Form 6-K

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 2013

 

 

Taiwan Semiconductor Manufacturing Company Ltd.

(Translation of Registrant’s 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 15, 2013

    By     

/s/ Lora Ho

    Lora Ho
    Senior Vice President & Chief Financial Officer


Taiwan Semiconductor Manufacturing

Company Limited and Subsidiaries

Consolidated Financial Statements for the

Nine months ended September 30, 2013 and 2012 and

Independent Accountants’ Review Report


INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

The Board of Directors and Shareholders

Taiwan Semiconductor Manufacturing Company Limited

We have reviewed the accompanying consolidated balance sheets of Taiwan Semiconductor Manufacturing Company Limited and subsidiaries as of September 30, 2013, December 31, 2012, September 30, 2012 and January 1, 2012 and the related consolidated statements of comprehensive income for the three months ended September 30, 2013 and 2012 and for the nine months ended September 30, 2013 and 2012, as well as the consolidated statements of changes in equity and cash flows for the nine months ended September 30, 2013 and 2012. These consolidated financial statements are the responsibility of the Company’s 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, International Financial Reporting Standard 1, “First-time adoption of International Financial Reporting Standards,” and International Accounting Standard 34, “Interim Financial Reporting,” endorsed by the Financial Supervisory Commission of the Republic of China.

November 12, 2013

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)

(Reviewed, Not Audited)

 

    September 30,
2013
    December 31,
2012
    September 30,
2012
    January 1,
2012
 
    Amount     %     Amount     %     Amount     %     Amount     %  

ASSETS

               

CURRENT ASSETS

               

Cash and cash equivalents (Note 6)

  $ 216,603,697        19      $ 143,410,588        15      $ 138,738,113        16      $ 143,472,277        18   

Financial assets at fair value through profit or loss (Note 7)

    188,970        —          39,554        —          58,690        —          15,360        —     

Available-for-sale financial assets (Note 8)

    672,179        —          2,410,635        —          2,067,730        —          3,308,770        —     

Held-to-maturity financial assets (Note 9)

    700,285        —          5,056,973        1        6,854,611        1        3,825,680        1   

Hedging derivative financial assets (Note 10)

    —          —          —          —          28,189        —          —          —     

Notes and accounts receivable, net (Note 11)

    78,844,389        7        57,777,586        6        64,386,937        7        45,830,288        6   

Receivables from related parties (Note 37)

    827,480        —          353,811        —          925,245        —          185,764        —     

Other receivables from related parties (Note 37)

    194,408        —          185,550        —          157,144        —          122,292        —     

Inventories (Notes 5 and 12)

    36,916,527        3        37,830,498        4        33,249,045        4        24,840,582        3   

Other current assets (Note 17)

    2,740,765        —          2,786,408        —          2,639,414        —          2,174,014        —     

Other financial assets (Note 38)

    522,137        —          473,833        —          469,979        —          617,142        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

    338,210,837        29        250,325,436        26        249,575,097        28        224,392,169        28   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NONCURRENT ASSETS

               

Available-for-sale financial assets (Note 8)

    61,145,097        5        38,751,245        4        —          —          —          —     

Held-to-maturity financial assets (Note 9)

    —          —          —          —          701,435        —          5,243,167        1   

Financial assets carried at cost (Note 13)

    2,124,507        —          3,605,077        —          3,981,251        —          4,315,005        1   

Investments accounted for using equity method (Notes 5 and 14)

    25,903,920        2        23,360,918        3        23,907,158        3        24,886,931        3   

Property, plant and equipment (Notes 5 and 15)

    727,716,024        62        617,562,188        64        580,114,062        66        490,422,153        63   

Intangible assets (Notes 5 and 16)

    11,393,280        1        10,959,569        1        10,888,854        1        10,861,563        1   

Deferred income tax assets (Notes 5 and 31)

    7,165,944        1        13,128,219        2        13,058,484        2        13,604,218        2   

Refundable deposits (Note 37)

    2,464,658        —          2,426,712        —          2,331,966        —          4,518,863        1   

Other noncurrent assets (Note 17)

    1,415,948        —          1,235,144        —          1,213,129        —          1,306,746        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total noncurrent assets

    839,329,378        71        711,029,072        74        636,196,339        72        555,158,646        72   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL

  $ 1,177,540,215        100      $ 961,354,508        100      $ 885,771,436        100      $ 779,550,815        100   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    September 30,
2013
    December 31,
2012
    September 30,
2012
    January 1,
2012
 
    Amount     %     Amount     %     Amount     %     Amount     %  

LIABILITIES AND EQUITY

               

CURRENT LIABILITIES

  

           

Short-term loans (Note 18)

  $ 18,053,096        2      $ 34,714,929        4      $ 29,749,650        3      $ 25,926,528        3   

Financial liabilities at fair value through profit or loss (Note 7)

    18,876        —          15,625        —          20,013        —          13,742        —     

Hedging derivative financial liabilities (Note 10)

    —          —          —          —          —          —          232        —     

Accounts payable

    13,478,598        1        14,490,429        2        13,773,108        2        10,530,487        1   

Payables to related parties (Note 37)

    1,594,104        —          748,613        —          783,253        —          1,328,521        —     

Salary and bonus payable

    7,668,518        1        7,535,296        1        6,994,285        1        6,148,499        1   

Accrued profit sharing to employees and bonus to directors and supervisors (Note 24)

    9,946,700        1        11,186,591        1        8,654,015        1        9,081,293        1   

Payables to contractors and equipment suppliers

    58,381,100        5        44,831,798        5        32,785,881        4        35,540,526        5   

Income tax payable (Note 31)

    17,025,992        1        15,635,594        2        10,855,245        1        10,656,124        1   

Provisions (Notes 5 and 19)

    6,720,214        1        6,038,003        —          6,900,184        —          5,068,263        1   

Accrued expenses and other current liabilities (Notes 15 and 22)

    15,396,990        1        13,148,944        1        15,312,033        2        13,218,235        2   

Current portion of bonds payable and long-term bank loans (Notes 20 and 21)

    —          —          128,125        —          125,000        —          4,562,500        1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

    148,284,188        13        148,473,947        16        125,952,667        14        122,074,950        16   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NONCURRENT LIABILITIES

               

Hedging derivative financial liabilities (Note 10)

    6,144,025        —          —          —          —          —          —          —     

Bonds payable (Note 20)

    210,416,434        18        80,000,000        8        75,600,000        9        18,000,000        3   

Long-term bank loans (Note 21)

    40,000        —          1,359,375        —          1,393,750        —          1,587,500        —     

Provisions (Note 19)

    7,344        —          4,891        —          3,619        —          2,889        —     

Other long-term payables (Note 22)

    36,000        —          54,000        —          54,000        —          —          —     

Obligations under finance leases (Note 15)

    758,732        —          748,115        —          737,034        —          870,993        —     

Accrued pension cost (Note 23)

    6,931,366        1        6,921,234        1        6,233,278        1        6,241,024        1   

Guarantee deposits

    149,622        —          203,890        —          229,212        —          443,983        —     

Others

    597,743        —          495,150        —          480,559        —          400,831        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total noncurrent liabilities

    225,081,266        19        89,786,655        9        84,731,452        10        27,547,220        4   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    373,365,454        32        238,260,602        25        210,684,119        24        149,622,170        20   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT

               

Capital stock (Note 24)

    259,283,910        22        259,244,357        27        259,220,476        29        259,162,226        33   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capital surplus (Note 24)

    55,841,716        5        55,675,340        6        55,630,425        6        55,471,662        7   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Retained earnings (Note 24)

               

Appropriated as legal capital reserve

    132,436,003        11        115,820,123        12        115,820,123        13        102,399,995        13   

Appropriated as special capital reserve

    2,785,741        —          7,606,224        1        7,606,224        1        6,433,874        1   

Unappropriated earnings

    338,752,961        29        284,985,121        29        244,003,918        28        211,630,458        27   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    473,974,705        40        408,411,468        42        367,430,265        42        320,464,327        41   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Others (Note 24)

    14,776,668        1        (2,780,485     —          (9,783,800     (1     (7,606,219     (1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity attributable to shareholders of the parent

    803,876,999        68        720,550,680        75        672,497,366        76        627,491,996        80   

NONCONTROLLING INTERESTS (Note 24)

    297,762        —          2,543,226        —          2,589,951        —          2,436,649        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

    804,174,761        68        723,093,906        75        675,087,317        76        629,928,645        80   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL

  $ 1,177,540,215        100      $ 961,354,508        100      $ 885,771,436        100      $ 779,550,815        100   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
 

 

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  
    2013     2012     2013     2012  
    Amount         %          Amount         %         Amount         %         Amount         %      

NET REVENUE (Notes 5, 26, 37 and 42)

  $ 162,577,034        100      $ 141,499,253        100      $ 451,218,350        100      $ 375,300,415        100   

COST OF REVENUE (Notes 12, 33 and 37)

    83,636,464        51        72,344,501        51        235,092,710        52        193,133,859        52   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GROSS PROFIT BEFORE REALIZED (UNREALIZED) GROSS PROFIT ON SALES TO ASSOCIATES

    78,940,570        49        69,154,752        49        216,125,640        48        182,166,556        48   

REALIZED (UNREALIZED) GROSS PROFIT ON SALES TO ASSOCIATES

    (49,759     —          10,381        —          (42,833     —          (129,569     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GROSS PROFIT

    78,890,811        49        69,165,133        49        216,082,807        48        182,036,987        48   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EXPENSES (Notes 5, 33 and 37)

               

Research and development

    13,357,075        8        10,656,855        8        35,949,931        8        29,883,097        8   

General and administrative

    4,738,276        3        4,478,517        3        15,119,366        3        13,500,459        3   

