MAJOR FACILITIES
Corporate Headquarters & FAB 2, FAB 5
No.121, Park Ave. III,
Science-Based Industrial Park,
Hsinchu, Taiwan 300, R.O.C.
FAB 8
No. 25, Li-Hsin Rd.,
Science-Based Industrial Park
Hsinchu, Taiwan 300, R.O.C.
TEL: 886-3-578-0221 FAX: 886-3-578-1546
TEL: 886-3-567-8888
FAX: 886-3-566-2051
FAB 1
Building 67, No. 195, Sec. 4, Chung-Hsing Rd.,
TSMC North America
2585 Junction Avenue, San Jose,
Chu-Tung, Hsinchu, Taiwan 310, R.O.C.
CA 95134, U.S.A.
TSMC SPOKESPERSON
Name: K. C. Chen
Title: Senior Vice President
TEL: 886-3-578-0221 FAX: 886-3-578-1545
AUDITORS
Company: T N SOONG & CO
Auditors: S. C. Huang, Edward Way
Address: 12Fl., No.156, Sec.3, Min-Sheng
E. Rd., Taipei, Taiwan 105, R.O.C.
TEL: 886-3-582-1240 FAX: 886-3-582-2616
TEL: 1-408-382-8000
FAX: 1-408-382-8008
TEL: 886-2-2545-9988 FAX: 886-2-2545-9966
FAB 3 & FAB 4
No. 9, Creation Rd. I,
Science-Based Industrial Park,
Hsinchu, Taiwan 300, R.O.C.
TEL: 886-3-578-1688 FAX: 886-3-578-1548
FAB 6
No. 1, Nan-Ke North Rd.,
Science-Based Industrial Park,
TSMC Europe
World Trade Center, Strawinskylaan 1145,
1077 XX Amsterdam, The Netherlands
STOCK TITLE TRANSFER
Company: China Trust Commercial Bank
Transfer Agency Department
TEL: 31-20-305-9900
FAX: 31-20-305-9911
Address: 5Fl., No.83, Sec.1, Chung-Ching
TSMC Japan
21F, Queen's Tower C, 2-3-5
Minato, Mirai, Nishi-Ku, Yokohama,
Kanagawa 220-6221, Japan
S. Rd., Taipei, Taiwan 100, R.O.C.
TEL: 886-2-2361-3033 FAX: 886-2-2311-6723
ADR DEPOSITARY BANK
Company: Citibank, N.A.
ShanHwa, Tainan, Taiwan 741, R.O.C.
TEL: 81-45-682-0670~2 FAX: 81-45-682-0649
Depositary Services Department
TEL: 886-6-505-2000 FAX: 886-6-505-2058
FAB 7
No. 6, Creation Rd. II,
Science-Based Industrial Park
Hsinchu, Taiwan 300, R.O.C.
TEL: 886-3-578-5112 FAX: 886-3-578-2038
Address: 20Fl., 111 Wall Street, New York,
NY 10005, U.S.A.
TEL: 1-212-657-2770 FAX: 1-212-825-5398
WEB SITE
http://www.tsmc.com.tw
I n 2 0 0 0 , T S M C d e l i v e r e d f o u n d r y ' s f i r s t 3 0 0 m m c u s t o m e r w a f e r s .
Table of Contents
LETTER TO OUR SHAREHOLDERS
A BRIEF INTRODUCTION TO TSMC
1. Company Profile
2. Organization
3. Capital & Shares, Corporate Bonds and ADR Issuance
OPERATIONAL HIGHLIGHTS
1. Business Activities
2. Marketing and Sales
3. Market Outlook
4. Employee Relations
5. Personnel Growth over the Last Two Years
6. Environmental Protection Measures
7. Major Contracts
8. Litigation Proceedings
BUSINESS AND FINANCIAL PLANS
1. Production and Sales Plans for 2001
2. Year 2001 Plans for Disposition or Acquisition of Real
Estate or Long-Term Investment
3. Research and Development Plans
4. Financing Plans
5. TSMC Education and Culture Foundation
FINANCIAL STATEMENTS
1. Brief Balance Sheet
2. Brief Statements of Income
3. Financial Analysis
4. Net Worth, Earnings, Dividends and Market Price Per Share
5. Auditors' Opinion
6. Supervisors' Report
7. Review and Analysis of Financial Status and Operating Results
8. Financial Statements and Independent Auditors' Report
9. Consolidated Financial Statements
SPECIFIC NOTES
1. Affiliates Information
2. Dividend Policy
3. Statement of Internal Control
4. Other Necessary Supplement
01
Business Philosophy
TSMC is committed to:
Integrity
Focus on Our Core Business - IC Foundry
Globalization
Long-term Vision and Strategies
Treating Customers as Partners
Building Quality into all Aspects of Our Business
Unceasing Innovation
Fostering a Dynamic and Fun Work Environment
Keeping Communication Channels Open
Caring for Employees and Shareholders, and
Being a Good Corporate Citizen
02
LETTER TO OUR SHAREHOLDERS
LETTER TO OUR SHAREHOLDERS
Dear Shareholders,
It has been, and is, TSMC's objective to be the most reputable, service-oriented and maximum-
total-benefits silicon foundry in the world, thus earning the reward of also being the largest and most
profitable. We are committed to developing long-term competitiveness by strengthening the bond
between ourselves and our customers. To meet these goals, TSMC in the year 2000 focused on
providing our customers with the most advanced technology, sufficient capacity, on-line and other
services.
Technology Advancement
Throughout 2000, TSMC worked toward fulfilling its commitment to provide customers with the latest
advancements in process technology, thereby enhancing our customers' competitiveness in the
global market.
Our 0.13µm process technology release surpassed the ITRS (International Technology Roadmap
for Semiconductors) roadmap the first time. Breakthroughs in processes have taken TSMC's technology
to a broad spectrum. In addition to the mainstream logic process, TSMC now offers Mixed Signal,
RF, SiGe, BiCMOS, embedded memories, high voltage devices and CMOS Image Sensor process
technologies. Taking 0.13µm process technology as an example, by the end of 2000, TSMC had
already delivered fully functional circuits to customer products using different versions of 0.13µm
process technology in our portfolio, including core logic, high-speed, low-power, and CPU processes.
The value of this technology leadership not only benefits our customers, but also flows directly to
TSMC's bottom line. By the fourth quarter of the year, shipments of wafers utilizing leading-edge
0.25µm, 0.18µm, 0.15µm and 0.13µm process technologies accounted for half of the company's
total revenues and contributed to our substantial profit margins.
Morris Chang, Chairman
F. C. Tseng, President
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03
Capacity Expansion
In June of 2000, we completed the mergers of TSMC-ACER and Worldwide Semiconductor
Manufacturing Company, providing immediate additional capacity to our customers. In addition,
TSMC invested nearly NT$114 billion in capacity expansion to support our customers' growing
needs. Several highlights are worth noting.
In March, TSMC officially opened Fab 6, the world's largest IC manufacturing facility, in the new
Tainan Science-Based Industrial Park. Fab 6 also houses the foundry industry's first 300mm pilot
line. By the end of the year, TSMC had delivered the industry's first customer products utilizing
300mm wafers. We are also constructing two dedicated 300mm production facilities - Fab 12 in
Hsinchu and Fab 14 in Tainan.
At SSMC, our joint venture with Philips in Singapore, the first batch of test wafers made their way
through production lines in September 2000, well ahead of schedule. In December, we increased
our equity position in WaferTech, USA to almost 100 percent, thus increasing TSMC's flexibility to
implement future strategic and capacity expansion plans.
By year end, TSMC's total wafer output reached 3.4 million 8-inch equivalent wafers, a 90 percent
increase over the 1.8 million 8-inch equivalent wafers produced in 1999.
Upgraded On-line Service
To allow our customers to focus on their design requirements, and ultimately enable greater innovation
at the system level, TSMC in year 2000 created the Design Service Alliance, an umbrella organization
that includes collaborative alliances with best-of-class vendors in the electronic design automation
(EDA), library, semiconductor intellectual property (IP), and design center industries. Through these
alliances, TSMC is able to provide customers with access to a wide selection of third-party products
and services proven in TSMC silicon.
Also, in 2000, we tailored TSMC Online to provide customers with a "personalized" environment.
This created a transparent window into our manufacturing operations, which increased our
customers' efficiency and optimized their supply chain capabilities. These services have significantly
reduced our customers' time-to-volume and helped lower their product design cost.
Record Revenues & Net Profit
The year 2000 was one of remarkable growth for the global semiconductor industry in general, and
for the foundry industry specifically. For the year, TSMC's efforts were rewarded by revenues of
NT$166.2 billion and net profits of NT$65.1 billion, increasing 127.3 percent and 165.1 percent
respectively, over 1999. As a result, earnings per share for 2000 reached NT$5.71, a significant
gain over the 1999 earnings per share.
Recognition and Awards
In addition to financial results, TSMC has been recognized in many areas of performance. Our
commitment to quality, environment, health and safety earned us the honor of being the first
04
semiconductor company in Taiwan to receive OHSA's 18001 certification. TSMC's Fab 5 was also
recognized by Semiconductor International magazine as one of the top two semiconductor fabs in
the world.
In addition, CommonWealth magazine, in its annual corporate survey, ranked TSMC as Taiwan's
number one company for the fourth consecutive year. The same magazine cited TSMC as the best
corporate citizen in Taiwan for its devotion to public service. Far Eastern Economic Review also
ranked TSMC first among the top 10 Taiwan businesses in its "Top Asia 200" corporation ranking.
Finally, TSMC was named the most favored employer out of the top 100 private businesses in a
survey of college students conducted by Taiwan's Cheers magazine.
Future Outlook
In retrospect, the semiconductor industry in year 2000 boomed to an overheated point. In 2001, an
industry-wide return to a more normal growth pattern will most likely occur. In the long term, however,
the foundry industry growth is still expected to surpass overall IC industry growth.
In addition to maintaining close collaboration with fabless semiconductor companies, IDMs and
systems companies, we intend to play a role in facilitating important technology developments in the
future. As part of this effort, we plan to continue increasing our R&D investment and aggressively invest
in 300mm wafer fabrication capabilities to accommodate emerging market demand.
In closing, we would like to thank all our customers, shareholders and employees for their continued
support and dedication that have made it possible for TSMC to achieve the outstanding results of
this past year.
Morris Chang
Chairman
F. C. Tseng
President
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05
06
A Brief Introduction to TSMC
A Brief Introduction to TSMC
1. Company Profile
Founded in 1987, Taiwan Semiconductor Manufacturing Company (TSMC) is the world's largest dedicated
semiconductor foundry. Based in Taiwan's "Silicon Valley," the Hsin-Chu Science-Based Industrial Park,
TSMC is listed on both the Taiwan Stock Exchange (TSE) and the New York Stock Exchange (NYSE)
under the symbol TSM.
TSMC was the first pure-play integrated circuit (IC) foundry in the world. Since the beginning, the
Company has been dedicated to providing advanced IC manufacturing services to its customers. Our
charter prevents us from designing or making our own brand-name IC products; TSMC therefore is a partner,
not a competitor, to our customers. TSMC's success in the foundry industry has served as an inspiration
for many companies, enabling a significant acceleration in technological innovation. With TSMC as the
engine of change, the number of global fabless IC companies has grown sbustaintially, and what was
once only a concept - a "pure play" foundry industry - has generated more than US $10 billion dollars in
revenues in year 2000. As the semiconductor industry faces ongoing consolidation and spiraling IC fab
construction costs, dedicated foundry companies like TSMC are now expected to become a primary
source of IC manufacturing worldwide.
One of TSMC's business strategies is to expand our production capacity deliberately to ensure customers
with sufficient capacity and maintain operation flexibility. At the end of 2000, we operated two 6-inch wafer
fabs (Fab 1 & 2), six 8-inch fabs (Fab 3, 4, 5, 6, 7 and 8). The Company also has substantial capacity
commitments at its affiliate, Vanguard International Semiconductor Corporation (VIS), its joint venture -
Systems on Silicon Manufacturing Company (SSMC) in Singapore, and its subsidiary - WaferTech in the
United States. TSMC's annual capacity in year 2000 totaled 3.4 million 8-inch equivalent wafers.
TSMC consistently produces the foundry industry's leading technologies, including 0.15µm and 0.13µm
logic processes with copper interconnects. TSMC offers the foundry industry's most comprehensive set of tech-
nology processes, including CMOS logic, mixed-signal, volatile and non-volatile memory, embedded
memory, and BiCMOS.
Also in 2000, TSMC delivered the first 300mm production wafers to its customers from our Fab 6 facility in
the Tainan Science Park. TSMC is currently constructing two 300mm manufacturing facilities, Fab 12 in
Hsinchu and Fab 14 in Tainan, which are expected to start production in the fourth quarter of 2001 and
2002, respectively. Proposals are on the drawing tables for several additional 300mm fabs, with construction
timetables starting 2001.
TSMC's objective is to be our customers' "Virtual Fab". That is, to provide customers with the benefits of
an in-house fabrication plant without the associated expense or organizational complexity. Our intent is to
make our foundry services as transparent to customers as possible. To that end, we launched the industry's
first "e-foundry" service in year 2000, extending much of our customer service structure onto the Internet
to provide our customers with a real-time and "personalized" view into our manufacturing operations.
As a good corporate citizen, TSMC takes community service and employee relations seriously. For example,
TSMC's award-winning Culture and Education Foundation established in 1987 supports activities in
Taiwan that promote education, social services, art and culture. The Foundation aims toward creating a
better quality of life for our society through our long-term community development efforts. TSMC's efforts
have been recognized by many distinguished entities, ranging from the Taiwan government to leading
media in Taiwan and around the world.
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07
TSMC's operating committee is comprised of many outstanding individuals, all of whom are committed to
the success of the foundry industry in general and TSMC in particular. Our chairman, Dr. Morris Chang,
has been at the forefront of this effort, receiving international acclaim for his achievements. In 2000, Dr.
Chang received the Institute of Electrical and Electronics Engineers (IEEE) first-ever Robert N. Noyce
Medal for his vision and leadership in pioneering the silicon integrated circuit foundry industry. In 1999, Dr.
Chang was honored by the Fabless Semiconductor Association (FSA) with its first-ever Exemplary
Leadership award, which is now permanently named The Dr. Morris Chang Award for Exemplary
Leadership in recognition of his outstanding contribution to the fabless semiconductor industry.
2.Organization
2-1 Organization Chart
Shareholders'
Meeting
Board of Directors
Chairman of the Board
President
Supervisors
V.P.
Assistant to
Chairman
Internal
Auditing
E.V.P.
World-Wide
Mkt. & Sales
V.P.
Design
Service
Sr. V.P.
Finance
Sr. V.P.
Legal &
Spokesperson
Operations
Sr. V.P.
R & D
V.P.
Quality &
Reliability
Sr. V.P.
Corp.
Development
V.P.
HR
V.P.
Corp. Mkt.
V.P.
Business
Operation
TSMC
North
America
TSMC
Europe
TSMC
Japan
Sr. Director
North Site
V.P.
South Site
V.P.
Tainan Site
V.P.
Fab-7
V.P.
Fab-8
08
2-2 Directors, Supervisors, & Major Officers (As of December 31, 2000)
Title
Name
Date
Elected
Term
(Year)
Shareholding* Spouse & Minor Education & Experience
Remarks
Shareholding*
Chairman & CEO
2000.4.14
Morris Chang
Director
2000.4.14
A.P.M. van der Poel
Director
J.C. Lobbezoo
Director
L.P. Hsu
Director
Stan Shih
Director
Chintay Shih
2000.4.14
2000.4.14
2000.4.14
2000.4.14
Director & President
2000.4.14
F.C. Tseng
Supervisor
2000.4.14
Jan Kees van Vliet
Supervisor
George Shiu
Supervisor
S.J. Paul Chien
2000.4.14
2000.4.14
3
3
3
3
3
3
3
3
3
3
57,634,912
-
Ph.D., Electrical Engineering, Standford University
Chairman, Vanguard International Semiconductor Corp.
1,658,733,948
1,658,733,948
1,658,733,948
2,159,520
1,413,936,368
-
-
-
-
-
B.S., Electronic Engineering, Eindhoven Technical University
Chairman & CEO, Philips Semiconductors International B.V.
Koninklijke Philips Electronics N.V.
Representative of Legal Entity
B.A., Business Economics, Erasmus University
Chief Financial Officer, Philips Semiconductors International B.V.
Koninklijke Philips Electronics N.V.
Representative of Legal Entity
B.S., Physics, National Cheng-Kung University
Koninklijke Philips Electronics N.V.
Executive Advisor, Philips Taiwan
Representative of Legal Entity
Master of Science of Electronical Engineering, National Chiao Tung University
Chi Cherng Investment Co., Ltd.
Chairman & CEO, The Acer Group
Representative of Legal Entity
Ph.D., Electrical Engineering, Princeton University
President, Industrial Technology Research Institute
Development Fund, Executive Yuan
Representative of Legal Entity
16,942,109
49,828
Ph.D., Electrical Engineering, National Cheng-Kung University
Director, Vanguard International Semiconductor Corp.
1,658,733,948
1,413,936,368
1,005,120
-
-
-
MBA, Business School of Erasmus / Delft Universityof Technology
Koninklijke Philips Electronics N.V.
Executive Vice President, Philips Taiwan
Representative of Legal Entity
Ph.D. Candidate in Economics, John Hopkins University
Development Fund, Executive Yuan
Deputy Executive Secretary, Development Fund, Executive Yuan
Representative of Legal Entity
M.S. and Engineer Degree in Chemical Engineering,
Massachusetts Institute of Technology
President, Vanguard International Semiconductor Corp.
Hsin Ruey Investment Co., Ltd.
Representative of Legal Entity
*As per the actual reported number of shares on December 31, 2000
Information regarding the Juristic Person Shareholders as directors and supervisors of TSMC
As of December 31, 2000
Name of Juristic Person Shareholders
Shareholders who owned more than ten percent outstanding shares or top ten shareholders of the Juristic Person Shareholders
Koninklijke Philips Electronics N.V.
Shareholders who owned more than ten percent outstanding shares: None.
Top ten shareholders: Unavailable in accordance to the regulations of the Netherlands
Development Fund, Executive Yuan
Development Fund
Chi Cherng Investment Co., Ltd.
TSMC and Kung Cherng, Chi Hsin, Po Cherng, Hsin Ruey, Cherng Huei Investment Co, Ltd.
Hsin Ruey Investment Co., Ltd.
TSMC and Kung Cherng, Chi Hsin, Po Cherng, Chi Cherng, Cherng Huei Investment Co, Ltd.
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3. Capital & Shares, Corporate Bonds and ADR Issuance
3-1 Capital & Shares
Type of Stock
Authorized Capital
Unit:Share
Issued Shares
Un-issued
Reserved Shares
Total
Listed
Non-Listed
Total
Shares
for Bond Conversion
Common Stock
11,689,364,587
-
11,689,364,587
3,433,034,095
1,377,601,318
17,800,000,000
Preferred Stock
-
1,300,000,000
1,300,000,000
-
-
3-2 Status of Preferred Stock Issuance
Issuance
Issuing Date
Tenor
Rate
Outstanding Shares
Use of Proceeds
Status Description
Preferred Stock
November 29, 2000
2.5 Years
3.5 %
1,300,000,000
Purchase equipment for Fab12
Proceeding
3-3 Status of Bond Issuance
Issuance
Issuing Date
Tenor
Coupon Rate (or YTM) Outstanding
Use of Proceeds
Status
Description
NT$4 billion
March 4, 1998
5 years
7.71% p.a.
NT$4 billion
Repay long-term bank loan
Completed
Corporate Bond
NT$6 billion
November 18, 1998-
5 years
7.12% p.a.
TSMC exercised the right to call back this bond two years
Corporate Bond
December 1, 1998
after the respective issuance date
NT$10 billion
October 21, 1999
Class A: 3 years
Class A: 5.67% p.a.
Class A: NT$5 billion
Procure equity
Completed
Corporate Bond
Class B: 5 years
Class B: 5.95% p.a.
Class B: NT$5 billion
securities of TASMC
as long-term
investment and
Fab 5 equipment
NT$15 billion
December 4, 2000-
Class A: 5 years
Class A: 5.28% p.a.
Class A: NT$10.5 billion
Procure manufacturing Completed
Corporate Bond
December 15, 2000
Class B: 7 years
Class B: 5.36% p.a.
Class B: NT$4.5 billion
equipment for Fab 8
10
3-4 Status of American Depositary Shares (ADSs) Issuance
Issuance & Listing : New York Stock Exchange (NYSE)
Symbol:TSM
1 ADS = 5 TSMC common shares
Depositary Bank : Citibank, N. A. - New York Branch
Custodian Bank : Citibank, N. A. - Taipei Branch
Date
Units Issued *
Total Amount (US$)
Underlying Securities
October 8, 1997
24,000,000 ADSs
594,720,000
TSMC Common Shares from Selling Shareholders
November 20,1998
12,094,000 ADSs
184,554,440
TSMC Common Shares from Selling Shareholders
January 12, 1999 -
2,000,000 ADSs
35,500,000
TSMC Common Shares from Selling Shareholders
January 14, 1999
July 15,1999
12,094,000 ADSs
296,499,641
TSMC Common Shares from Selling Shareholders
August 23, 1999 -
5,486,000 ADSs
158,897,088.5
TSMC Common Shares from Selling Shareholders
September 9, 1999
(Pursuant to ADR conversion sale program)
February 22, 2000 -
6,560,000 ADSs
379,134,598.8
TSMC Common Shares from Selling Shareholders
March 8, 2000
(Pursuant to ADR conversion sale program)
April 17, 2000
4,000,000 ADSs
224,640,000
TSMC Common Shares from Selling Shareholders
June 7, 2000
32,667,800 ADSs
1,167,873,850
Cash Offering
TSMC Common Shares from Selling Shareholders
* 1. TSMC has in aggregate issued 98,901,800 ADSs since 1997, which, if taking into consideration of stock dividend distributed over the periods, would
amount to 145,071,739 ADSs.
2. As of December 31, 2000, total number of outstanding ADSs is 144,608,739, of which 463,000 ADSs have been redeemed.
3. Stock dividend distributed in 1998,1999 and 2000 was 45%, 23% and 28%, respectively.
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12
OPERATIONAL HIGHLIGHTS
OPERATIONAL HIGHLIGHTS
1. Business Activities
(1) Business Scope
TSMC is dedicated to high integrity in business and has a single-minded focus on the foundry
industry. The company provides advanced IC manufacturing services of the highest quality to the
worldwide semiconductor industry. Building on our core competencies of excellent manufacturing and
attentive customer support, we offer a full range of manufacturing services, including ULSI and VLSI
wafer manufacturing, wafer probing, IC assembly and test, mask production, and design services.
Wafer manufacturing accounted for approximately 90 percent of total revenue in 2000.
Over the past 13 years, customers have utilized TSMC's manufacturing services in virtually every
product and end market segment across the entire semiconductor application spectrum. We estimate
that in 2000 TSMC produced approximately six percent of the world's supply of ICs.
(2) Customer Applications
The advanced ICs produced by TSMC for customers are used in a diverse range of the end-product
applications, including PCs, network servers, computer peripherals, Internet appliances, wired and
wireless communication systems, consumer electronics, automotive and industrial equipment.
2. Marketing and Sales
The recovery in the worldwide IC market coupled with the exceptional growth of the fabless IC
companies, pushed TSMC's 2000 sales up 127.3 percent to NT$166.2 billion.
The company's superior performance can be attributed to three major factors. First, we maintained
close relationships with a large customer base. TSMC has served over 400 customers in the past
13 years and over 50 percent have returned to use our services in 2000. Second, anticipating the
steady long-term growth of the IC industry and responding to strong immediate demand from key
customers, TSMC expanded advanced manufacturing capacity aggressively at nine internal or affiliated
8-inch fabs. The company also continued the construction of two of the industry's first production
scale 12-inch facilities. Third, we have approached our business as a service business from day
one. We continue to re-engineer this approach with a strong commitment to e-Commerce as a new
tool in realizing TSMC's vision - to become our customers' "Virtual Fab" for semiconductor manufacturing.
These factors extended our leading market position, and when combined with our ability to produce
the latest generation technologies, allowed the company to maintain superior results in a year of
robust demand for the entire semiconductor industry.
Production over the Last Two Years
Net Sales over the Last Two Years
Wafers
Wafers
Package
Other
Total
Year Capacity Quantity Amount
1999* 1,895,112
1,788,472 43,759,960
2000
3,263,236
3,467,270 76,545,082
Year Quantity Amount Quantity Amount Quantity Amount Quantity
Amount
1999 1,686,433 64,428,905
67,832 5,131,796
2000 3,314,407 152,595,853
93,682 5,815,381
-
-
3,570,505 1,754,265
73,131,206
7,817,186 3,408,089 166,228,420
Unit: Capatity/Quantity (8"wafer) / Amount(NT$K)
Unit: Quantity (8"wafer) / Amount(NT$K)
* The numbers of 1999 capacity and quantity have been
restated to conform to 2000 classification.
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3. Market Outlook
In 2000, the overheated semiconductor industry gradually returned to a more normal growth pattern
since November. For the year 2001, predictions of the overall IC market growth over 2000 are
divergent, ranging from negative to ten percent. Based upon the expectation of minor growth, the
memory market is forecast to grow less than five percent in 2001, due to high inventory and soft PC
demand in the first half of 2001. The growth rate for the logic component market is forecast to increase
slightly higher than the overall industry, however the foundry-dependent fabless IC companies are
expected to remain in double digit growth due to the higher value added applications that their chips
address.
With the low visibility for semiconductor growth in 2001, TSMC will adopt strategic actions necessary to
expand capacity in support of our customer base. The focus will be on capacity expansion of advanced
technology and 12-inch fabs. Currently, TSMC is constructing its two pure 12-inch facilities (Fab 12 in
Hsinchu and Fab 14 in Tainan). Fab 12 is expected to enter risk productions in the fourth quarter of
2001 and Fab 14 clean room construction will be finished at the end of the same year.
While supporting record breaking growth for the fabless IC companies, TSMC continues to diversify
its customer base. Major long-term customer opportunities have begun to emerge from the ranks
of the Integrated Device Manufacturers (IDMs). These companies, with their large established
customer bases and comprehensive product portfolios, can give significant acceleration to the
foundry industry as their outsourcing activities increase.
Over the years, TSMC has strategically managed its exposure to the memory market by limiting
the commitment of our memory manufacturing services to a certain percentage of sales revenue.
Considering the current shortage of logic production capability and the historically high volatility of
memory markets, TSMC will maintain the same policy in 2001 even as we work to expand our share
of the emerging market for embedded memory products.
In 2000, TSMC's customer base increased in the graphics, broadband communications, digital
consumer electronics, and wireless communication markets. All of these markets are high growth
segments and demand advanced manufacturing technologies. New customers in these markets
utilized large volumes of wafers in 2000 and are expected to benefit TSMC increasingly over the next
several years as these markets continue to grow. End market leaders such as Altera, Broadcom and
Qualcomm drive TSMC's demand from the fabless segment while leading IDMs such as
Philips and Motorola are also significant customers. Through 2001, TSMC will continue targeted
marketing efforts, engaging customers in similar high growth segments of the logic component
markets.
In the long run, we at TSMC believe that foundry services will play an increasingly important role in
the manufacturing sector of the worldwide IC industry. Fabless companies already depend on
foundries, and IDMs are expected to evolve stronger business connections with foundries for IC
manufacturing. Industry forecasts predict that by the year 2001, more than 15 percent of world-wide
IC production will come from foundries, increasing to more than 30 percent by the year 2010. As
better design automation and IP integration tools emerge, product development risks will continue
14
to decrease and facilitate system companies ability to shift part of their IC needs directly to
foundries. TSMC will continue to be a leader in reducing the barriers to entry to the IC business.
At the supply chain level, TSMC believes that it is in an ideal position to benefit from the current trend
toward "dis-integration," whereby fabless and systems companies and IDMs focus on their core
competencies, shifting manufacturing and other services to partners with expertise in those
areas. The frictionless business processes enabled by the Internet will add to the speed at which
this trend continues. As TSMC continues to grow, it will be able to positively influence other sup-
ply chain partners to expand support for the foundry model. Leading equipment and material sup-
pliers such as Applied Material, ASML, Tokyo Electron, Taisil, Komatsu and Shinetsu continue to
expand technology and service programs targeted at foundries.
At the technological level, consumer demand for lower cost and higher functionality of products is
expected to compel our customers to increasingly integrated chip design, creating a need for the
higher density of our advanced technologies. TSMC hopes to be able to maintain high average selling
prices (ASPs) for wafers as the company's production capacity evolves through more and more
advanced technologies.
TSMC fully understands that we will face serious competition in the future. Therefore, to ensure
TSMC's continuing leadership and profitability in 2001 and beyond, we are determined to establish
closer partnerships with customers and to provide the most advanced technologies and the most
comprehensive services.
For primary technologies, TSMC will focus on the following offerings:
(1) Advanced CMOS Logic Process
TSMC began mass-production of 0.15µm high performance and ultra high speed CMOS Logic
processes in the first half of 2000 and 0.18µm low power process in the second half of the same year.
The company is expected to enter volume production of 0.13µm high performance and ultra high
speed CMOS Logic processes in the second quarter of 2001. In addition, TSMC plans to introduce
0.13µm low power processes in the third quarter of 2001 for customers in the portable electronic
device markets. The 0.10µm CMOS Logic process is expected to be available in late 2002. The
move into those advanced technologies will help TSMC's customers develop higher-density and
higher-performance chips that will be competitive in world markets.
(2) Advanced Mixed-Signal Process
In the mixed digital-and-analog market, TSMC has successfully developed the 0.18µm 1-layer-
poly, 6-layer-metal mixed-signal and 0.25µm radio frequency (RF) CMOS processes to meet the
demands of communication and consumer ICs in the first half of 2000. The 0.18µm 1-layer-poly,
6-layer-metal radio frequency (RF) CMOS processes were also ready in the second half of the
same year. These processes make it easier for TSMC's customers to integrate digital-signal
processors and/or data-compression chips with analog circuitry for the fast-growing communications
and consumer markets. The 0.13µm mixed-signal and RF processes will be available in late 2001.
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(3) Advanced SRAM/Embedded SRAM Processes
TSMC entered mass production of 0.18µm high-speed SRAM process in the beginning of 2000.
The 0.18µm low-power SRAM process also began risk production in the first quarter of 2000. The
0.13µm high-speed and low-power processes are expected to be available in 2001. On the embedded
SRAM front, the company completed the development of a 0.15µm 1-layer-poly, 7-layer-metal
process in first quarter of 2000. The 0.13µm Embedded SRAM process entered risk production in
the end of 2000 and should support mass production in the first half of 2001. These processes will
enable TSMC customers to further reduce their costs and enhance performance.
(4) Advanced Flash/Embedded Flash Processes
In non-volatile memory, TSMC entered production of a 0.25µm logic based 2-layer-poly, 2-layer-
metal, split-gate Flash process and a 0.25µm mixed-signal 2-layer-poly, 5-layer-metal, split-gate
embedded Flash process in the beginning of 2000. The 0.22µm 1-layer-poly, 5-layer-metal EEP-
ROM-PLD process was also available in mid-2000. The embedded Flash process will help customers
integrate Flash with logic, especially in microcontroller, digital signal processor and other system-
on-chip applications requiring a high degree of integration. The 0.18µm Flash/embedded Flash
development is expected to be completed and available for volume production in the middle of
2001.
(5) Special Logic Processes
In addition to these advanced processes, TSMC has developed special logic processes, including
CMOS image sensor, color filter, and high voltage processes, for our customers to target niche markets.
The 0.35µm CMOS image sensor process development was finished in the end of 1999 and
entered volume production in the first quarter of 2000. The 0.25µm version development was
finished in the end of 2000 and will enter mass production in the beginning of 2001. The 8-inch
version of CMOS color filter processes was available in 2000. On high voltage technologies, the
development of 0.5µm 2-layer-poly, 3-layer-metal CMOS and 0.5µm 2-layer-poly, 3-layer-metal
LDMOS high voltage processes were completed in the end of 1999 and ready for production in the
beginning of 2000. The 0.8µm BiCMOS high voltage process also entered mass production in the
beginning of 2000. By the end of 2001, TSMC will complete the development of 0.35µm versions of
high voltage technologies and then enter production.
(6) Design Services
2000 has been a prosperous year for TSMC in design services, which includes libraries, intellectual
property cores (IP), electronic design automation (EDA), and design engineering services. TSMC
rolled out 0.13µm libraries with both internal and third-party library partners, introduced a broad network
of providers of key IP blocks, and expanded its network of engineering service partners to cover
customers' design needs. In 2001, TSMC is expected to present the high-performance and broadest
portfolio of VDSM SoC (Very deep sub-micron system-on-a-chip) libraries and key IP in the sub-100
nm area as well as a productized design reference flow - to further strengthen our design services
capability. Greatly expanded use of the Internet will aid customer access to all levels of design service
information.
