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 May 2014
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: May 19, 2014 | By | /s/ Lora Ho | ||||
Lora Ho | ||||||
Senior Vice President & Chief Financial Officer |
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
Consolidated Financial Statements for the Three Months Ended March 31, 2014 and 2013 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 as of March 31, 2014 and 2013 and the related consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended March 31, 2014 and 2013. 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.
May 13, 2014
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)
March 31, 2014 (Reviewed) |
December 31, 2013 (Audited) |
March 31, 2013 (Reviewed) |
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Amount | % | Amount | % | Amount | % | |||||||||||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||||||||||
CURRENT ASSETS |
||||||||||||||||||||||||||||||||||||
Cash and cash equivalents (Note 6) |
$ | 231,697,295 | 18 | $ | 242,695,447 | 19 | $ | 186,028,798 | 18 | |||||||||||||||||||||||||||
Financial assets at fair value through profit or loss (Note 7) |
11,425 | - | 90,353 | - | 18,206 | - | ||||||||||||||||||||||||||||||
Available-for-sale financial assets (Note 8) |
845,002 | - | 760,793 | - | 1,162,904 | - | ||||||||||||||||||||||||||||||
Held-to-maturity financial assets (Note 9) |
2,394,178 | - | 1,795,949 | - | 2,044,822 | - | ||||||||||||||||||||||||||||||
Notes and accounts receivable, net (Note 11) |
73,774,054 | 6 | 71,649,926 | 6 | 65,472,529 | 6 | ||||||||||||||||||||||||||||||
Receivables from related parties (Note 35) |
558,970 | - | 291,708 | - | 434,306 | - | ||||||||||||||||||||||||||||||
Other receivables from related parties (Note 35) |
162,444 | - | 221,576 | - | 176,298 | - | ||||||||||||||||||||||||||||||
Inventories (Note 12) |
43,481,269 | 3 | 37,494,893 | 3 | 37,833,465 | 4 | ||||||||||||||||||||||||||||||
Other financial assets (Note 36) |
584,364 | - | 501,785 | - | 1,240,492 | - | ||||||||||||||||||||||||||||||
Other current assets (Note 17) |
2,381,416 | - | 2,984,224 | - | 3,339,372 | - | ||||||||||||||||||||||||||||||
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Total current assets |
355,890,417 | 27 | 358,486,654 | 28 | 297,751,192 | 28 | ||||||||||||||||||||||||||||||
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NONCURRENT ASSETS |
||||||||||||||||||||||||||||||||||||
Available-for-sale financial assets (Note 8) |
59,284,283 | 5 | 58,721,959 | 5 | 42,087,667 | 4 | ||||||||||||||||||||||||||||||
Hedging derivative financial assets (Note 10) |
- | - | - | - | 659,351 | - | ||||||||||||||||||||||||||||||
Financial assets carried at cost (Note 13) |
2,055,075 | - | 2,145,591 | - | 3,703,593 | 1 | ||||||||||||||||||||||||||||||
Investments accounted for using equity method (Note 14) |
29,507,728 | 2 | 28,316,260 | 2 | 24,252,070 | 2 | ||||||||||||||||||||||||||||||
Property, plant and equipment (Note 15) |
828,011,580 | 64 | 792,665,913 | 63 | 666,447,384 | 63 | ||||||||||||||||||||||||||||||
Intangible assets (Note 16) |
12,113,629 | 1 | 11,490,383 | 1 | 11,478,437 | 1 | ||||||||||||||||||||||||||||||
Deferred income tax assets (Notes 4 and 30) |
7,893,479 | 1 | 7,239,609 | 1 | 11,610,593 | 1 | ||||||||||||||||||||||||||||||
Refundable deposits (Note 35) |
2,560,988 | - | 2,519,031 | - | 2,385,571 | - | ||||||||||||||||||||||||||||||
Other noncurrent assets (Note 17) |
1,422,102 | - | 1,469,577 | - | 1,253,868 | - | ||||||||||||||||||||||||||||||
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Total noncurrent assets |
942,848,864 | 73 | 904,568,323 | 72 | 763,878,534 | 72 | ||||||||||||||||||||||||||||||
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TOTAL |
$ | 1,298,739,281 | 100 | $ | 1,263,054,977 | 100 | $ | 1,061,629,726 | 100 | |||||||||||||||||||||||||||
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LIABILITIES AND EQUITY |
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CURRENT LIABILITIES |
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Short-term loans (Note 18) |
$ | 24,843,645 | 2 | $ | 15,645,000 | 1 | $ | 35,842,800 | 3 | |||||||||||||||||||||||||||
Financial liabilities at fair value through profit or loss (Note 7) |
188,535 | - | 33,750 | - | 4,223 | - | ||||||||||||||||||||||||||||||
Accounts payable |
15,380,651 | 1 | 14,670,260 | 1 | 12,462,978 | 1 | ||||||||||||||||||||||||||||||
Payables to related parties (Note 35) |
1,330,050 | - | 1,688,456 | - | 793,133 | - | ||||||||||||||||||||||||||||||
Salary and bonus payable |
6,107,014 | 1 | 8,330,956 | 1 | 5,075,309 | 1 | ||||||||||||||||||||||||||||||
Accrued profit sharing to employees and bonus to directors and supervisors (Note 23) |
16,018,761 | 1 | 12,738,801 | 1 | 13,864,935 | 1 | ||||||||||||||||||||||||||||||
Payables to contractors and equipment suppliers |
53,461,455 | 4 | 89,810,160 | 7 | 48,601,349 | 5 | ||||||||||||||||||||||||||||||
Income tax payable (Notes 4 and 30) |
28,433,542 | 2 | 22,563,286 | 2 | 20,164,514 | 2 | ||||||||||||||||||||||||||||||
Provisions (Note 19) |
9,964,997 | 1 | 7,603,781 | 1 | 6,350,698 | 1 | ||||||||||||||||||||||||||||||
Accrued expenses and other current liabilities (Notes 15 and 22) |
18,668,514 | 2 | 16,693,484 | 1 | 14,915,135 | 1 | ||||||||||||||||||||||||||||||
Current portion of long-term bank loans (Note 21) |
- | - | - | - | 131,250 | - | ||||||||||||||||||||||||||||||
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Total current liabilities |
174,397,164 | 14 | 189,777,934 | 15 | 158,206,324 | 15 | ||||||||||||||||||||||||||||||
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NONCURRENT LIABILITIES |
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Hedging derivative financial liabilities (Note 10) |
5,279,032 | - | 5,481,616 | - | - | - | ||||||||||||||||||||||||||||||
Bonds payable (Note 20) |
211,798,101 | 16 | 210,767,625 | 17 | 125,000,000 | 12 | ||||||||||||||||||||||||||||||
Long-term bank loans (Note 21) |
40,000 | - | 40,000 | - | 1,325,000 | - | ||||||||||||||||||||||||||||||
Other long-term payables (Note 22) |
36,000 | - | 36,000 | - | 54,000 | - | ||||||||||||||||||||||||||||||
Obligations under finance leases (Note 15) |
783,275 | - | 776,230 | - | 768,935 | - | ||||||||||||||||||||||||||||||
Accrued pension cost (Note 4) |
7,577,202 | 1 | 7,589,926 | 1 | 6,904,635 | 1 | ||||||||||||||||||||||||||||||
Others (Note 19) |
830,406 | - | 810,561 | - | 721,747 | - | ||||||||||||||||||||||||||||||
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Total noncurrent liabilities |
226,344,016 | 17 | 225,501,958 | 18 | 134,774,317 | 13 | ||||||||||||||||||||||||||||||
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Total liabilities |
400,741,180 | 31 | 415,279,892 | 33 | 292,980,641 | 28 | ||||||||||||||||||||||||||||||
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EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT |
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Capital stock (Note 23) |
259,291,239 | 20 | 259,286,171 | 21 | 259,282,327 | 25 | ||||||||||||||||||||||||||||||
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Capital surplus (Note 23) |
55,835,280 | 4 | 55,858,626 | 4 | 55,762,572 | 5 | ||||||||||||||||||||||||||||||
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Retained earnings (Note 23) |
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Appropriated as legal capital reserve |
132,436,003 | 10 | 132,436,003 | 11 | 115,820,123 | 11 | ||||||||||||||||||||||||||||||
Appropriated as special capital reserve |
2,785,741 | 1 | 2,785,741 | - | 7,606,224 | 1 | ||||||||||||||||||||||||||||||
Unappropriated earnings |
430,842,153 | 33 | 382,971,408 | 30 | 324,561,997 | 30 | ||||||||||||||||||||||||||||||
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566,063,897 | 44 | 518,193,152 | 41 | 447,988,344 | 42 | |||||||||||||||||||||||||||||||
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Others (Note 23) |
16,583,227 | 1 | 14,170,306 | 1 | 3,098,025 | - | ||||||||||||||||||||||||||||||
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Equity attributable to shareholders of the parent |
897,773,643 | 69 | 847,508,255 | 67 | 766,131,268 | 72 | ||||||||||||||||||||||||||||||
NONCONTROLLING INTERESTS (Note 23) |
224,458 | - | 266,830 | - | 2,517,817 | - | ||||||||||||||||||||||||||||||
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Total equity |
897,998,101 | 69 | 847,775,085 | 67 | 768,649,085 | 72 | ||||||||||||||||||||||||||||||
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TOTAL |
$ | 1,298,739,281 | 100 | $ | 1,263,054,977 | 100 | $ | 1,061,629,726 | 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) |
Three Months Ended March 31 | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||
Amount | % | Amount | % | |||||||||||||||||||||||
NET REVENUE (Notes 25, 35 and 40) |
$ | 148,215,172 | 100 | $ | 132,754,996 | 100 | ||||||||||||||||||||
COST OF REVENUE (Notes 12, 32 and 35) |
77,836,093 | 53 | 71,988,726 | 54 | ||||||||||||||||||||||
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GROSS PROFIT BEFORE REALIZED GROSS PROFIT ON SALES TO ASSOCIATES |
70,379,079 | 47 | 60,766,270 | 46 | ||||||||||||||||||||||
REALIZED GROSS PROFIT ON SALES TO ASSOCIATES |
21,017 | - | 3,540 | - | ||||||||||||||||||||||
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GROSS PROFIT |
70,400,096 | 47 | 60,769,810 | 46 | ||||||||||||||||||||||
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OPERATING EXPENSES (Notes 32 and 35) |
