SIGNATURES |
- 1 -
- 2 -
2010 | 2009 | |||||||||||||||
Amount | % | Amount | % | |||||||||||||
ASSETS |
||||||||||||||||
CURRENT ASSETS |
||||||||||||||||
Cash and cash equivalents (Notes 2 and 4) |
$ | 131,854,140 | 20 | $ | 171,474,261 | 30 | ||||||||||
Financial assets at fair value through profit or loss
(Notes 2, 5 and 23) |
378 | | 38,883 | | ||||||||||||
Held-to-maturity financial assets (Notes 2, 7 and 23) |
7,031,587 | 1 | 5,476,955 | 1 | ||||||||||||
Receivables from related parties (Note 24) |
24,822,081 | 4 | 18,716,737 | 3 | ||||||||||||
Notes and accounts receivable |
27,261,560 | 4 | 20,561,613 | 4 | ||||||||||||
Allowance for doubtful receivables (Notes 2 and 8) |
(523,000 | ) | | (398,419 | ) | | ||||||||||
Allowance for sales returns and others (Notes 2 and 8) |
(5,982,628 | ) | (1 | ) | (7,311,251 | ) | (1 | ) | ||||||||
Other receivables from related parties (Note 24) |
634,274 | | 794,151 | | ||||||||||||
Other financial assets (Note 25) |
718,908 | | 1,333,913 | | ||||||||||||
Inventories (Notes 2, 3 and 9) |
22,122,521 | 3 | 17,153,932 | 3 | ||||||||||||
Deferred income tax assets (Notes 2 and 18) |
3,216,953 | 1 | 5,669,448 | 1 | ||||||||||||
Prepaid expenses and other current assets |
1,134,163 | | 883,166 | | ||||||||||||
Total current assets |
212,290,937 | 32 | 234,393,389 | 41 | ||||||||||||
LONG-TERM INVESTMENTS (Notes 2, 6, 7, 10, 11 and 23) |
||||||||||||||||
Investments accounted for using equity method |
115,722,527 | 17 | 106,116,192 | 19 | ||||||||||||
Available-for-sale financial assets |
1,039,916 | | 1,035,686 | | ||||||||||||
Held-to-maturity financial assets |
3,528,645 | 1 | 8,615,988 | 2 | ||||||||||||
Financial assets carried at cost |
497,835 | | 501,060 | | ||||||||||||
Total long-term investments |
120,788,923 | 18 | 116,268,926 | 21 | ||||||||||||
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 12 and 24) |
||||||||||||||||
Cost |
||||||||||||||||
Buildings |
126,586,981 | 19 | 114,927,509 | 20 | ||||||||||||
Machinery and equipment |
802,138,783 | 121 | 644,746,923 | 113 | ||||||||||||
Office equipment |
11,402,593 | 2 | 9,902,124 | 2 | ||||||||||||
940,128,357 | 142 | 769,576,556 | 135 | |||||||||||||
Accumulated depreciation |
(665,861,387 | ) | (100 | ) | (592,207,395 | ) | (104 | ) | ||||||||
Advance payments and construction in progress |
36,387,561 | 5 | 25,712,586 | 5 | ||||||||||||
Net property, plant and equipment |
310,654,531 | 47 | 203,081,747 | 36 | ||||||||||||
INTANGIBLE ASSETS |
||||||||||||||||
Goodwill (Note 2) |
1,567,756 | | 1,567,756 | | ||||||||||||
Deferred charges, net (Notes 2 and 13) |
5,504,428 | 1 | 5,666,736 | 1 | ||||||||||||
Total intangible assets |
7,072,184 | 1 | 7,234,492 | 1 | ||||||||||||
OTHER ASSETS |
||||||||||||||||
Deferred income tax assets (Notes 2 and 18) |
9,600,630 | 2 | 5,030,761 | 1 | ||||||||||||
Refundable deposits |
2,381,457 | | 2,699,751 | | ||||||||||||
Others (Notes 2 and 24) |
459,256 | | 469,209 | | ||||||||||||
Total other assets |
12,441,343 | 2 | 8,199,721 | 1 | ||||||||||||
TOTAL |
$ | 663,247,918 | 100 | $ | 569,178,275 | 100 | ||||||||||
- 3 -
2010 | 2009 | |||||||||||||||
Amount | % | Amount | % | |||||||||||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||||||||||
CURRENT LIABILITIES |
||||||||||||||||
Short-term loans (Note 14) |
$ | 17,759,356 | 3 | $ | | | ||||||||||
Financial liabilities at fair value through profit or loss (Notes 2, 5
and 23) |
173,978 | | 32,709 | | ||||||||||||
Accounts payable |
9,783,999 | 1 | 7,784,982 | 1 | ||||||||||||
Payables to related parties (Note 24) |
3,218,130 | | 2,222,351 | | ||||||||||||
Income tax payable (Notes 2 and 18) |
3,484,996 | | 2,997,283 | 1 | ||||||||||||
Cash dividends payable (Note 20) |
77,708,120 | 12 | 76,876,312 | 14 | ||||||||||||
Accrued profit sharing to employees and bonus to directors (Notes 2
and 20) |
11,777,660 | 2 | 11,599,659 | 2 | ||||||||||||
Payables to contractors and equipment suppliers |
25,443,411 | 4 | 15,549,894 | 3 | ||||||||||||
Accrued expenses and other current liabilities (Notes 16 and 23) |
11,875,119 | 2 | 8,128,016 | 1 | ||||||||||||
Total current liabilities |
161,224,769 | 24 | 125,191,206 | 22 | ||||||||||||
LONG-TERM LIABILITIES |
||||||||||||||||
Bonds payable (Notes 15 and 23) |
4,500,000 | 1 | 4,500,000 | 1 | ||||||||||||
Other long-term payables (Notes 16 and 23) |
161,390 | | 590,724 | | ||||||||||||
Total long-term liabilities |
4,661,390 | 1 | 5,090,724 | 1 | ||||||||||||
OTHER LIABILITIES |
||||||||||||||||
Accrued pension cost (Notes 2 and 17) |
3,805,044 | 1 | 3,760,071 | 1 | ||||||||||||
Guarantee deposits (Note 27) |
872,331 | | 1,212,250 | | ||||||||||||
Deferred credits (Notes 2 and 24) |
| | 162,529 | | ||||||||||||
Total other liabilities |
4,677,375 | 1 | 5,134,850 | 1 | ||||||||||||
Total liabilities |
170,563,534 | 26 | 135,416,780 | 24 | ||||||||||||
CAPITAL STOCK NT$10 PAR VALUE (Note 20) |
||||||||||||||||
Authorized: 28,050,000 thousand shares |
||||||||||||||||
Issued: 25,905,017 thousand shares in 2010 25,626,356 thousand shares in 2009 |
259,050,172 | 39 | 256,263,562 | 45 | ||||||||||||
To be issued |
| | 2,699,971 | | ||||||||||||
259,050,172 | 39 | 258,963,533 | 45 | |||||||||||||
CAPITAL SURPLUS (Notes 2 and 20) |
55,566,995 | 8 | 55,331,535 | 10 | ||||||||||||
RETAINED EARNINGS (Note 20) |
||||||||||||||||
Appropriated as legal capital reserve |
86,239,494 | 13 | 77,317,710 | 14 | ||||||||||||
Appropriated as special capital reserve |
1,313,047 | | | | ||||||||||||
Unappropriated earnings |
90,567,054 | 14 | 41,347,655 | 7 | ||||||||||||
178,119,595 | 27 | 118,665,365 | 21 | |||||||||||||
OTHERS (Notes 2 and 23) |
||||||||||||||||
Cumulative translation adjustments |
(1,034,256 | ) | | 456,824 | | |||||||||||
Unrealized gain on financial instruments |
981,878 | | 344,238 | | ||||||||||||
(52,378 | ) | | 801,062 | | ||||||||||||
Total shareholders equity |
492,684,384 | 74 | 433,761,495 | 76 | ||||||||||||
TOTAL |
$ | 663,247,918 | 100 | $ | 569,178,275 | 100 | ||||||||||
- 4 -
2010 | 2009 | |||||||||||||||
Amount | % | Amount | % | |||||||||||||
GROSS SALES (Notes 2 and 24) |
$ | 196,370,319 | $ | 114,227,264 | ||||||||||||
SALES RETURNS AND ALLOWANCES (Notes 2 and 8) |
5,560,054 | 4,671,054 | ||||||||||||||
NET SALES |
190,810,265 | 100 | 109,556,210 | 100 | ||||||||||||
COST OF SALES (Notes 3, 9, 19 and 24) |
98,822,613 | 52 | 67,820,643 | 62 | ||||||||||||
GROSS PROFIT |
91,987,652 | 48 | 41,735,567 | 38 | ||||||||||||
REALIZED (UNREALIZED) GROSS PROFIT FROM
AFFILIATES (Note 2) |
1,646 | | (79,066 | ) | | |||||||||||
REALIZED GROSS PROFIT |
91,989,298 | 48 | 41,656,501 | 38 | ||||||||||||
OPERATING EXPENSES (Notes 19 and 24) |
||||||||||||||||
Research and development |
12,596,905 | 7 | 7,934,763 | 7 | ||||||||||||
General and administrative |
4,809,249 | 2 | 3,975,992 | 4 | ||||||||||||
Marketing |
1,358,880 | 1 | 822,469 | 1 | ||||||||||||
Total operating expenses |
18,765,034 | 10 | 12,733,224 | 12 | ||||||||||||
INCOME FROM OPERATIONS |
73,224,264 | 38 | 28,923,277 | 26 | ||||||||||||
NON-OPERATING INCOME AND GAINS |
||||||||||||||||
Equity in earnings of equity method
investees, net (Notes 2 and 10) |
2,179,835 | 1 | | | ||||||||||||
Settlement income (Note 27) |
1,278,400 | 1 | 494,070 | 1 | ||||||||||||
Interest income (Note 2) |
388,318 | | 740,068 | 1 | ||||||||||||
Technical service income (Notes 24 and 27) |
236,790 | | 149,052 | | ||||||||||||
Foreign exchange gain, net (Note 2) |
92,744 | | | | ||||||||||||
Valuation gain on financial instruments, net
(Notes 2, 5 and 23) |
29,739 | | | | ||||||||||||
Gain on settlement and disposal of
financial assets, net (Notes 2 and 23) |
| | 53,461 | | ||||||||||||
Others (Notes 2 and 24) |
169,924 | | 219,593 | | ||||||||||||
Total non-operating income and gains |
4,375,750 | 2 | 1,656,244 | 2 | ||||||||||||
- 5 -
2010 | 2009 | |||||||||||||||
Amount | % | Amount | % | |||||||||||||
NON-OPERATING EXPENSES AND LOSSES |
||||||||||||||||
Casualty loss (Note 9) |
$ | 194,137 | | $ | | | ||||||||||
Interest expense |
79,188 | | 74,526 | | ||||||||||||
Equity in losses of equity method investees,
net (Notes 2 and 10) |
| | 3,276,491 | 3 | ||||||||||||
Valuation loss on financial instruments, net
(Notes 2, 5 and 23) |
| | 42,347 | | ||||||||||||
Foreign exchange loss, net (Note 2) |
| | 32,612 | | ||||||||||||
Others (Note 2) |
76,974 | | 63,174 | | ||||||||||||
Total non-operating expenses and losses |
350,299 | | 3,489,150 | 3 | ||||||||||||
INCOME BEFORE INCOME TAX |
77,249,715 | 40 | 27,090,371 | 25 | ||||||||||||
INCOME TAX EXPENSE (Notes 2 and 18) |
3,304,682 | 1 | 1,089,852 | 1 | ||||||||||||
NET INCOME |
$ | 73,945,033 | 39 | $ | 26,000,519 | 24 | ||||||||||
2010 | 2009 | |||||||||||||||
Before | After | Before | After | |||||||||||||
Income | Income | Income | Income | |||||||||||||
Tax | Tax | Tax | Tax | |||||||||||||
EARNINGS PER SHARE (NT$, Note 22) |
||||||||||||||||
Basic earnings per share |
$ | 2.98 | $ | 2.85 | $ | 1.05 | $ | 1.01 | ||||||||
Diluted earnings per share |
$ | 2.98 | $ | 2.85 | $ | 1.04 | $ | 1.00 | ||||||||
(With Deloitte & Touche audit report dated July 22, 2010) | (Concluded) |
- 6 -
Others | ||||||||||||||||||||||||||||||||||||||||||||||||
Retained Earnings | Unrealized | |||||||||||||||||||||||||||||||||||||||||||||||
Capital Stock Common Stock | To Be Issued | Legal | Special | Cumulative | Gain (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||||
Shares | Shares | Capital | Capital | Capital | Unappropriated | Translation | on Financial | Shareholders | ||||||||||||||||||||||||||||||||||||||||
(In Thousands) | Amount | (In Thousands) | Amount | Surplus | Reserve | Reserve | Earnings | Total | Adjustments | Instruments | Equity | |||||||||||||||||||||||||||||||||||||
BALANCE, JANUARY 1, 2010 |
25,902,706 | $ | 259,027,066 | | $ | | $ | 55,486,010 | $ | 77,317,710 | $ | | $ | 104,564,972 | $ | 181,882,682 | $ | (1,766,667 | ) | $ | 453,621 | $ | 495,082,712 | |||||||||||||||||||||||||
Appropriations of prior years earnings |
||||||||||||||||||||||||||||||||||||||||||||||||
Legal capital reserve |
| | | | | 8,921,784 | | (8,921,784 | ) | | | | | |||||||||||||||||||||||||||||||||||
Special capital reserve |
| | | | | | 1,313,047 | (1,313,047 | ) | | | | | |||||||||||||||||||||||||||||||||||
Cash dividends to shareholders NT$3.00 per share |
| | | | | | | (77,708,120 | ) | (77,708,120 | ) | | | (77,708,120 | ) | |||||||||||||||||||||||||||||||||
Net income for the six months ended June 30, 2010 |
| | | | | | | 73,945,033 | 73,945,033 | | | 73,945,033 | ||||||||||||||||||||||||||||||||||||
Adjustment arising from changes in percentage of ownership in
equity method investees |
| | | | 711 | | | | | | | 711 | ||||||||||||||||||||||||||||||||||||
Translation adjustments |
| | | | | | | | | 732,411 | | 732,411 | ||||||||||||||||||||||||||||||||||||
Issuance of stock from exercising employee stock options |
2,311 | 23,106 | | | 62,508 | | | | | | | 85,614 | ||||||||||||||||||||||||||||||||||||
Valuation loss on available-for-sale financial assets |
| | | | | | | | | | (6,756 | ) | (6,756 | ) | ||||||||||||||||||||||||||||||||||
Net change in shareholders equity from equity method investees |
| | | | 17,766 | | | | | | 535,013 | 552,779 | ||||||||||||||||||||||||||||||||||||
BALANCE, JUNE 30, 2010 |
25,905,017 | $ | 259,050,172 | | $ | | $ | 55,566,995 | $ | 86,239,494 | $ | 1,313,047 | $ | 90,567,054 | $ | 178,119,595 | $ | (1,034,256 | ) | $ | 981,878 | $ | 492,684,384 | |||||||||||||||||||||||||
BALANCE, JANUARY 1, 2009 |
25,625,437 | $ | 256,254,373 | | $ | | $ | 49,875,255 | $ | 67,324,393 | $ | 391,857 | $ | 102,337,417 | $ | 170,053,667 | $ | 481,158 | $ | (287,342 | ) | $ | 476,377,111 | |||||||||||||||||||||||||
Appropriations of prior years earnings |
||||||||||||||||||||||||||||||||||||||||||||||||
Legal capital reserve |
| | | | | 9,993,317 | | (9,993,317 | ) | | | | | |||||||||||||||||||||||||||||||||||
Reversal of special capital reserve |
| | | | | | (391,857 | ) | 391,857 | | | | | |||||||||||||||||||||||||||||||||||
Cash dividends to shareholders NT$3.00 per share |
| | | | | | | (76,876,312 | ) | (76,876,312 | ) | | | (76,876,312 | ) | |||||||||||||||||||||||||||||||||
Stock dividends to shareholders NT$0.02 per share |
| | 51,251 | 512,509 | | | | (512,509 | ) | (512,509 | ) | | | | ||||||||||||||||||||||||||||||||||
Profit sharing to employees in stock |
| | 141,870 | 1,418,699 | 6,076,289 | | | | | | | 7,494,988 | ||||||||||||||||||||||||||||||||||||
Capital surplus transferred to capital stock |
| | 76,876 | 768,763 | (768,763 | ) | | | | | | | | |||||||||||||||||||||||||||||||||||
Net income for the six months ended June 30, 2009 |
| | | | | | | 26,000,519 | 26,000,519 | | | 26,000,519 | ||||||||||||||||||||||||||||||||||||
Adjustment arising from changes in percentage of ownership in
equity method investees |
| | | | 129,081 | | | | | | | 129,081 | ||||||||||||||||||||||||||||||||||||
Translation adjustments |
| | | | | | | | | (24,334 | ) | | (24,334 | ) | ||||||||||||||||||||||||||||||||||
Issuance of stock from exercising employee stock options |
919 | 9,189 | | | 19,673 | | | | | | | 28,862 | ||||||||||||||||||||||||||||||||||||
Valuation gain on available-for-sale financial assets |
| | | | | | | | | | 3,028 | 3,028 | ||||||||||||||||||||||||||||||||||||
Net change in shareholders equity from equity method investees |
| | | | | | | | | | 628,552 | 628,552 | ||||||||||||||||||||||||||||||||||||
BALANCE, JUNE 30, 2009 |
25,626,356 | $ | 256,263,562 | 269,997 | $ | 2,699,971 | $ | 55,331,535 | $ | 77,317,710 | $ | | $ | 41,347,655 | $ | 118,665,365 | $ | 456,824 | $ | 344,238 | $ | 433,761,495 | ||||||||||||||||||||||||||
- 7 -
2010 | 2009 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
Net income |
$ | 73,945,033 | $ | 26,000,519 | ||||
Adjustments to reconcile net income to net cash provided by operating
activities: |
||||||||
Depreciation and amortization |
39,684,919 | 37,142,624 | ||||||
Unrealized (realized) gross profit from affiliates |
(1,646 | ) | 79,066 | |||||
Amortization of premium/discount of financial assets |
8,666 | (15,843 | ) | |||||
Gain on disposal of available-for-sale financial assets, net |
| (37,370 | ) | |||||
Gain on held-to-maturity financial assets redeemed by the issuer |
| (16,091 | ) | |||||
Loss on disposal of financial assets carried at cost, net |
1,263 | | ||||||
Equity in losses (earnings) of equity method investees, net |
(2,179,835 | ) | 3,276,491 | |||||
Cash dividends received from equity method investees |
| 988,201 | ||||||
Gain on disposal of property, plant and equipment and other
assets, net |
(9,334 | ) | (55,936 | ) | ||||
Deferred income tax |
(990,530 | ) | (551,537 | ) | ||||
Changes in operating assets and liabilities: |
||||||||
Decrease (increase) in: |
||||||||
Financial assets and liabilities at fair value through
profit or loss |
355,343 | (47,332 | ) | |||||
Receivables from related parties |
(2,280,308 | ) | (6,988,533 | ) | ||||
Notes and accounts receivable |
(7,377,040 | ) | (9,120,437 | ) | ||||
Allowance for doubtful receivables |
92,000 | (38,327 | ) | |||||