16
4. Employee Relations
With over 14,000 employees worldwide, TSMC places priority on developing employees and gaining
their commitment. We are focused on our commitment to our employees, and our guiding principles
include caring for employees and shareholders (and being a good corporate citizen) as well as
fostering a dynamic and fun work environment.
Our ability to attract, develop and retain a very high level of engineering and support talent worldwide
has earned TSMC the honor of being the most reputable company from Commonwealth magazine for the
past four years. In addition, TSMC was once again recognized by the Taiwan government as one of
Taiwan's Best Organizations for its commitment to employee welfare, employee programs and
employee benefits.
TSMC's employee relation record is one of outstanding harmony. For year 2000, our main areas of
focus were on recruitment, development programs, compensation, and benefits.
(1) Recruitment
Being the largest IC foundry in the world, TSMC is a preferred employer within its industry. This
reputation is clearly evident in Taiwan, where the company was recently voted "favorite
enterprise/employer" in a recent university student poll.
TSMC prides itself in attracting and recruiting highly skilled and qualified talent from around the
world. In year 2000, in addition to 3,100 people joined TSMC family from merging companies, we
have also recruited around 6,000 new hires. After a stringent selection process, we had hired 2,500
engineers and professional employees out of 35,000 candidates and another 3,500 technicians out
of 15,000 candidates.
(2) Development Programs
TSMC subscribes to a philosophy of continuous learning and professional growth. To this end, we
have earned several industry accolades for our extensive and unique training programs. In 2000,
over 1,500 training courses were offered, with total enrollment reaching 43,000. These programs
included customized workshops that were delivered to a variety of TSMC organizations globally to
enhance inter-team collaboration and synergy.
We launched several new programs in 2000, including an "e-learning" initiative for new engineers;
an improved management development programs focusing on developing business and leadership
skills for section managers and above; and two companywide performance management and
development programs. These programs, known as "Directing Your Self Development", for all
associates and "Developing Your Staff", for managers, are designed to develop employees and
liberate talents. Besides, to help newly joined employees from merging companies integrate into
TSMC family, a customized culture orientation was provided.
Also in year 2000, a new learning center was set up with a capacity of 500 participants.
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(3) Compensation (Profit Sharing)
The Company has stock-based compensation plans, whereby every employee becomes a shareholder
of TSMC. Through TSMC's profit sharing system, employee goals are aligned with those of TSMC;
every employee is committed to and shares in the company's success.
(4) Benefits
In addition to competitive salaries, one of the ways TSMC compensates its employees is through
its comprehensive benefits and welfare programs. In year 2000, we have added new services to
enhance work life balance. Such services include on-site clinics, bookstores, coffee bars and art exhibition
galleries.
In addition, to foster a warm TSMC community, TSMC sponsors social clubs and organizes various
family activities throughout the year including Family Day, Sports Day, concerts and art performances.
5. Personnel Growth over the Last Two Years
Number of Employees
Average Average
Percentage by Education
Year Direct Engineer Admin. Manager* Total
Age
Years of Ph.D. MS/MA BS/BA College High Others Total
Labor
Service
School
1999 3,675
2,765
316
704
7,460
2000 7,370
5,739
503
1,024
14,636
29
29
3.8
3.2
2.3% 23.1% 15.9% 22.5% 36.1% 0.1% 100.0%
2.2% 23.7% 14.6% 26.3% 33.1% 0.1% 100.0%
* Starting from year 2000, employee category has been re-defined. "Manager" does not include employees without management responsibility.
The number of employees of 1999 has been reclassified to conforn to 2000 classification.
6. Environmental Protection Measures
TSMC is proud of its well-deserved reputation as a company with strong awareness for the environment
in the IC industry. Our industry-leading environmental policies have received international recognition
and our reporting and disclosure policies are regarded as a model for the industry.
TSMC Fab 1, 2, 3, 4 and 7 have been ISO14001 certified since 1996. Fab 5 received the certification
in 2000. In addition to ISO14001, TSMC's Fab 1, 2, 3, 4 and 5 are also Occupational Health and
Safety Assessment Series (OHSAS) 18001 certified. This is the first OHSAS certification ever given
to a company in the semiconductor industry in Taiwan.
Based on the principles of TSMC's Environmental, Safety and Health (ESH) Policy, TSMC has
devoted a significant amount of time and effort on ESH improvement programs in 2000. These
efforts have not only led to recognition from the government but also earned TSMC the award of
"Industrial Excellence" by the Ministry of Economic Affairs, and "Pollution Control Equipment
Maintenance Outstanding Performance Plant" by the Industry Development Bureau.
TSMC's Environmental, Safety and Health improvement programs in year 2000 include:
18
(1) Perfluorocompound (PFC) emission reduction
To support the PFC reduction target set by Taiwan Semiconductor Industry Association (TSIA),
TSMC has teamed up a PFC reduction work group to reduce the usage of CF4 and NF3, and to survey
replacement chemicals and abatement technologies.
(2) Water pollution prevention
In addition to already meeting wastewater quality standards, TSMC continues to make efficiency
improvements to our plants' wastewater treatment facilities above and beyond wastewater quality
standards. For example, we set up a new wastewater recovery system and modified existing systems
to improve the water recovery ratio.
(3) Air pollution prevention
TSMC not only installed air pollution prevention facilities to meet new environmental standards, but
also plans to set up backup facilities in 2001 to reduce the environmental impact in case of equipment
failure.
(4) Waste management
Recycling has been our ongoing goal. In 2000, TSMC received EPA approval to recycle IPA,
N-Methyl-2-Pyrrolidinone and photo-resist, thereby reducing materials waste.
(5) Environmental Impact Assessment (EIA)
The completion in year 2000 of an Environmental Impact Assessment for TSMC's Tainan site (Fab 15~Fab 18),
as well as for Fab 8 and Fab 12, was a major accomplishment. Taiwan EPA's approval of the EIA for
these sites is essential for future expansion. A world-class ESH design will be built-in as we expand
new fabs.
After very deliberate planning, the first edition of TSMC's Environmental Annual Report was published
in April 2000. Corporate Environmental Reporting (CER) is becoming an important part of our corporation's
social responsibility. TSMC's Environmental Annual Report, the first such report in Taiwan semiconductor
industry, represents TSMC's proactive approach to environmental protection. We hope this report
serves as a positive communication channel to all interested parties.
Other Disclosures The following disclosure is made in accordance with Taiwan SEC regulations:
In years 1999 and 2000, TSMC received three citations from local Taiwan Environmental Protection
Administration (EPA). Conditions warranting the citations included (1) accidental discharge of effluent
to storm water sewage system in the South Site; (2) lack of operating permit for chlorine in Fab 6; and
(3) failure to post proper labeling of a toxic chemical bottle in the test lab in Fab 8. Since the responsibility
for labeling of such bottles does not legally rest with TSMC, the Company has responded with a
petition to EPA. The total fine for these citations was NT$280,000 and the Company immediately
corrected all deficiencies. TSMC expects to invest another NT$1.839 billion on the improvement of
pollution control equipment throughout our manufacturing facilities over the next three years.
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7. Important Contracts
(1) Technology Cooperation Agreement
Term of Agreement: 7/9/1997 - 7/8/2007
Contracting Party: Philips Electronics N.V. (now renamed as Koninklijke Philips Electronics N.V.)
("Philips")
Summary: Under this agreement, TSMC is obliged to pay to Philips royalty at a fixed percentage of
net sales for certain products.
(2) Submicron Technology Licensing Agreement
Term of Agreement: 11/20/1990 - 12/31/2000
Contracting Party: Industrial Technology Research Institute ("ITRI")
Summary: Under this agreement, TSMC is obliged to pay a licensing fee of NT$129.4 million to ITRI
over a five-year period, plus royalty fees at fixed percentages of net sales for certain products. The
entire licensing fee had been paid by December 31, 1995.
(3) Building and Equipment Leasing Agreement (FAB 1)
Term of Agreement: 4/1/1997 - 3/31/2002
Contracting Party: Ministry of Economic Affairs
Summary: Under this agreement, TSMC leases certain buildings and equipment from the Ministry of
Economic Affairs.
(4) Land and Public Facility Leasing Agreement (FAB 1)
Term of Agreement: 4/1/1997 - 3/31/2002
Contracting Party: Industrial Technology Research Institute ("ITRI")
Summary: Under this agreement, TSMC leases certain land and public facilities from ITRI.
(5) Foundry Related Agreements
Term of Agreement: 1995 - 2004
Contracting Parties: More than 10 companies in the U.S.A., Europe, and Asia.
Summary: Under these agreements, TSMC guarantees a pre-determined capacity for a set number of
years to customers in the United States, Europe, and Asia. In return, custormers deposit fees with
TSMC. As of the end of 2000, more than ten companies had signed foundry related agreements
with TSMC.
(6) Manufacturing Agreement
Term of Agreement: three years, upon commencement of production at WaferTech, LLC
Contracting Party: WaferTech, LLC
Summary: Under this agreement, TSMC is obliged for three years, upon commencement of production
at WaferTech, LLC, to purchase a minimum of eighty-five percent of calculated installed capacity of
WaferTech, LLC. TSMC has the option to purchase up to one hundred percent of the calculated
installed capacity of WaferTech, LLC.
20
(7) Shareholders Agreement
Term of Agreement: May be terminated as provided in the Agreement
Contracting Party: Philips Electronics N. V. (now renamed as Koninklijke Philips Electronics N.V.)
("Philips") and EDB Investments Pte Ltd. ("EDBI")
Summary:Under this agreement, TSMC, Philips and EDBI agreed to form a joint venture "Systems
on Silicon Manufacturing Company Pte Ltd." ("SSMC") to build an IC foundry in Singapore. TSMC
holds 32% of the shares. Philips and TSMC committed to purchase a certain percentage of SSMC's
capacity.
(8) Technology Cooperation Agreement
Term of Agreement: 3/30/1999 - 3/29/2009
Contracting Party: Systems on Silicon Manufacturing Company Pte Ltd. ("SSMC")
Summary:Under this agreement, TSMC shall transfer its process technologies to SSMC and SSMC
shall pay TSMC remuneration at a certain percentage of net selling prices of its products.
(9) Technology Transfer Agreement
Term of Agreement: 6/27/2000 - 6/26/2010
Contracting Party: National Semiconductor Corporation ("NS")
Summary:Under this Agreement, TSMC shall transfer its process technologies to NS and NS shall
pay license fees to TSMC.
(10) Manufacturing Agreement
Term of Agreement: 2/14/2000 - 2/13/2005
Contracting Party: Vanguard International Semiconductor Corporation ("VIS")
Summary:Under this Agreement, VIS shall reserve its certain capacity to manufacture for TSMC
certain devices on logic or other technologies required by TSMC's customers, at discounted actual
setting prices as agreed by the parties.
8. Litigation Proceedings
Antidumping Investigation Against SRAMs
Micron Technology Inc. filed a petition for the antidumping investigation against SRAMs from Korea
and Taiwan in February 1997. Following the U.S. International Trade Commission's final determination
in April 1998 that U.S. industry is materially injured by imports from Taiwan, the U.S. Department
of Commerce announced the antidumping duty order. Taiwan industry subsequently appealed U.S.
International Trade Commission's final determination to the U.S. Court of International Trade. In
June 2000, U.S. International Trade Commission, pursuant to U.S. Court of International Trade's
second remand order, voted that SRAMs from Taiwan were not causing or threatening to cause
injury to the U.S. industry, which decision was later affirmed by U.S. Court of International Trade.
Micron has appealed to the U.S. Court of Appeals for the Federal Circuit. SRAMs account for a
very small portion of TSMC's total sales and TSMC's direct sales to the U.S. is even less. Thus, the
impact on TSMC's business is expected to be very limited.
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22
Business and Financial Plans
Business and Financial Plans
1. Production and Sales Plans for 2001
Sales Plan by Technology
Production Plan*
Quantity:(Thousand pcs 8" wafer)
>=0.50µm 20.8%
0.35µm 23.7%
0.25µm 33.6%
<=0.18µm 21.9%
700-
600-
500-
400-
300-
200-
100-
0-
133
654
537
548
528
468 487
446
7
Fab1O Fab2O Fab3O Fab4O Fab5O Fab6O Fab7O Fab8O Fab12
*TSMC only: 3,808 thousand pcs 8" wafers; total TSMC managed
capacity: 4,463 thousand pcs, including VIS, WaferTech, and SSMC
2. Year 2001 Plans for Disposition or Acquisition of Real Estate or Long-term Investment
Amount of disposing real estate/long-term investment up to NT$300 million or 20% of paid in Capital
Name of Real Estate or Company
Nature
Quantity
Location
Dated
Price
Purpose
Taiwan Semiconductor
Technology Corporation
Long-term
Investment
Common Share: 50,000,000
Linkou
Q2 2001
N/A
Strategical Adjustment of
Long-term Investment
Amount of acquiring real estate/long-term investment up to NT$300 million or 20% of paid in Capital
Name of Real Estate or
Nature
Quantity
Location
Date
Price
Funding Source
Purpose
Company
Buildings
Real estate
325,174M2
Hsinchu & Tainan
Starting from
NT$4,846
Retained earnings or
Increase capacity
Q1,2001
million
Bank borrowing
to enhance
competitiveness
System on Silicon
Long-term
Common share:
Singapore
Starting from
US$146
Retained earnings or
Increase capacity
Manufacturing Company
investment
292,352
Q1,2001
million
Bank borrowing
to enhance
Pte.Ltd.
competitiveness
Emerging Alliance L.P.
Long-term
99.5% of
Cayman Island
Starting from
US$29.85
Retained earnings
Diversify long-
investment
Interest
Q1,2001
million
term investment
and locate strategic
technology partners
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3. Research and Development Plans
(1) R&D mission and vision
TSMC's R&D mission is to provide the world's best and most competitive, cost-effective, and pervasive
technology platforms for state-of-the-art integrated circuit (IC) applications. Through our innovative
and aggressive R&D work, we strive not only to excel in semiconductor technology, but by extension,
to contribute to the use of technology to expand human understanding and experience.
TSMC has an acclaimed reputation for delivering the industry's broadest spectrum of leading-edge
processes, including logic, mixed-signal/RF, embedded memory, color image sensor, and high-voltage
process technologies. These state-of-the-art processes are rapidly transferred to volume production,
where they are used by our customers as platforms for the next generation of computing, communications
(network and wireless), industrial and consumer electronics applications. The Company has
established particularly effective leadership in CMOS logic processes, including CPU, high-
performance, low-power, and core logic with embedded memory and other options for system-on-
chip (SOC) design.
Significantly, in year 2000, TSMC became the first foundry to license its advanced logic processes
to an integrated device manufacturer (IDM), an achievement that reverses many years of technology
licensing by the foundry industry. Our research and development commitment is to continue to stay
ahead of the ITRS (International Technology Roadmap for Semiconductors) roadmap in the new
millenium. This in itself is a feat that is expected to be accomplished by only a handful of IC
manufacturing companies worldwide.
(2) R&D organization and investment
The success of TSMC's dedicated foundry model
has attracted to it tremendous overseas and domestic
talents and skills, thereby continuing to increase the
relative strength of our R&D organization. To
supplement that strength, our R&D expense in year
2000 was more than NT$5.1 billion, an increase of
approximately 115 percent over 1999. For 2001, our
total R&D investment is expected to exceed NT$9.7
billion.
TSMC's R&D organization has strong development
partnerships with key equipment and materials vendors.
These partnerships have proved invaluable in the
R&D Expense
5,131,497
2,390,538
6000 -
5500 -
5000 -
4500 -
4000 -
3500 -
3000 -
2500 -
2000 -
1500 -
1000 -
500 -
development of new processes as well as the execution
1999O
2000
of new manufacturing techniques aimed at reducing
production costs.
TSMC also maintains a vital presence in global semiconductor consortia, making significant contributions
in the areas of equipment, material and silicon-based IC process development. For example,
24
TSMC actively participates in both the NGL (Next Generation Lithography) organization and the
157nm Consortium, helping to secure a leading position in photolithography and related manufacturing
techniques for the development of processes below the 0.10µm generation. Not insignificantly,
TSMC is also the sole Taiwanese member of International Sematech - a feat that speaks directly for
the value of TSMC's reputation as the foundry industry R&D leader.
(3) Year 2000 R&D accomplishments
"Unceasing Innovation" is one of our 10 corporate values at TSMC. In the IC process technology
area, TSMC was awarded 523 US patents and 524 ROC patents in 2000, reflecting our commitment
to that value. We also continued to rapidly accelerate the introduction of new technologies, maintaining
our track record of releasing one technology generation per year.
TSMC's R&D organization posted many outstanding accomplishments in year 2000, the most
significant of which was the release to production of our cutting-edge 0.13µm logic process, which
features advanced copper interconnects and low-k dielectrics for superior quality and performance.
This milestone was achieved fully one year ahead of the ITRS roadmap for production release of
0.13µm technology.
Our 0.13µm process portfolio covers the entire spectrum of SOC applications with a family of
high-performance, low-power, and baseline processes. The high-performance, low-voltage technology
is ideal for processor applications (e.g., microprocessors, network processors, media processors,
etc.) The low-power technology is among the best available for battery/wireless applications (e.g.,
cell phones), while the core or standard ASIC-logic technology is a cost-effective option for many
industrial and consumer electronics uses. The TSMC 0.13µm process also features the most
aggressive design rules in the world, including low-voltage and high-performance transistors with
gate lengths of less than 0.07µm. Combining these fast transistors with advanced eight-layer copper
and low-k interconnects, this technology is capable of supporting greater than 1.5GHz microprocessors
and other high performance applications.
In 2000, TSMC was clearly recognized as a world leader in the use of copper and CVD-based
low-K materials for the 0.13µm technology node. These important technologies allow customers to
realize fast chip speed and lower power consumption, while demonstrating much better mechanical
and chemical properties for increased manufacturing yield, higher quality, and improved integration
with wire bond packaging techniques. In the course of our 0.13µm development work, TSMC was
also the first to demonstrate 193nm step-and-scan photolithographic tools and processes for
0.13µm production.
(4) Spectrum of Processes
It is worth noting that all of these developments were achieved shortly after releasing our industry-leading
0.15µm generation logic technology platform to production in early 2000. Concurrently, TSMC
R&D was hard at work developing a number of additional processes for our customers. Among the
processes introduced in year 2000 are:
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High-voltage logic
In the high voltage/low power area, TSMC enriched its existing portfolio of 1µm 16V and 40V
processes by introducing 0.6µm and 0.5µm versions of these processes, as well as a 0.8µm 200V
LDMOS version, in 2000. These processes are fully compatible with TSMC generic logic and
mixedsignal processes for mixed 5V and high voltage system integration.
0.18µm mixed-signal/RF technology
TSMC R&D released the industry's first 0.18µm mixed-signal/RF CMOS process in 2000,
combining RF, analog, and base-band features in a single chip to provide a platform for
developers of cutting-edge Bluetooth and other communication applications. It has a rich set of
modular digital, analog devices and precision passive components, such as, high-Q metal-
insulator-metal capacitors and inductors.
0.25µm CMOS image sensor process
TSMC's new color image sensor process is the most advanced in the industry, capable of
resolutions greater than 3.3M pixels for state-of-the-art camera-on-a-chip applications. The new
image sensors enhance our existing portfolio of production 0.8µm, 0.6µm, 0.5µm, and 0.35µm
color image sensor processes. These image sensors are further enhanced by color filters with
micro-lenses to double the sensitivity.
Embedded memory technology
During the past year, TSMC has aggressively scaled its embedded memory technologies for
SOC integration. These value-added technologies are fully compatible with their respective
corelogic technology platforms and are supported by compilers, design kits, and test structures for
fast time-to-volume. Our embedded 6T SRAM cells are available in a variety of density,
performance, and standby leakage variations. For example,
the cell size for our 0.13µm 6T SRAM cell is less
than 2.45µm 2, with compiler performance
capable of greater than 1GHz.These cells are
also available for stand-alone SRAM
devices with high speed, high bit density
or low power consumption.
Leading 0.25µm flash technology
In 2000, our 0.25µm flash technology
was released for both stand-alone and
embedded applications. At the same
time, our 0.22µm EEPLD technology was
transferred to production, becoming the
first true 2.5-volt EEPLD technology in the
world.
26
TSMC, the leading foundry in Copper Interconnect technology.
The first 300mm production wafers
In 2000, TSMC's R&D organization played a key role in the delivery of thefoundry industry's first
production 300mm wafers, from our 300mm pilot line in Fab 6.The organization is still actively
involved in finalizing the equipment set for our first two dedicated 300mm facilities, Fab 12 in
Hsinchu and Fab 14 in Tainan.
State-of-the-art mask production.
TSMC has one of the largest in-house mask fabrication capabilities any where. Our mask shops
are known for excellent quality and cycle time to support aggressive R&D, prototyping and
production requirements. Our facilities all have state-of-the-art E-beam mask writers and
inspection tools to support both R&D and production use, including advanced optical-proximity-
correction (OPC) and phase-shift mask (PSM) technology for use in the 0.15µm, 0.13µm, and
0.1µm logic processes and future technology generations.
(5) Year 2001 plans
Going forward, we will continue to increase our R&D investment in personnel and capital while
accelerating our R&D activities. The key focus of TSMC's R&D organization will include 0.10µm
logic/mixed signal technology platforms and related embedded memory for SOC applications. In
addition, we will continue development of our production 300mm equipment set. Other development
projects will include new 0.13µm Mixed-Signal/RF, 0.13µm embedded memory, 0.18µm silicon
germanium (SiGe) BiCMOS, 0.18µm color image sensors, and 0.35µm high-voltage process
modules, as well as exploration of new transistors and process technologies.
TSMC R&D began its full-scale 0.10µm development work in 2000 and is today well down the
development path. In addition, we are engaged in exploratory work on processes in support of the
0.07µm generation and beyond, including geometries as low as 0.05µm. Specific attention is being
paid to the development of advanced high-k gate insulators, and extreme low-k (k<=2) interconnect
insulator materials. When TSMC Fab 12 is ready for volume production in late 2001, it will feature
an R&D facility capable of taking the company well beyond 0.10µm generation.
With its skilled and dedicated R&D team and an ongoing commitment to investment in the most
advanced equipment and materials, TSMC is confident it will continue to deliver the world's best
and most cost-effective system-on-a-chip processes for our customers.
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4. Financing Plans
4-1 Capital Increase for Expansion Plans for 2001
Item
Amount(NT$M)
Objectives
Fab 14 - Construction
5,724
Scheduled to produce 12" wafers
Fab 12 - Construction
33,507
Scheduled to produce 12" wafers
Fab 8
Fab 7
Fab 6
4,237
Increase 8" wafer output capacity to 57K pcs/month by the end of 2001
2,277
Increase 8" wafer output capacity to 45K pcs/month by the end of 2001
7,926
Increase 8" wafer output capacity to 42K pcs/month by the end of 2001
Fab 1 ~ Fab 5
4,334
Upgrade product mix
300MM pilot line
1,112
Exercise advanced module & integration
Replacement and Others
12,380
Maintain technology superiority and competitiveness
* Capital expenditures will be funded by internally generated cash flow or/and external funding activities
71,497
4-2 Previous Financing Plans and Implementation
Projects
Gross funds raised
Planned use of funds
Implementation status
June 7, 2000
23,000,000 ADRs
November 29, 2000
1,300,000,000 preferred shares
December 4, 2000 -
December 15, 2000
NT$15billion corporate bond
US$822,250,000
Procurement of equipment for Fab 6 On schedule - 77.22%
completed
NT$13,000,000,000
Procurement of equipment for Fab 12 Will commence
implementation in Q1, 2001
NT$15,000,000,000
Procurement of equipment for Fab 8 Will commence
implementation in Q1, 2001
28
5. TSMC Education and Culture Foundation
Fundamental to TSMC's business philosophy, TSMC is committed to its role as a corporate citizen
and its care for Taiwan's social development through monetary grants as well as time and talents of
its employees. To satisfy the rising diversity of societal needs through a formal vehicle, TSMC
established the "TSMC Education and Culture Foundation" (TSMC Foundation) in 1998. TSMC
Foundation's mission is guided by the following three principles:
Commitment to Education
To help develop the university students' talents in high technology, management and intellectual
property rights, TSMC Foundation established three educational grant programs-"TSMC
Undergraduate International Exchange Program Scholarship", "TSMC Intellectual Property
Scholarship" and "TSMC Visiting Chair Professorship"- with Tsing-hua University, Chiao-tung
University and Cheng-kung University. Furthermore, TSMC Foundation endowed Tsing-hua
University toward the construction of Taiwan's first college of technology management to foster
more talents for Taiwan's high-tech industry.
Contributions to Communities
TSMC Foundation supports community services in Hsinchu and Tainan, where TSMC has major
facilities, with both funding and volunteers to build a sound environment for our employees and
neighbors. TSMC Foundation directs its efforts at arts and cultural activities, environmental protection,
health, athletics, and similar programs to enhance the quality of life in our communities.
In order to provide a safe learning environment, TSMC Foundation made a contribution to restore
the Da-ping Elementary School in Hsinchu County after the devastating earthquake of September
21,1999.
Sponsorship of National Arts and Cultural Activities
Without grants from industry or government, major national arts and cultural activities cannot take
place. We hope to increase the national population that participate in national arts and cultural
activities through TSMC Foundation's sponsorship. The sponsorships of
"Leonardo da Vinci"
Exhibition at the National Museum of History and
"U Theatre - The Sound of Ocean"
Tournament Performance in Taiwan , are some of the highlights. Conservation of historic
monuments in Taiwan was also an important mission in 2000. TSMC Foundation helped maintain
the Sage pavilion in Lung-tan and supported the restoration of former U.S. Consulate in Taipei.
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TSMC Fab 6
All financial information discussed
in this Annual Report
is derived from the unconsolidated financial
statements included herein that were prepared
on the basis of generally accepted accounting principles in the
Republic of China ("ROC GAAP") which differs significantly,
in certain respects, from generally accepted accounting principles
in the United States ("US GAAP") and certain other countries.
Consolidated financial statements are also included herein.
TSMC will file an Annual Report on Form 20-F with the United States
Securities and Exchange Commission (the "US SEC') prior to June 30,
2001 which will include consolidated financial statements
that include a reconciliation of certain items to US GAAP,
as required by applicable US SEC
regulations and the listing requirements
of the New York Stock Exchange.
31
1. Brief Balance Sheets
Financial analysis from 1996 to 2000
Item
1996
1997
1998
1999
2000
Unit: NT$K
Current assets
16,529,359
23,790,795
26,378,422
38,770,670
85,950,586
Long-term stock investments
12,608,506
19,220,371
17,537,765
28,208,643
33,422,010
Fixed assets
Other assets
Current liabilities
Before distribution
After distribution
Long-term liabilities
Other liabilities
Capital stock
Capital surplus
Retained earnings
Before distribution
After distribution
Total Assets
Total Liabilities
Before distribution
After distribution
Total Equity
Before distribution
After distribution
41,978,952
61,697,723
73,636,209
89,566,029
207,005,370
2,018,827
3,804,923
6,554,817
4,877,392
14,594,492
5,357,895
10,088,672
8,138,796
14,469,329
41,188,662
5,926,138
10,250,285
8,276,867
14,684,480
*
5,720,000
20,009,357
25,025,206
20,000,000
29,000,000
9,943,809
9,001,390
6,872,545
6,183,565
9,030,097
26,542,000
40,813,000
60,471,760
76,708,817
129,893,646
59,086
62,082
164,219
11,831,411
55,285,821
25,523,456
28,641,292
24,162,113
33,320,615
76,924,173
10,684,213
8,820,919
9,010,971
11,785,153
*
73,135,644
108,513,812 124,107,213 161,422,734
340,972,458
21,021,704
39,099,419
40,036,547
40,652,894
79,218,759
21,589,947
39,261,032
40,174,618
40,868,045
*
52,113,940
69,414,393
84,070,666 120,769,840
261,753,699
51,545,697
69,252,780
83,932,595 120,554,689
*
* Subject to change after shareholders' meeting resolution
2. Brief Statements of Income
Financial analysis from 1996 to 2000
Item
Net sales
Gross profit*
1996
1997
1998
1999
2000
Unit: NT$K(ExceptEPS: NT$)
39,400,179
43,935,627
50,233,008
73,131,206
166,228,420
21,411,531
20,134,920
20,336,042
32,215,693
73,924,745
Income from operations
18,235,246
15,489,780
16,202,245
25,916,619
60,541,105
Interest revenue
Interest expense
Profit before tax
Net profit
Earnings per share
653,462
277,161
501,434
546,490
566,020
981,388
808,616
1,415,527
1,575,460
1,858,197
18,972,932
15,517,103
13,648,622
24,109,865
63,837,594
19,400,689
17,960,075
15,344,203
24,559,884
65,106,194
7.31**
1.97***
4.40**
1.83***
2.54**
1.56***
3.24**
2.49***
5.71**
-
Capitalized interest
181,168
255,054
661,414
305,312
72,903
* Certain accounts of 1996 through 1999 have been reclassified to conform to 2000 classifications
** Based on weighted average shares outstanding in each year
*** Retroactive adjustment for capitalizations of unappropriated earnings and bonus to employees
32
3. Financial Analysis
Financial analysis from 1996 to 2000
Item
1996
1997
1998
1999
2000
Capital Structure Analysis
Debts ratio (%)
Long-term fund to fixed assets (%)
Liquidity Analysis
Current ratio (%)
Quick ratio (%)
Times interest earned (times)
Operating Performance Analysis
Average collection turnover (times)
Average collection days
Average inventory turnover (times)*
Average inventory turnover days*
Fixed assets turnover (times)
Total assets turnover (times)
Profitability Analysis
Return on total assets (%)
Return ratio on stockholders' equity (%)
Operating income to capital stock (%)
Profit before tax to capital stock (%)
Profit after tax to net sales (%)
Net worth per share (NTD)
Earnings per share (NTD)
Dividends per share (NTD)
Cash dividends (NTD)
Stock dividends (NTD)
Cash Flow
Cash flow ratio (%)
Cash flow adequacy ratio (%)
Cash flow reinvestment ratio (%)
Leverage
Operating leverage
Financial leverage
28.74
137.77
36.03
144.94
32.26
148.16
25.18
157.17
23.23
140.46
308.50
247.77
42.40
235.82
185.78
20.04
324.11
273.86
8.91
267.95
233.95
14.83
208.68
178.13
34.02
8.80
41.00
7.24
50.43
0.94
0.54
32.40
45.28
68.70
71.48
49.24
19.63
1.97**
8.00
-
8.00
6.22
58.68
6.12
59.69
0.71
0.41
20.35
29.56
37.95
38.02
40.88
17.01
5.90
61.85
6.82
53.49
0.68
0.40
14.04
19.99
26.79
22.57
30.55
13.90
7.18
50.82
9.96
36.66
0.82
0.45
18.19
23.98
33.79
31.43
33.58
15.74
1.83**
5.00
-
5.00
1.56**
4.50
-
4.50
2.49**
2.30
-
2.30
7.87
46.38
11.01
33.14
0.80
0.49
24.12
31.43
46.61
49.15
39.17
21.28
5.71
2.80
***
2.80
452.74
113.70
28.21
201.55
97.96
16.28
417.00
102.04
21.65
273.50
106.00
19.31
213.74
106.15
22.53
1.79
1.02
2.15
1.04
2.69
1.06
2.47
1.06
2.34
1.03
* Certain accounts of 1996 through 1999 have been reclassified to conform to 2000 classifications
** Retroactive adjustment for capitalizations of unappropriated earnings and bonus to employees
*** Subject to change after shareholders' meeting resolution
33
4. Net Worth, Earnings, Dividends and Market Price Per Share
Market price per share
Highest market price
Lowest market price
Average market price
Net worth per share
Before distribution
After distribution
Earnings per share
Weighted average shares
Earnings per share
Earnings per share1
Dividends per share
Cash dividends
Stock dividends
Dividends from retained earnings
Dividends from capital surplus
Return on investment
Price/Earning ratio2
Price/Dividend ratio3
Cash dividend yield rate4
1998
1999
2000
173.00
56.50
100.80
13.90
11.12
171.00
68.00
117.10
15.74
12.07
222.00
74.50
146.30
21.28
-
6,047,176,000
7,572,598,000 11,400,882,000
2.54
1.56
-
4.50
-
3.24
2.49
-
1.56
-
5.71
-
*
2.555
0.245
39.69
36.14
25.62
-
0
-
0
*
*
* Subject to change after shareholders' meeting resolution
Note 1. Retroactive adjustment for capitalizations of unappropriated earnings and bonus to employees
Note 2. Price/Earning ratio = Average market price/Earnings per share
Note 3. Price/Dividend ratio = Average market price/Cash dividends per share
Note 4. Cash dividend yield rate = Cash dividends per share/Average market price
34
5. Auditors' Opinion from 1996 to 2000
Year
1996
1997
1998
1999
2000
12F, No.156, Sec. 3, Min-Sheng E. Rd., Taipei, Taiwan, R.O.C.
