1934 Act Registration No. 1-14700
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2015
Taiwan Semiconductor Manufacturing Company Ltd.
(Translation of Registrants Name Into English)
No. 8, Li-Hsin Rd. 6,
Hsinchu Science Park,
Taiwan
(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F x Form 40-F ¨
(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
Yes ¨ No x
(If Yes is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82: .)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Taiwan Semiconductor Manufacturing Company Ltd. | ||||||
Date: November 13, 2015 | By | /s/ Lora Ho | ||||
Lora Ho | ||||||
Senior Vice President & Chief Financial Officer |
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries |
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Consolidated Financial Statements for the Nine months Ended September 30, 2015 and 2014 and Independent Accountants Review Report |
INDEPENDENT ACCOUNTANTS REVIEW REPORT
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Limited
We have reviewed the accompanying consolidated balance sheets of Taiwan Semiconductor Manufacturing Company Limited and subsidiaries (the Company) as of September 30, 2015 and 2014 and the related consolidated statements of comprehensive income for the three months ended September 30, 2015 and 2014 and for the nine months ended September 30, 2015 and 2014, as well as the consolidated statements of changes in equity and cash flows for the nine months ended September 30, 2015 and 2014. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to issue a report on these consolidated financial statements based on our reviews.
We conducted our reviews in accordance with Statement on Auditing Standards No. 36, Review of Financial Statements, issued by the Auditing Standards Committee of the Accounting Research and Development Foundation of the Republic of China. A review consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China, the objective of which is the expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, Interim Financial Reporting, endorsed by the Financial Supervisory Commission of the Republic of China.
November 10, 2015
Notice to Readers
The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally accepted and applied in the Republic of China.
For the convenience of readers, the accountants review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language accountants review report and consolidated financial statements shall prevail.
- 1 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In Thousands of New Taiwan Dollars)
September 30, 2015 (Reviewed) |
December 31, 2014 (Adjusted and Audited) |
September 30, 2014 (Adjusted and Reviewed) |
January 1, 2014 (Adjusted and Audited) |
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(Note 3) | (Note 3) | (Note 3) | (Note 3) | |||||||||||||||||||||||||||||
Amount | % | Amount | % | Amount | % | Amount | % | |||||||||||||||||||||||||
ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents (Note 6) |
$ | 515,731,398 | 33 | $ | 358,449,029 | 24 | $ | 225,884,318 | 17 | $ | 242,695,447 | 19 | ||||||||||||||||||||
Financial assets at fair value through profit or loss (Note 7) |
98,835 | | 192,045 | | 69,164 | | 90,353 | | ||||||||||||||||||||||||
Available-for-sale financial assets (Note 8) |
1,597,602 | | 73,797,476 | 5 | 64,391,337 | 5 | 760,793 | | ||||||||||||||||||||||||
Held-to-maturity financial assets (Note 9) |
7,362,003 | 1 | 4,485,593 | | | | 1,795,949 | | ||||||||||||||||||||||||
Hedging derivative financial assets (Note 10) |
96,153 | | | | | | | | ||||||||||||||||||||||||
Notes and accounts receivable, net (Note 11) |
96,611,632 | 6 | 114,734,743 | 8 | 113,999,433 | 8 | 71,649,926 | 6 | ||||||||||||||||||||||||
Receivables from related parties (Note 32) |
511,008 | | 312,955 | | 532,767 | | 291,708 | | ||||||||||||||||||||||||
Other receivables from related parties (Note 32) |
128,490 | | 178,625 | | 161,962 | | 221,576 | | ||||||||||||||||||||||||
Inventories (Note 12) |
65,066,214 | 4 | 66,337,971 | 5 | 65,336,989 | 5 | 37,494,893 | 3 | ||||||||||||||||||||||||
Noncurrent assets held for sale (Note 30) |
| | 944,208 | | | | | | ||||||||||||||||||||||||
Other financial assets (Note 33) |
3,613,680 | | 3,476,884 | | 2,989,824 | | 501,785 | | ||||||||||||||||||||||||
Other current assets (Note 17) |
2,844,481 | | 3,656,110 | | 2,864,405 | | 2,984,224 | | ||||||||||||||||||||||||
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Total current assets |
693,661,496 | 44 | 626,565,639 | 42 | 476,230,199 | 35 | 358,486,654 | 28 | ||||||||||||||||||||||||
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NONCURRENT ASSETS |
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Available-for-sale financial assets (Note 8) |
| | | | | | 58,721,959 | 5 | ||||||||||||||||||||||||
Held-to-maturity financial assets (Note 9) |
2,571,357 | | | | | | | | ||||||||||||||||||||||||
Financial assets carried at cost (Notes 13 and 31) |
1,507,749 | | 1,800,542 | | 1,866,008 | | 2,145,591 | | ||||||||||||||||||||||||
Investments accounted for using equity method (Note 14) |
26,935,985 | 2 | 28,255,737 | 2 | 26,985,165 | 2 | 28,321,241 | 2 | ||||||||||||||||||||||||
Property, plant and equipment (Note 15) |
830,825,109 | 53 | 818,198,801 | 55 | 824,309,879 | 61 | 792,665,913 | 63 | ||||||||||||||||||||||||
Intangible assets (Note 16) |
13,196,292 | 1 | 13,531,510 | 1 | 11,942,249 | 1 | 11,490,383 | 1 | ||||||||||||||||||||||||
Deferred income tax assets (Note 4) |
5,743,803 | | 5,138,782 | | 4,940,633 | 1 | 7,145,004 | 1 | ||||||||||||||||||||||||
Refundable deposits (Note 32) |
400,263 | | 356,069 | | 2,359,756 | | 2,519,031 | | ||||||||||||||||||||||||
Other noncurrent assets (Note 17) |
1,376,756 | | 1,202,006 | | 1,273,661 | | 1,469,577 | | ||||||||||||||||||||||||
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Total noncurrent assets |
882,557,314 | 56 | 868,483,447 | 58 | 873,677,351 | 65 | 904,478,699 | 72 | ||||||||||||||||||||||||
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TOTAL |
$ | 1,576,218,810 | 100 | $ | 1,495,049,086 | 100 | $ | 1,349,907,550 | 100 | $ | 1,262,965,353 | 100 | ||||||||||||||||||||
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LIABILITIES AND EQUITY |
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CURRENT LIABILITIES |
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Short-term loans (Note 18) |
$ | 33,564,120 | 2 | $ | 36,158,520 | 2 | $ | 35,883,358 | 3 | $ | 15,645,000 | 1 | ||||||||||||||||||||
Financial liabilities at fair value through profit or loss (Note 7) |
179,363 | | 486,214 | | 691,062 | | 33,750 | | ||||||||||||||||||||||||
Hedging derivative financial liabilities (Note 10) |
| | 16,364,241 | 1 | 9,769,897 | 1 | | | ||||||||||||||||||||||||
Accounts payable |
18,057,750 | 1 | 21,878,934 | 2 | 20,418,733 | 1 | 14,670,260 | 1 | ||||||||||||||||||||||||
Payables to related parties (Note 32) |
1,128,121 | | 1,491,490 | | 1,290,677 | | 1,688,456 | | ||||||||||||||||||||||||
Salary and bonus payable |
10,428,126 | 1 | 10,573,922 | 1 | 9,505,689 | 1 | 8,330,956 | 1 | ||||||||||||||||||||||||
Accrued compensation/profit sharing to employees and bonus to directors and supervisors (Notes 22 and 29) |
16,105,423 | 1 | 18,052,820 | 1 | 12,959,725 | 1 | 12,738,801 | 1 | ||||||||||||||||||||||||
Payables to contractors and equipment suppliers |
34,338,079 | 2 | 26,980,408 | 2 | 28,683,936 | 2 | 89,810,160 | 7 | ||||||||||||||||||||||||
Income tax payable (Note 4) |
24,464,158 | 2 | 28,616,574 | 2 | 19,412,953 | 1 | 22,563,286 | 2 | ||||||||||||||||||||||||
Provisions (Note 19) |
9,898,270 | 1 | 10,445,452 | 1 | 7,677,524 | 1 | 7,603,781 | 1 | ||||||||||||||||||||||||
Liabilities directly associated with noncurrent assets held for sale (Note 30) |
| | 219,043 | | | | | | ||||||||||||||||||||||||
Long-term liabilities - current portion (Note 20) |
23,515,931 | 1 | | | | | | | ||||||||||||||||||||||||
Accrued expenses and other current liabilities (Note 21) |
30,010,029 | 2 | 29,746,011 | 2 | 25,954,613 | 2 | 16,693,484 | 1 | ||||||||||||||||||||||||
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Total current liabilities |
201,689,370 | 13 | 201,013,629 | 14 | 172,248,167 | 13 | 189,777,934 | 15 | ||||||||||||||||||||||||
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NONCURRENT LIABILITIES |
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Hedging derivative financial liabilities (Note 10) |
| | | | 5,821 | | 5,481,616 | | ||||||||||||||||||||||||
Bonds payable (Note 20) |
191,970,754 | 12 | 213,673,818 | 14 | 211,796,805 | 15 | 210,767,625 | 17 | ||||||||||||||||||||||||
Long-term bank loans |
35,000 | | 40,000 | | 40,000 | | 40,000 | | ||||||||||||||||||||||||
Deferred income tax liabilities (Note 4) |
153,932 | | 199,750 | | | | | | ||||||||||||||||||||||||
Obligations under finance leases (Note 15) |
| | 802,108 | | 773,743 | | 776,230 | | ||||||||||||||||||||||||
Net defined benefit liability (Note 4) |
6,611,531 | | 6,567,782 | | 6,838,838 | 1 | 6,801,663 | 1 | ||||||||||||||||||||||||
Guarantee deposits (Note 21) |
23,208,034 | 2 | 25,538,475 | 2 | 160,419 | | 151,660 | | ||||||||||||||||||||||||
Others (Note 19) |
1,555,245 | | 885,192 | | 798,772 | | 694,901 | | ||||||||||||||||||||||||
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Total noncurrent liabilities |
223,534,496 | 14 | 247,707,125 | 16 | 220,414,398 | 16 | 224,713,695 | 18 | ||||||||||||||||||||||||
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Total liabilities |
425,223,866 | 27 | 448,720,754 | 30 | 392,662,565 | 29 | 414,491,629 | 33 | ||||||||||||||||||||||||
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EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT |
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Capital stock (Note 22) |
259,303,805 | 16 | 259,296,624 | 17 | 259,293,750 | 19 | 259,286,171 | 21 | ||||||||||||||||||||||||
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Capital surplus (Note 22) |
56,298,728 | 4 | 55,989,922 | 4 | 55,944,799 | 4 | 55,858,626 | 4 | ||||||||||||||||||||||||
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Retained earnings (Note 22) |
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Appropriated as legal capital reserve |
177,640,561 | 11 | 151,250,682 | 10 | 151,250,682 | 12 | 132,436,003 | 11 | ||||||||||||||||||||||||
Appropriated as special capital reserve |
| | | | | | 2,785,741 | | ||||||||||||||||||||||||
Unappropriated earnings |
644,577,881 | 41 | 553,914,592 | 37 | 473,751,730 | 35 | 383,670,168 | 30 | ||||||||||||||||||||||||
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822,218,442 | 52 | 705,165,274 | 47 | 625,002,412 | 47 | 518,891,912 | 41 | |||||||||||||||||||||||||
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Others (Note 22) |
13,138,191 | 1 | 25,749,291 | 2 | 16,865,491 | 1 | 14,170,306 | 1 | ||||||||||||||||||||||||
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Equity attributable to shareholders of the parent |
1,150,959,166 | 73 | 1,046,201,111 | 70 | 957,106,452 | 71 | 848,207,015 | 67 | ||||||||||||||||||||||||
NONCONTROLLING INTERESTS (Note 22) |
35,778 | | 127,221 | | 138,533 | | 266,709 | | ||||||||||||||||||||||||
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Total equity |
1,150,994,944 | 73 | 1,046,328,332 | 70 | 957,244,985 | 71 | 848,473,724 | 67 | ||||||||||||||||||||||||
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TOTAL |
$ | 1,576,218,810 | 100 | $ | 1,495,049,086 | 100 | $ | 1,349,907,550 | 100 | $ | 1,262,965,353 | 100 | ||||||||||||||||||||
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The accompanying notes are an integral part of the consolidated financial statements.