Marketing

    1,164,881        1        1,234,982        1        3,359,373        1        3,440,158        1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    19,260,232        12        16,370,354        12        54,428,670        12        46,823,714        12   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OTHER OPERATING INCOME AND EXPENSES, NET (Notes 27 and 33)

    (12,525     —          3,199        —          21,008        —          (425,894     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM OPERATIONS (Note 42)

    59,618,054        37        52,797,978        37        161,675,145        36        134,787,379        36   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NON-OPERATING INCOME AND EXPENSES

               

Share of profits of associates and joint venture (Note 14)

    1,113,243        1        712,186        1        2,826,900        1        1,338,261        —     

Other income (Note 28)

    433,395        —          353,132        —          1,788,780        —          1,364,809        —     

Foreign exchange gain (loss), net

    (314,948     —          (157,185     —          133,136        —          208,125        —     

Finance costs (Notes 10 and 29)

    (732,326     —          (270,379     —          (1,861,664     —          (685,418     —     

Other gains and losses (Note 30)

    (767,534     (1     326,609        —          552,180        —          (1,620,830     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total non-operating income and expenses

    (268,170     —          964,363        1        3,439,332        1        604,947        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME BEFORE INCOME TAX

    59,349,884        37        53,762,341        38        165,114,477        37        135,392,326        36   

INCOME TAX EXPENSE (Note 31)

    7,415,132        5        4,340,047        3        21,882,679        5        10,787,480        3   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME

    51,934,752        32        49,422,294        35        143,231,798        32        124,604,846        33   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OTHER COMPREHENSIVE INCOME (LOSS) (Notes 10, 14, 24 and 31)

               

Exchange differences arising on translation of foreign operations

    (1,740,459     (1     (2,239,717     (2     2,335,435        1        (3,627,600     (1

Changes in fair value of available-for-sale financial assets

    7,685,269        5        (112,534     —          15,180,754        3        1,710,289        1   

Cash flow hedges

    —          —          28,258        —          —          —          28,421        —     

Share of other comprehensive income of associates and joint venture

    37,947        —          48,074        —          (18,924     —          68,461        —     

Income tax benefit (expense) related to components of other comprehensive income

    10,274        —          (24,497     —          53,484        —          (333,426     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income (loss) for the period, net of income tax

    5,993,031        4        (2,300,416     (2     17,550,749        4        (2,153,855     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

  $ 57,927,783        36      $ 47,121,878        33      $ 160,782,547        36      $ 122,450,991        33   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO:

               

Shareholders of the parent

  $ 51,951,943        32      $ 49,379,633        35      $ 143,336,544        32      $ 124,714,606        33   

Noncontrolling interests

    (17,191     —          42,661        —          (104,746     —          (109,760     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 51,934,752        32      $ 49,422,294        35      $ 143,231,798        32      $ 124,604,846        33   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO:

               

Shareholders of the parent

  $ 57,951,263        36      $ 47,092,066        33      $ 160,893,697        36      $ 122,537,025        33   

Noncontrolling interests

    (23,480     —          29,812        —          (111,150     —          (86,034     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 57,927,783        36      $ 47,121,878        33      $ 160,782,547        36      $ 122,450,991        33   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    For the Three Months Ended September 30     For the Nine Months Ended September 30  
    2013     2012     2013     2012  
   

Income Attributable to
Shareholders of

the Parent

   

Income Attributable to
Shareholders of

the Parent

   

Income Attributable to
Shareholders of

the Parent

   

Income Attributable to

Shareholders of

the Parent

 

EARNINGS PER SHARE (NT$, Note 32)

       

Basic earnings per share

  $ 2.00      $ 1.90      $ 5.53      $ 4.81   
 

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

  $ 2.00      $ 1.90      $ 5.53      $ 4.81   
 

 

 

   

 

 

   

 

 

   

 

 

 

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

Translation
Reserve

   

Unrealized
Gain (Loss)
from Available-

for-sale
Financial Assets

    Cash Flow
Hedges Reserve
    Total     Total     Noncontrolling
Interests
   

Total

Equity

 
    Shares
(In Thousands)
    Amount     Capital Surplus     Legal
Capital
Reserve
   

Special

Capital
Reserve

    Unappropriated
Earnings
    Total                

BALANCE, JANUARY 1, 2013

    25,924,435      $ 259,244,357      $ 55,675,340      $ 115,820,123      $ 7,606,224      $ 284,985,121      $ 408,411,468      $ (10,753,806   $ 7,973,321      $ —        $ (2,780,485   $ 720,550,680      $ 2,543,226      $ 723,093,906   

Appropriations of prior year’s earnings

                           

Legal capital reserve

    —          —          —          16,615,880        —          (16,615,880     —          —          —          —          —          —          —          —     

Reversal of special capital reserve

    —          —          —          —          (4,820,483     4,820,483        —          —          —          —          —          —          —          —     

Cash dividends to shareholders—NT$3.00 per share

    —          —          —          —          —          (77,773,307     (77,773,307     —          —          —          —          (77,773,307     —          (77,773,307
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    —          —          —          16,615,880        (4,820,483     (89,568,704     (77,773,307     —          —          —          —          (77,773,307     —          (77,773,307
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income for the nine months ended September 30, 2013

    —          —          —          —          —          143,336,544        143,336,544        —          —          —          —          143,336,544        (104,746     143,231,798   

Other comprehensive income for the nine months ended September 30, 2013, net of income tax

    —          —          —          —          —          —          —          2,315,276        15,241,944        (67     17,557,153        17,557,153        (6,404     17,550,749   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the nine months ended September 30, 2013

    —          —          —          —          —          143,336,544        143,336,544        2,315,276        15,241,944        (67     17,557,153        160,893,697        (111,150     160,782,547   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Issuance of stock from exercise of employee stock options

    3,956        39,553        74,613        —          —          —          —          —          —          —          —          114,166        —          114,166   

Stock option compensation cost of subsidiary

    —          —          —          —          —          —          —          —          —          —          —          —          5,312        5,312   

Adjustments to share of changes in equity of associates and joint venture

    —          —          27,011        —          —          —          —          —          —          —          —          27,011        —          27,011   

Adjustments arising from changes in percentage of ownership in subsidiaries

    —          —          64,752        —          —          —          —          —          —          —          —          64,752        (64,752     —     

Increase in noncontrolling interests

    —          —          —          —          —          —          —          —          —          —          —          —          198,279        198,279   

Effect of deconsolidation of subsidiary

    —          —          —          —          —          —          —          —          —          —          —          —          (2,273,153     (2,273,153
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE, SEPTEMBER 30, 2013

    25,928,391      $ 259,283,910      $ 55,841,716      $ 132,436,003      $ 2,785,741      $ 338,752,961      $ 473,974,705      $ (8,438,530   $ 23,215,265      $ (67   $ 14,776,668      $ 803,876,999      $ 297,762      $ 804,174,761   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE, JANUARY 1, 2012

    25,916,222      $ 259,162,226      $ 55,471,662      $ 102,399,995      $ 6,433,874      $ 211,630,458      $ 320,464,327      $ (6,433,364   $ (1,172,762   $ (93   $ (7,606,219   $ 627,491,996      $ 2,436,649      $ 629,928,645   

Appropriations of prior year’s earnings

                           

Legal capital reserve

    —          —          —          13,420,128        —          (13,420,128     —          —          —          —          —          —          —          —     

Special capital reserve

    —          —          —          —          1,172,350        (1,172,350     —          —          —          —          —          —          —          —     

Cash dividends to shareholders—NT$3.00 per share

    —          —          —          —          —          (77,748,668     (77,748,668     —          —          —          —          (77,748,668     —          (77,748,668
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    —          —          —          13,420,128        1,172,350        (92,341,146     (77,748,668     —          —          —          —          (77,748,668     —          (77,748,668
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income for the nine months ended September 30, 2012

    —          —          —          —          —          124,714,606        124,714,606        —          —          —          —          124,714,606        (109,760     124,604,846   

Other comprehensive income for the nine months ended September 30, 2012, net of income tax

    —          —          —          —          —          —          —          (3,618,876     1,413,013        28,282        (2,177,581     (2,177,581     23,726        (2,153,855
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income for the nine months ended September 30, 2012

    —          —          —          —          —          124,714,606        124,714,606        (3,618,876     1,413,013        28,282        (2,177,581     122,537,025        (86,034     122,450,991   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Issuance of stock from exercise of employee stock options

    5,825        58,250        118,206        —          —          —          —          —          —          —          —          176,456        —          176,456   

Stock option compensation cost of subsidiary

    —          —          —          —          —          —          —          —          —          —          —          —          3,372        3,372   

Adjustments to share of changes in equity of associates and joint venture

    —          —          2,601        —          —          —          —          —          —          —          —          2,601        —          2,601   

Adjustments arising from changes in percentage of ownership in subsidiaries

    —          —          37,956        —          —          —          —          —          —          —          —          37,956        (37,956     —     

Increase in noncontrolling interests

    —          —          —          —          —          —          —          —          —          —          —          —          273,920        273,920   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE, SEPTEMBER 30, 2012

    25,922,047      $ 259,220,476      $ 55,630,425      $ 115,820,123      $ 7,606,224      $ 244,003,918      $ 367,430,265      $ (10,052,240   $ 240,251      $ 28,189      $ (9,783,800   $ 672,497,366      $ 2,589,951      $ 675,087,317   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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)

 

     For the Nine Months
Ended September 30
 
     2013     2012  

CASH FLOWS FROM OPERATING ACTIVITIES

    

Income before income tax

   $ 165,114,477      $ 135,392,326   

Adjustments for:

    