Tel: 886-2-2545-9988
CPA
Audit Opinion
S.C. Huang, Edward Way
An Unqualified Opinion
S.C. Huang, Edward Way
An Unqualified Opinion
S.C. Huang, Edward Way
An Unqualified Opinion
S.C. Huang, Edward Way
An Unqualified Opinion
S.C. Huang, Edward Way
An Unqualified Opinion
6. Supervisors' Report
The Board of Directors have prepared and submitted to us the Company's 2000 business report, balance sheet,
inventories of major assets, statement of profit and loss, statements of changes in shareholders' equity,
statements of cash flows, and proposal for allocating profit. The CPAs of T. N. SOONG & CO. were retained to
audit the balance sheet, inventories of major assets, statement of profit and loss, statements of changes in
shareholders' equity and statements of cash flows and have submitted a report relating thereto. The above
reports, statements and proposal have been further examined as being correct and accurate by the undersigned,
the supervisors of Taiwan Semiconductor Manufacturing Company Limited. According to Article 219 of the
Company Law, we hereby submit this report.
Taiwan Semiconductor Manufacturing Company Limited
Supervisor Jan Kees van Vliet
Supervisor George C. Shiu
Supervisor S. J. Paul Chien
March 9, 2001
35
7. Review and Analysis of Financial Position and Operating Results
(1) Liquidity Analysis
Item
Current ratio
Quick ratio
(2) Analysis of Operating Result
Dec. 31, 2000 Dec. 31, 1999
208.68%
178.13%
267.95%
233.95%
Change%
-22.12%
-23.86%
Unit:NT$K
Item
2000
1999
Chage Amount
Change%
GROSS SALES
SALES RETURNS AND ALLOWANCES
169,223,128
(2,994,708)
74,036,935
(905,729)
95,186,193
(2,088,979)
128.57%
230.64%
NET SALES
COST OF SALES
GROSS PROFIT
166,228,420
73,131,206
93,097,214
127.30%
(92,303,675)
(40,915,513)
(51,388,162)
125.60%
73,924,745
32,215,693
41,709,052
129.47%
OPERATING EXPENSES
(13,383,640)
(6,299,074)
(7,084,566)
112.47%
INCOME FROM OPERATIONS
60,541,105
25,916,619
34,624,486
133.60%
NON-OPERRATING INCOME
Insurance compensation
Interest
Foreign exchange gain-net
Equity in earnings of investee companies-net
Technology service income
Premium income
Gain on sales of short-term investments
Gain on disposal of properties
Reversal of allowance for losses on short-term
investment
Other
1,623,832
1,575,460
184,607
808,616
828,025
779,326
138,514
116,248
104,643
62,921
688
179,650
0
0
0
63,809
29,041
4,310
120,766
38,557
1,439,225
779.62%
94.83%
766,844
828,025
779,326
138,514
52,439
82.18%
75,602
260.33%
58,611
1359.88%
(120,078)
-99.43%
141,093
365.93%
Total Non-Operating Icome
5,409,307
1,249,706
4,159,601
332.85%
NNO-OPERATING EXPENSES
Interest
Premium expenses
Loss on disposal of properties
Bond issue cost
(1,858,197)
(1,415,527)
(108,133)
(99,220)
(32,658)
(86,746)
(35,810)
(114,839)
(442,670)
(21,387)
31.27%
24.65%
(63,410)
177.07%
82,181
-71.56%
Equity in net losses of investee companies-net
(1,191,891)
1,191,891
-100.00%
Loss on disposal of short-term investments
Foreign exchange loss-net
Other
(75,366)
(81,436)
(54,845)
(14,610)
Total Non-Operation Expenses
(2,112,818)
(3,056,460)
75,366
-100.00%
81,436
40,235
943,642
-100.00%
-73.36%
-30.87%
INCOME BEFORE INCOME TAX
63,837,594
24,109,865
39,727,729
164.78%
INCOME TAX BENEFIT
1,268,600
450,019
818,581
181.90%
NET INCOME
65,106,194
24,559,884
40,546,310
165.09%
36
8. Financial Statements & Independent Auditors' Report
English Translation of a Report Originally Issued in Chinese
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Ltd.
We have audited the accompanying balance sheets of Taiwan Semiconductor Manufacturing Company Ltd. as of
December 31, 2000 and 1999, and the related statements of income, changes in shareholders’ equity and cash
flows for the years then ended. These financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the Republic of China.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of Taiwan Semiconductor Manufacturing Company Ltd. as of December 31, 2000 and 1999, and the
results of its operations and its cash flows for the years then ended, in conformity with accounting principles
generally accepted in the Republic of China.
T N SOONG & CO
Taiwan, ROC
A member firm of Andersen Worldwide S. C.
January 29, 2001
Notice to Readers
The accompanying financial statements are intended only to present the 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 another jurisdictions. The standards, procedures and practices to audit such financial
statements are those generally accepted and applied in the Republic of China.
37
English Translation of Financial Statements Originally Issued in Chinese
BALANCE SHEETS
December 31, 2000 and 1999
(In Thousand New Taiwan Dollars, Except Par Value)
ASSETS
CURRENT ASSETS
2000
1999
Amount
%
Amount
%
Cash and cash equivalents (Notes 2 and 4)
$35,664,440
11
$16,650,017
10
Short-term investments (Note 2)
Receivable from related parties (Note 14)
Notes receivable
Accounts receivable
Allowance for doubtful receivables (Note 2)
Allowance for sales returns and others (Note 2)
Inventories (Notes 2 and 5)
Deferred income tax assets (Notes 2 and 13)
Prepaid expenses and other current assets
(Notes 2,14, 15 and 17)
Total Current Assets
-
994,815
125,175
30,335,314
(946,734)
(2,204,167)
10,967,935
8,122,000
2,891,808
85,950,586
LONG-TERM INVESTMENTS (Notes 2 and 6)
33,422,010
PROPERTY, PLANT AND EQUIPMENT(Notes 2, 7 and 14)
Cost
Buildings
Machinery and equipment
Office equipment
Total cost
Accumulated depreciation
Advance payments and construction in progress
Net Properties
GOODWILL (Note 2)
OTHER ASSETS
Leased assets (Note 2)
Deferred charges - net (Notes 2 and 8)
Deferred income tax assets (Notes 2 and 13)
Refundable deposits
Miscellaneous
Total Other Assets
-
-
-
9
-
(1)
3
2
1
25
10
14
62
1
77
236,250
468,903
164,134
13,380,253
(422,202)
(706,886)
4,529,714
2,329,000
2,141,487
38,770,670
28,208,643
21,337,655
102,672,163
1,939,392
125,949,210
-
-
-
8
-
-
3
2
1
24
17
13
64
1
78
46,307,643
210,461,923
3,672,927
260,442,493
(94,332,168)
(28)
(57,969,725)
(36)
40,895,045
207,005,370
12
61
21,586,544
89,566,029
14
56
3,309,707
625,647
3,122,610
6,559,293
967,985
9,250
11,284,785
1
-
1
2
-
-
3
-
-
578,544
4,273,252
16,346
9,250
4,877,392
-
-
-
3
-
-
3
TOTAL ASSETS
$340,972,458
100
$161,422,734
100
The accompanying notes are an integral part of the financial statements.
38
LIABILITIES AND SHAREHOLDERS’ EQUITY
Amount
%
Amount
%
2000
1999
CURRENT LIABILITIES
Payable to related parties (Note 14)
Accounts payable
Payables to contractors and equipment suppliers
Income tax payable (Notes 2 and 13)
Lease obligation payable (Notes 2 and 9)
$4,346,578
7,989,953
24,392,400
-
50,000
Accrued expenses and other current liabilities (Note 17)
4,409,731
1
3
7
-
-
1
$1,916,526
2,525,086
6,958,098
146,300
-
2,923,319
Total Current Liabilities
41,188,662
12
14,469,329
1
2
4
-
-
2
9
12
3
1
-
16
25
-
7
5
-
16
-
(1)
75
20,000,000
5,185,362
998,203
-
26,183,565
40,652,894
8
2
1
-
11
23
34
4
16
3
1
19
-
-
NONCURRENT LIABILITIES
Long-term bonds (Note 10)
Guarantee deposits
Accrued pension cost (Notes 2 and 12)
Deferred gain on sale-lease back (Note 2)
Total Noncurrent Liabilities
Total Liabilities
SHAREHOLDERS’ EQUITY (Note 2 and 11)
Capital stock - $10 par value
Authorized: 17,800,000 thousand shares in 2000
and 9,100,000 thousand shares in 1999
Issued:
Common - 11,689,365 thousand shares
29,000,000
7,086,379
1,509,535
434,183
38,030,097
79,218,759
in 2000 and 7,670,882 thousand shares in1999
116,893,646
Preferred - 1,300,000 thousand shares
Capital surplus
Retained earnings:
Appropriated as legal reserve
Appropriated as special reserve
Unappropriated earnings
Unrealized loss on long-term investment
Cumulative translation adjustments
Total Shareholders’ Equity
13,000,000
55,285,821
10,689,323
1,091,003
65,143,847
(71,564)
(278,377)
76,708,817
48
-
11,831,411
8,258,359
-
25,062,256
-
(1,091,003)
261,753,699
77
120,769,840
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$340,972,458
100
$161,422,734
100
39
English Translation of Financial Statements Originally Issued in Chinese
STATEMENTS OF INCOME
For the Years Ended December 31, 2000 and 1999
(In Thousand New Taiwan Dollars, Except Earnings Per Share)
2000
1999
Amount
%
Amount
%
GROSS SALES (Notes 2, 14 and 18)
SALES RETURNS AND ALLOWANCES
$169,223,128
(2,994,708)
$74,036,935
(905,729)
NET SALES
COST OF SALES (Note 14)
GROSS PROFIT
OPERATING EXPENSES (Note 14)
General and administrative
Marketing
Research and development
Total Operating Expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME
Insurance compensation
Interest
Foreign exchange gain - net (Notes 2 and 17)
Equity in earnings of investee companies - net
(Notes 2 and 6)
Technology service income (Note 14)
Premium income (Notes 2 and 17)
Gain on sales of short-term investments
Gain on disposal of properties
Reversal of allowance for losses on short-term investment
Other (Note 14)
Total Non-Operating Income
NON-OPERATING EXPENSES
Interest (Notes 7and 17)
Premium expenses(Notes 2 and 17)
Loss on disposal of properties
Bond issue cost
Equity in net losses of investee companies - net
(Notes 2 and 6)
Loss on disposal of short-term investments
Foreign exchange loss - net (Notes 2 and 17)
Other
Total Non-Operating Expenses
INCOME BEFORE INCOME TAX
INCOME TAX BENEFIT (Notes 2 and 13)
NET INCOME
166,228,420
100
73,131,206
100
92,303,675
73,924,745
5,299,135
2,953,008
5,131,497
13,383,640
56
44
3
2
3
8
40,915,513
32,215,693
2,097,835
1,810,701
2,390,538
6,299,074
56
44
3
2
4
9
60,541,105
36
25,916,619
35
1,623,832
1,575,460
828,025
779,326
138,514
116,248
104,643
62,921
688
179,650
5,409,307
1,858,197
108,133
99,220
32,658
-
-
-
14,610
2,112,818
1
1
1
-
-
-
-
-
-
-
3
1
-
-
-
-
-
-
-
1
184,607
808,616
-
-
-
63,809
29,041
4,310
120,766
38,557
1,249,706
1,415,527
86,746
35,810
114,839
1,191,891
75,366
81,436
54,845
3,056,460
1
1
-
-
-
-
-
-
-
-
2
2
-
-
-
2
-
-
-
4
63,837,594
1,268,600
$65,106,194
38
1
39
24,109,865
450,019
$24,559,884
33
1
34
EARNINGS PER SHARE
Based on common stock weighted-average number
of shares outstanding - 11,400,882 thousand shares
in 2000 and 7,572,598 thousand shares in 1999
$5.71
Based on 9,863,489 thousand shares
The accompanying notes are an integral part of the financial statements.
$3.24
$2.49
40
English Translation of Financial Statements Originally Issued in Chinese
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Years Ended December 31, 2000 and 1999
(In Thousand New Taiwan Dollars)
CAPITAL STOCK ISSUED
CAPITAL SURPLUS (Note 2)
RETAINED EARNINGS (Note 11)
Common Stock
Prefered Stock
Additional
From
Excess on
Gain on
UNREALIZED
LOSS ON
CUMULATIVE
LONG-TERM
TRANSLATION TOTAL
Shares
Shares
From
Paid-In
Long-term Foreign Bond Disposal of
Legal
Special
Unappropriated
INVESTMENT
ADJUSTSMENTS SHARHOLDERS'
(Thousand)
Amount
(Thousand)
Amount
Consolidation Capital
Investment
Investment
Properties Donation
Total
Reserve
Reserve
Earnings
Total
(NOTE 2)
(NOTE 2)
EQUITY
$ -
$ -
$ -
$99,128
$ -
$65,036
$55
$164,219
$6,724,240
$ -
$17,437,873
$24,162,113
$ -
($727,426)
$84,070,666
BALANCE, JANUARY 1, 1999
6,047,176
$60,471,760
Appropriations of prior year’s earnings
Legal reserve
-
-
Bonus to employees - stock
110,457
1,104,566
Stock dividends - 23%
1,390,850
13,908,505
Bonus to directors & supervisors
Net income in 1999
-
-
-
-
Conversion of foreign bonds
122,399
1,223,986
Gain on disposal of properties
Gain on disposal of property from investees
Adjustment arising from changes in ownership
percentage in investees
Translation adjustments
-
-
-
-
-
-
-
-
BALANCE, DECEMBER 31, 1999
7,670,882
76,708,817
Appropriations of prior year’s earnings
Legal reserve
Special reserve
-
-
-
-
Bonus to employees - stock
172,121
1,721,208
Stock dividends - 25.55%
1,959,910
19,599,103
Bonus to directors and supervisors
-
-
Capital Transferred from capital surplus - 2.45%
187,937
1,879,366
Issuance of shares on June 8, 2000
115,000
1,150,000
Issuance of shares for the mergers
on June 30, 2000
1,583,515
15,835,152
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Issuance of preferred stocks on November 29, 2000
Net income in 2000
Gain on disposal of properties
Gain on disposal of property from investees
Adjustment arising from changes in ownership
percentage in investees
Unrealized loss on long-term investment from investees
Translation adjustments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,300,000
13,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,329,129
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23,172,550
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
246,218
126,954
-
-
-
-
-
-
11,289,998
-
-
-
-
-
-
-
-
-
-
4,022
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,289,998
4,022
246,218
126,954
-
1,534,119
-
-
-
-
-
-
-
-
-
472,300
11,289,998
69,058
55
11,831,411
8,258,359
-
-
-
-
-
-
-
-
-
-
-
5,502
(231,583)
-
-
-
-
-
-
-
(1,879,366)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58,178
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,879,366)
23,172,550
22,329,129
-
-
58,178
5,502
(231,583)
-
-
2,430,964
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,534,119)
-
(1,104,566)
(1,104,566)
(13,908,505)
(13,908,505)
(138,071)
(138,071)
24,559,884
24,559,884
-
-
(4,022)
(4,022)
(246,218)
(246,218)
-
-
-
-
25,062,256
33,320,615
-
-
-
-
-
-
-
-
-
-
-
-
(2,430,964)
1,091,003
(1,091,003)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,721,208)
(1,721,208)
(19,599,103)
(19,599,103)
(215,151)
(215,151)
-
-
-
-
(135,077)
(135,077)
-
-
65,106,194
65,106,194
(58,178)
(58,178)
(5,502)
(5,502)
231,583
231,583
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
( 71,564)
-
-
-
-
-
-
-
-
-
-
-
-
(138,071)
24,559,884
12,513,984
-
-
126,954
(363,577)
(363,577)
(1,091,003)
120,769,840
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(215,151)
-
24,322,550
38,029,204
13,000,000
65,106,194
-
-
-
(71,564)
-
812,626
812,626
BALANCE, DECEMBER 31, 2000
11,689,365
$116,893,646
1,300,000
$13,000,000
$22,329,129
$23,172,550
$246,219
$9,410,632
$127,236
$55
$55,285,821
$10,689,323
$1,091,003
$65,143,847
$76,924,173
($71,564)
($278,377)
$261,753,699
The accompanying notes are an integral part of the financial statements.
41
English Translation of Financial Statements Originally Issued in Chinese
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2000 and 1999
(In Thousand New Taiwan Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Net income from the dissolved company before the merger
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Deferred income taxes
Equity in net losses or earnings of investee companies - net
Gain on sale of long-term investments
Loss on disposal of properties - net
Accretion in redemption value of bonds
Accrued pension cost
Allowance for doubtful receivables
Allowance for sales returns and others
Changes of operating assets and liabilities:
Decrease (increase) in:
Short-term investments
Forward exchange contract receivable
Receivable from related parties
Notes receivable
Accounts receivable
Inventories
Prepaid expenses and other current assets
Increase (decrease) in:
Payable to related parties
Accounts payable
Income tax payable
Forward exchange contract payable
Accrued expenses and other current liabilities
2000
1999
$65,106,194
$24,559,884
(135,077)
-
33,051,197
18,041,320
(1,059,841)
(383,686)
(779,326)
1,191,891
-
13,823
-
360,673
490,835
965,503
(9,881)
31,854
585,614
249,483
139,112
264,913
236,250
7,108
(538,201)
96,364
5,425,077
(2,633)
(234,396)
(129,266)
(14,268,429)
(5,443,998)
(2,985,133)
(840,937)
729,775
(1,289,994)
3,552,646
2,379,105
(146,300)
76,168
883,185
1,557,429
477,215
(629,208)
102,784
1,336,588
Net Cash Provided by Operating Activities
88,036,519
44,999,165
(Forward)
42
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Properties
Long-term investments
Proceeds from sale of:
Properties
Long-term investments
Decrease (increase) in refundable deposits
Increase in deferred charges
Cash of TASMC and WSMC as of July 1,2000
Net Cash Used in Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of :
Long-term bonds
Capital stock
Payments on:
Short-term bank loans
Commercial paper
Long-term bank loans
Increase (decrease) in guarantee deposits
Bonus paid to directors and supervisors
Net Cash Provided by Financing Activities
2000
1999
($79,270,461)
($29,842,159)
(11,866,583)
(12,105,618)
219,233
-
(770,733)
36,824
16,106
5,572
(1,089,730)
(433,187)
1,412,404
-
(91,365,870)
(42,322,462)
9,000,000
37,322,550
(12,635,000)
(5,479,288)
(7,550,000)
1,900,663
(215,151)
9,450,634
-
-
-
(2,692,938)
(938,463)
(138,071)
22,343,774
5,681,162
NET INCREASE IN CASH AND CASH EQUIVALENTS
19,014,423
8,357,865
CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR
16,650,017
8,292,152
CASH AND CASH EQUIVALENTS, END OF THE YEAR
$35,664,440
$16,650,017
SUPPLEMENTAL INFORMATION
Interest paid (excluding capitalized amounts)
Income tax paid
Noncash investing and financing activities - effect of
Exchange rate changes on cash and cash equivalents
Current portion of long-term debt
Cash paid for acquisitions of properties
Total acquisitions
Payables to contractors and equipment suppliers
Conversion of bonds into common stocks
$2,366,026
$1,300,591
$-
$540,873
$1,009,264
($66,376)
$50,000
$-
$89,963,658
$33,619,158
(10,693,197)
(3,776,999)
$79,270,461
$29,842,159
$-
$12,513,984
43
SUPPLEMENTAL INFORMATION OF THE MERGERS:
The Company had merged with Worldwide Semiconductor Manufacturing Corp. (WSMC) and had acquired
TSMC-Acer Semiconductor Manufacturing Corp. (TASMC) by issuing new shares. The balance sheets as of
June 30, 2000 of WSMC and TASMC were as follows:
Cash
Inventories
Other current assets
Properties - net
Other assets
Current liabilities
Long-term liabilities
Other liabilities
Net assets acquired
TASMC
WSMC
(Fair Value)
(Book Value)
Total
$736,594
1,647,845
2,308,391
$675,810
1,805,243
3,150,257
19,846,708
40,512,706
7,335,526
5,101,000
$1,412,404
3,453,088
5,458,648
60,359,414
12,436,526
(16,699,147)
(12,454,686)
(29,153,833)
(2,000,000)
(4,950,000)
(6,950,000)
(654,863)
(23,498)
(678,361)
12,521,054
33,816,832
46,337,886
Cancellation of stocks of the dissolved companies
(8,173,605)
-
(8,173,605)
Issuance of stocks from the surviving company
(4,335,152)
(11,500,000)
(15,835,152)
Capital surplus
$12,297
$22,316,832
$22,329,129
The accompanying notes are an integral part of the financial statements.
44
English Translation of Financial Statements Originally Issued in Chinese
NOTES TO FINANCIAL STATEMENTS
(Amounts in Thousand New Taiwan Dollars, Unless Specified Otherwise)
1. GENERAL
The Company is engaged mainly in the: (a) manufacture, sale, packaging, testing and computer-aided design of
integrated circuits and other semiconductor devices; and, (b) manufacture and design of masks.
The Company’s shares are listed and traded on the Taiwan Stock Exchange.
On October 8, 1997, the Company sold shares of stock in the New York Stock Exchange in the form of American
Depositary Receipts (ADRs).
TSMC had acquired TSMC-Acer Semiconductor Manufacturing Corp. (TASMC). It also merged with Worldwide
Semiconductor Manufacturing Corporation (WSMC) with TSMC as the surviving company. TASMC and WSMC
were subsequently dissolved. The acquisition of TASMC and the merger with WSMC took effect on June 30,
2000, and, on that date, the Company issued a total of 1,583,515 thousand common shares to the former
shareholders of TASMC and WSMC. The additional shares issued were based on the agreed exchange ratio of
three point nine TASMC shares and two WSMC shares for every share of TSMC. Also, the holders of the
additional shares have the same rights and the obligation as the holders of the other issued common stock of
the Company.
TASMC was incorporated on March 31, 1990, and commenced operations in January 1992. TASMC is engaged
mainly in the research, development, design, manufacturing, packaging, testing and sale of dynamic random-
access memory (DRAM) semiconductor devices, other memory integrated circuits and logic integrated circuits.
WSMC, was incorporated on March 6, 1996 and commenced operations from December 1, 1998. WSMC is
engaged mainly in the manufacture of semiconductor products.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The financial statements have been prepared in conformity with regulations governing the preparation of
financial statements of public companies, and generally accepted accounting principles in the Republic of China.
The significant accounting principles adopted by the Company are as follows:
Cash equivalents
Government bonds acquired under repurchase agreements with original maturities of less than three months are
classified as cash equivalents.
Short-term investments
Short-term investments are carried at the lower of cost or market value. The costs of investments sold are
determined by the specific identification method.
Allowance for doubtful receivables
Allowance for doubtful receivables are provided based on a review of the collectibility of individual receivables.
Sales and allowance for sales returns and others
Sales are recognized when products are shipped to customers. Allowances and the related provision for sales
returns and others are provided based on experience. Such provisions are accounted for as reduction from
sales and the related costs are deducted from cost of sales.
Inventories
Inventories are stated at the lower of standard cost (adjusted to approximate weighted average cost) or market
value. Market value represents net realizable value for finished goods and work in process, and replacement
value for raw materials, supplies and spare parts.
45
Long-term investments
Investments in shares of stock of companies wherein the Company exercises significant influence on their
operating and financial decisions are accounted for by equity method. The difference between the investment
cost and the Company’s proportionate share in the net assets of the investee on the date of acquisition is
amortized on a straight - line method over five years. Such amortization and the Company’s proportionate share
in the earnings or losses of investee companies are recognized as part of “Equity in net earnings or losses in
investee companies” account. The increase in the Company’s proportionate share in the net assets of its
investee company resulting from its subscription to additional shares of stock, issued by such investee company,
at the rate not proportionate to its existing equity ownership in such investee companies, is credited to a capital
surplus account while any decrease in the Company’s proportionate share in the net asset of investee company
is debited against the existing balance of the similar capital surplus account with the difference debited against
unappropriated retained earnings.
If an investee company’s losses are covered by additional paid-in capital that is soured from an increase in the
value of assets upon reappraisal after the long-term investment was made, then the Company shall calculate
such amount in accordance with its ownership percentage and debit the “Additional paid-in capital” account and
credit the “Retained earnings” account; no journal entries shall be made for other types of loss coverage increase
in asset values upon reappraisal.
Other stock investments are accounted for by cost method. These investments are stated at cost less decline in
market value of listed stocks or decline in value of unlisted stocks which is considered irrecoverable; such
reductions are charged to shareholders’ equity or current income, respectively. Cash dividends are recognized
as income in the year received but are accounted for as reduction in the carrying value of the long-term
investment if the dividends are received in the same year that the related investments are acquired.
Stock dividends received are recognized only as increase in the number of stocks held on the ex-dividend date.
Investments in foreign mutual funds are stated at the lower of cost or net asset value (NAV). Write-downs of cost
and write-ups to original acquisition cost resulting from subsequent recovery of the NAV are debited or credited to
shareholders’ equity.
The costs of investments sold are determined by the weighted-average method.
The Company’s proportionate share in the gains from disposal of properties, net of the applicable income tax,
included as part of its share in the earnings or losses of investee companies accounted for under the equity
method for the current year is transferred in to capital surplus from retained earnings. When the Company
subsequently disposed such investment in shares of stock, such capital surplus shall be transferred back to
retain earnings. Also, if an investee company has unrealized loss on long-term investment which is evaluated by
lower-of-cost-or-market method, the Company shall recognize that unrealized loss in proportion to the
Company’s equity interest and recorded in an account as a component of shareholders’ equity.
Gains or losses on transactions with investee companies wherein the Company owned at least 20% of the
outstanding common stock but less than a controlling interest are deferred in proportion to ownership percentage
until realized through a transaction with a third party. The entire amount of the gains or losses on sales to
majority-owned subsidiaries are deferred until such gains or losses are realized through the subsequent sale of
the related products to third parties. On the other hand, if the unrealized gains or losses arose from a sale by the
investee companies or majority-owned subsidiaries to the Company, an adjustment should be made in
accordance with ownership percentage.
Property, plant and equipment and rental assets
Property, plant and equipment and rental assets are stated at cost less accumulated depreciation. Major
additions, renewals and betterment, and interest expense incurred during the construction period are capitalized.
Maintenance and repairs are expensed currently.
Property, plant and equipment covered by agreements qualifying as capital leases are carried at the lower of the
46
present value of all minimum future rental payments, or the leased property’s market value at the inception date
of the lease. The lessee’s periodic rental payment includes the purchase price of the leased property, and the
interest expense.
Depreciation is provided on the straight-line method over these estimated service lives: Buildings - 10 to 20
years; machinery and equipment - 5 to 10 years; and office equipment - 3 to 5 years.
Upon sale or disposal of properties, the related cost and accumulated depreciation are removed from the
accounts, and any gain or loss is credited or charged to income. Any such gain, less applicable income tax, is
transferred to capital surplus at the-end of the year.
Goodwill
Goodwill arisen from the business merger is amortized by the straight-line method over 10 years.
Deferred charges
Deferred charges, consisting of technology, software and system design costs, technology know how, issuance
costs of bonds, and short-term credit instruments, are amortized over three years, five years, the contract period
of credit instruments, and the contract valid period or economic useful lives, respectively.
Pension costs
Net periodic pension costs are recorded on the basis of actuarial calculations. Unrecognized net transition
obligation is amortized over 25 years.
Deferred gain on sale-leaseback
The gain resulting from the sale of leased property is deferred. Such deferred gain is then amortized as follows:
(a) operating lease - adjustment of rental expenses over leasing period, and (b) capital lease - adjustment of
depreciation over the estimate useful life or leasing period.
Income tax
The Company adopted inter-period tax allocation. Deferred income taxes are recognized for the tax effects of
temporary differences, unused tax credits, and operating loss carry forwards. Valuation allowance is provided
for deferred income tax assets that are not certain to be realized. A deferred tax asset or liability should,
according to the classification of its related asset or liability, be classified as current or non-current. However, if a
deferred asset or liability cannot be related to an asset or liability in the financial statements, it should be
classified as current or non-current based on the expected reversal date of temporary difference.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.
Income taxes (10%) on unappropriated earnings generated starting January 1, 1998 are recorded as expense in
the year when the shareholders have resolved that the earnings shall be retained.
Derivative financial instruments
Foreign currency forward exchange contracts are recorded in New Taiwan dollars as assets or liabilities at spot
rates on the inception dates of the contracts. The difference in the New Taiwan dollar amounts translated using
the spot rates and the amounts translated using the contracted forward rates are also recognized as premiums
or discounts on the inception dates of the forward contracts. Premiums or discounts are amortized by the
straight-line method over the terms of the forward contracts are either deferred or recognized as income. At the
balance sheet dates, the receivables or payables arising from forward contracts are restated at the prevailing
spot rates, and the resulting differences are recognized in income. Also, the receivables and payable related to
the forward contracts are netted out, and the resulting net amount is presented as either an asset or liability.
Under interest rate swap contracts, the Company pays an amount equal to the interest rates based on notional
principal amount and receives a specified variable-rate of interest also based on the same notional principal
amount; with the notional amounts of the contracts are not exchanged. The net amounts paid or received under
the contracts are reported as adjustments to interest income or expense.
The notional amounts of the foreign currency option contracts entered into for hedging purposes are not
47
recognized as either assets or liabilities on the contract dates. However, amounts received on call options written
are recognized as assets and amounts paid on put options bought are recognized as liabilities. Such amounts
are amortized using the straight-line method over the period of the contracts and charged to current income.
Gains or losses on the exercise of the options are also recognized in current income.
Foreign-currency transactions
Foreign-currency transactions, except derivative financial instruments, are recorded in New Taiwan dollars at the
rates of exchange in effect when the transactions occur. Gains or losses resulting from the application of
different foreign exchange rates when cash in foreign currency is converted into New Taiwan dollar, or when
foreign-currency receivables and payables are settled, are credited or charged to income in the year of
conversion or settlement. At period-end, the balances of foreign-currency assets and liabilities are restated at
prevailing exchange rates, and the resulting differences are recorded as exchange gain or loss in current income.
Reclassifications
Certain accounts in 1999 have been reclassified to conform to 2000 classifications.
Mergers
The acquisition of TASMC effective on July 1, 2000 was accounted under the Statement of Financial Accounting
Standards No. 25 “Business Combination - Purchase Method”. On the other hand, the merger with WSMC was
accounted for as pooling of interest with the results of operations of WSMC included in the statement of income
for the year ended December 31, 2000.
Pro forma net sales, net income and earnings per share of the Company on the assumption that the acquisition
of TASMC and the merger with WSMC were completed as of January 1, 1999 are as follows:
Net sales
Net income
Earnings per share
2000
1999
$170,163,166
$87,015,703
65,050,836
17,714,691
Based on weighted-average number of shares outstanding -
11,616,455 and 11,029,303 thousand shares in 2000 and 1999
$5.60
$1.61
The individual operating results of the three companies before the mergers on June 30, 2000 are as follows:
For the six months ended June 30, 2000
Net sales
Net income (loss)
For the year ended December 31, 1999
Net sales
Net income (loss)
The Company
TASMC
WSMC
$60,089,632
$3,934,746
$4,844,501
23,458,253
(55,358)
135,077
73,131,206
24,559,884
10,655,995
3,228,502
(6,127,604)
(1,032,890)
3. The restated financial information of the Company on the assumption that the merger with WSMC had
occurred as of December 31, 1999 is as follows:
48
BALANCE SHEETS
December 31, 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Short-term investments
Receivables-net
Inventories
Deferred income tax assets
Pledged time deposits
Prepaid expenses and other current assets
Total Current Assets
LONG-TERM INVESTMENTS
PROPERTY, PLANT AND EQUIPMENT-NET
OTHER ASSETS
Deferred income tax assets
Deferred charges - net
Refundable deposits
Miscellaneous
Total Other Assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term bank loan
Commercial paper
Payable to related parties
Accounts payable
Payable to contractors and equipment suppliers
Income tax payable
Accrued expenses and other current liabilities
Total Current Liabilities
NONCURRENT LIABILITIES
Long-term bank loan
Long-term bonds
Total Noncurrent Liabilities
OTHER LIABILITIES
Accrued pension cost
Guarantee deposits and other liabilities
Total Other Liabilities
Total Liabilities
SHAREHOLDERS’ EQUITY
Capital stock
Subscribed capital
Capital surplus
Legal reserve
Unappropriated earning
Cumulative translation adjustments
Total Shareholders’ Equity
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
Amount
$28,505,434
266,890
13,940,578
5,791,791
2,498,455
3,161,000
2,578,883
56,743,031
28,240,267
118,942,185
$6,794,609
2,317,245
54,903
105,137
9,271,894
$213,197,377
$5,026,631
94,797
1,922,911
2,871,065
6,958,098
146,300
7,596,561
24,616,363
9,791,000
20,000,000
29,791,000
1,012,045
5,207,781
6,219,826
60,627,189
85,208,817
13,118,025
22,013,734
8,258,359
25,062,256
(1,091,003)
152,570,188
$213,197,377
49
STATEMENTS OF INCOME
For the Year Ended December 31, 1999
NET SALES
COST OF SALES
GROSS PROFIT
OPERATING EXPENSES
General and administrative
Marketing
Research and development
Total Operating Expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME
Interest
Insurance compensation
Reversal of allowance for losses on short-term investment
Premium income
Gain on disposal of investments
Rental income
Other
Total Non-Operating Income
NON-OPERATING EXPENSES
Interest
Equity in net losses of investee companies - net
Loss on disposal of properties
Foreign exchange loss - net
Bond issue cost
Premium expenses
Loss on disposal of short-term investments
Other
Total Non-Operating expenses
INCOME BEFORE INCOME TAX
INCOME TAX BENEFIT
NET INCOME
4. CASH AND CASH EQUIVALENTS
Cash and bank deposits
Government bonds acquired under repurchase agreements
$76,359,708
45,640,417
30,719,291
2,326,662
1,976,623
3,090,790
7,394,075
23,325,216
1,026,003
184,607
120,766
63,809
29,041
3,667
111,272
1,539,165
1,954,366
1,191,891
164,351
119,141
114,839
86,746
75,366
80,706
3,787,406
21,076,975
2,450,019
$23,526,994
2000
1999
$35,053,733
$16,575,032
610,707
74,985
$35,664,440
$16,650,017
50
5.