- 2 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
(Reviewed, Not Audited)
For the Three Months Ended September 30 |
For the Nine Months Ended September 30 |
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2015 (Note 3) |
2014 (Adjusted) (Note 3) |
2015 (Note 3) |
2014 (Adjusted) (Note 3) |
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Amount | % | Amount | % | Amount | % | Amount | % | |||||||||||||||||||||||||
NET REVENUE (Notes 24, 32 and 37) |
$ | 212,504,909 | 100 | $ | 209,049,734 | 100 | $ | 639,978,805 | 100 | $ | 540,285,390 | 100 | ||||||||||||||||||||
COST OF REVENUE (Notes 12, 29 and 32) |
110,188,424 | 52 | 103,471,256 | 49 | 328,509,564 | 51 | 273,136,725 | 51 | ||||||||||||||||||||||||
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GROSS PROFIT BEFORE REALIZED (UNREALIZED) GROSS PROFIT ON SALES TO ASSOCIATES |
102,316,485 | 48 | 105,578,478 | 51 | 311,469,241 | 49 | 267,148,665 | 49 | ||||||||||||||||||||||||
REALIZED (UNREALIZED) GROSS PROFIT ON SALES TO ASSOCIATES |
19,271 | | (3,206 | ) | | 735 | | 13,442 | | |||||||||||||||||||||||
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GROSS PROFIT |
102,335,756 | 48 | 105,575,272 | 51 | 311,469,976 | 49 | 267,162,107 | 49 | ||||||||||||||||||||||||
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OPERATING EXPENSES (Notes 29 and 32) |
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Research and development |
16,486,365 | 8 | 15,207,282 | 8 | 49,880,041 | 8 | 40,885,511 | 7 | ||||||||||||||||||||||||
General and administrative |
4,296,668 | 2 | 4,612,193 | 2 | 13,126,301 | 2 | 14,676,344 | 3 | ||||||||||||||||||||||||
Marketing |
1,377,131 | 1 | 1,323,259 | 1 | 4,247,546 | 1 | 3,710,936 | 1 | ||||||||||||||||||||||||
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Total operating expenses |
22,160,164 | 11 | 21,142,734 | 11 | 67,253,888 | 11 | 59,272,791 | 11 | ||||||||||||||||||||||||
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OTHER OPERATING INCOME AND EXPENSES, NET (Notes 15,16 and 29) |
(1,786,668 | ) | | (5,300 | ) | | (2,131,983 | ) | | (235,292 | ) | | ||||||||||||||||||||
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INCOME FROM OPERATIONS (Note 37) |
78,388,924 | 37 | 84,427,238 | 40 | 242,084,105 | 38 | 207,654,024 | 38 | ||||||||||||||||||||||||
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NON-OPERATING INCOME AND EXPENSES |
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Share of profits of associates and joint venture |
925,854 | | 1,036,725 | | 2,876,252 | | 3,040,159 | 1 | ||||||||||||||||||||||||
Other income |
1,066,001 | | 688,325 | | 3,492,533 | 1 | 2,618,607 | | ||||||||||||||||||||||||
Foreign exchange gain, net (Note 36) |
2,571,011 | 1 | 1,150,993 | 1 | 2,326,899 | | 759,385 | | ||||||||||||||||||||||||
Finance costs (Note 25) |
(792,941 | ) | | (816,054 | ) | | (2,370,284 | ) | | (2,414,084 | ) | | ||||||||||||||||||||
Other gains and losses (Note 26) |
1,235,770 | 1 | (1,110,583 | ) | | 21,375,777 | 3 | 1,109,450 | | |||||||||||||||||||||||
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Total non-operating income and expenses |
5,005,695 | 2 | 949,406 | 1 | 27,701,177 | 4 | 5,113,517 | 1 | ||||||||||||||||||||||||
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INCOME BEFORE INCOME TAX |
83,394,619 | 39 | 85,376,644 | 41 | 269,785,282 | 42 | 212,767,541 | 39 | ||||||||||||||||||||||||
INCOME TAX EXPENSE (Notes 4 and 27) |
8,077,319 | 4 | 9,076,017 | 4 | 36,071,170 | 5 | 28,969,205 | 5 | ||||||||||||||||||||||||
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NET INCOME |
75,317,300 | 35 | 76,300,627 | 37 | 233,714,112 | 37 | 183,798,336 | 34 | ||||||||||||||||||||||||
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OTHER COMPREHENSIVE INCOME (LOSS) (Notes 22 and 27) |
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Items that may be reclassified subsequently to profit or loss |
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Exchange differences arising on translation of foreign operations |
13,245,566 | 6 | 3,410,878 | 1 | 7,597,640 | 1 | 3,190,117 | 1 | ||||||||||||||||||||||||
Changes in fair value of available-for-sale financial assets |
(3,622,659 | ) | (1 | ) | 8,120 | | (20,455,403 | ) | (3 | ) | (438,481 | ) | | |||||||||||||||||||
Share of other comprehensive income (loss) of associates and joint venture |
(354,145 | ) | | (36,019 | ) | | 239,665 | | (42,040 | ) | | |||||||||||||||||||||
Income tax benefit (expense) related to components of other comprehensive income that may be reclassified subsequently |
15,553 | | (2,622 | ) | | (2,551 | ) | | (13,745 | ) | | |||||||||||||||||||||
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Other comprehensive income (loss) for the period, net of income tax |
9,284,315 | 5 | 3,380,357 | 1 | (12,620,649 | ) | (2 | ) | 2,695,851 | 1 | ||||||||||||||||||||||
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TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |
$ | 84,601,615 | 40 | $ | 79,680,984 | 38 | $ | 221,093,463 | 35 | $ | 186,494,187 | 35 | ||||||||||||||||||||
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|||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO: |
||||||||||||||||||||||||||||||||
Shareholders of the parent |
$ | 75,329,224 | 35 | $ | 76,331,255 | 37 | $ | 233,736,649 | 37 | $ | 183,896,351 | 34 | ||||||||||||||||||||
Noncontrolling interests |
(11,924 | ) | | (30,628 | ) | | (22,537 | ) | | (98,015 | ) | | ||||||||||||||||||||
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$ | 75,317,300 | 35 | $ | 76,300,627 | 37 | $ | 233,714,112 | 37 | $ | 183,798,336 | 34 | |||||||||||||||||||||
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|||||||||||||||||
TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: |
||||||||||||||||||||||||||||||||
Shareholders of the parent |
$ | 84,613,016 | 40 | $ | 79,711,149 | 38 | $ | 221,125,549 | 35 | $ | 186,591,536 | 35 | ||||||||||||||||||||
Noncontrolling interests |
(11,401 | ) | | (30,165 | ) | | (32,086 | ) | | (97,349 | ) | | ||||||||||||||||||||
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$ | 84,601,615 | 40 | $ | 79,680,984 | 38 | $ | 221,093,463 | 35 | $ | 186,494,187 | 35 | |||||||||||||||||||||
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|||||||||||||||||
For the Three Months Ended September 30 |
For the Nine Months Ended September 30 |
|||||||||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||||||||
Income Attributable to the Parent |
Income Attributable to the Parent |
Income Attributable to the Parent |
Income Attributable to Shareholders of the Parent |
|||||||||||||||||||||||||||||
EARNINGS PER SHARE (NT$, Note 28) |
||||||||||||||||||||||||||||||||
Basic earnings per share |
$ | 2.91 | $ | 2.94 | $ | 9.01 | $ | 7.09 | ||||||||||||||||||||||||
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Diluted earnings per share |
$ | 2.91 | $ | 2.94 | $ | 9.01 | $ | 7.09 | ||||||||||||||||||||||||
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The accompanying notes are an integral part of the consolidated financial statements.
- 3 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
(Reviewed, Not Audited)
Equity Attributable to Shareholders of the Parent | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Others | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Stock - Common Stock |
Retained Earnings | Foreign Currency |
Unrealized Gain/Loss from Available- |
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares (In Thousands) |
Amount | Capital Surplus | Legal Capital Reserve |
Special Capital Reserve |
Unappropriated Earnings |
Total | Translation Reserve |
for-sale Financial Assets |
Cash Flow Hedges Reserve |
Total | Total | Noncontrolling Interests |
Total Equity | |||||||||||||||||||||||||||||||||||||||||||
BALANCE, JANUARY 1, 2015 |
25,929,662 | $ | 259,296,624 | $ | 55,989,922 | $ | 151,250,682 | $ | | $ | 553,261,982 | $ | 704,512,664 | $ | 4,502,113 | $ | 21,247,483 | $ | (305 | ) | $ | 25,749,291 | $ | 1,045,548,501 | $ | 127,246 | $ | 1,045,675,747 | ||||||||||||||||||||||||||||
Effect of retrospective application |
| | | | | 652,610 | 652,610 | | | | | 652,610 | (25 | ) | 652,585 | |||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
ADJUSTED BALANCE, JANUARY 1, 2015 |
25,929,662 | 259,296,624 | 55,989,922 | 151,250,682 | | 553,914,592 | 705,165,274 | 4,502,113 | 21,247,483 | (305 | ) | 25,749,291 | 1,046,201,111 | 127,221 | 1,046,328,332 | |||||||||||||||||||||||||||||||||||||||||
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Appropriations of prior years earnings |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legal capital reserve |
| | | 26,389,879 | | (26,389,879 | ) | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||
Cash dividends to shareholders - NT$4.50 per share |
| | | | | (116,683,481 | ) | (116,683,481 | ) | | | | | (116,683,481 | ) | | (116,683,481 | ) | ||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
Total |
| | | 26,389,879 | | (143,073,360 | ) | (116,683,481 | ) | | | | | (116,683,481 | ) | | (116,683,481 | ) | ||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
Net income for the nine months ended September 30, 2015 |
| | | | | 233,736,649 | 233,736,649 | | | | | 233,736,649 | (22,537 | ) | 233,714,112 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income for the nine months ended September 30, 2015, net of income tax |
| | | | | | | 7,507,537 | (20,118,301 | ) | (336 | ) | (12,611,100 | ) | (12,611,100 | ) | (9,549 | ) | (12,620,649 | ) | ||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
Total comprehensive income for the nine months ended September 30, 2015 |
| | | | | 233,736,649 | 233,736,649 | 7,507,537 | (20,118,301 | ) | (336 | ) | (12,611,100 | ) | 221,125,549 | (32,086 | ) | 221,093,463 | ||||||||||||||||||||||||||||||||||||||
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Issuance of stock from exercise of employee stock options |
718 | 7,181 | 130,974 | | | | | | | | | 138,155 | | 138,155 | ||||||||||||||||||||||||||||||||||||||||||
Disposal of investments accounted for using equity method |
| | (26,537 | ) | | | | | | | | | (26,537 | ) | | (26,537 | ) | |||||||||||||||||||||||||||||||||||||||
Adjustments to share of changes in equities of associates and joint venture |
| | 230,222 | | | | | | | | | 230,222 | 149 | 230,371 | ||||||||||||||||||||||||||||||||||||||||||
From share of changes in equities of subsidiaries |
| | (25,853 | ) | | | | | | | | | (25,853 | ) | 25,853 | | ||||||||||||||||||||||||||||||||||||||||
Decrease in noncontrolling interests |
| | | | | | | | | | | | (42,719 | ) | (42,719 | ) | ||||||||||||||||||||||||||||||||||||||||
Effect of disposal of subsidiary |
| | | | | | | | | | | | (42,640 | ) | (42,640 | ) | ||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
BALANCE, September 30, 2015 |
25,930,380 | $ | 259,303,805 | $ | 56,298,728 | $ | 177,640,561 | $ | | $ | 644,577,881 | $ | 822,218,442 | $ | 12,009,650 | $ | 1,129,182 | $ | (641 | ) | $ | 13,138,191 | $ | 1,150,959,166 | $ | 35,778 | $ | 1,150,994,944 | ||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
BALANCE, JANUARY 1, 2014 |
25,928,617 | $ | 259,286,171 | $ | 55,858,626 | $ | 132,436,003 | $ | 2,785,741 | $ | 382,971,408 | $ | 518,193,152 | $ | (7,140,362 | ) | $ | 21,310,781 | $ | (113 | ) | $ | 14,170,306 | $ | 847,508,255 | $ | 266,830 | $ | 847,775,085 | |||||||||||||||||||||||||||
Effect of retrospective application |
| | | | | 698,760 | 698,760 | | | | | 698,760 | (121 | ) | 698,639 | |||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
ADJUSTED BALANCE, JANUARY 1, 2014 |
25,928,617 | 259,286,171 | 55,858,626 | 132,436,003 | 2,785,741 | 383,670,168 | 518,891,912 | (7,140,362 | ) | 21,310,781 | (113 | ) | 14,170,306 | 848,207,015 | 266,709 | 848,473,724 | ||||||||||||||||||||||||||||||||||||||||
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Appropriations of prior years earnings |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legal capital reserve |
| | | 18,814,679 | | (18,814,679 | ) | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||
Reversal of special capital reserve |
| | | | (2,785,741 | ) | 2,785,741 | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||
Cash dividends to shareholders -NT$3.00 per share |
| | | | | (77,785,851 | ) | (77,785,851 | ) | | | | | (77,785,851 | ) | | (77,785,851 | ) | ||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
Total |
| | | 18,814,679 | (2,785,741 | ) | (93,814,789 | ) | (77,785,851 | ) | | | | | (77,785,851 | ) | | (77,785,851 | ) | |||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
Net income for the nine months ended September 30, 2014 |
| | | | | 183,896,351 | 183,896,351 | | | | | 183,896,351 | (98,015 | ) | 183,798,336 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income for the nine months ended September 30, 2014, net of income tax |
| | | | | | | 3,150,962 | (455,751 | ) | (26 | ) | 2,695,185 | 2,695,185 | 666 | 2,695,851 | ||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
Total comprehensive income for the nine months ended September 30, 2014 |
| | | | | 183,896,351 | 183,896,351 | 3,150,962 | (455,751 | ) | (26 | ) | 2,695,185 | 186,591,536 | (97,349 | ) | 186,494,187 | |||||||||||||||||||||||||||||||||||||||
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Issuance of stock from exercise of employee stock options |
758 | 7,579 | 25,908 | | | | | | | | | 33,487 | | 33,487 | ||||||||||||||||||||||||||||||||||||||||||
Disposal of investments accounted for using equity method |
| | (2,273 | ) | | | | | | | | | (2,273 | ) | | (2,273 | ) | |||||||||||||||||||||||||||||||||||||||
Adjustments to share of changes in equities of associates and joint venture |
| | 90,327 | | | | | | | | | 90,327 | (45 | ) | 90,282 | |||||||||||||||||||||||||||||||||||||||||
From share of changes in equities of subsidiaries |
| | (27,789 | ) | | | | | | | | | (27,789 | ) | 27,789 | | ||||||||||||||||||||||||||||||||||||||||
Decrease in noncontrolling interests |
| | | | | | | | | | | | (58,571 | ) | (58,571 | ) | ||||||||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||
BALANCE, September 30, 2014 |
25,929,375 | $ | 259,293,750 | $ | 55,944,799 | $ | 151,250,682 | $ | | $ | 473,751,730 | $ | 625,002,412 | $ | (3,989,400 | ) | $ | 20,855,030 | $ | (139 | ) | $ | 16,865,491 | $ | 957,106,452 | $ | 138,533 | $ | 957,244,985 | |||||||||||||||||||||||||||
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The accompanying notes are an integral part of the consolidated financial statements.
