June 30, 2015 and 2014, respectively.
- 40 -
Other price risk
The Company is exposed to equity price risk arising from available-for-sale equity investments. To reduce the equity price risk, the Company utilizes some stock forward contracts to partially hedge its exposure.
Assuming a hypothetical decrease of 5% in equity prices of the equity investments at the end of the reporting period, the net income for the six months ended June 30, 2015 and 2014 would have been unaffected as they were classified as available-for-sale; however, the other comprehensive income for the six months ended June 30, 2015 and 2014 would have decreased by NT$135,538 thousand and NT$128,251 thousand, respectively.
d. | Credit risk management |
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from operating activities, primarily trade receivables, and from investing activities, primarily bank deposits, fixed-income investments and other financial instruments. Credit risk is managed separately for business related and financial related exposures. As of the end of the reporting period, the Companys maximum credit risk exposure is mainly from the carrying amount of financial assets recognized in the consolidated balance sheet.
Business related credit risk
The Company has considerable trade receivables outstanding with its customers worldwide. A substantial majority of the Companys outstanding trade receivables are not covered by collateral or credit insurance. While the Company has procedures to monitor and limit exposure to credit risk on trade receivables, there can be no assurance such procedures will effectively limit its credit risk and avoid losses. This risk is heightened during periods when economic conditions worsen.
As of June 30, 2015, December 31, 2014 and June 30, 2014, the Companys ten largest customers accounted for 66%, 76% and 67% of accounts receivable, respectively. The Company believes the concentration of credit risk is insignificant for the remaining accounts receivable.
Financial credit risk
The Company regularly monitors and reviews the transaction limit applied to counterparties and adjusts the concentration limit according to market conditions and the credit standing of the counterparties. The Company mitigates its exposure by selecting counterparties with investment-grade credit ratings.
e. | Liquidity risk management |
The objective of liquidity risk management is to ensure the Company has sufficient liquidity to fund its business requirements associated with existing operations over the next 12 months. The Company manages its liquidity risk by maintaining adequate cash.
- 41 -
The table below summarizes the maturity profile of the Companys financial liabilities based on contractual undiscounted payments, including principal and interest.
Less Than 1 Year |
2-3 Years | 4-5 Years | 5+ Years | Total | ||||||||||||||||
June 30, 2015 |
||||||||||||||||||||
Non-derivative financial liabilities |
||||||||||||||||||||
Short-term loans |
$ | 5,594,309 | $ | | $ | | $ | | $ | 5,594,309 | ||||||||||
Accounts payable (including related parties) |
21,100,895 | | | | 21,100,895 | |||||||||||||||
Payables to contractors and equipment suppliers |
43,610,962 | | | | 43,610,962 | |||||||||||||||
Accrued expenses and other current liabilities |
21,890,115 | | | | 21,890,115 | |||||||||||||||
Bonds payable |
13,915,132 | 107,533,065 | 66,178,944 | 36,407,035 | 224,034,176 | |||||||||||||||
Long-term bank loans |
3,931 | 21,933 | 18,002 | | 43,866 | |||||||||||||||
Other long-term payables (classified under accrued expenses and other current liabilities) |
18,000 | | | | 18,000 | |||||||||||||||
Obligations under finance leases |
29,076 | 58,151 | 755,364 | | 842,591 | |||||||||||||||
Guarantee deposits (including those classified under accrued expense and other current liabilities) |
6,602,375 | 12,595,587 | 9,321,000 | | 28,518,962 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
112,764,795 | 120,208,736 | 76,273,310 | 36,407,035 | 345,653,876 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Derivative financial instruments |
||||||||||||||||||||
Forward exchange contracts |
||||||||||||||||||||
Outflows |
76,898,431 | | | | 76,898,431 | |||||||||||||||
Inflows |
(76,154,158 | ) | | | | (76,154,158 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
744,273 | | | | 744,273 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cross currency swap contracts |
||||||||||||||||||||
Outflows |
3,033,613 | | | | 3,033,613 | |||||||||||||||
Inflows |
(3,060,582 | ) | | | | (3,060,582 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(26,969 | ) | | | | (26,969 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Stock forward contracts |
||||||||||||||||||||
Outflows |
10,575,328 | | | | 10,575,328 | |||||||||||||||
Inflows |
(10,575,328 | ) | | | | (10,575,328 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
| | | | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 113,482,099 | $ | 120,208,736 | $ | 76,273,310 | $ | 36,407,035 | $ | 346,371,180 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
December 31, 2014 |
||||||||||||||||||||
Non-derivative financial liabilities |
||||||||||||||||||||
Short-term loans |
$ | 36,164,316 | $ | | $ | | $ | | $ | 36,164,316 | ||||||||||
Accounts payable (including related parties) |
23,370,424 | | | | 23,370,424 | |||||||||||||||
Payables to contractors and equipment suppliers |
26,980,408 | | | | 26,980,408 | |||||||||||||||
Accrued expenses and other current liabilities |
22,177,901 | | | | 22,177,901 | |||||||||||||||
Bonds payable |
3,079,862 | 66,720,514 | 98,460,598 | 58,320,169 | 226,581,143 | |||||||||||||||
Long-term bank loans |
1,450 | 19,792 | 20,846 | 2,504 | 44,592 | |||||||||||||||
Other long-term payables (classified under accrued expenses and other current liabilities and other noncurrent liabilities) |
18,000 | 18,000 | | | 36,000 | |||||||||||||||
Obligations under finance leases |
29,667 | 59,335 | 800,409 | | 889,411 | |||||||||||||||
Guarantee deposits (including those classified under accrued expense and other current liabilities) |
4,757,700 | 12,851,275 | 12,687,200 | | 30,296,175 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
116,579,728 | 79,668,916 | 111,969,053 | 58,322,673 | 366,540,370 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
(Continued)
- 42 -
Less Than 1 Year |
2-3 Years | 4-5 Years | 5+ Years | Total | ||||||||||||||||
Derivative financial instruments |
||||||||||||||||||||
Forward exchange contracts |
||||||||||||||||||||
Outflows |
$ | 17,327,250 | $ | | $ | | $ | | $ | 17,327,250 | ||||||||||
Inflows |
(17,283,079 | ) | | | | (17,283,079 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
44,171 | | | | 44,171 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cross currency swap contracts |
||||||||||||||||||||
Outflows |
47,291,943 | | | | 47,291,943 | |||||||||||||||
Inflows |
(46,970,942 | ) | | | | (46,970,942 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
321,001 | | | | 321,001 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Stock forward contracts |
||||||||||||||||||||
Outflows |
56,172,570 | | | | 56,172,570 | |||||||||||||||
Inflows |
(56,172,570 | ) | | | | (56,172,570 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
| | | | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 116,944,900 | $ | 79,668,916 | $ | 111,969,053 | $ | 58,322,673 | $ | 366,905,542 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
June 30, 2014 |
||||||||||||||||||||
Non-derivative financial liabilities |
||||||||||||||||||||
Short-term loans |
$ | 34,713,484 | $ | | $ | | $ | | $ | 34,713,484 | ||||||||||
Accounts payable (including related parties) |
21,697,296 | | | | 21,697,296 | |||||||||||||||
Payables to contractors and equipment suppliers |
34,657,746 | | | | 34,657,746 | |||||||||||||||
Accrued expenses and other current liabilities |
17,572,283 | | | | 17,572,283 | |||||||||||||||
Bonds payable |
3,038,196 | 38,216,868 | 98,612,394 | 85,318,276 | 225,185,734 | |||||||||||||||
Long-term bank loans |
1,450 | 15,079 | 21,208 | 7,579 | 45,316 | |||||||||||||||
Other long-term payables (classified under accrued expenses and other current liabilities and other noncurrent liabilities) |
36,000 | 18,000 | | | 54,000 | |||||||||||||||
Obligations under finance leases |
27,921 | 55,843 | 753,300 | | 837,064 | |||||||||||||||
Guarantee deposits |
| 157,011 | | | 157,011 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
111,744,376 | 38,462,801 | 99,386,902 | 85,325,855 | 334,919,934 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Derivative financial instruments |
||||||||||||||||||||
Forward exchange contracts |
||||||||||||||||||||
Outflows |
21,906,386 | | | | 21,906,386 | |||||||||||||||
Inflows |
(21,976,316 | ) | | | | (21,976,316 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(69,930 | ) | | | | (69,930 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cross currency swap contracts |
||||||||||||||||||||
Outflows |
28,436,568 | | | | 28,436,568 | |||||||||||||||
Inflows |
(28,543,835 | ) | | | | (28,543,835 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(107,267 | ) | | | | (107,267 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Stock forward contracts |
||||||||||||||||||||
Outflows |
42,712,852 | 10,162,117 | | | 52,874,969 | |||||||||||||||
Inflows |
(42,712,852 | ) | (10,162,117 | ) | | | (52,874,969 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
| | | | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 111,567,179 | $ | 38,462,801 | $ | 99,386,902 | $ | 85,325,855 | $ | 334,742,737 | |||||||||||
|
|
|
|
|
|
|
|
|
|
(Concluded)
f. | Fair value of financial instruments |
1) | Fair value of financial instruments carried at amortized cost |
Except as detailed in the following table, the Company considers that the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements approximate their fair values.