INVENTORIES
Finished goods
Work in process
Raw materials
Supplies and spare parts
Allowance for losses
6. LONG-TERM INVESTMENTS
2000
1999
$1,606,368
8,422,401
423,444
1,083,348
11,535,561
(567,626)
$653,347
3,618,693
320,685
718,344
5,311,069
(781,355)
$10,967,935
$4,529,714
2000
1999
% of
% of
Carrying Owner-
Carrying Owner-
Value
ship
Value
ship
Shares of stock
Equity method
TSMC International Investment
Vanguard International Semiconductor
TSMC - North America
$23,678,522
5,615,075
666,924
TSMC - Europe
TSMC - Japan
TASMC
Systems on Silicon Manufacturing
Company Pte. Ltd. (SSMC)
Po Cherng Investment
Chi Hsin Investment
Kung Cherng Investment
Chi Cherng Investment
Hsin Ruey Investment
Cherng Huei Investment
TSMC Partners
Cost method
Listed
Taiwan Mask
Non-listed
TASMC-preferred stocks
Taiwan Semiconductor Technology
United Industrial Gases Co., Ltd.
Shin-Etsu Handotai Taiwan Company Ltd.
W.K. Technology Fund IV
Hon Tung Venture Capital
(Forward)
100
25
100
100
100
-
32
25
25
25
25
25
25
$10,078,880
5,010,897
255,025
25,956
10,168
3,630,193
360,177
103,017
103,012
102,773
102,770
103,003
103,005
100
25
100
100
100
32
32
25
25
25
25
25
25
100
9,968
100
9,594
37,803
-
935,870
136,984
139,000
158,752
130,794
128,100
138,200
535,162
32,310,780
19,998,844
32,129
-
500,000
146,250
105,000
50,000
120,000
953,379
2
-
19
10
7
4
10
32,129
4,854,742
500,000
146,250
105,000
50,000
80,000
5,768,121
2
28
19
11
7
4
10
51
Funds
Crimson Asia Capital
Horizon Ventures
Subscription to shares of stock of
TSMC International Investment
64,547
93,304
157,851
-
$33,422,010
-
-
-
34,534
31,744
66,278
2,375,400
$28,208,643
-
-
-
Equity in net earnings or losses of investee companies in 2000 and 1999 were as follows:
TSMC International Investment
Vanguard International Semiconductor
Others
2000
1999
$138,589
($1,007,218)
597,812
42,925
(527,823)
343,150
$779,326
($1,191,891)
The carrying values of investments accounted for by equity method and the related investment income and
losses for the years ended December 31, 2000 were based on audited financial statements of the investees in
the same period except for TSMC - Japan in 1999.
Information on the long-term investments is as follows:
Market value of listed stocks
Equity in the net assets of unlisted stocks
Net asset value of funds
7. PROPERTY, PLANT AND EQUIPMENT
Accumulated depreciation consisted of the following:
Buildings
Machinery and equipment
Office equipment
2000
1999
$8,729,639
$19,753,642
27,597,593
20,177,278
157,851
66,278
2000
1999
$9,816,698
82,775,965
1,739,505
$7,441,342
49,369,894
1,158,489
$94,332,168
$57,969,725
Information on the status of the construction of the Company’s manufacturing facilities as of December 31, 2000
is as follows:
Manufacturing Plant
Fab 6
Fab 7
Fab 8
Fab 12 - 1st stage
Fab 14 - 1st stage
Estimated
Cost
Accumulated
Expenditures
$76,889,000
$67,565,100
22,540,400
28,314,300
38,280,800
9,711,000
11,121,100
15,217,800
21,372,000
7,946,600
Expected or Actual
Date of Starting
Operations
March 2000
March 2001
March 2001
November 2001
May 2002
Interest expense capitalized for the years ended December 31, 2000 and 1999 were $72,903 and $305,312,
respectively.
52
As of December 31, 2000, properties with an aggregate net book value of about $7,171,081 were mortgaged as
collateral for long-term bank loans.
8. DEFERRED CHARGES - NET
Technology
Software and system design costs
Technology know how
Bond issue costs
Others
9. LEASE OBLIGATION PAYABLE
Lease payable - repayable by June 30, 2001
Current portion
10. LONG-TERM BONDS
Domestic unsecured bonds:
2000
1999
$1,442,292
1,420,528
157,500
45,595
56,695
$-
541,306
-
37,238
-
$3,122,610
$578,544
2000
$50,000
(50,000)
$-
2000
1999
Repayable in March 2003, 7.71% annual interest payable semi-annually
$4,000,000
$4,000,000
Repayable in November 2003, 7.12% annual interest payable annually,
prepaid in November 2000
-
6,000,000
Repayable in October 2002 and 2004, 5.67% and 5.95% annual interest
payable annually, respectively
10,000,000
10,000,000
Repayable in December 2005 and 2007, 5.25% and 5.36% annual interest
payable annually, respectively
15,000,000
-
$29,000,000
$20,000,000
11. SHAREHOLDERS' EQUITY
According to Company Law, capital surplus can only be used to offset a deficit or transferred to capital.
The Company's Articles of Incorporation provide that the following shall be appropriated from the annual net
income (less any deficit):
a. 10% legal reserve;
b. Special reserve according to the relevant laws or the regulating authorities;
c. Bonuses to directors and supervisors and to employees equal to 1% and at least 1% of the remainder,
respectively.
d. Dividends to shareholders of preferred stock equal to 3.5% annual rate, based on outstanding period.
These appropriations and the disposition of the remaining net income shall be resolved by the shareholders in
the following year and given effect to in the financial statements of that year.
The aforementioned appropriation for legal reserve shall be made until the reserve equals aggregate par value of
53
the Company’s outstanding capital stock. The reserve can only be used to offset a deficit; or, when it has
reached 50% of the aggregate par value of the Company’s outstanding capital stock, up to 50% thereof can be
distributed as stock dividend.
Pursuant to existing regulations promulgated by the Securities and Futures Commission, a special reserve
equivalent to the debit balance of any account shown in the shareholder equity section of the balance sheets,
other than the deficit, shall be made from unappropriated retained earnings. The special reserve shall be
adjusted accordingly based on the debit balance of such accounts as at year-end.
Under the Integrated Income Tax System that became effective on January 1, 1998, non-corporate and ROC-
resident shareholders are allowed a tax credit for the income tax paid by the Company on earnings generated
starting January 1, 1998. An Imputation Credit Account (ICA) is maintained by the Company for such income tax
and the tax credit allocated to each shareholder. The maximum credit available for allocation to each
shareholder cannot exceed the balance shown in the ICA on the date of distribution of dividends.
The company issued nonpublic 1,300,000 thousand preferred stock - Series A to certain investors. The following
are the rights of the holders of the preferred shares and other terms and conditions.
a. Entitled to receive cumulative cash dividends at an annual rate of 3.5%.
b. Not be entitled participating any additional shares of stock upon transfer of unappropriated earnings and
capital surplus to stock.
c. Have priority over the holders of common shares to the assets of the Corporation available for distribution to
stockholders upon liquidation or dissolution of the Corporation; however, the preemptive rights to the assets
shall not excess the issue value of the shares.
d. Have voting rights similar to that of the holders of common stock.
e. No right to convert their shares into common stock. The preferred shares will be redeemed within thirty
months from its issuance. The holders will have the foregoing rights and the Company’s related obligations
will remain the same until the preferred shares are actually redeemed by the Company.
12. PENSION PLAN
The Company has a pension plan for all regular employees, which provides benefits based on length of service
and average monthly salary for the final six months of employment.
The Company makes monthly contributions, equal to 2% of salaries, to a pension fund that is administered by a
pension fund monitoring committee and deposited in the committee’s name in the Central Trust of China.
The changes in the fund and accrued pension cost are summarized as follows:
a. Components of pension cost
Service cost
Interest cost
Projected return on plan assets
Amortization
(Forward)
2000
1999
$376,689
$248,378
91,234
(26,675)
8,300
78,961
(22,317)
8,300
$449,548
$313,322
54
b. Reconciliation of the fund status of the plan and accrued pension cost
Benefit obligation
Vested benefit obligation
Nonvested benefit obligation
Accumulated benefit obligation
Additional benefits based on future salaries
Projected benefit obligation
Fair value of plan assets
Funded status
Unrecognized prior service cost
Unrecognized net transitional obligation
Unrecognized net gain
Additional liability
Accrued pension cost
c. Actuarial assumptions
Discount rated used in determining present values
Future salary increase rate
Expected rate of return plan on assets
d. Contributions to pension fund
e. Funds transferred from TASMC and WSMC
f. Payments from pension fund
13.
INCOME TAX BENEFIT
$-
763,879
763,879
1,550,009
2,313,888
(661,099)
1,652,789
-
$-
428,257
428,257
975,345
1,403,602
(364,994)
1,038,608
-
(165,991)
(174,291)
22,737
-
$1,509,535
135,448
-
$999,765
6.0%
6.0%
6.0%
6.5%
6.0%
6.5%
$95,932
$67,227
$173,339
$-
$1,458
$3,591
a. A reconciliation of income tax expense - current before tax credits and income tax expense on income before
income tax at statutory rate is shown below:
2000
1999
Income tax expense on "income before income tax" at statutory rate (20%)
($12,760,503)
($4,821,973)
Tax-exempt income
Temporary difference
Assess additional income tax on the unappropriated earning
Income tax expense - current
b.
Income tax credits as of December 31, 2000 and 1999 consist of:
Income tax expense - current before tax credits
Tax credits
Net change in deferred income tax assets (liabilities) for the period
Investment tax credits
Temporary differences
Valuation allowance
Adjustment of prior years' taxes
7,770,000
(49,497)
(88,024)
3,434,802
(221,129)
-
($5,128,024)
($1,608,300)
2000
1999
($5,128,024)
($1,608,300)
5,128,024
1,587,000
-
(21,300)
3,146,369
(388,671)
1,798,325
(111,139)
(1,678,791)
(1,303,500)
189,693
$1,268,600
87,633
$450,019
55
c. Deferred income tax assets and liabilities as of December 31, 2000 and 1999 consisted of:
Current
Investment tax credits
Valuation allowance
Noncurrent
Investment tax credits
Valuation allowance
Temporary differences
Depreciation
2000
1999
$8,422,000
$2,329,000
(300,000)
-
$8,122,000
$2,329,000
$15,490,536
$5,806,891
(8,312,433)
(1,303,500)
238,879
197,268
(857,689)
$6,559,293
(427,407)
$4,273,252
d.
Integrated income tax information:
The balances of the imputation credit account (ICA) as of December 31, 2000 and 1999 were $5,888 and
$1,497, respectively.
The expected and actual creditable ratio for 2000 and 1999 is 0.009%.
The imputation credit allocated to each shareholder shall be based on the balance in the ICA on the date of
distribution of dividends; thus the expected creditable ratio for 2000 may be adjusted according to the
difference between the expected and actual imputation credit allowed under the regulation.
e. The unappropriated retained earnings as of December 31, 2000 and 1999 included the earnings generated up
to December 31, 1997 of $4,827 and $752,612, respectively.
The effective tax rates for deferred income tax as of December 31, 2000 and 1999 were 7.54% and 5.9%,
respectively.
Unused investment tax credits arising from investments in machinery and equipment, and research and
development expenditures as of December 31, 2000 will expire as follows:
Year of Expiry
2000
2001
2002
2003
2004
The income from the following projects and services are exempt from income tax:
Amount
$2,899,245
4,015,461
4,800,268
5,738,563
6,458,999
$23,912,536
Tax-Exemption Period
Expansion of second manufacturing plant and computer-aided
design services, and construction of third manufacturing plant
1996 to 1999
Expansion of first and second manufacturing plants - modules A and B,
third manufacturing plant, and construction of fourth manufacturing plant
1997 to 2000
Expansion of first and second manufacturing plants-modules A and B,
third manufacturing plant and fourth manufacturing plant, and construction
of fifth manufacturing plant
1999 to 2002
Income tax returns through 1996 have been examined and cleared by the tax authorities.
56
14. RELATED PARTY TRANSACTIONS
The Company engages in business transactions with the following related parties:
a.
Industrial Technology Research Institute (ITRI); the Company's chairman is one of its director
b. Philips Electronics N.V., a major shareholder
c. Subsidiaries
TSMC International Investment (TSMC - BVI)
TSMC - North America
TSMC - Europe
TSMC - Japan
d.
Investees
Vanguard International Semiconductor Corporation (VIS)
Systems on Silicon Manufacturing Company Pte.Ltd. (SSMC)
e. TSMC-ACER Semiconductor Manufacturing Corp. (TASMC), a merged company
f. WaferTech, LLC, an indirect subsidiary of TSMC-BVI
g. TSMC Technology, a subsidiary of TSMC-BVI
The transactions with the aforementioned parties in addition to those disclosed in other notes, are summarized
as follows:
2000
1999
Amount
%
Amount
%
For the period
Sales
ITRI
Philips and its affiliates
VIS
TASMC
WaferTech
Purchase
WaferTech
TASMC
VIS
Rental expense - ITRI
$198,146
5,289,927
17,012
-
30,816
$5,535,901
$13,296,633
-
6,572,110
$19,868,743
$161,575
Manufacturing expenses Technical assistance fee - Philips $2,137,175
General and administrative expenses Consulting fee - VIS
$-
(Forward)
-
3
-
-
-
3
37
-
19
56
14
86
-
$132,507
2,864,149
48,473
22,246
59,438
$3,126,813
$4,636,780
808,926
381,989
$5,827,695
$161,488
-
4
-
-
-
4
40
7
3
50
54
$862,398
100
$20,400
-
57
Marketing expenses
Commission -
TSMC - North America
TSMC - Europe
TSMC - Japan
Service Charge -
TSMC - North America
Sale of Properties
WaferTech
VIS
Non-operating income
SSMC (mainly technical service income)
VIS
Others
At end of period
Receivable
ITRI
Philips and its affiliates
TSMC - Japan
VIS
WaferTech
TSMC Technology
SSMC
TASMC
Rental prepayment - ITRI
Payable
Philips and its affiliates
TSMC - North America
TSMC - Europe
TSMC - Japan
VIS
WaferTech
TSMC Technology
TASMC
$994,686
143,461
165,087
118,852
$1,422,086
$-
87,189
$87,189
$152,347
5,604
1,787
$159,738
$56,078
643,604
-
159,890
20,361
25,728
89,154
-
34
5
5
4
48
-
37
37
3
-
-
3
6
65
-
16
2
2
9
-
$692,927
87,414
81,951
99,087
$961,379
$350,969
-
$350,969
$-
-
-
$-
$18,458
133,245
17,550
25,674
198,163
47,343
5,353
23,117
38
5
4
5
52
100
-
100
-
-
-
-
4
28
4
6
42
10
1
5
$994,815
$42,664
100
6
$468,903
$42,541
100
2
$797,375
166,063
66,343
16,165
1,808,964
1,487,181
4,487
-
18
4
2
-
42
34
-
-
$305,756
125,637
13,422
13,189
184,741
730,483
3,832
539,466
16
6
1
1
10
38
-
28
$4,346,578
100
$1,916,526
100
Sales to related parties are based on regular selling prices and collection terms, except for disposal of properties
and technical service, which were in accordance with the underlying contracts.
Payable to WaferTech includes those arising from purchases of finished goods and compensation for violation of
manufacturing agreement. As there were no comparable sales of properties and purchases, they were in
accordance with contracts.
58
15. LONG-TERM OPERATING LEASES
The Company leases from ITRI the land, building and certain machinery and equipment of its first manufacturing
facility under agreements that will expire in March 2002. The annual rent and other related charges under such
agreement amount to $170,656. The agreements can be renewed upon their expiration.
The Company leases the land where its second through fourteen manufacturing facilities are located from the
Science-Based Industrial Park Administration. These agreements will expire on various dates from March 2008
to November 2019 and have annual rentals aggregating $172,000. The agreements can also be renewable upon
their expiration.
Future annual minimum rentals under the aforementioned leases are as follows:
Year
2001
2002
2003
2004
2005
2006-2019
Amount
$342,657
214,664
172,000
172,000
172,000
1,488,431
$2,561,752
16. COMMITMENTS AS OF DECEMBER 31, 2000
The Company's commitments as of December 31,2000 are as follows:
a. Under a Technical Cooperation Agreement with Philips, as amended on May 12, 1997, the Company shall pay
technical assistance fee at a percentage of net sales, as defined in the agreement, of certain products. The
agreement shall remain in force up to July 9, 2007 and thereafter be automatically renewed for successive
periods of three years. Under the amended agreement, the fee is subject to deduction by the amounts the
Company pays to any third party for settling any licensing/infringement issue after the first five-year period of
the amended agreement, provided that the fee after reduction will not be below a certain percentage of the net
selling price.
b. Subject to certain equity ownership and notification requirements, Philips and its affiliates can avail
themselves each year up to 30% of the Company's production capacity.
c. Under a Submicron Technology License Agreement with ITRI, the Company shall pay license fees of
$129,400 (including 5% value-added tax) to ITRI plus royalty fee at an agreed percentage of net sales of
certain products through December 31, 2000 as amended. In addition, under a technical cooperation
agreement with ITRI, the Company shall reserve and allocate up to 35% of its production capacity for use by
the Ministry of Economic Affairs (MOEA) or any other party designated by the MOEA.
d. Under a manufacturing agreement, the Company shall buy at least 85% of the calculated installed capacity of
the wafer-fabrication plant (“WaferTech, LLC”) constructed by TSMC Development, Inc. for three years from
start of production. If the Company is unable or unwilling to buy the minimum purchase allocation, it shall
compensate TSMC Development, Inc. at the full price of the products less certain costs. Later, TSMC
Development, Inc. transferred its rights under the agreement to WaferTech, LLC.
e. Under several foundry agreements, the Company shall allocate a portion of its production output for sale to
certain major customers from whom guarantee deposits of US$213,865 thousand had been received as of
December 31, 2000.
f. Under a Shareholders Agreement entered into with Philips and EDB Investments Pte. Ltd. dated March 30,
1999, the parties agreed to: (a) form a joint venture company to be named Systems on Silicon Manufacturing
Company Pte Ltd. (SSMC) for the purpose of constructing an integrated circuit foundry in Singapore, (b) set
SSMC's total authorized capital at about US$1.2 billion, and, (c) allow the Company to invest 32% of SSMC's
59
capital. The Company and Philips committed to buy a certain percentage of the production capacity of SSMC.
If any party defaults on the agreement and the capacity utilization of SSMC falls below a certain percentage of
its total capacity, the defaulting party should compensate SSMC for all related unavoidable costs.
g. Under a Technical Cooperation Agreement with SSMC entered into on May 12, 1999, SSMC shall
compensate TSMC for technology service provided to SSMC. The compensation shall be a certain
percentage of net selling prices of certain products sold by SSMC. The agreement will remain in force for ten
years and be automatically renewed for successive periods of five years unless predetermined by either party
under certain conditions.
h. The Company provides guarantee for loans of US$268,000 thousand and US$40,000 thousand obtained by
TSMC Development, Inc. and TSMC - North America.
i. Under a Technical Transfer Agreement with National Semiconductor Corporation (“National”) entered into on
June 27, 2000, TSMC shall receive payments for the technology transferred to National. The agreement will
remain in force for ten years. After expiration, this agreement will be automatically renewed for successive
periods of two years unless pre-terminated by either party under certain conditions.
j. The Company entered into a Manufacturing Agreement with Vanguard International Semiconductor Corp.
(“VIS”). VIS agrees to reserve certain capacity to manufacture for the Company certain devices on logic or
other technologies required by the Company's customers, at discounted actual setting prices as agreed by the
parties. The Company shall pay NT$1,200,000 thousands to VIS as Security Bond (which was paid on July 7,
2000). VIS shall return certain amount of the Bond without any interest to the Company for some wafers
ordered by the Company. The contract will remain in force for five years.
k. Unused credit lines as of December 31, 2000 are approximately $ 250,338.
17. ADDITIONAL DISCLOSURES
The following are the additional disclosure requirements for TSMC and affiliates pursuant to SFC requirements:
a. Financing provided to other parties: Please see table 1 attached.
b. Collateral provided to other parties: Please see table 2 attached.
c. Marketable Securities held: Please see table 3 attached.
d. Balance of marketable securities acquired and disposed of, exceeding NTD 100 million or 20% of the issued
capital: Please see table 4 attached.
e. Acquisition of properties exceeding NTD 100 million or 20% of issued capital: Please see table 5 attached.
f. Disposal of properties exceeding NTD 100 million or 20% of issued capital: None.
g. Transaction of purchase or sales with related parties amounting to more than NTD 100 million or 20% of the
issued capital: Please see table 6 attached.
h. Receivable from related parties amounting to more than NTD 100 million or 20% of the issued capital: Please
see table 7 attached.
i.
Information regarding names and locations etc. of investees on which the Company exercises significant
influences: Please see table 8 attached.
j. Transactions of derivative financial instruments:
The relevant information on the derivative financial instruments entered into by the Company is as follows:
1) Outstanding forward exchange contracts as of December 31, 2000 and 1999:
60
Contract Amount
Fair Value
Currency
(Thousands)
(Thousands)
Settlement Date
Maturity Amount
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
60,000
NTD 1,978,998
Jan. 2001
NTD 1,989,006
106,993
156,875
365,000
25,000
81,367
16,000
30,000
NTD 3,582,959
Jan. to Feb. 2001
NTD 3,553,080
NTD 5,100,386
Jan. 2001
NTD 5,091,560
NTD 12,105,459
Jan. to Dec. 2001
NTD 12,032,465
JPY 2,472,080
Jul. 2000
NTD
879,154
JPY 8,303,350
Jan. to Jul. 2000
NTD 2,564,297
NLG
NTD
34,926
941,847
Jan. 2000
Jan. 2000
NTD
NTD
497,159
947,880
2000
Buy
Sell
Sell
Sell
1999
Buy
Sell
Sell
Sell
Receivables from forward exchange contracts (shown in the balance sheet as part of “Other current assets”
account) as of December 31, 2000 and 1999 aggregated to $49,480 and $19,144 respectively, and payables
from forward exchange contracts (shown in the balance sheet as part of “Other current liabilities” account)
aggregated to $178,952 and $102,784 as of December 31, 2000 and 1999. Net exchange losses and gains for
the years ended December 31, 2000 and 1999 were $266,393 and $105,859, respectively.
The net assets or liabilities that have been hedged by the above forward exchange contracts are as follows:
Accounts receivable
Payable to contractors and equipment suppliers
Guarantee deposits
2) Interest rate swaps
Amount(Thousand)
2000
1999
US$
US$
813,685
571,332
JPY 21,237,708
EUR
62,480
US$ 375,749
US$ 151,392
-
US$ 764,765
The Company has entered into interest rate swap transactions to hedge exposure to rising interest rates on its
floating rate long-term bank loans. These significant transactions are summarized as follows:
Contract Date
April 28, 1998
April 29, 1998
June 26, 1998
June 26, 1998
Period
May 21, 1998 to May 21, 2003
May 21, 1998 to May 21, 2003
June 26, 1998 to June 26, 2003
July 6, 1998 to July 6, 2003
Amount
$2,000,000
1,000,000
1,000,000
1,000,000
Interest expenses on these transactions for the years ended December 31, 2000 and 1999 were $113,683 and
$112,213, respectively.
3) Option contracts
Outstanding option contracts as of December 31, 2000 and 1999 were as follows:
61
Contract
Currency (Thousands)
Value
Fair Value
Strike Price
Maturity
Contract Amount Carrying
2000
Put option sell
Call option sell
Call option sell
Put option buy
1999
EUR
US$
US$
US$
EUR 525,537
US$ 203,500
US$
US$
20,000
15,000
$-
($189,735) 0.8870~0.9680 (US$/EUR) May 2001
-
-
-
(264,885) 107.77~110.5 (US$/JPY)
Mar 2001
(1,485) 32.42 (US$/NTD)
37
110~110.5 (US$/JPY)
Jan. 2001
Feb. 2001
Call option sell
Call option sell
US$
US$
US$ 100,000
US$
60,000
3,911
3,035
3,911
3,035
0.9785~0.9940 (US$/EUR) Jan. 2000
106.6 (US$/JPY)
Jan. 2000
For the years ended December 31, 2000 and 1999, the Company realized premium income of $116,248 and
$63,809 on foreign currency options written and incurred premium expenses of $108,133 and $86,746 on foreign
currency options bought.
4) Transaction risk
a) Credit risk. The banks, which are the counter-parties to the foregoing derivative financial instruments, are
reputable financial institutions. Management believes its exposures related to the potential default by those
counter parties are low.
b) Market price risk. The Company is exposed to market risks arising from changes in currency exchange rates
due to U.S. dollar-denominated accounts receivable, Yen-dominated accounts payable, Euro-denominated
accounts payables, and U.S. dollar-denominated debt related to its importation of materials and machinery
and equipment and long-term bank loans. The Company enters into forward contracts and option contracts to
manage its exposures. The Company uses interest rate swap contracts with banks to principally manage the
risks arising from the changes in interest rates of its obligations. It enters into financial derivative contracts
based on analysis of specific and known economic exposures and by policy prohibits entering into such
contracts for trading purposes. Its hedging strategy is to use financial instruments having negative correlation
to fair value of the hedged items as hedging instruments and periodically evaluates the effectiveness of these
instruments' as hedges of its interest rate exposures.
c) Liquidity and cash flow requirements. The cash flow requirements with respect to the Company's derivative
financial instruments are as follows: (i) forward contracts - the net differences between the spot rates and
contracted forward rates, (ii) options - the exercise price but the options may not have to be exercised at all in
cases where the strike price is higher than the related market price at exercise dates, and (iii) interest rate
swap agreements - equal to the net difference between the interest receivable and payables under the
agreements.
5) Fair value of financial instruments
Non-derivative financial instruments
Assets
Cash and cash equivalents
Short-term investments
Receivable from related parties
Accounts and notes receivable
Long-term investments
(Forward)
2000
Carrying
Amount
Fair Value
1999
Carrying
Amount
Fair Value
$35,664,440
$35,664,440
$16,650,017
$16,650,017
-
-
994,815
994,815
236,250
468,903
241,850
468,903
30,460,489
30,460,489
13,544,387
13,544,387
33,422,010
36,485,083
28,208,643
39,997,198
62
Pledge time deposit
Refundable deposits
Liabilities
Payable to related parties
Accounts payable
46,856
967,985
46,856
967,985
8,710
16,346
8,710
16,346
4,346,578
7,989,953
4,346,578
7,989,953
1,916,526
2,525,086
6,958,098
1,916,526
2,525,086
6,958,098
Payable to contractors and equipment suppliers
24,392,400
24,392,400
Long-term bonds
Guarantee deposits
Derivative financial instruments
Forward exchange contracts (buy)
Forward exchange contracts (sell)
Interest rate swaps
Option
29,000,000
29,035,803
20,000,000
20,013,774
7,086,379
7,086,379
5,185,362
5,185,362
1,984,740
1,978,998
784,875
760,906
20,802,311
20,788,804
3,998,698
3,998,108
1,601
-
234,017
(456,068)
7,488
6,946
7,488
6,946
Fair values of financial instruments were determined as follows:
a) Short-term financial instruments — carrying values.
b) Short-term investments — market values.
c) Long-term investments — market value for listed companies and net equity value for the others.
d) Refundable deposits and guarantees deposits — carrying values.
e) Long-term bank loans — based on forecasted cash flows discounted at interest rates of similar long-term
liabilities. Long-term bonds payable is discounted at present value. Fair values of other long-term liabilities
are also their carrying values as they use floating interest rates.
f) Derivative financial instruments — based on outright forward rates and interest rate in each contract.
The fair values of non-financial instruments were not included in the fair values disclosed above. Accordingly, the
sum of the fair values of the financial instruments listed above are not equal the fair value of the company.
18. SEGMENT FINANCIAL INFORMATION
a. Export sales
Area
America
Asia
Europe
2000
1999
$81,686,803
$38,084,870
42,906,968
11,360,517
16,493,721
4,778,646
$135,954,288
$59,357,237
The export sales information is presented by billed regions.
b. The Company has no single customer that accounts for at least 10% of its total sales.
63
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES
FINANCING PROVIDED TO OTHER PARTIES
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 1
No. Financing Transaction Accounts
Limitation
Maximum
Ending
Interest
Financing
Allowance
Mortgage
Transaction Amount
Provider Entity
on Financing
Balance for
Balance
Rate
Reasons
for Bad
Company
Name
the Period
(Thousand)
Debt
1
TSMC-
BVI
TSMC
Technology
Other
receivables
-
USD13,887 USD13,887
7.75%
Operating
capital
$-
2
VIS
VIS
Prepaid
(Note 2)
$6,122
$1,232
-
Prepayments
-
America
expenses
for product
development
Item Value
Amount
Limited on
Financing
-
-
$-
-
$- USD779,788
(Note 1)
5,706
$4,400,000
(Note 3)
Note 1: Not exceeding the issued capital of the Company
Note 2: Not exceeding 10% of the issued capital of VIS for each transaction entity, and also limiting to 30% of the issued capital of each transaction entity.
Note 3: Not exceeding 20% of the issued capital of VIS.
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES
COLLATERAL PROVIDED TO OTHER PARTIES
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 2
No. Collateral
Transaction Entity
Limitation
Maximum
Provider
Name
Name
0
TSMC
TSMC
Development Inc.
TSMC -
North America
Nature
of the
Relationship
(Note 3)
3
2
on Collateral
Balance
for the
Period
(US in
Thousand)
Ending
Balance
(US in
Amount of
% of Accumulated
Amount Limited
Properties
Amount of Collateral on Collateral
Guaranteed
on Net Equity of
(Note 1)
Thousand)
by Collateral
the Latest Financial
Statement
(Note 2)
$8,865,172
$8,865,172
$8,865,172
3.39%
$38,968,094
(USD268,000)
(USD268,000)
1,323,160
1,323,160
1,323,160
0.51%
(USD40,000)
(USD40,000)
Note 1: 30% of the issued capital of the Company.
Note 2: Not exceeding 10% of the issued capital of the Company, and also limiting to the issued capital of the transaction entity with the exception of approval from BOD.
Note 3: The number 2 represent subsidiary that directly holds exceeding 50% of the issued.
The number 3 represents the investee that has over 50% of the common stocks holds by the parent company and subsidiary.