Depreciation expense

     113,400,781        93,501,687   

Amortization expense

     1,629,482        1,642,604   

Stock option compensation cost of subsidiary

     5,312        3,372   

Finance costs

     1,861,664        685,418   

Share of profits of associates and joint venture

     (2,826,900     (1,338,261

Interest income

     (1,282,220     (1,294,864

Gain on disposal of property, plant and equipment and intangible assets, net

     (19,554     (263

Impairment loss on property, plant and equipment

     —          422,323   

Impairment loss of financial assets

     1,541,170        2,748,616   

Gain on disposal of available-for-sale financial assets, net

     (1,239,442     (321,580

Gain on disposal of financial assets carried at cost, net

     (32,199     (127,480

Loss on disposal of investments in associates

     733        1,009   

Gain on deconsolidation of subsidiary

     (293,578     —     

Unrealized gross profit on sales to associates

     42,833        129,569   

Loss (gain) on foreign exchange, net

     353,755        (1,707,952

Dividend income

     (506,560     (69,945

Income from receipt of equity securities in settlement of trade receivables

     (9,590     (886

Loss on hedging instruments

     6,319,146        —     

Gain arising from changes in fair value of available-for-sale financial assets in hedge effective portion

     (5,989,610     —     

Changes in operating assets and liabilities:

    

Derivative financial instruments

     (145,680     (37,059

Receivables from related parties

     (740,050     (739,481

Notes and accounts receivable, net

     (21,325,495     (18,556,562

Other receivables from related parties

     77,757        (34,852

Inventories

     700,838        (8,408,463

Other current assets

     (79,924     (476,904

Other financial assets

     39,939        107,508   

Accounts payable

     (959,796     2,891,661   

Payables to related parties

     755,742        (559,968

Salary and bonus payable

     221,487        845,786   

Accrued profit sharing to employees and bonus to directors and supervisors

     (1,239,891     (427,278

Accrued expenses and other current liabilities

     2,906,280        4,418,928   

Provisions

     714,527        1,839,277   

Accrued pension cost

     13,068        (7,746
  

 

 

   

 

 

 

Cash generated from operations

     259,008,502        210,520,540   

Income taxes paid

     (14,398,067     (10,355,944
  

 

 

   

 

 

 

Net cash generated by operating activities

     244,610,435        200,164,596   
  

 

 

   

 

 

 

(Continued)

 

- 5 -


Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

 

     For the Nine Months
Ended September 30
 
     2013     2012  

CASH FLOWS FROM INVESTING ACTIVITIES

    

Acquisitions of:

    

Available-for-sale financial assets

   $ (16,496   $ (4,434

Financial assets carried at cost

     (18,059     (6,833

Property, plant and equipment

     (213,640,001     (186,371,680

Intangible assets

     (2,013,354     (1,106,734

Proceeds from disposal or redemption of:

    

Available-for-sale financial assets

     2,370,217        616,757   

Held-to-maturity financial assets

     4,445,850        1,278,089   

Financial assets carried at cost

     53,857        236,735   

Property, plant and equipment

     97,368        116,748   

Other assets

     —          8,259   

Costs from entering into hedging transactions

     (143,982     —     

Interest received

     1,194,967        1,340,623   

Other dividends received

     506,560        69,945   

Dividends received from associates

     2,141,881        2,088,472   

Refundable deposits paid

     (67,513     (103,531

Refundable deposits refunded

     81,922        2,290,428   

Net cash outflow from deconsolidation of subsidiary (Note 34)

     (979,910     —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (205,986,693     (179,547,156
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

    

Proceeds from issuance of bonds

     130,844,821        57,600,000   

Repayment of bonds

     —          (4,500,000

Increase (decrease) in short-term loans

     (17,314,261     4,494,916   

Increase in long-term bank loans

     690,000        50,000   

Repayment of long-term bank loans

     (62,500     (181,250

Repayment of other long-term payables

     (853,788     (2,367,866

Interest paid

     (1,242,377     (683,003

Guarantee deposits received

     14,916        14,814   

Guarantee deposits refunded

     (71,982     (229,585

Decrease in obligations under finance leases

     (27,796     (124,923

Proceeds from exercise of employee stock options

     114,166        176,456   

Cash dividends

     (77,773,307     (77,748,668

Increase in noncontrolling interests

     212,410        273,920   
  

 

 

   

 

 

 

Net cash generated (used) by financing activities

     34,530,302        (23,225,189
  

 

 

   

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

     39,065        (2,126,415
  

 

 

   

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     73,193,109        (4,734,164

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

     143,410,588        143,472,277   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

   $ 216,603,697      $ 138,738,113   
  

 

 

   

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.                                                           (Concluded)

 

- 6 -


Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012

(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. Beginning in 2010, TSMC also engages in the researching, developing, designing, manufacturing and selling of solid state lighting devices and related applications products and systems, and renewable energy and efficiency related technologies and products.

On September 5, 1994, TSMC’s 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 42.

 

2. THE AUTHORIZATION OF FINANCIAL STATEMENTS

The consolidated financial statements were reported to the Board of Directors and issued on November 12, 2013.

 

3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs)

On May 14, 2009, the Financial Supervisory Commission (FSC) announced the roadmap of IFRSs adoption for R.O.C. companies. Accordingly, starting 2013, companies with shares listed on the TWSE or traded on the Taiwan GreTai Securities Market or Emerging Stock Market should prepare the consolidated financial statements in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the IFRSs, International Accounting Standards (IASs), interpretations as well as related guidance translated by Accounting Research and Development Foundation (ARDF) endorsed by the FSC with the effective dates (collectively, “Taiwan-IFRSs”).

The new, revised or amended IFRSs, IASs, interpretations and related guidance in issue but not yet adopted by the Company as well as the effective dates issued by the International Accounting Standards Board (IASB), are stated as follows; however, the initial adoption to the following new, revised or amended standards and interpretations is still subject to the effective date to be published by the FSC.

 

- 7 -


New, Revised or Amended Standards and Interpretations

  

Effective Date Issued by

IASB (Note)

Endorsed by the FSC but the
    effective dates have not yet
    been determined by the FSC

     
Amendments to IFRSs   

Improvements to IFRSs 2009—Amendment to IAS 39

   January 1, 2009 or
    January 1, 2010
IFRS 9 (2009)   

Financial Instruments

   January 1, 2015
Amendment to IAS 39   

Embedded Derivatives

   Effective in fiscal year
    beginning on or after
    June 30, 2009

Not yet endorsed by the FSC

     
Amendments to IFRSs   

Improvements to IFRSs 2010—Amendment to IAS 39

   July 1, 2010 or January 1, 2011
Amendments to IFRSs   

Annual Improvements to IFRSs 2009—2011 Cycle

   January 1, 2013
Amendments to IFRS 1   

Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters

   July 1, 2010
Amendments to IFRS 1   

Government Loans

   January 1, 2013
Amendments to IFRS 1   

Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters

   July 1, 2011
Amendment to IFRS 7   

Disclosures-offsetting Financial Assets and Financial Liabilities

   January 1, 2013
Amendments to IFRS 9 and IFRS 7   

Mandatory Effective Date and Transition Disclosure

   January 1, 2015
Amendment to IFRS 7   

Disclosures—Transfers of Financial Assets

   July 1, 2011
Amendment to IFRS 9 (2010)   

Financial Instruments

   January 1, 2015
IFRS 10   

Consolidated Financial Statements

   January 1, 2013
IFRS 11   

Joint Arrangements

   January 1, 2013
IFRS 12   

Disclosure of Interests in Other Entities

   January 1, 2013

Amendments to IFRS 10,

    IFRS 11 and IFRS 12

  

Consolidated financial Statements, Joint Arrangements, and Disclosure of Interests in Other Entities: Transition Guidance

   January 1, 2013

Amendments to IFRS 10,

    IFRS 12 and IAS 27

  

Investment Entities

   January 1, 2014
IFRS 13   

Fair Value Measurement

   January 1, 2013
Amendment to IAS 1   

Presentation of Items of Other Comprehensive Income

   July 1, 2012
Amendment to IAS 12   

Deferred Tax: Recovery of Underlying Assets

   January 1, 2012
Amendment to IAS 19   

Employee Benefits

   January 1, 2013
Amendment to IAS 27   

Separate Financial Statements

   January 1, 2013
Amendment to IAS 28   

Investments in Associates and Joint Ventures

   January 1, 2013
Amendment to IAS 32   

Offsetting of Financial Assets and Financial Liabilities

   January 1, 2014
Amendment to IAS 36   

Recoverable Amount Disclosures for Non-Financial Assets

   January 1, 2014

(Continued)

 

- 8 -


New, Revised or Amended Standards and Interpretations

  

Effective Date Issued by

IASB (Note)

Amendment to IAS 39   

Novation of Derivatives and Continuation of Hedge Accounting

   January 1, 2014
IFRIC 20   

Stripping Costs in the Production Phase of A Surface Mine

   January 1, 2013
IFRIC 21   

Levies

   January 1, 2014

(Concluded)

 

  Note: The aforementioned new, revised or amended standards or interpretations are effective after fiscal year beginning on or after the effective dates, unless specified otherwise.

Except for the following items, the Company believes that the adoption of aforementioned new, revised or amended standards or interpretations will not have a significant effect on the Company’s accounting policies.

 

  a. IFRS 9, “Financial Instruments”

Under IFRS 9, all recognized financial assets currently in the scope of IAS 39, “Financial Instruments: Recognition and Measurement,” will be subsequently measured at either the amortized cost or the fair value. If the objective of the Company’s business model is to hold the financial asset to collect the contractual cash flows which are solely for payments of principal and interest on the principal amount outstanding, such assets are measured at the amortized cost. All other financial assets must be measured at the fair value through profit or loss as of the balance sheet date.