Allowance for sales returns and others |
(2,601,004 | ) | 1,442,669 | |||||
Other receivables from related parties |
33,182 | 168,432 | ||||||
Other financial assets |
385,164 | (603,233 | ) | |||||
Inventories |
(3,292,305 | ) | (4,345,996 | ) | ||||
Prepaid expenses and other current assets |
(230,184 | ) | 309,309 | |||||
Increase (decrease) in: |
||||||||
Accounts payable |
492,889 | 3,470,717 | ||||||
Payables to related parties |
1,178,788 | 1,020,001 | ||||||
Income tax payable |
(5,276,124 | ) | (6,225,528 | ) | ||||
Accrued profit sharing to employees and bonus to directors |
5,006,322 | 3,946,590 | ||||||
Accrued expenses and other current liabilities |
(4,941,797 | ) | 154,947 | |||||
Accrued pension cost |
(2,132 | ) | 50,062 | |||||
Deferred credits |
(47,873 | ) | (115,831 | ) | ||||
Net cash provided by operating activities |
91,953,457 | 49,887,634 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
Acquisitions of: |
||||||||
Property, plant and equipment |
(98,190,906 | ) | (12,638,153 | ) | ||||
Held-to-maturity financial assets |
| (662,685 | ) | |||||
Investments accounted for using equity method |
(8,018,146 | ) | (210,999 | ) | ||||
Financial assets carried at cost |
(480 | ) | (483 | ) | ||||
Proceeds from disposal or redemption of: |
||||||||
Available-for-sale financial assets |
| 1,037,370 |
- 8 -
2010 | 2009 | |||||||
Held-to-maturity financial assets |
$ | 11,595,000 | $ | 4,245,000 | ||||
Financial assets carried at cost |
3,370 | | ||||||
Property, plant and equipment and other assets |
20,903 | 383 | ||||||
Proceeds from return of capital by investees |
| 20,201 | ||||||
Increase in deferred charges |
(585,185 | ) | (194,313 | ) | ||||
Decrease in refundable deposits |
316,659 | 19,986 | ||||||
Net cash used in investing activities |
(94,858,785 | ) | (8,383,693 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
Increase in short-term loans |
17,759,356 | | ||||||
Repayment of bonds payable |
| (8,000,000 | ) | |||||
Decrease in guarantee deposits |
(129,045 | ) | (266,902 | ) | ||||
Proceeds from exercise of employee stock options |
85,614 | 28,862 | ||||||
Net cash provided by (used in) financing activities |
17,715,925 | (8,238,040 | ) | |||||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
14,810,597 | 33,265,901 | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
117,043,543 | 138,208,360 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 131,854,140 | $ | 171,474,261 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
||||||||
Interest paid |
$ | 145,179 | $ | 351,803 | ||||
Income tax paid |
$ | 9,452,574 | $ | 7,694,716 | ||||
INVESTING ACTIVITIES AFFECTING BOTH CASH AND NON-CASH ITEMS |
||||||||
Acquisition of property, plant and equipment |
$ | 94,612,614 | $ | 20,613,156 | ||||
Decrease (increase) in payables to contractors and
equipment suppliers |
3,701,212 | (7,975,003 | ) | |||||
Nonmonetary exchange trade-out price |
(122,920 | ) | | |||||
Cash paid |
$ | 98,190,906 | $ | 12,638,153 | ||||
Disposal of property, plant and equipment and other assets |
$ | 143,823 | $ | 58,833 | ||||
Increase in other payables to related parties |
| (58,450 | ) | |||||
Nonmonetary exchange trade-out price |
(122,920 | ) | | |||||
Cash received |
$ | 20,903 | $ | 383 | ||||
NON-CASH FINANCING ACTIVITIES |
||||||||
Current portion of other long-term payables (under accrued
expenses and other current liabilities) |
$ | 569,149 | $ | 935,825 | ||||
Profit sharing to employees transferred to capital stock |
$ | | $ | 7,494,988 | ||||
(With Deloitte & Touche audit report dated July 22, 2010) | (Concluded) |
- 9 -
1. | GENERAL |
Taiwan Semiconductor Manufacturing Company Limited (the Company or TSMC), a Republic of China (R.O.C.) corporation, was incorporated on February 21, 1987. The Company is a dedicated foundry in the semiconductor industry which engages mainly in the manufacturing, selling, packaging, testing and computer-aided designing of integrated circuits and other semiconductor devices and the manufacturing of masks. Beginning in 2010, the Company also engages in the researching, developing, designing, manufacturing and selling of LED lighting devices and related applications products and systems, and renewable energy and efficiency related technologies and products. On September 5, 1994, its shares were listed on the Taiwan Stock Exchange (TSE). 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). |
As of June 30, 2010 and 2009, the Company had 25,306 and 19,759 employees, respectively. |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The financial statements are presented in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, Business Accounting Law, Guidelines Governing Business Accounting, and accounting principles generally accepted in the R.O.C. |
For the convenience of readers, the accompanying 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 financial statements shall prevail. |
Significant accounting policies are summarized as follows: | ||
Use of Estimates |
The preparation of financial statements in conformity with the aforementioned guidelines, law and principles requires management to make reasonable assumptions and estimates of matters that are inherently uncertain. The actual results may differ from managements estimates. | ||
Classification of Current and Noncurrent Assets and Liabilities |
Current assets are assets held for trading purposes and assets expected to be converted to cash, sold or consumed within one year from the balance sheet date. Current liabilities are obligations incurred for trading purposes and obligations expected to be settled within one year from the balance sheet date. Assets and liabilities that are not classified as current are noncurrent assets and liabilities, respectively. | ||
Cash Equivalents |
Repurchase agreements collateralized by government bonds acquired with maturities of less than three months from the date of purchase are classified as cash equivalents. The carrying amount approximates fair value. |
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Financial Assets/Liabilities at Fair Value Through Profit or Loss | ||
Derivatives that do not meet the criteria for hedge accounting are initially recognized at fair value, with transaction costs expensed as incurred. The derivatives are remeasured at fair value subsequently with changes in fair value recognized in earnings. A regular way purchase or sale of financial assets is accounted for using settlement date accounting. |
Fair value is estimated using valuation techniques incorporating estimates and assumptions that are consistent with prevailing market conditions. When the fair value is positive, the derivative is recognized as a financial asset; when the fair value is negative, the derivative is recognized as a financial liability. |
Available-for-sale Financial Assets | ||
Available-for-sale financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Changes in fair value from subsequent remeasurement are reported as a separate component of shareholders equity. The corresponding accumulated gains or losses are recognized in earnings when the financial asset is derecognized from the balance sheet. A regular way purchase or sale of financial assets is accounted for using settlement date accounting. |
The fair value of debt securities is determined using the average of bid and asked prices at the end of the period. |
Any difference between the initial carrying amount of a debt security and the amount due at maturity is amortized using the effective interest method, with the amortization recognized in earnings. |
If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in a subsequent period, the amount of the impairment loss decreases, for equity securities, the previously recognized impairment loss is reversed to the extent of the decrease and recorded as an adjustment to shareholders equity; for debt securities, the amount of the decrease is recognized in earnings, provided that the decrease is clearly attributable to an event which occurred after the impairment loss was recognized. |
Held-to-maturity Financial Assets | ||
Debt securities for which the Company has a positive intention and ability to hold to maturity are categorized as held-to-maturity financial assets and are carried at amortized cost. Those financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Gains or losses are recognized at the time of derecognition, impairment or amortization. A regular way purchase or sale of financial assets is accounted for using settlement date accounting. |
If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in a subsequent period, the amount of the impairment loss decreases and the decrease is clearly attributable to an event which occurred after the impairment loss was recognized, the previously recognized impairment loss is reversed to the extent of the decrease. The reversal may not result in a carrying amount that exceeds the amortized cost that would have been determined as if no impairment loss had been recognized. | ||
Allowance for Doubtful Receivables |
An allowance for doubtful receivables is provided based on a review of the collectability of receivables. The Company determines the amount of the allowance for doubtful receivables with a charge of 1% of the amount of outstanding receivables considering the account aging analysis and current trends in the credit quality of its customers. |
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Revenue Recognition and Allowance for Sales Returns and Others | ||
The Company recognizes revenue when evidence of an arrangement exists, the rewards of ownership and significant risk of the goods has been transferred to the buyer, price is fixed or determinable, and collectability is reasonably assured. Provisions for estimated sales returns and others are recorded in the period the related revenue is recognized, based on historical experience, managements judgment, and any known factors that would significantly affect the allowance. |
Sales prices are determined using fair value taking into account related sales discounts agreed to by the Company and its customers. Sales agreements typically provide that payment is due 30 days from invoice date for a majority of the customers and 30 to 45 days after the end of the month in which sales occur for some customers. Since the receivables from sales are collectible within one year and such transactions are frequent, fair value of the receivables is equivalent to the nominal amount of the cash to be received. |
Inventories | ||
Inventories are recorded at standard cost and adjusted to approximate weighted-average cost on the balance sheet date. |
Prior to January 1, 2009, inventories were stated at the lower of cost or market value. Any write-down was made on a total-inventory basis. Market value represented replacement cost for raw materials, supplies and spare parts and net realizable value for work in process and finished goods. |
As stated in Note 3, effective January 1, 2009, inventories are stated at the lower of cost or net realizable value. Inventory write-downs are made on an item-by-item basis, except where it may be appropriate to group similar or related items. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and necessary selling costs. | ||
Investments Accounted for Using Equity Method |
Investments in companies wherein the Company exercises significant influence over the operating and financial policy decisions are accounted for using the equity method. The Companys share of the net income or net loss of an investee is recognized in the equity in earnings/losses of equity method investees, net account. The cost of an investment shall be analyzed and the cost of investment in excess of the fair value of identifiable net assets acquired, representing goodwill, shall not be amortized. If the fair value of identifiable net assets acquired exceeds the cost of investment, the excess shall be proportionately allocated as reductions to fair values of non-current assets (except for financial assets other than investments accounted for using the equity method and deferred income tax assets). When an indication of impairment is identified, the carrying amount of the investment is reduced, with the related impairment loss recognized in earnings. |
When the Company subscribes for additional investees shares at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment in the investee differs from the amount of the Companys share of the investees equity. The Company records such a difference as an adjustment to long-term investments with the corresponding amount charged or credited to capital surplus. |
Gains or losses on sales from the Company to equity method investees are deferred in proportion to the Companys ownership percentages in the investees until such gains or losses are realized through transactions with third parties. The entire amount of the gains or losses on sales to investees over which the Company has a controlling interest is deferred until such gains or losses are realized through subsequent sales of the related products to third parties. Gains or losses on sales from equity method investees to the Company are deferred in proportion to the Companys ownership percentages in the investees until they are realized through transactions with third parties. Gains or losses on sales between equity method investees over each of which the Company has control are deferred in proportion to the Companys weighted-average ownership percentage in the investee which records gains or losses. In transactions between equity method investees over either or both of which the Company has no control, gains or losses on sales are |
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deferred in proportion to the multiplication of the Companys weighted-average ownership percentages in the investees. Such gains or losses are recorded until they are realized through transactions with third parties. |
If an investees functional currency is a foreign currency, differences will result from the translation of the investees financial statements into the reporting currency of the Company. Such differences are charged or credited to cumulative translation adjustments, a separate component of shareholders equity. |
Financial Assets Carried at Cost | ||
Investments for which the Company does not exercise significant influence and that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, such as non-publicly traded stocks and mutual funds, are carried at their original cost. The costs of non-publicly traded stocks and mutual funds are determined using the weighted-average method. If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. A subsequent reversal of such impairment loss is not allowed. | ||
Cash dividends are recognized as investment income upon resolution of shareholders of an investee but are accounted for as a reduction to the original cost of investment if such dividends are declared on the earnings of the investee attributable to the period prior to the purchase of the investment. Stock dividends are recorded as an increase in the number of shares held and do not affect investment income. The cost per share is recalculated based on the new total number of shares. |