- 43 -
June 30, 2015 | December 31, 2014 | June 30, 2014 | ||||||||||||||||||||||
Carrying Amount |
Fair Value | Carrying Amount |
Fair Value | Carrying Amount |
Fair Value | |||||||||||||||||||
Financial assets |
||||||||||||||||||||||||
Held-to-maturity financial assets |
||||||||||||||||||||||||
Commercial paper |
$ | 7,180,351 | $ | 7,189,249 | $ | 4,485,593 | $ | 4,486,541 | $ | 299,230 | $ | 299,857 | ||||||||||||
Financial liabilities |
||||||||||||||||||||||||
Measured at amortized cost |
||||||||||||||||||||||||
Bonds payable |
212,722,606 | 213,040,105 | 213,673,818 | 213,177,122 | 210,869,059 | 210,756,224 |
2) | Valuation techniques and assumptions used in fair value measurement |
The fair values of financial assets and financial liabilities are determined as follows:
| The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices (includes publicly traded stocks and money market funds). |
| Forward exchange contracts and cross currency swap contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contracts; interest rate swaps are measured at the present value of future cash flows estimated and discounted based on the applicable yield curves derived from quoted interest rates; and stock forward contracts are measured at the difference between the present value of stock forward price discounted based on the applicable yield curve derived from quoted interest rates and the stock spot price. |
| The fair values of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis. |
3) | Fair value measurements recognized in the consolidated balance sheets |
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
| Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and |
| Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). |
- 44 -
Financial assets and liabilities measured at fair value on a recurring basis
The following table presents the Companys financial assets and liabilities measured at fair value on a recurring basis:
June 30, 2015 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets at FVTPL |
||||||||||||||||
Derivative financial instruments |
$ | | $ | 58,535 | $ | | $ | 58,535 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Available-for-sale financial assets |
||||||||||||||||
Publicly traded stocks |
$ | 14,216,491 | $ | | $ | | $ | 14,216,491 | ||||||||
Money market funds |
383 | | | 383 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 14,216,874 | $ | | $ | | $ | 14,216,874 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities at FVTPL |
||||||||||||||||
Derivative financial instruments |
$ | | $ | 780,721 | $ | | $ | 780,721 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Hedging derivative financial liabilities |
||||||||||||||||
Stock forward contract |
$ | | $ | 2,625,763 | $ | | $ | 2,625,763 | ||||||||
|
|
|
|
|
|
|
|
December 31, 2014 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets at FVTPL |
||||||||||||||||
Derivative financial instruments (Note) |
$ | | $ | 200,364 | $ | | $ | 200,364 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Available-for-sale financial assets |
||||||||||||||||
Publicly traded stocks |
$ | 73,797,085 | $ | | $ | | $ | 73,797,085 | ||||||||
Money market funds |
391 | | | 391 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 73,797,476 | $ | | $ | | $ | 73,797,476 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities at FVTPL |
||||||||||||||||
Derivative financial instruments (Note) |
$ | | $ | 486,614 | $ | | $ | 486,614 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Hedging derivative financial liabilities |
||||||||||||||||
Stock forward contract |
$ | | $ | 16,364,241 | $ | | $ | 16,364,241 | ||||||||
|
|
|
|
|
|
|
|
Note: | Including those classified to noncurrent assets held for sale or liabilities directly associated with noncurrent assets held for sale. |
- 45 -
June 30, 2014 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Financial assets at FVTPL |
||||||||||||||||
Derivative financial instruments |
$ | | $ | 158,265 | $ | | $ | 158,265 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Available-for-sale financial assets |
||||||||||||||||
Publicly traded stocks |
$ | 59,082,115 | $ | | $ | | $ | 59,082,115 | ||||||||
Money market funds |
367 | | | 367 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 59,082,482 | $ | | $ | | $ | 59,082,482 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial liabilities at FVTPL |
||||||||||||||||
Derivative financial instruments |
$ | | $ | 19,418 | $ | | $ | 19,418 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Hedging derivative financial liabilities |
||||||||||||||||
Stock forward contract |
$ | | $ | 5,559,559 | $ | | $ | 5,559,559 | ||||||||
|
|
|
|
|
|
|
|
For assets and liabilities held as of June 30, 2015, December 31, 2014 and June 30, 2014 that are measured at fair value on a recurring basis, there were no transfers between Level 1 and Level 2 of the fair value hierarchy.
There were no purchases and disposals for assets on Level 3 for the six months ended June 30, 2015 and 2014, respectively.
Financial assets and liabilities not measured at fair value but for which the fair value is disclosed
For investments in commercial paper, the fair value is determined at the present value of future cash flows based on the observable yield curves.
The fair value of the Companys bonds payable is determined using active market prices.
The table below sets out the balances for the Companys assets and liabilities at amortized cost but for which the fair value is disclosed as of June 30, 2015:
June 30, 2015 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
NT$ | NT$ | NT$ | NT$ | |||||||||||||
(In Millions) | (In Millions) | (In Millions) | (In Millions) | |||||||||||||
Assets |
||||||||||||||||
Held-to-maturity securities |
||||||||||||||||
Commercial paper |
$ | | $ | 7,189,249 | $ | | $ | 7,189,249 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities |
||||||||||||||||
Measured at amortized cost |
||||||||||||||||
Bonds payable |
$ | 213,040,105 | $ | | $ | | $ | 213,040,105 | ||||||||
|
|
|
|
|
|
|
|
- 46 -
32. | RELATED PARTY TRANSACTIONS |
Intercompany balances and transactions between TSMC and its subsidiaries, which are related parties of TSMC, have been eliminated upon consolidation; therefore those items are not disclosed in this note. The following is a summary of transactions between the Company and other related parties:
a. | Net revenue | |||||||||||||||||||
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||||||
Item |
Related Party Categories |
|||||||||||||||||||
Net revenue from sale
of |
Associates |
$ | 1,171,840 | $ | 1,000,358 | $ | 2,186,502 | $ | 1,993,064 | |||||||||||
Joint venture |
283 | 315 | 667 | 650 | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
$ |
1,172,123 |
|
$ | 1,000,673 | $ | 2,187,169 | $ | 1,993,714 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Net revenue from royalties |
Associates |
$ | 130,168 | $ | 127,574 | $ | 262,144 | $ | 255,064 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
b. |
Purchases |
|||||||||||||||||||
Three Months Ended June 30 |
Six Months Ended June 30 | |||||||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||||||
Related Party Categories |
||||||||||||||||||||
Associates |
$ | 2,974,865 | $ | 3,235,213 | $ | 5,979,141 | $ | 5,851,848 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
c. |
Receivables from related parties |
|||||||||||||||||||
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||||||||||
Item |
Related Party Categories |
|||||||||||||||||||
Receivables from |
Associates |
$ | 744,584 | $ | 312,641 | $ | 462,704 | |||||||||||||
Joint venture |
123 | 314 | 28 | |||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
$ |
744,707 |
|
$ | 312,955 | $ | 462,732 | ||||||||||||||
|
|
|
|
|
|
|||||||||||||||
Other receivables from |
Associates |
$ | 3,164,538 | $ | 178,625 | $ | 2,875,842 | |||||||||||||
Joint venture |
400,803 | | | |||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
$ | 3,565,341 | $ | 178,625 | $ | 2,875,842 | |||||||||||||||
|
|
|
|
|
|
|||||||||||||||
d. |
Payables to related parties |
|||||||||||||||||||
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||||||||||
Item |
Related Party Categories |
|||||||||||||||||||
Payables to related parties |
Associates |
$ | 1,325,844 | $ | 1,490,997 | $ | 1,679,807 | |||||||||||||
Joint venture |
1,501 | 493 | 1,974 | |||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
$ |
1,327,345 |
|
$ | 1,491,490 | $ | 1,681,781 | ||||||||||||||
|
|
|
|
|
|
- 47 -
e | Disposal of property, plant and equipment | |||||||||||||||||||
Proceeds |
||||||||||||||||||||
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||||||
Related Party Categories |
||||||||||||||||||||
Associates |
$ | | $ | 15,817 | $ | | $ | 15,817 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
f. |
Others |
|||||||||||||||||||
Gains |
||||||||||||||||||||
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||||||
Related Party Categories |
||||||||||||||||||||
Associates |
$ | | $ | 15,817 | $ | | $ | 15,817 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||||||||||
Item |
Related Party Categories |
|||||||||||||||||||
Refundable deposits |
Associates |
$ | | $ | | $ | 5,813 | |||||||||||||
|
|
|
|
|
|
|||||||||||||||
Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||||||
Item |
Related Party Categories |
|||||||||||||||||||
Manufacturing expenses |
Associates |
$ | 680,185 | $ | 651,522 | $ | 1,394,699 | $ | 1,129,860 | |||||||||||
Joint venture |
3,023 | 2,109 | 5,363 | 4,695 | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
$ |
683,208 |
|
$ | 653,631 | $ | 1,400,062 | $ | 1,134,555 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Research and development expenses |
Associates |
$ | 6,873 | $ | 45,302 | $ | 25,926 | $ | 53,333 | |||||||||||
Joint venture |
888 | 233 | 948 | 841 | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
$ | 7,761 | $ | 45,535 | $ | 26,874 | $ | 54,174 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
General and administrative expenses |
Associates |
$ | 1,050 | $ | | $ | 1,050 | $ | | |||||||||||
|
|
|
|
|
|
|
|
The sales prices and payment terms to related parties were not significantly different from those of sales to third parties. For other related party transactions, price and terms were determined in accordance with mutual agreements.