64
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES
MARKETABLE SECURITIES HELD
December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 3
Marketable Securities
Name & Type
Nature of the
Relationship
Account
December 31, 2000
Note
Shares
Carrying
% of Market Value
(Thousand)
Value
(US in
Owner- or Net Asset
ship
Value (US in
Thousand)
Thousand)
Held Company Name: TSMC
TSMC-North America - Stock
Subsidiary
Long-term investment
11,000
$666,924
TSMC-Europe - Stock
Subsidiary
Long-term investment
TSMC-Japan - Stock
Subsidiary
Long-term investment
-
2
9,594
37,803
100
100
100
$666,924
9,594
37,803
VIS - Stock
Investee
Long-term investment
556,133
5,615,075
25
8,642,314
TSMC-BVI - Stock
Subsidiary
Long-term investment
779,788
23,678,522
100
23,678,522
Po Cherng Investment - Certificate
Chi Hsin Investment - Certificate
Investee
Investee
Long-term investment
Long-term investment
Kung Cherng Investment - Certificate
Investee
Long-term investment
Chi Cherng Investment - Certificate
Hsin Ruey Investment - Certificate
Investee
Investee
Long-term investment
Long-term investment
Cherng Huei Investment - Certificate
Investee
Long-term investment
TSMC Partners, Ltd. - Stock
Subsidiary
Long-term investment
SSMC - Stock
Investee
Long-term investment
-
-
-
-
-
-
300
90
136,984
139,000
158,752
130,794
128,100
138,200
25
25
25
25
25
25
136,984
139,000
158,752
130,794
128,100
138,200
535,162
100
535,162
935,870
Taiwan Mask Corp. - Stock
United Industrial Gases Co., Ltd. - Stock
-
-
Long-term investment
6,887
32,129
Long-term investment
10,058
146,250
Shin-Etsu Handotai Taiwan Co., Ltd. - Stock -
Long-term investment
10,500
105,000
W.K. Technology Fund IV - Stock
Taiwan Semiconductor
Technology Corp. - Stock
Hon Tung Ventures Capital - Stock
Crimson Asia Capital Fund - Equity
Horizon Ventures Fund - Equity
(Forward)
-
-
-
-
-
Long-term investment
5,000
50,000
Long-term investment
50,000
500,000
Long-term investment
12,000
120,000
Long-term investment
Long-term investment
-
-
64,547
93,304
N/A
N/A
32
2
10
7
4
19
10
935,870
87,325
155,041
105,476
81,059
434,385
125,927
64,547
93,304
65
Marketable Securities
Name & Type
Nature of the
Relationship
Account
December 31, 2000
Note
Shares
Carrying
% of Market Value
(Thousand)
Value
(US in
Owner- or Net Asset
ship
Value (US in
Thousand)
Thousand)
Held Company Name: Chi Cherng Investmen
TSMC - Stock
Major shareholder Short-term investment
2,160
98,282
Po Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
82,191
Chi Hsin Investment - Certificate
Major shareholder Long-term investment
6,000
83,400
Hsin Ruey Investment - Certificate
Major shareholder Long-term investment
6,000
76,860
Kung Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
95,251
Cherng Huei Investment - Certificate
Major shareholder Long-term investment
6,000
82,920
-
15
15
15
15
15
184,451
82,191
83,400
76,860
95,251
82,920
Held Company Name: Kung Cherng Investment
TSMC - Stock
Major shareholder Short-term investment
4,827
226,819
-
412,317
4,827 thousands
shares-pledged
Po Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
82,191
Chi Hsin Investment - Certificate
Major shareholder Long-term investment
6,000
83,400
Chi Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
78,476
Hsin Ruey Investment - Certificate
Major shareholder Long-term investment
6,000
76,860
Cherng Huei Investment - Certificate
Major shareholder Long-term investment
6,000
82,920
15
15
15
15
15
82,191
83,400
78,476
76,860
82,920
Held Company Name: Po Cherng Investment
TSMC - Stock
Major shareholder Short-term investment
3,814
$236,150
-
$325,790
2,814 thousands
shares-pledged
Chi Hsin Investment - Certificate
Major shareholder Long-term investment
6,000
83,400
Chi Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
78,476
Hsin Ruey Investment - Certificate
Major shareholder Long-term investment
6,000
76,861
Kung Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
95,251
Cherng Huei Investment - Certificate
Major shareholder Long-term investment
6,000
82,920
15
15
15
15
15
83,400
78,476
76,861
95,251
82,920
(Forward)
66
Marketable Securities
Name & Type
Nature of the
Relationship
Held Company Name: Cherng Huei Investment
Account
December 31, 2000
Note
Shares
Carrying
% of Market Value
(Thousand)
Value
(US in
Owner- or Net Asset
ship
Value (US in
Thousand)
Thousand)
TSMC - Stock
Major shareholder Short-term investment
4,298
243,391
-
367,074
3,297 thousands
shares-pledged
Po Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
82,191
Chi Hsin Investment - Certificate
Major shareholder Long-term investment
6,000
83,400
Chi Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
78,476
Hsin Ruey Investment - Certificate
Major shareholder Long-term investment
6,000
76,860
Kung Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
95,251
15
15
15
15
15
82,191
83,400
78,476
76,860
95,251
Held Company Name: Chi Hsin Investment
TSMC - Stock
Major shareholder Short-term investment
2,544
138,747
-
217,270
2,543 thousands
shares-pledged
Po Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
82,191
Chi Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
78,476
Hsin Ruey Investment - Certificate
Major shareholder Long-term investment
6,000
76,860
Kung Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
95,251
Cherng Huei Investment - Certificate
Major shareholder Long-term investment
6,000
82,920
Held Company Name: Hsin Ruey Investment
TSMC - Stock
Major shareholder Short-term investment
1,006
85,850
Po Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
82,191
Chi Hsin Investment - Certificate
Major shareholder Long-term investment
6,000
83,400
Chi Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
78,476
Kung Cherng Investment - Certificate
Major shareholder Long-term investment
6,000
95,251
Cherng Huei Investment - Certificate
Major shareholder Long-term investment
6,000
82,920
(Forward)
15
15
15
15
15
-
15
15
15
15
15
82,191
78,476
76,860
95,251
82,920
85,936
82,191
83,400
78,476
95,251
82,920
67
Marketable Securities
Name & Type
Nature of the
Relationship
Account
December 31, 2000
Note
Shares
Carrying
% of Market Value
(Thousand)
Value
(US in
Owner- or Net Asset
ship
Value (US in
Thousand)
Thousand)
Held Company Name: TSMC-BVI
InveStar Semiconductor
Subsidiary of
Long-term investment
45,000 USD53,602
97 USD53,995
Development Fund Inc. - Stock
TSMC-BVI
InveStar Semiconductor
Development Fund (II) Inc.- Stock
Subsidiary of
TSMC-BVI
Long-term investment
13,950 USD14,046
97 USD14,046
TSMC Development Inc.- Stock
Subsidiary of
Long-term investment
1 USD648,332
100 USD648,332
TSMC-BVI and its
chairman is also
TSMC’s chairman
TSMC Technology Inc.- Stock
Subsidiary of
Long-term investment
1
(USD5,285)
100
(USD5,285)
TSMC-BVI and its
chairman is also
TSMC’s chairman
3DFX. Interactive Inc. - Stock
-
Long-term investment
68
USD297
-
USD84
Held Company Name: VIS
VIS Associates Inc. - Stock
Subsidiary
Long-term investment
23,570
$464,077
100
$464,077
PowerChip Semiconductor Inc.- Stock
Investee
Long-term investment
168,488
2,651,216
Etron Technology Inc. - Stock
-
Long-term investment
5,590
310,132
Walsin Technology Inc. - Stock
Investee
Long-term investment
31,410
414,481
MEGIC Corporation - Stock
Form Factor Inc. - Stock
United Industrial Gases Co., Ltd. - Stock
-
-
-
Long-term investment
16,500
177,000
Long-term investment
267
64,360
Long-term investment
2,313
29,250
9
3
10
15
1
2
3,315,837
278,118
414,481
177,000
64,360
29,250
Held Company Name: VIS Associates Inc.
VIS Investment Holding, Inc. - Stock
Subsidiary of
Long-term investment
67,500
USD871
100
USD871
VIS Associates Inc.
Silicon Valley Equity Fund - Equity
Silicon Valley Equity Fund II - Equity
Grand Palace Trust Fund - Equity
-
-
-
Long-term investment
Long-term investment
Long-term investment
-
-
-
USD9,448
USD3,326
35
16
USD9,448
USD3,326
-
100
-
(Forward)
68
Marketable Securities
Name & Type
Nature of the
Relationship
Account
December 31, 2000
Note
Shares
Carrying
% of Market Value
(Thousand)
Value
(US in
Owner- or Net Asset
ship
Value (US in
Thousand)
Thousand)
Held Company Name: VIS Investment Holding, Inc.
VIS Micro Inc. - Stock
VIS America. - Stock
Investee
Investee
Long-term investment
200
USD237
Long-term investment
6,500
USD627
100
100
USD237
USD627
Held Company Name: TSMC Development
WaferTech, LLC- Equity
Investee of TSMC Long-term investment
- USD623,957
97 USD623,957
Development and
its chairman is also
chairman of TSMC
Held Company Name: TSMC Partners
TSMC - ADR
Parent Company
Short-term investment
495
USD7,357
-
USD8,916
Held Company Name: InveStar Semiconductor Development Fund Inc.
Silicon Image, Inc. - Stock
Sage, Inc. - Stock
Centillium Tec. Corp. - Stock
Marvell Technology Group Ltd. - Stock
Silicon Labo Ratories - Stock
Chang Yi Technology - Stock
Capella Microsystems, Inc. - Stock
Equator Technologies, Inc. - Stock
Scenix Semiconductor Inc. - Stock
Global Test Corp. - Stock
Chip strate - Stock
Ritch Tech - Stock
APE Fu Ding Technology - Stock
Integrated Memory Logic, Inc.
- Preferred Stock
Divio (Next wave) - Preferred Stock
(Forward)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
411
140
165
USD720
USD506
USD650
-
-
-
USD2,237
USD2,065
USD3,671
Short-term investment
4,665
USD4,579
- USD102,347
Short-term investment
15
USD482
Long-term investment
1,113
USD1,500
Long-term investment
Long-term investment
Long-term investment
42
133
861
USD10
USD90
USD172
Long-term investment
11,292
USD5,559
Long-term investment
6,660
USD2,142
Long-term investment
790
USD313
Long-term investment
2,750
USD1,518
Long-term investment
1,831
USD1,809
Long-term investment
667
USD500
-
-
-
-
-
-
-
-
-
-
-
USD219
USD1,500
USD10
USD260
USD172
USD9,242
USD2,190
USD302
USD1,411
USD2,559
USD2,233
69
Marketable Securities
Name & Type
Nature of the
Relationship
Account
December 31, 2000
Note
Shares
Carrying
% of Market Value
(Thousand)
Value
(US in
Owner- or Net Asset
ship
Value (US in
Thousand)
Thousand)
Held Company Name: InveStar Semiconductor Development Fund Inc.
SiRF Technology Inc. - Preferred Stock
Rise - preferred Stock
Capella Microsystems, Inc.
- Preferred Stock
Sensory, Inc. - Preferred Stock
-
-
-
-
Long-term investment
306
USD1,333
Long-term investment
600
USD1,500
Long-term investment
1,383
USD1,298
Long-term investment
1,404
USD1,250
Equator Technologies, Inc. -Preferred Stock -
Long-term investment
443
USD1,338
Long-term investment
2,252
USD3,064
-
-
-
-
-
-
USD1,771
USD1,500
USD1,383
USD1,250
USD864
USD5,639
Light Speed Semiconductor Corporation
- Preferred Stock
Empower Tel Networks, Inc.
- Preferred Stock
Lara Technology, Inc. - Preferred Stock
Scenix Semiconductor Inc.
- Preferred Stock
RapidSteam - Preferred Stock
Tropian, Inc (Premier R.F., Inc.)
- Preferred Stock
Sonics, Inc. - Preferred Stock
Pico Turbo, Inc - Preferred Stock
T-Span Systems Corporation
- Preferred Stock
NanoAmp Solutions, Inc.
- Preferred Stock
Formfactor, Inc. - Preferred Stock
Monolithic Power Systems, Inc
- Preferred Stock
Memsic, Inc - Preferred Stock
Reflectivity, Inc. - Preferred Stock
Signia - Preferred Stock
Match Lab, Inc. - Preferred Stock
HINT Corporation - Preferred Stock
Creosys, Inc. - Preferred Stock
(Forward)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
70
Long-term investment
3,840
USD5,128
- USD14,980
Long-term investment
1,544
USD772
- USD10,034
Long-term investment
1,056
USD1,361
Long-term investment
2,056
USD1,050
Long-term investment
1,758
USD2,334
Long-term investment
2,686
USD3,530
Long-term investment
1,050
USD1,250
Long-term investment
1,266
USD1,385
Long-term investment
541
USD853
Long-term investment
267
USD2,000
Long-term investment
2,521
USD2,000
Long-term investment
3
USD1,500
Long-term investment
1,064
USD2,000
Long-term investment
3,000
USD1,500
Long-term investment
1,875
USD1,500
Long-term investment
1,000
USD1,000
Long-term investment
1,500
USD1,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
USD2,919
USD7,286
USD7,498
USD4,110
USD1,250
USD3,653
USD1,900
USD2,747
USD2,000
USD1,500
USD2,000
USD1,500
USD1,500
USD1,000
USD1,500
Marketable Securities
Name & Type
Nature of the
Relationship
Account
December 31, 2000
Note
Shares
Carrying
% of Market Value
(Thousand)
Value
(US in
Owner- or Net Asset
ship
Value (US in
Thousand)
Thousand)
Held Company Name: InveStar Semiconductor Development Fund (II) Inc.
Incentia Design Systems, Inc.
- Preferred Stock
Rise - Bond
Lara Networks, Inc. - Preferred Stock
Seagull Semiconductor, Inc.
- Preferred Stock
Memsic, Inc. - Preferred Stock
OEpic - Preferred Stock
FabCentric, Inc. - Preferred Stock
Equator Technologies, Inc.
- Preferred Stock
NanAmp Solutions, Inc.
- Preferred Stock
RapidStream, Inc. - Preferred Stock
FabCentric, Inc. - Bond
Signia Technologies, Inc. - Bond
-
-
-
-
-
-
-
-
-
-
-
-
Long-term investment
Long-term investment
286
N/A
USD500
USD300
Long-term investment
188
USD1,500
Long-term investment
1,389
USD1,250
Long-term investment
1,818
USD1,000
Long-term investment
Long-term investment
600
500
USD750
USD250
Long-term investment
770
USD1,501
Long-term investment
250
USD1,000
Long-term investment
246
USD1,057
Long-term investment
Long-term investment
N/A
N/A
USD250
USD500
Advanced Analogic Technology, Inc. - Bond -
Long-term investment
N/A
USD1,250
-
-
-
-
-
-
-
-
-
-
-
-
-
USD500
USD300
USD1,500
USD1,250
USD1,000
USD750
USD250
USD1,501
USD1,000
USD1,057
USD250
USD500
USD1,250
71
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES
BALANCE OF MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF
EXCEEDING NTD 100 MILLION OR 20% OF THE ISSUED CAPITAL
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 4
Marketable Securities Type
Account
Transaction
Nature of the
Beginning Balance
Acquisition
Disposal
Ending Balance
and Name
Entity
Relationship
Shares
Amount
Shares
Amount
Share
Amount
Carrying
Gain
Shares
Amount
(Thousand)
(Thousand)
(Thousand)
Value
(Loss)
(Thousand)
Company Name: TSMC
Taipei Bank Stock
The Wan Pao Securities
Investment Trust Fund
Kwang Hua Bond Fund
Jin-sun Bond Fund
Capital Safe Income Securities
Investment Trust Fund
First Global Investment
Trust Wan Tai Bond Fund
President Home Run Bond Fund
Grand Cathay Bond Fund
The GP ROC Bond Fund
Flemings Taiwan Bond Fund
National Investment Taiwan
Bond Fund
National Investment Bond Fund
United Bond Fund
President Investment Bond Fund
VIS Stock
TSMC-BVI Stock
SSMC Stock
(Forward)
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Long-term
investment
Long-term
investment
Long-term
investment
72
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,750
$236,250
-
$-
8,750
$288,719
$236,250
$52,469
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,207
230,000
18,207
231,644
230,000
1,644
25,495
323,000
25,495
326,273
323,000
3,273
26,382
300,000
26,382
302,604
300,000
2,604
24,468
300,000
24,468
302,748
300,000
2,748
25,484
300,000
25,484
302,523
300,000
2,523
28,222
332,000
28,222
333,627
332,000
1,627
57,900
630,000
57,900
633,522
630,000
3,522
26,842
340,000
26,842
341,476
340,000
1,476
25,593
330,000
25,593
332,564
330,000
2,564
25,556
300,000
25,556
301,955
300,000
1,955
2,956
410,000
2,956
411,752
410,000
1,752
30,054
330,000
30,054
331,605
300,000
1,605
46,405
600,000
46,405
603,210
600,000
3,210
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$-
-
-
-
-
-
-
-
-
-
-
-
-
-
VIS
Investee
556,133
5,010,897
-
-
TSMC-BVI
Subsidiary
464,788
12,454,280
315,000
10,409,490
SSMC
Investee
26
360,177
64
989,690
-
-
-
-
-
-
-
-
-
-
-
-
556,133
5,615,075
23,678,522
779,788
(Note 1)
90
935,870
Marketable Securities Type
Account
Transaction
Nature of the
Beginning Balance
Acquisition
Disposal
Ending Balance
and Name
Entity
Relationship
Shares
Amount
Shares
Amount
Share
Amount
Carrying
Gain
Shares
Amount
(Thousand)
(Thousand)
(Thousand)
Value
(Loss)
(Thousand)
TSMC-North America Stock
Long-term
investment
TSMC-
North
America
Subsidiary
1,000
255,025
10,000
308,130
-
-
-
-
11,000
666,924
-
-
-
-
-
-
-
-
984
50,509
4,682
219,376
839
172,270
43,066
129,204
4,827
226,819
642
88,519
3,603
206,936
430
88,166
59,306
28,860
3,814
236,150
642
88,732
4,288
239,512
632
119,571
84,853
34,718
4,298
243,391
642
87,157
2,439
124,547
537
110,211
72,957
37,254
2,544
138,747
Company Name: Kung Cherng Investment
TSMC Stock
Short-term
investment
Company Name: Po Cherng Investment
TSMC Stock
Short-term
investment
Company Name: Cherng Huei Investment
TSMC Stock
Short-term
investment
Company Name: Chi Hsin Investment
TSMC Stock
Company Name: TSMC-BVI
TSMC Development Inc. Stock
InveStar Semiconductor
Development Fund (II) Inc. Stock
Short-term
investment
Long-term
investment
Long-term
investment
Company Name: TSMC Development
TSMC
Development
Subsidiary
Subsidiary
InveStar
Semiconductor
Development
Fund (II) Inc.
1
-
USD42,018
- USD315,000
-
13,950
USD13,995
WAFERTECH, LLC Stock
Long-term
investment
WAFERTECH, Subsidiary
LLC
-
USD401,464
- USD226,105
Company Name: TSMC Partners
TSMC ADR
Short-term
investment
-
-
302
USD3,703
193
USD3,654
Company Name: InveStar Semiconductor Development Fund Inc.
Empower Tel Networks, Inc. Stock
Global Test Corp. Stock
(Forward)
Long-term
investment
Long-term
investment
Empower Tel
Networks, Inc.
Global Test
Corp.
Investee
3,087
USD1,878
752
USD3,250
Investee
7,500
USD2,281
3,792
USD3,278
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 USD648,332
13,950 USD14,046
- USD623,957
495
USD7,357
3,840
USD5,128
11,292
USD5,559
73
Marketable Securities Type
Account
Transaction
Nature of the
Beginning Balance
Acquisition
Disposal
Ending Balance
and Name
Entity
Relationship
Shares
Amount
Shares
Amount
Share
Amount
Carrying
Gain
Shares
Amount
(Thousand)
(Thousand)
(Thousand)
Value
(Loss)
(Thousand)
Company Name: VIS
The GP Bond Fund
Kwang Hua Bond Fund
Ta Chong Investment Bond Fund
National Investment Bond Fund
First Global Investment Trust Wan
Tai Bond Fund
Money Mgmt Fund
Grand Cathay Bond Fund
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Company Name: VIS Associates Inc.
Silicon Valley Equity Fund II Stock
Long-term
investment
Asia Tech
Management
LLC.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58,761
$750,000
58,761
$761,731
$750,000
$11,731
42,671
550,000
42,671
558,584
550,000
8,584
16,199
180,000
16,199
182,393
180,000
2,393
3,921
550,000
3,921
558,516
550,000
8,516
45,921
550,000
45,921
558,212
550,000
8,212
31,415
400,000
31,415
404,997
400,000
4,997
21,446
240,000
21,446
242,656
240,000
2,656
-
USD3,400
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
USD3,326
(Note 3)
Note 1: Acquire 75,000 thousands shares of stocks and including the beginning balance of prepayment for stocks.
Note 2: The ending balance included the recognition of the investment income (loss) by the equity method and the accumulated translation adjustment.
Note 3: The ending balance included the movement of net asset value of trust fund.
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES
ACQUISITION OF PROPERTIES EXCEEDING NTD 100 MILLION OR 20% OF ISSUED CAPITAL
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 5
Company Name: TSMC
Properties
Transaction
Transaction
Payment Term
Transaction
Nature of the
Former Transaction Detail when
Reference
Purpose of
Other
Date
Amount
Entity
Relationship
Transacting with Related Parties
of Price
Acquisition
Commitments
Owner Relationship Transfer Amount
Determined
Date
Fab 6
Feb. 16, 2000 ~
$3,254,412
Depend on the progress
Fu Tsu
-
N/A
N/A
N/A
N/A
Public bidding Manufacturing None
and office
Dec. 31, 2000
of the construction
Construction
purpose
Co. Ltd.
74
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES
TRANSACTION OF PURCHASE OR SALES WITH RELATED PARTIES AMOUNTING
TO MORE THAN NTD 100 MILLION OR 20% OF THE ISSUED CAPITAL
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 6
Company Name: TSMC
Transaction
Nature of the
Entity
Relationship
Transaction Detail
Abnormal
Notes,Accounts Note
Purchase
Amount
% Collection Terms
or Sales
ITRI
It’s director is
TSMC’s chairman
Sales
$198,146
Phillips and its Major shareholder
Sales
5,289,927
affiliates
-
3
WAFERTECH,
LLC
Indirect Investee
of the subsidiary
(TSMC-BVI)
Purchase
13,296,633
37
Net 45 days from
monthly closing date
Net 30 days from
invoice date
Net 30 days from
monthly closing date
Transaction
Payable or
Unit
Price
Collection
Terms
Receivables
Ending
Balance
%
None None
$56,078
6
None None
643,604
65
None None
(1,487,181)
(34)
VIS
Investee
Purchase
6,572,110
19
Net 45 days from
monthly closing date
None
None
(1,808,964)
(42)
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES
RECEIVABLE FROM RELATED PARTIES AMOUNTING TO MORE
THAN NTD 100 MILLION OR 20% OF THE ISSUED CAPITAL
December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 7
Company Name: TSMC
Transaction Entity
Nature of the
Relationship
Ending Turnover
Overdue
Amounts Received
Allowance
Balance
Amount Management
from Dec. 31, 2000
Up-to-Date
for Bad
Debts
Phillips and its affiliates Major shareholder $643,604 27days $175,828 Accelerate demand on
$193,403
account receivables
VIS
Investee
159,890 N/A
10,080 Accelerate demand on
-
account receivables
$-
-
75
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES
INFORMATION REGARDING NAMES,LOCATIONS AND OTHERS OF INVESTEE
ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCES
December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 8
Investee
Company Name: TSMC
Location
Businesses
Activity
Original Investment
Amount
Balance as of
Dec. 31, 2000
Dec. 31,
Dec. 31, Shares
%
Carrying
2000
1999
(Thousand)
Value
Net Income Recognized Note
(Loss)
of the
Gain
(Loss) on
Investee
Recognized
TSMC-North America
San Jose,
Marketing and
$333,718
$25,588
11,000
100
$666,924
$131,107 $131,107 Subsidiary
California, U.S.A
engineering support
TSMC-Europe
Amsterdam,
Marketing and
2,960
2,960
-
100
9,594
(14,668)
(14,668) Subsidiary
The Netherlands
engineering support
TSMC-Japan
Yokohama,
Marketing and
35,142
7,440
2
100
37,803
2,261
2,261 Subsidiary
Japan
engineering support
VIS
Hsin-Chu,
IC Design and
6,503,640
6,503,640
556,133
25
5,615,075 2,573,745
597,812
Investee
Taiwan
manufacturing
TSMC-BVI
Tortola, British
Investment
24,159,958
13,750,468
779,788
100 23,678,522
138,589
138,589 Subsidiary
Virgin Islands
Po Cherng Investment
Taipei, Taiwan
Investment
100,000
100,000
Chi Hsin Investment
Taipei, Taiwan
Investment
100,000
100,000
Kung Cherng Investment Taipei, Taiwan
Investment
100,000
100,000
Chi Cherng Investment
Taipei, Taiwan
Investment
100,000
100,000
Hsin Ruey Investment
Taipei, Taiwan
Investment
100,000
100,000
Cherng Huei Investment Taipei, Taiwan
Investment
100,000
100,000
-
-
-
-
-
-
25
136,984
135,869
33,967
Investee
25
139,000
143,951
35,988
Investee
25
158,752
223,915
55,979
Investee
25
130,794
112,094
28,023
Investee
25
128,100
100,391
25,098
Investee
25
138,200
140,781
35,195
Investee
TSMC Partners
Tortola, British
Investment
10,350
10,350
300
100
535,162
494,966
494,966 Subsidiary
Virgin Islands
SSMC
Singapore
Manufacture
1,432,482
442,792
90
32
935,870 (1,480,190)
(473,661)
Investee
of wafer
76
9. Consolidted Financial Statements
English Translation of a Report Originally Issued in Chinese
Independent Auditors' Report
The Board of Directors and the Shareholders
Taiwan Semiconductor Manufacturing Company Ltd.
We have audited the accompanying consolidated balance sheets of Taiwan Semiconductor Manufacturing
Company Ltd. and subsidiaries as of December 31, 2000, and 1999, and the related consolidated statements of
income, changes in shareholders' equity and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the Republic of China.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of Taiwan Semiconductor Manufacturing Company Ltd. and subsidiaries as of December 31,
2000 and 1999, and the results of their operations and their cash flows for the years then ended, in conformity
with accounting principles generally accepted in the Republic of China.
As stated in Note 2, to the consolidated financial statements, the merger with TASMC and Worldwide
Semiconductor Manufacturing Corp. effective on June 30, 2000 resulted in a change in reporting entity. The
consolidated financial statements of Taiwan Semiconductor Manufacturing Company Ltd. and subsidiaries for the
year then ended December 31, 1999, have been restated to make reporting entity consistently.
T N SOONG & CO
Taiwan, ROC
A member firm of Andersen Worldwide S. C.
January 29, 2001
Notice to Readers
The accompanying financial statements are intended only to present the 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 another jurisdictions. The standards, procedures and practices to audit such financial
statements are those generally accepted and applied in the Republic of China.
77
English Translation of Financial Statements Originally Issued in Chinese
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2000 and 1999 (Note 2)
(In Thousand New Taiwan Dollars, Except Par Value)
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)
Pledged time deposits (Note 20)
Short-term investments (Notes 2, 5 and 20)
Receivable from related parties (Note 18)
Notes receivable
Accounts receivable
Allowance for doubtful receivables (Note 2)
Allowance for sales returns and others (Note 2)
Inventories (Notes 2 and 6)
Deferred income tax assets (Notes 2 and 17)
Prepaid expenses and other current assets
(Notes 18 ,19 and 22)
Total Current Assets
LONG-TERM INVESTMENTS (Notes 2, 7 and 23)
PROPERTY, PLANT AND EQUIPMENT
(Notes 2, 8, 17, 18 and 20)
Cost
Land and land improvements
Buildings
Machinery and equipment
Office equipment
Total cost
Accumulated depreciation
Advance payments and construction in progress
Net Property, plant and equipment
CONSOLIDATED DEBITS (Note 2)
OTHER ASSETS
Rental assets (Note 2)
Deferred charges - net (Notes 2 and 9)
Deferred income tax assets (Notes 2 and 17)
Refundable deposits
Pledged time deposits (Note 20)
Miscellaneous
Total Other Assets
2000
1999
Amount
%
Amount
$38,840,217
-
2,351,560
948,726
125,175
30,335,314
(946,734)
(2,458,323)
12,785,723
8,178,016
3,034,624
93,194,298
9,814,342
829,239
53,874,708
241,995,862
4,865,610
301,565,419
(103,884,879)
47,067,352
244,747,892
11,530,973
625,647
3,335,665
6,629,805
979,067
-
28,290
11,598,474
11
-
1
-
-
8
-
(1)
3
2
1
25
3
-
15
65
1
81
(28)
13
66
3
-
1
2
-
-
-
3
$29,517,682
3,161,000
965,397
340,938
210,980
14,240,095
(422,202)
(706,886)
7,104,042
2,616,618
2,629,973
59,657,637
16,164,676
783,809
33,929,572
148,580,088
3,637,083
186,930,552
(65,409,688)
28,539,044
150,059,908
-
-
2,380,792
7,006,697
59,371
693
105,740
9,553,293
%
13
1
-
-
-
6
-
-
3
1
1
25
7
-
14
63
2
79
(28)
13
64
-
-
1
3
-
-
-
4
TOTAL ASSETS
$370,885,979
100
$235,435,514
100
78
LIABILITIES AND SHAREHOLDERS' EQUITY
Amoun
%
Amount
2000
1999
CURRENT LIABILITIES
Short-term bank loans (Notes 10 and 20)
Commercial paper payable (Note 11)
Payable to related parties (Note 18)
Accounts payable
Payables to contractors and equipment suppliers
Income tax payable (Notes 2 and 17)
Current portion of long term liabilities (Notes 12 and 20)
Accrued expenses and other current liabilities (Note 22)
Total Current Liabilities
LONG-TERM LIABILITIES
Long-term bank loans (Notes 13, and 20)
Long-term bonds (Notes 2 and 14)
Total Long-term Liabilities
OTHER LIABILITIES
Guarantee deposits
Accrued pension cost (Notes 2 and 16)
Deferred gain on sale lease-back (Note 2)
Obligation under capital lease (Note 12)
Other noncurrent liabilities
Total Other Liabilities
MINORITY INTEREST IN SUBSIDIARIES (Notes 2)
$3,833,841
-
2,606,339
8,507,827
25,550,273
3,298
51,055
6,872,359
47,424,992
23,339,367
29,000,000
52,339,367
7,086,379
1,511,277
434,183
3,316
11,040
9,046,195
321,726
1
-
1
2
7
-
-
2
13
6
8
14
2
-
-
-
-
2
-
$5,026,631
94,797
1,036,348
3,273,894
12,593,712
155,127
1,001
4,208,917
26,390,427
22,743,462
20,000,000
42,743,462
5,185,362
1,013,840
-
4,368
3,370
6,206,940
7,524,168
%
2
-
1
1
5
-
-
2
11
10
8
18
2
1
-
-
3
3
Total Liabilities
109,132,280
29
82,864,997
35
SHAREHOLDERS' EQUITY (Notes 2 and 15)
Capital stock - $10 par value
Authorized : 17,800,000 thousand shares in 2000
and 9,100,000 thousand shares in 1999
Issued: Common - 11,689,365 thousand shares in
2000 and 8,520,882 thousand shares in 1999
Preferred - 1,300,000 thousand shares
Subscribed capital
Capital surplus
Retained earnings:
Appropriated as legal reserve
Appropriated as special reserve
Unappropriated earnings
Unrealized loss on long-term investment
Cumulative translation adjustments
Total Shareholders' Equity
116,893,646
13,000,000
-
55,285,821
10,689,323
1,091,003
65,143,847
(71,564)
(278,377)
261,753,699
32
3
-
15
3
-
18
-
-
71
85,208,817
-
13,118,025
23,951,411
8,258,359
-
23,124,011
-
(1,090,106)
152,570,517
36
-
5
10
4
-
10
-
-
65
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$370,885,979
100
$235,435,514
100
The accompanying notes are an integral part of the consolidated financial statements.
(Please refer to the issued auditor's report by Andersen on January 29, 2001)
79
English Translation of Financial Statements Originally Issued in Chinese
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 2000 and 1999 (Note 2)
(In Thousand New Taiwan Dollars, Except Consolidated Earnings Per Share)
2000
1999
Amount
%
Amount
%
GROSS SALES (Notes 2, 17and 23)
SALES RETURNS AND ALLOWANCES
NET SALES
COST OF SALES (Note 18)
GROSS PROFIT
OPERATING EXPENSES (Note 23)
General and administrative (Note 18)
Marketing
Research and development
Total Operating Expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME (Note 23)
Interest
Insurance compensation
Gain on sale of short-term investments - net
Foreign exchange gain - net (Notes 2 and 22)
Premium income (Notes 2 and 22)
Technology service income (Note 18)
Gain on disposal of property, plant and equipment
Gain on sales of long-term investments
Reversal of allowance for losses on short-term investments
Other
Total Non-Operating Income
NON-OPERATING EXPENSES (Note 23)
Interest (Notes 2, 8,18 and 22)
Equity in net losses of investee companies - net
(Notes 2 and 7)
Premium expenses (Notes 2 and 22)
Loss on disposal of property, plant and equipment
Bond issue cost
Permanent loss on long-term investments
Foreign exchange loss - net (Note 2)
Other
Total Non-Operating Expenses
INCOME BEFORE INCOME TAX (Note 23)
INCOME TAX BENEFIT (Notes 2 and 17)
INCOME BEFORE MINORITY INTEREST
MINORITY INTEREST IN LOSS OF SUBSIDIARIES
(Notes 2 & 23)
NET INCOME
EARNINGS PER SHARE
Based on common stock weighted-average number
$169,192,312
(2,994,708)
166,197,604
89,681,764
76,515,840
8,807,156
1,282,499
5,131,497
15,221,152
61,294,688
1,679,736
1,623,832
1,060,919
828,025
640,442
138,514
62,921
15,144
688
177,715
6,227,936
2,717,035
187,179
108,133
114,768
32,658
-
-
461,327
3,621,100
63,901,524
1,167,884
65,069,408
36,786
$65,106,194
of shares outstanding - 11,400,882 thousand shares
in 2000 and 8,349,682 Thousand shares in 1999
$5.71
Based on 10,656,033 thousand shares
The accompanying notes are an integral part of the consolidated financial statements.