Property, Plant and Equipment and Assets Leased to Others | ||
Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation. When an indication of impairment is identified, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, net of depreciation, as if no impairment loss had been recognized. Significant additions, renewals and betterments incurred during the construction period are capitalized. Maintenance and repairs are expensed as incurred. |
Depreciation is computed using the straight-line method over the following estimated service lives: buildings 10 to 20 years; machinery and equipment 5 years; and office equipment 3 to 5 years. |
Upon sale or disposal of property, plant and equipment and assets leased to others, the related cost and accumulated depreciation are deducted from the corresponding accounts, with any gain or loss recorded as non-operating gains or losses in the period of sale or disposal. |
Intangible Assets | ||
Goodwill represents the excess of the consideration paid for acquisition over the fair value of identifiable net assets acquired. Goodwill is no longer amortized and instead is tested for impairment annually. If an event occurs or circumstances change which indicate that the fair value of goodwill is more likely than not below its carrying amount, an impairment loss is recognized. A subsequent reversal of such impairment loss is not allowed. |
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Deferred charges consist of technology license fees, software and system design costs and patent and others. The amounts are amortized over the following periods: Technology license fees the estimated life of the technology or the term of the technology transfer contract; software and system design costs 3 years; patent and others the economic life or contract period. When an indication of impairment is identified, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the previously recognized impairment loss would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, net of amortization, as if no impairment loss had been recognized. | ||
Expenditures related to research activities and those related to development activities that do not meet the criteria for capitalization are charged to expenses when incurred. |
Pension Costs | ||
For employees who participate in defined contribution pension plans, pension costs are recorded based on the actual contributions made to employees individual pension accounts during their service periods. For employees who participate in defined benefit pension plans, pension costs are recorded based on actuarial calculations. |
Income Tax | ||
The Company applies an inter-period allocation for its income tax whereby deferred income tax assets and liabilities are recognized for the tax effects of temporary differences and unused tax credits. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified as current or noncurrent in accordance with the classification of its related asset or liability. However, if a deferred tax asset or liability does not relate to an asset or liability in the financial statements, then it is classified as either current or noncurrent based on the expected length of time before it is realized or settled. |
Any tax credits arising from purchases of machinery, equipment and technology, research and development expenditures, personnel training expenditures, and investments in important technology-based enterprises are recognized using the flow-through method. |
Adjustments of prior years tax liabilities are added to or deducted from the current periods tax provision. |
Income tax on unappropriated earnings at a rate of 10% is expensed in the year of shareholder approval which is the year subsequent to the year the earnings are generated. |
Stock-based Compensation | ||
Employee stock options that were granted or modified in the period from January 1, 2004 to December 31, 2007 are accounted for by the interpretations issued by the Accounting Research and Development Foundation of the Republic of China. The Company adopted the intrinsic value method and any compensation cost determined using this method is recognized in earnings over the employee vesting period. Employee stock option plans that were granted or modified after December 31, 2007 are accounted for using fair value method in accordance with Statement of Financial Accounting Standards No. 39, Accounting for Share-based Payment. The Company did not grant or modify any employee stock options since January 1, 2008. |
Profit Sharing to Employees and Bonus to Directors | ||
Effective January 1, 2008, the Company adopted Interpretation 2007-052, Accounting for Bonuses to Employees, Directors and Supervisors, which requires companies to record profit sharing to employees and bonus to directors as an expense rather than as an appropriation of earnings. |
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Foreign-currency Transactions | ||
Foreign-currency transactions other than derivative contracts are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur. Exchange gains or losses derived from foreign-currency transactions or monetary assets and liabilities denominated in foreign currencies are recognized in earnings. | ||
At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are revalued at prevailing exchange rates with the resulting gains or losses recognized in earnings. |
3. | ACCOUNTING CHANGES |
Effective January 1, 2009, the Company adopted the newly revised Statement of Financial Accounting Standards (SFAS) No. 10, Accounting for Inventories. The main revisions are (1) inventories are stated at the lower of cost or net realizable value, and inventories are written down to net realizable value on an item-by-item basis except when the grouping of similar or related items is appropriate; (2) unallocated overheads are recognized as expenses in the period in which they are incurred; and (3) abnormal cost, write-downs of inventories and any reversal of write-downs are recorded as cost of sales for the period. Such changes in accounting principle did not have significant effect on the Companys financial statements for the six months ended June 30, 2009. |
4. | CASH AND CASH EQUIVALENTS |
June 30 | ||||||||
2010 | 2009 | |||||||
Cash and deposits in banks |
$ | 129,953,580 | $ | 164,060,131 | ||||
Repurchase agreements collateralized by government bonds |
1,900,560 | 7,414,130 | ||||||
$ | 131,854,140 | $ | 171,474,261 | |||||
5. | FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS |
June 30 | ||||||||
2010 | 2009 | |||||||
Trading financial assets |
||||||||
Cross currency swap contracts |
$ | 378 | $ | 38,883 | ||||
Trading financial liabilities |
||||||||
Forward exchange contracts |
$ | 13,893 | $ | 6,284 | ||||
Cross currency swap contracts |
160,085 | 26,425 | ||||||
$ | 173,978 | $ | 32,709 | |||||
The Company entered into derivative contracts during the six months ended June 30, 2010 and 2009 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 its derivative contracts. |
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Outstanding forward exchange contracts consisted of the following: |
Contract Amount | ||||||||
Maturity Date | (In Thousands) | |||||||
June 30,
2010 |
||||||||
Sell EUR/Buy NT$ |
July 2010 | EUR14,000/NT$549,304 | ||||||
Sell US$/Buy NT$ |
July 2010 | US$40,000/NT$1,277,000 | ||||||
June 30,
2009 |
||||||||
Sell EUR/Buy US$ |
July 2009 | EUR12,200/US$17,019 |
Outstanding cross currency swap contracts consisted of the following: |
Range of | Range of | |||||||||||
Contract Amount | Interest Rates | Interest Rates | ||||||||||
Maturity Date | (In Thousands) | Paid | Received | |||||||||
June 30,
2010 |
||||||||||||
July 2010 to August 2010 |
US$615,000/NT$19,689,710 | 0.41%-0.67 | % | 0.00%-0.00 | % | |||||||
June 30,
2009 |
||||||||||||
July 2009 |
US$767,000/NT$25,197,800 | 0.46%-9.26 | % | 0.00%-0.76 | % |
For the six months ended June 30, 2010 and 2009, changes in fair value related to derivative financial instruments recognized in earnings was a net gain of NT$29,739 thousand and a net loss of NT$42,347 thousand, respectively. |
6. | AVAILABLE-FOR-SALE FINANCIAL ASSETS |
June 30 | ||||||||
2010 | 2009 | |||||||
Corporate bonds |
$ | 1,039,916 | $ | 1,035,686 | ||||
7. | HELD-TO-MATURITY FINANCIAL ASSETS |
June 30 | ||||||||
2010 | 2009 | |||||||
Corporate bonds |
$ | 9,560,232 | $ | 13,209,510 | ||||
Structured time deposits |
1,000,000 | | ||||||
Government bonds |
| 883,433 | ||||||
10,560,232 | 14,092,943 | |||||||
Current portion |
(7,031,587 | ) | (5,476,955 | ) | ||||
$ | 3,528,645 | $ | 8,615,988 | |||||
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Structured time deposits categorized as held-to-maturity financial assets consisted of the following: |
Principal | Interest | Range of | ||||||||||||||
Amount | Receivable | Interest Rates | Maturity Date | |||||||||||||
June 30, 2010 |
||||||||||||||||
Callable domestic deposits |
$ | 1,000,000 | $ | 819 | 0.36% | July 2010 | ||||||||||
8. | ALLOWANCES FOR DOUBTFUL RECEIVABLES, SALES RETURNS AND OTHERS |
Movements of the allowance for doubtful receivables were as follows: |
Six Months Ended June 30 | ||||||||
2010 | 2009 | |||||||
Balance, beginning of period |
$ | 431,000 | $ | 436,746 | ||||
Provision |
92,000 | 205,480 | ||||||
Write-off |
| (243,807 | ) | |||||
Balance, end of period |
$ | 523,000 | $ | 398,419 | ||||
Movements of the allowance for sales returns and others were as follows: |
Six Months Ended June 30 | ||||||||
2010 | 2009 | |||||||
Balance, beginning of period |
$ | 8,583,632 | $ | 5,868,582 | ||||
Provision |
5,560,054 | 4,671,054 | ||||||
Write-off |
(8,161,058 | ) | (3,228,385 | ) | ||||
Balance, end of period |
$ | 5,982,628 | $ | 7,311,251 | ||||
9. | INVENTORIES |
June 30 | ||||||||
2010 | 2009 | |||||||
Finished goods |
$ | 2,266,830 | $ | 1,762,370 | ||||
Work in process |
16,884,693 | 13,832,628 | ||||||
Raw materials |
1,953,960 | 872,203 | ||||||
Supplies and spare parts |
1,017,038 | 686,731 | ||||||
$ | 22,122,521 | $ | 17,153,932 | |||||
Write-down of inventories to net realizable value in the amount of NT$47,183 thousand and NT$691,760 thousand, respectively, were included in the cost of sales for the six months ended June 30, 2010 and 2009. And inventories losses related to earthquake in the amount of NT $194,137 thousand were classified under non-operating expenses and losses for the six months ended June 30, 2010. |
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10. | INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD |
June 30 | ||||||||||||||||
2010 | 2009 | |||||||||||||||
% of | % of | |||||||||||||||
Carrying | Owner- | Carrying | Owner- | |||||||||||||
Amount | ship | Amount | ship | |||||||||||||
TSMC Global Ltd. (TSMC Global) |
$ | 46,004,067 | 100 | $ | 46,275,534 | 100 | ||||||||||
TSMC Partners, Ltd. (TSMC Partners) |
34,361,272 | 100 | 32,889,200 | 100 | ||||||||||||
Vanguard International Semiconductor
Corporation (VIS) |
9,233,879 | 38 | 9,209,323 | 37 | ||||||||||||
Systems on Silicon Manufacturing Company Pte
Ltd. (SSMC) |
6,727,380 | 39 | 5,744,178 | 39 | ||||||||||||
Motech Industries Inc. (Motech) |
6,225,880 | 20 | | | ||||||||||||
TSMC China Company Limited (TSMC China) |
3,134,321 | 100 | 4,286,079 | 100 | ||||||||||||
VentureTech Alliance Fund III, L.P. (VTAF III) |
2,890,551 | 99 | 1,418,421 | 98 | ||||||||||||
TSMC North America |
2,800,334 | 100 | 2,593,228 | 100 | ||||||||||||
Xintec Inc. (Xintec) |
1,576,835 | 41 | 1,349,779 | 42 | ||||||||||||
VentureTech Alliance Fund II, L.P. (VTAF II) |
1,128,923 | 98 | 807,446 | 98 | ||||||||||||
Global UniChip Corporation (GUC) |
1,000,709 | 35 | 920,198 | 36 | ||||||||||||
Emerging Alliance Fund, L.P. (Emerging
Alliance) |
315,832 | 99 | 332,124 | 99 | ||||||||||||
TSMC Europe B.V. (TSMC Europe) |
156,985 | 100 | 141,821 | 100 | ||||||||||||
TSMC Japan Limited (TSMC Japan) |
146,335 | 100 | 132,285 | 100 | ||||||||||||
TSMC Korea Limited (TSMC Korea) |
19,224 | 100 | 16,576 | 100 | ||||||||||||
$ | 115,722,527 | $ | 106,116,192 | |||||||||||||
For the six months ended June 30, 2010, the Company increased its investment in VTAF III for the amount of NT$1,710,588 thousand, and the Companys percentage of ownership in VTAF III increased from 98% to 99%. | ||
In February 2010, the Company subscribed 75,316 thousand shares in Motech through a private placement for NT$6,228,661 thousand; after the subscription, the Companys percentage of ownership in Motech was 20%. Transfer of the aforementioned common shares within three years is prohibited according to the related regulations. | ||
TSMC Partners and TSMC International were both 100% owned subsidiaries of the Company. To simplify the organization structure of investment, TSMC Partners merged TSMC International in June 2009. | ||
For the six months ended June 30, 2010 and 2009, equity in earnings/losses of equity method investees was a net gain of NT$2,179,835 thousand and a net loss of NT$3,276,491 thousand, respectively. Related equity in earnings/losses of equity method investees were determined based on the audited financial statements, except for Emerging Alliance, TSMC Japan, TSMC Europe and TSMC Korea. The Company believes that, had Emerging Alliance, TSMC Japan, TSMC Europe and TSMC Koreas financial statements been audited, any adjustments arising would have no material effect on the Companys financial statements. | ||
As of June 30, 2010 and 2009, quoted market price of publicly traded stocks in unrestricted investments accounted for using equity method (VIS and GUC) were NT$13,692,207 thousand and NT$15,082,092 thousand, respectively. |
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Movements of the difference between the cost of investments and the Companys share in investees net assets allocated to depreciable assets were as follows: |
Six Months Ended June 30 | ||||||||
2010 | 2009 | |||||||
Balance, beginning of period |
$ | 1,429,118 | $ | 2,053,253 | ||||
Additions |
2,055,660 | | ||||||
Amortizations |
(472,501 | ) | (312,068 | ) | ||||
Balance, end of period |
$ | 3,012,277 | $ | 1,741,185 | ||||
Movements of the difference allocated to goodwill were as follows: |
Six Months Ended June 30 | ||||||||
2010 | 2009 | |||||||
Balance, beginning of period |
$ | 1,061,885 | $ | 1,061,885 | ||||
Additions |
353,680 | | ||||||
Balance, end of period |
$ | 1,415,565 | $ | 1,061,885 | ||||
11. | FINANCIAL ASSETS CARRIED AT COST |
June 30 | ||||||||
2010 | 2009 | |||||||
Non-publicly traded stocks |
$ | 338,584 | $ | 338,584 | ||||
Mutual funds |
159,251 | 162,476 | ||||||
$ | 497,835 | $ | 501,060 | |||||
12. | PROPERTY, PLANT AND EQUIPMENT |
Six Months Ended June 30, 2010 | ||||||||||||||||||||
Balance, | ||||||||||||||||||||
Beginning of | Balance, | |||||||||||||||||||
Period | Additions | Disposals | Reclassification | End of Period | ||||||||||||||||
Cost |
||||||||||||||||||||
Buildings |