The Company leased machinery and equipment from Xintec. The lease terms and prices were determined in accordance with mutual agreements. The rental expense was paid quarterly and the related expense was classified under manufacturing expenses.
The Company deferred the disposal gain/loss derived from sales of property, plant and equipment to related parties (transactions with associates and joint venture), and then recognized such gain/loss over the depreciable lives of the disposed assets.
- 48 -
g. | Compensation of key management personnel |
The compensation to directors and other key management personnel for the three months and six months ended June 30, 2015 and 2014 were as follows:
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Short-term employee benefits |
$ | 484,183 | $ | 430,685 | $ | 970,226 | $ | 763,022 | ||||||||
Post-employment benefits |
1,037 | 976 | 2,042 | 33,930 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 485,220 | $ | 431,661 | $ | 972,268 | $ | 796,952 | |||||||||
|
|
|
|
|
|
|
|
The compensation to directors and other key management personnel were determined by the Compensation Committee of TSMC in accordance with the individual performance and the market trends.
33. | PLEDGED ASSETS |
The Company provided certificate of deposits recorded in other financial assets as collateral mainly for litigation and building lease agreements. As of June 30, 2015, December 31, 2014 and June 30, 2014, the aforementioned other financial assets amounted to NT$269,032 thousand, NT$293,409 thousand and NT$120,705 thousand, respectively.
34. | SIGNIFICANT OPERATING LEASE ARRANGEMENTS |
The Company leases several parcels of land, factory and office premises from the Science Park Administration and entered into lease agreements for its office premises and certain office equipment located in the United States, Europe, Japan, Shanghai and Taiwan. These operating leases expire between August 2015 and December 2034 and can be renewed upon expiration.
Future minimum lease payments under the above non-cancellable operating leases are as follows:
June 30, 2015 |
December 31, 2014 |
June 30, 2014 |
||||||||||||||
Not later than 1 year |
$ | 1,005,463 | $ | 891,767 | $ | 872,608 | ||||||||||
Later than 1 year and not later than 5 years |
3,608,378 | 3,490,783 | 2,959,087 | |||||||||||||
Later than 5 years |
7,168,284 | 6,576,218 | 5,215,876 | |||||||||||||
|
|
|
|
|
|
|||||||||||
$ | 11,782,125 | $ | 10,958,768 | $ | 9,047,571 | |||||||||||
|
|
|
|
|
|
35. | SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS |
Significant contingent liabilities and unrecognized commitments of the Company as of the end of the reporting period, excluding those disclosed in other notes, were as follows:
a. | Under a technical cooperation agreement with Industrial Technology Research Institute, the R.O.C. Government or its designee approved by TSMC can use up to 35% of TSMCs capacity provided TSMCs outstanding commitments to its customers are not prejudiced. The term of this agreement is for five years beginning from January 1, 1987 and is automatically renewed for successive periods of five years unless otherwise terminated by either party with one year prior notice. As of June 30, 2015, the R.O.C. Government did not invoke such right. |
- 49 -
b. | 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, which is an integrated circuit foundry in Singapore. TSMCs equity interest in SSMC was 32%. Nevertheless, in September 2006, Philips spun-off its semiconductor subsidiary which was renamed as NXP B.V. Further, TSMC and NXP B.V. purchased all the SSMC shares owned by EDB Investments Pte Ltd. pro rata according to the Shareholders Agreement on November 15, 2006. After the purchase, TSMC and NXP B.V. currently own approximately 39% and 61% of the SSMC shares, respectively. TSMC and NXP B.V. are required, in the aggregate, to purchase at least 70% of SSMCs capacity, but TSMC alone is not required to purchase more than 28% of the capacity. If any party defaults on the commitment and the capacity utilization of SSMC falls below a specific percentage of its capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs. There was no default from the aforementioned commitment as of June 30, 2015. |
c. | In June 2010, Keranos, LLC. filed a complaint in the U.S. District Court for the Eastern District of Texas alleging that TSMC, TSMC North America, and several other leading technology companies infringe three expired U.S. patents. In response, TSMC, TSMC North America, and several co-defendants in the Texas case filed a lawsuit against Keranos in the U.S. District Court for the Northern District of California in November 2010, seeking a judgment declaring that they did not infringe the asserted patents, and that those patents were invalid. These two litigations have been consolidated into a single lawsuit in the U.S. District Court for the Eastern District of Texas. In February 2014, the Court entered a final judgment in favor of TSMC, dismissing all of Keranos claims against TSMC with prejudice. Keranos appealed the final judgment to the U.S. Court of Appeals for the Federal Circuit and the oral argument was heard in April 2015. There has not been a decision yet. The outcome cannot be determined and the Company cannot make a reliable estimate of the contingent liability at this time. |
d. | In December 2010, Ziptronix, Inc. filed a complaint in the U.S. District Court for the Northern District of California accusing TSMC, TSMC North America and one other company of infringing several U.S. patents. In September 2014, the Court granted summary judgment of noninfringement in favor of TSMC and TSMC North America. Ziptronix, Inc. can appeal the Courts order. The outcome cannot be determined and the Company cannot make a reliable estimate of the contingent liability at this time. |
e. | TSMC joined the Customer Co-Investment Program of ASML and entered into the investment agreement in August 2012. The agreement includes an investment of EUR837,816 thousand by TSMC Global to acquire 5% of ASMLs equity with a lock-up period of 2.5 years. TSMC Global has acquired the aforementioned equity on October 31, 2012, and the lock-up period expired on May 1, 2015. Both parties also signed the research and development funding agreement whereby TSMC shall provide EUR276,000 thousand to ASMLs research and development programs from 2013 to 2017. As of June 30, 2015, TSMC has paid EUR 137,186 thousand to ASML under the research and development funding agreement. |
f. | In September 2013, Zond Inc. filed a complaint in U.S. District Court for the District of Massachusetts against TSMC, certain TSMC subsidiaries and other companies alleging infringing of several U.S. patents. Subsequently, TSMC and Zond initiated additional legal actions in the U.S. District Courts for the District of Delaware and the District of Massachusetts over several additional patents owned by Zond. In March 2015, all pending litigations between the parties in the U.S. District Courts for the District of Massachusetts and the District of Delaware were dismissed. |