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Research and development |
12,066,622 | 8 | 10,650,985 | 8 | ||||||||||||||||||||||
General and administrative |
4,655,671 | 3 | 4,695,520 | 3 | ||||||||||||||||||||||
Marketing |
1,152,702 | 1 | 1,029,799 | 1 | ||||||||||||||||||||||
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Total operating expenses |
17,874,995 | 12 | 16,376,304 | 12 | ||||||||||||||||||||||
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OTHER OPERATING INCOME AND EXPENSES, NET (Notes 26 and 32) |
(2,741 | ) | - | 34,503 | - | |||||||||||||||||||||
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INCOME FROM OPERATIONS (Note 40) |
52,522,360 | 35 | 44,428,009 | 34 | ||||||||||||||||||||||
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NON-OPERATING INCOME AND EXPENSES |
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Share of profits of associates and joint venture |
955,380 | 1 | 654,153 | - | ||||||||||||||||||||||
Other income (Note 27) |
613,699 | - | 346,321 | - | ||||||||||||||||||||||
Foreign exchange loss, net |
(36,401 | ) | - | (192,914 | ) | - | ||||||||||||||||||||
Finance costs (Note 28) |
(796,580 | ) | - | (493,998 | ) | - | ||||||||||||||||||||
Other gains and losses (Note 29) |
43,384 | - | 1,006,343 | 1 | ||||||||||||||||||||||
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Total non-operating income and expenses |
779,482 | 1 | 1,319,905 | 1 | ||||||||||||||||||||||
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INCOME BEFORE INCOME TAX |
53,301,842 | 36 | 45,747,914 | 35 | ||||||||||||||||||||||
INCOME TAX EXPENSE (Notes 4 and 30) |
5,456,064 | 4 | 6,212,371 | 5 | ||||||||||||||||||||||
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NET INCOME |
47,845,778 | 32 | 39,535,543 | 30 | ||||||||||||||||||||||
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(Continued)
- 3 -
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) |
Three Months Ended March 31 | ||||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||||
Amount | % | Amount | % | |||||||||||||||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) (Notes 23 and 30) |
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Exchange differences arising on translation of foreign operations |
$ | 2,831,381 | 2 | $ | 2,903,753 | 2 | ||||||||||||||||||||
Changes in fair value of available-for-sale financial assets |
(415,445 | ) | - | 2,825,692 | 2 | |||||||||||||||||||||
Share of other comprehensive income (loss) of associates and joint venture |
(4,747 | ) | - | 135,123 | - | |||||||||||||||||||||
Income tax benefit related to components of other comprehensive income |
2,956 | - | 43,239 | - | ||||||||||||||||||||||
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Other comprehensive income for the period, net of income tax |
2,414,145 | 2 | 5,907,807 | 4 | ||||||||||||||||||||||
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TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |
$ | 50,259,923 | 34 | $ | 45,443,350 | 34 | ||||||||||||||||||||
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NET INCOME (LOSS) ATTRIBUTABLE TO: |
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Shareholders of the parent |
$ | 47,870,745 | 32 | $ | 39,576,876 | 30 | ||||||||||||||||||||
Noncontrolling interests |
(24,967 | ) | - | (41,333 | ) | - | ||||||||||||||||||||
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$ | 47,845,778 | 32 | $ | 39,535,543 | 30 | |||||||||||||||||||||
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TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: |
||||||||||||||||||||||||||
Shareholders of the parent |
$ | 50,283,666 | 34 | $ | 45,455,386 | 34 | ||||||||||||||||||||
Noncontrolling interests |
(23,743 | ) | - | (12,036 | ) | - | ||||||||||||||||||||
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$ | 50,259,923 | 34 | $ | 45,443,350 | 34 | |||||||||||||||||||||
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2014 | 2013 | |||||||||
Income Attributable to the Parent |
Income Attributable to Shareholders of the Parent | |||||||||
EARNINGS PER SHARE (NT$, Note 31) |
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Basic earnings per share |
$ | 1.85 | $ | 1.53 | ||||||
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Diluted earnings per share |
$ | 1.85 | $ | 1.53 | ||||||
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The accompanying notes are an integral part of the consolidated financial statements. | (Concluded) |
- 4 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)
Equity Attributable to Shareholders of the Parent | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Others | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Currency Translation Reserve |
Unrealized Gain/Loss from for-sale Financial |
Cash Flow Hedges |
Total |
Total | Non- Interests |
Total Equity |
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Capital Stock - Common Stock |
Retained Earnings | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares (In |
Capital | Legal Capital |
Special Capital |
Unappro- priated |
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Thousands) | Amount | Surplus | Reserve | Reserve | Earnings | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
Net income for the three months ended March 31, 2014 |
- | - | - | - | - | 47,870,745 | 47,870,745 | - | - | - | - | 47,870,745 | (24,967 | ) | 47,845,778 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income for the three months ended March 31, 2014, net of income tax |
- | - | - | - | - | - | - | 2,807,924 | (395,098 | ) | 95 | 2,412,921 | 2,412,921 | 1,224 | 2,414,145 | |||||||||||||||||||||||||||||||||||||||||
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Total comprehensive income for the three months ended March 31, 2014 |
- | - | - | - | - | 47,870,745 | 47,870,745 | 2,807,924 | (395,098 | ) | 95 | 2,412,921 | 50,283,666 | (23,743 | ) | 50,259,923 | ||||||||||||||||||||||||||||||||||||||||
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Issuance of stock from exercise of employee stock options |
507 | 5,068 | 17,235 | - | - | - | - | - | - | - | - | 22,303 | - | 22,303 | ||||||||||||||||||||||||||||||||||||||||||
Adjustments to share of changes in equity of associates and joint venture |
- | - | (29,636 | ) | - | - | - | - | - | - | - | - | (29,636 | ) | - | (29,636 | ) | |||||||||||||||||||||||||||||||||||||||
Adjustments arising from changes in percentage of ownership in subsidiaries |
- | - | (10,945 | ) | - | - | - | - | - | - | - | - | (10,945 | ) | 10,945 | - | ||||||||||||||||||||||||||||||||||||||||
Decrease in noncontrolling interests |
- | - | - | - | - | - | - | - | - | - | - | - | (29,574 | ) | (29,574 | ) | ||||||||||||||||||||||||||||||||||||||||
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BALANCE, MARCH 31, 2014 |
25,929,124 | $ | 259,291,239 | $ | 55,835,280 | $ | 132,436,003 | $ | 2,785,741 | $ | 430,842,153 | $ | 566,063,897 | $ | (4,332,438 | ) | $ | 20,915,683 | $ | (18 | ) | $ | 16,583,227 | $ | 897,773,643 | $ | 224,458 | $ | 897,998,101 | |||||||||||||||||||||||||||
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BALANCE, JANUARY 1, 2013 |
25,924,435 | $ | 259,244,357 | $ | 55,675,340 | $ | 115,820,123 | $ | 7,606,224 | $ | 284,985,121 | $ | 408,411,468 | $ | (10,753,806 | ) | $ | 7,973,321 | $ | - | $ | (2,780,485 | ) | $ | 720,550,680 | $ | 2,543,226 | $ | 723,093,906 | |||||||||||||||||||||||||||
Net income for the three months ended March 31, 2013 |
- | - | - | - | - | 39,576,876 | 39,576,876 | - | - | - | - | 39,576,876 | (41,333 | ) | 39,535,543 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income for the three months ended March 31, 2013, net of income tax |
- | - | - | - | - | - | - | 3,006,684 | 2,871,826 | - | 5,878,510 | 5,878,510 | 29,297 | 5,907,807 | ||||||||||||||||||||||||||||||||||||||||||
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Total comprehensive income for the three months ended March 31, 2013 |
- | - | - | - | - | 39,576,876 | 39,576,876 | 3,006,684 | 2,871,826 | - | 5,878,510 | 45,455,386 | (12,036 | ) | 45,443,350 | |||||||||||||||||||||||||||||||||||||||||
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Issuance of stock from exercise of employee stock options |
3,797 | 37,970 | 69,384 | - | - | - | - | - | - | - | - | 107,354 | - | 107,354 | ||||||||||||||||||||||||||||||||||||||||||
Stock option compensation cost of subsidiary |
- | - | - | - | - | - | - | - | - | - | - | - | 2,701 | 2,701 | ||||||||||||||||||||||||||||||||||||||||||
Adjustments to share of changes in equity of associates and joint venture |
- | - | 14,238 | - | - | - | - | - | - | - | - | 14,238 | - | 14,238 | ||||||||||||||||||||||||||||||||||||||||||
Adjustments arising from changes in percentage of ownership in subsidiaries |
- | - | 3,610 | - | - | - | - | - | - | - | - | 3,610 | (3,610 | ) | - | |||||||||||||||||||||||||||||||||||||||||
Decrease in noncontrolling interests |
- | - | - | - | - | - | - | - | - | - | - | - | (12,464 | ) | (12,464 | ) | ||||||||||||||||||||||||||||||||||||||||
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BALANCE, MARCH 31, 2013 |
25,928,232 | $ | 259,282,327 | $ | 55,762,572 | $ | 115,820,123 | $ | 7,606,224 | $ | 324,561,997 | $ | 447,988,344 | $ | (7,747,122 | ) | $ | 10,845,147 | $ | - | $ | 3,098,025 | $ | 766,131,268 | $ | 2,517,817 | $ | 768,649,085 | ||||||||||||||||||||||||||||
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The accompanying notes are an integral part of the consolidated financial statements.