$ | 124,522,047 | $ | 2,065,029 | $ | (95 | ) | $ | | $ | 126,586,981 | |||||||||
Machinery and equipment |
713,426,126 | 89,052,436 | (479,621 | ) | 139,842 | 802,138,783 | ||||||||||||||
Office equipment |
10,781,099 | 894,165 | (272,229 | ) | (442 | ) | 11,402,593 | |||||||||||||
848,729,272 | $ | 92,011,630 | $ | (751,945 | ) | $ | 139,400 | 940,128,357 | ||||||||||||
Accumulated depreciation |
||||||||||||||||||||
Buildings |
73,525,160 | $ | 4,059,404 | $ | (95 | ) | $ | | 77,584,469 | |||||||||||
Machinery and equipment |
545,693,910 | 34,213,131 | (479,621 | ) | 139,842 | 579,567,262 | ||||||||||||||
Office equipment |
8,545,253 | 437,074 | (272,229 | ) | (442 | ) | 8,709,656 | |||||||||||||
627,764,323 | $ | 38,709,609 | $ | (751,945 | ) | $ | 139,400 | 665,861,387 | ||||||||||||
Advance payments and
construction in progress |
33,786,577 | $ | 2,600,984 | $ | | $ | | 36,387,561 | ||||||||||||
$ | 254,751,526 | $ | 310,654,531 | |||||||||||||||||
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Six Months Ended June 30, 2009 | ||||||||||||||||||||
Balance, | ||||||||||||||||||||
Beginning of | Balance, | |||||||||||||||||||
Period | Additions | Disposals | Reclassification | End of Period | ||||||||||||||||
Cost |
||||||||||||||||||||
Buildings |
$ | 114,014,588 | $ | 913,730 | $ | (809 | ) | $ | | $ | 114,927,509 | |||||||||
Machinery and equipment |
635,008,261 | 11,454,368 | (1,718,271 | ) | 2,565 | 644,746,923 | ||||||||||||||
Office equipment |
9,748,869 | 290,510 | (137,255 | ) | | 9,902,124 | ||||||||||||||
758,771,718 | $ | 12,658,608 | $ | (1,856,335 | ) | $ | 2,565 | 769,576,556 | ||||||||||||
Accumulated depreciation |
||||||||||||||||||||
Buildings |
65,351,514 | $ | 4,051,294 | $ | (809 | ) | $ | | 69,401,999 | |||||||||||
Machinery and equipment |
484,046,160 | 31,694,103 | (1,115,264 | ) | 2,565 | 514,627,564 | ||||||||||||||
Office equipment |
7,849,580 | 465,322 | (137,070 | ) | | 8,177,832 | ||||||||||||||
557,247,254 | $ | 36,210,719 | $ | (1,253,143 | ) | $ | 2,565 | 592,207,395 | ||||||||||||
Advance payments and
construction in progress |
17,758,038 | $ | 7,954,548 | $ | | $ | | 25,712,586 | ||||||||||||
$ | 219,282,502 | $ | 203,081,747 | |||||||||||||||||
No interest was capitalized during the six months ended June 30, 2010 and 2009. |
13. | DEFERRED CHARGES, NET |
Six Months Ended June 30, 2010 | ||||||||||||||||
Balance, | ||||||||||||||||
Beginning of | Balance, | |||||||||||||||
Period | Additions | Amortization | End of Period | |||||||||||||
Technology license fees |
$ | 2,979,801 | $ | | $ | (366,983 | ) | $ | 2,612,818 | |||||||
Software and system design costs |
1,646,973 | 585,185 | (425,060 | ) | 1,807,098 | |||||||||||
Patent and others |
1,264,911 | | (180,399 | ) | 1,084,512 | |||||||||||
$ | 5,891,685 | $ | 585,185 | $ | (972,442 | ) | $ | 5,504,428 | ||||||||
Six Months Ended June 30, 2009 | ||||||||||||||||
Balance, | ||||||||||||||||
Beginning of | Balance, | |||||||||||||||
Period | Additions | Amortization | End of Period | |||||||||||||
Technology license fees |
$ | 3,786,251 | $ | | $ | (423,468 | ) | $ | 3,362,783 | |||||||
Software and system design costs |
1,559,857 | 194,313 | (370,739 | ) | 1,383,431 | |||||||||||
Patent and others |
1,055,353 | | (134,831 | ) | 920,522 | |||||||||||
$ | 6,401,461 | $ | 194,313 | $ | (929,038 | ) | $ | 5,666,736 | ||||||||
14. | SHORT-TERM LOANS |
June 30 | ||||
2010 | ||||
Unsecured loans |
||||
Due in July 2010, annual interest at 0.51%-0.75% |
$ | 17,759,356 | ||
- 20 -
15. | BONDS PAYABLE |
June 30 | ||||||||
2010 | 2009 | |||||||
Domestic unsecured bonds: |
||||||||
Issued in January 2002 and
repayable in January 2012, 3.00%
interest payable annually |
$ | 4,500,000 | $ | 4,500,000 | ||||
16. | OTHER LONG-TERM PAYABLES |
The Companys long-term payables mainly resulted from license agreements for certain semiconductor-related patents. As of June 30, 2010, future payments for other long-term payables were as follows: |
Year of Payment | Amount | |||
2010 (3rd and 4th quarter) |
$ | 310,925 | ||
2011 |
419,614 | |||
730,539 | ||||
Current portion (classified under accrued expenses and other current liabilities) |
(569,149 | ) | ||
$ | 161,390 | |||
17. | PENSION PLANS |
The pension mechanism under the Labor Pension Act is deemed a defined contribution plan. Pursuant to the Act, the Company has made monthly contributions equal to 6% of each employees monthly salary to employees pension accounts, and recognized pension costs of NT$408,072 thousand and NT$284,118 thousand for the six months ended June 30, 2010 and 2009, respectively. |
The Company has a defined benefit plan under the Labor Standards Law that provides benefits based on an employees length of service and average monthly salary for the six-month period prior to retirement. The Company contributes an amount equal to 2% of salaries paid each month to a pension fund (the Fund), which is administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the Committees name in the Bank of Taiwan. The Company recognized pension costs of NT$118,159 thousand and NT$144,341 thousand for the six months ended June 30, 2010 and 2009, respectively. |
- 21 -
Movements of the Fund and accrued pension cost under the defined benefit plan were summarized as follows: |
Six Months Ended June 30 | ||||||||
2010 | 2009 | |||||||
The Fund |
||||||||
Balance, beginning of period |
$ | 2,595,717 | $ | 2,389,519 | ||||
Contributions |
112,906 | 98,290 | ||||||
Interest |
41,105 | 52,445 | ||||||
Payments |
(7,690 | ) | (37,801 | ) | ||||
Balance, end of period |
$ | 2,742,038 | $ | 2,502,453 | ||||
Accrued pension cost |
||||||||
Balance, beginning of period |
$ | 3,807,176 | $ | 3,710,009 | ||||
Accruals (payments) |
(2,132 | ) | 50,062 | |||||
Balance, end of period |
$ | 3,805,044 | $ | 3,760,071 | ||||
18. | INCOME TAX |
a. | A reconciliation of income tax expense based on income before income tax at statutory rate and income tax currently payable was as follows: |
Six Months Ended June 30 | ||||||||
2010 | 2009 | |||||||
Income tax expense based on income before
income tax at statutory rate (17% and 25% for
2010 and 2009, respectively) |
$ | 13,132,452 | $ | 6,772,583 | ||||
Tax effect of the following: |
||||||||
Tax-exempt income |
(7,108,909 | ) | (3,229,360 | ) | ||||
Temporary and permanent differences |
(405,323 | ) | 2,063,571 | |||||
Others |
| 69,174 | ||||||
Additional tax at 10% on unappropriated earnings |
127,489 | | ||||||
Income tax credits used |
(2,441,073 | ) | (2,837,984 | ) | ||||
Income tax currently payable |
$ | 3,304,636 | $ | 2,837,984 | ||||
b. | Income tax expense consisted of the following: |
Six Months Ended June 30 | ||||||||
2010 | 2009 | |||||||
Income tax currently payable |
$ | 3,304,636 | $ | 2,837,984 | ||||
Income tax adjustments on prior years |
980,428 | (1,155,113 | ) | |||||
Other income tax adjustments |
10,148 | (41,482 | ) | |||||
Net change in deferred income tax assets |
||||||||
Investment tax credits |
(4,859,385 | ) | (2,296,767 | ) | ||||
Temporary differences |
69,029 | 308,450 | ||||||
Valuation allowance |
3,799,826 | 1,436,780 | ||||||
Income tax expense |
$ | 3,304,682 | $ | 1,089,852 | ||||
- 22 -
c. | Net deferred income tax assets consisted of the following: |
June 30 | ||||||||
2010 | 2009 | |||||||
Current deferred income tax assets |
||||||||
Investment tax credits |
$ | 2,512,000 | $ | 4,956,104 | ||||
Temporary differences |
||||||||
Allowance for sales returns and others |
520,488 | 624,215 | ||||||
Others |
184,465 | 89,129 | ||||||
$ | 3,216,953 | $ | 5,669,448 | |||||
Noncurrent deferred income tax assets |
||||||||
Investment tax credits |
$ | 17,079,126 | $ | 10,952,881 | ||||
Temporary differences |
||||||||
Depreciation |
2,026,861 | 1,543,210 | ||||||
Others |
93,801 | 371,096 | ||||||
Valuation allowance |
(9,599,158 | ) | (7,836,426 | ) | ||||
$ | 9,600,630 | $ | 5,030,761 | |||||
Effective in May 2009 and June 2010, the Article 5 of the Income Tax Law of the Republic of China was amended, in which the income tax rate of profit-seeking enterprises would be reduced from 25% to 20% and from 20% to 17%, respectively. The last amended income tax rate of 17% is retroactively applied on January 1, 2010. The Company recalculated its deferred tax assets in accordance with the new amended Article and adjusted the resulting difference as an income tax expense in 2010 and 2009, respectively. |
Under Article 10 of the Statute for Industrial Innovation (SII) legislated and effective in May 2010, a profit-seeking enterprise may deduct up to 15% of its research and development expenditures from its income tax payable for the period in which these expenditures are incurred, but this deduction should not exceed 30% of the income tax payable for that period. This incentive is retroactive to January 1, 2010 and effective until December 31, 2019. |
d. | Integrated income tax information: |
The balance of the imputation credit account as of June 30, 2010 and 2009 was NT$10,284,010 thousand and NT$8,102,454 thousand, respectively. |
The estimated and actual creditable ratios for distribution of earnings of 2009 and 2008 were 9.84% and 9.10%, respectively. |
The imputation credit allocated to shareholders is based on its balance as of the date of dividend distribution. The estimated creditable ratio may change when the actual distribution of imputation credit is made. |
e. | All earnings generated prior to December 31, 1997 have been appropriated. |
- 23 -
f. | As of June 30, 2010, investment tax credits consisted of the following: |
Total | Remaining | |||||||||||||||
Creditable | Creditable | Expiry | ||||||||||||||
Law/Statute | Item | Amount | Amount | Year | ||||||||||||
Statute for Upgrading Industries |
Purchase of machinery and equipment |
$ | 3,216,963 | $ | 3,216,963 | 2012 | ||||||||||
6,043,444 | 6,043,444 | 2013 | ||||||||||||||
2,721,184 | 2,721,184 | 2014 | ||||||||||||||
$ | 11,981,591 | $ | 11,981,591 | |||||||||||||
Statute for Upgrading Industries |
Research and development expenditures |
$ | 1,000,000 | $ | | 2010 | ||||||||||
1,054,194 | 522,971 | 2011 | ||||||||||||||
2,691,517 | 2,691,517 | 2012 | ||||||||||||||
4,328,009 | 4,328,009 | 2013 | ||||||||||||||
$ | 9,073,720 | $ | 7,542,497 | |||||||||||||
Statute for Upgrading Industries |
Personnel training expenditures |
$ | 19,293 | $ | 19,293 | 2011 | ||||||||||
30,624 | 30,624 | 2012 | ||||||||||||||
17,121 | 17,121 | 2013 | ||||||||||||||
$ | 67,038 | $ | 67,038 | |||||||||||||
Statute for Industrial Innovation |
Research and development expenditures |
$ |
909,850 |
$ |
|
2010 |
g. | The profits generated from the following projects are exempt from income tax for a five-year period: |
Tax-exemption Period | ||
Construction and expansion of 2001
|
2006 to 2010 | |
Construction and expansion of 2003
|
2007 to 2011 | |
Construction and expansion of 2004
|
2008 to 2012 | |
Construction and expansion of 2005
|
2010 to 2014 (proposed) |
h. | The tax authorities have examined income tax returns of the Company through 2007. All investment tax credit adjustments assessed by the tax authorities have been recognized accordingly. |
- 24 -
19. | LABOR COST, DEPRECIATION AND AMORTIZATION |
Six Months Ended June 30, 2010 | ||||||||||||
Classified as | ||||||||||||
Classified as | Operating | |||||||||||
Cost of Sales | Expenses | Total | ||||||||||
Labor cost |
||||||||||||
Salary and bonus |
$ | 11,079,255 | $ | 8,196,609 | $ | 19,275,864 | ||||||
Labor and health insurance |
405,536 | 236,761 | 642,297 | |||||||||
Pension |
332,212 | 194,019 | 526,231 | |||||||||
Meal |
254,042 | 106,506 | 360,548 | |||||||||
Welfare |
101,229 | 60,505 | 161,734 | |||||||||
Others |
33,161 | 7,935 | 41,096 | |||||||||
$ | 12,205,435 | $ | 8,802,335 | $ | 21,007,770 | |||||||
Depreciation |
$ | 36,299,789 | $ | 2,401,688 | $ | 38,701,477 | ||||||
Amortization |
$ | 627,488 | $ | 344,954 | $ | 972,442 | ||||||
Six Months Ended June 30, 2009 | ||||||||||||
Classified as | ||||||||||||
Classified as | Operating | |||||||||||
Cost of Sales | Expenses | Total | ||||||||||
Labor cost |
||||||||||||
Salary and bonus |
$ | 6,099,123 | $ | 4,445,518 | $ | 10,544,641 | ||||||
Labor and health insurance |
290,166 | 172,465 | 462,631 | |||||||||
Pension |
268,466 | 159,993 | 428,459 | |||||||||
Meal |
193,992 | 80,986 | 274,978 | |||||||||
Welfare |
62,101 | 37,965 | 100,066 | |||||||||
Others |
37,969 | 8,800 | 46,769 | |||||||||
$ | 6,951,817 | $ | 4,905,727 | $ | 11,857,544 | |||||||
Depreciation |
$ | 34,426,607 | $ | 1,775,979 | $ | 36,202,586 | ||||||
Amortization |
$ | 608,828 | $ | 320,210 | $ | 929,038 | ||||||
20. | SHAREHOLDERS EQUITY |
As of June 30, 2010, 1,097,136 thousand ADSs of the Company were traded on the NYSE. The number of common shares represented by the ADSs was 5,485,679 thousand (one ADS represents five common shares). | ||
Capital surplus can only be used to offset a deficit under the Company Law. However, 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 and the surplus from treasury stock transactions) may be appropriated as stock dividends, which are limited to a certain percentage of the Companys paid-in capital. In addition, the capital surplus from long-term investments may not be used for any purpose. |
- 25 -
Capital surplus consisted of the following: |
June 30 | ||||||||
2010 | 2009 | |||||||
Additional paid-in capital |
$ | 23,520,313 | $ | 23,289,667 | ||||
From merger |
22,805,390 | 22,805,390 | ||||||
From convertible bonds |
8,893,190 | 8,893,190 | ||||||
From long-term investments |
348,047 | 343,233 | ||||||
Donations |
55 | 55 | ||||||
$ | 55,566,995 | $ | 55,331,535 | |||||
The Companys Articles of Incorporation provide that, when allocating the net profits for each fiscal year, the Company shall first offset its losses in previous years and then set aside the following items accordingly: |
a. | Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve equals the Companys paid-in capital; | ||
b. | Special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge; | ||
c. | Bonus to directors and profit sharing to employees of the Company of not more than 0.3% and not less than 1% of the remainder, respectively. Directors who also serve as executive officers of the Company are not entitled to receive the bonus to directors. The Company may issue profit sharing to employees of an affiliated company meeting the conditions set by the Board of Directors or, by the person duly authorized by the Board of Directors; | ||
d. | Any balance left over shall be allocated according to the resolution of the shareholders meeting. |
The Companys Articles of Incorporation also provide that profits of the Company 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. | ||