- 4 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)
Nine Months Ended September 30 | ||||||||
2015 | 2014 (Adjusted) |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
Income before income tax |
$ | 269,785,282 | $ | 212,767,541 | ||||
Adjustments for: |
||||||||
Depreciation expense |
163,884,425 | 141,919,819 | ||||||
Amortization expense |
2,365,320 | 1,914,239 | ||||||
Finance costs |
2,370,284 | 2,414,084 | ||||||
Share of profits of associates and joint venture |
(2,876,252 | ) | (3,040,159 | ) | ||||
Interest income |
(2,875,858 | ) | (1,974,366 | ) | ||||
Loss (gain) on disposal of property, plant and equipment and intangible assets, net |
49,503 | (13,482 | ) | |||||
Impairment loss on property, plant and equipment |
2,317,424 | 239,864 | ||||||
Impairment loss on intangible assets |
58,514 | | ||||||
Impairment loss on financial assets |
132,015 | 176,920 | ||||||
Gain on disposal of available-for-sale financial assets, net |
(21,482,011 | ) | (260,908 | ) | ||||
Gain on disposal of financial assets carried at cost, net |
(82,128 | ) | (65,819 | ) | ||||
Gain on disposal of investments accounted for using equity method |
(2,305,323 | ) | (2,028,643 | ) | ||||
Loss from liquidation of subsidiaries |
| 90 | ||||||
Realized gross profit on sales to associates |
(735 | ) | (13,442 | ) | ||||
Loss on foreign exchange, net |
2,492,659 | 1,200,859 | ||||||
Dividend income |
(616,675 | ) | (644,241 | ) | ||||
Income from receipt of equity securities in settlement of trade receivables |
| (1,211 | ) | |||||
Loss from hedging instruments |
137,124 | 4,643,145 | ||||||
Loss (gain) arising from changes in fair value of available-for-sale financial assets in hedge effective portion |
298,751 | (4,163,555 | ) | |||||
Gain from lease agreement modification |
(428,388 | ) | | |||||
Changes in operating assets and liabilities: |
||||||||
Derivative financial instruments |
(213,641 | ) | 678,501 | |||||
Notes and accounts receivable, net |
15,780,788 | (42,349,537 | ) | |||||
Receivables from related parties |
(198,053 | ) | (241,059 | ) | ||||
Other receivables from related parties |
51,115 | 4,897 | ||||||
Inventories |
1,271,757 | (27,842,096 | ) | |||||
Other financial assets |
1,049,004 | (2,244,906 | ) | |||||
Other current assets |
925,665 | 137,831 | ||||||
Accounts payable |
(3,106,992 | ) | 5,726,261 | |||||
Payables to related parties |
(363,369 | ) | (397,779 | ) | ||||
Salary and bonus payable |
(145,796 | ) | 1,174,733 | |||||
Accrued compensation/profit sharing to employees and bonus to directors and supervisors |
(1,947,397 | ) | 220,924 | |||||
Accrued expenses and other current liabilities |
198,533 | 9,654,733 | ||||||
Provisions |
(540,919 | ) | 73,286 | |||||
Net defined benefit liability |
43,749 | 37,175 | ||||||
|
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|
(Continued)
- 5 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)
Nine Months Ended September 30 | ||||||||
2015 | 2014 (Adjusted) |
|||||||
Cash generated from operations |
$ | 426,028,375 | $ | 297,703,699 | ||||
Income taxes paid |
(40,821,123 | ) | (29,848,815 | ) | ||||
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|
|||||
Net cash generated by operating activities |
385,207,252 | 267,854,884 | ||||||
|
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|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
Acquisitions of: |
||||||||
Available-for-sale financial assets |
(3,628 | ) | (91,405 | ) | ||||
Financial assets carried at cost |
(87,970 | ) | (3,765 | ) | ||||
Held-to-maturity financial assets |
(19,301,111 | ) | (1,396,723 | ) | ||||
Property, plant and equipment |
(172,993,344 | ) | (236,115,030 | ) | ||||
Intangible assets |
(2,657,499 | ) | (2,268,872 | ) | ||||
Proceeds from disposal or redemption of: |
||||||||
Available-for-sale financial assets |
53,990,941 | 663,433 | ||||||
Held-to-maturity financial assets |
13,900,000 | 3,200,000 | ||||||
Financial assets carried at cost |
357,993 | 68,919 | ||||||
Investments accounted for using equity method |
3,962,848 | 3,471,883 | ||||||
Property, plant and equipment |
70,433 | 163,250 | ||||||
Cash received from other long-term receivables |
| 83,840 | ||||||
Costs from entering into hedging transactions |
(495,348 | ) | (520,856 | ) | ||||
Interest received |
2,606,926 | 1,874,722 | ||||||
Other dividends received |
616,675 | 644,241 | ||||||
Dividends received from investments accounted for using equity method |
3,407,126 | 3,223,090 | ||||||
Refundable deposits paid |
(267,994 | ) | (49,868 | ) | ||||
Refundable deposits refunded |
227,253 | 73,851 | ||||||
Net cash inflow from disposal of subsidiary (Note 30) |
601,047 | | ||||||
|
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|
|||||
Net cash used in investing activities |
(116,065,652 | ) | (226,979,290 | ) | ||||
|
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|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
Increase (decrease) in short-term loans |
(2,628,330 | ) | 20,610,319 | |||||
Interest paid |
(2,704,853 | ) | (2,743,513 | ) | ||||
Guarantee deposits received |
557,639 | 13,213 | ||||||
Guarantee deposits refunded |
(552,993 | ) | (4,981 | ) | ||||
Decrease in obligations under finance leases |
(29,098 | ) | (28,426 | ) | ||||
Proceeds from exercise of employee stock options |
33,891 | 33,487 | ||||||
Cash dividends |
(116,683,481 | ) | (77,785,851 | ) | ||||
Decrease in noncontrolling interests |
(42,719 | ) | (58,571 | ) | ||||
|
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|
|||||
Net cash used in financing activities |
(122,049,944 | ) | (59,964,323 | ) | ||||
|
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|
(Continued)
- 6 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)
Nine Months Ended September 30 | ||||||||
2015 | 2014 (Adjusted) |
|||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
$ | 10,109,235 | $ | 2,277,600 | ||||
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|
|||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
157,200,891 | (16,811,129 | ) | |||||
CASH AND CASH EQUIVALENTS INCLUDED IN NONCURRENT ASSETS HELD FOR SALE, BEGINNING OF PERIOD |
81,478 | | ||||||
CASH AND CASH EQUIVALENT ON CONSOLIDATED BALANCE SHEET, BEGINNING OF PERIOD |
358,449,029 | 242,695,447 | ||||||
|
|
|
|
|||||
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 515,731,398 | $ | 225,884,318 | ||||
|
|
|
|
The accompanying notes are an integral part of the consolidated financial statements. | (Concluded) |
- 7 -
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 and 2014
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
(Reviewed, Not Audited)
1. | GENERAL |
Taiwan Semiconductor Manufacturing Company Limited (TSMC), a Republic of China (R.O.C.) corporation, was incorporated on February 21, 1987. TSMC is a dedicated foundry in the semiconductor industry which engages mainly in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of masks.
On September 5, 1994, TSMCs shares were listed on the Taiwan Stock Exchange (TWSE). On October 8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form of American Depositary Shares (ADSs).
The address of its registered office and principal place of business is No. 8, Li-Hsin Rd. 6, Hsinchu Science Park, Taiwan. The principal operating activities and operating segments information of TSMC and its subsidiaries (collectively as the Company) are described in Notes 4 and 37.
2. | THE AUTHORIZATION OF FINANCIAL STATEMENTS |
The accompanying consolidated financial statements were reported to the Board of Directors and issued on November 10, 2015.
3. | APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS |
a. | Initial application of the amendments to the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and the 2013 version of the International Financial Reporting Standards, International Accounting Standards (IASs), Interpretations of International Financial Reporting Standards (IFRIC), and Interpretations of IASs (SIC) (collectively, IFRSs) endorsed by the Financial Supervisory Commission (FSC) (collectively, 2013 Taiwan-IFRSs version) |
According to Rule No. 1030029342 and Rule No. 1030010325 issued by the FSC, the 2013 Taiwan-IFRSs version and the related amendments to the Guidelines Governing the Preparation of Financial Reports by Securities Issuers should be adopted by the Company starting 2015.
The Company believes that as a result of the adoption of aforementioned 2013 Taiwan-IFRSs version and the related amendments to the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the following items have impacted the Companys consolidated financial statements.
1) | IFRS 12, Disclosure of Interests in Other Entities |
IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 for the Companys annual consolidated financial statements are more extensive than in the previous standards.
- 8 -
2) | IFRS 13, Fair Value Measurement |
IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. It defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The disclosure requirements in IFRS 13 are more extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments only are extended by IFRS 13 to cover all assets and liabilities within its scope.
The measurement requirements of IFRS 13 shall be applied prospectively from January 1, 2015. Please refer to Note 31 for related disclosures.
3) | Amendments to IAS 1, Presentation of Items of Other Comprehensive Income |
According to the amendments to IAS 1, the items of other comprehensive income will be grouped into two categories: (a) items that may not be reclassified subsequently to profit or loss; and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. In addition, income tax on items of other comprehensive income is also required to be allocated on the same basis.
The items that may not be reclassified subsequently to profit or loss include actuarial gains or losses from defined benefit plans, the share of actuarial gains or losses from defined benefit plans of associates and joint venture as well as the related income tax on such items. Items that may be reclassified subsequently to profit or loss include exchange differences arising on translation of foreign operations, changes in fair value of available-for-sale financial assets, cash flow hedges, the share of other comprehensive income of associates and joint venture as well as the related income tax on items of other comprehensive income.
4) | Amendments to IAS 19, Employee Benefits |
The amendments to IAS 19 require the Company to calculate a net interest amount by applying the discount rate to the net defined benefit liability or asset to replace the interest cost and expected return on planned assets used in current IAS 19. In addition, the amendments eliminate the accounting treatment of either corridor approach or the immediate recognition of actuarial gains and losses to profit or loss when it incurs, and instead, require to recognize all actuarial gains and losses immediately through other comprehensive income. The past service cost, on the other hand, will be expensed immediately when it incurs and no longer be amortized over the average period before vested on a straight-line basis. In addition, the amendments also require a broader disclosure in defined benefit plans.