 

  b. IFRS 12, “Disclosure of Interests in Other Entities”

IFRS 12 is a standard that requires a broader disclosure in an entity’s interests in subsidiaries, joint arrangements, associates and unconsolidated entities. The objective of IFRS 12 is to specify the disclosure information provided by the entity that enables the users of financial statements in evaluating the nature of, and risks associated with, its interests in other entities and the effects of those interests on the entity’s financial assets and liabilities, as well as the involvement of the owners of noncontrolling interests towards the entity. The Company expects the application of IFRS 12 will result in more extensive disclosures of interests in other entities in the financial statements.

 

  c. IFRS 13, “Fair Value Measurement”

IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements.

 

  d. Amendments to IAS 1, “Presentation of Items of Other Comprehensive Income”

The amendments to IAS 1 introduce a new disclosure terminology for other comprehensive income, which require additional disclosures in other comprehensive income. The items of other comprehensive income will be grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss; and (b) items that will be reclassified subsequently to profit or loss when specific conditions are met. In addition, income tax on items of other comprehensive income is also required to be allocated on the same basis. The Company expects the aforementioned amendments will change the Company’s presentation on the statement of comprehensive income.

 

- 9 -


  e. Amendments to IAS 19, “Employee Benefits”

The amendments to IAS 19 change the accounting for defined benefit plans, which require the Company to recognize changes in defined benefit obligations or assets, to disclose the components of the defined benefit costs, to eliminate the corridor approach and to accelerate the recognition of past service cost. According to the amendments, all actuarial gains and losses will be recognized 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 amendment also requires a broader disclosure in defined benefit plans.

 

  f. 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.

As of the date that the consolidated financial statements were authorized for issue, the Company continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the above standards or interpretations. The related impact will be disclosed when the Company completes the evaluation.

 

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements are the Taiwan-IFRSs interim consolidated financial statements for part of the period covered by the Taiwan-IFRSs annual consolidated financial statements prepared for the year ended December 31, 2013. The Company’s date of transition to Taiwan-IFRSs is January 1, 2012, and the effect of the transition to Taiwan-IFRSs is disclosed in Note 43.

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.

Significant accounting policies are summarized as follows:

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 IFRS 1, “First-time adoption of International Financial Reporting Standards,” (IFRS 1) and IAS 34, “Interim Financial Reporting,” endorsed by the FSC. The consolidated financial statements do not present all the disclosures required for a complete set of annual consolidated financial statements prepared under Taiwan-IFRSs.

Basis of Consolidation

The basis for the consolidated financial statements

The consolidated financial statements incorporate the financial statements of TSMC and entities controlled by TSMC (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

 

- 10 -


Income and expenses of subsidiaries acquired or disposed of are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to the shareholders of the parent and to the noncontrolling interests even if this results in the noncontrolling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Company’s interests and the noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to shareholders of the parent.

When the Company loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between:

 

  a. the aggregate of the fair value of consideration received and the fair value of any retained interest at the date when control is lost; and

 

  b. the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any noncontrolling interest.

The Company shall account for all amounts recognized in other comprehensive income in relation to the subsidiary on the same basis as would be required if the Company had directly disposed of the related assets and liabilities.

The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the cost on initial recognition of an investment in an associate.

The subsidiaries in the consolidated financial statements

The detail information of the subsidiaries at the end of reporting period was as follows:

 

           

Establishment
and Operating

Location

  Percentage of Ownership      
Name of Investor   Name of Investee   Main Businesses and Products    

September 30,

2013

   

December 31,

2012

   

September 30,

2012

   

January 1,

2012

    Note

TSMC

  TSMC North America  

Selling and marketing of integrated circuits and semiconductor devices

 

San Jose, California, U.S.A.

    100     100     100     100   —  
 

TSMC Japan Limited (TSMC Japan)

 

Marketing activities

 

Yokohama, Japan

    100     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     100   —  
 

TSMC Korea Limited (TSMC Korea)

 

Customer service and technical supporting activities

 

Seoul, Korea

    100     100     100     100   a)
 

TSMC Europe B.V. (TSMC Europe)

 

Marketing and engineering supporting activities

 

Amsterdam, the Netherlands

    100     100     100     100   a)
 

TSMC Global, Ltd. (TSMC Global)

 

Investment activities

 

Tortola, British Virgin Islands

    100     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     100   —  
 

VentureTech Alliance Fund III, L.P. (VTAF III)

 

Investing in new start-up technology companies

 

Cayman Islands

    50     50     50     53   —  
 

VentureTech Alliance Fund II, L.P. (VTAF II)

 

Investing in new start-up technology companies

 

Cayman Islands

    98     98     98     98   —  
 

Emerging Alliance Fund, L.P. (Emerging Alliance)

 

Investing in new start-up technology companies

 

Cayman Islands

    99.5     99.5     99.5     99.5   a)

(Continued)

 

- 11 -


                Percentage of Ownership      
Name of Investor   Name of Investee   Main Businesses and
Products
 

Establishment

and
Operating

Location

 

September 30,

2013

   

December 31,

2012

   

September 30,

2012

   

January 1,

2012

    Note

TSMC

 

Xintec Inc. (Xintec)

 

Wafer level chip size packaging service

 

Taoyuan, Taiwan

    b     40%        40%        40%      —  
 

TSMC Solid State Lighting Ltd. (TSMC SSL)

 

Engaged in researching, developing, designing, manufacturing and selling solid state lighting devices and related applications products and systems

 

Hsin-Chu, Taiwan

    92%        95%        95%        100%     

TSMC and TSMC GN aggregately have a controlling interest of 93% in TSMC SSL

 

TSMC Solar Ltd. (TSMC Solar)

 

Engaged in researching, developing, designing, manufacturing and selling renewable energy and saving related technologies and products

 

Tai-Chung, Taiwan

    99%        99%        99%        100%     

TSMC and TSMC GN aggregately have a controlling interest of 99% in TSMC Solar

 

TSMC Guang Neng Investment, Ltd. (TSMC GN)

 

Investment activities

 

Taipei, Taiwan

    100%        100%        100%        —        —  

TSMC Partners

 

TSMC Design Technology Canada Inc. (TSMC Canada)

 

Engineering support activities

 

Ontario, Canada

    100%        100%        100%        100%      a)
 

TSMC Technology, Inc. (TSMC Technology)

 

Engineering support activities

 

Delaware, U.S.A.

    100%        100%        100%        100%      a)
 

TSMC Development, Inc. (TSMC Development)

 

Investment activities

 

Delaware, U.S.A.

    100%        100%        100%        100%      —  
 

InveStar Semiconductor Development Fund, Inc. (ISDF)

 

Investing in new start-up technology companies

 

Cayman Islands

    97%        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%        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%        100%      —  

VTAF III

 

Mutual-Pak Technology Co., Ltd. (Mutual-Pak)

 

Manufacturing and selling of electronic parts and researching, developing, and testing of RFID

 

Taipei, Taiwan

    58%        58%        58%        57%      a)
 

Growth Fund Limited (Growth Fund)

 

Investing in new start-up technology companies

 

Cayman Islands

    100%        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%        100%      a)

TSMC SSL

 

TSMC Lighting North America, Inc. (TSMC Lighting NA)

 

Selling and marketing of solid state lighting related products

 

Delaware, U.S.A.

    100%        100%        100%        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%        100%      a)
 

TSMC Solar Europe B.V. (TSMC Solar Europe)

 

Investing in solar related business

 

Amsterdam, the Netherlands

    100%        100%        100%        100%      a)
 

VentureTech Alliance Fund III, L.P. (VTAF III)

 

Investing in new start-up technology companies

 

Cayman Islands

    49%        49%        49%        46%      —  

TSMC Solar Europe

 

TSMC Solar Europe GmbH

 

Selling of solar related products and providing customer service

 

Hamburg, Germany

    100%        100%        100%        100%      a)

(Concluded)

 

Note a: This is an insignificant subsidiary for which the financial statements are not reviewed by the Company’s independent accountants. The Company’s management believes the investment in such subsidiary has no material effect on the Company’s consolidated financial statements.

 

Note b: TSMC has no power to govern the financial and operating policies of Xintec starting June 2013 due to the loss of power to cast the majority of votes at meetings of the Board of Directors. As a result, Xintec is no longer consolidated and is accounted for using the equity method. Please refer to Note 34.

Other Significant Accounting Policies

The same accounting policies have been followed in this consolidated financial statements as were applied in the preparation of the Company’s consolidated financial statements for the three months ended March 31, 2013. For the summary of other significant accounting policies, please refer to Note 4 to the consolidated financial statements for the three months ended March 31, 2013.

 

- 12 -


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 Company’s consolidated financial statements for the three months ended March 31, 2013. For the related information, please refer to Note 5 to the consolidated financial statements for the three months ended March 31, 2013.

 

6. CASH AND CASH EQUIVALENTS

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Cash and deposits in banks

   $ 213,978,108       $ 140,072,294       $ 135,330,257       $ 139,637,363   

Repurchase agreements collateralized by corporate bonds

     2,052,723         2,691,042         2,534,741         —     

Repurchase agreements collateralized by short-term commercial paper

     449,803         349,341         399,585         —     

Repurchase agreements collateralized by government bonds

     123,063         297,911         473,530         3,834,914   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 216,603,697       $ 143,410,588       $ 138,738,113       $ 143,472,277   
  

 

 

    

 

 

    

 

 

    

 

 

 

Deposits in banks, for the purpose of meeting short-term cash commitments, consisted of highly liquid time deposits that were readily convertible to known amounts of cash and which were subject to an insignificant risk of changes in value.

 

7. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Derivative financial assets

           

Forward exchange contracts

   $ 26,051       $ 38,607       $ 55,995       $ 15,360   

Cross currency swap contracts

     162,919         947         2,695         —     
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 188,970       $ 39,554       $ 58,690       $ 15,360   
  

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial liabilities

           

Forward exchange contracts

   $ 2,086       $ 12,174       $ 16,045       $ 13,623   

Cross currency swap contracts

     16,790         3,451         3,968         119   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 18,876       $ 15,625       $ 20,013       $ 13,742   
  

 

 

    

 

 

    

 

 

    

 

 

 

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.