The Company accrued profit sharing to employees as a charge to earnings of certain percentage of net income during the period amounted to NT$4,988,630 thousand and NT$3,906,590 thousand for the six months ended June 2010 and 2009, respectively; bonuses to directors were accrued with an estimate based on historical experience. If the actual amounts subsequently resolved by the shareholders differ from the estimated amounts, the differences are recorded in the year of shareholders resolution as a change in accounting estimate. If profit sharing is resolved to be distributed to employees in stock, 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 Company no longer has supervisors since January 1, 2007. The required duties of supervisors are being fulfilled by the Audit Committee. | ||
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 and bonuses for the portion in excess of 50% of the paid-in capital if the Company has no unappropriated earnings and the reserve balance has exceeded 50% of the Companys paid-in capital. The Company Law also prescribes that, when the reserve has reached 50% of the Companys paid-in capital, up to 50% of the reserve may be transferred to capital. |
- 26 -
A special capital reserve equivalent to the net debit balance of the other components of shareholders equity (for example, cumulative translation adjustments and unrealized loss on financial instruments, but excluding treasury stock) shall be made from unappropriated earnings pursuant to existing regulations promulgated by the Securities and Futures Bureau (SFB). Any special reserve appropriated may be reversed to the extent that the net debit balance reverses. | ||
The appropriations of earnings for 2009 and 2008 had been approved in the shareholders meeting held on June 15, 2010 and June 10, 2009, respectively. The appropriations and dividends per share were as follows: |
Dividends Per Share | ||||||||||||||||
Appropriation of Earnings | (NT$) | |||||||||||||||
For Fiscal | For Fiscal | For Fiscal | For Fiscal | |||||||||||||
Year 2009 | Year 2008 | Year 2009 | Year 2008 | |||||||||||||
Legal capital reserve |
$ | 8,921,784 | $ | 9,993,317 | ||||||||||||
Special capital reserve |
1,313,047 | (391,857 | ) | |||||||||||||
Cash dividends to shareholders |
77,708,120 | 76,876,312 | $ | 3.00 | $ | 3.00 | ||||||||||
Stock dividends to shareholders |
| 512,509 | | 0.02 | ||||||||||||
$ | 87,942,951 | $ | 86,990,281 | |||||||||||||
TSMCs profit sharing to employees to be paid in cash and bonus to directors in the amounts of NT$6,691,338 thousand and NT$67,692 thousand for 2009, respectively, and profit sharing to employees to be paid in cash and in stock as well as bonus to directors in the amounts of NT$7,494,988 thousand, NT$7,494,988 thousand and NT$158,080 thousand for 2008, respectively, had been approved in the shareholders meeting held on June 15, 2010 and June 10, 2009, respectively. The profit sharing to employees in stock of 141,870 thousand shares for 2009 was determined by the closing price of the Companys common shares (after considering the effect of dividends) of the day immediately preceding the shareholders meeting, which was NT$52.83. The resolved amounts of the profit sharing to employees and bonus to directors were consistent with the resolutions of meeting of the Board of Directors held on February 9, 2010 and February 10, 2009 and same amount had been charged against earnings of 2009 and 2008, respectively. | ||
The shareholders meeting held on June 10, 2009 also resolved to distribute stock dividends out of capital surplus, and stock dividends to shareholders as well as profit sharing to employees to be paid in stock in the amount of NT$768,763 thousand, NT$512,509 thousand and NT$7,494,988 thousand, respectively. | ||
The information about the appropriations of profit sharing to employees and bonus directors is available at the Market Observation Post System website. | ||
Under the Integrated Income Tax System that became effective on January 1, 1998, the R.O.C. resident shareholders are allowed a tax credit for their proportionate share of the income tax paid by the Company on earnings generated since January 1, 1998. |
- 27 -
21. | STOCK-BASED COMPENSATION PLANS |
The Companys Employee Stock Option Plans, consisting of the 2004 Plan, 2003 Plan and 2002 Plan, were approved by the SFB on January 6, 2005, October 29, 2003 and June 25, 2002, respectively. The maximum number of options authorized to be granted under the 2004 Plan, 2003 Plan and 2002 Plan was 11,000 thousand, 120,000 thousand and 100,000 thousand, respectively, with each option eligible to subscribe for one common share when exercisable. The options may be granted to qualified employees of the Company or any of its domestic or foreign subsidiaries, in which the Companys shareholding with voting rights, directly or indirectly, is more than fifty percent (50%). The options of all the plans are valid for ten years and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the terms of the plans, the options are granted at an exercise price equal to the closing price of the Companys common shares listed on the TSE on the grant date. | ||
Options of the plans that had never been granted or had been granted but subsequently canceled had expired as of June 30, 2010. | ||
Information about outstanding options for the six months ended June 30, 2010 and 2009 was as follows: |
Weighted- | ||||||||
Number of | average | |||||||
Options | Exercise Price | |||||||
(In Thousands) | (NT$) | |||||||
Six months ended
June 30, 2010 |
||||||||
Balance, beginning of period |
28,810 | $ | 33.5 | |||||
Options exercised |
(2,311 | ) | 37.1 | |||||
Balance, end of period |
26,499 | 33.1 | ||||||
Six months ended
June 30, 2009 |
||||||||
Balance, beginning of period |
36,234 | $ | 35.3 | |||||
Options exercised |
(919 | ) | 31.4 | |||||
Options canceled |
(243 | ) | 46.4 | |||||
Balance, end of period |
35,072 | 35.3 | ||||||
The number of outstanding options and exercise prices have been adjusted to reflect the distribution of earnings in accordance with the plans. |
- 28 -
As of June 30, 2010, information about outstanding options was as follows: |
Options Outstanding | ||||||||||||
Weighted-average | ||||||||||||
Remaining | Weighted-average | |||||||||||
Range of Exercise | Number of Options | Contractual Life | Exercise Price | |||||||||
Price (NT$) | (In Thousands) | (Years) | (NT$) | |||||||||
$22.8-$32.0 |
19,961 | 2.68 | $ | 29.0 | ||||||||
38.0- 50.1 |
6,538 | 4.41 | 45.6 | |||||||||
26,499 | 3.11 | 33.1 | ||||||||||
As of June 30, 2010, all of the above outstanding options were exercisable. |
No compensation cost was recognized under the intrinsic value method for the six months ended June 30, 2010 and 2009. Had the Company used the fair value based method to evaluate the options using the Black-Scholes model, the assumptions at the various grant dates and pro forma results of the Company for the six months ended June 30, 2010 and 2009 would have been as follows: |
Assumptions: |
||
Expected dividend yield |
1.00%-3.44% | |
Expected volatility |
43.77%-46.15% | |
Risk free interest rate |
3.07%-3.85% | |
Expected life |
5 years |
Six Months Ended June 30 | ||||||||
2010 | 2009 | |||||||
Net income: |
||||||||
Net income as reported |
$ | 73,945,033 | $ | 26,000,519 | ||||
Pro forma net income |
73,996,839 | 25,823,759 | ||||||
Earnings per share (EPS) after income tax (NT$): |
||||||||
Basic EPS as reported |
$ | 2.85 | $ | 1.01 | ||||
Pro forma basic EPS |
2.86 | 1.00 | ||||||
Diluted EPS as reported |
2.85 | 1.00 | ||||||
Pro forma diluted EPS |
2.86 | 1.00 |
- 29 -
22. | EARNINGS PER SHARE |
EPS is computed as follows: |
Number of | EPS (NT$) | |||||||||||||||||||
Amounts (Numerator) | Shares | Before | After | |||||||||||||||||
Before | After | (Denominator) | Income | Income | ||||||||||||||||
Income Tax | Income Tax | (In Thousands) | Tax | Tax | ||||||||||||||||
Six months ended June 30, 2010 |
||||||||||||||||||||
Basic EPS |
||||||||||||||||||||
Earnings available to common shareholders |
$ | 77,249,715 | $ | 73,945,033 | 25,904,196 | $ | 2.98 | $ | 2.85 | |||||||||||
Effect of dilutive potential common shares |
| | 12,654 | |||||||||||||||||
Diluted EPS |
||||||||||||||||||||
Earnings available to common shareholders (including effect of dilutive potential common shares) |
$ | 77,249,715 | $ | 73,945,033 | 25,916,850 | $ | 2.98 | $ | 2.85 | |||||||||||
Six months ended June 30, 2009 |
||||||||||||||||||||
Basic EPS |
||||||||||||||||||||
Earnings available to common shareholders |
$ | 27,090,371 | $ | 26,000,519 | 25,770,637 | $ | 1.05 | $ | 1.01 | |||||||||||
Effect of dilutive potential common shares |
| | 172,992 | |||||||||||||||||
Diluted EPS |
||||||||||||||||||||
Earnings available to common shareholders (including effect of dilutive potential common shares) |
$ | 27,090,371 | $ | 26,000,519 | 25,943,629 | $ | 1.04 | $ | 1.00 | |||||||||||
Effective January 1, 2008, the Company adopted Interpretation 2007-052 that requires companies to record profit sharing to employees as an expense rather than as an appropriation of earnings. If the Company may settle the obligation by cash, by issuing shares, or in combination of both cash and shares, profit sharing to employees which will be settled in shares should be included in the weighted average number of shares outstanding in calculation of diluted EPS, if the shares have a dilutive effect. The number of shares is estimated by dividing the amount of profit sharing to employees in stock by the closing price (after considering the dilutive effect of dividends) of the common shares on the balance sheet date. Such dilutive effect of the potential shares needs to be included in the calculation of diluted EPS until the shares of profit sharing to employees are resolved in the shareholders meeting in the following year. | ||
The average number of shares outstanding for EPS calculation has been considered for the effect of retroactive adjustments. This adjustment caused each of the basic and diluted after income tax EPS for the six months ended June 30, 2009 to remain at NT$1.01 and NT$1.00, respectively. |
- 30 -
23. | DISCLOSURES FOR FINANCIAL INSTRUMENTS |
a. | Fair values of financial instruments were as follows: |
June 30 | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Carrying | Carrying | |||||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
Assets |
||||||||||||||||
Financial assets at fair value through profit or loss |
$ | 378 | $ | 378 | $ | 38,883 | $ | 38,883 | ||||||||
Available-for-sale financial assets |
1,039,916 | 1,039,916 | 1,035,686 | 1,035,686 | ||||||||||||
Held-to-maturity financial assets |
10,560,232 | 10,668,153 | 14,092,943 | 14,181,730 | ||||||||||||
Financial assets carried at cost |
497,835 | | 501,060 | | ||||||||||||
Liabilities |
||||||||||||||||
Financial liabilities at fair value through profit or loss |
173,978 | 173,978 | 32,709 | 32,709 | ||||||||||||
Bonds payable |
4,500,000 | 4,556,853 | 4,500,000 | 4,592,795 | ||||||||||||
Other long-term payable (including current portion) |
730,539 | 730,539 | 1,526,549 | 1,526,549 |
b. | Methods and assumptions used in the estimation of fair values of financial instruments |
1) | The aforementioned financial instruments do not include cash and cash equivalents, receivables, other financial assets, refundable deposits, short-term loans, payables and guarantee deposits. The carrying amounts of these financial instruments approximate their fair values due to their short maturities. | ||
2) | Except for derivatives and structured time deposits, available-for-sale and held-to-maturity financial assets were based on their quoted market prices. | ||
3) | The fair values of those derivatives and structured time deposits are determined using valuation techniques incorporating estimates and assumptions that were consistent with prevailing market conditions. | ||
4) | Financial assets carried at cost have no quoted prices in an active market and entail an unreasonably high cost to obtain verifiable fair values. Therefore, no fair value is presented. | ||
5) | Fair value of bonds payable was based on their quoted market price. | ||
6) | Fair value of other long-term payables was based on the present value of expected cash flows, which approximates their carrying amount. |
c. | The changes in fair values of derivatives contracts which were outstanding as of June 30, 2010 and 2009 estimated using valuation techniques were recognized as a net loss of NT$173,600 thousand and a net gain of NT$6,174 thousand, respectively. | ||
d. | As of June 30, 2010 and 2009, financial assets exposed to fair value interest rate risk were NT$11,600,526 thousand and NT$15,167,512 thousand, respectively, financial liabilities exposed to fair value interest rate risk were NT$22,433,334 thousand and NT$4,532,709 thousand, respectively. |
- 31 -
e. | Movements of unrealized gains or losses on financial instruments for the six months ended June 30, 2010 and 2009 were as follows: |
Six Months Ended June 30, 2010 | ||||||||||||
From | ||||||||||||
Available- | Equity- | |||||||||||
for-sale | method | |||||||||||
Financial Assets | Investments | Total | ||||||||||
Balance, beginning of period |
$ | 46,672 | $ | 406,949 | $ | 453,621 | ||||||
Recognized directly in shareholders equity |
(6,756 | ) | 535,013 | 528,257 | ||||||||
Balance, end of period |
$ | 39,916 | $ | 941,962 | $ | 981,878 | ||||||
Six Months Ended June 30, 2009 | ||||||||||||
From | ||||||||||||
Available- | Equity- | |||||||||||
for-sale | method | |||||||||||
Financial Assets | Investments | Total | ||||||||||
Balance, beginning of period |
$ | 32,658 | $ | (320,000 | ) | $ | (287,342 | ) | ||||
Recognized directly in shareholders equity |
40,398 | 628,552 | 668,950 | |||||||||
Removed from shareholders equity and recognized in earnings |
(37,370 | ) | | (37,370 | ) | |||||||
Balance, end of period |
$ | 35,686 | $ | 308,552 | $ | 344,238 | ||||||
f. | Information about financial risks |
1) | Market risk. The derivative financial instruments categorized as financial assets/liabilities at fair value through profit or loss are mainly used to hedge the market exchange rate fluctuations of foreign-currency assets and liabilities; therefore, the market exchange rate risk of derivatives will be offset by the foreign exchange risk of these hedged items. Available-for-sale financial assets and held-to-maturity financial assets held by the Company are mainly fixed-interest-rate debt securities; therefore, the fluctuations in market interest rates will result in changes in fair values of these debt securities. | ||
2) | Credit risk. Credit risk represents the potential loss that would be incurred by the Company if the counter-parties or third-parties breached contracts. Financial instruments with positive fair values at the balance sheet date are evaluated for credit risk. The Company evaluated whether the financial instruments for any possible counter-party or third-parties are reputable financial institutions, business enterprises, and government agencies and accordingly, the Company believed that the Companys exposure to credit risk was not significant. | ||
3) | Liquidity risk. The Company has sufficient operating capital to meet cash needs upon settlement of derivative financial instruments and bonds payable. Therefore, the liquidity risk is low. | ||