The impact on the current period is summarized as follows:
Impact on Assets, Liabilities and Equity | September 30, 2015 |
|||
Increase in investments accounted for using equity method |
$ | 471 | ||
Increase in deferred income tax assets |
2,060 | |||
|
|
|||
Increase in assets |
$ | 2,531 | ||
|
|
|||
Increase in net defined benefit liability |
$ | 17,169 | ||
|
|
|||
Increase in liabilities |
$ | 17,169 | ||
|
|
|||
Decrease in retained earnings |
$ | (14,638 | ) | |
|
|
|||
Decrease in equity |
$ | (14,638 | ) | |
|
|
- 9 -
Impact on Total Comprehensive Income | Three Months September 30, |
Nine Months September 30, |
||||||
Increase in cost of revenue |
$ | (3,658 | ) | $ | (11,021 | ) | ||
Increase in operating expense |
(2,065 | ) | (6,148 | ) | ||||
Increase in share of profit of associate and joint venture |
144 | 471 | ||||||
Decrease in income tax expense |
686 | 2,060 | ||||||
|
|
|
|
|||||
Decrease in net income and other comprehensive income attributable to shareholders of the parent |
$ | (4,893 | ) | $ | (14,638 | ) | ||
|
|
|
|
The impact on the prior reporting periods is summarized as follows:
Impact on Assets, Liabilities and Equity | As Originally Stated |
Adjustments Arising from Initial Application |
Adjusted | |||||||||
December 31, 2014 |
||||||||||||
Noncurrent assets held for sale |
$ | 945,356 | $ | (1,148 | ) | $ | 944,208 | |||||
Investments accounted for using equity method |
28,251,002 | 4,735 | 28,255,737 | |||||||||
Deferred income tax assets |
5,227,128 | (88,346 | ) | 5,138,782 | ||||||||
|
|
|||||||||||
Total effect on assets |
$ | (84,759 | ) | |||||||||
|
|
|||||||||||
Liabilities directly associated with noncurrent assets held for sale |
220,191 | $ | (1,148 | ) | 219,043 | |||||||
Net defined benefit liability |
7,303,978 | (736,196 | ) | 6,567,782 | ||||||||
|
|
|||||||||||
Total effect on liabilities |
$ | (737,344 | ) | |||||||||
|
|
|||||||||||
Retained earnings |
704,512,664 | $ | 652,610 | 705,165,274 | ||||||||
Noncontrolling interests |
127,246 | (25 | ) | 127,221 | ||||||||
|
|
|||||||||||
Total effect on equity |
$ | 652,585 | ||||||||||
|
|
|||||||||||
September 30, 2014 |
||||||||||||
Investments accounted for using the equity method |
26,979,558 | $ | 5,607 | 26,985,165 | ||||||||
Deferred income tax assets |
5,033,530 | (92,897 | ) | 4,940,633 | ||||||||
|
|
|||||||||||
Total effect on assets |
$ | (87,290 | ) | |||||||||
|
|
|||||||||||
Net defined benefit liability |
7,612,862 | $ | (774,024 | ) | 6,838,838 | |||||||
|
|
|||||||||||
Total effect on liabilities |
$ | (774,024 | ) | |||||||||
|
|
|||||||||||
Retained earnings |
624,315,567 | $ | 686,845 | 625,002,412 | ||||||||
Noncontrolling interests |
138,644 | (111 | ) | 138,533 | ||||||||
|
|
|||||||||||
Total effect on equity |
$ | 686,734 | ||||||||||
|
|
(Continued)
- 10 -
Impact on Assets, Liabilities and Equity | As Originally Stated |
Adjustments Arising from Initial Application |
Adjusted | |||||||||
January 1, 2014 |
||||||||||||
Investments accounted for using the equity method |
$ | 28,316,260 | $ | 4,981 | $ | 28,321,241 | ||||||
Deferred income tax assets |
7,239,609 | (94,605 | ) | 7,145,004 | ||||||||
|
|
|||||||||||
Total effect on assets |
$ | (89,624 | ) | |||||||||
|
|
|||||||||||
Net defined benefit liability |
7,589,926 | $ | (788,263 | ) | 6,801,663 | |||||||
|
|
|||||||||||
Total effect on liabilities |
$ | (788,263) | ||||||||||
|
|
|||||||||||
Retained earnings |
518,193,152 | $ | 698,760 | 518,891,912 | ||||||||
Noncontrolling interests |
266,830 | (121 | ) | 266,709 | ||||||||
|
|
|||||||||||
Total effect on equity |
$ | 698,639 | ||||||||||
|
|
|||||||||||
(Concluded | ) | |||||||||||
Impact on Total Comprehensive Income | As Originally Stated |
Adjustments Arising from Initial Application |
Adjusted | |||||||||
Three months ended September 30, 2014 |
||||||||||||
Cost of revenue |
$ | (103,468,164 | ) | $ | (3,092 | ) | $ | (103,471,256 | ) | |||
Operating expense |
(21,141,080 | ) | (1,654 | ) | (21,142,734 | ) | ||||||
Share of the profit or loss of associates and joint ventures |
1,036,527 | 198 | 1,036,725 | |||||||||
Income tax expense |
(9,076,586 | ) | 569 | (9,076,017 | ) | |||||||
|
|
|||||||||||
Impact on net income for the period |
$ | (3,979 | ) | |||||||||
|
|
|||||||||||
Impact on net income attributable to: |
||||||||||||
Shareholders of the parent |
$ | 76,335,237 | $ | (3,982 | ) | $ | 76,331,255 | |||||
Noncontrolling interests |
(30,631 | ) | 3 | (30,628 | ) | |||||||
|
|
|
|
|
|
|||||||
$ | 76,304,606 | $ | (3,979 | ) | $ | 76,300,627 | ||||||
|
|
|
|
|
|
|||||||
Impact on total comprehensive income attributable to: |
||||||||||||
Shareholders of the parent |
$ | 79,715,131 | $ | (3,982 | ) | $ | 79,711,149 | |||||
Noncontrolling interests |
(30,168 | ) | 3 | (30,165 | ) | |||||||
|
|
|
|
|
|
|||||||
$ | 79,684,963 | $ | (3,979 | ) | $ | 79,680,984 | ||||||
|
|
|
|
|
|
(Continued)
- 11 -
Impact on Total Comprehensive Income | As Originally Stated |
Adjustments Arising from Initial Application |
Adjusted | |||||||||
Nine months ended September 30, 2014 |
||||||||||||
Cost of revenue |
$ | (273,127,447 | ) | $ | (9,278 | ) | $ | (273,136,725 | ) | |||
Operating expense |
(59,267,830 | ) | (4,961 | ) | (59,272,791 | ) | ||||||
Share of the profit or loss of associates and joint ventures |
3,039,533 | 626 | 3,040,159 | |||||||||
Income tax expense |
(28,970,913 | ) | 1,708 | (28,969,205 | ) | |||||||
|
|
|||||||||||
Impact on net income for the period |
$ | (11,905 | ) | |||||||||
|
|
|||||||||||
Impact on net income attributable to: |
||||||||||||
Shareholders of the parent |
$ | 183,908,266 | $ | (11,915 | ) | $ | 183,896,351 | |||||
Noncontrolling interests |
(98,025 | ) | 10 | (98,015 | ) | |||||||
|
|
|
|
|
|
|||||||
$ | 183,810,241 | $ | (11,905 | ) | $ | 183,798,336 | ||||||
|
|
|
|
|
|
|||||||
Impact on total comprehensive income attributable to: |
||||||||||||
Shareholders of the parent |
$ | 186,603,451 | $ | (11,915 | ) | $ | 186,591,536 | |||||
Noncontrolling interests |
(97,359 | ) | 10 | (97,349 | ) | |||||||
|
|
|
|
|
|
|||||||
$ | 186,506,092 | $ | (11,905 | ) | $ | 186,494,187 | ||||||
|
|
|
|
|
|
(Concluded)
b. | The IFRSs issued by IASB but not endorsed by FSC |
The Company has not applied the following IFRSs issued by the IASB but not endorsed by the FSC. As of the date that the consolidated financial statements were issued, the initial adoption to the following standards and interpretations is still subject to the effective date to be published by the FSC.
New, Revised or Amended Standards and Interpretations |
Effective Date Issued by IASB (Note 1) | |
Annual Improvements to IFRSs 2010 - 2012 Cycle |
July 1, 2014 or transactions on or after July 1, 2014 | |
Annual Improvements to IFRSs 2011 - 2013 Cycle |
July 1, 2014 | |
Annual Improvements to IFRSs 2012 - 2014 Cycle |
January 1, 2016 (Note 2) | |
IFRS 9 Financial Instruments |
January 1, 2018 | |
Amendments to IFRS 9 and IFRS 7 Mandatory Effective Date of IFRS 9 and Transition Disclosure |
January 1, 2018 | |
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture |
Prospectively applicable to transactions beginning on or after January 1, 2016 | |
Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception |
January 1, 2016 | |
Amendment to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations |
January 1, 2016 |
(Continued)
- 12 -
New, Revised or Amended Standards and Interpretations |
Effective Date Issued by IASB (Note 1) | |
IFRS 15 Revenue from Contracts with Customers |
January 1, 2018 | |
Amendment to IAS 1 Disclosure Initiative |
January 1, 2016 | |
Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortization |
January 1, 2016 | |
Amendment to IAS 19 Defined Benefit Plans: Employee Contributions |
July 1, 2014 | |
Amendment to IAS 27 Equity Method in Separate Financial Statements |
January 1, 2016 | |
Amendment to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets |
January 1, 2014 | |
Amendment to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting |
January 1, 2014 |
(Concluded)
Note 1: | The aforementioned new, revised or amended standards or interpretations are effective after fiscal year beginning on or after the effective dates, unless specified otherwise. |
Note 2: | The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that occur in annual periods beginning on or after January 1, 2016; the remaining amendments are effective for annual periods beginning on or after January 1, 2016. |
Except for the following, the initial application of the above new standards and interpretations has not had any material impact on the Companys accounting policies:
1) | IFRS 9, Financial Instruments |
All recognized financial assets currently in the scope of IAS 39, Financial Instruments: Recognition and Measurement, will be subsequently measured at either the amortized cost or the fair value. The classification and measurement requirements in IFRS 9 are stated as follows:
For the debt instruments invested by the Company, if the contractual cash flows that are solely for payments of principal and interest on the principal amount outstanding, the classification and measurement requirements are stated as follows:
a) | If the objective of the Companys business model is to hold the financial asset to collect the contractual cash flows, such assets are measured at the amortized cost. Interest revenue should be recognized in profit or loss by using the effective interest method, continuously assessed for impairment and the impairment loss or reversal of impairment loss should be recognized in profit and loss. |
b) | If the objective of the Companys business model is to hold the financial asset both to collect the contractual cash flows and to sell the financial assets, such assets are measured at fair value through other comprehensive income and are continuously assessed for impairment. Interest revenue should be recognized in profit or loss by using the effective interest method. A gain or loss on a financial asset measured at fair value through other comprehensive income should be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When such financial asset is derecognized or reclassified, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss. |
The other financial assets which do not meet the aforementioned criteria should be measured at the fair value through profit or loss. However, the Company may irrevocably designate an investment in equity instruments that is not held for trading as measured at fair value through other comprehensive income. All relevant gains and losses shall be recognized in other comprehensive income, except for dividends which are recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative gain or loss previously recognized in other comprehensive income cannot be reclassified from equity to profit or loss.
- 13 -
IFRS 9 adds a new expected loss impairment model to measure the impairment of financial assets. A loss allowance for expected credit losses should be recognized on financial assets measured at amortized cost and financial assets mandatorily measured at fair value through other comprehensive income. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company should measure the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. If the credit risk on a financial instrument has increased significantly since initial recognition and is not deemed to be a low credit risk, the Company should measure the loss allowance for that financial instrument at an amount equal to the lifetime expected credit losses. The Company should always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables.
The main change in IFRS 9 is the increase of the eligibility of hedge accounting. It allows reporters to reflect risk management activities in the financial statements more closely as it provides more opportunities to apply hedge accounting. A fundamental difference to IAS 39 is that IFRS 9 (a) increases the scope of hedged items eligible for hedge accounting. For example, the risk components of non-financial items may be designated as hedging accounting; (b) revises a new way to account for the gain or loss recognition arising from hedging derivative financial instruments, which results in a less volatility in profit or loss; and (c) is necessary for there to be an economic relationship between the hedged item and hedging instrument instead of performing the retrospective hedge effectiveness testing.
2) | IFRS 15, Revenue from Contracts with Customers |
IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and will supersede IAS 18, Revenue, IAS 11, Construction Contracts, and a number of revenue-related interpretations.
When applying IFRS 15, the Company shall recognize revenue by applying the following steps:
| Identify the contract with the customer; |
| Identify the performance obligations in the contract; |
| Determine the transaction price; |
| Allocate the transaction price to the performance obligations in the contracts; and |
| Recognize revenue when the entity satisfies a performance obligation. |
When IFRS 15 is effective, the Company may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this Standard recognized at the date of initial application.
3) | Amendments to IAS 36, Recoverable Amount Disclosures for Non-Financial Assets |
The amendments to IAS 36 clarify that the Company is only required to disclose the recoverable amount in the period of impairment accrual or reversal. Moreover, if the recoverable amount of impaired assets is based on fair value less costs of disposal, the Company should also disclose the discount rate used. The Company expects the aforementioned amendments will result in a broader disclosure of recoverable amount for non-financial assets.
Except for the aforementioned impact, as of the date that the accompanying consolidated financial statements were issued, the Company continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the other standards or interpretations. The related impact will be disclosed when the Company completes the evaluation.
- 14 -
4. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Except for the following, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2014.
For the convenience of readers, the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the R.O.C. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language consolidated financial statements shall prevail.
Statement of Compliance
The accompanying consolidated financial statements have been prepared in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and IAS 34, Interim Financial Reporting, endorsed by the FSC. The consolidated financial statements do not present all the disclosures required for a complete set of annual consolidated financial statements prepared under Taiwan-IFRSs.
Basis of Consolidation
The basis for the consolidated financial statements
The basis for the consolidated financial statements applied in these consolidated financial statements is consistent with those applied in the consolidated financial statements for the year ended December 31, 2014.