g. | In March 2014, DSS Technology Management, Inc. (DSS) filed a complaint in the U.S. District Court for the Eastern District of Texas alleging that TSMC, TSMC North America, TSMC Development and several other companies infringe one U.S. patent. TSMC Development has subsequently been dismissed. In May 2015, the Court entered a final judgment of noninfringement in favor of TSMC and TSMC North America. DSS has appealed the final judgment to the U.S. Court of Appeals for the Federal Circuit. The outcome cannot be determined and the Company cannot make a reliable estimate of the contingent liability at this time. |
h. | Amounts available under unused letters of credit as of June 30, 2015, December 31, 2014 and June 30, 2014 were NT$198,848 thousand, NT$222,026 thousand and NT$89,568 thousand, respectively. |
- 50 -
36. | EXCHANGE RATE INFORMATION OF FOREIGN-CURRENCY FINANCIAL ASSETS AND LIABILITIES |
The following information was summarized according to the foreign currencies other than the functional currency of each subsidiary of the Company. The exchange rates disclosed were used to translate the foreign currencies into the functional currency of each subsidiary. The significant financial assets and liabilities denominated in foreign currencies were as follows:
Foreign (In Thousands) |
Exchange Rate (Note 1) |
Carrying Amount |
||||||||||
June 30, 2015 |
||||||||||||
Financial assets |
||||||||||||
Monetary items |
||||||||||||
USD |
$ | 4,645,790 | 31.070 | $ | 144,344,694 | |||||||
RMB |
2,496,163 | 0.161 | (Note 2) | 12,507,023 | ||||||||
EUR |
218,538 | 34.70 | 7,583,271 | |||||||||
JPY |
39,072,839 | 0.2542 | 9,932,316 | |||||||||
Non-monetary items |
||||||||||||
HKD |
179,390 | 4.01 | 719,354 | |||||||||
Financial liabilities |
||||||||||||
Monetary items |
||||||||||||
USD |
2,516,198 | 31.070 | 78,178,285 | |||||||||
EUR |
224,175 | 34.70 | 7,778,856 | |||||||||
JPY |
41,504,262 | 0.2542 | 10,550,383 | |||||||||
December 31, 2014 |
||||||||||||
Financial assets |
||||||||||||
Monetary items |
||||||||||||
USD |
5,002,082 | 31.718 | 158,656,051 | |||||||||
EUR |
22,887 | 38.57 | 882,741 | |||||||||
JPY |
704,925 | 0.2652 | 186,946 | |||||||||
Non-monetary items |
||||||||||||
HKD |
149,844 | 4.09 | 612,860 | |||||||||
Financial liabilities |
||||||||||||
Monetary items |
||||||||||||
USD |
3,348,306 | 31.718 | 106,201,584 | |||||||||
EUR |
44,152 | 38.57 | 1,702,926 | |||||||||
JPY |
28,734,248 | 0.2652 | 7,620,323 |
(Continued)
- 51 -
Foreign (In Thousands) |
Exchange Rate (Note 1) |
Carrying Amount |
||||||||||
June 30, 2014 |
||||||||||||
Financial assets |
||||||||||||
Monetary items |
||||||||||||
USD |
$ | 3,462,413 | 29.856 | $ | 103,373,806 | |||||||
EUR |
71,378 | 40.75 | 2,908,664 | |||||||||
JPY |
739,275 | 0.2946 | 217,790 | |||||||||
Non-monetary items |
||||||||||||
HKD |
184,891 | 3.85 | 711,832 | |||||||||
Financial liabilities |
||||||||||||
Monetary items |
||||||||||||
USD |
2,299,423 | 29.856 | 68,651,575 | |||||||||
EUR |
132,123 | 40.75 | 5,383,995 | |||||||||
JPY |
41,879,354 | 0.2946 | 12,337,658 |
(Concluded)
Note 1: | Except as otherwise noted, exchange rate represents the number of N.T. dollars for which one foreign currency could be exchanged. |
Note 2: | The exchange rate represents the number of USD dollars for which one RMB could be exchanged. |
The realized and unrealized foreign exchange losses were NT$292,295 thousand and NT$355,207 thousand for the three months ended June 30, 2014 and 2015, respectively; NT$244,112 thousand and NT$391,608 thousand for the six months ended June 30, 2014 and 2015, respectively. Since there were varieties of foreign currency transactions and functional currencies within the subsidiaries of the Company, the Company was unable to disclose foreign exchange gain (loss) towards each foreign currency with significant impact.
37. | OPERATING SEGMENTS INFORMATION |
a. | Operating segments |
The Companys only reportable segment is the foundry segment. The foundry segment engages mainly in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of masks. The Company also had other operating segments that did not exceed the quantitative threshold for separate reporting. These segments mainly engage in the researching, developing, designing, manufacturing and selling of renewable energy and efficiency related technologies and products.
The Company uses the income from operations as the measurement for segment profit and the basis of performance assessment. There was no material differences between the accounting policies of the operating segment and the accounting policies described in Note 4.
- 52 -
b. | Segment revenue and operating results |
Foundry | Others | Elimination | Total | |||||||||||||
Three months ended June 30, 2015 |
||||||||||||||||
Net revenue from external customers |
$ | 205,167,427 | $ | 272,325 | $ | | $ | 205,439,752 | ||||||||
Income from operations |
77,380,992 | (311,934 | ) | | 77,069,058 | |||||||||||
Three months ended June 30, 2014 |
||||||||||||||||
Net revenue from external customers |
182,820,998 | 199,486 | | 183,020,484 | ||||||||||||
Net revenue from sales among intersegments |
| 12,323 | (12,323 | ) | | |||||||||||
Income from operations |
71,369,814 | (660,642 | ) | | 70,709,172 | |||||||||||
Six months ended June 30, 2015 |
||||||||||||||||
Net revenue from external customers |
427,062,560 | 411,336 | | 427,473,896 | ||||||||||||
Income from operations |
164,356,759 | (661,578 | ) | | 163,695,181 | |||||||||||
Six months ended June 30, 2014 |
||||||||||||||||
Net revenue from external customers |
330,896,123 | 339,533 | | 331,235,656 | ||||||||||||
Net revenue from sales among intersegments |
| 26,895 | (26,895 | ) | | |||||||||||
Income from operations |
124,565,538 | (1,338,752 | ) | | 123,226,786 |
38. | ADDITIONAL DISCLOSURES |
Following are the additional disclosures required by the Securities and Futures Bureau (SFB) for TSMC:
a. | Financings provided: Please see Table 1 attached; |
b. | Endorsement/guarantee provided: Please see Table 2 attached; |
c. | Marketable securities held (excluding investments in subsidiaries, associates and jointly controlled entities): Please see Table 3 attached; |
d. | Marketable securities acquired and disposed of at costs or prices of at least NT$300 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$300 million or 20% of the paid-in capital: Please see Table 5 attached; |
f. | Disposal of individual real estate properties at prices of at least NT$300 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 paid-in capital: Please see Table 6 attached; |
h. | Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 7 attached; |
i. | Information about the derivative financial instruments transaction: Please see Notes 7 and 10; |
- 53 -
j. | Others: The business relationship between the parent and the subsidiaries, and significant transactions between them: Please see Table 8 attached; |
k. | Names, locations, and related information of investees over which TSMC exercises significant influence (excluding information on investment in Mainland China): Please see Table 9 attached; |
l. | Information on investment in Mainland China |
1) | The name of the investee in Mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: Please see Table 10 attached. |
2) | Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in Mainland China on financial reports: Please see Table 8 attached. |
- 54 -
TABLE 1