4) | Cash flow interest rate risk. The Company mainly invests in fixed-interest-rate debt securities. Therefore, cash flows are not expected to fluctuate significantly due to changes in market interest rates. |
- 32 -
24. | RELATED PARTY TRANSACTIONS |
The Company engages in business transactions with the following related parties: |
a. | Subsidiaries |
TSMC North America | |||
TSMC China | |||
TSMC Europe | |||
TSMC Japan | |||
TSMC Korea |
b. | Investees |
GUC (with a controlling financial interest) | |||
Xintec (with a controlling financial interest) | |||
VIS (accounted for using equity method) | |||
SSMC (accounted for using equity method) | |||
Motech (accounted for using equity method) |
c. | Indirect subsidiaries |
WaferTech, LLC (WaferTech) | |||
TSMC Technology, Inc. (TSMC Technology) | |||
TSMC Design Technology Canada Inc. (TSMC Canada) |
d. | Indirect investee |
VisEra Technology Company, Ltd. (VisEra), an indirect investee accounted for using equity method. |
e. | Others |
Related parties over which the Company has control or exercises significant influence but with which the Company had no material transactions. |
Transactions with the aforementioned parties, other than those disclosed in other notes, are summarized as follows: |
2010 | 2009 | |||||||||||||||
Amount | % | Amount | % | |||||||||||||
For the six months ended June 30 |
||||||||||||||||
Sales |
||||||||||||||||
TSMC North America |
$ | 102,705,311 | 52 | $ | 61,280,891 | 53 | ||||||||||
Others |
1,051,606 | 1 | 906,621 | 1 | ||||||||||||
$ | 103,756,917 | 53 | $ | 62,187,512 | 54 | |||||||||||
Purchases |
||||||||||||||||
WaferTech |
$ | 3,743,351 | 17 | $ | 2,012,386 | 16 | ||||||||||
TSMC China |
3,691,579 | 16 | 1,288,201 | 10 | ||||||||||||
SSMC |
2,211,401 | 10 | 1,422,840 | 11 | ||||||||||||
VIS |
2,094,567 | 9 | 1,399,271 | 11 | ||||||||||||
$ | 11,740,898 | 52 | $ | 6,122,698 | 48 | |||||||||||
- 33 -
2010 | 2009 | |||||||||||||||
Amount | % | Amount | % | |||||||||||||
Manufacturing expenses |
||||||||||||||||
Xintec (rent and outsourcing) |
$ | 113,104 | | $ | | | ||||||||||
VisEra (outsourcing) |
11,625 | | 15,168 | | ||||||||||||
$ | 124,729 | | $ | 15,168 | | |||||||||||
Marketing expenses commission |
||||||||||||||||
TSMC Europe |
$ | 206,214 | 15 | $ | 151,844 | 18 | ||||||||||
TSMC Japan |
128,234 | 9 | 104,755 | 13 | ||||||||||||
TSMC China |
25,404 | 2 | | | ||||||||||||
TSMC Korea |
10,139 | 1 | 6,336 | 1 | ||||||||||||
$ | 369,991 | 27 | $ | 262,935 | 32 | |||||||||||
Research and development expenses |
||||||||||||||||
TSMC Technology (primarily consulting fee) |
$ | 289,788 | 2 | $ | 179,751 | 2 | ||||||||||
TSMC Canada (primarily consulting fee) |
95,047 | 1 | 76,380 | 1 | ||||||||||||
VIS (primarily rent) |
5,291 | | | | ||||||||||||
Others |
17,349 | | 24,608 | | ||||||||||||
$ | 407,475 | 3 | $ | 280,739 | 3 | |||||||||||
Sales of property, plant and equipment and other assets |
||||||||||||||||
VIS |
$ | 15,940 | 11 | $ | | | ||||||||||
TSMC China |
11,224 | 8 | | | ||||||||||||
WaferTech |
9,655 | 7 | 263 | | ||||||||||||
Xintec |
| | 58,450 | 99 | ||||||||||||
$ | 36,819 | 26 | $ | 58,713 | 99 | |||||||||||
Purchases of property, plant and equipment |
||||||||||||||||
TSMC China |
$ | 63,525 | | $ | | | ||||||||||
VIS |
15,865 | | | | ||||||||||||
WaferTech |
9,624 | | | | ||||||||||||
$ | 89,014 | | $ | | | |||||||||||
Non-operating income and gains |
||||||||||||||||
VIS (primarily technical service income, see Note 27e) |
$ | 158,021 | 4 | $ | 88,964 | 5 | ||||||||||
SSMC (primarily technical service income, see Note 27d) |
96,783 | 2 | 57,560 | 4 | ||||||||||||
TSMC China |
36,232 | 1 | 97,186 | 6 | ||||||||||||
Others |
9,643 | | 263 | | ||||||||||||
$ | 300,679 | 7 | $ | 243,973 | 15 | |||||||||||
- 34 -
2010 | 2009 | |||||||||||||||
Amount | % | Amount | % | |||||||||||||
As of June 30 |
||||||||||||||||
Receivables |
||||||||||||||||
TSMC North America |
$ | 24,563,831 | 99 | $ | 18,436,885 | 99 | ||||||||||
Others |
258,250 | 1 | 279,852 | 1 | ||||||||||||
$ | 24,822,081 | 100 | $ | 18,716,737 | 100 | |||||||||||
Other receivables |
||||||||||||||||
VIS |
$ | 378,802 | 60 | $ | 373,849 | 47 | ||||||||||
GUC |
93,255 | 15 | 153,874 | 19 | ||||||||||||
Motech |
67,785 | 11 | | | ||||||||||||
SSMC |
49,217 | 8 | 36,923 | 5 | ||||||||||||
TSMC China |
13,836 | 2 | 136,106 | 17 | ||||||||||||
Xintec |
9,292 | 1 | 70,823 | 9 | ||||||||||||
Others |
22,087 | 3 | 22,576 | 3 | ||||||||||||
$ | 634,274 | 100 | $ | 794,151 | 100 | |||||||||||
Payables |
||||||||||||||||
TSMC China |
$ | 899,850 | 28 | $ | 365,620 | 16 | ||||||||||
VIS |
853,331 | 27 | 735,925 | 33 | ||||||||||||
WaferTech |
750,706 | 23 | 480,794 | 22 | ||||||||||||
SSMC |
447,822 | 14 | 400,558 | 18 | ||||||||||||
TSMC Technology |
118,085 | 4 | 123,536 | 6 | ||||||||||||
Others |
148,336 | 4 | 115,918 | 5 | ||||||||||||
$ | 3,218,130 | 100 | $ | 2,222,351 | 100 | |||||||||||
Deferred debits (credits) |
||||||||||||||||
TSMC China |
$ | 13,887 | 3 | $ | (90,452 | ) | (56 | ) | ||||||||
The sales prices and payment terms to related parties were not significantly different from those of sales to third parties. For other related party transactions, prices and terms were determined in accordance with mutual agreements. | ||
The Company leased certain buildings, facilities, and machinery and equipment from Xintec. The lease terms and prices were determined in accordance with mutual agreements. The rental expense was paid monthly and the related expenses were classified under manufacturing expenses. | ||
The Company leased certain office space from VIS. The lease terms and prices were determined in accordance with mutual agreements. The rental expense was prepaid by the Company and the related expenses were classified under research and development expenses. | ||
The Company deferred the gains and losses (classified under deferred debits and deferred credits) derived from sales of property, plant, and equipment to TSMC China, and then recognized such gains and losses (classified under non-operating income and gains and non-operating expenses and losses) over the depreciable lives of the disposed assets. |
- 35 -
25. | PLEDGED OR MORTGAGED ASSETS |
As of June 30, 2010 and 2009, the Company had pledged time deposits of NT$352,354 thousand and NT$605,602 thousand (classified as other financial assets) as collateral for land lease agreements and customs duty guarantee, respectively. |
26. | SIGNIFICANT LONG-TERM LEASES |
The Company leases several parcels of land from the Science Park Administration. These operating leases expire on various dates from December 2010 to December 2029 and can be renewed upon expiration. | ||
As of June 30, 2010, future lease payments were as follows: |
Year | Amount | |||
2010 (3rd and 4th quarter) |
$ | 198,269 | ||
2011 |
398,009 | |||
2012 |
398,009 | |||
2013 |
376,364 | |||
2014 |
363,378 | |||
2015 and thereafter |
3,269,059 | |||
$ | 5,003,088 | |||
27. | SIGNIFICANT COMMITMENTS AND CONTINGENCIES |
Significant commitments and contingencies of the Company as of June 30, 2010, excluding those disclosed in other notes, were as follows: |
a. | Under a technical cooperation agreement with ITRI, the R.O.C. Government or its designee approved by the Company can use up to 35% of the Companys capacity if the Companys outstanding commitments to its customers are not prejudiced. The term of this agreement is for five years beginning from January 1, 1987 and is automatically renewed for successive periods of five years unless otherwise terminated by either party with one year prior notice. | ||
b. | Under several foundry agreements, the Company shall reserve a portion of its production capacity for certain major customers that have guarantee deposits with the Company. As of June 30, 2010 the Company had a total of US$25,262 thousand of guarantee deposits | ||
c. | Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30, 1999, the parties formed a joint venture company, SSMC, which is an integrated circuit foundry in Singapore. The Companys equity interest in SSMC was 32%. Nevertheless, Philips parted with its semiconductor company which was renamed as NXP B.V. in September 2006. The Company and NXP B.V. purchased all the SSMC shares owned by EDB Investments Pte Ltd. pro rata according to the Shareholders Agreement on November 15, 2006. After the purchase, the Company and NXP B.V. currently own approximately 39% and 61% of the SSMC shares respectively. The Company and Philips (now NXP B.V.) are required, in the aggregate, to purchase at least 70% of SSMCs capacity, but the Company alone is not required to purchase more than 28% of the capacity. If any party defaults on the commitment and the capacity utilization of SSMC fall below a specific percentage of its capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs. |
- 36 -
d. | The Company provides technical services to SSMC under a Technical Cooperation Agreement (the Agreement) effective March 30, 1999. The company receives compensation for such services computed at a specific percentage of net selling price of all products sold by SSMC. The Agreement shall remain in force for ten years and will be automatically renewed for successive periods of five years each unless pre-terminated by either party under certain conditions. | ||
e. | The Company provides a technology transfer to VIS under a Manufacturing License and Technology Transfer Agreement entered into on April 1, 2004. The Company receives compensation for such technology transfer in the form of royalty payments from VIS computed at specific percentages of net selling price of certain products sold by VIS. VIS agreed to reserve its certain capacity to manufacture for the Company certain products at prices as agreed by the parties. | ||
f. | In August 2006, TSMC filed a lawsuit against Semiconductor Manufacturing International Corporation, SMIC (Shanghai) and SMIC Americas (aggregately referring to as SMIC) in the Superior Court of California for Alameda County for breach of a 2005 agreement that settled an earlier trade secret misappropriation and patent infringement litigation between the parties, as well as for trade secret misappropriation, seeking injunctive relief and monetary damages. In September 2006, SMIC filed a cross-complaint against TSMC in the same court alleging breach of settlement agreement, implied covenant of good faith and fair dealing. SMIC also filed a civil action against TSMC in November 2006 with the Beijing Peoples High Court alleging defamation and breach of good faith. On June 10, 2009, the Beijing Peoples High Court ruled in favor of TSMC and dismissed SMICs lawsuit. On November 4, 2009, after a two-month trial, a jury in the California action found SMIC to have both breached the 2005 settlement agreement and misappropriated TSMCs trade secrets. TSMC has subsequently settled both lawsuits with SMIC. Pursuant to the new settlement agreement, the parties have agreed to the entry of a stipulated judgment in favor of TSMC in the California action, and to the dismissal of SMICs appeal against the Beijing High Courts finding in favor of TSMC. Under the new settlement agreement and the related stipulated judgment, SMIC has agreed to make cash payments by installments to TSMC totaling US$200 million, which are in addition to the US$135 million previously paid to TSMC under the 2005 settlement agreement, and, conditional upon relevant government regulatory approvals, to issue to TSMC a total of 1,789,493,218 common shares of Semiconductor Manufacturing International Corporation and a three-year warrant to purchase 695,914,030 common shares (subject to adjustment) of Semiconductor Manufacturing International Corporation at HK$1.30 per share (subject to adjustment). TSMC has received the approval from the Investment Commission of Ministry of Economic Affairs and acquired the above mentioned 1,789,493,218 common shares on July 5, 2010, representing approximately 7.37% of Semiconductor Manufacturing International Corporations total shares outstanding. The Company expects to recognize the settlement income of NT$4,434,364 thousand in the third quarter of 2010. | ||
g. | In June 2010, STC.UNM, the technology transfer arm of the University of New Mexico, filed a complaint in the US International Trade Commission (US ITC) accusing TSMC and one other company of allegedly infringing a single US patent. The US ITC has initiated an investigation on July 21, 2010. The outcome of such an investigation cannot be determined at this time. |
28. | ADDITIONAL DISCLOSURES |
Following are the additional disclosures required by the SFB for the Company and its investees: |
a. | Financing provided: None; | ||
b. | Endorsement/guarantee provided: None; | ||
c. | Marketable securities held: Please see Table 1 attached; | ||
d. | Marketable securities acquired or disposed of at costs or prices of at least NT$100 million or 20% of the paid-in capital: Please see Table 2 attached; |
- 37 -
e. | Acquisition of individual real estate properties at costs of at least NT$100 million or 20% of the paid-in capital: Please see Table 3 attached; | ||
f. | Disposal of individual real estate properties at prices of at least NT$100 million or 20% of the paid-in capital: None; | ||
g. | Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: Please see Table 4 attached; | ||
h. | Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 5 attached; | ||
i. | Names, locations, and related information of investees over which the Company exercises significant influence: Please see Table 6 attached; | ||
j. | Information about derivatives of investees in which the Company has a controlling interest: | ||
Not meet the criteria for hedge accounting | |||
TSMC China entered into forward exchange contracts during the six months ended June 30, 2010 to manage exposures due to foreign exchange rate fluctuations. There are no outstanding forward exchange contracts as of June 30, 2010. | |||
For the six months ended June 30, 2010, net losses arising from forward exchange contracts of TSMC China amounted to NT$380 thousand. | |||
Xintec entered into forward exchange contracts during the six months ended June 30, 2010 to manage exposures due to foreign exchange rate fluctuations. Outstanding forward exchange contracts as of June 30, 2010 consisted of the following: |
Contract Amount | ||||
Maturity Date | (In Thousands) | |||
Sell US$/Buy NT$
|
July 2010 to September 2010 | US$13,000/ NT$416,574 |
For the six months ended June 30, 2010, net losses arising from forward exchange contracts of Xintec amounted to NT$8,892 thousand. | |||
Meet the criteria for hedge accounting | |||
Xintec monitors and manages the financial risk through the analysis of business environment and evaluation of entitys financial risks. Further, Xintec seeks to reduce the effects of future cash flow related interest rate exposures by primarily using derivative financial instruments. | |||
Xintec is exposed to interest rate risk because its long-term bank loans bear floating interest rates. Accordingly, Xintec enters into interest rate swap contract to hedge such a cash flow interest rate risk. As of June 30, 2010, the outstanding interest rate swap contract of Xintec consisted of the following: |