(Please refer to the issued auditor's report by Andersen on January 29, 2001)
100
54
46
5
1
3
9
37
1
1
1
-
-
-
-
-
-
-
3
2
-
-
-
-
-
-
-
2
38
1
39
-
39
100
61
39
4
2
4
10
29
2
-
-
-
-
-
-
-
-
-
2
3
1
-
-
-
-
-
-
4
27
3
30
1
31
$77,298,726
(993,624)
76,305,102
46,237,403
30,067,699
2,845,299
1,861,621
3,090,790
7,797,710
22,269,989
1,114,530
184,607
48,575
-
63,809
-
4,310
67,772
140,137
58,587
1,682,327
2,417,021
288,500
86,746
164,384
114,839
31,568
119,141
101,803
3,324,002
20,628,314
2,382,782
23,011,096
515,898
$23,526,994
$2.82
$2.21
80
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
English Translation of Financial Statements Origianlly Issued in Chinese
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY AND SUBSIDIARIES
For the Years Ended December 31, 2000 and 1999 (Note 2)
(In Thousand New Taiwan Dollars)
CAPITAL STOCK ISSUED
CAPITAL SURPLUS (Note 2)
RETAINED EARNINGS (Note 15)
Common Stock
Prefered Stock
Additional
From
Excess on
Gain on
UNREALIZED
LOSS ON
CUMULATIVE
LONG-TERM
TRANSLATION
TOTAL
Shares
Shares
Subscribe
From
Paid-In
Long-term
Foreign Bond Disposal of
Legal
Special
Unappropriated
Total
INVESTMENT
ADJUSTSMENTS SHARHOLDERS'
(Thousand)
Amount
(Thousand)
Amount
Capital
Consolidation
Capital
Investment
Investment
Properties Donation
Total
Reserve
Reserve
Earnings
(Note 2)
(Note 2)
EQUITY
$7,120,000
$-
$99,128
$-
$65,036
$55
$7,284,219
$6,724,240
$-
$16,532,518
$23,256,758
$-
($727,426)
$96,285,311
-
-
-
-
-
-
13,118,025
-
-
-
-
-
-
-
-
-
-
5,000,000
-
-
-
-
-
-
-
13,118,025
12,120,000
-
-
-
-
-
-
-
-
-
-
-
-
(13,118,025)
12,000,000
BALANCE, JANUARY 1, 1999
6,647,176
$66,471,760
Appropriations of prior year's earnings
Legal reserve
-
-
Bonus to employees - stock
110,457
1,104,566
Stock dividends - 23%
1,390,850
13,908,505
Bonus to directors and supervisors
-
-
Issuance of shares on April 15, 1999
250,000
2,500,000
Subscribed Capital
Net income in 1999
-
-
-
-
Conversion of foreign bonds
122,399
1,223,986
Gain on disposal of properties
Gain on disposal of property from investees
Adjustment arising from changes in
ownership percentage in investees
Translation adjustments
-
-
-
-
-
-
-
-
BALANCE, DECEMBER 31, 1999
8,520,882
85,208,817
Appropriations of prior year' s earnings
Legal reserve
Special reserve
-
-
-
-
Bonus to employees - stock
172,121
1,721,208
Stock dividends - 25.55%
1,959,910
19,599,103
Bonus to directors and supervisors
-
-
Capital Transferred from
capital surplus - 2.45%
187,937
1,879,366
Issuance of shares on
January 28, 2000
300,000
3,000,000
Issuance of shares on June 8, 2000
115,000
1,150,000
Issuance of shares for the mergers
on June 30, 2000 (Note 1)
433,515
4,335,152
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Issuance of preferred stocks on
November 29, 2000
Net income in 2000
Gain on disposal of properties
Gain on disposal of property from investees
Adjustment arising from changes in
ownership percentage in investees
Unrealized loss on long-term investment
from investees
Translation adjustments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,300,000
13,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23,172,550
(1,790,871)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
246,218
126,954
-
-
-
-
-
-
-
-
11,289,998
-
-
-
-
-
-
-
-
-
-
-
-
4,022
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000,000
-
-
11,289,998
4,022
246,218
126,954
-
1,534,119
-
-
-
-
-
-
-
-
-
-
-
472,300
11,289,998
69,058
55
23,951,411
8,258,359
-
-
-
-
-
-
-
-
-
-
-
-
5,502
(231,583)
-
-
-
-
-
-
-
(1,879,366)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58,178
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,879,366)
12,000,000
23,172,550
(1,790,871)
-
-
58,178
5,502
(231,583)
-
-
2,430,964
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,534,119)
-
(1,104,566)
(1,104,566)
(13,908,505)
(13,908,505)
(138,071)
(138,071)
-
-
-
-
23,526,994
23,526,994
-
-
(4,022)
(4,022)
(246,218)
(246,218)
-
-
-
-
23,124,011
31,382,370
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,430,964)
1,091,003
(1,091,003)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,721,208)
(1,721,208)
(19,599,103)
(19,599,103)
(215,151)
(215,151)
-
-
-
-
-
-
1,803,168
1,803,168
-
-
65,106,194
65,106,194
(58,178)
(58,178)
(5,502)
(5,502)
231,583
231,583
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
( 71,564)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(138,071)
7,500,000
13,118,025
23,526,994
12,513,984
-
-
126,954
(362,680)
(362,680)
(1,090,106)
152,570,517
-
-
-
-
-
-
-
-
-
-
-
-
(215,151)
-
1,881,975
24,322,550
(897)
4,346,552
-
-
-
-
-
-
13,000,000
65,106,194
-
-
-
(71,564)
-
812,626
812,626
BALANCE, DECEMBER 31, 2000
11,689,365
$116,893,646
1,300,000
$13,000,000
$-
$22,329,129
$23,172,550
$246,219
$9,410,632
$127,236
$55
$55,285,821
$10,689,323
$1,091,003
$65,143,847
$76,924,173
($71,564)
($278,377)
$261,753,699
The accompanying notes are an integral part of the financial statements.
(Please refer to the issued auditor's report by Andersen on January 29, 2001)
81
English Translation of Financial Statements Originally Issued in Chinese
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2000 and 1999 (Note 2)
(In Thousand New Taiwan Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization
Deferred income taxes
Equity in net losses of investee companies - net
Gain on sales of long-term investments
Loss on disposal of property, plant and equipment - net
Accretion in redemption value of bonds
Permanent loss of long-term investments
Accrued pension cost
Allowance for doubtful receivables
Allowance for sales returns and others
Transfer property into expense
Changes in operating assets and liabilities:
Decrease (increase) in:
Short-term investments
Forward exchange contract receivable
Receivable from related parties
Notes receivable
Accounts receivable
Inventories
Prepaid expenses and other current assets
Increase (decrease) in :
Payable to related parties
Notes payable
Accounts payable
Income tax payable
Forward exchange contract payable
Accrued expenses and other current liabilities
Minority interest in subsidiaries
Net Cash Provided by Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Pledge time deposits
Decrease in restricted cash
Acquisitions of:
Property, plant and equipment
Long-term investments
Proceeds from sales of:
Property, plant, and equipment
Long-term investments
Increase in deferred charges
Decrease (increase) in refundable deposits
Decrease in other assets
Decrease in minority interest in subsidiaries
(Forward)
2000
1999
$65,106,194
$23,526,994
41,446,137
(956,118)
187,179
(15,144)
51,847
-
-
370,276
524,532
1,679,309
-
(1,373,616)
(113,730)
(737,105)
38,959
(15,467,155)
(4,033,836)
351,988
2,334,247
(4,303)
3,174,958
(151,828)
(987,604)
2,024,180
(36,786)
93,412,581
25,197,866
(2,481,758)
288,500
(67,772)
160,427
585,614
31,568
260,425
148,603
402,068
39,130
5,049,694
-
(273,194)
(176,112)
(6,215,651)
(2,765,251)
(1,278,128)
878,411
-
985,875
(622,297)
6,108
2,137,160
(515,898)
45,302,382
3,161,693
-
(2,290,000)
7,255
(103,761,905)
(2,107,296)
(51,459,113)
(10,057,902)
364,875
49,376
(1,793,209)
(915,559)
77,451
(15,386,922)
413,096
150,015
(1,179,300)
61,416
13,470
(1,660,815)
82
Cash of TASMC and WSMC as of July 1, 2000
Net Cash Used in Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of :
Short-term bank loans
Long-term bonds
Long-term bank loans
Capital stock
Payments on:
Short-term bank loans
Commercial paper
Short-term marketable security
Long-term bank loans
Increase(decrease) in guarantee deposits
Decrease in obligations under capital lease
Bonus paid to directors and supervisors
Issuance cost of financing
Decrease in other liabilities
Net Cash Provided by Financing Activities
2000
1999
736,594
(119,574,902)
-
(66,001,878)
-
9,000,000
-
39,204,525
(8,592,790)
(4,241,048)
-
(2,648,853)
2,978,984
(1,052)
(215,151)
(118,335)
-
35,366,280
2,917,409
9,450,634
7,997,586
20,618,025
-
-
(253,445)
(938,463)
-
(138,071)
(63,275)
(71,951)
39,518,449
NET INCREASE CASH AND CASH EQUIVALENTS
EFFECT OF EXCHANGE RATE CHANGES
9,203,959
18,818,953
118,576
(173,144)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR
29,517,682
10,871,873
CASH AND CASH EQUIVALENTS, END OF THE YEAR
$38,840,217
$29,517,682
SUPPLEMENTAL INFORMATION
Interest paid (excluding amounts capitalized)
Income tax paid
Noncash investing and financing activities -
Effect of exchange rate changes on cash and cash equivalents
Current portion of long-term debt
Cash paid for acquisition of property, plant and equipment:
Total acquisitions
Payable to contractors and equipment suppliers
Conversion of bonds into common stocks and capital surplus
(Forward)
$4,036,210
$96,523
$2,441,840
$594,098
$1,009,264
$51,055
($66,376)
$1,001
$113,996,068
(10,234,163)
$103,761,905
$-
$56,857,625
(5,398,512)
$51,459,113
$12,513,984
83
SUPPLEMENTAL INFORMATION OF THE MERGERS:
TSMC had merged with Worldwide Semiconductor Manufacturing Corp. (WSMC) and had acquired TSMC-Acer
Semiconductor Manufacturing Corp. (TASMC) by issuing new shares. The balance sheets as of June 30, 2000
of WSMC and TASMC were as follows:
Cash
Inventories
Other current assets
Property, plant and equipment - net
Other assets
Current liabilities
Long-term liabilities
Other liabilities
Net assets acquired
Cancellation of stocks of the dissolved companies
Issuance of stocks from the surviving company
Capital surplus
The accompanying notes are an integral part of the consolidated financial statements.
(Please refer to the issued financial report by Andersen on January 29, 2001)
TASMC
(Fair Value)
WSMC
(Book Value)
$736,594
1,647,845
2,308,391
19,846,708
7,335,526
(16,699,147)
(2,000,000)
(654,863)
12,521,054
(8,173,605)
(4,335,152)
$12,297
$675,810
1,805,243
3,150,257
40,512,706
5,101,000
(12,454,686)
(4,950,000)
(23,498)
33,816,832
-
(11,500,000)
$22,316,832
Total
$1,412,404
3,453,088
5,458,648
60,359,414
12,436,526
(29,153,833)
(6,950,000)
(678,361)
46,337,886
(8,173,605)
(15,835,152)
$22,329,129
84
English Translation of Financial Statements Originally Issued in Chinese
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousand New Taiwan Dollars, Except Per Share Amounts and Unless Specified Otherwise)
1. GENERAL
Taiwan Semiconductor Manufacturing Company Ltd. (TSMC) is engaged mainly in the: (a) manufacture, sale,
packaging, testing and computer-aided design of integrated circuits and other semiconductor devices; and, (b)
manufacture and design of masks.
TSMC's shares are listed and traded on the Taiwan Stock Exchange.
On October 8, 1997, TSMC sold shares of stock in the New York Stock Exchange in the form of American
Depositary Receipts (ADRs).
TSMC had acquired TSMC-Acer Semiconductor Manufacturing Corp. (TASMC). It also merged with Worldwide
Semiconductor Manufacturing Corporation (WSMC) with TSMC as the surviving company. TASMC and WSMC
were subsequently dissolved. The acquisition of TASMC and the merger with WSMC took effect on June 30,
2000, and, on that date, TSMC issued a total of 1,583,515 thousand common shares to the former shareholders
of TASMC and WSMC. The additional shares issued were based on the agreed exchange ratio of three point
nine TASMC shares and two WSMC shares for every share of TSMC. Also, the holders of the additional shares
issued have the same rights and the obligation as the holders of the previously issued common stock of TSMC.
TASMC was incorporated on March 31, 1990, and commenced operations in January 1992. TASMC was
engaged mainly in the research, development, design, manufacturing, packaging, testing and sale of dynamic
random-access memory (DRAM) semiconductor devices, other memory integrated circuits and logic integrated
circuits.
WSMC, was incorporated on March 6, 1996 and commenced operations on December 1, 1998. WSMC was
engaged mainly in the manufacture of the semiconductor products.
TSMC has eleven wholly-owned subsidiaries, namely, TSMC-North America, Taiwan Semiconductor
Manufacturing Company Europe B.V (TSMC-Europe), TSMC-Japan, TSMC international Investment, TSMC
Partners, and 25% owned affiliated - Po Cherng Investment, Chi Hsin Investment, Kung Cherng Investment, Chi
Cherng Investment, Hsin Ruey Investment, and Cherng Huei Investment. As of December 31, 2000, TSMC
International Investment has two wholly owned subsidiaries-TSMC Development, Inc. and TSMC Technology
Inc., and two 97%-owned subsidiaries-InveStar Semiconductor Development Fund, Inc. and, InveStar
Semiconductor Development Fund (II), Inc. (new investee in the year of 2000). TSMC Development Inc. in turn
has 97%-owned subsidiary, WaferTech, LLC.
The following diagram presents information of relations and percentage of holding shares among TSMC, and its
subsidiaries as of December 31, 2000:
85
TSMC
100%
100%
100%
100%
100%
25%
TSMC-
North America
TSMC-Japan
TSMC International
Investment
TSMC-Europe
TSMC Partners
Po Cherng
Investment etc.
100%
TSMC-
Technology
100%
TSMC-
Development
97%
97%
InveStar
InveStar (II)
97%
WAFERTECH
TSMC-North America, TSMC-Europe and TSMC-Japan are engaged mainly in marketing and engineering
support activities. TSMC Partners and Kung Cherng Investment etc. are engaged in investments. TSMC
International Investment and its subsidiaries are engaged in investing in affairs focused on the design,
manufacture, and other related business of semiconductors. WaferTech, LLC. is a foundry.
2. SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies, which conform to generally accepted accounting principles in the Republic of
China, are summarized as follows:
Consolidation
The consolidated financial statements include the accounts of TSMC and its eleven subsidiaries identified in Note
1 above (hereinafter, referred to individually or collectively as "Company"). All significant inter-company accounts
and transactions have been eliminated.
The reporting entities for the consolidated financial statements as of and for the year ended December 31, 2000
included TSMC, TSMC-North America, TSMC-Europe, TSMC-Japan, TSMC Partners, Po Cherng Investment,
Chi Hsin Investment, Kung Cherng Investment, Chi Cherng Investment, Hsin Ruey Investment, Cherng Huei
Investment, TSMC International Investment and its subsidiaries, InveStar Semiconductor Development Fund, Inc
and InveStar Semiconductor Development Fund, (II) Inc. (Incremental investment in 2000), TSMC Development
Inc. (including WAFERTECH, LLC) and TSMC Technology Inc.
As stated in Note 1, TSMC had acquired TASMC and merged with WSMC on June 30, 2000. In view of the
changes in reporting entities, the consolidated financial statements of the year ended December 31, 1999 have
been restated. The restatement of consolidated balance sheets, income statements, statements of changes in
shareholders' equity and statements of cash flows was carried out by including all assets and liabilities of WSMC.
All minority interests have been eliminated. Also, the income statements was restated by including the income
and expense of WSMC. The minority interest in loss is added to the consolidated net income.
Minority interests in InveStar I, InveStar II and WaferTech are presented separately in consolidated financial
statements.
Cash equivalents
Government bonds acquired under repurchase agreements with original maturity of less than three months and
commercial paper are classified as cash equivalents.
86
Short-term investments
Short-term investments are carried at the lower of cost or market value. The costs of investments sold are
determined by the specific identification method.
Allowance for doubtful receivables
Allowance for doubtful receivables are provided based on a review of the collectibility of individual receivables.
Sales and allowance for sales returns and others
Sales are recognized when products are shipped to customers. Allowance and the related provision for sales
returns and others are provided based on experience. Such provisions are accounted for as reduction from sales
and the related costs are deducted from cost of sales.
Inventories
Inventories are stated at the lower of standard cost (adjusted to approximate weighted average cost) or market
value. Market value represents net realizable value for finished goods and work in process, and replacement
value for raw materials, supplies and spare parts.
Long-term investments
Investments in shares of stock of companies wherein the Company exercises significant influence on their
operating and financial decisions are accounted for using equity method. The increase in the Company's
proportionate share in the net assets of its investee companies resulting from its subscription to additional shares
of stock, issued by such investee companies, at the rate not proportionate to its existing equity ownership in such
investee companies, is credited to a capital surplus account while any decrease in the Company's proportionate
share in the net asset of investee company is debited against the existing balance of the similar capital surplus
account with the difference debited against unappropriated retained earnings.
If an investee company's losses are covered by additional paid-in capital that is sourced from an increase in the
value of assets upon reappraisal after the long-term investment was made, then the Company shall calculate
such amount in accordance with its ownership percentage and debit the "Additional paid-in capital" account and
credit the "Retained earnings" account; no journal entries shall be made for other types of loss coverage increase
in asset values upon reappraisal.
Other stock investments are accounted by the cost method. These investments are stated at cost less decline in
market value of listed stocks or decline in value of unlisted stocks which is considered irrecoverable; such
reductions are charged to shareholders' equity or current income, respectively. Cash dividends are recognized
as income in the year received but are accounted for as reduction in the carrying value of the long-term
investment if the dividends are received in the same year that the related investments are acquired.
Stock dividends are recognized only as increase in the number of stocks held on the ex-dividend date.
Investments in foreign mutual funds are stated at the lower of cost or net asset value (NAV). Write-downs of cost
and write-ups to original acquisition cost resulting from subsequent recovery of the NAV are debited or credited to
shareholders' equity.
Convertible notes and stock warrants are carried at cost.
The costs of investments sold are determined by the weighted-average method.
The Company's proportionate share in the gains from disposal of property, plant and equipment, net of the
applicable income tax, included as part of its share in the earnings or losses of investee companies accounted for
using the equity method for the current year is transferred in to capital surplus from retained earnings. When the
Company subsequently disposed such investment in shares of stock, such capital surplus shall be transferred
back to retain earnings. Also, if an investee company has unrealized loss on long-term investment which is
evaluated by lower-of-cost-or-market method, the Company shall recognize that unrealized loss in proportion to
the Company's equity interest and recorded in an account as a component of shareholders' equity.
Gains or losses on transactions with investee companies wherein the Company owned at least 20% of the
87
outstanding common stock but less than a controlling interest are deferred in proportion to ownership percentage
until realized through a transaction with a third party. The entire amount of the gains or losses on sales to
majority-owned subsidiaries are deferred until such gains or losses are realized through the subsequent sale of
the related products to third parties. On the other hand, if the unrealized gains or losses arose from a sale by the
investee companies or majority-owned subsidiaries to the Company, an adjustment should be made in
accordance with ownership percentage.
Property, plant and equipment and rental assets
Property, plant and equipment and rental assets are stated at cost less accumulated depreciation. Major
additions, renewals and betterment, and interest expense incurred during the construction period are capitalized.
Maintenance and repairs are expensed currently.
Property, plant and equipment covered by agreements qualifying as capital leases are carried at the lower of the
present value of all minimum future rental payments, or the leased property's market value at the inception date
of the lease, whichever is lower. The periodic rental payment made by the Company includes the purchase price
of the leased property, and the interest expense.
Depreciation is provided on the straight-line method over these estimated service lives: buildings - 10 to 50
years; machinery and equipment - 5 to 10 years; and office equipment - 3 to 7 years.
Upon sale or disposal of property, plant and equipment, the related cost and accumulated depreciation are
removed from the accounts, and any gain or loss is credited or charged to income. Any such gain, less
applicable income tax, is transferred to capital surplus at the-end of the year.
Consolidated Debits
Consolidated debits arose from the business merger and the difference between the investment cost and the
Company's proportionate share in the net asset of the investee companies at the date of acquisition.
Consolidated debits are amortized by the straight-line method over 5 to 15 years.
Deferred charges
Deferred charges, consisting of technology, software and system design costs, bond issuance costs, credit
instruments and technology know how, are amortized over three years, five years, the term of credit instruments,
and the term of the contract valid period or economic useful lives, respectively.
Pension costs
Net periodic pension costs are recorded on the basis of actuarial calculations. Unrecognized net transition
obligation and unrecognized net gain are amortized over 25 years, respectively.
Deferred gain on sale-leaseback
The gain resulting from the sale of leased property is deferred. Such deferred gain is then amortized as follows:
(a) operating lease - adjustment of rental expenses over leasing period, and (b) capital lease - adjustment of
depreciation over the estimate useful life or leasing period.
Income tax
The Company adopted inter-period tax allocation. Deferred income taxes are recognized for the tax effects of
temporary differences, unused tax credits, and operating loss carry forwards. Valuation allowance is provided for
deferred income tax assets that are not certain to be realized. A deferred tax asset or liability should, according
to the classification of its related asset or liability, be classified as current or non-current. However, if a deferred
asset or liability cannot be related to an asset or liability in the financial statements, it should be classified as
current or non-current based on the expected reversal date of temporary difference.
Adjustments of prior years' tax liabilities are added to or deducted from the current year's tax provision.
Income taxes (10%) on unappropriated earnings generated starting January 1, 1998 are recorded as expense in
the year when the shareholders have resolved that the earnings shall be retained.
88
Derivative financial instruments
Foreign currency forward exchange contracts are recorded in New Taiwan dollars as assets or liabilities at spot
rates on the inception dates of the contracts. The difference in the New Taiwan dollar amounts translated using
the spot rates and the amounts translated using the contracted forward rates are also recognized as premiums or
discounts on the inception dates of the forward contracts. Premiums or discounts are amortized by the straight-
line method over the terms of the forward contracts are either deferred or recognized as income. At the balance
sheet dates, the receivables or payables arising from forward contracts are restated at the prevailing spot rates,
and the resulting differences are recognized in income. Also, the receivables and payable related to the forward
contracts are netted out, and the resulting net amount is presented as either an asset or liability.
Under interest rate swap contracts, the Company pays an amount equal to the interest rates based on notional
principal amount and receives a specified variable-rate of interest also based on the same notional principal
amount; with the notional amounts of the contracts are not exchanged. The net amounts paid or received under
the contracts are reported as adjustments to interest income or expense.
The notional amounts of the foreign currency option contracts entered into for hedging purposes are not
recognized as either assets or liabilities on the contract dates. However, amounts paid on options bought are
recognized as assets and amounts received on options written are recognized as liabilities. Such amounts are
amortized using the straight-line method over the period of the contracts and charged to current income. Gains
or losses on the exercise of the options are also recognized in current income.
Foreign-currency transactions
Foreign-currency transactions, except derivative financial instruments, are recorded in New Taiwan dollars at the
rates of exchange in effect when the transactions occur. Gains or losses resulting from the application of
different foreign exchange rates when cash in foreign currency is converted into New Taiwan dollar, or when
foreign-currency receivables and payables are settled, are credited or charged to income in the year of
conversion or settlement. At period-end, the balances of foreign-currency assets and liabilities are restated at
prevailing exchange rates, and the resulted differences are recorded as exchange gain or loss in current income.
Translation of foreign-currency financial statements
The financial statements of the foreign subsidiaries are translated into New Taiwan dollars at the following
exchange rates: assets and liabilities-current rate; shareholders' equity-historical rates; income and expenses-
weighted average rate during the year. The resulting translation adjustments recorded as a separate component
of shareholders' equity
Reclassifications
Certain accounts in 1999 have been reclassified to conform to 2000 classifications.
Mergers
The acquisition of TASMC was accounted for under the Statement of Financial Accounting Standards No. 25
"Business Combination - Purchase Method". On the other hand, the merger with WSMC was accounted for as
pooling of interest with the results of operations of WSMC included in the statement of income for the year ended
December 31, 2000.
Pro forma net sales, net income and earnings per share of TSMC on the assumption that the acquisition of
TASMC was completed as of January 1, 1999 are as follows:
Net sales
Net income
Earnings per share
Based on weighted-average number of shares
outstanding - 11,616,455 and 11,089,548
thousand shares in 2000 and 1999
2000
1999
$170,132,350
$86,130,100
65,050,836
17,084,089
$5.60
$1.54
89
The individual operating results of TASMC before the mergers on June 30, 2000 are as follows:
Net sales
Net loss
Six Months
Year Ended
Ended June 30, 2000
December 31, 2000
$3,934,746
(55,358)
10,655,995
(6,127,604)
3. SIGNIFICANT ELIMINATING ENTRIES
The details of transactions with companies included in the consolidated financial statements are as follows:
Company
Account
Amount
Transaction Entity
TSMC
Payable to related parties
$166,063
TSMC-North America
66,343
16,165
TSMC-Europe
TSMC-Japan
1,487,181
WAFERTECH, LLC
4,487
TSMC-Technology
25,728
20,361
TSMC-Technology
WAFERTECH, LLC
370,762
WSMC
30,816
WAFERTECH, LLC
13,296,633
WAFERTECH, LLC
Receivable from related parties
Sales
Purchase
General administration expenses
14,095
TSMC-Technology
Marketing expenses - Commissions
Marketing expenses -service charges
Deferred revenue
Accounts receivable
Accounts payable
WSMC
TSMC International
Investment
Interest receivable
Notes receivable
Interest revenue
994,686
143,461
165,087
118,852
5,837
1,670
768,677
TSMC-North America
TSMC-Europe
TSMC-Japan
TSMC-North America
WAFERTECH, LLC
TASMC
TASMC
128,594
330,790
TSMC-Technology
TSMC-Technology
24,181
TSMC-Technology
TSMC Partners
Deferred revenue
10,791,704
TSMC International Investment
Royalty income
Notes receivable
491,733
TSMC International Investment
11,313,018
TSMC International Investment
TSMC - Technology
Deferred revenue
Licensing fee
Sales
Other receivable
40,962
13,323
63,727
17,669
WAFERTECH, LLC
WAFERTECH, LLC
WAFERTECH, LLC
WAFERTECH, LLC
90
4. CASH AND CASH EQUIVALENTS
Cash and bank deposits
Government bonds acquired under repurchase agreements
Commercial paper
5. SHORT-TERM INVESTMENTS
Listed stocks
Mutual funds
Less - allowance for losses
6.
INVENTORIES
Finished goods
Work in process
Raw materials
Supplies and spare parts
Less - allowance for losses
7. LONG-TERM INVESTMENTS
2000
1999
$38,229,510
$29,442,697
610,707
-
-
74,985
$38,840,217
$29,517,682
2000
1999
$1,502,098
959,561
2,461,659
(110,099)
$927,856
37,541
965,397
-
$2,351,560
$965,397
2000
1999
$1,762,287
9,455,492
770,884
1,364,686
$905,626
5,924,555
632,732
969,797
13,353,349
8,432,710
(567,626)
(1,328,668)
$12,785,723
$7,104,042
2000
1999
% of
% of
Carrying Owner-
Carrying Owner-
Value
Ship
Value
Ship
$5,615,075
-
935,870
6,550,945
25
-
32
$5,010,897
3,630,193
360,177
9,001,267
25
32
32
Common Stocks
Equity method
Vanguard International Semiconductor
TASMC
Systems on Silicon Manufacturing Company Pte Ltd.
(SSMC)
(Forward)
91
Cost Method
Listed
Taiwan Mask
Non-listed
Taiwan Semiconductor Technology
United Industrial Gases Co.,Ltd
Shin-Etsu Handotai Taiwan
W.K. Technology Fund IV
Hong Tung Venture Capital
3Dfx Interactive
Programmable Microelectronics
Capella Microsystems
Equator Technologies
Global Test
ChipStrate Technology
Ritch Technology
Scenix Semiconductor
APE
Preferred stocks
TASMC
Programmable Microelectronics
Lara Technology
Marvell Technology
Integrated Memory Logic
Divio
Integrated Micromachines
SiRF Technology
Rise Technology
Capella Microsystems
Sensory
Flow Wise Networks
Equator Technologies
LightSpeed Semiconductor
Centillium Technology
Scenix Semiconductor
Lara Networks Inc.
RapidStream
Tropian, Inc. (Premier R. F.)
Krypton Isolation
Pico Turbo
Sonics
3Dfx Interactive
NanoAmp Solutions
T-Span System
Memsic
Monolithic Power System
(Forward)
32,129
500,000
146,250
105,000
50,000
120,000
9,826
49,619
345
2,978
2
19
10
7
4
10
-
4
-
-
183,896
10
70,854
10,338
5,697
50,222
1,337,154
-
-
-
-
59,845
16,540
-
44,105
49,619
42,949
41,349
-
93,908
101,368
-
45,023
75,151
69,708
77,209
-
41,349
116,752
-
61,281
45,829
82,689
66,158
9
9
2
6
-
-
-
-
10
4
-
1
2
8
6
-
2
6
-
2
7
6
5
-
9
7
-
3
3
24
17
32,129
500,000
146,250
105,000
50,000
80,000
-
-
-
-
71,613
32,927
7,407
5,407
-
1,030,733
4,854,742
47,092
83,197
139,055
23,546
15,698
4,709
41,860
47,092
12,040
39,244
15,697
42,011
68,562
23,546
66,277
-
32,965
31,395
39,244
39,244
31,395
9,326
26,537
15,698
47,088
62,790
2
19
11
7
4
10
-
-
-
-
5
2
1
-
-
28
3
6
10
2
1
-
3
3
1
3
1
3
5
2
5
-
2
2
3
3
2
-
2
1
3
4
92
Formfactor
Reflectivity
Signia
Empower Tel Networks
Match Lab
HINT Corporation
Creosys
Incentia Design Systems
Seagull Semiconductor
Oepic
FabCentric
Convertible note
Integrated Memory Logic
Sonics
Rise
FabCentric
Signia Technologies
Advanced Analogic Technology
Funds
Crimson Asia Capital
Horizon Ventures
Warrant
Flow Wise Networks
Cumulative translation adjustments
Allowance for losses
66,158
66,158
49,619
169,634
49,619
33,079
49,619
16,539
41,349
24,809
8,270
1,705,685
-
-
9,924
8,270
16,540
41,349
76,083
64,547
93,304
157,851
-
9,827,718
(13,376)
-
1
6
22
7
11
5
8
2
14
-
-
-
-
-
-
-
-
-
-
-
-
-
62,790
62,790
47,090
-
-
-
-
-
-
-
-
6,032,720
31,395
23,546
9,419
-
-
-
64,360
34,534
31,744
66,278
6
16,195,364
-
(30,688)
4
4
3
-
-
-
-
-
-
-
-
2
2
1
-
-
-
-
-
-
-
-
The carrying values of investments accounted for using the equity method and the related investment income
and losses for the years ended December 31, 2000 and 1999 were based on audited financial statements of the
investee for the same period.
Equity in losses of investee companies in 2000 and 1999 were as follows:
$9,814,342
$16,164,676
VIS
SSMC
TASMC
Information on the long-term investments is as follows:
Market value of listed stocks
Equity in the net assets of unlisted stocks
Net asset value of funds
2000
1999
$597,812
(473,661)
(311,330)
($527,823)
(75,978)
315,301
($187,179)
($288,500)
2000
1999
$8,729,639
$19,762,968
5,466,227
157,851
8,351,897
66,278
93
As of December 31, 2000, the unexercised stock warrants for purchase of shares are as follows:
Stock
Shares (Maximum) Exercise Price Per Share (US$)
Exercise Period
Common Stocks
Empower Tel Networks, Inc
Ubicom, Inc
Capella Microsystems, Inc.