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
FINANCINGS PROVIDED
FOR THE SIX MONTHS ENDED JUNE 30, 2015
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Collateral | ||||||||||||||||||||||||||||||||||||||||||||||||||
No. |
Financing Company |
Counter-party |
Financial Statement Account |
Related Party |
Maximum Balance for the Period (US$ in Thousands) (Note 4) |
Ending Balance (US$ in Thousands) (Note 4) |
Amount Actually Drawn (US$ in Thousands) |
Interest Rate |
Nature for Financing |
Transaction Amounts |
Reason for Financing |
Allowance for Bad Debt |
Item | Value | Financing Limits for Each Borrowing Company |
Financing Companys Total Financing Amount Limits (Note 3) |
||||||||||||||||||||||||||||||||||
1 |
TSMC Partners | TSMC Solar | Other receivables from related parties |
Yes | $ (US$ |
5,281,900 170,000 |
) |
$ (US$ |
5,281,900 170,000 |
) |
$ (US$ |
4,940,130 159,000 |
) |
0.38 | % | The need for short-term financing |
$ | | Operating capital |
$ | | | $ | | $
|
19,125,325 (Note 1 |
) |
$ | 47,813,313 | |||||||||||||||||||||
TSMC SSL | Other receivables from related parties |
Yes | (US$ |
1,553,500 50,000 |
) |
| | 0.38 | % | The need for short-term financing |
| Operating capital |
| | |
|
19,125,325 (Note 1 |
) |
47,813,313 | |||||||||||||||||||||||||||||||
2 |
TSMC Solar | TSMC Solar NA |
Other receivables from related parties |
Yes | (US$ |
18,642 600 |
) |
(US$ |
18,642 600 |
) |
| | The need for short-term financing |
| Operating capital |
| | |
|
196,389 (Note 2 |
) |
392,777 |
Note 1: | The total amount for lending to a company for funding for a short-term period shall not exceed ten percent (10%) of the net worth of TSMC Partners. In addition, the total amount lendable to any one borrower shall be no more than thirty percent (30%) of the borrowers net worth. The above restriction does not apply to the subsidiaries whose voting shares are 90% and up owned, directly or indirectly, by TSMC (90% and up owned subsidiaries). However, the aggregate amounts lendable to 90% and up owned subsidiaries and the total amount lendable to one such borrower of 90% and up owned subsidiaries shall not exceed forty percent (40%) of the net worth of TSMC Partners. |
Note 2: | The total amount for lending to a company for funding for a short-term period shall not exceed ten percent (10%) of the net worth of TSMC Solar. In addition, the total amount lendable to any one borrower shall be no more than thirty percent (30%) of the borrowers net worth; however, this restriction does not apply to the subsidiaries whose voting shares are 100% owned, directly or indirectly, by TSMC Solar. |
Note 3: | The total amount available for lending purpose shall not exceed the net worth of TSMC Partners and twenty percent (20%) of the net worth of TSMC Solar. |
Note 4: | The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. |
- 55 -
TABLE 2
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
ENDORSEMENTS/GUARANTEES PROVIDED
FOR THE SIX MONTHS ENDED JUNE 30, 2015
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Guaranteed Party |
||||||||||||||||||||||||||||||||||||||||
No. |
Endorsement/ Guarantee Provider |
Name |
Nature of Relationship |
Limits
on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party (Notes 1 and 2) |
Maximum Balance for the Period (US$ in Thousands) (Note 3) |
Ending Balance (US$ in Thousands) (Note 3) |
Amount Actually Drawn (US$ in Thousands) |
Amount
of Endorsement/ Guarantee Collateralized by Properties |
Ratio
of Accumulated Endorsement/ Guarantee to Net Equity per Latest Financial Statements |
Maximum Endorsement/ Guarantee Amount Allowable (Note 2) |
Guarantee Provided by Parent Company |
Guarantee Provided by A Subsidiary |
Guarantee Provided to Subsidiaries in Mainland China | |||||||||||||||||||||||||||
0 |
TSMC | TSMC Global |
Subsidiary | $ | 266,645,095 | $ (US$ |
46,605,000 1,500,000 |
) |
$ (US$ |
46,605,000 1,500,000 |
) |
$ (US$ |
46,605,000 1,500,000 |
) |
$ | | 4.37 | % | $ | 266,645,095 | Yes | No | No | |||||||||||||||||
TSMC North America |
Subsidiary | 266,645,095 | (US$ |
2,585,437 83,213 |
) |
(US$ |
2,585,437 83,213 |
) |
(US$ |
2,585,437 83,213 |
) |
| 0.24 | % | 266,645,095 | Yes | No | No |
Note 1: | The total amount of the guarantee provided by TSMC to any individual entity shall not exceed ten percent (10%) of TSMCs net worth, or the net worth of such entity. However, subsidiaries whose voting shares are 100% owned, directly or indirectly, by TSMC are not subject to the above restrictions after the approval of the Board of Directors. |
Note 2: | The total amount of guarantee shall not exceed twenty-five percent (25%) of TSMCs net worth. |
Note 3: | The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. |
- 56 -
TABLE 3
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
MARKETABLE SECURITIES HELD
JUNE 30, 2015
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
June 30, 2015 | ||||||||||||||||||||||||
Held Company Name |
Marketable Securities Type and Name |
Relationship with the Company | Financial Statement Account |
Shares/Units (In Thousands) |
Carrying Value (Foreign Currencies in Thousands) |
Percentage of Ownership (%) |
Fair Value (Foreign Currencies in Thousands) |
Note | ||||||||||||||||
TSMC |
Commercial Paper |
|||||||||||||||||||||||
Taiwan Power Company |
| Held-to-maturity financial assets |
720 | $ | 7,180,351 | N/A | $ | 7,189,249 | ||||||||||||||||
Stock |
||||||||||||||||||||||||
Semiconductor Manufacturing International Corporation |
| Available-for-sale financial assets |
211,047 | 719,354 | 1 | 719,354 | ||||||||||||||||||
United Industrial Gases Co., Ltd. |
| Financial assets carried at cost |
21,230 | 193,584 | 10 | 193,584 | ||||||||||||||||||
Shin-Etsu Handotai Taiwan Co., Ltd. |
| |
10,500 | 105,000 | 7 | 105,000 | ||||||||||||||||||
W.K. Technology Fund IV |
| |
4,000 | 39,280 | 2 | 39,280 | ||||||||||||||||||
Fund |
||||||||||||||||||||||||
Horizon Ventures Fund |
| Financial assets carried at cost |
| 17,029 | 12 | 17,029 | ||||||||||||||||||
Crimson Asia Capital |
| |
| 18,265 | 1 | 18,265 | ||||||||||||||||||
TSMC Global |
Stock |
|||||||||||||||||||||||
ASML |
| Available-for-sale financial assets |
4,109 | US$ | 424,707 | 1 | US$ | 424,707 | ||||||||||||||||
Money market fund |
||||||||||||||||||||||||
Ssga Cash Mgmt Global Offshore |
| Available-for-sale financial assets |
12 | US$ | 12 | N/A | US$ | 12 | ||||||||||||||||
TSMC Partners |
Stock |
|||||||||||||||||||||||
Mcube Inc. |
| Financial assets carried at cost |
6,333 | | 16 | | ||||||||||||||||||
Fund |
||||||||||||||||||||||||
Shanghai Walden Venture Capital Enterprise |
| Financial assets carried at cost |
| US$ | 5,000 | 6 | US$ | 5,000 | ||||||||||||||||
China Walden Venture Investments II, L.P. |
| |
| US$ | 2,800 | 9 | US$ | 2,800 | ||||||||||||||||
Emerging Alliance |
Common stock |
|||||||||||||||||||||||
Global Investment Holding Inc. |
| Financial assets carried at cost |
11,124 | US$ | 3,065 | 6 | US$ | 3,065 | ||||||||||||||||
RichWave Technology Corp. |
| |
4,074 | US$ | 1,545 | 10 | US$ | 1,545 | ||||||||||||||||
Preferred stock |
||||||||||||||||||||||||
QST Holdings, LLC |
| Financial assets carried at cost |
| US$ | 141 | 4 | US$ | 141 | ||||||||||||||||
ISDF |
Preferred stock |
|||||||||||||||||||||||