Expected | Expected Timing for the | |||||||||
Hedging Financial | Fair Value | Cash Flow | Recognition of Gains | |||||||
Hedged Item | Instrument | June 30, 2010 | Generated Period | or Losses from Hedge | ||||||
Long-term bank loans |
Interest rate swap contract |
$ | (761 | ) | 2010 to 2012 | 2010 to 2012 |
The adjustment to shareholders equity of Xintec as a result of the above interest rate swap contract |
- 38 -
amounted to NT$761 thousand for the six months period ended June 30, 2010. |
k. | Information on investment in Mainland China |
1) | The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, equity in the net gain or net loss, ending balance, amount received as dividends from the investee, and the limitation on investee: Please see Table 7 attached. | ||
2) | Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: Please see Note 24. |
- 39 -
June 30, 2010 | ||||||||||||||||||||||||||
Market Value or Net | ||||||||||||||||||||||||||
Shares/Units | Carrying Value | Percentage of | Asset Value | |||||||||||||||||||||||
Held Company Name | Marketable Securities Type and Name | Relationship with the Company | Financial Statement Account | (In Thousands) | (US$ in Thousands) | Ownership (%) | (US$ in Thousands) | Note | ||||||||||||||||||
TSMC |
Corporate bond | |||||||||||||||||||||||||
Taiwan Mobile Co., Ltd. | | Available-for-sale financial assets | | $ | 1,039,961 | N/A | $ | 1,039,916 | ||||||||||||||||||
Formosa Petrochemical Corporation | | Held-to-maturity financial assets | | 2,190,008 | N/A | 2,210,300 | ||||||||||||||||||||
Nan Ya Plastics Corporation | | ² | | 2,000,939 | N/A | 2,043,355 | ||||||||||||||||||||
Taiwan Power Company | | ² | | 1,908,207 | N/A | 1,926,431 | ||||||||||||||||||||
China Steel Corporation | | ² | | 1,509,791 | N/A | 1,526,601 | ||||||||||||||||||||
Formosa Plastics Corporation | | ² | | 1,151,571 | N/A | 1,162,811 | ||||||||||||||||||||
CPC Corporation, Taiwan | | ² | | 500,001 | N/A | 499,940 | ||||||||||||||||||||
Taipei Fubon Commercial Bank Co., Ltd. | | ² | | 299,715 | N/A | 299,678 | ||||||||||||||||||||
Stock | ||||||||||||||||||||||||||
TSMC Global | Subsidiary | Investments accounted for using equity method | 1 | 46,004,067 | 100 | 46,004,067 | ||||||||||||||||||||
TSMC Partners | Subsidiary | ² | 988,268 | 34,361,272 | 100 | 34,361,272 | ||||||||||||||||||||
VIS | Investee accounted for using equity method | ² | 628,223 | 9,233,879 | 38 | 8,229,728 | ||||||||||||||||||||
SSMC | Investee accounted for using equity method | ² | 314 | 6,727,380 | 39 | 6,250,731 | ||||||||||||||||||||
Motech | Investee accounted for using equity method | ² | 75,316 | 6,225,880 | 20 | 4,017,503 | ||||||||||||||||||||
TSMC North America | Subsidiary | ² | 11,000 | 2,800,334 | 100 | 2,800,334 | ||||||||||||||||||||
Xintec | Investee with a controlling financial interest | ² | 93,081 | 1,576,835 | 41 | 1,551,723 | ||||||||||||||||||||
GUC | Investee with a controlling financial interest | ² | 46,688 | 1,000,709 | 35 | 5,462,479 | ||||||||||||||||||||
TSMC Europe | Subsidiary | ² | | 156,985 | 100 | 156,985 | ||||||||||||||||||||
TSMC Japan | Subsidiary | ² | 6 | 146,335 | 100 | 146,335 | ||||||||||||||||||||
TSMC Korea | Subsidiary | ² | 80 | 19,224 | 100 | 19,224 | ||||||||||||||||||||
United Industrial Gases Co., Ltd. | | Financial assets carried at cost | 16,783 | 193,584 | 10 | 293,186 | ||||||||||||||||||||
Shin-Etsu Handotai Taiwan Co., Ltd. | | ² | 10,500 | 105,000 | 7 | 353,790 | ||||||||||||||||||||
W.K. Technology Fund IV | | ² | 4,000 | 40,000 | 2 | 42,637 | ||||||||||||||||||||
Fund | ||||||||||||||||||||||||||
Horizon Ventures Fund | | Financial assets carried at cost | | 103,992 | 12 | 103,992 | ||||||||||||||||||||
Crimson Asia Capital | | ² | | 55,259 | 1 | 55,259 | ||||||||||||||||||||
Capital | ||||||||||||||||||||||||||
TSMC China | Subsidiary | Investments accounted for using equity method | | 3,134,321 | 100 | 3,144,809 | ||||||||||||||||||||
VTAF III | Subsidiary | ² | | 2,890,551 | 99 | 2,872,451 | ||||||||||||||||||||
VTAF II | Subsidiary | ² | | 1,128,923 | 98 | 1,123,154 | ||||||||||||||||||||
Emerging Alliance | Subsidiary | ² | | 315,832 | 99 | 315,832 | ||||||||||||||||||||
TSMC Partners |
Corporate bond | |||||||||||||||||||||||||
General Elec Cap Corp. Mtn | | Held-to-maturity financial assets | | US$ | 20,416 | N/A | US$ | 21,248 | ||||||||||||||||||
General Elec Cap Corp. Mtn | | ² | | US$ | 20,181 | N/A | US$ | 21,320 |
- 40 -
June 30, 2010 | ||||||||||||||||||||||||||
Market Value or Net | ||||||||||||||||||||||||||
Shares/Units | Carrying Value | Percentage of | Asset Value | |||||||||||||||||||||||
Held Company Name | Marketable Securities Type and Name | Relationship with the Company | Financial Statement Account | (In Thousands) | (US$ in Thousands) | Ownership (%) | (US$ in Thousands) | Note | ||||||||||||||||||
TSMC Partners |
Common stock | |||||||||||||||||||||||||
TSMC Development, Inc. (TSMC Development) | Subsidiary | Investments accounted for using equity method | 1 | US$ | 368,023 | 100 | US$ | 368,023 | ||||||||||||||||||
VisEra Holding Company | Investee accounted for using equity method | ² | 43,000 | US$ | 73,240 | 49 | US$ | 73,240 | ||||||||||||||||||
InveStar Semiconductor Development Fund, Inc. (ISDF) | Subsidiary | ² | 7,680 | US$ | 27,132 | 97 | US$ | 27,132 | ||||||||||||||||||
InveStar Semiconductor Development Fund, Inc. (II) LDC. (ISDF II) | Subsidiary | ² | 21,415 | US$ | 16,853 | 97 | US$ | 16,853 | ||||||||||||||||||
TSMC Technology | Subsidiary | ² | 1 | US$ | 9,452 | 100 | US$ | 9,452 | ||||||||||||||||||
TSMC Canada | Subsidiary | ² | 2,300 | US$ | 3,392 | 100 | US$ | 3,392 | ||||||||||||||||||
Mcube Inc. | Investee accounted for using equity method | ² | 5,333 | | 70 | | ||||||||||||||||||||
Preferred stock | ||||||||||||||||||||||||||
Mcube Inc. | Investee accounted for using equity method | Investments accounted for using equity method | 1,000 | US$ | 692 | 10 | US$ | 692 | ||||||||||||||||||
TSMC Development |
Corporate bond | |||||||||||||||||||||||||
GE Capital Corp. | | Held-to-maturity financial assets | | US$ | 20,275 | N/A | US$ | 21,320 | ||||||||||||||||||
JP Morgan Chase & Co. | | ² | | US$ | 15,000 | N/A | US$ | 14,850 | ||||||||||||||||||
Stock | ||||||||||||||||||||||||||
WaferTech | Subsidiary | Investments accounted for using equity method | 293,637 | US$ | 182,026 | 100 | US$ | 182,026 | ||||||||||||||||||
Emerging Alliance |
Common stock | |||||||||||||||||||||||||
RichWave Technology Corp. | | Financial assets carried at cost | 4,247 | US$ | 1,648 | 11 | US$ | 1,648 | ||||||||||||||||||
Global Investment Holding Inc. | | ² | 11,124 | US$ | 3,065 | 6 | US$ | 3,065 | ||||||||||||||||||
Preferred stock | ||||||||||||||||||||||||||
Audience, Inc. | | Financial assets carried at cost | 1,654 | US$ | 250 | | US$ | 250 | ||||||||||||||||||
Axiom Microdevices, Inc. | | ² | 1,000 | US$ | 13 | 1 | US$ | 13 | ||||||||||||||||||
Mosaic Systems, Inc. | | ² | 2,481 | US$ | 12 | N/A | US$ | 12 | ||||||||||||||||||
Next IO, Inc. | | ² | 800 | US$ | 500 | 1 | US$ | 500 | ||||||||||||||||||
Optichron, Inc. | | ² | 1,276 | US$ | 1,145 | 2 | US$ | 1,145 | ||||||||||||||||||
Pixim, Inc. | | ² | 4,641 | US$ | 1,137 | 2 | US$ | 1,137 | ||||||||||||||||||
QST Holdings, LLC | | ² | | US$ | 142 | 4 | US$ | 142 | ||||||||||||||||||
Capital | ||||||||||||||||||||||||||
VentureTech Alliance Holdings, LLC (VTA Holdings) | Subsidiary | Investments accounted for using equity method | | | 7 | | ||||||||||||||||||||
VTAF II |
Common stock | |||||||||||||||||||||||||
Leadtrend | | Available-for-sale financial assets | 969 | US$ | 4,504 | 2 | US$ | 4,504 | ||||||||||||||||||
Aether Systems, Inc. | | Financial assets carried at cost | 1,600 | US$ | 1,503 | 25 | US$ | 1,503 | ||||||||||||||||||
RichWave Technology Corp. | | ² | 1,238 | US$ | 1,036 | 3 | US$ | 1,036 | ||||||||||||||||||
Sentelic | | ² | 1,200 | US$ | 2,040 | 9 | US$ | 2,040 | ||||||||||||||||||
Preferred stock | ||||||||||||||||||||||||||
5V Technologies, Inc. | | Financial assets carried at cost | 2,890 | US$ | 2,168 | 4 | US$ | 2,168 | ||||||||||||||||||
Aquantia | | ² | 3,974 | US$ | 3,816 | 3 | US$ | 3,816 | ||||||||||||||||||
Audience, Inc. | | ² | 12,378 | US$ | 2,378 | 3 | US$ | 2,378 | ||||||||||||||||||
Beceem Communications | | ² | 834 | US$ | 1,701 | 1 | US$ | 1,701 | ||||||||||||||||||
Impinj, Inc. | | ² | 475 | US$ | 1,000 | | US$ | 1,000 | ||||||||||||||||||
Next IO, Inc. | | ² | 3,795 | US$ | 953 | 2 | US$ | 953 | ||||||||||||||||||
Optichron, Inc. | | ² | 4,048 | US$ | 2,825 | 4 | US$ | 2,825 | ||||||||||||||||||
Pixim, Inc. | | ² | 33,347 | US$ | 1,878 | 2 | US$ | 1,878 | ||||||||||||||||||
Power Analog Microelectronics | | ² | 7,027 | US$ | 3,383 | 19 | US$ | 3,383 |
- 41 -
June 30, 2010 | ||||||||||||||||||||||||||
Market Value or Net | ||||||||||||||||||||||||||
Shares/Units | Carrying Value | Percentage of | Asset Value | |||||||||||||||||||||||
Held Company Name | Marketable Securities Type and Name | Relationship with the Company | Financial Statement Account | (In Thousands) | (US$ in Thousands) | Ownership (%) | (US$ in Thousands) | Note | ||||||||||||||||||
VTAF II |
QST Holdings, LLC | | Financial assets carried at cost | | US$ | 593 | 13 | US$ | 593 | |||||||||||||||||
Xceive | | ² | 4,210 | US$ | 1,554 | 3 | US$ | 1,554 | ||||||||||||||||||
Capital | ||||||||||||||||||||||||||
VTA Holdings | Subsidiary | Investments accounted for using equity method | | | 31 | | ||||||||||||||||||||
VTAF III |
Common stock | |||||||||||||||||||||||||
Mutual-Pak Technology Co., Ltd. | Subsidiary | Investments accounted for using equity method | 9,180 | US$ | 1,709 | 59 | US$ | 1,709 | ||||||||||||||||||
Aiconn Technology Corporation | Investee accounted for using equity method | ² | 5,623 | US$ | 770 | 43 | US$ | 770 | ||||||||||||||||||
Preferred stock | ||||||||||||||||||||||||||
Auramicro, Inc. | | Financial assets carried at cost | 4,694 | US$ | 1,408 | 20 | US$ | 1,408 | ||||||||||||||||||
BridgeLux, Inc. | | ² | 6,113 | US$ | 7,781 | 4 | US$ | 7,781 | ||||||||||||||||||
Exclara, Inc. | | ² | 21,708 | US$ | 4,568 | 18 | US$ | 4,568 | ||||||||||||||||||
GTBF, Inc. | | ² | 1,154 | US$ | 1,500 | N/A | US$ | 1,500 | ||||||||||||||||||
InvenSense, Inc. | | ² | 816 | US$ | 1,000 | 1 | US$ | 1,000 | ||||||||||||||||||
LiquidLeds Lighting Corp. | | ² | 1,600 | US$ | 800 | 11 | US$ | 800 | ||||||||||||||||||
Neoconix, Inc. | | ² | 3,283 | US$ | 4,608 | 6 | US$ | 4,608 | ||||||||||||||||||
Powervation, Ltd. | | ² | 310 | US$ | 4,678 | 16 | US$ | 4,678 | ||||||||||||||||||
Quellan, Inc. | | ² | 3,106 | US$ | 457 | 6 | US$ | 457 | ||||||||||||||||||
Silicon Technical Services, LLC | | ² | 1,055 | US$ | 1,208 | | US$ | 1,208 | ||||||||||||||||||
Stion Corp. | | ² | 7,347 | US$ | 50,000 | 23 | US$ | 50,000 | ||||||||||||||||||
Tilera, Inc. | | ² | 3,222 | US$ | 2,781 | 2 | US$ | 2,781 | ||||||||||||||||||
Validity Sensors, Inc. | | ² | 8,070 | US$ | 3,089 | 4 | US$ | 3,089 | ||||||||||||||||||
Capital | ||||||||||||||||||||||||||
Growth Fund Limited (Growth Fund) | Subsidiary | Investments accounted for using equity method | | US$ | 860 | 100 | US$ | 860 | ||||||||||||||||||
VTA Holdings | Subsidiary | ² | | | 62 | | ||||||||||||||||||||
Growth Fund |
Common stock | |||||||||||||||||||||||||
SiliconBlue Technologies, Inc. | | Financial assets carried at cost | 5,107 | US$ | 762 | 2 | US$ | 762 | ||||||||||||||||||
Staccato | | ² | 10 | US$ | 25 | | US$ | 25 | ||||||||||||||||||
ISDF |
Common stock | |||||||||||||||||||||||||
Integrated Memory Logic, Inc. | | Available-for-sale financial assets | 4,874 | US$ | 22,135 | 7 | US$ | 22,135 | ||||||||||||||||||
Memsic, Inc. | | ² | 1,286 | US$ | 2,905 | 5 | US$ | 2,905 | ||||||||||||||||||
Capella Microsystems (Taiwan), Inc. | | ² | 547 | US$ | 3,081 | 2 | US$ | 3,081 | ||||||||||||||||||
Preferred stock | ||||||||||||||||||||||||||
IP Unity, Inc. | | Financial assets carried at cost | 1,008 | US$ | 290 | 1 | US$ | 290 | ||||||||||||||||||
Sonics, Inc. | | ² | 230 | US$ | 497 | 2 | US$ | 497 | ||||||||||||||||||
ISDF II |
Common stock | |||||||||||||||||||||||||
Memsic, Inc. | | Available-for-sale financial assets | 1,072 | US$ | 2,423 | 5 | US$ | 2,423 | ||||||||||||||||||
Capella Microsystems (Taiwan), Inc. | | ² | 551 | US$ | 3,103 | 2 | US$ | 3,103 | ||||||||||||||||||
Alchip Technologies Limited | | Financial assets carried at cost | 7,520 | US$ | 3,664 | 15 | US$ | 3,664 | ||||||||||||||||||
Sonics, Inc. | | ² | 278 | US$ | 10 | 3 | US$ | 10 | ||||||||||||||||||
EON Technology, Corp. | | ² | 874 | US$ | 242 | 1 | US$ | 242 | ||||||||||||||||||
Goyatek Technology, Corp. | | ² | 932 | US$ | 545 | 6 | US$ | 545 | ||||||||||||||||||
Auden Technology MFG. Co., Ltd. | | ² | 1,049 | US$ | 223 | 3 | US$ | 223 | ||||||||||||||||||
Preferred stock | ||||||||||||||||||||||||||
FangTek, Inc. | | Financial assets carried at cost | 1,032 | US$ | 686 | 6 | US$ | 686 | ||||||||||||||||||
Sonics, Inc. | | ² | 264 | US$ | 456 | 3 | US$ | 456 |
- 42 -
June 30, 2010 | ||||||||||||||||||||||||||
Market Value or Net | ||||||||||||||||||||||||||
Shares/Units | Carrying Value | Percentage of | Asset Value | |||||||||||||||||||||||
Held Company Name | Marketable Securities Type and Name | Relationship with the Company | Financial Statement Account | (In Thousands) | (US$ in Thousands) | Ownership (%) | (US$ in Thousands) | Note | ||||||||||||||||||
GUC |
Common stock | |||||||||||||||||||||||||
GUC-NA | Subsidiary | Investments accounted for using equity method | 800 | 40,795 | 100 | 40,795 | ||||||||||||||||||||
GUC-Japan | Subsidiary | ² | 1 | 14,205 | 100 | 14,205 | ||||||||||||||||||||
GUC-BVI | Subsidiary | ² | 550 | 9,611 | 100 | 9,611 | ||||||||||||||||||||
GUC-Europe | Subsidiary | ² | | 4,366 | 100 | 4,366 | ||||||||||||||||||||
GUC-BVI |
Capital | |||||||||||||||||||||||||
Global Unichip (Shanghai) Company, Limited (GUC-Shanghai) | Subsidiary | Investments accounted for using equity method | | 8,158 | 100 | 8,158 | ||||||||||||||||||||
Xintec |
Capital | |||||||||||||||||||||||||
Compositech Ltd. | | Financial assets carried at cost | 587 | | 3 | | ||||||||||||||||||||
TSMC Global |
Corporate bond | |||||||||||||||||||||||||
Ab Svensk Exportkredit Swedish | | Available-for-sale financial assets | 5,000 | US$ | 5,042 | N/A | US$ | 5,042 | ||||||||||||||||||
African Development Bank | | ² | 2,600 | US$ | 2,619 | N/A | US$ | 2,619 | ||||||||||||||||||
Allstate Life Gbl Fdg Secd | | ² | 4,430 | US$ | 4,857 | N/A | US$ | 4,857 | ||||||||||||||||||
Alltel Corp. | | ² | 100 | US$ | 110 | N/A | US$ | 110 | ||||||||||||||||||
American Honda Fin Corp. Mtn | | ² | 4,000 | US$ | 3,975 | N/A | US$ | 3,975 | ||||||||||||||||||
Anz National Intl Ltd. | | ² | 3,500 | US$ | 3,545 | N/A | US$ | 3,545 | ||||||||||||||||||
Asian Development Bank | | ² | 2,500 | US$ | 2,497 | N/A | US$ | 2,497 | ||||||||||||||||||
Astrazeneca Plc | | ² | 3,150 | US$ | 3,440 | N/A | US$ | 3,440 | ||||||||||||||||||
AT+T Wireless | | ² | 3,500 | US$ | 3,917 | N/A | US$ | 3,917 | ||||||||||||||||||