- 5 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited) |
Three Months Ended March 31 | ||||||||||
2014 | 2013 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||
Income before income tax |
$ | 53,301,842 | $ | 45,747,914 | ||||||
Adjustments for: |
||||||||||
Depreciation expense |
40,985,942 | 35,964,677 | ||||||||
Amortization expense |
636,435 | 531,513 | ||||||||
Stock option compensation cost of subsidiary |
- | 2,701 | ||||||||
Finance costs |
796,580 | 493,998 | ||||||||
Share of profits of associates and joint venture |
(955,380 | ) | (654,153 | ) | ||||||
Interest income |
(613,699 | ) | (346,321 | ) | ||||||
Gain on disposal of property, plant and equipment and intangible assets, net |
(497 | ) | (28,710 | ) | ||||||
Gain on disposal of available-for-sale financial assets, net |
(20,987 | ) | (818,315 | ) | ||||||
Gain on disposal of financial assets carried at cost, net |
(23,758 | ) | (2,105 | ) | ||||||
Loss on disposal of investments in associates |
- | 484 | ||||||||
Realized gross profit on sales to associates |
(21,017 | ) | (3,540 | ) | ||||||
Loss on foreign exchange, net |
2,665,824 | 704,013 | ||||||||
Income from receipt of equity securities in settlement of trade receivables |
- | (8,565 | ) | |||||||
Gain from hedging instruments |
(325,678 | ) | (649,991 | ) | ||||||
Loss arising from changes in fair value of available-for-sale financial assets in hedge effective portion |
327,961 | 759,175 | ||||||||
Changes in operating assets and liabilities: |
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Derivative financial instruments |
233,713 | 9,946 | ||||||||
Notes and accounts receivable, net |
(2,124,198 | ) | (7,695,015 | ) | ||||||
Receivables from related parties |
(267,262 | ) | (80,495 | ) | ||||||
Other receivables from related parties |
4,415 | 9,252 | ||||||||
Inventories |
(5,986,376 | ) | (2,967 | ) | ||||||
Other financial assets |
(28,952 | ) | 66,064 | |||||||
Other current assets |
615,697 | (541,426 | ) | |||||||
Accounts payable |
722,298 | (2,065,468 | ) | |||||||
Payables to related parties |
(358,406 | ) | 69,794 | |||||||
Salary and bonus payable |
(2,223,942 | ) | (2,459,987 | ) | ||||||
Accrued profit sharing to employees and bonus to directors and supervisors |
3,279,960 | 2,678,344 | ||||||||
Accrued expenses and other current liabilities |
2,073,184 | 1,637,627 | ||||||||
Provisions |
2,359,196 | 306,904 | ||||||||
Accrued pension cost |
(12,724 | ) | (16,599 | ) | ||||||
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Cash generated from operations |
95,040,171 | 73,608,749 | ||||||||
Income taxes paid |
(179,230 | ) | (39,077 | ) | ||||||
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Net cash generated by operating activities |
94,860,941 | 73,569,672 | ||||||||
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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) |
Three Months Ended March 31 | ||||||||||
2014 | 2013 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
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Acquisitions of: |
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Available-for-sale financial assets |
$ | (5,181 | ) | $ | (4,022 | ) | ||||
Financial assets carried at cost |
(3,782 | ) | (16,511 | ) | ||||||
Held-to-maturity financial assets |
(1,396,723 | ) | - | |||||||
Property, plant and equipment |
(114,905,317 | ) | (80,418,491 | ) | ||||||
Intangible assets |
(1,178,194 | ) | (951,989 | ) | ||||||
Other assets |
- | (11,896 | ) | |||||||
Proceeds from disposal or redemption of: |
||||||||||
Available-for-sale financial assets |
62,843 | 915,865 | ||||||||
Held-to-maturity financial assets |
800,000 | 3,091,725 | ||||||||
Financial assets carried at cost |
28,533 | 9,564 | ||||||||
Property, plant and equipment |
55,255 | 12,531 | ||||||||
Cash refund from long-term receivables |
78,060 | - | ||||||||
Interest received |
596,277 | 315,163 | ||||||||
Refundable deposits paid |
(7,869 | ) | (5,693 | ) | ||||||
Refundable deposits refunded |
16,506 | 30,841 | ||||||||
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Net cash used in investing activities |
(115,859,592 | ) | (77,032,913 | ) | ||||||
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CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||||
Increase in short-term loans |
8,819,028 | 230,321 | ||||||||
Proceeds from issuance of bonds |
- | 45,000,000 | ||||||||
Repayment of long-term bank loans |
- | (31,250 | ) | |||||||
Interest paid |
(863,834 | ) | (331,695 | ) | ||||||
Guarantee deposits received |
3,744 | 3,436 | ||||||||
Guarantee deposits refunded |
(1,443 | ) | (26,382 | ) | ||||||
Proceeds from exercise of employee stock options |
22,303 | 107,354 | ||||||||
Decrease in noncontrolling interests |
(29,574 | ) | (12,464 | ) | ||||||
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Net cash generated by financing activities |
7,950,224 | 44,939,320 | ||||||||
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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
2,050,275 | 1,142,131 | ||||||||
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(10,998,152 | ) | 42,618,210 | |||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
242,695,447 | 143,410,588 | ||||||||
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CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 231,697,295 | $ | 186,028,798 | ||||||
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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 THREE MONTHS ENDED MARCH 31, 2014 and 2013
(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 40.
2. | THE AUTHORIZATION OF FINANCIAL STATEMENTS |
The accompanying consolidated financial statements were reported to the Board of Directors and issued on May 13, 2014.
3. | APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS |
As of the date that the accompanying consolidated financial statements were issued, the Company has not applied the following International Financial Reporting Standards, International Accounting Standards (IASs), Interpretations of International Financial Reporting Standards (IFRIC), and Interpretations of IAS (SIC) issued by the International Accounting Standards Board (IASB) (collectively, IFRSs.)
a. | The 2013 IFRSs version in issue but not yet effective |
On April 3, 2014, according to Rule No. 1030010325 issued by the Financial Supervisory Commission (FSC), the following 2013 IFRSs version endorsed by the FSC (collectively, 2013 Taiwan-IFRSs version) should be adopted by the Company starting 2015.
New, Revised or Amended Standards and Interpretations |
Effective Date Issued | |
Amendments to IFRSs Improvements to IFRSs 2009 - Amendment to IAS 39 |
January 1, 2009 or January 1, 2010 | |
Amendment to IAS 39 Embedded Derivatives |
Effective in fiscal year ended on or after June 30, 2009 |
(Continued)
- 8 -
New, Revised or Amended Standards and Interpretations |
Effective Date Issued | |
Improvements to IFRSs 2010 |
July 1, 2010 or January 1, 2011 | |
Annual Improvements to IFRSs 2009 - 2011 Cycle |
January 1, 2013 | |
Amendments to IFRS 1 Limited Exemption from Comparative IFRS 7 Disclosures for First - time Adopters |
July 1, 2010 | |
Amendment to IFRS 7 Disclosures - offsetting Financial Assets and Financial Liabilities |
January 1, 2013 | |
Amendment to IFRS 7 Disclosures - Transfers of Financial Assets |
July 1, 2011 | |
IFRS 10 Consolidated Financial Statements |
January 1, 2013 | |
IFRS 11 Joint Arrangements |
January 1, 2013 | |
IFRS 12 Disclosure of Interests in Other Entities |
January 1, 2013 | |
Amendments to IFRS 10, IFRS 11 and IFRS 12 Consolidated financial Statements, Joint Arrangements, and Disclosure of Interests in Other Entities: Transition Guidance |
January 1, 2013 | |
Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities |
January 1, 2014 | |
IFRS 13 Fair Value Measurement |
January 1, 2013 | |
Amendment to IAS 1 Presentation of Items of Other Comprehensive Income |
July 1, 2012 | |
Amendment to IAS 12 Deferred Tax: Recovery of Underlying Assets |
January 1, 2012 | |
Amendment to IAS 19 Employee Benefits |
January 1, 2013 | |
Amendment to IAS 27 Separate Financial Statements |
January 1, 2013 | |
Amendment to IAS 28 Investments in Associates and Joint Ventures |
January 1, 2013 | |
Amendment to IAS 32 Offsetting of Financial Assets and Financial Liabilities |
January 1, 2014 |
(Concluded)
Note: |
The aforementioned new, revised or amended standards or interpretations are effective after fiscal year beginning on or after the effective dates, unless specified otherwise. |
Except for the following items, the Company believes that the adoption of aforementioned 2013 Taiwan-IFRSs version will not have a significant effect on the Companys consolidated financial statements.