HINT Corporation
Preferred Stocks
SiRF Technology, Inc
Sonics, Inc
Sonics, Inc
Sonics, Inc
Ubicom, Inc
Formfactor, Inc
Integrated Memory Logics, Inc
Integrated Memory Logics, Inc
Match Lab, Inc
317,307
90,980
500,000
15,000
5,556
450,000
30,000
30,000
45,490
66,666
746,268
333,333
625,000
8. PROPERTY, PLANT AND EQUIPMENT
Accumulated depreciation consisted of the following:
Land improvements
Buildings
Machinery and equipment
Office equipment
1.625
01/29/1999-01/29/2009
0.20
0.25
0.25
6.00
1.00
1.50
1.50
2.00
7.50
0.67
1.50
0.80
03/22/1999-12/23/2003
-
03/17/2000-03/17/2005
01/16/1998-01/16/2003
09/25/1998-09/27/2001
11/30/1999-11/29/2002
03/14/2000-03/14/2002
12/23/1998-12/23/2003
07/30/1999-07/30/2004
12/20/1999-12/20/2004
12/20/1999-12/20/2004
01/14/2000-01/14/2005
2000
1999
$64,006
10,692,112
90,956,200
2,172,561
$33,691
8,131,392
55,576,499
1,668,106
$103,884,879
$65,409,688
Information on the status of the construction of TSMC's manufacturing facilities as of December 31, 2000 is as
follows:
Manufacturing Plant
Estimated Cost
Accumulated
Expected or Actual Date of
Expenditures
the Starting of Operations
Fab 6
Fab 7
Fab 8
Fab 12 - 1st stage
Fab 14 - 1st stage
$76,889,000
$67,565,100
22,540,400
28,314,300
38,280,800
9,711,000
11,121,100
15,217,800
21,372,000
March 2000
March 2001
March 2001
November 2001
7,946,600
May 2002
Interest expense capitalized for the years ended December 31, 2000 and 1999 were $541,078 and $845,246
respectively.
94
9. DEFERRED CHARGES - NET
Technology
Software and system design costs
Technology know how
Bond issue costs
Patent
Others
10. SHORT-TERM BANK LOANS
Loan in NT Dollars:
2000
1999
$1,442,292
$1,636,596
1,420,635
625,306
157,500
142,881
-
172,357
-
37,238
18,105
63,547
$3,335,665
$2,380,792
2000
1999
Secured loan, repayable by October 2001 and June 2000, annual interest
of 5.8% and 0.75%~7.39% in the years of 2000 and 1999, respectively
$329,375
$2,037,629
Unsecured loan, repayable by June 2000, annual interest of 0.75%~7.93%
-
2,989,002
Loan in US Dollars:
Unsecured and loan secured by mortgage, US$105,942 thousand, repayable
by December 2001, annual interest of 7.53% ~ 9.25%
3,504,466
-
$3,833,841
$5,026,631
Unused credit lines as of December 31, 2000 aggregated about NT$470,625 and US$41,000 thousand.
11. COMMERCIAL PAPERS PAYABLE
Repayable by March 2000, annual interest of 4.40%~5.51%
Less - unamortized discount
12. OBLIGATION UNDER CAPITAL LEASE
Repayable through between June 30, 2001 and 2003
Current portion
1999
$95,000
(203)
$94,797
2000
1999
$54,371
(51,055)
$3,316
$5,369
(1,001)
$4,368
95
13. LONG-TERM BANK LOANS
2000
1999
Bank loans in US Dollars:
Unsecured and loan mortgage,US$705,564 thousand in 2000 and US$192,500
thousand in 1999, repayable by March 2005, annual interest of 6.91% ~
7.663% and 6.76% ~ 6.83% in 2000 and 1999, respectively.
$23,339,367
$12,952,462
Bank loans in NT Dollars:
Repayable by March 2001, interest, 6.68%~7.21%, paid in 2000.
-
9,791,000
$23,339,367
$22,743,462
Unused credit lines for long-term bank loans as of December 31, 2000 aggregated to US $62,436 thousand.
14. LONG-TERM BONDS
Domestic unsecured bonds:
2000
1999
Repayable in March 2003, 7.71% annual interest payable semi-annually
$4,000,000
$4,000,000
Repayable in November 2003, 7.12% annual interest payable annually,
redeemed in November 2000
-
6,000,000
Repayable in October 2002 and 2004, 5.67% and 5.95% annual interest
payable annually, respectively
10,000,000
10,000,000
Repayable in December 2005 and 2007, 5.25% and 5.36% annual
interest payable annually, respectively
15,000,000
-
$29,000,000
$20,000,000
15. SHAREHOLDERS' EQUITY
According to ROC Company Law, capital surplus can only be used to offset a deficit or transferred to capital.
TSMC's Articles of Incorporation provide that the following shall be appropriated from the annual net income (less
any deficit):
a. 10% legal reserve;
b. Special reserve according to the relevant laws or the regulating authorities;
c. Bonus to directors and supervisors and to employees equal to 1% and at least 1% of the remainder,
respectively;
d. Dividends to shareholders of preferred stock equal to 3.5% annual rate, based on outstanding period;
e. These appropriations and the disposition of the remaining net income should be resolved by the shareholders
in the following year and given effect to in the financial statements of that year.
TSMC issued nonpublic 1,300,000 thousand preferred stock - Series A to certain investors. The following are the
rights of the holders of the preferred stock and other terms and conditions:
a. Entitled to receive cumulative cash dividends at an annual rate of 3.5%.
b. Not be entitled to participate in any additional shares of stock upon transfer of unappropriated earnings and
capital surplus to stock.
c. Have priority over the holders of common shares to the assets of the Company available for distribution to
stockholders upon liquidation or dissolution of the Company; however, the preemptive rights to the assets
shall not excess the issue value of the shares.
d. Have voting rights similar to that of the holders of common stock.
96
e. No right to convert their shares into common stock. The preferred shares will be redeemed within thirty
months from its issuance. The holders will have the foregoing rights and TSMC's related obligations will
remain the same until the preferred shares are actually redeemed by TSMC.
The aforementioned appropriation for legal reserve shall be made until the reserve equals aggregate par value of
TSMC's outstanding capital stock. The reserve can only be used to offset a deficit; or, when it has reached 50%
of the aggregate par value of TSMC's outstanding capital stock, up to 50% thereof can be distributed as stock
dividend.
The Company shall record a special reserve of $1,091,003 from unappropriated retained earnings equivalent to
the net debit balance of any item, other than a deficit, in the shareholders' equity as of December 31, 1999. The
special reserve will be adjusted in proportion to the change in the net debit balance of any item in the
shareholders' equity.
Under the Integrated Income Tax System that became effective on January 1, 1998, resident shareholders are
allowed a tax credit for the income tax paid by the Company on earnings generated starting January 1, 1998. An
Imputation Credit Account (ICA) is maintained by the Company for such income tax and the tax credit allocated
to each shareholder. The maximum credit available for allocation to each shareholder cannot exceed the
balance shown in the ICA on the date of distribution of dividends.
16. PENSION PLAN
TSMC and its subsidiaries have pension plans for all regular employees, which provides benefits based on length
of service and average monthly salary for the final six months of employment.
TSMC and its subsidiaries makes monthly contributions, equal to 2% of salaries to a pension fund that is
administered by a pension fund monitoring committee and deposited in the committee's name in the Central
Trust of China.
The changes in the fund and accrued pension cost of TSMC and its subsidiaries are summarized as follows:
a. Components of pension cost
Service cost
Interest cost
Projected return on plan assets
Amortization
b. Reconciliation of the fund status of the plan and accrued pension cost
Benefit obligation
Vested benefit obligation
Non-vested benefit obligation
Accumulated benefit obligation
Additional benefits based on future salaries
Projected benefit obligation
Fair value of plan assets
Funded status
Unrecognized prior service cost
Unrecognized net transitional obligation
Unrecognized net gain
Additional liability
Accrued pension cost
(Forward)
2000
1999
$376,689
91,234
(26,675)
8,300
$449,548
$272,228
80,694
(22,931)
9,114
$339,105
$-
763,879
763,879
1,550,009
2,313,888
(661,099)
1,652,789
-
(165,991)
22,737
-
$1,509,535
$128
447,148
447,276
1,008,650
1,455,926
(390,655)
1,065,271
-
(179,348)
127,684
-
$1,013,607
97
c. Actuarial assumptions
Discount rated used in determining present values
Future salary increase rate
Expected rate of return plan on assets
d. Contributions to pension fund
e. Funds transferred from TASMC and WSMC
f. Payments from pension fund
17. INCOME TAX
2000
1999
6.0%
6.0%
6.0%
6.5%
6.0%
6.5%
$95,932
$83,053
$173,339
$-
$1,458
$3,591
a. A reconciliation of income tax expense - current before tax credits and income tax expense on income before
income tax at statutory rate is shown below:
2000
1999
Income tax expense on "income before income tax" at statutory rate
($12,787,660)
($4,889,210)
Tax-exempt income
Temporary difference
Assessed additional income tax on the unappropriated earning
Income tax expense - current
b.
Income tax credits as of December 31, 2000 and 1999 consisted of:
Income tax expense - current before tax credits
Tax credits
Net change in deferred income tax assets (liabilities) for the period
Investment tax credits
Temporary differences
Others
Valuation allowance
Adjustment of prior years' taxes
c. Deferred income tax assets (liabilities) consisted of the following:
Current
Investment tax credit
Accrued liabilities and others
Valuation allowance
(Forward)
7,770,000
(49,497)
(88,024)
3,434,802
(221,129)
-
($5,155,181)
($1,675,537)
2000
1999
($5,155,181)
($1,675,537)
5,128,024
1,587,000
(27,157)
(88,537)
3,146,369
3,798,325
(388,671)
(73,559)
(111,139)
-
(1,678,791)
(1,303,500)
189,693
87,633
$1,167,884
$2,382,782
2000
1999
$8,422,000
$2,329,000
56,016
(300,000)
287,618
-
$8,178,016
$2,616,618
98
Noncurrent
Investment tax credit
Loss carried forward
Interest expense
Deferred revenue
Organization cost
Depreciation
Others
Valuation allowance
d.
Integrated income tax information:
Balances of the imputation credit account
TSMC
WSMC
Expected and actual creditable ratio
TSMC
WSMC
$12,591,291
$8,769,605
-
45,008
46,077
-
(857,689)
267,831
981,149
201,798
43,753
65,006
(305,358)
(205,699)
12,092,518
9,550,254
(5,462,713)
(2,543,557)
$6,629,805
$7,006,697
2000
1999
$5,888
$-
2000
(Expect)
$1,497
$2,116
1999
(Actual)
0.009%
0.006%
-
-
The imputation credit allocated to each shareholder shall be based on the balance in the ICA on the date of
distribution of dividends; thus the expected creditable ratio for 2000 may be adjusted according to the
difference between the expected and actual imputation credit allowed under the regulation.
e. The unappropriated retained earnings as of December 31, 2000 and 1999 included the earnings generated up
to December 31, 1997 of $4,827 and $799,298, respectively.
The effective tax rates for deferred income tax of TSMC as of December 31, 2000 and 1999 were 7.54% and
5.9%, respectively. Its subsidiaries were 32~54% and 32%~40%, respectively. WSMC was 20% for the year
ended 1999.
Unused investment tax credits arising from investments in machinery and equipment, and research and
development expenditures as of December 31, 2000 will expire as follows:
Year of Expiry
2001
2002
2003
2004
Tax credits
4,015,461
4,800,268
5,738,563
6,458,999
$21,013,291
99
The income from the following projects and services are exempt from income tax:
Tax-Exemption Period
Expansion of second manufacturing plant and computer-aided design services, and
construction of third manufacturing plant
Expansion of first and second manufacturing plants-modules A and B, third manufacturing
plant, and construction of fourth manufacturing plant
1996 to 1999
1997 to 2000
Expansion of first and second manufacturing plants-modules A and B, third manufacturing
plant and fourth manufacturing plant, and construction of fifth manufacturing plant
1999 to 2002
TASMC is entitled to an income tax exemption for a period of four years for the income generated. TASMC
decided to commence such tax exemption from January 1, 1998 to December 31, 2000.
Income tax returns for TSMC through 1996, TASMC and WSMC through 1997, have been examined and
cleared by the tax authorities. However, TASMC is contesting the assessment of tax authority for 1995, 1996,
and 1997.
18. RELATED PARTY TRANSACTIONS
The Company engaged in business transactions with the following related parties:
Industrial Technology Research Institute (ITRI); the Company's chairman is one of its director.
a.
b. Philips Electronics N.V., (Philips), a major shareholder.
c. Vanguard International Semiconductor Corporation (VIS), an investee.
d. Systems on Silicon Manufacturing Company Pte Ltd. (SSMC), an investee.
e. Winbond Electronics Corporation (Winbond ); a director.
f. Taisil Electronic Materials Corporation (Taisil); a director before March 6, 1999.
g. Syntek Design Technology Corporation (Syntek Design); a director.
The transactions with the foregoing parties, in addition to those disclosed in other notes, are summarized as
follows:
For the period
Sales
ITRI
Philips and its affiliates
VIS
Winbond
Taisil
Purchase
VIS
Syntek Design
Rental expense - ITRI
Manufacturing expenses
Technical assistance fee - Philips
Technology - Winbond
(Forward)
2000
1999
Amount
%
Amount
%
$198,146
5,289,927
17,012
-
-
$5,505,085
$6,572,110
-
$6,572,110
$161,575
$2,137,175
-
$2,137,175
-
3
-
-
-
3
19
-
19
14
3
-
3
$132,507
2,864,149
48,473
625,246
58,877
$3,729,252
$381,989
30,820
$412,809
-
4
-
1
-
5
3
-
3
$161,488
54
$862,398
300,000
$1,162,398
2
1
3
100
General and administrative expenses
Consulting fee - VIS
Disposal of properties - VIS
Non-operating income
SSMC(mainly technical service income)
VIS
Others
$-
$87,189
$152,347
5,604
38
$157,989
-
37
3
-
-
3
$20,400
$-
$-
-
-
$-
-
-
-
-
-
-
Under a technology development and transfer contract with Winbond in January 1997, Winbond agreed to
transfer technology and provide related information and other consultant services to WSMC. WSMC agreed to
pay compensation for technology development and transfer amounting to NT$800 thousand in accordance with
the progress of the construction of buildings and technology development and transfer. As of December 31,
1999, WSMC has paid the entire license fee.
Research and development expenses
Winbond
At end of period
Receivable
ITRI
Philips and its affiliates
VIS
SSMC
TASMC
Winbond
Other
Rental Prepayment - ITRI
Payable
Philips and its affiliates
VIS
TASMC
Syntek Design
$-
-
$3,531
-
$56,078
643,604
159,890
89,154
-
-
-
$948,726
$42,664
$797,375
1,808,964
-
-
6
68
17
9
-
-
-
100
6
31
69
-
-
$18,458
133,245
25,674
5,353
23,117
131,927
3,164
$340,938
$42,541
$305,757
184,741
539,466
6,385
5
39
8
1
7
39
1
100
2
29
18
52
1
$2,606,339
100
$1,036,349
100
Sales to related parties are based on regular selling prices and collection terms, expect for disposal of properties
and technical service, which were in accordance with the underlying contracts.
19. LONG-TERM LEASES
TSMC leases from ITRI the land, building and certain machinery and equipment of its first manufacturing facility
under agreements that will expire in March 2002. The annual rent and other related charges under such
agreement amount to $170,656. The agreements can be renewed upon their expiration.
TSMC leases the lands where its second through fourteen manufacturing facilities are located from the Science-
Based Industrial Park Administration. These agreements will expire on various dates from March 2008 to
November 2019 and have annual rentals aggregating $172,000. The agreements can also be renewable upon
their expiration.
TSMC-North America leases its office premises and certain equipment under a non-cancelable operating
agreement, which will expire in September 2020. TSMC Europe entered into an office lease agreement premise,
which will expire in 2004; annual rental is $57,379.
101
Future annual minimum rentals under the aforementioned leases are as follows:
Year
2001
2002
2003
2004
2005
2006-2020
Amount
$433,792
308,386
268,387
271,116
269,068
1,990,581
$3,541,330
20. PLEDGED OR MORTGAGED ASSETS
Certain assets had been pledged or mortgaged as collateral for short and long-term loan, derivative financial
instruments, letter of credit, customs duties, and guarantee deposits for foreign workers are as follows:
Cash - for revolving credit agreement
Short-term investments
Properties (net) - for bank loans
2000
1999
$-
$3,161,693
937,428
-
7,171,081
46,343,950
$8,108,509
$49,505,643
Other than the collateral stated above, all of WaferTech LLC,'s assets (in US$1,243,996 thousand) is secured for
the long-term bank loans under the credit facility.
21. COMMITMENTS AS OF DECEMBER 31, 2000
The commitments as of December 31,2000 are as follows:
a. Under a Technical Cooperation Agreement with Philips, as amended on May 12, 1997, TSMC shall pay
technical assistance fee at a percentage of net sales, as defined in the agreement, of certain products. The
agreement shall remain in force up to July 9, 2007 and thereafter be automatically renewed for successive
periods of three years. Under the amended agreement, the fee is subject to deduction by the amounts TSMC
pays to any third party for settling any licensing/infringement issue after the first five-year period of the
amended agreement, provided that the fee after reduction will not be below a certain percentage of the net
selling price.
b. Subject to certain equity ownership and notification requirements, Philips and its affiliates can avail
themselves each year up to 30% of TSMC's production capacity.
c. Under a Submicron Technology License Agreement with ITRI, TSMC shall pay license fees of $129,400
(including 5% value-added tax) to ITRI plus royalty fee at an agreed percentage of net sales of certain
products through December 31, 2000 as amended. In addition, under a technical cooperation agreement with
ITRI, TSMC shall reserve and allocate up to 35% of its production capacity for use by the Ministry of
Economic Affairs (MOEA) or any other party designated by the MOEA.
d. Under several foundry agreements, TSMC shall allocate a portion of its production output for sale to certain
major customers from whom guarantee deposits of US$213,865 thousand had been received as of December
31, 2000.
e. Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. dated March 30,
1999, the parties agreed to: (a) form a joint venture company to be named Systems on Silicon Manufacturing
Company Pte Ltd. (SSMC) for the purpose of constructing an integrated circuit foundry in Singapore, (b) set
SSMC's total authorized capital at about US$1.2 billion, and, (c) allow TSMC to invest 32% of SSMC's capital.
102
TSMC and Philips committed to buy a certain percentage of the production capacity of SSMC. If any party
defaults on the agreement and the capacity utilization of SSMC falls below a certain percentage of its total
capacity, the defaulting party should compensate SSMC for all related unavoidable costs.
f. Under a Technical Cooperation Agreement with SSMC entered into on May 12, 1999, SSMC shall
compensate TSMC for technology service provided to SSMC. The compensation shall be a certain
percentage of net selling prices of certain products sold by SSMC. The agreement will remain in force for ten
years and be automatically renewed for successive periods of five years unless predetermined by either party
under certain conditions.
g. Under a Technical Transfer Agreement with National Semiconductor Corporation ("National") entered into on
June 27, 2000, TSMC shall receive payments for the technology transferred to National. The agreement will
remain in force for ten years. After expiration, this agreement will be automatically renewed for successive
periods of two years unless pre-terminated by either party under certain conditions.
h. TSMC entered into a Manufacturing Agreement with Vanguard International Semiconductor Corp. ("VIS").
VIS agrees to reserve certain capacity to manufacture for TSMC certain devices on logic or other technologies
required by TSMC's customers, at discounted actual setting prices as agreed by the parties. VIS shall return
certain amount of the Bond without any interest to TSMC for some wafers ordered by TSMC. The contract
will remain in force for five years.
i. Under a management agreement, InveStar capital Inc. and InveStar capital Inc. II., (ISC) of the Cayman
Islands provides investment and administrative services to TSMC. ISC should receive quarterly, starting from
October 1, 1996, a management fee of 2% each year of total weighted average paid-in capital and capital
surplus of TSMC, excluding retained earnings and losses.
j. WaferTech had recorded a reserve of US$16,000 thousand for a litigation arising from a charge by certain
contractors that Wafertech caused the contractors to incur additional labor and material costs outside the
contracts. The reserve is reflected in accrued construction and equipment payable with the offset to
construction in progress. On January 19, 2000, WaferTech entered into a settlement agreement with one of
the construction contractors in the amount of US$10,750 thousand. Payment of the settlement amount will be
made in four installments throughout fiscal year 2000. The remaining accrued reserve of US$5,250 thousand
is sufficient for payments to the other construction contractors.
k.
In 1996, WaferTech adopted an Executive Incentive Plan, which was amended in 1997. Under the 1997
amendment, the Board of Directors approved the Senior Executive Incentive Plan and the Employee Incentive
Plan ("Plan") under which officers, key employees and nonemployee directors may be granted option rights.
However, WaferTech is a limited liability company and does not have shares of stock. Thus, each option right
granted under the Plan provides grantees rights to buy ownership interests in WaferTech. The Plans also
provides for approximately 6% of the total ownership interests to be available for grant, represented by 15.15
million-option rights. For option rights granted to date, the option purchase price exceeded fair value as of the
date of the grant. While WaferTech may grant employees option rights that are exercisable at different times
or within different periods, it has generally granted option rights which are exercisable on a cumulative basis in
annual installments of 25% each on the first, second, third, and fourth anniversaries of the date of grant.
103
The following table summarizes information about the Plans:
Outstanding Option Rights
Option Rights
Number of
Exercise price
Balance, December 31, 1998
Options granted
Option price > fair market value
Options exercised
Options cancelled
Balance, December 31, 1999
Additional option rights authorized
Options granted
Option price > fair market value
Options exercised
Options cancelled
Available for Grant
Option Rights
6,400,252
7,099,748
(3,084,305)
3,084,305
-
(1,119,323)
838,650
(838,650)
4,154,597
1,650,000
8,226,080
-
(3,203,302)
3,203,302
-
1,180,871
(3,411,867)
(1,180,871)
Balance, December 31, 2000
3,782,166
6,836,644
These options will expire if not exercised at specific dates between May 2006 to December 2010.
(US$)
$0.74
0.86
0.74
0.74
0.78
-
1.86
0.74
1.09
1.23
l. WaferTech, LLC was assessed by the Department of Revenue of the State of Washington deficiency excise
taxes of approximately US$8,800 thousand. WaferTech, LLC intends to appeal the assessment. As of
December 31, 2000, WaferTech, has recorded a reserve that management believes is sufficient to address
any exposure related to this tax assessment.
m. TSMC-North America started a stock appreciation right program whereby the employees received cash
bonuses based on the appreciation of the quoted market price of the shares of stock of TSMC.
Compensation expenses are recorded based on the difference between the grant price and market price at
the end of each period. This expense is recognized ratably over the vesting period and adjusted based on
period fluctuations in the stock. In view of depreciation of the stock from December 1 to December 31, 2000,
TSMC-North America did not have any compensation expense or liability related to this program.
n. As of TSMC provided a guarantee for loans of US$268,000 thousand and US$40,000 thousand obtained by
TSMC Development, Inc. and TSMC-North America.
o. Unused credit lines for TSMC as of December 31, 2000 were approximately $250,338.
22. ADDITIONAL DISCLOSURES
The followings are the additional disclosure requirements for TSMC and affiliates pursuant to SFC requirements:
a. Financing provided to other parties: Please see table 1 attached.
b. Collateral provided to other parties: Please see table 2 attached.
c. Marketable Securities held: Please see table 3 attached.
d. Balance of marketable securities acquired and disposed of, exceeding 100 million or 20% of the issued
capital: Please see table 4 attached.
e. Acquisition of properties exceeding 100 million or 20% of the issued capital: Please see table 5 attached.
f. Disposal of properties exceeding 100 million or 20% of the issued capital: None.
g. Transaction of purchase or sales with related parties amounting to more than 100 million or 20% of the issued
capital: Please see table 6 attached.
h. Receivables from related parties amounting to more than 100 million or 20% of the issued capital: Please see
table 7 attached.
104
i.
Information regarding names, locations and others of investee on which the Company exercises significant
influences: Please see table 8 attached.
j. Transactions of derivative financial instruments:
The relevant information on the derivative financial instruments entered into by the Company and subsidiaries
are as follows:
1) Outstanding forward exchange contracts as of December 31, 2000:
Contract Amount
Currency
(Thousand)
Fair Value
(Thousand)
Settlement Date
(Thousand)
Maturity Amount
Buy
Buy
Buy
Sell
Sell
Sell
US$
EUR
JPY
US$
US$
US$
US$
EUR
JPY
US$
US$
US$
60,000
28,968
42,772
106,993
156,875
365,000
NTD 1,978,998
Jan. 2001
NTD 1,989,006
US$
27,080
Jan. to Sep. 2001
US$
26,823
374
US$
NTD 3,582,959
Jan. 2001
Jan. to Feb. 2001
NTD 5,100,386
Jan. 2001
374
US$
NTD 3,553,080
NTD 5,091,560
NTD 12,105,459
Jan. to Dec. 2001
NTD12,032,465
Receivables from forward exchange contracts (shown in the balance sheet as part of "Other current assets"
account) as of December 31, 2000 aggregated to $119,227 and payables from forward exchange contracts
(shown in the balance sheet as part of "Other current liabilities" account) aggregated to $180,256 as of
December 31, 2000. Net exchange gains for the year ended December 31, 2000 was $266,393 .
The net assets or liabilities that have been hedged by the above forward exchange contracts are as follows:
Accounts receivable
Payable to contractors and equipment suppliers
Amount (Thousand)
2000
US$
US$
JPY
EUR
813,685
571,332
21,237,708
62,480
2) Interest rate swaps
TSMC has entered into interest rate swap transactions to hedge exposure to rising interest rates on its floating
rate long-term bank loans. These significant transactions are summarized as follows:
Contract Date
April 28, 1998
April 29, 1998
June 26, 1998
June 26, 1998
Period
May 21, 1998 to May 21, 2003
May 21, 1998 to May 21, 2003
June 26, 1998 to June 26, 2003
July 6, 1998 to July 6, 2003
Amount
$2,000,000
1,000,000
1,000,000
1,000,000
Interest expenses on these transactions for the years ended December 31, 2000 was $113,683.
3) Option contracts
Outstanding option contracts as of December 31, 2000 were as follows:
Contract Amount Carrying
Contract
Currency (Thousands)
Value Fair Value
Strike Price
Maturity
Put option sell EUR
Call option sell US$
Call option sell US$
Put option buy US$
EUR
US$
US$
US$
525,537
203,500
20,000
15,000
$-
($189,735)
0.8870~0.9680(US$/EUR) May 2001
-
-
-
(264,885)
107.77~110.5(US$/JPY)
Mar. 2001
(1,485)
32.42(US$/NTD)
37
110~110.5(US$/JPY)
Jan. 2001
Feb.2001
105
For the year ended December 31, 2000, TSMC realized premium income of $116,248 on foreign currency
options written and incurred premium expenses of $108,133 on foreign currency options bought.
4) Transaction risk
a) Credit risk. The banks, which are the counter-parties to the foregoing derivative financial instruments, are
reputable financial institutions. Management believes its exposures related to the potential default by
those counter parties are low.
b) Market price risk. The Company is exposed to market risks arising from changes in currency exchange
rates due to U.S. dollar-denominated accounts receivable, Yen-dominated accounts payable, Euro-
denominated accounts payables, and U.S. dollar-denominated debt related to its importation of materials
and machinery and equipment and long-term bank loans. The Company enters into forward contracts and
option contracts to manage its exposures. The Company uses interest rate swap contracts with banks to
principally manage the risks arising from the changes in interest rates of its obligations. It enters into
financial derivative contracts based on analysis of specific and known economic exposures and by policy
prohibits entering into such contracts for trading purposes. Its hedging strategy is to use financial
instruments having negative correlation to fair value of the hedged items as hedging instruments and
periodically evaluates the effectiveness of these instruments as hedges of its interest rate exposures.
c) Liquidity and cash flow requirements. The cash flow requirements with respect to the Company's
derivative financial instruments are as follows: (i) forward contracts - the net differences between the spot
rates and contracted forward rates, (ii) options - the exercise price but the options may not have to be
exercised at all in cases where the strike price is higher than the related market price at exercise dates,
and (iii) interest rate swap agreements - equal to the net difference between the interest receivables and
payables under the agreements.
5) Fair value of financial instruments
December 31, 2000
December 31, 1999
Carrying/
Notional
Carrying/
Notional
Amount
Fair Value
Amount
Fair Value
Nonderivative financial instruments
Assets
Cash and cash equivalents
Short-term investments
Receivables from related parties
$38,840,217
$38,840,217
$29,517,682
$29,517,682
2,351,560
2,351,560
948,726
948,726
965,397
340,938
965,397
340,938
Accounts and notes receivable
27,055,432
27,055,432
13,321,987
13,321,987
Long-term investments
Refundable deposits
Pledge time deposits
Liabilities
9,814,342
14,353,717
16,164,676
28,181,143
979,067
979,067
59,371
59,371
-
-
3,161,693
3,161,693
Short-term bank loan
Commercial paper payable
Payable to related parties
Accounts payable
Payable to contractor and equipment
suppliers
Long-term liabilities
(including current portion)
Long-term bonds
Guarantee deposits
3,833,841
-
2,606,339
8,507,827
3,833,841
-
2,606,339
8,507,827
5,026,631
94,797
1,036,349
3,273,894
5,026,631
94,797
1,036,349
3,273,894
25,550,273
25,550,273
12,593,712
12,593,712
23,390,422
29,000,000
7,086,379
23,390,422
29,035,803
7,086,379
23,390,422
20,000,000
5,185,362
22,748,831
20,222,611
5,185,362
(Forward)
106
Derivative financial instruments
Forward exchange contracts (buy)
Forward exchange contracts (sell)
Interest rate swaps
Option
2,820,220
20,802,311
1,601
-
2,887,126
20,788,804
234,017
(456,068)
2,372,219
3,998,698
7,488
6,946
2,306,638
3,998,108
7,488
6,946
Fair values of financial instruments were determined as follows:
a) Short-term financial instruments - carrying values.
b) Short-term investments - market values.
c) Long-term investments - market value for listed companies and net equity value for the others.
d) Refundable deposits and guarantees deposits - carrying values.
e) Long-term liabilities - based on forecasted cash flows discounted at interest rates of similar long-term
liabilities. Long-term bonds payable is discounted at present value. Fair values of other long-term
liabilities are also their carrying values as they use floating interest rates.
f) Derivative financial instruments - based on outright forward rates and interest rate in each contract.
The fair values of non-financial instruments were not included in the fair values disclosed above. Accordingly,
the sum of the fair values of the financial instruments listed above are not equal the fair value of the Company.
23. SEGMENT FINANCIAL INFORMATION
a. Geographic information:
Overseas
Domestic
Elimination Consolidated
Adjustments and
2000
Sales to unaffiliated customers
$- $166,197,604
$- $166,197,604
Transfers between geographic areas
14,451,231
30,816
(14,482,047)
-
Total sales
Gross profit
Operating expenses
Non-operating income
Non-operating expenses
Income before income tax
Minority interest loss
Identifiable assets
Long-term investments
Total assets
(Forward)
$14,451,231 $166,228,420
($14,482,047) $166,197,604
$3,970,099
$73,924,745
($1,379,004)
$76,515,840
(15,221,152)
6,227,936
(3,621,100)
$63,901,524
$36,786
$64,659,712 $320,273,323
($23,861,398) $361,071,637
9,814,342
$370,885,979
107
1999
Sales to unaffiliated customers
$5,193,000
$71,112,102
$-
$76,305,102
Transfers between geographic areas
975,431
4,696,218
(5,671,649)
-
Total sales
Gross profit
Operating expenses
Non-operating income
Non-operating expenses
Income before income tax
Minority interest
Identifiable assets
Long-term investments
Total assets
b. Gross export sales
Area
America
Asia
Europe
$6,168,431
$75,808,320
($5,671,649)
$76,305,102
$5,670,076
$30,069,272
($5,671,649)
$30,067,699
(7,797,710)
1,682,327
(3,324,002)
$20,628,314
$515,898
$34,807,935 $185,054,075
($591,172) $219,270,838
16,164,676
$235,435,514
2000
1999
$81,655,987
$38,418,426
42,906,968
11,360,517
16,744,842
4,778,646
$135,923,472
$59,941,914
The export sales information is presented by billed regions.
c. TSMC and subsidiaries has no single customer that accounts for at least 10% of its total sales.
108
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES
FINANCING PROVIDED TO OTHER PARTIES
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 1
No. Financing Transaction Accounts
Limitation
Maximum
Ending
Interest
Financing
Allowance
Mortgage
Transcation Amount
Provider Entry
Company
Name
Entry on
Financing
Balance for
Balance
Rate
Reasons
for Bad
the Period
(Thousand)
Debt
Item Value
Amount
Limited on
Financing
2
VIS
VIS
America
Prepaid
expenses
(Note 1)
$6,122
$1,232
-
Prepayments
for product
development
-
-
$-
$5,706
$4,400,000
(Note 2)
Note 1: Not exceeding 10% of the issued capital of VIS for each transaction entity, and also limiting to 30% of the issued capital of each transaction entity.