 

- 13 -


Outstanding forward exchange contracts consisted of the following:

 

     Maturity Date   

Contract Amount

(In Thousands)

September 30, 2013

     

Sell NT$/Buy JPY

   October 2013    NT$14,344/JPY48,000

Sell NT$/Buy US$

   October 2013    NT$639,824/US$21,650

Sell US$/Buy EUR

   October 2013    US$428,345/EUR317,000

Sell US$/Buy JPY

   October 2013    US$64,418/JPY6,352,719

Sell US$/Buy RMB

   October 2013 to December 2013    US$117,000/RMB718,331

December 31, 2012

     

Sell NT$/Buy EUR

   January 2013    NT$9,417,062/EUR246,000

Sell NT$/Buy US$

   January 2013    NT$590,403/US$20,400

Sell NT$/Buy JPY

   January 2013    NT$44,110/JPY130,000

Sell US$/Buy NT$

   January 2013 to March 2013    US$13,700/NT$398,239

Sell US$/Buy RMB

   January 2013    US$20,000/RMB124,735

September 30, 2012

     

Sell NT$/Buy EUR

   October 2012    NT$7,684/EUR200

Sell NT$/Buy JPY

   October 2012 to November 2012    NT$149,017/JPY393,000

Sell NT$/Buy US$

   October 2012 to November 2012    NT$449,412/US$15,000

Sell RMB/Buy US$

   October 2012    RMB685,056/US$108,000

Sell US$/Buy EUR

   October 2012    US$52,421/EUR40,500

Sell US$/Buy JPY

   October 2012    US$315,000/JPY24,525,215

Sell US$/Buy NT$

   October 2012 to December 2012    US$106,190/NT$3,131,774

January 1, 2012

     

Sell EUR/Buy NT$

   January 2012    EUR38,600/NT$1,528,206

Sell NT$/Buy US$

   January 2012 to February 2012    NT$163,491/US$5,400

Sell RMB/Buy US$

   January 2012    RMB1,118,705/US$177,000

Sell US$/Buy EUR

   January 2012    US$2,082/EUR1,591

Sell US$/Buy JPY

   January 2012    US$3,335/JPY259,830

Sell US$/Buy NT$

   January 2012 to February 2012    US$16,900/NT$510,122

Outstanding cross currency swap contracts consisted of the following:

 

Maturity Date   

Contract Amount

(In Thousands)

  

Range of

Interest Rates
Paid

  

Range of

Interest Rates
Received

September 30, 2013

        

October 2013

   NT$1,366,150/US$46,080    —      0.32%-0.60%

October 2013 to November 2013

   US$1,199,000/NT$35,692,006    0.31%-3.51%    —  

December 31, 2012

        

January 2013

   NT$1,083,139/US$37,280    —      0.06%

January 2013

   US$275,000/NT$7,986,190    0.14%-0.17%    —  

(Continued)

 

- 14 -


Maturity Date   

Contract Amount

(In Thousands)

  

Range of

Interest Rates
Paid

  

Range of

Interest Rates
Received

September 30, 2012

        

October 2012

   NT$833,013/US$28,280    —      0.04%-0.05%

October 2012

   US$170,000/NT$4,991,030    0.10%-0.11%    —  

January 1, 2012

        

January 2012

   NT$420,431/US$13,880    —      0.48%

(Concluded)        

 

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Publicly traded stocks

   $ 61,802,636       $ 41,160,437       $ 2,067,730       $ 3,306,248   

Money market funds

     14,640         1,443         —           2,522   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 61,817,276       $ 41,161,880       $ 2,067,730       $ 3,308,770   
  

 

 

    

 

 

    

 

 

    

 

 

 

Current portion

   $ 672,179       $ 2,410,635       $ 2,067,730       $ 3,308,770   

Noncurrent portion

     61,145,097         38,751,245         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 61,817,276       $ 41,161,880       $ 2,067,730       $ 3,308,770   
  

 

 

    

 

 

    

 

 

    

 

 

 

In October 2012, the Company acquired 5% of the outstanding equity of ASML Holding N.V. (ASML) for EUR837,816 thousand with a lock-up period of 2.5 years starting from the acquisition date. (Note 40f)

In the second quarter of 2012, the Company recognized an impairment loss on some of the overseas publicly traded stocks in the amount of NT$2,677,529 thousand due to the significant decline in fair value.

 

9. HELD-TO-MATURITY FINANCIAL ASSETS

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Corporate bonds

   $ 700,285       $ 5,056,973       $ 7,556,046       $ 8,614,527   

Government bonds

     —           —           —           454,320   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 700,285       $ 5,056,973       $ 7,556,046       $ 9,068,847   
  

 

 

    

 

 

    

 

 

    

 

 

 

Current portion

   $ 700,285       $ 5,056,973       $ 6,854,611       $ 3,825,680   

Noncurrent portion

     —           —           701,435         5,243,167   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 700,285       $ 5,056,973       $ 7,556,046       $ 9,068,847   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

- 15 -


10. HEDGING DERIVATIVE FINANCIAL INSTRUMENTS

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Financial assets

           

Current

           

Cash flow hedges

           

Forward exchange contract

   $ —         $ —         $ 28,189       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities

           

Current

           

Cash flow hedges

           

Interest rate swap contracts

   $ —         $ —         $ —         $ 232   
  

 

 

    

 

 

    

 

 

    

 

 

 

Noncurrent

           

Fair value hedges

           

Stock forward contracts

   $ 6,144,025       $ —         $ —         $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

The Company’s 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 in a specific future period in order to hedge the fair value risk caused by changes in equity prices.

The outstanding stock forward contracts consisted of the following:

 

Contract Shares (In Thousands)    Maturity Date    Contract Price

September 30, 2013

     

8,250

   May 2015 to

September 2015

   Determined by the specific percentage of
spot price on the trade date

The Company entered into derivative contracts to hedge cash flow risk arising from foreign exchange rate fluctuations of an expected equity transaction in September 2012. Outstanding forward exchange contracts consisted of the following:

 

     Maturity Date      Contract Amount
(In Thousands)
 

September 30, 2012

     

Sell US$/Buy EUR

     October 2012       US$ 257,759/EUR200,000   

For the three months and nine months ended September 30, 2012, the amount recognized in other comprehensive income and accumulated under the heading of cash flow hedges reserve from the above forward exchange contract both amounted to a net gain of NT$28,189 thousand.

In addition, the Company’s long-term bank loans bear floating interest rates; therefore, changes in the market interest rate may cause future cash flows to be volatile. Accordingly, the Company entered into an interest rate swap contract in order to hedge cash flow risk caused by floating interest rates. The interest rate swap contract of the Company was due in August 2012.

 

- 16 -


The outstanding interest rate swap contract consisted of the following:

 

Contract Amount

(In Thousands)

   Maturity Date     

Range of Interest

Rates Paid

     Range of Interest
Rates Received

January 1, 2012

        

NT$80,000

     August 31, 2012         1.38%       0.63%-0.86%

For the three months and the nine months ended September 30, 2012, the amount recognized in other comprehensive income and accumulated under the heading of cash flow hedges reserve from the above interest rate swap contract amounted to a net gain of NT$22 thousand and NT$5 thousand, respectively; the amount reclassified from equity and recognized as a loss from the above interest rate swap contract amounted to a net loss of NT$47 thousand and NT$227 thousand, respectively, which were included under finance costs in the consolidated statements of comprehensive income.

 

11. NOTES AND ACCOUNTS RECEIVABLE, NET

 

    

September 30,

2013

    December 31,
2012
   

September 30,

2012

   

January 1,

2012

 

Notes and accounts receivable

   $ 79,330,887      $ 58,257,798      $ 64,876,527      $ 46,321,240   

Allowance for doubtful receivables

     (486,498     (480,212     (489,590     (490,952
  

 

 

   

 

 

   

 

 

   

 

 

 

Notes and accounts receivable, net

   $ 78,844,389      $ 57,777,586      $ 64,386,937      $ 45,830,288   
  

 

 

   

 

 

   

 

 

   

 

 

 

The Company’s sales agreements typically provide that the payment is due 30 days from the invoice date for a majority of the costumers and 30 to 45 days after the end of the month in which sales occur for some customers. 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 an 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,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Neither past due nor impaired

   $ 71,148,159       $ 47,528,952       $ 55,324,138       $ 39,362,390   

Past due but not impaired

           

Past due within 30 days

     7,696,230         10,248,634         9,062,799         6,467,898   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 78,844,389       $ 57,777,586       $ 64,386,937       $ 45,830,288   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

- 17 -


Movements of the allowance for doubtful receivables

 

     Nine Months Ended
September 30
 
     2013     2012  

Balance, beginning of the period

   $ 480,212      $ 490,952   

Provision (reversal)

     9,380        (3

Write-off

     —          (1,272

Effect of deconsolidation of subsidiary

     (3,157     —     

Effect of exchange rate changes

     63        (87
  

 

 

   

 

 

 

Balance, end of the period

   $ 486,498      $ 489,590   
  

 

 

   

 

 

 

Aging analysis of accounts receivable that is individually determined to be impaired

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Not past due

   $ 7,557       $ 160,354       $ 125,474       $ 81,017   

Past due 1-30 days

     6,832         2,863         10,165         24,351   

Past due 31-60 days

     4,576         —           —           4,684   

Past due over 120 days

     —           3,157         —           9,769   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 18,965       $ 166,374       $ 135,639       $ 119,821   
  

 

 

    

 

 

    

 

 

    

 

 

 

The Company held bank guarantees and other credit enhancements as collateral for certain impaired accounts receivables. As of September 30, 2013, December 31, 2012, September 30, 2012 and January 1, 2012, the amount of the bank guarantee and other credit enhancements were US$9 thousand, US$1,000 thousand, US$1,985 thousand and US$2,962 thousand, respectively.