The subsidiaries in the consolidated financial statements
The detail information of the subsidiaries at the end of reporting period was as follows:
Establishment and Operating Location |
Percentage of Ownership | |||||||||||||||||||||
Name of Investor | Name of Investee | Main Businesses and Products |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
Note | ||||||||||||||||
TSMC |
TSMC North America |
Selling and marketing of integrated circuits and semiconductor devices |
San Jose, California, U.S.A. | 100 | % | 100 | % | 100 | % | | ||||||||||||
TSMC Japan Limited (TSMC Japan) |
Marketing activities |
Yokohama, Japan | 100 | % | 100 | % | 100 | % | a | ) | ||||||||||||
TSMC Partners, Ltd. (TSMC Partners) |
Investing in companies involved in the design, manufacture, and other related business in the semiconductor industry |
Tortola, British Virgin Islands | 100 | % | 100 | % | 100 | % | a | ) | ||||||||||||
TSMC Korea Limited (TSMC Korea) |
Customer service and technical supporting activities |
Seoul, Korea | 100 | % | 100 | % | 100 | % | a | ) | ||||||||||||
TSMC Europe B.V. (TSMC Europe) |
Marketing and engineering supporting activities |
Amsterdam, the Netherlands | 100 | % | 100 | % | 100 | % | a | ) | ||||||||||||
TSMC Global, Ltd. (TSMC Global) |
Investment activities |
Tortola, British Virgin Islands | 100 | % | 100 | % | 100 | % | | |||||||||||||
TSMC China Company Limited (TSMC China) |
Manufacturing and selling of integrated circuits at the order of and pursuant to product design specifications provided by customers |
Shanghai, China | 100 | % | 100 | % | 100 | % | | |||||||||||||
VentureTech Alliance Fund III, L.P. (VTAF III) |
Investing in new start-up technology companies |
Cayman Islands | 98 | % | 98 | % | 98 | % | a | ) | ||||||||||||
VentureTech Alliance Fund II, L.P. (VTAF II) |
Investing in new start-up technology companies |
Cayman Islands | 98 | % | 98 | % | 98 | % | a | ) | ||||||||||||
Emerging Alliance Fund, L.P. (Emerging Alliance) |
Investing in new start-up technology companies |
Cayman Islands | 99.5 | % | 99.5 | % | 99.5 | % | a | ) | ||||||||||||
TSMC Solid State Lighting Ltd. (TSMC SSL) |
Engaged in researching, developing, designing, manufacturing and selling solid state lighting devices and related applications products and systems |
Hsin-Chu, Taiwan | | 92 | % | 92 | % | b | ) |
(Continued)
- 15 -
Establishment and Operating Location |
Percentage of Ownership | |||||||||||||||||||
Name of Investor | Name of Investee | Main Businesses and Products | September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
Note | ||||||||||||||
TSMC |
TSMC Solar Ltd. (TSMC Solar) |
Engaged in researching, developing, designing, manufacturing and selling renewable energy and saving related technologies and products |
Tai-Chung, Taiwan | 99 | % | 99 | % | 99 | % | TSMC and TSMC GN aggregately have a 99.8% controlling interest of in TSMC Solar. c) | ||||||||||
TSMC Guang Neng Investment, Ltd. (TSMC GN) |
Investment activities |
Taipei, Taiwan | 100 | % | 100 | % | 100 | % | a) | |||||||||||
TSMC Partners |
TSMC Design Technology Canada Inc. (TSMC Canada) |
Engineering support activities |
Ontario, Canada | 100 | % | 100 | % | 100 | % | a) | ||||||||||
TSMC Technology, Inc. (TSMC Technology) |
Engineering support activities |
Delaware, U.S.A. | 100 | % | 100 | % | 100 | % | a) | |||||||||||
TSMC Development, Inc. (TSMC Development) |
Investment activities |
Delaware, U.S.A. | 100 | % | 100 | % | 100 | % | | |||||||||||
InveStar Semiconductor Development Fund, Inc. (ISDF) |
Investing in new start-up technology companies |
Cayman Islands | 97 | % | 97 | % | 97 | % | a) | |||||||||||
InveStar Semiconductor Development Fund, Inc. (II) LDC. (ISDF II) |
Investing in new start-up technology companies |
Cayman Islands | 97 | % | 97 | % | 97 | % | a) | |||||||||||
TSMC Development |
WaferTech, LLC (WaferTech) |
Manufacturing, selling, testing and computer-aided designing of integrated circuits and other semiconductor devices |
Washington, U.S.A. | 100 | % | 100 | % | 100 | % | | ||||||||||
VTAF III |
Mutual-Pak Technology Co., Ltd. (Mutual-Pak) |
Manufacturing and selling of electronic parts and researching, developing, and testing of RFID |
New Taipei, Taiwan | 58 | % | 58 | % | 58 | % | a) | ||||||||||
Growth Fund Limited (Growth Fund) |
Investing in new start-up technology companies |
Cayman Islands | 100 | % | 100 | % | 100 | % | a) | |||||||||||
VTAF III, VTAF II and Emerging Alliance |
VentureTech Alliance Holdings, LLC (VTA Holdings) |
Investing in new start-up technology companies |
Delaware, U.S.A. | 100 | % | 100 | % | 100 | % | a) | ||||||||||
TSMC Solar |
TSMC Solar North America, Inc. (TSMC Solar NA) |
Selling and marketing of solar related products |
Delaware, U.S.A. | 100 | % | 100 | % | 100 | % | a), c) | ||||||||||
TSMC Solar Europe B.V. (TSMC Solar Europe) |
Investing in solar related business |
Amsterdam, the Netherlands | | 100 | % | 100 | % | a), d) | ||||||||||||
TSMC Solar Europe GmbH |
Selling of solar related products and providing customer service |
Hamburg, Germany | 100 | % | | | a), c), d) | |||||||||||||
TSMC Solar Europe |
TSMC Solar Europe GmbH |
Selling of solar related products and providing customer service |
Hamburg, Germany | | 100 | % | 100 | % | a), d) |
(Concluded)
Note a: | This is an immaterial subsidiary for which the consolidated financial statements are not reviewed by the Companys independent accountants. |
Note b: | TSMC and TSMC GN aggregately had a controlling interest of 94% in TSMC SSL as of December 31, 2014 and September 30, 2014. TSMC and TSMC GN completed the disposal of TSMC SSL in February 2015. Please refer to Note 30. |
Note c: | In August 2015, TSMC Solar ceased its manufacturing operations. In November 2015, the Board of Directors of TSMC approved that TSMC Solar will be incorporated into TSMC. |
Note d: | To simplify overseas investments structure, in the second quarter of 2014, the Board of Directors of TSMC Solar approved to file for the liquidation of TSMC Solar Europe. The liquidation procedure was completed in the second quarter of 2015 and TSMC Solar Europe GmbH, the 100% owned subsidiary of TSMC Solar Europe, is held directly by TSMC Solar. |
Retirement Benefits
Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the Projected Unit Credit Method. Service cost (including current service cost), and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.
Net defined benefit liability (asset) represents the actual deficit (surplus) in the Companys defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.
Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year.
- 16 -
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax. The interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the pre-tax income of the interim period.
5. | CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY |
The same critical accounting judgments and key sources of estimates and uncertainty have been followed in these consolidated financial statements as were applied in the preparation of the Companys consolidated financial statements for the year ended December 31, 2014.
6. | CASH AND CASH EQUIVALENTS |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Cash and deposits in banks |
$ | 510,693,940 | $ | 352,761,240 | $ | 222,381,793 | ||||||
Repurchase agreements collateralized by corporate bonds |
3,961,517 | 3,920,562 | 2,680,979 | |||||||||
Repurchase agreements collateralized by government bonds |
576,463 | 158,722 | 321,802 | |||||||||
Repurchase agreements collateralized by short-term commercial paper |
499,478 | 449,180 | | |||||||||
Commercial paper |
| 1,159,325 | 499,744 | |||||||||
|
|
|
|
|
|
|||||||
$ | 515,731,398 | $ | 358,449,029 | $ | 225,884,318 | |||||||
|
|
|
|
|
|
Deposits in banks consisted of highly liquid time deposits that were readily convertible to known amounts of cash and were subject to an insignificant risk of changes in value.
7. | FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Derivative financial assets |
||||||||||||
Forward exchange contracts |
$ | 73,638 | $ | 73,117 | $ | 31,324 | ||||||
Cross currency swap contracts |
25,197 | 118,928 | 37,840 | |||||||||
|
|
|
|
|
|
|||||||
$ | 98,835 | $ | 192,045 | $ | 69,164 | |||||||
|
|
|
|
|
|
|||||||
Derivative financial liabilities |
||||||||||||
Forward exchange contracts |
$ | 179,363 | $ | 126,607 | $ | 77,315 | ||||||
Cross currency swap contracts |
| 359,607 | 613,747 | |||||||||
|
|
|
|
|
|
|||||||
$ | 179,363 | $ | 486,214 | $ | 691,062 | |||||||
|
|
|
|
|
|
- 17 -
The Company entered into derivative contracts to manage exposures due to fluctuations of foreign exchange rates. The derivative contracts entered into by the Company did not meet the criteria for hedge accounting. Therefore, the Company did not apply hedge accounting treatment for derivative contracts.
Outstanding forward exchange contracts consisted of the following:
Contract Amount | ||||
Maturity Date | (In Thousands) | |||
September 30, 2015 |
||||
Sell EUR/Buy US$ |
October 2015 | EUR3,400/US$3,810 | ||
Sell NT$/Buy US$ |
October 2015 | NT$1,828,624/US$56,000 | ||
Sell US$/Buy EUR |
October 2015 | US$25,692/EUR23,000 | ||
Sell US$/Buy NT$ |
October 2015 to November 2015 | US$845,000/NT$27,667,518 | ||
Sell US$/Buy RMB |
October 2015 to November 2015 | US$188,000/RMB1,199,447 | ||
December 31, 2014 |
||||
Sell EUR/Buy US$ |
January 2015 | EUR4,550/US$5,561 | ||
Sell NT$/Buy US$ |
January 2015 | NT$1,632,401/US$51,900 | ||
Sell US$/Buy EUR |
January 2015 | US$29,450/EUR24,100 | ||
Sell US$/Buy JPY |
January 2015 | US$226,003/JPY27,150,983 | ||
Sell US$/Buy NT$ |
January 2015 | US$170,000/NT$5,276,500 | ||
Sell US$/Buy RMB |
January 2015 | US$181,000/RMB1,129,243 | ||
September 30, 2014 |
||||
Sell EUR/Buy US$ |
October 2014 | EUR3,580/US$4,568 | ||
Sell NT$/Buy JPY |
October 2014 | NT$55,560/JPY200,000 | ||
Sell NT$/Buy US$ |
October 2014 | NT$1,613,044/US$53,600 | ||
Sell US$/Buy EUR |
October 2014 | US$20,060/EUR15,800 | ||
Sell US$/Buy JPY |
October 2014 | US$291,612/JPY31,673,300 | ||
Sell US$/Buy NT$ |
October 2014 | US$90,000/NT$2,713,420 | ||
Sell US$/Buy RMB |
October 2014 to November 2014 | US$152,000/RMB936,402 |
Outstanding cross currency swap contracts consisted of the following:
Maturity Date | Contract Amount (In Thousands) |
Range of Interest Rates |
Range of Interest Rates | |||
September 30, 2015 |
||||||
October 2015 |
NT$3,216,025/US$98,500 | | 0.18% | |||
December 31, 2014 |
||||||
January 2015 |
NT$2,511,905/US$80,080 | | 0.05%-0.13% | |||
January 2015 |
US$1,460,000/NT$45,974,755 | 0.16%-1.92% | | |||
September 30, 2014 |
||||||
October 2014 |
NT$2,947,561/US$98,080 | | 0.20%-0.33% | |||
October 2014 to November 2014 |
US$1,800,000/NT$54,200,290 | 0.19%-1.91% | |
- 18 -
8. | AVAILABLE-FOR-SALE FINANCIAL ASSETS |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Publicly traded stocks |
$ | 1,597,196 | $ | 73,797,085 | $ | 64,390,960 | ||||||
Money market funds |
406 | 391 | 377 | |||||||||
|
|
|
|
|
|
|||||||
$ | 1,597,602 | $ | 73,797,476 | $ | 64,391,337 | |||||||
|
|
|
|
|
|
In the second quarter of 2014, the Company reclassified some publicly traded stocks from non-current asset to current asset since the lock-up period ended within a year.
9. | HELD-TO-MATURITY FINANCIAL ASSETS |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Corporate bonds/Bank debentures |
$ | 7,539,404 | $ | | $ | | ||||||
Commercial paper |
2,393,956 | 4,485,593 | | |||||||||
|
|
|
|
|
|
|||||||
$ | 9,933,360 | $ | 4,485,593 | $ | | |||||||
|
|
|
|
|
|
|||||||
Current portion |
$ | 7,362,003 | $ | 4,485,593 | $ | | ||||||
Noncurrent portion |
2,571,357 | | | |||||||||
|
|
|
|
|
|
|||||||
$ | 9,933,360 | $ | 4,485,593 | $ | | |||||||
|
|
|
|
|
|
10. | HEDGING DERIVATIVE FINANCIAL INSTRUMENTS |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Financial assets- current |
||||||||||||
Fair value hedges |
||||||||||||
Stock forward contracts |
$ | 96,153 | $ | | $ | | ||||||
|
|
|
|
|
|
|||||||
Financial liabilities- current |
||||||||||||
Fair value hedges |
||||||||||||
Stock forward contracts |
$ | | $ | 16,364,241 | $ | 9,769,897 | ||||||
|
|
|
|
|
|
|||||||
Financial liabilities- noncurrent |
||||||||||||
Fair value hedges |
||||||||||||
Stock forward contracts |
$ | | $ | | $ | 5,821 | ||||||
|
|
|
|
|
|
The Companys investments in publicly traded stocks are exposed to the risk of market price fluctuations. Accordingly, the Company entered into stock forward contracts to sell shares at a contracted price determined by specific percentage of the spot price on the trade date in a specific future period in order to hedge the fair value risk caused by changes in equity prices.