Sonics, Inc. |
| Financial assets carried at cost |
230 | | 2 | | ||||||||||||||||||
ISDF II |
Common stock |
|||||||||||||||||||||||
Alchip Technologies Limited |
| Available-for-sale financial assets |
6,581 | US$ | 9,703 | 11 | US$ | 9,703 | ||||||||||||||||
Sonics, Inc. |
| Financial assets carried at cost |
278 | | 3 | | ||||||||||||||||||
Goyatek Technology, Corp. |
| |
745 | | 6 | | ||||||||||||||||||
Preferred stock |
||||||||||||||||||||||||
Sonics, Inc. |
| Financial assets carried at cost |
264 | | 3 | | ||||||||||||||||||
VTAF II |
Common stock |
|||||||||||||||||||||||
Sentelic |
| Financial assets carried at cost |
1,806 | US$ | 2,607 | 8 | US$ | 2,607 | ||||||||||||||||
Aether Systems, Inc. |
| |
2,600 | US$ | 2,243 | 28 | US$ | 2,243 | ||||||||||||||||
RichWave Technology Corp. |
| |
1,267 | US$ | 1,036 | 3 | US$ | 1,036 |
(Continued)
- 57 -
June 30, 2015 | ||||||||||||||||||||||||
Held Company Name |
Marketable Securities Type and Name |
Relationship with the Company | Financial Statement Account |
Shares/Units (In Thousands) |
Carrying Value (Foreign Currencies in Thousands) |
Percentage of Ownership (%) |
Fair Value (Foreign Currencies in Thousands) |
Note | ||||||||||||||||
VTAF II |
Preferred stock |
|||||||||||||||||||||||
5V Technologies, Inc. |
| Financial assets carried at cost |
963 | US$ | 2,168 | 2 | US$ | 2,168 | ||||||||||||||||
Aquantia |
| |
4,643 | US$ | 4,441 | 2 | US$ | 4,441 | ||||||||||||||||
Cresta Technology Corporation |
| |
92 | US$ | 28 | | US$ | 28 | ||||||||||||||||
Impinj, Inc. |
| |
711 | US$ | 1,100 | | US$ | 1,100 | ||||||||||||||||
QST Holdings, LLC |
| |
| US$ | 588 | 13 | US$ | 588 | ||||||||||||||||
VTAF III |
Common stock |
|||||||||||||||||||||||
Accton Wireless Broadband Corp. |
| Financial assets carried at cost |
2,249 | US$ | 315 | 6 | US$ | 315 | ||||||||||||||||
Preferred stock |
||||||||||||||||||||||||
BridgeLux, Inc. |
| Financial assets carried at cost |
7,522 | US$ | 9,379 | 3 | US$ | 9,379 | ||||||||||||||||
GTBF, Inc. |
| |
1,154 | US$ | 1,500 | N/A | US$ | 1,500 | ||||||||||||||||
LiquidLeds Lighting Corp. |
| |
1,600 | US$ | 800 | 11 | US$ | 800 | ||||||||||||||||
Neoconix, Inc. |
| |
4,147 | US$ | 170 | | US$ | 170 | ||||||||||||||||
Powervation, Ltd. |
| |
568 | US$ | 8,878 | 14 | US$ | 8,878 |
(Concluded)
- 58 -
TABLE 4
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 2015
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Beginning Balance | Acquisition | Disposal | Ending Balance (Note 1) | |||||||||||||||||||||||||||||||||||||||||||||
Company Name |
Marketable Securities Type and Name |
Financial Statement Account |
Counter- party |
Nature of Relationship |
Shares/ Units (In Thousands) |
Amount | Shares/ Units (In Thousands) |
Amount | Shares/ Units (In Thousands) |
Amount | Carrying Value |
Gain/ Loss on Disposal |
Shares/ Units (In Thousands) |
Amount | ||||||||||||||||||||||||||||||||||
TSMC |
Commercial Paper |
|||||||||||||||||||||||||||||||||||||||||||||||
Taiwan Power Company |
Held-to-maturity financial assets |
| | 220 | $ | 2,192,014 | 1,080 | $ | 10,768,924 | 580 | $ | 5,800,000 | $ | 5,780,587 | $ | 19,413 | 720 | $ | 7,180,351 | |||||||||||||||||||||||||||||
CPC Corporation, Taiwan |
|
| | 230 | 2,293,579 | 100 | 997,799 | 330 | 3,300,000 | 3,291,378 | 8,622 | | | |||||||||||||||||||||||||||||||||||
Stock |
||||||||||||||||||||||||||||||||||||||||||||||||
VIS |
Investments accounted for using equity method |
Public Market |
Associate | 546,223 | 10,105,485 | | | 82,000 | 3,871,910 | 1,608,371 | 2,263,539 | 464,223 | 8,196,482 | |||||||||||||||||||||||||||||||||||
TSMC SSL |
Noncurrent assets held for sale |
EPISTAR | Subsidiary | 554,674 | 669,472 | | | 554,674 |
|
782,701 (Note 2 |
) |
669,472 | 113,229 | | | |||||||||||||||||||||||||||||||||
TSMC Global |
Stock |
|||||||||||||||||||||||||||||||||||||||||||||||
ASML |
Available-for-sale financial assets |
| | 20,993 | US$ | 2,284,919 | | | 16,884 | US$ | 1,438,279 | US$ | 873,012 | US$ | 565,267 | 4,109 | US$ | 424,707 |
Note 1: | The ending balance includes share of profits/losses of investees and other related adjustment. |
Note 2: | The amount of disposal is the selling price less associated expenditure. |
- 59 -
TABLE 5
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
ACQUISITION OF INDIVIDUAL REAL ESTATE PROPERTIES AT COSTS OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 2015
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Prior Transaction of Related Counter-party | ||||||||||||||||||||||||||||
Company Name |
Types of Property |
Transaction Date |
Transaction Amount (Foreign Currencies in Thousands) |
Payment Term |
Counter-party |
Nature of Relationships |
Owner | Relationships | Transfer Date | Amount | Price Reference |
Purpose of Acquisition |
Other Terms | |||||||||||||||
TSMC |
Fab |
July 9, 2014 to May 28, 2015 |
$ | 2,416,993 | Monthly settlement by the construction progress and acceptance |
DA CIN Construction Co., Ltd. |
| N/A | N/A | N/A | N/A | Bidding, price comparison and price negotiation |
Manufacturing purpose |
None | ||||||||||||||
Fab |
November 3, 2014 to June 18, 2015 |
1,371,031 | Monthly settlement by the construction progress and acceptance |
China Steel Structure Co., Ltd. |
| N/A | N/A | N/A | N/A | Bidding, price comparison and price negotiation |
Manufacturing purpose |
None |
- 60 -
TABLE 6
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 2015
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Transaction Details | Abnormal Transaction | Notes/Accounts Payable or Receivable |
||||||||||||||||||||||||||||||
Company Name |
Related Party |
Nature of Relationships |
Purchases/ Sales |
Amount (Foreign Currencies in Thousands) |
% to Total |
Payment Terms |
Unit Price | Payment Terms | Ending Balance (Foreign Currencies in Thousands) |
% to Total |
Note | |||||||||||||||||||||
TSMC |
TSMC North America |
Subsidiary |
Sales | $ | 280,853,604 | 65 | Net 30 days from invoice date (Note) |
| Note | $ | 62,756,545 | 64 | ||||||||||||||||||||
GUC |
Associate |
Sales | 1,599,748 | | Net 30 days from the end of the month of when invoice is issued |
| | 542,764 | 1 | |||||||||||||||||||||||
TSMC China |
Subsidiary |
Purchases | 11,475,242 | 30 | Net 30 days from the end of the month of when invoice is issued |
| | (2,072,310 | ) | 9 | ||||||||||||||||||||||
WaferTech |
Indirect subsidiary |
Purchases | 4,600,176 | 12 | Net 30 days from the end of the month of when invoice is issued |
| | (700,505 | ) | 3 | ||||||||||||||||||||||
VIS |
Associate |
Purchases | 3,784,843 | 10 | Net 30 days from the end of the month of when invoice is issued |
| | (504,352 | ) | 2 | ||||||||||||||||||||||
SSMC |
Associate |
Purchases | 2,194,298 | 6 | Net 30 days from the end of the month of when invoice is issued |
| | (420,321 | ) | 2 | ||||||||||||||||||||||
TSMC Solar |
TSMC Solar Europe GmbH |
Subsidiary |
Sales | 206,556 | 58 | Net 90 days from the end of the month of when invoice is issued |
| | 125,506 | 56 | ||||||||||||||||||||||
TSMC North America |
GUC |
Associate of TSMC |
Sales | (US$ |
523,775 16,795 |
) |
| Net 30 days from invoice date |
| | (US$ |
197,299 6,350 |
) |
|
Note: | The tenor is 30 days from TSMCs invoice date or determined by the payment terms granted to its clients by TSMC North America. |