1) | IFRS 12, Disclosure of Interests in Other Entities |
IFRS 12 is a standard that requires a broader disclosure in an entitys interests in subsidiaries, joint arrangements, associates and unconsolidated entities. The objective of IFRS 12 is to specify the disclosure information provided by the entity that enables the users of financial statements in evaluating the nature of, and risks associated with, its interests in other entities and the effects of those interests on the entitys financial assets and liabilities, as well as the involvement of the owners of noncontrolling interests towards the entity. The Company expects the application of IFRS 12 will result in more extensive disclosures of interests in other entities in the financial statements.
- 9 -
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 will be extended by IFRS 13 to cover all assets and liabilities within its scope.
The measurement requirements of IFRS 13 shall be applied prospectively starting 2015.
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 will not be reclassified subsequently to profit or loss; and (b) items that will 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 aforementioned allocation basis will not be strictly enforced prior to the adoption of amendments.
Staring 2015, the Company will adopt the aforementioned amendments to prepare the consolidated statements of comprehensive income. The items that will not be reclassified subsequently to profit or loss are expected to 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 will be reclassified subsequently to profit or loss are expected to 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 (except for the share of actuarial gains or losses from defined benefit plans.)
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, required 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.
According to the retrospective application of aforementioned amendments, as of March 31, 2014 and January 1, 2014, the primary impacts on the Company include the adjustment in accrued pension cost for a decrease of NT$796,305 thousand and NT$788,263 thousand, respectively, and the adjustment in retained earnings for an increase of NT$706,285 thousand and NT$698,762 thousand, respectively.
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.
- 10 -
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 | |
IFRS 9 Financial Instruments |
Note 2 | |
Amendments to IFRS 9 and IFRS 7 Mandatory Effective Date of IFRS 9 and Transition Disclosure |
Note 2 | |
Amendment to IAS 19 Defined Benefit Plans: Employee Contributions |
July 1, 2014 | |
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 |
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 IASB tentatively decided that an entity should apply IFRS 9 for annual periods beginning on or after January 1, 2018. |
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 |
Under IFRS 9, 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. If the objective of the Companys business model is to hold the financial asset to collect the contractual cash flows which are solely for payments of principal and interest on the principal amount outstanding, such assets are measured at the amortized cost. The other financial assets not met the aforementioned criteria must be measured at the fair value through profit or loss.
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) | 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.
- 11 -
Except for the aforementioned impact, as of the date that the accompanying consolidated financial statements were reported for issue, 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.
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, 2013.
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 consolidated financial statements incorporate the financial statements of TSMC and entities controlled by TSMC (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
Income and expenses of subsidiaries acquired or disposed of are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to the shareholders of the parent and to the noncontrolling interests even if this results in the noncontrolling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Changes in the Companys ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Companys interests and the noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to shareholders of the parent.
When the Company loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between:
a. | the aggregate of the fair value of consideration received and the fair value of any retained interest at the date when control is lost; and |
- 12 -
b. | the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any noncontrolling interest. |
The Company shall account for all amounts recognized in other comprehensive income in relation to the subsidiary on the same basis as would be required if the Company had directly disposed of the related assets and liabilities.
The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the cost on initial recognition of an investment in an associate.
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 |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 |
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% | - | ||||||||
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 |
50% | 50% | 50% | - | ||||||||
VentureTech Alliance Fund II, L.P. (VTAF II) |
Investing in new start-up technology companies |
Cayman Islands |
98% | 98% | 98% | - | ||||||||
Emerging Alliance Fund, L.P. (Emerging Alliance) |
Investing in new start-up technology companies |
Cayman Islands |
99.5% | 99.5% | 99.5% | a) | ||||||||
Xintec Inc. (Xintec) |
Wafer level chip size packaging service |
Taoyuan, Taiwan |
b) | b) | 40% | - | ||||||||
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% | 95% | TSMC and TSMC GN aggregately have a controlling interest of 94% in TSMC SSL. | ||||||||
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 controlling interest of 99% 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% | - |
(Continued)
- 13 -
Establishment | Percentage of Ownership | |||||||||||||
Name of Investor | Name of Investee | Main Businesses and Products | and Operating Location |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 |
Note | |||||||
VTAF III |
Mutual-Pak Technology Co., Ltd. (Mutual-Pak) |
Manufacturing and selling of electronic parts and researching, developing, and testing of RFID |
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% | 100% | 100% | a) | |||||||
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% | 100% | a) | ||||||||
VentureTech Alliance Fund III, L.P. (VTAF III) |
Investing in new start-up technology companies |
Cayman Islands |
49% | 49% | 49% | - | ||||||||
TSMC Solar Europe |
TSMC Solar Europe GmbH |
Selling of solar related products and providing customer service |
Hamburg, Germany |
100% | 100% | 100% | a) |
(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 no longer has power to govern the financial and operating policies of Xintec starting June 2013 due to the loss of power to cast the majority of votes at meetings of the Board of Directors. As a result, Xintec is no longer consolidated and is accounted for using the equity method. Please refer to Note 33. |
Retirement Benefits
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.
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, 2013.
6. | CASH AND CASH EQUIVALENTS |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 |
||||||||||||||
Cash and deposits in banks |
$ | 224,475,625 | $ | 238,014,580 | $ | 182,657,223 | ||||||||||
Repurchase agreements collateralized by corporate bonds |
3,071,910 | 1,809,344 | 2,361,274 | |||||||||||||
Repurchase agreements collateralized by short-term commercial paper |
2,927,812 | 2,395,644 | 499,825 | |||||||||||||
Repurchase agreements collateralized by government bonds |
922,097 | 475,879 | 510,476 | |||||||||||||
Commercial paper |
299,851 | - | - | |||||||||||||
|
|
|
|
|
|
|||||||||||
$ | 231,697,295 | $ | 242,695,447 | $ | 186,028,798 | |||||||||||
|
|
|
|
|
|
- 14 -
7. | FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Derivative financial assets |
|||||||||||||||
Cross currency swap contracts |
$ | 7,490 | $ | - | $ | 8,613 | |||||||||
Forward exchange contracts |
3,935 | 90,353 | 9,593 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 11,425 | $ | 90,353 | $ | 18,206 | ||||||||||
|
|
|
|
|
|
||||||||||
Derivative financial liabilities |
|||||||||||||||
Forward exchange contracts |
$ | 186,105 | $ | 29,573 | $ | 3,808 | |||||||||
Cross currency swap contracts |
2,430 | 4,177 | 415 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 188,535 | $ | 33,750 | $ | 4,223 | ||||||||||
|
|
|
|
|
|
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:
Maturity Date | Contract Amount (In Thousands) | |||
March 31, 2014 |
||||
Sell EUR/Buy US$ |
April 2014 | EUR1,030/ US$1,421 | ||
Sell NT$/Buy EUR |
April 2014 | NT$419,405/EUR10,000 | ||
Sell NT$/Buy JPY |
April 2014 | NT$941,573/JPY3,150,000 | ||
Sell NT$/Buy US$ |
April 2014 | NT$962,307/US$31,700 | ||
Sell US$/Buy EUR |
April 2014 | US$266,577/EUR193,700 | ||
Sell US$/Buy JPY |
April 2014 | US$498,716/JPY50,938,160 | ||
Sell US$/Buy RMB |
April 2014 to June 2014 | US$86,000/RMB525,831 | ||