 

12. INVENTORIES

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Finished goods

   $ 6,696,080       $ 6,244,824       $ 4,255,500       $ 3,347,849   

Work in process

     25,528,912         25,713,217         24,686,231         17,940,960   

Raw materials

     2,889,113         3,864,105         2,429,431         1,808,615   

Supplies and spare parts

     1,802,422         2,008,352         1,877,883         1,743,158   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 36,916,527       $ 37,830,498       $ 33,249,045       $ 24,840,582   
  

 

 

    

 

 

    

 

 

    

 

 

 

Write-down of inventories to net realizable value was included in the cost of revenue, which was as follows:

 

     Three Months Ended
September 30
     Nine Months Ended
September 30
 
     2013      2012      2013      2012  

Inventory losses

   $ 252,245       $ 443,728       $ 489,414       $ 1,485,371   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

- 18 -


13. FINANCIAL ASSETS CARRIED AT COST

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Non-publicly traded stocks

   $ 1,844,469       $ 3,314,713       $ 3,689,527       $ 4,004,314   

Mutual funds

     280,038         290,364         291,724         310,691   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 2,124,507       $ 3,605,077       $ 3,981,251       $ 4,315,005   
  

 

 

    

 

 

    

 

 

    

 

 

 

Since there is a wide range of estimated fair values of the Company’s 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 Company recognized impairment loss on financial assets carried at cost in the amount of NT$1,495,454 thousand and NT$160 thousand for the three months ended September 30, 2013 and 2012, respectively; and of NT$1,541,170 thousand and NT$71,087 thousand for the nine months ended September 30, 2013 and 2012, respectively.

 

14. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments accounted for using the equity method consisted of the following:

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Associates

   $ 22,459,686       $ 20,325,277       $ 20,993,580       $ 22,033,567   

Jointly controlled entities

     3,444,234         3,035,641         2,913,578         2,853,364   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 25,903,920       $ 23,360,918       $ 23,907,158       $ 24,886,931   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

  a. Investments in associates

Associates consisted of the following:

 

       

Place of

Incorporation and
Operation

  Carrying Amount     % of Ownership and Voting Rights Held by the Company  
Name of Associate   Principal Activities    

September 30,

2013

    December 31,
2012
   

September 30,

2012

    January 1,
2012
   

September 30,

2013

    December 31,
2012
   

September 30,

2012

    January 1,
2012
 

Vanguard International Semiconductor Corporation (VIS)

 

Research, design, development, manufacture, packaging, testing and sale of memory integrated circuits, LSI, VLSI and related parts

  Hsinchu, Taiwan   $ 10,107,307      $ 9,406,597      $ 9,121,036      $ 8,985,340        39     40     41     39

Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)

 

Fabrication and supply of integrated circuits

  Singapore     6,870,266        6,710,956        6,253,232        6,289,429        39     39     39     39

Motech Industries, Inc. (Motech)

 

Manufacturing and sales of solar cells, crystalline silicon solar cell, and test and measurement instruments and design and construction of solar power systems

  Taipei, Taiwan     2,713,227        2,992,899        4,449,280        5,609,002        20     20     20     20

Xintec

 

Wafer level chip size packaging service

  Taoyuan, Taiwan     1,785,184        —          —          —          40     —          —          —     

Global Unichip Corporation (GUC)

 

Researching, developing, manufacturing, testing and marketing of integrated circuits

  Hsinchu, Taiwan     983,702        1,214,825        1,170,032        1,149,796        35     35     35     35

Mcube Inc. (Mcube)

 

Research, development, and sale of micro-semiconductor device

  Delaware, U.S.A.     —          —          —          —          —          25     25     25
     

 

 

   

 

 

   

 

 

   

 

 

         
      $ 22,459,686      $ 20,325,277      $ 20,993,580      $ 22,033,567           
     

 

 

   

 

 

   

 

 

   

 

 

         

 

- 19 -


Since TSMC did not participate in Mcube’s issuance of new shares in the third quarter of 2013, the Company’s percentage of ownership in Mcube decreased to 18%. As a result, after reassessment, the Company did not exercise significant influence over Mcube and therefore, Mcube is no longer accounted for using the equity method. Further, such investment was reclassified to financial assets carried at cost. The Company also measured the fair value of retained interest in Mcube when the significant influence was lost, which has no difference with the carrying amount; accordingly, the Company did not recognize any gain or loss.

TSMC has no power to govern the financial and operating policies of Xintec starting June 2013 due to the loss of power to cast the majority of votes at meetings of the Board of Directors. As a result, Xintec is no longer consolidated and is accounted for using the equity method. Please refer to Note 34.

In the fourth quarter of 2012, the Company recognized an impairment loss in the amount of NT$1,186,674 thousand due to the lower estimated recoverable amount compared with the carrying amount of its investments in stocks traded on the Taiwan GreTai Securities Market.

In February 2010, the Company acquired 75,316 thousand shares of Motech through a private placement for NT$6,228,661 thousand; following such acquisition, the Company’s percentage of ownership in Motech was 20%. Transfer of the aforementioned common shares within three years from the acquisition date is prohibited unless permitted by other related regulations.

Financial information of the Company’s associates was summarized as follows:

 

    

September 30,

2013

    December 31,
2012
   

September 30,

2012

   

January 1,

2012

 

Total assets

   $ 86,577,100      $ 76,889,298      $ 78,210,258      $ 79,721,042   

Total liabilities

     (25,288,666     (21,683,504     (23,922,106     (20,948,855
  

 

 

   

 

 

   

 

 

   

 

 

 

Net assets

   $ 61,288,434      $ 55,205,794      $ 54,288,152      $ 58,772,187   
  

 

 

   

 

 

   

 

 

   

 

 

 

The Company’s share of net assets of associates

   $ 22,459,686      $ 20,325,277      $ 20,993,580      $ 22,033,567   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     Three Months Ended
September 30
     Nine Months Ended
September 30
 
     2013      2012      2013      2012  

Net revenue

   $ 16,901,548       $ 14,721,518       $ 45,692,397       $ 41,525,415   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 3,107,787       $ 1,230,675       $ 6,806,119       $ 1,170,094   
  

 

 

    

 

 

    

 

 

    

 

 

 

The Company’s share of profits of associates

   $ 969,247       $ 558,002       $ 2,420,334       $ 852,523   
  

 

 

    

 

 

    

 

 

    

 

 

 

The Company’s share of other comprehensive income (loss) of associates

   $ 1,108       $ 3,115       $ 28,292       $ (6,682
  

 

 

    

 

 

    

 

 

    

 

 

 

The market prices of the investments accounted for using the equity method in publicly traded stocks calculated by the closing price at the balance sheet date are summarized as follows:

 

Name of Associate   

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

VIS

   $ 20,323,030       $ 12,658,703       $ 11,370,845       $ 6,627,758   
  

 

 

    

 

 

    

 

 

    

 

 

 

Motech

   $ 4,435,225       $ 2,383,824       $ 2,703,125       $ 4,645,176   
  

 

 

    

 

 

    

 

 

    

 

 

 

GUC

   $ 4,066,513       $ 4,692,130       $ 5,439,136       $ 4,645,442   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

- 20 -


b. Investments in jointly controlled entities

Jointly controlled entities consisted of the following:

 

Name of Jointly
Controlled Entity
  Principal Activities  

Place of

Incorporation and

Operation

  Carrying Amount     % of Ownership and Voting Rights Held by the Company  
     

September 30,

2013

    December 31,
2012
   

September 30,

2012

    January 1,
2012
   

September 30,

2013

    December 31,
2012
   

September 30,

2012

    January 1,
2012
 

VisEra Holding Company (VisEra Holding)

 

Investing in companies involved in the design, manufacturing and other related businesses in the semiconductor industry

  Cayman
Islands
  $ 3,444,234      $ 3,035,641      $ 2,913,578      $ 2,853,364        49     49     49     49
     

 

 

   

 

 

   

 

 

   

 

 

         

Financial information of the Company’s jointly controlled entities was summarized as follows:

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Current assets

   $ 2,221,606       $ 1,887,122       $ 1,531,298       $ 1,616,916   
  

 

 

    

 

 

    

 

 

    

 

 

 

Noncurrent assets

   $ 1,641,911       $ 1,780,903       $ 1,975,543       $ 1,732,247   
  

 

 

    

 

 

    

 

 

    

 

 

 

Current liabilities

   $ 418,821       $ 631,803       $ 592,516       $ 495,066   
  

 

 

    

 

 

    

 

 

    

 

 

 

Noncurrent liabilities

   $ 462       $ 581       $ 747       $ 733   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Three Months Ended
September 30
     Nine Months Ended
September 30
 
     2013      2012      2013     2012  

Net revenue

   $ 482,576       $ 546,251       $ 1,463,662      $ 1,251,020   
  

 

 

    

 

 

    

 

 

   

 

 

 

Cost of revenue

   $ 311,902       $ 334,873       $ 905,720      $ 856,342   
  

 

 

    

 

 

    

 

 

   

 

 

 

Operating expenses

   $ 34,084       $ 30,024       $ 99,545      $ 90,615   
  

 

 

    

 

 

    

 

 

   

 

 

 

Non-operating income, net

   $ 31,673       $ 3,205       $ 39,287      $ 193,414   
  

 

 

    

 

 

    

 

 

   

 

 

 

Income tax expense

   $ 24,267       $ 30,375       $ 91,118      $ 11,739   
  

 

 

    

 

 

    

 

 

   

 

 

 

The Company’s share of profits of joint venture

   $ 143,996       $ 154,184       $ 406,566      $ 485,738   
  

 