- 19 -
The outstanding stock forward contracts consisted of the following:
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Contract amount (US$ in thousands) |
$ | 814,135 | $ | 56,172,570 | $ | 53,962,363 | ||||||
(US$ | 24,741 | ) | (US$ | 1,771,000 | ) | (US$ | 1,771,000 | ) |
11. | NOTES AND ACCOUNTS RECEIVABLE, NET |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Notes and accounts receivable |
$ | 97,115,658 | $ | 115,221,473 | $ | 114,486,051 | ||||||
Allowance for doubtful receivables |
(504,026 | ) | (486,730 | ) | (486,618 | ) | ||||||
|
|
|
|
|
|
|||||||
Notes and accounts receivable, net |
$ | 96,611,632 | $ | 114,734,743 | $ | 113,999,433 | ||||||
|
|
|
|
|
|
In principle, the payment term granted to customers is due 30 days from the invoice date or 30 days from the end of the month of when the invoice is issued. The allowance for doubtful receivables is assessed by reference to the collectability of receivables by performing the account aging analysis, historical experience and current financial condition of customers.
Except for those impaired, for the rest of the notes and accounts receivable, the account aging analysis at the end of the reporting period is summarized in the following table. Notes and accounts receivable include amounts that are past due but for which the Company has not recognized a specific allowance for doubtful receivables after the assessment since there has not been a significant change in the credit quality of its customers and the amounts are still considered recoverable.
Aging analysis of notes and accounts receivable, net
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Neither past due nor impaired |
$ | 87,742,721 | $ | 102,692,871 | $ | 103,429,104 | ||||||
Past due but not impaired |
||||||||||||
Past due within 30 days |
8,585,713 | 12,041,872 | 10,570,329 | |||||||||
Past due 31-60 days |
283,198 | | | |||||||||
|
|
|
|
|
|
|||||||
$ | 96,611,632 | $ | 114,734,743 | $ | 113,999,433 | |||||||
|
|
|
|
|
|
Movements of the allowance for doubtful receivables
Individually Assessed for Impairment |
Collectively Assessed for Impairment |
Total | ||||||||||
Balance at January 1, 2015 |
$ | 8,093 | $ | 478,637 | $ | 486,730 | ||||||
Provision |
28,593 | 20,670 | 49,263 | |||||||||
Reversal |
| (32,832 | ) | (32,832 | ) | |||||||
Effect of exchange rate changes |
775 | 90 | 865 | |||||||||
|
|
|
|
|
|
|||||||
Balance at September 30, 2015 |
$ | 37,461 | $ | 466,565 | $ | 504,026 | ||||||
|
|
|
|
|
|
(Continued)
- 20 -
Individually Assessed for Impairment |
Collectively Assessed for Impairment |
Total | ||||||||||
Balance at January 1, 2014 |
$ | 8,058 | $ | 478,530 | $ | 486,588 | ||||||
Provision |
| 22,071 | 22,071 | |||||||||
Reversal |
(284 | ) | (21,787 | ) | (22,071 | ) | ||||||
Effect of exchange rate changes |
| 30 | 30 | |||||||||
|
|
|
|
|
|
|||||||
Balance at September 30, 2014 |
$ | 7,774 | $ | 478,844 | $ | 486,618 | ||||||
|
|
|
|
|
|
(Concluded)
Aging analysis of accounts receivable that is individually determined as impaired
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Not past due |
$ | 1,136 | $ | | $ | | ||||||
Past due 1-30 days |
3,327 | | | |||||||||
Past due 31-60 days |
4,207 | | | |||||||||
Past due 61-120 days |
3,264 | | | |||||||||
Past due over 121 days |
25,527 | 8,093 | 7,774 | |||||||||
|
|
|
|
|
|
|||||||
$ | 37,461 | $ | 8,093 | $ | 7,774 | |||||||
|
|
|
|
|
|
12. | INVENTORIES |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Finished goods |
$ | 10,138,370 | $ | 9,972,024 | $ | 5,043,513 | ||||||
Work in process |
49,216,582 | 51,027,892 | 55,142,160 | |||||||||
Raw materials |
3,422,366 | 3,222,523 | 3,160,203 | |||||||||
Supplies and spare parts |
2,288,896 | 2,115,532 | 1,991,113 | |||||||||
|
|
|
|
|
|
|||||||
$ | 65,066,214 | $ | 66,337,971 | $ | 65,336,989 | |||||||
|
|
|
|
|
|
Write-down of inventories to net realizable value was included in the cost of revenue, which were as follows:
Three Months Ended September 30 |
Nine Months Ended September 30 |
|||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Inventory losses |
$ | 97,971 | $ | 691,557 | $ | 1,465,692 | $ | 2,215,165 | ||||||||
|
|
|
|
|
|
|
|
- 21 -
13. | FINANCIAL ASSETS CARRIED AT COST |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Non-publicly traded stocks |
$ | 1,215,789 | $ | 1,606,659 | $ | 1,678,365 | ||||||
Mutual funds |
291,960 | 193,883 | 187,643 | |||||||||
|
|
|
|
|
|
|||||||
$ | 1,507,749 | $ | 1,800,542 | $ | 1,866,008 | |||||||
|
|
|
|
|
|
Since there is a wide range of estimated fair values of the Companys investments in non-publicly traded stocks, the Company concludes that the fair value cannot be reliably measured and therefore should be measured at the cost less any impairment.
The common stock of Alchip Technologies, Ltd. was listed on the Taiwan Stock Exchange Corporation in October 2014. Thus, the Company reclassified the aforementioned investments from financial assets carried at cost to available-for-sale financial assets.
14. | INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD |
Investments accounted for using the equity method consisted of the following:
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Associates |
$ | 23,585,244 | $ | 24,968,071 | $ | 23,805,190 | ||||||
Joint venture |
3,350,741 | 3,287,666 | 3,179,975 | |||||||||
|
|
|
|
|
|
|||||||
$ | 26,935,985 | $ | 28,255,737 | $ | 26,985,165 | |||||||
|
|
|
|
|
|
a. | Investments in associates |
Associates consisted of the following:
Place of | Carrying Amount | % of Ownership and Voting Rights Held by the Company |
||||||||||||||||||||||||||
Name of Associate | Principal Activities | Incorporation and Operation |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||||||||||||
Vanguard International Semiconductor Corporation (VIS) |
Research, design, development, manufacture, packaging, testing and sale of memory integrated circuits, LSI, VLSI and related parts |
Hsinchu, Taiwan |
$ | 8,201,681 | $ | 10,105,485 | $ | 9,642,010 | 28 | % | 33 | % | 33 | % | ||||||||||||||
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC) |
Fabrication and supply of integrated circuits |
Singapore | 8,961,566 | 8,296,955 | 7,606,755 | 39 | % | 39 | % | 39 | % | |||||||||||||||||
Motech Industries, Inc. (Motech) |
Manufacturing and sales of solar cells, crystalline silicon solar cell, and test and measurement instruments and design and construction of solar power systems |
New Taipei, Taiwan |
3,102,751 | 3,408,945 | 3,571,283 | 18 | % | 20 | % | 20 | % | |||||||||||||||||
Xintec Inc. (Xintec) |
Wafer level chip size packaging service |
Taoyuan, Taiwan |
2,240,223 | 2,053,982 | 1,932,853 | 35 | % | 40 | % | 40 | % | |||||||||||||||||
Global Unichip Corporation (GUC) |
Researching, developing, manufacturing, testing and marketing of integrated circuits |
Hsinchu, Taiwan |
1,079,023 | 1,102,704 | 1,052,289 | 35 | % | 35 | % | 35 | % | |||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||
$ | 23,585,244 | $ | 24,968,071 | $ | 23,805,190 | |||||||||||||||||||||||
|
|
|
|
|
|
- 22 -
In March 2015, Xintec listed its shares on the R.O.C. Over-the-Counter (Taipei Exchange). Consequently, TSMCs percentage of ownership over Xintec was diluted to approximately 35.4%. In April 2015, TSMC sold 2,172 thousand common shares of Xintec and recognized a disposal gain of NT$43,017 thousand in the second quarter of 2015. After the sale, TSMC owned approximately 34.6% of the equity interest in Xintec.
In both of the second quarters of 2015 and 2014, the Company sold 82,000 thousand common shares of VIS and respectively recognized a disposal gain of NT$2,263,539 thousand and NT$2,028,643 thousand. After the sale, the Company owned approximately 28.3% and 33.7% of the equity interest in VIS.
In June 2015, Motech merged with Tpcell Solar International Co., Ltd (TSi) with exchange of shares. As a result, the Companys percentage of ownership over Motech decreased to 18.0%. Motech continues to be accounted for using equity method as the Company still retains significant influence over Motech.
The market prices of the investments accounted for using the equity method in publicly traded stocks calculated by the closing price at the end of the reporting period are summarized as follow. The closing price represents the quoted price in active markets, the level 1 fair value measurement.
Name of Associate | September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
|||||||||
VIS |
$ | 17,315,536 | $ | 28,567,489 | $ | 24,361,568 | ||||||
|
|
|
|
|
|
|||||||
Motech |
$ | 3,179,890 | $ | 4,242,769 | $ | 3,525,435 | ||||||
|
|
|
|
|
|
|||||||
GUC |
$ | 2,712,565 | $ | 4,327,965 | $ | 4,267,270 | ||||||
|
|
|
|
|
|
|||||||
Xintec |
$ | 3,256,518 | ||||||||||
|
|
b. | Investments in joint venture |
Joint venture consisted of the following:
Place of | Carrying Amount | % of Ownership and Voting Rights Held by the Company |
||||||||||||||||||||||||||
Name of Joint Venture |
Principal Activities |
Incorporation and Operation |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||||||||||||
VisEra Holding Company (VisEra Holding) |
Investing in companies involved in the design, manufacturing and other related businesses in the semiconductor industry |
Cayman Islands |
$ | 3,350,741 | $ | 3,287,666 | $ | 3,179,975 | 49 | % | 49 | % | 49 | % | ||||||||||||||
|
|
|
|
|
|
In August 2015, the Board of Directors of TSMC approved the acquisition of OmniVision Technologies, Inc.s (OVTs) 49.1% ownership in VisEra Holding and 100% ownership in Taiwan OmniVision Investment Holding Co. Inc., at an amount not more than US$126 million. The acquisition of shares is pending upon the regulatory approval from related governments.