December 31, 2013 |
||||
Sell NT$/Buy EUR |
January 2014 | NT$4,514,314/EUR110,000 | ||
Sell NT$/Buy US$ |
January 2014 | NT$683,749/US$22,800 | ||
Sell US$/Buy EUR |
January 2014 | US$340,134/EUR248,000 | ||
Sell US$/Buy JPY |
January 2014 | US$341,023/JPY35,754,801 | ||
Sell US$/Buy RMB |
January 2014 to February 2014 | US$138,000/RMB841,492 | ||
March 31, 2013 |
||||
Sell NT$/Buy US$ |
April 2013 | NT$810,124/US$27,200 | ||
Sell NT$/Buy JPY |
April 2013 | NT$14,261/JPY45,000 | ||
Sell US$/Buy JPY |
April 2013 | US$73,191/JPY6,893,306 | ||
Sell US$/Buy NT$ |
April 2013 to June 2013 | US$14,340/NT$424,772 | ||
Sell US$/Buy RMB |
April 2013 to May 2013 | US$64,000/RMB399,375 |
- 15 -
Outstanding cross currency swap contracts consisted of the following:
Maturity Date | Contract Amount (In Thousands) |
Range of Interest Rates |
Range of Interest Rates | |||
March 31, 2014 |
||||||
April 2014 |
NT$2,222,031/US$73,080 | - | 0.45%-0.76% | |||
December 31, 2013 |
||||||
January 2014 |
NT$1,639,215/US$55,080 | - | 1.03%-2.00% | |||
March 31, 2013 |
||||||
April 2013 |
NT$1,448,327/US$48,580 | - | 0.20%-0.57% | |||
April 2013 |
US$252,000/NT$7,525,120 | 0.50%-0.60% | - |
8. | AVAILABLE-FOR-SALE FINANCIAL ASSETS |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Publicly traded stocks |
$ | 60,122,854 | $ | 59,481,569 | $ | 43,248,325 | |||||||||
Money market funds |
6,431 | 1,183 | 2,246 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 60,129,285 | $ | 59,482,752 | $ | 43,250,571 | ||||||||||
|
|
|
|
|
|
||||||||||
Current portion |
$ | 845,002 | $ | 760,793 | $ | 1,162,904 | |||||||||
Noncurrent portion |
59,284,283 | 58,721,959 | 42,087,667 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 60,129,285 | $ | 59,482,752 | $ | 43,250,571 | ||||||||||
|
|
|
|
|
|
9. | HELD-TO-MATURITY FINANCIAL ASSETS |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Current portion |
|||||||||||||||
Commercial paper |
$ | 2,394,178 | $ | 1,795,949 | $ | - | |||||||||
Corporate bonds |
- | - | 2,044,822 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 2,394,178 | $ | 1,795,949 | $ | 2,044,822 | ||||||||||
|
|
|
|
|
|
- 16 -
10. | HEDGING DERIVATIVE FINANCIAL INSTRUMENTS |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Financial assets - noncurrent |
|||||||||||||||
Fair value hedges |
|||||||||||||||
Stock forward contracts |
$ | - | $ | - | $ | 659,351 | |||||||||
|
|
|
|
|
|
||||||||||
Financial liabilities- noncurrent |
|||||||||||||||
Fair value hedges |
|||||||||||||||
Stock forward contracts |
$ | 5,279,032 | $ | 5,481,616 | $ | - | |||||||||
|
|
|
|
|
|
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:
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | ||||
Contract amount (US$ in thousands) |
$50,253,432 | $37,431,626 | $11,707,678 | |||
(US$1,648,572) | (US$1,256,095) | (US$ 391,968) |
11. | NOTES AND ACCOUNTS RECEIVABLE, NET |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 |
||||||||||
Notes and accounts receivable |
$ | 74,260,712 | $ | 72,136,514 | $ | 65,962,277 | ||||||
Allowance for doubtful receivables |
(486,658 | ) | (486,588 | ) | (489,748 | ) | ||||||
|
|
|
|
|
|
|||||||
Notes and accounts receivable, net |
$ | 73,774,054 | $ | 71,649,926 | $ | 65,472,529 | ||||||
|
|
|
|
|
|
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.
- 17 -
Aging analysis of notes and accounts receivable, net
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Neither past due nor impaired |
$ | 66,347,383 | $ | 64,112,564 | $ | 56,678,899 | |||||||||
Past due but not impaired |
|||||||||||||||
Past due within 30 days |
7,426,671 | 7,537,362 | 8,793,630 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 73,774,054 | $ | 71,649,926 | $ | 65,472,529 | ||||||||||
|
|
|
|
|
|
Movements of the allowance for doubtful receivables
Individually Assessed for Impairment |
Collectively Assessed for Impairment |
Total | |||||||||||||
Balance at January 1, 2014 |
$ | 8,058 | $ | 478,530 | $ | 486,588 | |||||||||
Provision |
- | 21,147 | 21,147 | ||||||||||||
Reversal |
(230 | ) | (20,917 | ) | (21,147 | ) | |||||||||
Effect of exchange rate changes |
- | 70 | 70 | ||||||||||||
|
|
|
|
|
|
||||||||||
Balance at March 31, 2014 |
$ | 7,828 | $ | 478,830 | $ | 486,658 | |||||||||
|
|
|
|
|
|
||||||||||
Balance at January 1, 2013 |
$ | 137,336 | $ | 342,876 | $ | 480,212 | |||||||||
Provision |
- | 44,699 | 44,699 | ||||||||||||
Reversal |
(35,235 | ) | - | (35,235 | ) | ||||||||||
Effect of exchange rate changes |
1,632 | (1,560 | ) | 72 | |||||||||||
|
|
|
|
|
|
||||||||||
Balance at March 31, 2013 |
$ | 103,733 | $ | 386,015 | $ | 489,748 | |||||||||
|
|
|
|
|
|
Aging analysis of accounts receivable that is individually determined to be impaired
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Not past due |
$ | - | $ | 38 | $ | 97,405 | |||||||||
Past due 1-30 days |
- | 276 | 1,867 | ||||||||||||
Past due 31-60 days |
- | 80 | 521 | ||||||||||||
Past due 61-120 days |
321 | 158 | 783 | ||||||||||||
Past due over 121 days |
7,832 | 7,824 | 3,157 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 8,153 | $ | 8,376 | $ | 103,733 | ||||||||||
|
|
|
|
|
|
The Company held bank guarantees and other credit enhancements as collateral for certain impaired accounts receivables. As of March 31, 2014, December 31, 2013 and March 31, 2013, the amount of the bank guarantee and other credit enhancements were NT$325 thousand (US$11 thousand), NT$318 thousand (US$11 thousand) and nil, respectively.
- 18 -
12. | INVENTORIES |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Finished goods |
$ | 7,332,318 | $ | 7,245,209 | $ | 6,953,902 | |||||||||
Work in process |
31,895,019 | 26,033,625 | 25,517,540 | ||||||||||||
Raw materials |
2,444,274 | 2,435,269 | 3,320,050 | ||||||||||||
Supplies and spare parts |
1,809,658 | 1,780,790 | 2,041,973 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 43,481,269 | $ | 37,494,893 | $ | 37,833,465 | ||||||||||
|
|
|
|
|
|
Write-down of inventories to net realizable value in the amount of NT$590,034 thousand was included in the cost of revenue for the three months ended March 31, 2014. The reserve for inventory write-downs in the amount of NT$94,941 thousand was reversed in the cost of revenue for the three months ended March 31, 2013 when the related inventory items were scrapped or sold.
13. | FINANCIAL ASSETS CARRIED AT COST |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Non-publicly traded stocks |
$ | 1,771,146 | $ | 1,865,078 | $ | 3,408,947 | |||||||||
Mutual funds |
283,929 | 280,513 | 294,646 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 2,055,075 | $ | 2,145,591 | $ | 3,703,593 | ||||||||||
|
|
|
|
|
|
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.
14. | INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD |
Investments accounted for using the equity method consisted of the following:
March 31, 2014 |
December 31, 2013 |
March 31, 2013 |
||||||||||
Associates |
$ | 25,954,914 | $ | 24,823,807 | $ | 21,075,728 | ||||||
Jointly controlled entities |
3,552,814 | 3,492,453 | 3,176,342 | |||||||||
|
|
|
|
|
|
|||||||
$ | 29,507,728 | $ | 28,316,260 | $ | 24,252,070 | |||||||
|
|
|
|
|
|
- 19 -
a. | Investments in associates |
Associates consisted of the following:
Name of Associate |
Principal Activities |
Place of Incorporation |
Carrying Amount | % of Ownership and Voting Rights Held by the Company | ||||||||||||||||||||||||||||||
March 31, 2014 |
December 31, 2013 |
March 31, 2013 |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||||||||||||||||||
Vanguard International Semiconductor Corporation (VIS) |
Research, design, development, manufacture, packaging, testing and sale of memory integrated circuits, LSI, VLSI and related parts |
Hsinchu, Taiwan |
$ | 11,073,716 | $ | 10,556,348 | $ | 9,783,163 | 39% | 39% | 40% | |||||||||||||||||||||||
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC) |
Fabrication and supply of integrated circuits |
Singapore |
8,036,044 | 7,457,733 | 7,292,694 | 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 |
Taipei, Taiwan |
3,855,061 | 3,887,462 | 2,752,394 | 20% | 20% | 20% | ||||||||||||||||||||||||||
Xintec |
Wafer level chip size packaging service |
Taoyuan, Taiwan |
1,863,039 | 1,866,123 | - | 40% | 40% | - | ||||||||||||||||||||||||||
Global Unichip Corporation (GUC) |
Researching, developing, manufacturing, testing and marketing of integrated circuits |
Hsinchu, Taiwan |
1,127,054 | 1,056,141 | 1,247,477 | 35% | 35% | 35% | ||||||||||||||||||||||||||
Mcube Inc. (Mcube) |
Research, development, and sale of micro-semiconductor device |
Delaware, U.S.A. |
- | - | - | - | - | 25% | ||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||
$ | 25,954,914 | $ | 24,823,807 | $ | 21,075,728 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
In the fourth quarter of 2012, the Company recognized an impairment loss in the amount of NT$1,186,674 thousand, due to the lower estimated recoverable amount compared with the carrying amount of its investments in stocks traded on the Taiwan GreTai Securities Market. Subsequently, as the recoverable amount of the aforementioned investments was higher than its carrying amount, the impairment loss of NT$1,186,674 thousand recognized in prior year was reversed in the fourth quarter of 2013.