 

    

 

 

    

 

 

   

 

 

 

The Company’s share of other comprehensive income (loss) of joint venture

   $ 36,839       $ 44,959       $ (47,216   $ 75,143   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

15. PROPERTY, PLANT AND EQUIPMENT

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Land and land improvements

   $ 3,586,612       $ 1,159,755       $ 1,170,071       $ 1,185,573   

Buildings

     105,868,005         85,610,120         86,982,731         71,915,740   

Machinery and equipment

     427,938,323         404,382,298         418,513,468         294,814,381   

Office equipment

     7,689,194         6,907,376         6,558,696         5,148,538   

Assets under finance leases

     421,911         438,663         444,782         493,945   

Advance payments and construction in progress

     182,211,979         119,063,976         66,444,314         116,863,976   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 727,716,024       $ 617,562,188       $ 580,114,062       $ 490,422,153   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

- 21 -


    Nine Months Ended September 30, 2013  
    Balance, Beginning
of Period
    Additions     Disposals     Reclassification     Effect of
Deconsolidation of
Subsidiary
   

Effect of Exchange

Rate Changes

   

Balance,

End of Period

 

Cost

             

Land and land improvements

  $ 1,527,124      $ 3,212,000      $ —        $ —        $ (772,029   $ 13,860      $ 3,980,955   

Buildings

    197,411,851        30,371,814        —          3,797        (986,205     586,240        227,387,497   

Machinery and equipment

    1,279,893,177        127,162,251        (2,094,599     —          (5,630,854     1,628,558        1,400,958,533   

Office equipment

    20,067,943        3,006,548        (506,366     —          (1,055,809     29,489        21,541,805   

Assets under finance leases

    766,732        —          —          —          —          24,593        791,325   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    1,499,666,827      $ 163,752,613      $ (2,600,965   $ 3,797      $ (8,444,897   $ 2,282,740        1,654,660,115   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation and impairment

             

Land improvements

    367,369      $ 20,332      $ —        $ —        $ —        $ 6,642        394,343   

Buildings

    111,801,731        9,642,611        —          —          (226,908     302,058        121,519,492   

Machinery and equipment

    875,510,879        101,931,987        (2,024,038     —          (3,656,326     1,257,708        973,020,210   

Office equipment

    13,160,567        1,774,915        (506,117     —          (599,483     22,729        13,852,611   

Assets under finance leases

    328,069        30,936        —          —          —          10,409        369,414   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    1,001,168,615      $ 113,400,781      $ (2,530,155   $ —        $ (4,482,717   $ 1,599,546        1,109,156,070   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Advance payments and construction in progress

    119,063,976      $ 64,777,969      $ —        $ —        $ (1,632,860   $ 2,894        182,211,979   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 617,562,188                $ 727,716,024   
 

 

 

             

 

 

 

 

    Nine Months Ended September 30, 2012  
    Balance, Beginning
of Period
   

Additions

(Deductions)

    Disposals     Impairment     Reclassification    

Effect of Exchange

Rate Changes

   

Balance,

End of Period

 

Cost

             

Land and land improvements

  $ 1,541,128      $ 18,500      $ —        $ —        $ —        $ (25,431   $ 1,534,197   

Buildings

    172,997,391        23,699,216        (53,487     —          —          (772,172     195,870,948   

Machinery and equipment

    1,057,926,529        208,463,387        (1,125,566     —          (35     (2,354,872     1,262,909,443   

Office equipment

    17,041,306        2,790,915        (472,763     —          35        (75,533     19,283,960   

Assets under finance leases

    791,480        —          —          —          —          (31,217     760,263   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    1,250,297,834      $ 234,972,018      $ (1,651,816   $ —        $ —        $ (3,259,225     1,480,358,811   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation and impairment

             

Land improvements

    355,555      $ 20,335      $ —        $ —        $ —        $ (11,764     364,126   

Buildings

    101,081,651        8,248,043        (43,387     —          —          (398,090     108,888,217   

Machinery and equipment

    763,112,148        83,843,149        (1,028,311     422,323        (8     (1,953,326     844,395,975   

Office equipment

    11,892,768        1,359,994        (464,794     —          8        (62,712     12,725,264   

Assets under finance leases

    297,535        30,166        —          —          —          (12,220     315,481   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    876,739,657      $ 93,501,687      $ (1,536,492   $ 422,323      $ —        $ (2,438,112     966,689,063   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Advance payments and construction in progress

    116,863,976      $ (50,318,756   $ —        $ —        $ (2,086   $ (98,820     66,444,314   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 490,422,153                $ 580,114,062   
 

 

 

             

 

 

 

The significant part of the Company’s 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.

For the nine months ended September 30, 2012, the Company recognized impairment loss of NT$422,323 thousand related to property, plant and equipment of the foundry reportable segment since the carrying amount of some of property, plant and equipment is expected to be unrecoverable.

The Company entered into agreements to lease buildings from December 2003 to November 2018 that qualify as finance leases.

Future minimum lease gross payments were as follows:

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Minimum lease payments

           

Not later than 1 year

   $ 27,912       $ 27,042       $ 26,809       $ —     

Later than 1 year and not later than 5 years

     111,648         108,168         107,236         223,296   

Later than five years

     725,137         729,566         723,303         780,962   
  

 

 

    

 

 

    

 

 

    

 

 

 
     864,697         864,776         857,348         1,004,258   

Less: Future finance expenses

     97,353         108,471         112,244         133,265   
  

 

 

    

 

 

    

 

 

    

 

 

 

Present value of minimum lease payments

   $ 767,344       $ 756,305       $ 745,104       $ 870,993   
  

 

 

    

 

 

    

 

 

    

 

 

 

(Continued)

 

- 22 -


    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Present value of minimum lease payments

           

Not later than 1 year

   $ 27,231       $ 26,382       $ 26,156       $ —     

Later than 1 year and not later than 5 years

     102,443         100,821         98,397         213,411   

Later than five years

     637,670         629,102         620,551         657,582   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 767,344       $ 756,305       $ 745,104       $ 870,993   
  

 

 

    

 

 

    

 

 

    

 

 

 

Current portion

   $ 8,612       $ 8,190       $ 8,070       $ —     

Noncurrent portion

     758,732         748,115         737,034         870,993   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 767,344       $ 756,305       $ 745,104       $ 870,993   
  

 

 

    

 

 

    

 

 

    

 

 

 

(Concluded)

There was no capitalization of interest for the nine months ended September 30, 2013. During the nine months ended September 30, 2012, the Company capitalized the borrowing costs directly attributable to the acquisition or construction of property, plant and equipment. For the three months and the nine months ended September 30, 2012, the amount of capitalized interest was nil and NT$6,442 thousand, respectively, and the capitalized interest rate was 1.08%-1.20%.

 

16. INTANGIBLE ASSETS

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Goodwill

   $ 5,596,319       $ 5,523,707       $ 5,560,762       $ 5,693,999   

Technology license fees

     1,174,288         1,461,893         1,548,893         1,682,892   

Software and system design costs

     3,666,125         2,968,942         2,627,158         2,366,483   

Patent and others

     956,548         1,005,027         1,152,041         1,118,189   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 11,393,280       $ 10,959,569       $ 10,888,854       $ 10,861,563   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

    Nine Months Ended September 30, 2013  
   

Balance,

Beginning of

Period

    Additions     Disposals     Reclassification    

Effect of

Deconsolidation of

Subsidiary

   

Effect of

Exchange Rate

Changes

   

Balance,

End of Period

 

Cost

             

Goodwill

  $ 5,523,707      $ —        $ —        $ —        $ —        $ 72,612      $ 5,596,319   

Technology license fees

    4,590,548        —          —          (29,565     (113,340     (1,164     4,446,479   

Software and system design costs

    15,095,421        1,809,264        (17,486     (110,746     (25,335     3,498        16,754,616   

Patent and others

    3,094,664        287,840        (23,549     101,007        (42,089     3,662        3,421,535   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    28,304,340      $ 2,097,104      $ (41,035   $ (39,304   $ (180,764   $ 78,608        30,218,949   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated amortization

             

Technology license fees

    3,128,655      $ 211,287      $ —        $ —        $ (66,587   $ (1,164     3,272,191   

Software and system design costs

    12,126,479        994,698        (17,214     (5,942     (12,661     3,131        13,088,491   

Patent and others

    2,089,637        423,497        (23,549     —          (25,195     597        2,464,987   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    17,344,771      $ 1,629,482      $ (40,763   $ (5,942   $ (104,443   $ 2,564        18,825,669   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 10,959,569                $ 11,393,280   
 

 

 

             

 

 

 

 

- 23 -


    Nine Months Ended September 30, 2012  
   

Balance,

Beginning of

Period

    Additions     Disposals     Reclassification     Effect of
Exchange Rate
Changes
   

Balance,

End of Period

 

Cost

           

Goodwill

  $ 5,693,999      $ —        $ —        $ —        $ (133,237   $ 5,560,762   

Technology license fees

    4,370,173        29,565        —          191,580        (527     4,590,791   

Software and system design costs

    13,438,579        1,162,867        (48,201     (91,904     (5,114     14,456,227   

Patent and others

    2,670,031        422,527        (91,844     93,990        (4,641     3,090,063   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    26,172,782      $ 1,614,959      $ (140,045   $ 193,666      $ (143,519     27,697,843   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated amortization

           

Technology license fees

    2,687,281      $ 354,029      $ —        $ —        $ 588        3,041,898   

Software and system design costs

    11,072,096        846,409        (48,201     (36,552     (4,683     11,829,069   

Patent and others

    1,551,842        442,166        (91,844     36,552        (694     1,938,022   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    15,311,219      $ 1,642,604      $ (140,045   $ —        $ (4,789     16,808,989   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 10,861,563              $ 10,888,854   
 

 

 

           

 

 

 

The recoverable amount of the Company’s goodwill has been tested for impairment at the end of the annual reporting period and was determined based on the value in use. The value in use was calculated based on the cash flow forecast from the financial budgets covering future five-year period, and the Company used annual discount rate of 9.00% and 9.68% in its test of impairment as of December 31, 2012 and 2011, respectively, to reflect the relevant specific risk in the cash-generating unit.