- 23 -
15. | PROPERTY, PLANT AND EQUIPMENT |
Land and Land Improvements |
Buildings | Machinery and Equipment |
Office Equipment |
Assets under Finance Leases |
Equipment under Installation and Construction in Progress |
Total | ||||||||||||||||||||||
Cost |
||||||||||||||||||||||||||||
Balance at January 1, 2015 |
$ | 4,036,785 | $ | 269,163,850 | $ | 1,754,170,227 | $ | 27,960,835 | $ | 841,154 | $ | 109,334,736 | $ | 2,165,507,587 | ||||||||||||||
Additions |
| 24,150,678 | 123,991,559 | 2,406,587 | | 28,365,554 | 178,914,378 | |||||||||||||||||||||
Disposals or retirements |
| (6,180 | ) | (1,908,608 | ) | (880,917 | ) | | | (2,795,705 | ) | |||||||||||||||||
Lease agreement modification |
| | | | (820,963 | ) | | (820,963 | ) | |||||||||||||||||||
Effect of exchange rate changes |
30,892 | 471,030 | 2,593,902 | 53,458 | (13,076 | ) | 26,861 | 3,163,067 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at September 30, 2015 |
$ | 4,067,677 | $ | 293,779,378 | $ | 1,878,847,080 | $ | 29,539,963 | $ | 7,115 | $ | 137,727,151 | $ | 2,343,968,364 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Accumulated depreciation and impairment |
||||||||||||||||||||||||||||
Balance at January 1, 2015 |
$ | 459,140 | $ | 141,245,913 | $ | 1,188,388,402 | $ | 16,767,934 | $ | 447,397 | $ | | $ | 1,347,308,786 | ||||||||||||||
Additions |
21,494 | 11,968,771 | 149,087,602 | 2,781,445 | 25,113 | | 163,884,425 | |||||||||||||||||||||
Disposals or retirements |
| (5,313 | ) | (1,832,675 | ) | (836,801 | ) | | | (2,674,789 | ) | |||||||||||||||||
Lease agreement modification |
| | | | (458,612 | ) | | (458,612 | ) | |||||||||||||||||||
Impairment |
| 278,057 | 2,028,627 | 10,740 | | | 2,317,424 | |||||||||||||||||||||
Effect of exchange rate changes |
18,215 | 380,506 | 2,339,517 | 34,566 | (6,783 | ) | | 2,766,021 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at September 30, 2015 |
$ | 498,849 | $ | 153,867,934 | $ | 1,340,011,473 | $ | 18,757,884 | $ | 7,115 | $ | | $ | 1,513,143,255 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Carrying amounts at January 1, 2015 |
$ | 3,577,645 | $ | 127,917,937 | $ | 565,781,825 | $ | 11,192,901 | $ | 393,757 | $ | 109,334,736 | $ | 818,198,801 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Carrying amounts at September 30, 2015 |
$ | 3,568,828 | $ | 139,911,444 | $ | 538,835,607 | $ | 10,782,079 | $ | | $ | 137,727,151 | $ | 830,825,109 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cost |
||||||||||||||||||||||||||||
Balance at January 1, 2014 |
$ | 3,986,909 | $ | 229,182,736 | $ | 1,413,919,794 | $ | 22,062,032 | $ | 804,430 | $ | 272,173,793 | $ | 1,942,129,694 | ||||||||||||||
Additions |
| 36,959,513 | 315,209,803 | 5,289,730 | | (183,863,766 | ) | 173,595,280 | ||||||||||||||||||||
Disposals or retirements |
| (1,140 | ) | (978,661 | ) | (576,042 | ) | | | (1,555,843 | ) | |||||||||||||||||
Reclassification |
| (1,996 | ) | 1,996 | | | | | ||||||||||||||||||||
Effect of exchange rate changes |
17,423 | 373,621 | 1,403,525 | 35,457 | 12,041 | 13,347 | 1,855,414 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at September 30, 2014 |
$ | 4,004,332 | $ | 266,512,734 | $ | 1,729,556,457 | $ | 26,811,177 | $ | 816,471 | $ | 88,323,374 | $ | 2,116,024,545 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Accumulated depreciation and impairment |
||||||||||||||||||||||||||||
Balance at January 1, 2014 |
$ | 404,192 | $ | 125,234,166 | $ | 1,009,213,689 | $ | 14,225,771 | $ | 385,963 | | $ | 1,149,463,781 | |||||||||||||||
Additions |
20,608 | 11,526,796 | 128,094,234 | 2,246,814 | 31,367 | | 141,919,819 | |||||||||||||||||||||
Disposals or retirements |
| (418 | ) | (884,428 | ) | (575,946 | ) | | | (1,460,792 | ) | |||||||||||||||||
Impairment |
| | 239,864 | | | | 239,864 | |||||||||||||||||||||
Reclassification |
| (532 | ) | 532 | | | | | ||||||||||||||||||||
Effect of exchange rate changes |
9,325 | 261,933 | 1,239,751 | 34,697 | 6,288 | | 1,551,994 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at September 30, 2014 |
$ | 434,125 | $ | 137,021,945 | $ | 1,137,903,642 | $ | 15,931,336 | $ | 423,618 | $ | | $ | 1,291,714,666 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Carrying amounts at September 30, 2014 |
$ | 3,570,207 | $ | 129,490,789 | $ | 591,652,815 | $ | 10,879,841 | $ | 392,853 | $ | 88,323,374 | 824,309,879 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The significant part of the Companys buildings includes main plants, mechanical and electrical power equipment and clean rooms, and the related depreciation is calculated using the estimated useful lives of 20 years, 10 years and 10 years, respectively.
In August 2015, TSMC Solar ceased its manufacturing operations. The Company recognized an impairment loss of NT$2,286,016 thousand since the carrying amounts of some of machinery and equipment, office equipment and mechanical and electrical power equipment were expected to be unrecoverable. Such impairment loss was included in other operating income and expenses for the nine months ended September 30, 2015.
In the second quarter of 2014, the Company recognized impairment losses of NT$239,864 thousand under other operating segments since the carrying amount of some of machinery and equipment was expected to be unrecoverable. Such impairment losses were included in other operating income and expenses for the six months ended June 30, 2014.
The Company had a building lease agreement with leasing terms from December 2003 to November 2018 and such lease was accounted for as a finance lease. In August 2015, the lease was determined to be an operating lease due to a modification on lease conditions; as such, the Company recognized a gain of NT$428,388 thousand from the modification. Such gain was included in other operating income and expenses for the nine months ended September 30, 2015.
- 24 -
16. | INTANGIBLE ASSETS |
Goodwill | Technology License Fees |
Software and System Design Costs |
Patent and Others |
Total | ||||||||||||||||
Cost |
||||||||||||||||||||
Balance at January 1, 2015 |
$ | 5,888,813 | $ | 6,350,253 | $ | 18,697,098 | $ | 4,292,555 | $ | 35,228,719 | ||||||||||
Additions |
| 1,068,240 | 416,977 | 440,090 | 1,925,307 | |||||||||||||||
Retirements |
| | (100,272 | ) | | (100,272 | ) | |||||||||||||
Effect of exchange rate changes |
161,845 | (6,542 | ) | 2,281 | 1,753 | 159,337 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at September 30, 2015 |
$ | 6,050,658 | $ | 7,411,951 | $ | 19,016,084 | $ | 4,734,398 | $ | 37,213,091 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Accumulated amortization |
||||||||||||||||||||
Balance at January 1, 2015 |
$ | | $ | 3,778,912 | $ | 14,861,146 | $ | 3,057,151 | $ | 21,697,209 | ||||||||||
Additions |
| 693,671 | 1,245,215 | 426,434 | 2,365,320 | |||||||||||||||
Retirements |
| | (100,272 | ) | | (100,272 | ) | |||||||||||||
Impairment |
| 58,130 | 384 | | 58,514 | |||||||||||||||
Effect of exchange rate changes |
| (6,542 | ) | 2,073 | 497 | (3,972 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at September 30, 2015 |
$ | | $ | 4,524,171 | $ | 16,008,546 | $ | 3,484,082 | $ | 24,016,799 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Carrying amounts at January 1, 2015 |
$ | 5,888,813 | $ | 2,571,341 | $ | 3,835,952 | $ | 1,235,404 | $ | 13,531,510 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Carrying amounts at September 30, 2015 |
$ | 6,050,658 | $ | 2,887,780 | $ | 3,007,538 | $ | 1,250,316 | $ | 13,196,292 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cost |
||||||||||||||||||||
Balance at January 1, 2014 |
$ | 5,627,517 | $ | 4,444,828 | $ | 17,086,805 | $ | 3,729,396 | $ | 30,888,546 | ||||||||||
Additions |
| 875,891 | 711,811 | 685,382 | 2,273,084 | |||||||||||||||
Retirements |
| | (51,405 | ) | | (51,405 | ) | |||||||||||||
Effect of exchange rate changes |
91,276 | (1,491 | ) | 2,019 | 2,003 | 93,807 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at September 30, 2014 |
$ | 5,718,793 | $ | 5,319,228 | $ | 17,749,230 | $ | 4,416,781 | $ | 33,204,032 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Accumulated amortization |
||||||||||||||||||||
Balance at January 1, 2014 |
$ | | $ | 3,341,667 | $ | 13,439,135 | $ | 2,617,361 | $ | 19,398,163 | ||||||||||
Additions |
| 314,529 | 1,102,788 | 496,922 | 1,914,239 | |||||||||||||||
Retirements |
| | (51,405 | ) | | (51,405 | ) | |||||||||||||
Effect of exchange rate changes |
| (1,491 | ) | 1,879 | 398 | 786 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at September 30, 2014 |
$ | | $ | 3,654,705 | $ | 14,492,397 | $ | 3,114,681 | $ | 21,261,783 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Carrying amounts at September 30, 2014 |
$ | 5,718,793 | $ | 1,664,523 | $ | 3,256,833 | $ | 1,302,100 | $ | 11,942,249 | ||||||||||
|
|
|
|
|
|
|
|
|
|
The Companys goodwill has been tested for impairment at the end of the annual reporting period and the recoverable amount is determined based on the value in use. The value in use was calculated based on the cash flow forecast from the financial budgets covering the future five-year period, and the Company used annual discount rate of 8.40% and 8.50% in its test of impairment as of December 31, 2014 and 2013, respectively, to reflect the relevant specific risk in the cash-generating unit.
In August 2015, TSMC Solar ceased its manufacturing operation and the Company recognized an impairment loss of NT$58,514 thousand since the carrying amounts of technology license fees, software and system design costs were expected to be unrecoverable. Such impairment loss was included in other operating income and expenses for the nine months ended September 30, 2015.
- 25 -
17. | OTHER ASSETS |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Tax receivable |
$ | 1,671,508 | $ | 2,187,136 | $ | 1,787,749 | ||||||
Prepaid expenses |
1,079,711 | 1,399,810 | 1,070,833 | |||||||||
Long-term receivable |
369,500 | 385,700 | 537,880 | |||||||||
Others |
1,100,518 | 885,470 | 741,604 | |||||||||
|
|
|
|
|
|
|||||||
$ | 4,221,237 | $ | 4,858,116 | $ | 4,138,066 | |||||||
|
|
|
|
|
|
|||||||
Current portion |
$ | 2,844,481 | $ | 3,656,110 | $ | 2,864,405 | ||||||
Noncurrent portion |
1,376,756 | 1,202,006 | 1,273,661 | |||||||||
|
|
|
|
|
|
|||||||
$ | 4,221,237 | $ | 4,858,116 | $ | 4,138,066 | |||||||
|
|
|
|
|
|
18. | SHORT-TERM LOANS |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Unsecured loans Amount |
$ | 33,564,120 | $ | 36,158,520 | $ | 35,883,358 | ||||||
|
|
|
|
|
|
|||||||
Original loan content |
||||||||||||
US$ (in thousands) |
$ | 1,020,000 | $ | 1,140,000 | $ | 1,147,400 | ||||||
EUR (in thousands) |
| | 24,000 | |||||||||
Annual interest rate |
0.38%-0.47% | 0.38%-0.50% | 0.35%-0.51% | |||||||||
Maturity date |
|
Due in October 2015 |
|
|
Due in January 2015 |
|
|
Due by November 2014 |
|
19. | PROVISIONS |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Sales returns and allowances |
$ | 9,898,270 | $ | 10,445,452 | $ | 7,677,524 | ||||||
Warranties |
46,805 | 19,828 | 16,148 | |||||||||
|
|
|
|
|
|
|||||||
$ | 9,945,075 | $ | 10,465,280 | $ | 7,693,672 | |||||||
|
|
|
|
|
|
|||||||
Current portion |
$ | 9,898,270 | $ | 10,445,452 | $ | 7,677,524 | ||||||
Noncurrent portion (classified under other noncurrent liabilities) |
46,805 | 19,828 | 16,148 | |||||||||
|
|
|
|
|
|
|||||||
$ | 9,945,075 | $ | 10,465,280 | $ | 7,693,672 | |||||||
|
|
|
|
|
|
- 26 -
Sales Returns and Allowances |
Warranties | Total | ||||||||||
Nine months ended September 30, 2015 |
||||||||||||
Balance, beginning of period |
$ | 10,445,452 | $ | 19,828 | $ | 10,465,280 | ||||||
Provision |
11,957,512 | 39,353 | 11,996,865 | |||||||||
Payment |
(12,526,015 | ) | (11,769 | ) | (12,537,784 | ) | ||||||
Effect of exchange rate changes |
21,321 | (607 | ) | 20,714 | ||||||||
|
|
|
|
|
|
|||||||
Balance, end of period |
$ | 9,898,270 | $ | 46,805 | $ | 9,945,075 | ||||||
|
|
|
|
|
|
|||||||
Nine months ended September 30, 2014 |
||||||||||||
Balance, beginning of period |
$ | 7,603,781 | $ | 10,452 | $ | 7,614,233 | ||||||
Provision |
5,747,340 | 7,416 | 5,754,756 | |||||||||
Payment |
(5,680,243 | ) | (1,227 | ) | (5,681,470 | ) | ||||||
Effect of exchange rate changes |
6,646 | (493 | ) | 6,153 | ||||||||
|
|
|
|
|
|
|||||||
Balance, end of period |
$ | 7,677,524 | $ | 16,148 | $ | 7,693,672 | ||||||
|
|
|
|
|
|
Provisions for sales returns and allowances are estimated based on historical experience, management judgment, and any known factors that would significantly affect the returns and allowances, and are recognized as a reduction of revenue in the same period of the related product sales.
The provision for warranties represents the present value of the Companys best estimate of the future outflow of the economic benefits that will be required under the Companys obligations for warranties. The estimate has been made on the basis of historical warranty trends of business and may vary as a result of new materials, altered manufacturing processes or other events affecting product quality.