Since TSMC did not participate in Mcubes issuance of new shares in the third quarter of 2013, the Companys percentage of ownership in Mcube decreased to 18%. As a result, the Company evaluated and concluded that the Company no longer exercises significant influence over Mcube. Therefore Mcube is no longer accounted for using the equity method. Further, such investment was reclassified to financial assets carried at cost. The Company also measured the fair value of retained interest in Mcube when the significant influence was lost, which has no difference with the carrying amount; accordingly, the Company did not recognize any gain or loss.
TSMC no longer has power to govern the financial and operating policies of Xintec starting June 2013 due to the loss of power to cast the majority of votes at meetings of the Board of Directors. As a result, Xintec is no longer consolidated and is accounted for using the equity method. Please refer to Note 33.
On April 14, 2014, the Company sold 82,000 thousand common shares of VIS and recognized a disposal gain of NT$2,028,643 thousand in the second quarter of 2014. After the sale, the Company owned approximately 33.7% of the equity interest in VIS.
- 20 -
b. | Investments in jointly controlled entities |
Jointly controlled entities consisted of the following:
Name of Jointly |
Principal Activities |
Place of Incorporation |
Carrying Amount | % of Ownership and Voting Rights Held by the Company | ||||||||||||||||||||||||||||||
March 31, 2014 |
December 31, 2013 |
March 31, 2013 |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||||||||||||||||||
VisEra Holding Company (VisEra Holding) |
Investing in companies involved in the design, manufacturing and other related businesses in the semiconductor industry |
Cayman Islands |
$ 3,552,814 | $ 3,492,453 | $ 3,176,342 | 49 | % | 49 | % | 49 | % |
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, 2014 |
$ | 3,986,909 | $ | 229,182,736 | $ | 1,413,919,794 | $ | 22,062,032 | $ | 804,430 | $ | 272,173,793 | $ | 1,942,129,694 | |||||||||||||||||||||
Additions |
- | 2,519,647 | 9,108,620 | 606,260 | - | 63,974,216 | 76,208,743 | ||||||||||||||||||||||||||||
Disposals or retirements |
- | - | (223,116 | ) | (318,888 | ) | - | - | (542,004 | ) | |||||||||||||||||||||||||
Effect of exchange rate changes |
17,761 | 198,335 | 959,428 | 32,285 | 2,400 | 3,217 | 1,213,426 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Balance at March 31, 2014 |
$ | 4,004,670 | $ | 231,900,718 | $ | 1,423,764,726 | $ | 22,381,689 | $ | 806,830 | $ | 336,151,226 | $ | 2,019,009,859 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
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 |
6,898 | 3,584,230 | 36,724,579 | 659,617 | 10,618 | - | 40,985,942 | ||||||||||||||||||||||||||||
Disposals or retirements |
- | - | (223,075 | ) | (318,888 | ) | - | - | (541,963 | ) | |||||||||||||||||||||||||
Effect of exchange rate changes |
9,318 | 144,311 | 909,022 | 26,776 | 1,092 | - | 1,090,519 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Balance at March 31, 2014 |
$ | 420,408 | $ | 128,962,707 | $ | 1,046,624,215 | $ | 14,593,276 | $ | 397,673 | $ | - | $ | 1,190,998,279 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Carrying amounts at January 1, 2014 |
$ | 3,582,717 | $ | 103,948,570 | $ | 404,706,105 | $ | 7,836,261 | $ | 418,467 | $ | 272,173,793 | $ | 792,665,913 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Carrying amounts at March 31, 2014 |
$ | 3,584,262 | $ | 102,938,011 | $ | 377,140,511 | $ | 7,788,413 | $ | 409,157 | $ | 336,151,226 | $ | 828,011,580 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Cost |
|||||||||||||||||||||||||||||||||||
Balance at January 1, 2013 |
$ | 1,527,124 | $ | 197,411,851 | $ | 1,279,893,177 | $ | 20,067,943 | $ | 766,732 | $ | 119,063,976 | $ | 1,618,730,803 | |||||||||||||||||||||
Additions |
3,212,000 | 1,653,205 | 10,143,673 | 1,157,523 | - | 68,238,002 | 84,404,403 | ||||||||||||||||||||||||||||
Disposals or retirements |
- | - | (1,054,277 | ) | (287,361 | ) | - | - | (1,341,638 | ) | |||||||||||||||||||||||||
Effect of exchange rate changes |
21,609 | 492,285 | 1,632,861 | 35,168 | 16,498 | 4,299 | 2,202,720 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Balance at March 31, 2013 |
$ | 4,760,733 | $ | 199,557,341 | $ | 1,290,615,434 | $ | 20,973,273 | $ | 783,230 | $ | 187,306,277 | $ | 1,703,996,288 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Accumulated depreciation and impairment |
|||||||||||||||||||||||||||||||||||
Balance at January 1, 2013 |
$ | 367,369 | $ | 111,801,731 | $ | 875,510,879 | $ | 13,160,567 | $ | 328,069 | $ | - | $ | 1,001,168,615 | |||||||||||||||||||||
Additions |
6,715 | 2,930,306 | 32,449,040 | 568,497 | 10,119 | - | 35,964,677 | ||||||||||||||||||||||||||||
Disposals or retirements |
- | - | (1,052,478 | ) | (287,126 | ) | - | - | (1,339,604 | ) | |||||||||||||||||||||||||
Effect of exchange rate changes |
10,609 | 288,001 | 1,422,674 | 26,783 | 7,149 | - | 1,755,216 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Balance at March 31, 2013 |
$ | 384,693 | $ | 115,020,038 | $ | 908,330,115 | $ | 13,468,721 | $ | 345,337 | $ | - | $ | 1,037,548,904 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Carrying amounts at March 31, 2013 |
$ | 4,376,040 | $ | 84,537,303 | $ | 382,285,319 | $ | 7,504,552 | $ | 437,893 | $ | 187,306,277 | $ | 666,447,384 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
The Company entered into agreements to lease buildings from December 2003 to November 2018 that qualify as finance leases.
Future minimum lease gross payments were as follows:
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Minimum lease payments |
|||||||||||||||
Not later than 1 year |
$ | 28,456 | $ | 28,376 | $ | 27,622 | |||||||||
Later than 1 year and not later than 5 years |
853,104 | 850,703 | 110,488 | ||||||||||||
Later than five years |
- | - | 745,222 | ||||||||||||
|
|
|
|
|
|
||||||||||
881,560 | 879,079 | 883,332 | |||||||||||||
Less: Future finance expenses |
(89,396 | ) | (94,040 | ) | (105,979 | ) | |||||||||
|
|
|
|
|
|
||||||||||
Present value of minimum lease payments |
$ | 792,164 | $ | 785,039 | $ | 777,353 | |||||||||
|
|
|
|
|
|
(Continued)
- 21 -
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Present value of minimum lease payments |
|||||||||||||||
Not later than 1 year |
$ | 27,762 | $ | 27,684 | $ | 26,948 | |||||||||
Later than 1 year and not later than 5 years |
764,402 | 757,355 | 107,803 | ||||||||||||
Later than five years |
- | - | 642,602 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 792,164 | $ | 785,039 | $ | 777,353 | ||||||||||
|
|
|
|
|
|
||||||||||
Current portion |
$ | 8,889 | $ | 8,809 | $ | 8,418 | |||||||||
Noncurrent portion |
783,275 | 776,230 | 768,935 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 792,164 | $ | 785,039 | $ | 777,353 | ||||||||||
|
|
|
|
|
|
(Concluded)
There was no capitalization of borrowing costs for the three months ended March 31, 2014 and 2013.