- 61 -
TABLE 7
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
JUNE 30, 2015
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Overdue | ||||||||||||||||||||||||
Company Name |
Related Party |
Nature of Relationships |
Ending Balance (Foreign Currencies in Thousands) |
Turnover Days (Note 1) |
Amount | Action Taken |
Amounts Received in Subsequent Period |
Allowance for Bad Debts |
||||||||||||||||
TSMC |
TSMC North America |
Subsidiary |
$ | 63,048,111 | 49 | $ | 6,176,072 | | $ | 11,882,043 | $ | | ||||||||||||
SSMC |
Associate |
1,627,246 | Note 2 | | | | | |||||||||||||||||
VIS |
Associate |
1,293,572 | Note 2 | | | | | |||||||||||||||||
GUC |
Associate |
684,164 | 46 | | | | | |||||||||||||||||
Xintec |
Associate |
106,414 | 26 | | | | | |||||||||||||||||
TSMC Partners |
TSMC Solar |
The same parent company |
(US$ |
4,953,605 159,434 |
) |
Note 2 | | | | | ||||||||||||||
VisEra Holding |
Jointly controlled entity |
(US$ |
400,803 12,900 |
) |
Note 2 | | | | | |||||||||||||||
TSMC China |
TSMC |
Parent company |
(RMB |
2,072,310 413,595 |
) |
32 | | | | | ||||||||||||||
TSMC Technology |
TSMC |
Parent company |
(US$ |
421,059 13,552 |
) |
Note 2 | | | | | ||||||||||||||
WaferTech |
TSMC |
Parent company |
(US$ |
700,505 22,546 |
) |
28 | | | | | ||||||||||||||
TSMC North America |
GUC |
Associate of TSMC |
(US$ |
197,299 6,350 |
) |
42 | (US$ |
54,265 1,747 |
) |
| (US$ |
54,646 1,759 |
) |
| ||||||||||
TSMC Solar |
TSMC Solar Europe GmbH |
Subsidiary |
125,506 | 128 | 50,289 | Accelerate collection process |
42,351 | |
Note 1: | The calculation of turnover days excludes other receivables from related parties. |
Note 2: | The ending balance is primarily consisted of other receivables, which is not applicable for the calculation of turnover days. |
- 62 -
TABLE 8
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2015
(Amounts in Thousands of New Taiwan Dollars)
Intercompany Transactions |
||||||||||||||||||||
No. | Company Name |
Counter Party |
Nature of Relationship (Note 1) |
Financial Statements Item |
Amount | Terms (Note 2) |
Percentage of Consolidated Net Revenue or Total Assets |
|||||||||||||
0 | TSMC | TSMC North America | 1 | Net revenue from sale of goods | $ | 280,853,604 | | 66 | % | |||||||||||
Receivables from related parties | 62,756,545 | | 4 | % | ||||||||||||||||
Other receivables from related parties | 291,566 | | | |||||||||||||||||
TSMC China | 1 | Purchases | 11,475,242 | | 3 | % | ||||||||||||||
Disposal of property, plant and equipment | 109,647 | | | |||||||||||||||||
Payables to related parties | 2,072,310 | | | |||||||||||||||||
TSMC Japan | 1 | Marketing expenses - commission | 114,914 | | | |||||||||||||||
TSMC Europe | 1 | Marketing expenses - commission | 191,368 | | | |||||||||||||||
TSMC Technology | 1 | Research and development expenses | 884,441 | | | |||||||||||||||
Payables to related parties | 421,059 | | | |||||||||||||||||
WaferTech | 1 | Purchases | 4,600,176 | | 1 | % | ||||||||||||||
Payables to related parties | 700,505 | | | |||||||||||||||||
TSMC Canada | 1 | Research and development expenses | 118,454 | | | |||||||||||||||
1 | TSMC Solar | TSMC Solar Europe GmbH | 1 | Net revenue from sale of goods | 206,556 | | | |||||||||||||
Receivables from related parties | 125,506 | | | |||||||||||||||||
TSMC Partners | 3 | Other payables to related parties | 4,953,605 | | |
Note 1: | No. 1 represents the transactions from parent company to subsidiary. |
No. 3 represents the transactions between subsidiaries. |
Note 2: | The sales prices and payment terms of intercompany sales are not significantly different from those to third parties. For other intercompany transactions, prices and terms are determined in accordance with mutual agreements. |
- 63 -
TABLE 9
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA)
FOR THE SIX MONTHS ENDED JUNE 30, 2015
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Original Investment Amount | Balance as of June 30, 2015 | |||||||||||||||||||||||||||||||||||
Investor Company |
Investee Company |
Location |
Main Businesses and Products |
June 30, 2015 (Foreign Currencies in Thousands) |
December 31, 2014 (Foreign Currencies in Thousands) |
Shares (In Thousands) |
Percentage of Ownership (%) |
Carrying Value (Foreign Currencies in Thousands) |
Net Income (Losses) of the Investee (Foreign Currencies in Thousands) |
Share of Profits/Losses of Investee (Note 1) (Foreign Currencies in Thousands) |
Note | |||||||||||||||||||||||||
TSMC |
TSMC Global |
Tortola, British Virgin Islands |
Investment activities |
$ | 103,114,868 | $ | 103,114,868 | 3 | 100 | $ | 129,842,267 | $ | 17,853,676 | $ | 17,853,676 | Subsidiary | ||||||||||||||||||||
TSMC Partners |
Tortola, British Virgin Islands |
Investing in companies involved in the design, manufacture, and other related business in the semiconductor industry |
31,456,130 | 31,456,130 | 988,268 | 100 | 47,749,091 | 915,556 | 915,609 | Subsidiary | ||||||||||||||||||||||||||
VIS |
Hsin-Chu, Taiwan |
Research, design, development, manufacture, packaging, testing and sale of memory integrated circuits, LSI, VLSI and related parts |
10,180,677 | 11,789,048 | 464,223 | 28 | 8,196,482 | 2,431,449 | 793,099 | Associate | ||||||||||||||||||||||||||
SSMC |
Singapore |
Fabrication and supply of integrated circuits |
5,120,028 | 5,120,028 | 314 | 39 | 7,831,408 | 3,261,648 | 1,265,193 | Associate | ||||||||||||||||||||||||||
TSMC North America |
San Jose, California, U.S.A. |
Selling and marketing of integrated circuits and semiconductor devices |
333,718 | 333,718 | 11,000 | 100 | 3,942,656 | 39,835 | 39,835 | Subsidiary | ||||||||||||||||||||||||||
Xintec |
Taoyuan, Taiwan |
Wafer level chip size packaging service |
1,309,969 | 1,357,890 | 92,778 | 35 | 2,250,809 | 241,614 | 90,390 | Associate | ||||||||||||||||||||||||||
TSMC Solar |
Tai-Chung, Taiwan |
Engaged in researching, developing, designing, manufacturing and selling renewable energy and saving related technologies and products |
11,180,000 | 11,180,000 |
|
1,118,000 (Note 3 |
) |
99 | 1,967,224 | (973,486 | ) | (961,750 | ) | Subsidiary | ||||||||||||||||||||||
GUC |
Hsin-Chu, Taiwan |
Researching, developing, manufacturing, testing and marketing of integrated circuits |
386,568 | 386,568 | 46,688 | 35 | 1,013,265 | 200,219 | 70,679 | Associate | ||||||||||||||||||||||||||
VTAF III |
Cayman Islands |
Investing in new start-up technology companies |
1,737,336 | 1,850,782 | | 98 | 734,873 | 50,637 | 49,624 | Subsidiary | ||||||||||||||||||||||||||
VTAF II |
Cayman Islands |
Investing in new start-up technology companies |
608,562 | 605,479 | | 98 | 459,633 | (3,741 | ) | (3,666 | ) | Subsidiary | ||||||||||||||||||||||||
TSMC Europe |
Amsterdam, the Netherlands |
Marketing and engineering supporting activities |
15,749 | 15,749 | | 100 | 299,775 | 19,280 | 19,280 | Subsidiary | ||||||||||||||||||||||||||
Emerging Alliance |
Cayman Islands |
Investing in new start-up technology companies |
844,775 | 844,775 | | 99.5 | 150,260 | (1,707 | ) | (1,698 | ) | Subsidiary | ||||||||||||||||||||||||
TSMC Japan |
Yokohama, Japan |
Marketing activities |
83,760 | 83,760 | 6 | 100 | 118,029 | 2,969 | 2,969 | Subsidiary | ||||||||||||||||||||||||||
TSMC GN |