Australia + New Zealand Bkg | | ² | 2,000 | US$ | 2,059 | N/A | US$ | 2,059 | ||||||||||||||||||
Banco Bilbao Vizcaya P R | | ² | 3,250 | US$ | 3,247 | N/A | US$ | 3,247 | ||||||||||||||||||
Bank New York Inc. | | ² | 1,615 | US$ | 1,609 | N/A | US$ | 1,609 | ||||||||||||||||||
Bank New York Inc. Medium | | ² | 2,100 | US$ | 2,274 | N/A | US$ | 2,274 | ||||||||||||||||||
Bank of America | | ² | 1,900 | US$ | 2,020 | N/A | US$ | 2,020 | ||||||||||||||||||
Bank of New York Mellon | | ² | 2,200 | US$ | 2,209 | N/A | US$ | 2,209 | ||||||||||||||||||
Bank of Nova Scotia | | ² | 5,000 | US$ | 4,993 | N/A | US$ | 4,993 | ||||||||||||||||||
Bank of Scotland Plc | | ² | 4,000 | US$ | 3,993 | N/A | US$ | 3,993 | ||||||||||||||||||
Barclays Bank Plc | | ² | 12,000 | US$ | 11,995 | N/A | US$ | 11,995 | ||||||||||||||||||
Barclays Bank Plc NY | | ² | 5,000 | US$ | 4,997 | N/A | US$ | 4,997 | ||||||||||||||||||
Bbva US Senior SA Uniper | | ² | 4,745 | US$ | 4,709 | N/A | US$ | 4,709 | ||||||||||||||||||
Bear Stearns Cos Inc. | | ² | 5,000 | US$ | 4,975 | N/A | US$ | 4,975 | ||||||||||||||||||
Bear Stearns Cos Inc. | | ² | 3,500 | US$ | 3,445 | N/A | US$ | 3,445 | ||||||||||||||||||
Berkshire Hathaway Inc. Del | | ² | 3,500 | US$ | 3,506 | N/A | US$ | 3,506 | ||||||||||||||||||
Bhp Billiton Fin USA Ltd. | | ² | 2,000 | US$ | 2,130 | N/A | US$ | 2,130 | ||||||||||||||||||
Bk Tokyo Mitsubishi Ufj | | ² | 2,000 | US$ | 2,033 | N/A | US$ | 2,033 | ||||||||||||||||||
Bmw US Capital LLC | | ² | 1,600 | US$ | 1,599 | N/A | US$ | 1,599 | ||||||||||||||||||
Bnp Paribas SA | | ² | 3,810 | US$ | 3,823 | N/A | US$ | 3,823 | ||||||||||||||||||
Boeing Cap Corp. | | ² | 2,925 | US$ | 3,234 | N/A | US$ | 3,234 | ||||||||||||||||||
Boeing Co. | | ² | 450 | US$ | 456 | N/A | US$ | 456 | ||||||||||||||||||
Bsch Issuances Ltd. | | ² | 2,250 | US$ | 2,269 | N/A | US$ | 2,269 | ||||||||||||||||||
Caterpillar Financial SE | | ² | 300 | US$ | 302 | N/A | US$ | 302 | ||||||||||||||||||
Cello Part/Veri Wirelss | | ² | 3,000 | US$ | 3,067 | N/A | US$ | 3,067 | ||||||||||||||||||
Citibank NA | | ² | 10,000 | US$ | 10,092 | N/A | US$ | 10,092 | ||||||||||||||||||
Citigroup Funding Inc. | | ² | 6,000 | US$ | 6,127 | N/A | US$ | 6,127 | ||||||||||||||||||
Citigroup Funding Inc. | | ² | 2,000 | US$ | 2,042 | N/A | US$ | 2,042 | ||||||||||||||||||
Citigroup Inc. | | ² | 1,400 | US$ | 1,367 | N/A | US$ | 1,367 | ||||||||||||||||||
Citigroup Inc. | | ² | 800 | US$ | 793 | N/A | US$ | 793 | ||||||||||||||||||
Citigroup Inc. | | ² | 400 | US$ | 416 | N/A | US$ | 416 | ||||||||||||||||||
Citigroup Inc. | | ² | 5,000 | US$ | 5,326 | N/A | US$ | 5,326 | ||||||||||||||||||
Commonwealth Bank Aust | | ² | 2,800 | US$ | 2,798 | N/A | US$ | 2,798 |
- 43 -
June 30, 2010 | ||||||||||||||||||||||||||
Market Value or Net | ||||||||||||||||||||||||||
Shares/Units | Carrying Value | Percentage of | Asset Value | |||||||||||||||||||||||
Held Company Name | Marketable Securities Type and Name | Relationship with the Company | Financial Statement Account | (In Thousands) | (US$ in Thousands) | Ownership (%) | (US$ in Thousands) | Note | ||||||||||||||||||
TSMC Global |
Countrywide Finl Corp. | | Available-for-sale financial assets | 4,000 | US$ | 4,206 | N/A | US$ | 4,206 | |||||||||||||||||
Credit Suisse First Boston USA | | ² | 2,150 | US$ | 2,284 | N/A | US$ | 2,284 | ||||||||||||||||||
Credit Suisse New York | | ² | 3,945 | US$ | 4,075 | N/A | US$ | 4,075 | ||||||||||||||||||
Deutsche Bank AG NY | | ² | 2,500 | US$ | 2,480 | N/A | US$ | 2,480 | ||||||||||||||||||
Dexia Credit Local | | ² | 6,000 | US$ | 5,964 | N/A | US$ | 5,964 | ||||||||||||||||||
Dexia Credit Local | | ² | 4,000 | US$ | 3,995 | N/A | US$ | 3,995 | ||||||||||||||||||
Dexia Credit Local S.A | | ² | 4,000 | US$ | 3,985 | N/A | US$ | 3,985 | ||||||||||||||||||
Dexia Credit Local SA NY | | ² | 5,000 | US$ | 5,001 | N/A | US$ | 5,001 | ||||||||||||||||||
Finance for Danish Ind | | ² | 3,800 | US$ | 3,797 | N/A | US$ | 3,797 | ||||||||||||||||||
General Elec Cap Corp. | | ² | 1,000 | US$ | 985 | N/A | US$ | 985 | ||||||||||||||||||
General Elec Cap Corp. | | ² | 300 | US$ | 299 | N/A | US$ | 299 | ||||||||||||||||||
General Elec Cap Corp. | | ² | 7,000 | US$ | 7,015 | N/A | US$ | 7,015 | ||||||||||||||||||
General Electric Capital Corp. | | ² | 2,000 | US$ | 1,942 | N/A | US$ | 1,942 | ||||||||||||||||||
Georgia Pwr Co. | | ² | 6,000 | US$ | 6,006 | N/A | US$ | 6,006 | ||||||||||||||||||
Goldman Sachs Group Inc. | | ² | 2,000 | US$ | 1,884 | N/A | US$ | 1,884 | ||||||||||||||||||
Goldman Sachs Group Incser 2 | | ² | 3,000 | US$ | 3,009 | N/A | US$ | 3,009 | ||||||||||||||||||
Hewlett Packard Co. | | ² | 3,000 | US$ | 3,003 | N/A | US$ | 3,003 | ||||||||||||||||||
Hewlett Packard Co. | | ² | 1,365 | US$ | 1,384 | N/A | US$ | 1,384 | ||||||||||||||||||
Household Fin Corp. | | ² | 4,330 | US$ | 4,676 | N/A | US$ | 4,676 | ||||||||||||||||||
HSBC Fin Corp. | | ² | 2,315 | US$ | 2,258 | N/A | US$ | 2,258 | ||||||||||||||||||
HSBC Fin Corp. | | ² | 2,900 | US$ | 3,070 | N/A | US$ | 3,070 | ||||||||||||||||||
HSBC USA Inc. Fdic Gtd Tlgp | | ² | 2,200 | US$ | 2,279 | N/A | US$ | 2,279 | ||||||||||||||||||
Hutchison Whampoa Intl | | ² | 1,750 | US$ | 1,777 | N/A | US$ | 1,777 | ||||||||||||||||||
IBM Corp. | | ² | 6,100 | US$ | 6,105 | N/A | US$ | 6,105 | ||||||||||||||||||
IBM Corp. | | ² | 3,000 | US$ | 3,020 | N/A | US$ | 3,020 | ||||||||||||||||||
Intl Bk Recon + Develop | | ² | 5,000 | US$ | 5,007 | N/A | US$ | 5,007 | ||||||||||||||||||
Intl Bk Recon + Develop | | ² | 2,000 | US$ | 2,064 | N/A | US$ | 2,064 | ||||||||||||||||||
John Deer Capital Corp. Fdic GT | | ² | 3,500 | US$ | 3,640 | N/A | US$ | 3,640 | ||||||||||||||||||
JP Morgan Chase + Co. | | ² | 2,500 | US$ | 2,523 | N/A | US$ | 2,523 | ||||||||||||||||||
JP Morgan Chase + Co. | | ² | 5,000 | US$ | 5,000 | N/A | US$ | 5,000 | ||||||||||||||||||
JP Morgan Chase + Co. Fdic Gtd Tlg | | ² | 3,000 | US$ | 3,028 | N/A | US$ | 3,028 | ||||||||||||||||||
Kfw Medium Term Nts Book Entry | | ² | 1,950 | US$ | 1,951 | N/A | US$ | 1,951 | ||||||||||||||||||
Kreditanstalt Fur Wiederaufbau | | ² | 650 | US$ | 670 | N/A | US$ | 670 | ||||||||||||||||||
Lloyds Tsb Bank Plc Ser 144A | | ² | 4,850 | US$ | 4,870 | N/A | US$ | 4,870 | ||||||||||||||||||
Lloyds Tsb Bank Plc Ser 144A | | ² | 5,950 | US$ | 6,027 | N/A | US$ | 6,027 | ||||||||||||||||||
Massmutual Global Fdg II Mediu | | ² | 4,000 | US$ | 3,880 | N/A | US$ | 3,880 | ||||||||||||||||||
Mellon Fdg Corp. | | ² | 3,500 | US$ | 3,423 | N/A | US$ | 3,423 | ||||||||||||||||||
Merck + Co. Inc. | | ² | 4,000 | US$ | 4,038 | N/A | US$ | 4,038 | ||||||||||||||||||
Merck + Co. Inc. | | ² | 2,000 | US$ | 2,101 | N/A | US$ | 2,101 | ||||||||||||||||||
Merrill Lynch + Co. Inc. | | ² | 4,691 | US$ | 4,556 | N/A | US$ | 4,556 | ||||||||||||||||||
Met Life Glob Funding I | | ² | 5,000 | US$ | 4,997 | N/A | US$ | 4,997 | ||||||||||||||||||
Met Life Glob Funding I | | ² | 500 | US$ | 502 | N/A | US$ | 502 | ||||||||||||||||||
Metlife Inc. | | ² | 2,000 | US$ | 2,012 | N/A | US$ | 2,012 | ||||||||||||||||||
Metropolitan Life Global Fdg | | ² | 750 | US$ | 741 | N/A | US$ | 741 | ||||||||||||||||||
Metropolitan Life Global Fdg I | | ² | 3,340 | US$ | 3,289 | N/A | US$ | 3,289 | ||||||||||||||||||
Monumental Global Fdg III | | ² | 750 | US$ | 724 | N/A | US$ | 724 | ||||||||||||||||||
Morgan Stanley | | ² | 1,000 | US$ | 972 | N/A | US$ | 972 | ||||||||||||||||||
Morgan Stanley Dean Witter | | ² | 8,000 | US$ | 8,490 | N/A | US$ | 8,490 | ||||||||||||||||||
Morgan Stanley Fdic Gtd Tlgp | | ² | 2,000 | US$ | 2,020 | N/A | US$ | 2,020 | ||||||||||||||||||
Morgan Stanley for Equity | | ² | 2,000 | US$ | 1,940 | N/A | US$ | 1,940 | ||||||||||||||||||
National Australia Bank | | ² | 1,000 | US$ | 1,009 | N/A | US$ | 1,009 | ||||||||||||||||||
New York Life Global Fdg | | ² | 2,000 | US$ | 2,039 | N/A | US$ | 2,039 | ||||||||||||||||||
Nordea Bank Fld Plc | | ² | 2,250 | US$ | 2,245 | N/A | US$ | 2,245 | ||||||||||||||||||
Oesterreichische Kontrollbank | | ² | 2,000 | US$ | 2,018 | N/A | US$ | 2,018 |
- 44 -
June 30, 2010 | ||||||||||||||||||||||||||
Market Value or Net | ||||||||||||||||||||||||||
Shares/Units | Carrying Value | Percentage of | Asset Value | |||||||||||||||||||||||
Held Company Name | Marketable Securities Type and Name | Relationship with the Company | Financial Statement Account | (In Thousands) | (US$ in Thousands) | Ownership (%) | (US$ in Thousands) | Note | ||||||||||||||||||
TSMC Global |
Ontario (Province of) | | Available-for-sale financial assets | 2,000 | US$ | 2,023 | N/A | US$ | 2,023 | |||||||||||||||||
Pepsico Inc. | | ² | 3,000 | US$ | 3,001 | N/A | US$ | 3,001 | ||||||||||||||||||
Pfizer Inc. | | ² | 2,725 | US$ | 2,875 | N/A | US$ | 2,875 | ||||||||||||||||||
Pnc Funding Corp. | | ² | 2,000 | US$ | 1,981 | N/A | US$ | 1,981 | ||||||||||||||||||
Pricoa Global Fdg I Med Term | | ² | 1,750 | US$ | 1,673 | N/A | US$ | 1,673 | ||||||||||||||||||
Pricoa Global Funding 1 | | ² | 1,200 | US$ | 1,177 | N/A | US$ | 1,177 | ||||||||||||||||||
Principal Life Income Fdgs Mtn | | ² | 2,500 | US$ | 2,500 | N/A | US$ | 2,500 | ||||||||||||||||||
Princoa Global Fdg I Medium | | ² | 2,200 | US$ | 2,147 | N/A | US$ | 2,147 | ||||||||||||||||||
Rabobank Nederland | | ² | 5,000 | US$ | 4,999 | N/A | US$ | 4,999 | ||||||||||||||||||
Roche Hldgs Inc. | | ² | 2,000 | US$ | 2,025 | N/A | US$ | 2,025 | ||||||||||||||||||
Roche Hldgs Inc. | | ² | 2,000 | US$ | 2,106 | N/A | US$ | 2,106 | ||||||||||||||||||
Royal Bk of Scotland Plc | | ² | 4,000 | US$ | 4,011 | N/A | US$ | 4,011 | ||||||||||||||||||
Royal Bk of Scotland Plc | | ² | 5,000 | US$ | 5,049 | N/A | US$ | 5,049 | ||||||||||||||||||
Royal Bk Scotlnd Grp Plc 144A | | ² | 9,450 | US$ | 9,458 | N/A | US$ | 9,458 | ||||||||||||||||||
Shell International Fin | | ² | 700 | US$ | 702 | N/A | US$ | 702 | ||||||||||||||||||
Shell International Fin | | ² | 1,200 | US$ | 1,207 | N/A | US$ | 1,207 | ||||||||||||||||||
Shell International Fin | | ² | 2,000 | US$ | 2,017 | N/A | US$ | 2,017 | ||||||||||||||||||
Southern Co. | | ² | 600 | US$ | 602 | N/A | US$ | 602 | ||||||||||||||||||
Sovereign Bancorp Fdic Gtd Tlg | | ² | 2,200 | US$ | 2,261 | N/A | US$ | 2,261 | ||||||||||||||||||
State Str Corp. | | ² | 7,020 | US$ | 6,987 | N/A | US$ | 6,987 | ||||||||||||||||||
Sun Life Finl Global | | ² | 4,400 | US$ | 4,268 | N/A | US$ | 4,268 | ||||||||||||||||||
Sun Life Finl Global Fdg II Lp | | ² | 1,500 | US$ | 1,486 | N/A | US$ | 1,486 | ||||||||||||||||||
Suncorp Metway Ltd. | | ² | 8,800 | US$ | 9,039 | N/A | US$ | 9,039 | ||||||||||||||||||
Suncorp Metway Ltd. | | ² | 2,000 | US$ | 2,001 | N/A | US$ | 2,001 | ||||||||||||||||||
Svenska Handelsbanken AB | | ² | 2,200 | US$ | 2,233 | N/A | US$ | 2,233 | ||||||||||||||||||
Swedbank AB | | ² | 2,000 | US$ | 1,994 | N/A | US$ | 1,994 | ||||||||||||||||||
Swedbank Foreningssparbanken A | | ² | 1,500 | US$ | 1,546 | N/A | US$ | 1,546 | ||||||||||||||||||
Teva Pharma Fin III LLC | | ² | 4,000 | US$ | 4,008 | N/A | US$ | 4,008 | ||||||||||||||||||
Ubs Ag Stamford CT | | ² | 800 | US$ | 803 | N/A | US$ | 803 | ||||||||||||||||||
US Central Federal Cred | | ² | 4,800 | US$ | 4,839 | N/A | US$ | 4,839 | ||||||||||||||||||
Verizon Communications Inc. | | ² | 1,500 | US$ | 1,644 | N/A | US$ | 1,644 | ||||||||||||||||||
Wachovia Corp. New | | ² | 1,400 | US$ | 1,383 | N/A | US$ | 1,383 | ||||||||||||||||||
Wachovia Corp. New | | ² | 4,000 | US$ | 4,187 | N/A | US$ | 4,187 | ||||||||||||||||||
Wal Mart Stores Inc. | | ² | 2,603 | US$ | 2,655 | N/A | US$ | 2,655 | ||||||||||||||||||
Wells Fargo + Company | | ² | 2,000 | US$ | 2,013 | N/A | US$ | 2,013 | ||||||||||||||||||
Westfield Cap Corp. Ltd. | | ² | 500 | US$ | 505 | N/A | US$ | 505 | ||||||||||||||||||
Westpac Banking Corp. | | ² | 2,100 | US$ | 2,111 | N/A | US$ | 2,111 | ||||||||||||||||||
Westpac Banking Corp. | | ² | 4,000 | US$ | 4,006 | N/A | US$ | 4,006 | ||||||||||||||||||
Westpac Banking Corp. | | ² | 2,170 | US$ | 2,168 | N/A | US$ | 2,168 | ||||||||||||||||||
Aust + Nz Banking Group | | Held-to-maturity financial assets | 20,000 | US$ | 20,000 | N/A | US$ | 19,874 | ||||||||||||||||||
Commonwealth Bank of Australia | | ² | 25,000 | US$ | 25,000 | N/A | US$ | 24,642 | ||||||||||||||||||
Commonwealth Bank of Australia | | ² | 25,000 | US$ | 25,000 | N/A | US$ | 24,715 | ||||||||||||||||||
JP Morgan Chase + Co. | | ² | 25,000 | US$ | 25,098 | N/A | US$ | 24,942 | ||||||||||||||||||
Nationwide Building Society-UK Government Guarantee | | ² | 8,000 | US$ | 8,000 | N/A | US$ | 7,949 | ||||||||||||||||||
Westpac Banking Corp. | | ² | 25,000 | US$ | 25,000 | N/A | US$ | 24,409 | ||||||||||||||||||
Westpac Banking Corporation Govet Gtd | | ² | 5,000 | US$ | 5,000 | N/A | US$ | 4,998 | ||||||||||||||||||
Agency bond | ||||||||||||||||||||||||||
Fannie Mae | | Available-for-sale financial assets | 8,000 | US$ | 7,998 | N/A | US$ | 7,998 | ||||||||||||||||||
Fannie Mae | | ² | 3,770 | US$ | 3,774 | N/A | US$ | 3,774 | ||||||||||||||||||
Fannie Mae | | ² | 4,000 | US$ | 4,003 | N/A | US$ | 4,003 | ||||||||||||||||||
Fannie Mae | | ² | 4,000 | US$ | 4,019 | N/A | US$ | 4,019 | ||||||||||||||||||
Fannie Mae | | ² | 4,000 | US$ | 4,026 | N/A | US$ | 4,026 | ||||||||||||||||||
Fannie Mae | | ² | 3,000 | US$ | 3,010 | N/A | US$ | 3,010 |
- 45 -
June 30, 2010 | ||||||||||||||||||||||||||
Market Value or Net | ||||||||||||||||||||||||||
Shares/Units | Carrying Value | Percentage of | Asset Value | |||||||||||||||||||||||
Held Company Name | Marketable Securities Type and Name | Relationship with the Company | Financial Statement Account | (In Thousands) | (US$ in Thousands) | Ownership (%) | (US$ in Thousands) | Note | ||||||||||||||||||
TSMC Global |
Fed Hm Ln Pc Pool 1b2830 | | Available-for-sale financial assets | 2,080 | US$ | 2,186 | N/A | US$ | 2,186 | |||||||||||||||||
Fed Hm Ln Pc Pool 1g0115 | | ² | 2,247 | US$ | 2,325 | N/A | US$ | 2,325 | ||||||||||||||||||
Fed Hm Ln Pc Pool 1k1210 | | ² | 1,692 | US$ | 1,736 | N/A | US$ | 1,736 | ||||||||||||||||||
Fed Hm Ln Pc Pool 780741 | | ² | 1,951 | US$ | 2,029 | N/A | US$ | 2,029 | ||||||||||||||||||
Federal Farm Cr Bks | | ² | 2,000 | US$ | 2,101 | N/A | US$ | 2,101 | ||||||||||||||||||
Federal Farm Credit Bank | | ² | 1,000 | US$ | 1,000 | N/A | US$ | 1,000 | ||||||||||||||||||
Federal Farm Credit Bank | | ² | 4,000 | US$ | 3,993 | N/A | US$ | 3,993 | ||||||||||||||||||
Federal Farm Credit Bank | | ² | 5,000 | US$ | 5,036 | N/A | US$ | 5,036 | ||||||||||||||||||
Federal Farm Credit Bank | | ² | 2,200 | US$ | 2,238 | N/A | US$ | 2,238 | ||||||||||||||||||
Federal Home Ln Bks | | ² | 5,000 | US$ | 5,097 | N/A | US$ | 5,097 | ||||||||||||||||||
Federal Home Ln Mtg Corp. | | ² | 4,368 | US$ | 4,337 | N/A | US$ | 4,337 | ||||||||||||||||||
Federal Home Ln Mtg Corp. | | ² | 1,829 | US$ | 1,916 | N/A | US$ | 1,916 | ||||||||||||||||||
Federal Home Ln Mtg Corp. | | ² | 3,333 | US$ | 3,506 | N/A | US$ | 3,506 | ||||||||||||||||||
Federal Home Ln Mtg Corp. | | ² | 2,691 | US$ | 2,770 | N/A | US$ | 2,770 |