16. | INTANGIBLE ASSETS |
Goodwill | Technology License Fees |
Software and System Design Costs |
Patent and Others |
Total | |||||||||||||||||||||
Cost |
|||||||||||||||||||||||||
Balance at January 1, 2014 |
$ | 5,627,517 | $ | 4,444,828 | $ | 17,086,805 | $ | 3,729,396 | $ | 30,888,546 | |||||||||||||||
Additions |
- | 371,030 | 269,160 | 526,097 | 1,166,287 | ||||||||||||||||||||
Retirements |
- | - | (20,353 | ) | - | (20,353 | ) | ||||||||||||||||||
Effect of exchange rate changes |
93,047 | (954 | ) | 537 | 380 | 93,010 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance at March 31, 2014 |
$ | 5,720,564 | $ | 4,814,904 | $ | 17,336,149 | $ | 4,255,873 | $ | 32,127,490 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Accumulated amortization |
|||||||||||||||||||||||||
Balance at January 1, 2014 |
$ | - | $ | 3,341,667 | $ | 13,439,135 | $ | 2,617,361 | $ | 19,398,163 | |||||||||||||||
Additions |
- | 123,690 | 359,025 | 153,720 | 636,435 | ||||||||||||||||||||
Retirements |
- | - | (20,353 | ) | - | (20,353 | ) | ||||||||||||||||||
Effect of exchange rate changes |
- | (954 | ) | 526 | 44 | (384 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance at March 31, 2014 |
$ | - | $ | 3,464,403 | $ | 13,778,333 | $ | 2,771,125 | $ | 20,013,861 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Carrying amounts at January 1, 2014 |
$ | 5,627,517 | $ | 1,103,161 | $ | 3,647,670 | $ | 1,112,035 | $ | 11,490,383 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Carrying amounts at March 31, 2014 |
$ | 5,720,564 | $ | 1,350,501 | $ | 3,557,816 | $ | 1,484,748 | $ | 12,113,629 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost |
|||||||||||||||||||||||||
Balance at January 1, 2013 |
$ | 5,523,707 | $ | 4,590,548 | $ | 15,095,421 | $ | 3,094,664 | $ | 28,304,340 | |||||||||||||||
Additions |
- | - | 763,917 | 200,815 | 964,732 | ||||||||||||||||||||
Retirements |
- | - | (700 | ) | - | (700 | ) | ||||||||||||||||||
Reclassification |
- | (29,565 | ) | - | - | (29,565 | ) | ||||||||||||||||||
Effect of exchange rate changes |
113,210 | 442 | 2,400 | 2,442 | 118,494 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance at March 31, 2013 |
$ | 5,636,917 | $ | 4,561,425 | $ | 15,861,038 | $ | 3,297,921 | $ | 29,357,301 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Accumulated amortization |
|||||||||||||||||||||||||
Balance at January 1, 2013 |
$ | - | $ | 3,128,655 | $ | 12,126,479 | $ | 2,089,637 | $ | 17,344,771 | |||||||||||||||
Additions |
- | 67,617 | 313,690 | 150,206 | 531,513 | ||||||||||||||||||||
Retirements |
- | - | (428 | ) | - | (428 | ) | ||||||||||||||||||
Effect of exchange rate changes |
- | 441 | 2,164 | 403 | 3,008 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance at March 31, 2013 |
$ | - | $ | 3,196,713 | $ | 12,441,905 | $ | 2,240,246 | $ | 17,878,864 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Carrying amounts at March 31, 2013 |
$ | 5,636,917 | $ | 1,364,712 | $ | 3,419,133 | $ | 1,057,675 | $ | 11,478,437 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
- 22 -
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 8.50% and 9.00% in its test of impairment as of December 31, 2013 and 2012, respectively, to reflect the relevant specific risk in the cash-generating unit.
For the three months ended March 31, 2014 and 2013, the Company did not recognize any impairment loss on goodwill.
17. | OTHER ASSETS |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Tax receivable |
$ | 1,327,531 | $ | 1,781,376 | $ | 1,397,893 | |||||||||
Prepaid expenses |
1,068,105 | 1,081,957 | 1,855,312 | ||||||||||||
Long-term receivable |
754,020 | 820,000 | 764,200 | ||||||||||||
Others |
653,862 | 770,468 | 575,835 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 3,803,518 | $ | 4,453,801 | $ | 4,593,240 | ||||||||||
|
|
|
|
|
|
||||||||||
Current portion |
$ | 2,381,416 | $ | 2,984,224 | $ | 3,339,372 | |||||||||
Noncurrent portion |
1,422,102 | 1,469,577 | 1,253,868 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 3,803,518 | $ | 4,453,801 | $ | 4,593,240 | ||||||||||
|
|
|
|
|
|
18. | SHORT-TERM LOANS |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Unsecured loans |
|||||||||||||||
Amount |
$ | 24,843,645 | $ | 15,645,000 | $ | 35,842,800 | |||||||||
|
|
|
|
|
|
||||||||||
Original loan content |
|||||||||||||||
US$ (in thousands) |
$ | 815,000 | $ | 525,000 | $ | 1,200,000 | |||||||||
Annual interest rate |
0.38%-0.50% | 0.38%-0.42% | 0.41%-0.49% | ||||||||||||
Maturity date |
|
Due in April 2014 |
|
|
Due in January 2014 |
|
|
Due in April 2013 |
|
19. | PROVISIONS |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Sales returns and allowances |
$ | 9,964,997 | $ | 7,603,781 | $ | 6,350,698 | |||||||||
Warranties |
12,925 | 10,452 | 5,199 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 9,977,922 | $ | 7,614,233 | $ | 6,355,897 | ||||||||||
|
|
|
|
|
|
(Continued)
- 23 -
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Current portion |
$ | 9,964,997 | $ | 7,603,781 | $ | 6,350,698 | |||||||||
Noncurrent portion (classified under other noncurrent liabilities) |
12,925 | 10,452 | 5,199 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 9,977,922 | $ | 7,614,233 | $ | 6,355,897 | ||||||||||
|
|
|
|
|
|
(Concluded)
Sales Returns and Allowances |
Warranties | Total | |||||||||||||
Three months ended March 31, 2014 |
|||||||||||||||
Balance, beginning of period |
$ | 7,603,781 | $ | 10,452 | $ | 7,614,233 | |||||||||
Provision |
4,354,104 | 3,064 | 4,357,168 | ||||||||||||
Payment |
(1,997,250 | ) | (722 | ) | (1,997,972 | ) | |||||||||
Effect of exchange rate changes |
4,362 | 131 | 4,493 | ||||||||||||
|
|
|
|
|
|
||||||||||
Balance, end of period |
$ | 9,964,997 | $ | 12,925 | $ | 9,977,922 | |||||||||
|
|
|
|
|
|
||||||||||
Three months ended March 31, 2013 |
|||||||||||||||
Balance, beginning of period |
$ | 6,038,003 | $ | 4,891 | $ | 6,042,894 | |||||||||
Provision |
1,746,905 | 323 | 1,747,228 | ||||||||||||
Payment |
(1,440,324 | ) | - | (1,440,324 | ) | ||||||||||
Effect of exchange rate changes |
6,114 | (15 | ) | 6,099 | |||||||||||
|
|
|
|
|
|
||||||||||
Balance, end of period |
$ | 6,350,698 | $ | 5,199 | $ | 6,355,897 | |||||||||
|
|
|
|
|
|
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 |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Noncurrent portion |
|||||||||||||||
Domestic unsecured bonds |
$ | 166,200,000 | $ | 166,200,000 | $ | 125,000,000 | |||||||||
Overseas unsecured bonds |
45,724,500 | 44,700,000 | - | ||||||||||||
|
|
|
|
|
|
||||||||||
211,924,500 | 210,900,000 | 125,000,000 | |||||||||||||
Less: Discounts on bonds payable |
(126,399 | ) | (132,375 | ) | - | ||||||||||
|
|
|
|
|
|
||||||||||
$ | 211,798,101 | $ | 210,767,625 | $ | 125,000,000 | ||||||||||
|
|
|
|
|
|
- 24 -
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% | |
21. | LONG-TERM BANK LOANS |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Bank loans for working capital |
$ | 40,000 | $ | 40,000 | $ | 1,456,250 | |||||||||
|
|
|
|
|
|
||||||||||
Current portion |
$ | - | $ | - | $ | 131,250 | |||||||||
Noncurrent portion |
40,000 | 40,000 | 1,325,000 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 40,000 | $ | 40,000 | $ | 1,456,250 | ||||||||||
|
|
|
|
|
|
In relation to the deconsolidation of Xintec in June 2013 (refer to Note 33), long-term bank loans of Xintec have been derecognized.
22. | OTHER LONG-TERM PAYABLES |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Payables for software and system design costs |
$ | 54,000 | $ | 54,000 | $ | 113,000 | |||||||||
Payables for acquisition of property, plant and equipment |
- | - | 843,160 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 54,000 | $ | 54,000 | $ | 956,160 | ||||||||||
|
|
|
|
|
|
||||||||||
Current portion (classified under accrued expenses and other current liabilities) |
$ | 18,000 | $ | 18,000 | $ | 902,160 | |||||||||
Noncurrent portion |
36,000 | 36,000 | 54,000 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 54,000 | $ | 54,000 | $ | 956,160 | ||||||||||
|
|
|
|
|
|
TSMC entered into an agreement with a counterparty in 2003 whereby TSMC China purchased in 2004 certain property, plant and equipment. The obligations under the aforementioned agreement were fully paid in July 2013.
- 25 -
23. | EQUITY |
a. | Capital stock |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Authorized shares (in thousands) |
28,050,000 | 28,050,000 | 28,050,000 | ||||||||||||
|
|
|
|
|
|
||||||||||
Authorized capital |
$ | 280,500,000 | $ | 280,500,000 | $ | 280,050,000 | |||||||||
|
|
|
|
|
|
||||||||||
Issued and paid shares (in thousands) |
25,929,124 | 25,928,617 | 25,928,232 | ||||||||||||
|
|
|
|
|
|
||||||||||
Issued capital |
$ | 259,291,239 | $ | 259,286,171 | $ | 259,282,327 | |||||||||
|
|
|
|
|
|
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 March 31, 2014, 1,077,434 thousand ADSs of TSMC were traded on the NYSE. The number of common shares represented by the ADSs was 5,387,171 thousand shares (one ADS represents five common shares).
b. | Capital surplus |
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | |||||||||||||
Additional paid-in capital |
$ | 24,034,598 | $ | 24,017,363 | $ | 24,003,991 | |||||||||
From merger |
22,804,510 | 22,804,510 | 22,804,510 | ||||||||||||
From convertible bonds |
8,892,847 | 8,892,847 | 8,892,847 | ||||||||||||
From differences between equity purchase price and carrying amount arising from acquisition or disposal of subsidiaries |
89,882 | 100,827 | 44,343 | ||||||||||||
From share of changes in equities of associates and joint venture |
13,388 | 43,024 | 16,826 | ||||||||||||
Donations |
55 | 55 | 55 | ||||||||||||
|
|
|
|
|
|
||||||||||
$ | 55,835,280 | $ | 55,858,626 | $ | 55,762,572 | ||||||||||
|
|
|
|
|
|
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 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.