Taipei, Taiwan |
Investment activities |
270,000 | 200,000 | | 100 | 38,011 | (72,371 | ) | (72,371 | ) | Subsidiary | ||||||||||||||||||||||||
TSMC Korea |
Seoul, Korea |
Customer service and technical supporting activities |
13,656 | 13,656 | 80 | 100 | 34,042 | 2,036 | 2,036 | Subsidiary | ||||||||||||||||||||||||||
TSMC Partners |
TSMC Development |
Delaware, U.S.A. |
Investment activities |
(US$ |
0.03 0.001 |
) |
(US$ |
0.03 0.001 |
) |
| 100 | (US$ |
24,150,627 777,297 |
) |
(US$ |
826,829 26,513 |
) |
Note 2 | Subsidiary | |||||||||||||||||
VisEra Holding |
Cayman Islands |
Investing in companies involved in the design, manufacturing, and other related businesses in the semiconductor industry |
(US$ |
1,336,010 43,000 |
) |
(US$ |
1,336,010 43,000 |
) |
43,000 | 49 | (US$ |
3,469,013 111,652 |
) |
(US$ |
74,139 2,377 |
) |
Note 2 | Jointly controlled entity | ||||||||||||||||||
TSMC Technology |
Delaware, U.S.A. |
Engineering support activities |
(US$ |
0.03 0.001 |
) |
(US$ |
0.03 0.001 |
) |
| 100 | (US$ |
500,673 16,114 |
) |
(US$ |
34,406 1,103 |
) |
Note 2 | Subsidiary | ||||||||||||||||||
ISDF II |
Cayman Islands |
Investing in new start-up technology companies |
(US$ |
288,920 9,299 |
) |
(US$ |
288,920 9,299 |
) |
9,299 | 97 | (US$ |
395,216 12,720 |
) |
(US$ |
(325 (10 |
) )) |
Note 2 | Subsidiary | ||||||||||||||||||
TSMC Canada |
Ontario, Canada |
Engineering support activities |
(US$ |
71,461 2,300 |
) |
(US$ |
71,461 2,300 |
) |
2,300 | 100 | (US$ |
151,114 4,864 |
) |
(US$ |
8,914 286 |
) |
Note 2 | Subsidiary | ||||||||||||||||||
ISDF |
Cayman Islands |
Investing in new start-up technology companies |
(US$ |
18,114 583 |
) |
(US$ |
18,114 583 |
) |
583 | 97 | (US$ |
3,916 126 |
) |
(US$ |
(376 (12 |
) )) |
Note 2 | Subsidiary | ||||||||||||||||||
TSMC Development |
WaferTech |
Washington, U.S.A. |
Manufacturing, selling, testing and computer-aided designing of integrated circuits and other semiconductor devices |
| | 293,637 | 100 | (US$ |
6,524,666 209,999 |
) |
(US$ |
792,862 25,424 |
) |
Note 2 | Subsidiary | |||||||||||||||||||||
VTAF III |
Mutual-Pak |
New Taipei, Taiwan |
Manufacturing and selling of electronic parts and researching, developing, and testing of RFID |
(US$ |
161,958 5,212 |
) |
(US$ |
161,958 5,212 |
) |
15,643 | 58 | (US$ |
23,107 744 |
) |
(US$ |
(10,095 (324 |
) )) |
Note 2 | Subsidiary | |||||||||||||||||
Growth Fund |
Cayman Islands |
Investing in new start-up technology companies |
(US$ |
20,561 662 |
) |
(US$ |
67,733 2,180 |
) |
| 100 | (US$ |
1,497 48 |
) |
(US$ |
31,764 1,019 |
) |
Note 2 | Subsidiary | ||||||||||||||||||
VTA Holdings |
Delaware, U.S.A. |
Investing in new start-up technology companies |
| | | 62 | | | Note 2 | Subsidiary |
(Continued)
- 64 -
Original Investment Amount | Balance as of June 30, 2015 | |||||||||||||||||||||||||||||||||||
Investor Company |
Investee Company |
Location |
Main Businesses and Products |
June 30, 2015 (Foreign Currencies in Thousands) |
December 31, 2014 (Foreign Currencies in Thousands) |
Shares (In Thousands) |
Percentage of Ownership (%) |
Carrying Value (Foreign Currencies in Thousands) |
Net Income (Losses) of the Investee (Foreign Currencies in Thousands) |
Share of Profits/Losses of Investee (Note 1) (Foreign Currencies in Thousands) |
Note | |||||||||||||||||||||||||
VTAF II |
VTA Holdings |
Delaware, U.S.A. |
Investing in new start-up technology companies |
$ | | $ | | | 31 | $ | | $ | | |
Note 2 |
|
Subsidiary | |||||||||||||||||||
Emerging Alliance |
VTA Holdings |
Delaware, U.S.A. |
Investing in new start-up technology companies |
| | | 7 | | | |
Note 2 |
|
Subsidiary | |||||||||||||||||||||||
TSMC Solar |
Motech |
New Taipei, Taiwan |
Manufacturing and sales of solar cells, crystalline silicon solar cell, and test and measurement instruments and design and construction of solar power systems |
6,228,661 | 6,228,661 | 87,480 | 18 | 3,154,231 | (1,036,142 | ) | |
Note 2 |
|
Associate | ||||||||||||||||||||||
TSMC Solar NA |
Delaware, U.S.A. |
Selling and marketing of solar related products |
236,025 | 236,025 | 1 | 100 | 16,893 | 1,521 | |
Note 2 |
|
Subsidiary | ||||||||||||||||||||||||
TSMC Solar Europe GmbH |
Hamburg, Germany |
Selling of solar related products and providing customer service |
25,266 | | 1 | 100 | 15,389 | (20,914 | ) | |
Note 2 |
|
Subsidiary | |||||||||||||||||||||||
TSMC Solar Europe |
Amsterdam, the Netherlands |
Investing in solar related business |
| 504,107 | | | | (5,081 | ) | |
Note 2 |
|
Subsidiary | |||||||||||||||||||||||
TSMC GN |
TSMC Solar |
Tai-Chung, Taiwan |
Engaged in researching, developing, designing, manufacturing and selling renewable energy and saving related technologies and products |
94,586 | 53,092 |
|
13,478 (Note 3 |
) |
1 | 23,366 | (973,486 | ) | |
Note 2 |
|
Associate | ||||||||||||||||||||
TSMC Solar Europe |
TSMC Solar Europe GmbH |
Hamburg, Germany |
Selling of solar related products and providing customer service |
| (EUR |
430,280 12,400 |
) |
| | | (EUR |
(20,914
|
) (595)) |
|
Note 2 |
|
Subsidiary |
Note 1: | The share of profits/losses of investee includes the effect of unrealized gross profit on intercompany transactions. |
Note 2: | The share of profits/losses of the investee company is not reflected herein as such amount is already included in the share of profits/losses of the investor company. |
Note 3: | TSMC Solar completed the filing of capital reduction in July 2015 and thereafter, TSMC and TSMC GN hold 289,647 thousand and 3,492 thousand shares of TSMC Solar, respectively. |
(Concluded)
- 65 -
TABLE 10
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
INFORMATION ON INVESTMENT IN MAINLAND CHINA
FOR THE SIX MONTHS ENDED JUNE 30, 2015
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Investment Flows | ||||||||||||||||||||||||||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||||||||||||||||||||||||
Investee |
Main Businesses |
Total Amount of Paid-in Capital (Foreign Currencies in Thousands) |
Method of Investment |
Outflow
of Investment from Taiwan as of January 1, 2015 (US$ in Thousands) |
Outflow | Inflow | Outflow
of Investment from Taiwan as of June 30, 2015 (US$ in Thousands) |
Net Income (Losses) of the Investee Company |
Percentage of Ownership |
Share of Profits/ Losses |
Carrying Amount as of June 30, 2015 |
Accumulated Inward Remittance of Earnings as of June 30, 2015 |
||||||||||||||||||||||||||||||||||
TSMC China |
Manufacturing and selling of integrated circuits at the order of and pursuant to product design specifications provided by customers |
$ (RMB |
18,939,667 4,502,080 |
) |
Note 1 | $ (US$ |
18,939,667 596,000 |
) |
$ | | $ | | $ (US$ |
18,939,667 596,000 |
) |
$ | 4,723,047 | 100 | % | $
|
4,739,205 (Note 2 |
) |
$ | 35,857,354 | $ | |
Accumulated Investment in Mainland China as of June 30, 2015 (US$ in Thousands) |
Investment Amounts Authorized by Investment Commission, MOEA (US$ in Thousands) |
Upper Limit on Investment (US$ in Thousands) |
||||||||
$ (US$ |
18,939,667 596,000 |
) |
$ (US$ |
18,939,667 596,000 |
) |
$ (US$ |
18,939,667 596,000 |
) |
Note 1: | TSMC directly invested US$596,000 thousand in TSMC China. |
Note 2: | Amount was recognized based on the reviewed financial statements. |
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