20. | BONDS PAYABLE |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Domestic unsecured bonds |
$ | 166,200,000 | $ | 166,200,000 | $ | 166,200,000 | ||||||
Overseas unsecured bonds |
49,359,000 | 47,577,000 | 45,705,000 | |||||||||
|
|
|
|
|
|
|||||||
215,559,000 | 213,777,000 | 211,905,000 | ||||||||||
Less: Discounts on bonds payable |
(77,315 | ) | (103,182 | ) | (108,195 | ) | ||||||
Less: Current portion |
(23,510,931 | ) | | | ||||||||
|
|
|
|
|
|
|||||||
$ | 191,970,754 | $ | 213,673,818 | $ | 211,796,805 | |||||||
|
|
|
|
|
|
The major terms of overseas unsecured bonds are as follows:
Issuance Period | Total Amount in Thousands) |
Coupon Rate | Repayment and Interest Payment | |||||||
April 2013 to April 2016 |
$ | 350,000 | 0.95 | % | Bullet repayment; interest payable semi-annually | |||||
April 2013 to April 2018 |
1,150,000 | 1.625 | % | The same as above |
- 27 -
21. | GUARANTEE DEPOSITS |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Capacity guarantee |
$ | 28,792,750 | $ | 30,132,100 | $ | | ||||||
Others |
173,834 | 164,075 | 160,419 | |||||||||
|
|
|
|
|
|
|||||||
$ | 28,966,584 | $ | 30,296,175 | $ | 160,419 | |||||||
|
|
|
|
|
|
|||||||
Current portion (classified under accrued expenses and other current liabilities) |
$ | 5,758,550 | $ | 4,757,700 | $ | | ||||||
Noncurrent portion |
23,208,034 | 25,538,475 | 160,419 | |||||||||
|
|
|
|
|
|
|||||||
$ | 28,966,584 | $ | 30,296,175 | $ | 160,419 | |||||||
|
|
|
|
|
|
Starting from the second quarter of 2015, some of guarantee deposits were refunded to customers by offsetting related accounts receivable.
22. | EQUITY |
a. | Capital stock |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Authorized shares (in thousands) |
28,050,000 | 28,050,000 | 28,050,000 | |||||||||
|
|
|
|
|
|
|||||||
Authorized capital |
$ | 280,500,000 | $ | 280,500,000 | $ | 280,500,000 | ||||||
|
|
|
|
|
|
|||||||
Issued and paid shares (in thousands) |
25,930,380 | 25,929,662 | 25,929,375 | |||||||||
|
|
|
|
|
|
|||||||
Issued capital |
$ | 259,303,805 | $ | 259,296,624 | $ | 259,293,750 | ||||||
|
|
|
|
|
|
A holder of issued common shares with par value of NT$10 per share is entitled to vote and to receive dividends.
The authorized shares include 500,000 thousand shares allocated for the exercise of employee stock options.
As of September 30, 2015, 1,072,645 thousand ADSs of TSMC were traded on the NYSE. The number of common shares represented by the ADSs was 5,363,225 thousand shares (one ADS represents five common shares).
b. | Capital surplus |
September 30, 2015 |
December 31, 2014 |
September 30, 2014 |
||||||||||
Additional paid-in capital |
$ | 24,184,939 | $ | 24,053,965 | $ | 24,043,271 | ||||||
From merger |
22,804,510 | 22,804,510 | 22,804,510 | |||||||||
From convertible bonds |
8,892,847 | 8,892,847 | 8,892,847 | |||||||||
From share of changes in equities of subsidiaries |
78,482 | 104,335 | 73,038 | |||||||||
From share of changes in equities of associates and joint venture |
337,895 | 134,210 | 131,078 | |||||||||
Donations |
55 | 55 | 55 | |||||||||
|
|
|
|
|
|
|||||||
$ | 56,298,728 | $ | 55,989,922 | $ | 55,944,799 | |||||||
|
|
|
|
|
|
- 28 -
Under the Company Law, the capital surplus generated from donations and the excess of the issuance price over the par value of capital stock (including the stock issued for new capital, mergers, convertible bonds, the surplus from treasury stock transactions and the differences between equity purchase price and carrying amount arising from actual acquisition or disposal of subsidiaries) may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or stock dividends up to a certain percentage of TSMCs paid-in capital. The capital surplus from share of changes in equities of subsidiaries may be used to offset a deficit.
c. | Retained earnings and dividend policy |
TSMCs Articles of Incorporation provide that, when allocating the net profits for each fiscal year, TSMC shall first offset its losses in previous years and then set aside the following items accordingly:
1) | Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve equals TSMCs paid-in capital; |
2) | Special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge; |
3) | Bonus to directors and profit sharing to employees of TSMC of not more than 0.3% and not less than 1% of the remainder, respectively. Directors who also serve as executive officers of TSMC are not entitled to receive the bonus to directors. TSMC may issue profit sharing to employees in stock of an affiliated company meeting the conditions set by the Board of Directors or, by the person duly authorized by the Board of Directors; |
4) | Any balance left over shall be allocated according to the resolution of the shareholders meeting. |
TSMCs Articles of Incorporation also provide that profits of TSMC may be distributed by way of cash dividend and/or stock dividend. However, distribution of profits shall be made preferably by way of cash dividend. Distribution of profits may also be made by way of stock dividend; provided that the ratio for stock dividend shall not exceed 50% of the total distribution.
Any appropriations of the profits are subject to shareholders approval in the following year.
In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. Accordingly, the Company expects to make amendments to the Companys Articles of Incorporation to be approved during the 2016 annual shareholders meeting. For information about the accrual basis of employees compensation or profit sharing to employees and bonus to directors for the three months ended September 30, 2015 and 2014, and the nine months ended September 30, 2015 and 2014, and the actual appropriations for the years ended December 31, 2014 and 2013, please refer to Employee benefits expense in Note 29.
The appropriation for legal capital reserve shall be made until the reserve equals the Companys paid-in capital. The reserve may be used to offset a deficit, or be distributed as dividends in cash or stocks for the portion in excess of 25% of the paid-in capital if the Company incurs no loss.
Pursuant to existing regulations, the Company is required to set aside additional special capital reserve equivalent to the net debit balance of the other components of stockholders equity, such as the accumulated balance of foreign currency translation reserve, unrealized valuation gain/loss from available-for-sale financial assets, gain/loss from changes in fair value of hedging instruments in cash flow hedges, etc. For the subsequent decrease in the deduction amount to stockholders equity, any special reserve appropriated may be reversed to the extent that the net debit balance reverses.
- 29 -
The appropriations of 2014 and 2013 earnings have been approved by TSMCs shareholders in its meeting held on June 9, 2015 and on June 24, 2014, respectively. The appropriations and dividends per share were as follows:
Appropriation of Earnings | Dividends Per Share (NT$) |
|||||||||||||||
For Fiscal | For Fiscal | For Fiscal | For Fiscal | |||||||||||||
Year 2014 | Year 2013 | Year 2014 | Year 2013 | |||||||||||||
Legal capital reserve |
$ | 26,389,879 | $ | 18,814,679 | ||||||||||||
Special capital reserve |
| (2,785,741 | ) | |||||||||||||
Cash dividends to shareholders |
116,683,481 | 77,785,851 | $ | 4.50 | $ | 3.00 | ||||||||||
|
|
|
|
|||||||||||||
$ | 143,073,360 | $ | 93,814,789 | |||||||||||||
|
|
|
|
Under the Integrated Income Tax System that became effective on January 1, 1998, the R.O.C. resident shareholders are allowed a tax credit for their proportionate share of the income tax paid by TSMC on earnings generated since January 1, 1998.
d. | Others |
Changes in others were as follows:
Nine Months Ended September 30, 2015 | ||||||||||||||||
Foreign Currency Translation Reserve |
Unrealized Gain/Loss from Available-for- sale Financial Assets |
Cash Flow Hedges Reserve |
Total | |||||||||||||
Balance, beginning of period |
$ | 4,502,113 | $ | 21,247,483 | $ | (305 | ) | $ | 25,749,291 | |||||||
Exchange differences arising on translation of foreign operations |
8,955,736 | | | 8,955,736 | ||||||||||||
Changes in fair value of available-for-sale financial assets |
| (322,039 | ) | | (322,039 | ) | ||||||||||
Cumulative (gain)/loss reclassified to profit or loss upon disposal of available-for-sale financial assets |
(1,358,840 | ) | (20,123,082 | ) | | (21,481,922 | ) | |||||||||
Share of other comprehensive income of associates and joint venture |
(93,715 | ) | 327,320 | (347 | ) | 233,258 | ||||||||||
The proportionate share of other comprehensive income/losses reclassified to profit or loss upon partial disposal of associates |
4,356 | 2,051 | 11 | 6,418 | ||||||||||||
Income tax effect |
| (2,551 | ) | | (2,551 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of period |
$ | 12,009,650 | $ | 1,129,182 | $ | (641 | ) | $ | 13,138,191 | |||||||
|
|
|
|
|
|
|
|
- 30 -
Nine Months Ended September 30, 2014 | ||||||||||||||||
Foreign Currency Translation Reserve |
Unrealized Gain/Loss from Available-for- sale Financial Assets |
Cash Flow Hedges Reserve |
Total | |||||||||||||
Balance, beginning of period |
$ | (7,140,362 | ) | $ | 21,310,781 | $ | (113 | ) | $ | 14,170,306 | ||||||
Exchange differences arising on translation of foreign operations |
3,189,480 | | | 3,189,480 | ||||||||||||
Other comprehensive income/losses reclassified to profit or loss upon disposal of subsidiaries |
84 | | | 84 | ||||||||||||
Changes in fair value of available-for-sale financial assets |
| (178,550 | ) | | (178,550 | ) | ||||||||||
Cumulative (gain)/loss reclassified to profit or loss upon disposal of available-for-sale financial assets |
| (260,050 | ) | | (260,050 | ) | ||||||||||
Share of other comprehensive income of associates and joint venture |
(41,619 | ) | (486 | ) | (26 | ) | (42,131 | ) | ||||||||
The proportionate share of other comprehensive income/losses reclassified to profit or loss upon partial disposal of associates |
3,017 | (2,920 | ) | | 97 | |||||||||||
Income tax effect |
| (13,745 | ) | | (13,745 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, end of period |
$ | (3,989,400 | ) | $ | 20,855,030 | $ | (139 | ) | $ | 16,865,491 | ||||||
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The exchange differences arising on translation of foreign operations net assets from its functional currency to TSMCs presentation currency are recognized directly in other comprehensive income and also accumulated in the foreign currency translation reserve.
Unrealized gain/loss on available-for-sale financial assets represents the cumulative gains or losses arising from the fair value measurement on available-for-sale financial assets that are recognized in other comprehensive income, excluding the amounts recognized in profit or loss for the effective portion from changes in fair value of the hedging instruments. When those available-for-sale financial assets have been disposed of or are determined to be impaired subsequently, the related cumulative gains or losses in other comprehensive income are reclassified to profit or loss.
The cash flow hedges reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of the hedging instruments entered into as cash flow hedges. The cumulative gains or losses arising on changes in fair value of the hedging instruments that are recognized and accumulated in cash flow hedges reserve will be reclassified to profit or loss only when the hedge transaction affects profit or loss.
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e. | Noncontrolling interests |
Nine Months Ended September 30 | ||||||||
2015 | 2014 | |||||||
Balance, beginning of period |
$ | 127,221 | $ | 266,709 | ||||
Share of noncontrolling interests |
||||||||
Net loss |
(22,537 | ) | (98,015 | ) | ||||
Exchange differences arising on translation of foreign operations |
744 | 547 | ||||||
Other comprehensive income/losses reclassified to profit or loss upon disposal of subsidiaries |
| 6 | ||||||
Changes in fair value of available-for-sale financial assets |
(10,193 | ) | 977 | |||||
Cumulative (gain)/loss reclassified to profit or loss upon disposal of available-for-sale financial assets |
(89 | ) | (858 | ) | ||||
Share of other comprehensive income of associates and joint venture |
(14 | ) | (6 | ) | ||||
The proportionate share of other comprehensive income/losses reclassified to profit or loss upon partial disposal of associates |
3 | | ||||||
Adjustments to share of changes in equities of associates and joint venture |
149 | (45 | ) | |||||
From share of changes in equities of subsidiaries |
25,853 | 27,789 | ||||||
Decrease in noncontrolling interests |
(42,719 | ) | (58,571 | ) | ||||
Effect of disposal of subsidiary |
(42,640 | ) | | |||||
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Balance, end of period |
$ | 35,778 | $ | 138,533 | ||||
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23. | SHARE-BASED PAYMENT |
The Company did not issue employee stock option plans for nine months ended September 30, 2015 and 2014. TSMC elected to take the optional exemption for its issued employee stock options from applying IFRS 2 Share-based Payment. The related information is as follows:
Number of Options (In Thousands) |
Weighted- average Exercise |
|||||||
Nine months ended September 30, 2015 |
||||||||
Balance, beginning of period |
718 | $ | 47.2 | |||||
Options exercised |
(718 | ) | 47.2 | |||||
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Balance, end of period |
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Balance exercisable, end of period |
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Nine months ended September 30, 2014 |
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Balance, beginning of period |
1,763 | $ | 45.9 | |||||
Options exercised |
(758 | ) | 44.2 | |||||
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Balance, end of period |
1,005 | 47.2 | ||||||
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Balance exercisable, end of period |
1,005 | 47.2 | ||||||
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The numbers of outstanding stock options and exercise prices have been adjusted to reflect the distribution of earnings by TSMC in accordance with the plans.
The employee stock options have been fully exercised in the second quarter of 2015.
Information