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; |
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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.
TSMC accrued profit sharing to employees based on certain percentage of net income during the period, which amounted to NT$3,200,716 thousand and NT$2,660,482 thousand for the three months ended March 31, 2014 and 2013, respectively. Bonuses to members of the Board of Directors were expensed based on estimated amount payable. If the actual amounts subsequently approved by the shareholders differ from the amounts estimated, the differences are recorded in the year such bonuses are approved by the shareholders as a change in accounting estimate. If profit sharing approved for distribution to employees is in the form of common shares, the number of shares is determined by dividing the amount of profit sharing by the closing price (after considering the effect of dividends) of the shares on the day preceding the shareholders meeting.
The appropriation for legal capital reserve shall be made until the reserve equals the Companys paid-in capital. The reserve may be used to offset a deficit, or be distributed as dividends in cash or stocks for the portion in excess of 25% of the paid-in capital if the Company incurs no loss.
Pursuant to existing regulations, the Company is required to set aside additional special capital reserve equivalent to the net debit balance of the other components of stockholders equity, such as the accumulated balance of foreign currency translation reserve, unrealized valuation gain/loss from available-for-sale financial assets, gain/loss from changes in fair value of hedging instruments in cash flow hedges, etc. For the subsequent decrease in the deduction amount to stockholders equity, any special reserve appropriated may be reversed to the extent that the net debit balance reverses.
The appropriations of 2013 and 2012 earnings have been approved by TSMCs Board of Directors in its meeting held on February 18, 2014 and by TSMCs shareholders in its meeting held on June 11, 2013, respectively. The appropriations and dividends per share were as follows:
Appropriation of Earnings | Dividends Per Share (NT$) | |||||||||||||||||||
For Fiscal Year 2013 |
For Fiscal Year 2012 |
For Fiscal Year 2013 |
For Fiscal Year 2012 | |||||||||||||||||
Legal capital reserve |
$ | 18,814,679 | $ | 16,615,880 | ||||||||||||||||
Special capital reserve |
(2,785,741 | ) | (4,820,483 | ) | ||||||||||||||||
Cash dividends to shareholders |
77,785,851 | 77,773,307 | $3.00 | $3.00 | ||||||||||||||||
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$ | 93,814,789 | $ | 89,568,704 | |||||||||||||||||
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The Board of Directors of TSMC also approved on February 18, 2014 the profit sharing to employees and bonus to members of the Board of Directors in the amounts of NT$12,634,665 thousand and NT$104,136 thousand in cash for 2013, respectively. There is no significant difference between the aforementioned approved amounts and the amounts charged against earnings of 2013.
The appropriations of earnings, profit sharing to employees and bonus to members of the Board of Directors for 2013 are to be presented for approval in the TSMCs shareholders meeting to be held on June 24, 2014 (expected).
TSMCs profit sharing to employees and bonus to members of the Board of Directors in the amounts of NT$11,115,240 thousand and NT$71,351 thousand in cash for 2012, respectively, had been approved by shareholders in its meeting held on June 11, 2013. The aforementioned approved amounts are the same as the amounts approved by the Board of Directors in its meetings held on February 5, 2013, and the same amounts had been charged against earnings of 2012.
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.
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:
Three Months Ended March 31, 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 |
2,830,754 | - | - | 2,830,754 | ||||||||||||||||
Changes in fair value of available-for-sale financial assets |
- | (395,296 | ) | - | (395,296 | ) | ||||||||||||||
Cumulative (gain)/loss reclassified to profit or loss upon disposal of available-for-sale financial assets |
- | (20,649 | ) | - | (20,649 | ) | ||||||||||||||
Share of other comprehensive income of associates and joint venture |
(22,830 | ) | 17,891 | 95 | (4,844 | ) | ||||||||||||||
Income tax effect |
- | 2,956 | - | 2,956 | ||||||||||||||||
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Balance, end of period |
$ | (4,332,438 | ) | $ | 20,915,683 | $ | (18 | ) | $ | 16,583,227 | ||||||||||
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Three Months Ended March 31, 2013 | ||||||||||||||||||||
Foreign Currency Translation Reserve |
Unrealized Gain/Loss from Available-for- sale Financial Assets |
Cash Flow Hedges Reserve |
Total | |||||||||||||||||
Balance, beginning of period |
$ | (10,753,806 | ) | $ | 7,973,321 | $ | - | $ | (2,780,485 | ) | ||||||||||
Exchange differences arising on translation of foreign operations |
2,871,521 | - | - | 2,871,521 | ||||||||||||||||
Changes in fair value of available-for-sale financial assets |
- | 3,644,263 | - | 3,644,263 | ||||||||||||||||
Cumulative (gain)/loss reclassified to profit or loss upon disposal of available-for-sale financial assets |
- | (815,636 | ) | - | (815,636 | ) | ||||||||||||||
Share of other comprehensive income of associates and joint venture |
134,653 | (14 | ) | - | 134,639 | |||||||||||||||
The proportionate share of other comprehensive income/losses reclassified to profit or loss upon partial disposal of associates |
510 | (26 | ) | - | 484 | |||||||||||||||
Income tax effect |
- | 43,239 | - | 43,239 | ||||||||||||||||
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Balance, end of period |
$ | (7,747,122 | ) | $ | 10,845,147 | $ | - | $ | 3,098,025 | |||||||||||
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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.
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e. | Noncontrolling interests |
Three Months Ended March 31 | ||||||||||
2014 | 2013 | |||||||||
Balance, beginning of period |
$ | 266,830 | $ | 2,543,226 | ||||||
Share of noncontrolling interests |
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Net loss |
(24,967 | ) | (41,333 | ) | ||||||
Exchange differences arising on translation of foreign operations |
627 | 32,232 | ||||||||
Changes in fair value of available-for-sale financial assets |
838 | (256 | ) | |||||||
Cumulative (gain)/loss reclassified to profit or loss upon disposal of available-for-sale financial assets |
(338 | ) | (2,679 | ) | ||||||
Stock option compensation cost of subsidiary |
- | 2,701 | ||||||||
Share of other comprehensive income of associates and joint venture |
97 | - | ||||||||
Adjustments arising from changes in percentage of ownership in subsidiaries |
10,945 | (3,610 | ) | |||||||
Decrease in noncontrolling interests |
(29,574 | ) | (12,464 | ) | ||||||
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Balance, end of period |
$ | 224,458 | $ | 2,517,817 | ||||||
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24. | SHARE-BASED PAYMENT |
The Company did not issue employee stock option plans for the three months ended March 31, 2014 and 2013. Information about TSMCs outstanding employee stock options is described as follows:
a. | Optional exemption from applying IFRS 2 Share-based Payment (IFRS 2) |
TSMC | Number of Options (In Thousands) |
Weighted- average Exercise Price (NT$) | ||||||||
Three months ended March 31, 2014 |
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Balance, beginning of period |
1,763 | $45.9 | ||||||||
Options exercised |
(507 | ) | 44.0 | |||||||
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Balance, end of period |
1,256 | 46.7 | ||||||||
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Balance exercisable, end of period |
1,256 | 46.7 | ||||||||
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Three months ended March 31, 2013 |
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Balance, beginning of period |
5,945 | $34.6 | ||||||||
Options exercised |
(3,797 | ) | 28.3 | |||||||
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Balance, end of period |
2,148 | 45.7 | ||||||||
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Balance exercisable, end of period |
2,148 | 45.7 | ||||||||
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The numbers of outstanding stock options and exercise prices have been adjusted to reflect the distribution of earnings by TSMC in accordance with the plans.
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Information about TSMCs outstanding stock options was as follows:
March 31, 2014 |
December 31, 2013 |
March 31, 2013 | ||||||||
Range of Exercise Price (NT$) |
Weighted-average Remaining Contractual Life (Years) |
Range of Exercise Price (NT$) |
Weighted-average Remaining Contractual Life (Years) |
Range of Exercise Price (NT$) |
Weighted-average Remaining Contractual Life (Years) | |||||
$43.2-$47.2 | 1.0 | $43.2-$47.2 | 1.0 | $20.2-$28.3 | 0.2 | |||||
$38.0-$50.1 | 1.8 |
Xintec |
Number of (In Thousands) |
Weighted- average Exercise Price (NT$) | ||||||||
Three months ended March 31, 2013 |
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Balance, beginning of period |
515 | $ | 13.8 | |||||||
Options exercised |
(58 | ) | 14.7 | |||||||
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Balance, end of period |
457 | 13.7 | ||||||||
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& |