For the nine months ended September 30, 2013 and 2012, the Company did not recognize any impairment loss on goodwill.

 

17. OTHER ASSETS

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Tax receivable

   $ 1,471,795       $ 1,565,104       $ 1,462,504       $ 708,891   

Prepaid expenses

     1,258,358         1,080,236         1,042,826         1,436,416   

Long-term receivable

     796,400         767,800         756,400         785,400   

Others

     630,160         608,412         590,813         550,053   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 4,156,713       $ 4,021,552       $ 3,852,543       $ 3,480,760   
  

 

 

    

 

 

    

 

 

    

 

 

 

Current portion

   $ 2,740,765       $ 2,786,408       $ 2,639,414       $ 2,174,014   

Noncurrent portion

     1,415,948         1,235,144         1,213,129         1,306,746   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 4,156,713       $ 4,021,552       $ 3,852,543       $ 3,480,760   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

- 24 -


18. SHORT-TERM LOANS

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Unsecured loans

           

Amount

   $ 18,053,096       $ 34,714,929       $ 29,749,650       $ 25,926,528   
  

 

 

    

 

 

    

 

 

    

 

 

 

Original loan content

           

US$ (in thousands)

   $ 610,500       $ 1,195,500       $ 1,015,000       $ 856,000   

Annual interest rate

     0.38%-0.40%         0.39%-0.58%         0.42%-0.65%         0.45%-1.00%   

Maturity date

    
 
Due in
October 2013
  
  
    

 

Due in

January 2013

  

  

    
 
Due in
October 2012
  
  
    
 
Due by
February 2012
  
  

 

19. PROVISIONS

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Sales returns and allowances

   $ 6,720,214       $ 6,038,003       $ 6,900,184       $ 5,068,263   

Warranties

     7,344         4,891         3,619         2,889   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 6,727,558       $ 6,042,894       $ 6,903,803       $ 5,071,152   
  

 

 

    

 

 

    

 

 

    

 

 

 

Current portion

   $ 6,720,214       $ 6,038,003       $ 6,900,184       $ 5,068,263   

Noncurrent portion

     7,344         4,891         3,619         2,889   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 6,727,558       $ 6,042,894       $ 6,903,803       $ 5,071,152   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Sales Returns
and Allowances
    Warranties     Total  

Nine months ended September 30, 2013

      

Balance, beginning of period

   $ 6,038,003      $ 4,891      $ 6,042,894   

Provision

     3,798,683        3,687        3,802,370   

Payment

     (3,086,482     (1,361     (3,087,843

Effect of deconsolidation of subsidiary

     (37,748     —          (37,748

Effect of exchange rate changes

     7,758        127        7,885   
  

 

 

   

 

 

   

 

 

 

Balance, end of period

   $ 6,720,214      $ 7,344      $ 6,727,558   
  

 

 

   

 

 

   

 

 

 

Nine months ended September 30, 2012

      

Balance, beginning of period

   $ 5,068,263      $ 2,889      $ 5,071,152   

Provision

     6,462,738        820        6,463,558   

Payment

     (4,624,281     —          (4,624,281

Effect of exchange rate changes

     (6,536     (90     (6,626
  

 

 

   

 

 

   

 

 

 

Balance, end of period

   $ 6,900,184      $ 3,619      $ 6,903,803   
  

 

 

   

 

 

   

 

 

 

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.

 

- 25 -


The provision for warranties represents the present value of the Company’s best estimate of the future outflow of the economic benefits that will be required under the Company’s 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,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Domestic unsecured bonds

   $ 166,200,000       $ 80,000,000       $ 75,600,000       $ 22,500,000   

Overseas unsecured bonds

     44,356,500         —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 
     210,556,500         80,000,000         75,600,000         22,500,000   

Less: Discounts on bonds payable

     140,066         —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 210,416,434       $ 80,000,000       $ 75,600,000       $ 22,500,000   
  

 

 

    

 

 

    

 

 

    

 

 

 

Current portion

   $ —         $ —         $ —         $ 4,500,000   

Noncurrent portion

     210,416,434         80,000,000         75,600,000         18,000,000   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 210,416,434       $ 80,000,000       $ 75,600,000       $ 22,500,000   
  

 

 

    

 

 

    

 

 

    

 

 

 

The major terms of domestic unsecured bonds are as follows:

 

          Issuance   Tranche    Issuance Period   Total Amount  

Coupon

Rate

 

Repayment and

Interest Payment

100-1

  A    September 2011 to   September 2016   $10,500,000   1.40%  

Bullet repayment;
interest payable annually

  B    September 2011 to   September 2018   7,500,000   1.63%  

100-2

  A    January 2012 to   January 2017   10,000,000   1.29%  
  B    January 2012 to   January 2019   7,000,000   1.46%  

101-1

  A    August 2012 to   August 2017   9,900,000   1.28%  
  B    August 2012 to   August 2019   9,000,000   1.40%  

101-2

  A    September 2012 to   September 2017   12,700,000   1.28%  
  B    September 2012 to   September 2019   9,000,000   1.39%  

101-3

  —      October 2012 to   October 2022   4,400,000   1.53%  

101-4

  A    January 2013 to   January 2018   10,600,000   1.23%  
  B    January 2013 to   January 2020   10,000,000   1.35%  
  C    January 2013 to   January 2023   3,000,000   1.49%  

(Continued)

 

- 26 -


    Issuance   Tranche    Issuance Period   Total Amount  

Coupon

Rate

 

Repayment and

Interest Payment

102-1

  A    February 2013 to   February 2018   $6,200,000   1.23%  

Bullet repayment;
interest payable annually

  B   

February 2013 to

  February 2020

  11,600,000   1.38%  
  C   

February 2013 to

  February 2023

  3,600,000   1.50%  

102-2

  A   

July 2013 to

  July 2020

  10,200,000   1.50%  
  B   

July 2013 to

  July 2023

  3,500,000   1.70%  

102-3

  A   

August 2013 to

  August 2017

  4,000,000   1.34%  
  B   

August 2013 to

  August 2019

  8,500,000   1.52%  

102-4

  A   

September 2013 to

  September 2016

  1,500,000   1.35%  
  B   

September 2013 to

  September 2017

  1,500,000   1.45%  
  C   

September 2013 to

  March 2019

  1,400,000   1.60%  

Bullet repayment; interest payable annually (interest for the six months prior to maturity will accrue on the basis of actual days and be repayable at maturity)

  D   

September 2013 to

  March 2021

  2,600,000   1.85%  
  E   

September 2013 to

  March 2023

  5,400,000   2.05%  
  F   

September 2013 to

  September 2023

  2,600,000   2.10%  

Bullet repayment; interest payable annually

Domestic

      5th

  C   

January 2002 to

  January 2012

  4,500,000   3.00%  

(Concluded)

The major terms of overseas unsecured bonds are as follows:

 

Issuance Period  

Total Amount

(US$)

  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%  

 

- 27 -


21. LONG-TERM BANK LOANS

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Bank loans for working capital:

           

Repayable from April 2016 in 16 quarterly installments, annual interest rate at 3.63% in 2013

   $ 40,000       $ —         $ —         $ —     

Repayable in full in one lump sum payment in June 2016 but repaid earlier of NT$100,000 thousand in September 2012, annual interest rate at 1.08%-1.21% in 2012

     —           550,000         550,000         650,000   

Repayable in full in one lump sum payment in March 2015 but repaid earlier of NT$50,000 thousand in August 2012, annual interest rate at 1.16%-1.18% in 2012

     —           450,000         450,000         500,000   

Repayable from July 2012 in 16 quarterly installments, annual interest rate at 1.21%-1.24% in 2012

     —           262,500         281,250         300,000   

Repayable from September 2012 in 16 quarterly installments, annual interest rate at 1.21%-1.24% in 2012

     —           175,000         187,500         200,000   

Repayable from October 2013 in 16 quarterly installments, annual interest rate at 1.23%-1.24% in 2012

     —           50,000         50,000         —     
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 40,000       $ 1,487,500       $ 1,518,750       $ 1,650,000   
  

 

 

    

 

 

    

 

 

    

 

 

 

Current portion

   $ —         $ 128,125       $ 125,000       $ 62,500   

Noncurrent portion

     40,000         1,359,375         1,393,750         1,587,500   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 40,000       $ 1,487,500       $ 1,518,750       $ 1,650,000   
  

 

 

    

 

 

    

 

 

    

 

 

 

As of September 30, 2013, some of the long-term bank loans were amounted to nil as a result of deconsolidation of Xintec in June 2013 (refer to Note 34).

 

- 28 -


22. OTHER LONG-TERM PAYABLES

 

    

September 30,

2013

     December 31,
2012
    

September 30,

2012

    

January 1,

2012

 

Payables for software and system design costs

   $ 54,000       $ 113,000       $ 113,000       $ —     

Payables for acquisition of property, plant and equipment

     —           825,447         818,361         3,399,855   

Payables for technology transfer

     —           29,038         29,310         —     
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 54,000       $ 967,485       $ 960,671       $ 3,399,855   
  

 

 

    

 

 

    

 

 

    

 

 

 

Current portion (classified under accrued expenses and other current liabilities)

   $ 18,000       $ 913,485       $ 906,671       $ 3,399,855   

Noncurrent portion

     36,000         54,000         54,000         —     
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 54,000       $ 967,485       $ 960,671       $ 3,399,855