Note 2: Not exceeding 20% of the issued capital of VIS.
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES
COLLATERAL PROVIDED TO OTHER PARTIES
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 2
No. Collateral
Transcation Entity
Limitation
Maximum
Provider
Name
Name
0
TSMC
TSMC
Development Inc.
TSMC -
North America
Note 1: 30% of the issued capital of TSMC.
Nature
of the
Relationship
(Note 3)
3
2
on Collateral
Balance
for the
Period
(US in
Thousand)
Ending
Balance
(US in
Amount of
% of Accumulated
Amount Limited
Properties
Amount of Collateral on Collateral
Guaranteed
on Net Equity of the
(Note 1)
Thousand)
by Collateral
Latest Financial
Statement
(Note 2)
$8,865,172
$8,865,172
$8,865,172
3.39%
$38,968,094
(USD268,000)
(USD268,000)
1,323,160
1,323,160
1,323,160
0.51%
(USD40,000)
(USD40,000)
Note 2: Not exceeding 10% of the issued capital of the Company, and also limiting to the issued capital of the transaction entity with the exception of approval from BOD.
Note 3: The number 2 represent subsidiary that directly holds exceeding 50% of the issued.
The number 3 represents the investee that has over 50% of the common stocks holds by the parent company and subsidiary.
109
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES
MARKETABLE SECURITIES HELD
December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 3
Marketable Securities
Name & Type
Nature of the
Relationship
Held Company Name: TSMC
VIS - Stock
SSMC - Stock
Taiwan Mask Corp. - Stock
United Industrial Gases Co., Ltd. - Stock
Investee
Investee
-
-
W.K. Technology Fund IV - Stock
Taiwan Semiconductor
Technology Corp. - Stock
Hon Tung Ventures Capital - Stock
Crimson Asia Capital Fund - Equity
Horizon Ventures Fund - Equity
-
-
-
-
-
Held Company Name: Chi Cherng Investment
Account
December 31, 2000
Note
Shares
Carrying
% of Market Value
(Thousand)
Value
(US in
Owner- or Net Asset
ship
Value (US in
Thousand)
Thousand)
Long-term investment
556,133
$5,615,075
25
$8,642,314
Long-term investment
90
935,870
Long-term investment
6,887
32,129
Long-term investment
10,058
146,250
Long-term investment
5,000
50,000
Long-term investment
50,000
500,000
Long-term investment
12,000
120,000
Long-term investment
Long-term investment
-
-
64,547
93,304
N/A
N/A
32
2
10
7
4
19
10
Shin-Etsu Handotai Taiwan Co., Ltd. - Stock -
Long-term investment
10,500
105,000
TSMC - Stock
Major shareholder Short-term investment
2,160
98,282
Held Company Name: Kung Cherng Investment
TSMC - Stock
Major shareholder Short-term investment
4,827
226,819
Held Company Name: Po Cherng Investment
TSMC - Stock
Major shareholder Short-term investment
3,814
236,150
Held Company Name: Cherng Huei Investment
TSMC - Stock
Major shareholder Short-term investment
4,298
243,391
-
-
-
-
(Forward)
110
935,870
87,325
155,041
105,476
81,059
434,385
125,927
64,547
93,304
184,451
412,317
4,827 thousands
shares-pledged
325,790
2,814 thousands
shares-pledged
367,074
3,297 thousands
shares-pledged
Marketable Securities
Name & Type
Nature of the
Relationship
Account
December 31, 2000
Note
Shares
Carrying
% of Market Value
(Thousand)
Value
(US in
Owner- or Net Asset
ship
Value (US in
Thousand)
Thousand)
Held Company Name: Chi Hsin Investment
TSMC - Stock
Major shareholder Short-term investment
2,544
138,747
Held Company Name: Hsin Ruey Investment
TSMC - Stock
Major shareholder Short-term investment
1,006
85,850
Held Company Name: TSMC-BVI
3DFX. Interactive Inc. - Stock
-
Long-term investment
68
USD297
-
-
-
217,270
2,543 thousands
shares-pledged
85,936
USD84
Held Company Name: VIS
VIS Associates Inc. - Stock
Subsidiary
Long-term investment
23,570
$464,077
100
$464,077
PowerChip Semiconductor Inc.- Stock
Investee
Long-term investment
168,488
2,651,216
Etron Technology Inc. - Stock
-
Long-term investment
5,590
310,132
Walsin Technology Inc. - Stock
Investee
Long-term investment
31,410
414,481
MEGIC Corporation - Stock
Form Factor Inc. - Stock
United Industrial Gases Co., Ltd. - Stock
-
-
-
Long-term investment
16,500
177,000
Long-term investment
267
64,360
Long-term investment
2,313
29,250
9
3
10
15
1
2
3,315,837
278,118
414,481
177,000
64,360
29,250
Held Company Name: TSMC Partners
TSMC - ADR
Parent Company
Short-term investment
495
USD7,357
-
USD8,916
Held Company Name: InveStar Semiconductor Development Fund Inc.
Silicon Image, Inc. - Stock
Sage, Inc. - Stock
Centillium Tec. Corp. - Stock
Marvell Technology Group Ltd. - Stock
Silicon Labo Ratories - Stock
Programmable Microelectronics - Stock
Capella Microsystems, Inc. - Stock
(Forward)
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
411
140
165
USD720
USD506
USD650
-
-
-
USD2,237
USD2,065
USD3,671
Short-term investment
4,665
USD4,579
- USD102,347
Short-term investment
15
USD482
Long-term investment
1,113
USD1,500
Long-term investment
42
USD10
-
-
-
USD219
USD1,500
USD10
111
Marketable Securities
Name & Type
Nature of the
Relationship
Account
December 31, 2000
Note
Shares
Carrying
% of Market Value
(Thousand)
Value
(US in
Owner- or Net Asset
ship
Value (US in
Thousand)
Thousand)
Equator Technologies, Inc. - Stock
Scenix Semiconductor Inc. - Stock
Global Test Corp. - Stock
Chip strate - Stock
Ritch Tech - Stock
APE Fu Ding Technology - Stock
Integrated Memory Logic, Inc. -
Preferred Stock
Divio (Next wave) - Preferred Stock
SiRF Technology Inc. - Preferred Stock
Rise - preferred Stock
-
-
-
-
-
-
-
-
-
-
Long-term investment
Long-term investment
133
861
USD90
USD172
Long-term investment
11,292
USD5,559
Long-term investment
6,660
USD2,142
Long-term investment
790
USD313
Long-term investment
2,750
USD1,518
Long-term investment
1,831
USD1,809
Long-term investment
667
USD500
Long-term investment
306
USD1,333
Long-term investment
600
USD1,500
Capella Microsystems, Inc. - Preferred Stock -
Long-term investment
1,383
USD1,298
Sensory, Inc. - Preferred Stock
-
Long-term investment
1,404
USD1,250
Equator Technologies, Inc. - Preferred Stock -
Long-term investment
443
USD1,338
-
-
-
-
-
-
-
-
-
-
-
-
-
-
USD260
USD172
USD9,242
USD2,190
USD302
USD1,411
USD2,559
USD2,233
USD1,771
USD1,500
USD1,383
USD1,250
USD864
USD5,639
Light Speed Semiconductor Corporation -
Preferred Stock
Empower Tel Networks, Inc. -
Preferred Stock
Lara Technology, Inc. - Preferred Stock
-
-
-
Long-term investment
2,252
USD3,064
Long-term investment
3,840
USD5,128
- USD14,980
Long-term investment
1,544
USD772
- USD10,034
Scenix Semiconductor Inc. - Preferred Stock -
Long-term investment
1,056
USD1,361
RapidSteam - Preferred Stock
Tropian, Inc (Premier R.F., Inc.) -
Preferred Stock
Sonics, Inc. - Preferred Stock
Pico Turbo, Inc - Preferred Stock
T-Span Systems Corporation -
Preferred Stock
NanoAmp Solutions, Inc. - Preferred Stock
Formfactor, Inc. - Preferred Stock
Monolithic Power Systems, Inc -
Preferred Stock
(Forward)
-
-
-
-
-
-
-
-
112
Long-term investment
2,056
USD1,050
Long-term investment
1,758
USD2,334
Long-term investment
2,686
USD3,530
Long-term investment
1,050
USD1,250
Long-term investment
1,266
USD1,385
Long-term investment
541
USD853
Long-term investment
267
USD2,000
Long-term investment
2,521
USD2,000
-
-
-
-
-
-
-
-
-
USD2,919
USD7,286
USD7,498
USD4,110
USD1,250
USD3,653
USD1,900
USD2,747
USD2,000
Marketable Securities
Name & Type
Nature of the
Relationship
Account
December 31, 2000
Note
Shares
Carrying
% of Market Value
(Thousand)
Value
(US in
Owner- or Net Asset
ship
Value (US in
Thousand)
Thousand)
Memsic, Inc - Preferred Stock
Reflectivity, Inc. - Preferred Stock
Signia - Preferred Stock
Match Lab, Inc. - Preferred Stock
HINT Corporation - Preferred Stock
Creosys, Inc. - Preferred Stock
Incentia Design Systems, Inc. -
Preferred Stock
Rise - Bond
-
-
-
-
-
-
-
-
Long-term investment
3
USD1,500
Long-term investment
1,064
USD2,000
Long-term investment
3,000
USD1,500
Long-term investment
1,875
USD1,500
Long-term investment
1,000
USD1,000
Long-term investment
1,500
USD1,500
Long-term investment
Long-term investment
286
N/A
USD500
USD300
Held Company Name: InveStar Semiconductor Development Fund (II) Inc.
Lara Networks, Inc. - Preferred Stock
-
Long-term investment
188
USD1,500
Seagull Semiconductor, Inc. - Preferred Stock-
Long-term investment
1,389
USD1,250
Memsic, Inc. - Preferred Stock
OEpic - Preferred Stock
FabCentric, Inc. - Preferred Stock
-
-
-
Long-term investment
1,818
USD1,000
Long-term investment
Long-term investment
600
500
USD750
USD250
Equator Technologies, Inc. - Preferred Stock -
Long-term investment
770
USD1,501
NanAmp Solutions, Inc. - Preferred Stock
RapidStream, Inc. - Preferred Stock
FabCentric, Inc. - Bond
Signia Technologies, Inc. - Bond
-
-
-
-
Long-term investment
250
USD1,000
Long-term investment
246
USD1,057
Long-term investment
Long-term investment
N/A
N/A
USD250
USD500
Advanced Analogic Technology, Inc. - Bond -
Long-term investment
N/A
USD1,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
USD1,500
USD2,000
USD1,500
USD1,500
USD1,000
USD1,500
USD500
USD300
USD1,500
USD1,250
USD1,000
USD750
USD250
USD1,501
USD1,000
USD1,057
USD250
USD500
USD1,250
113
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES
BALANCE OF MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF
EXCEEDING 100 MILLION OR 20% OF THE ISSUED CAPITAL
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 4
Marketable Securities Type
Account
Transaction
Nature of the
Beginning Balance
Acquisition
Disposal
Ending Balance
and Name
Entity
Relationship
Shares
Amount
Shares
Amount
Share
Amount
Carrying
Gain
Shares
Amount
(Thousand)
(Thousand)
(US in
(Thousand)
(US in
Value
(Loss)
(Thousand)
(US in
Thousand)
Thousand)
Thousand)
Company Name: TSMC
Taipei Bank Stock
The Wan Pao Securities
Investment Trust Fund
Kwang Hua Bond Fund
Jin-sun Bond Fund
Capital Safe Income Securities
Investment Trust Fund
First Global Investment Trust
Wan Tai Bond Fund
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
President Home Run Bond Fund
Short-term
Grand Cathay Bond Fund
The GP ROC Bond Fund
Flemings Taiwan Bond Fund
National Investment Taiwan
Bond Fund
National Investment Bond Fund
United Bond Fund
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
President Investment Bond Fund
Short-term
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,750
$236,250
-
$-
8,750
$288,719
$236,250
$52,469
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,207
230,000
18,207
231,644
230,000
1,644
25,495
323,000
25,495
326,273
323,000
3,273
26,382
300,000
26,382
302,604
300,000
2,604
24,468
300,000
24,468
302,748
300,000
2,748
25,484
300,000
25,484
302,523
300,000
2,523
28,222
332,000
28,222
333,627
332,000
1,627
57,900
630,000
57,900
633,522
630,000
3,522
26,842
340,000
26,842
341,476
340,000
1,476
25,593
330,000
25,593
332,564
330,000
2,564
25,556
300,000
25,556
301,955
300,000
1,955
2,956
410,000
2,956
411,752
410,000
1,752
30,054
330,000
30,054
331,605
300,000
1,605
46,405
600,000
46,405
603,210
600,000
3,210
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$-
-
-
-
-
-
-
-
-
-
-
-
-
-
investment
Long-term
investment
Long-term
investment
VIS Stock
SSMC Stock
(Forward)
114
VIS
Investee
556,133
5,010,897
-
-
SSMC
Investee
26
360,177
64
989,690
-
-
-
-
-
-
-
-
556,133
5,615,075
90
935,870
Marketable Securities Type
Account
Transaction
Nature of the
Beginning Balance
Acquisition
Disposal
Ending Balance
and Name
Entity
Relationship
Shares
Amount
Shares
Amount
Share
Amount
Carrying
Gain
Shares
Amount
(Thousand)
(Thousand)
(US in
(Thousand)
(US in
Value
(Loss)
(Thousand)
(US in
Thousand)
Thousand)
Thousand)
Company Name: Kung Cherng Investment
TSMC Stock
Short-term
investment
Company Name: Po Cherng Investment
TSMC Stock
Short-term
investment
Company Name: Cherng Huei Investment
TSMC Stock
Short-term
investment
Company Name: Chi Hsin Investment
TSMC Stock
Company Name: TSMC Partners
TSMC ADR
Short-term
investment
Short-term
investment
-
-
-
-
-
-
-
-
-
-
984
$50,509
4,682
$219,376
839
$172,270
$43,066
$129,204
4,827
$226,819
642
88,519
3,603
206,936
430
88,166
59,306
28,860
3,814
236,150
642
88,732
4,288
239,512
632
119,571
84,853
34,718
4,298
243,391
642
87,157
2,439
124,547
537
110,211
72,957
37,254
2,544
138,747
302
USD3,703
193
USD3,654
Company Name: InveStar Semiconductor Development Fund Inc.
Empower Tel Networks, Inc. Stock
Long-term
Empower Tel
Investee
3,087
USD1,878
752
USD3,250
investment
Networks, Inc.
-
-
-
-
-
-
-
-
-
-
-
-
495
USD7,357
3,840
USD5,128
11,292
USD5,559
Global Test Corp. Stock
Long-term
investment
Company Name: VIS
The GP Bond Fund
Kwang Hua Bond Fund
Ta Chong Investment Bond Fund
National Investment Bond Fund
First Global Investment Trust
Wan Tai Bond Fund
Money Mgmt Fund
Grand Cathay Bond Fund
-
-
-
-
-
-
-
Global Test
Investee
7,500
USD2,281
3,792
USD3,278
Corp.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58,761
750,000
58,761
761,731
750,000
11,731
42,671
550,000
42,671
558,584
550,000
8,584
16,199
180,000
16,199
182,393
180,000
2,393
3,921
550,000
3,921
558,516
550,000
8,516
45,921
550,000
45,921
558,212
550,000
8,212
31,415
400,000
31,415
404,997
400,000
4,997
21,446
240,000
21,446
242,656
240,000
2,656
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Note 1: The ending balance included the recognition of the investment income (loss) by the equity method and the accumulated translation adjustment.
115
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES
ACQUISITION OF PROPERTIES EXCEEDING 100 MILLION OR 20% OF ISSUED CAPITAL
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 5
Company Name: TSMC
Properties
Transaction
Transaction
Payment Term
Transaction
Nature of the
Former Transaction Detail when
Reference
Purpose of
Other
Date
Amount
Entity
Relationship
Transacting with Related Parties
of Price
Acquisition
Commitments
Owner Relationship Transfer Amount
Determined
Date
Fab 6
Feb. 16, 2000 ~
$3,254,412
Depend on the progress
Fu Tsu
-
N/A
N/A
N/A
N/A
Public bidding Manufacturing None
and office
Dec. 31, 2000
of the construction
Construction Co. Ltd.
purpose
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES
TRANSACTION OF PURCHASE OR SALES WITH RELATED PARTIES AMOUNTING TO
MORE THAN 100 MILLION OR 20% OF THE ISSUED CAPITAL
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 6
Company Name: TSMC
Transcation
Nature of the
Entity
Relationship
Transaction Detail
Abnormal
Notes, Accounts Note
Purchase
Amount
% Collection Terms
or Sales
Transaction
Payable or
Unit
Collection
Price
Terms
Receivables
Ending
Balance
%
ITRI
It’s director is
Sales
$198,146
-
Net 45 days from
None None
$56,078
6
TSMC’s chairman
monthly closing date
Phillips and its Major shareholder
Sales
5,289,927
3
Net 30 days from
None None
643,604
68
affiliates
VIS
Investee
Purchase
6,572,110
19
invoice date
Net 45 days from
monthly closing date
None
None
(1,808,964)
(69)
116
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES
RECEIVABLE FROM RELATED PARTIES AMOUNTING TO MORE
THAN 100 MILLION OR 20% OF THE ISSUED CAPITAL
December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 7
Company Name: TSMC
Transaction Entity
Nature of the
Relationship
Ending Turnover
Overdue
Amounts Received
Allowance
Balance
Amount Management
from Dec. 31, 2000
Up-to-Date
for Bad
Debts
Phillips and its affiliates Major shareholder $643,604 27days $175,828 Accelerate demand on
$193,403
account receivables
VIS
Investee
159,890 N/A
10,080 Accelerate demand on
-
account receivables
$-
-
117
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES
INFORMATION REGARDING NAMES, LOCATIONS AND OTHERS OF INVESTEE ON WHICH THE COMPANY EXERCISES
SIGNIFICANT INFLUENCES
December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 8
Company Name: TSMC
Investee
Location
Businesses
Activity
Original Investment
Amount
Balance as of
Dec. 31, 2000
Dec. 31,
Dec. 31, Shares
%
Carrying
2000
1999
(Thousand)
Value
Net income Investment Note
Gain (Loss)
(Loss)
of the
Investee
VIS
Hsin-Chu,
IC Design and
$6,503,640
$6,503,640
556,133
25 $5,615,075 $2,573,745 $597,812
Investee
Taiwan
manufacturing
SSMC
Singapore
Manufacture
1,432,482
442,792
90
32
935,870 (1,480,190)
(473,661)
Investee
of wafer
118
Special Notes
1. Affiliates Information
(1) TSMC Affiliated Companies Chart
Unit: Shares, %
Taiwan Semiconductor Manufacturing Company, Ltd.
TSMC, North America
TSMC, Europe B.V.
TSMC, Japan K.K.
TSMC Int'l
TSMC Partners, Ltd.
Kung Cherng
Vanguard Int'l
Shareholding: 100%
Shareholding: 100%
Shareholding: 100%
Shareholding: 100%
Shareholding: 100%
Investment Ltd.
TSMC
TSMC
InveStar Semiconductor
InveStar Semiconductor
Development, Inc.
Technology, Inc.
Development Fund (I)
Development Fund (2)
Shareholding: 100%
Shareholding: 100%
Shareholding: 97%
Shareholding: 97%
WaferTech, LLC
Shareholding: 97%
Semiconductor Corp.
Shareholding:25%
Vanguard
Association Inc.
Shareholding:100%
VIS Investment Holding
Shareholding:100%
VIS Micro.
VIS America
Shareholding:100%
Shareholding:100%
Investment Co., Ltd.
Shareholding:25%
Po Cherng: 15%
Chi Cherng: 15%
Chi Hsin: 15%
Cherng Huei : 15%
Hsin Ruey: 15%
Chi Cherng
Investment Co., Ltd.
Shareholding: 25%
Po Cherng: 15%
Kung Cherng: 15%
Chi Hsin: 15%
Cherng Huei: 15%
Hsin Ruey: 15%
Chi Hsin
Investment Co., Ltd.
Shareholding: 25%
Po Cherng: 15%
Kung Cherng: 15%
Chi Cherng: 15%
Cherng Huei: 15%
Hsin Ruey: 15%
Po Cherng
Investment Co., Ltd.
Shareholding: 25%
Kung Cherng: 15%
Chi Cherng: 15%
Chi Hsin: 15%
Cherng Huei: 15%
Hsin Ruey: 15%
Cherng Huei
Investment Co., Ltd.
Shareholding: 25%
Po Cherng: 15%
Kung Cherng: 15%
Chi Hsin: 15%
Chi Cherng: 15%
Hsin Ruey: 15%
Hsin Ruey
Investment Co., Ltd.
Shareholding: 25%
Po Cherng: 15%
Kung Cherng: 15%
Chi Hsin: 15%
Chi Cherng: 15%
Cherng Huei 15%
119
(2) TSMC Affiliated Companies
December 31, 2000
Company
Date of
Place of Registration
Paid-in Capital
Business Activities
Incorporation
Unit: NT(US, NLG, JPY) $K
Jan. 18, 1988
San Jose, California, USA
US$
11,000
Marketing & Engineering support
Mar. 4, 1994
Amsterdam, The Netherlands NLG
200 Marketing & Engineering support
TSMC, North America
TSMC, Europe B.V.
TSMC, Japan K.K.
TSMC Int'l Investment Ltd.
TSMC Partners, Ltd.
TSMC Development, Inc.
TSMC Technology, Inc.
Sep. 10, 1997
Yokohama, Japan
Apr. 9, 1996
Tortola, British Virgin Islands
Mar. 26, 1998
Tortola, British Virgin Islands
Feb. 16, 1996
Delaware, USA
Feb. 20, 1996
Delaware, USA
InveStar Semiconductor Development Fund Inc.
Sep. 10, 1996 Cayman Island
InveStar Semiconductor Development Fund(II) Inc.
Aug. 25, 2000 Cayman Island
Wafertech, LLC
Po Cherng Investment Co., Ltd.
Chi Hsin Investment Co., Ltd.
Cherng Huei Investment Co., Ltd.
Hsin Ruey Investment Co., Ltd.
Kung Cherng Investment Co., Ltd.
Chi Cherng Investment Co., Ltd.
Jun. 3, 1996
Washington, USA
Jul. 6, 1998
Taipei, Taiwan
Jul. 6, 1998
Taipei, Taiwan
Jul. 10, 1998
Taipei, Taiwan
Jul. 13, 1998
Taipei, Taiwan
Jul. 14, 1998
Taipei, Taiwan
Jul. 15, 1998
Taipei, Taiwan
JPY
US$
US$
US$
US$
US$
US$
US$
NT$
NT$
NT$
NT$
NT$
NT$
120,000
Marketing & Engineering support
779,788
Investment
300
Investment
734,403
Investment
0.001
Investment
46,350
Investment
14,369
Investment
769,927 Wafer Manufacturing
400,000
Investment
400,000
Investment
400,000
Investment
400,000
Investment
400,000
Investment
400,000
Investment
Vanguard Int'l Semiconductor Corp.
Dec. 5, 1994
Hsin-Chu, Taiwan
NT$ 22,000,000
IC Design & Manufacturing
VIS Associates Inc.
VIS Investment Holding, Inc.
VIS Micro, Inc.
Sep. 24, 1996
Tortola, British Virgin Islands
Nov. 16, 1996
Delaware, USA
Nov. 21, 1996
San Jose, California, USA
Vanguard International Semiconductor- America
Apr. 24, 1996
San Jose, California, USA
US$
US$
US$
US$
23,570
IC Related Investment
6,750
IC Related Investment
200 Marketing & Engineering support
6,500
IC Design & Manufacturing
NOTE: Foreign exchange rate on the reporting date is shown below:
US$1 = NT$33.079
NLG1 = NT$13.9
JPY1 = NT$0.2892
120
(3) Business Scope of TSMC and its Affiliated Companies
TSMC and its affiliates work together to provide dedicated foundry services to our customers around the world. In addition, few of TSMC's
affiliate companies are focused on conducting investment businesses. In general, TSMC and its affiliates give each other support in
technology, capacity, marketing and services with an aim to create the maximum synergy, enabling TSMC to provide our worldwide
customers with the best dedicated foundry services worldwide. The ultimate goal of this strategy is to ensure TSMC's leading position in the
global IC market.
(4) TSMC Shareholders Representing Both Holding Comapnies and Subordinates
December 31, 2000
Unit: NT$K, except Shareholding
Reasoning Name
Shareholding (Note 2 )
Date of Incorporation
Place of Registration
Paid-in Capital
Business Activities
(Note 1)
Shares
Holding %
None
The presumed interested parties representing both holding companies and subordinates include the company's Director, the shareholders
conducting business on behavior of the company, and the shareholders holding more than 50% shares of the company.
Note 1 The same legal and natural persons apply a company name and a personal name, respectively.
Note 2 It shows the shareholdings to the holding company (excluding the holdings to the subordinates).
121
(5) Rosters of Directors, Supervisors, and Presidents of TSMC's Affiliated Companies
December 31, 2000
Company
Title
Name
Shareholding
Unit: NT$, except Shareholding
TSMC, North America
Director
F.C.Tseng
Director
Rick Tsai
President Edward C. Ross
TSMC, Europe B. V.
Director
Morris Chang
Director
Rick Tsai
Director
Quincy Lin
Director
Hans Richard Rohrer
President Hans Richard Rohrer
TSMC, Japan K. K.
Chairman Sachiaki Nagae
Director
Morris Chang
Director
F.C.Tseng
Director
Rick Tsai
Director
Makoto Onodera
Supervisor Harvey Chang
TSMC International
Director
Morris Chang
Investment Ltd.
President
F.C.Tseng
TSMC Partners, Ltd.
Director
F.C.Tseng
Director
Rick Tsai
Director
Quincy Lin
Director
Steve Tso
Director
K.C. Chen
Director
Harvey Chang
Amount
-
-
%
-
-
(TSMC holds 11,000,000 shares )
(100%)
-
-
-
-
-
-
-
-
-
-
(TSMC holds 200 shares )
(100%)
-
-
-
-
-
(TSMC holds 2,400 shares )
-
-
(TSMC holds 779,968,244 shares )
-
-
-
-
-
-
-
-
-
-
-
(100%)
-
-
(100%)
-
-
-
-
-
-
(TSMC holds 300,000 shares )
(100%)
TSMC Development, Inc.
Chairman Morris Chang
President Morris Chang
-
-
-
-
(TSMC International Investment Ltd. holds 734,403,200,000 shares) (100%)
TSMC Technology, Inc.
Chairman Morris Chang
President Morris Chang
-
-
-
-
(TSMC International Investment Ltd. holds 1,000 shares)
(100%)
(Forward)
122
Company
Title
Name
Shareholding
Unit: NT$, except Shareholding
InveStar Semiconductor
Director
Kenneth Tai
Development Fund Inc.
InveStar Semiconductor
Amount
-
%
-
(TSMC International Investment Ltd. holds 45,000,000 shares)
(97%)
Development Fund Inc. (II)
Director
Kenneth Tai
-
-
LDC
(TSMC International Investment Ltd. holds 13,950,000 shares)
(97%)
WaferTech, LLC
Director
Morris Chang
Director
Jerald Fishman
Director
Rodney Smith
Director
Jimmy Lee
Director
Rick Tsai
Director
Ronald C. Norris
Director
Steve Tso
President Steve Tso
Common Share 590,625
Common share 33,334
Common share 75,000
Common share 75,000
-
-
-
-
0.23%
0.01%
0.03%
0.03%
-
-
-
-
(TSMC Development, Inc. holds 250,646,584 Preferred Shares)
(97.98%)
Po Cherng Investment Co., Ltd.
Director
K.C. Chen (Representative of Chi Hsin Investment Co., Ltd.)
(Chi Hsin's investment NT$60,000,000)
(TSMC's investment NT$99,999,960)
Chi Hsin Investment Co., Ltd.
Director
Harvey Chang (Representative of Po Cherng Investment Co., Ltd.)
(Po Cherng's investment NT$60,000,040)
(TSMC's investment NT$99,999,960)
Cherng Huei
Director
Rick Tsai (Representative of Hsin Ruey Investment Co., Ltd.)
(Hsin Ruey's investment NT$60,000,040)
Investment Co., Ltd.
(TSMC's investment NT$99,999,960)
Hsin Ruey Investment Co., Ltd.
Director
Rick Tsai (Representative of Cherng Huei Investment Co., Ltd.)
(Cherng Huei's investment NT$60,000,000)
(TSMC's investment NT$99,999,960)
Kung Cherng
Director
F.C.Tseng (Representative of Chi Cherng Investment Co., Ltd)
(Chi Cherng's investment NT$60,000,040)
Investment Co., Ltd.
(TSMC's investment NT$99,999,960)
Chi Cherng Investment Co., Ltd.
Director
F.C.Tseng (Representative of Kung Cherng Investment Co., Ltd.)
(Kung Cherng's investment NT$60,000,000)
(15%)
(25%)
(15%)
(25%)
(15%)
(25%)
(15%)
(25%)
(15%)
(25%)
(15%)
(25%)
0.15%
Vanguard International
Chairman Morris Chang
Semiconductor Corporation
Director
Liu, Bor-Hong
(Representative of The Development Fund, Executive Yuan, R.O.C.)
Director
Liou, Ming-Jong
(Representative of The Development Fund, Executive Yuan, R.O.C.)
Director
Shih, Chin-Tay
(Representative of The Development Fund, Executive Yuan, R.O.C.)
(Forward)
(TSMC's investment NT$99,999,960)
3,240,448 shares
(The Development Fund holds 639,713,750 shares)
(29.08%)
123
Unit: NT$, except Shareholding
Company
Title
Name
Shareholding
Amount
Vanguard International
Director
Rick Tsai (Representative of TSMC)
(TSMC holds 556,133,496 shares)
Semiconductor Corporation
Director
F.C.Tseng (Representative of TSMC)
Director
Paul Chien (Representative of TSMC)
Director
Robert Hsieh (Representative of TSMC)
Director
Wu, Quintin Y.G. (Representative of USI Far East Corp.)
(USI Far East Corp. holds 155,978,533 shares)
Director
Chiao, Yu-Heng (Representative of Walsin Lihwa Corp.)
(Walsin Lihwa Corp. holds 58,827,741 shares)
Supervisor Yeh, Huey-Ching
(Representative of The Development Fund, Executive Yuan, R.O.C.)
Supervisor K. C. Chen (Representative of TSMC)
%
(25.28%)
(7.09%)
(2.67%)
Supervisor Chow, Sidney H.(Representative of Maw Chong Investment Co.,Ltd.)
(Maw Chong Investment Co.,Ltd. holds 42,992,356 shares)
(1.95%)
President Paul Chien
2,478,229 shares
0.00%
VIS Associates Inc.
Director
Morris Chang (Representative of VIS)
Director
Robert Hsieh (Representative of VIS)
Director
Paul Chien (Representative of VIS)
VIS Investment Holding, Inc.
Director
Morris Chang (Representative of VIS Associates Inc.)
Director
Robert Hsieh (Representative of VIS Associates Inc.)
Director
Paul Chien (Representative of VIS Associates Inc.)
VIS Micro, Inc.
Director
Robert Hsieh (Representative of VIS Investment Holding, Inc.)
Director
Paul Chien (Representative of VIS Investment Holding, Inc.)
Director
Stephen Pletcher (Representative of VIS Investment Holding, Inc.)
Vanguard International
Director
Rick Tsai (Representative of VIS Investment Holding, Inc.)
Semiconductor- America
Director
Paul Chien (Representative of VIS Investment Holding, Inc.)
Director
Nun-Sian Tsai (Representative of VIS Investment Holding, Inc.)
Director
Stephen Pletcher (Representative of VIS Investment Holding, Inc.)
(VIS holds 23,570,000 shares)
(100%)
(VIS Associates Inc. holds 6,750,000 shares)
(100%)
(VIS Investment Holding, Inc. holds 200,000 shares)
(100%)
(VIS investment Holding, Inc. holds 6,500,000 shares)
(100%)
124
(6) Operational Highlights for TSMC Affiliated Companies
December 31, 2000
Unit: NT$K, except EPS($)
Company
Paid-in Capital
Assets
Liabilities
Net Worth
Net Sales*
Income from
Net Income*
EPS*
Operation*
(net of tax)
(net of tax)
TSMC, North America
363,869
1,794,126
1,127,202
666,924
1,104,857
197,564
131,107
11.92
TSMC, Europe B.V.
TSMC, Japan K.K.
2,780
34,704
47,214
37,620
9,594
96,409
68,394
30,591
37,803
164,001
8,764
8,389
(14,668)
N.A.
2,261
942.23
TSMC Int'l Investment Ltd.
25,794,615
34,992,260
11,313,738
23,678,522
240,424
240,079
138,589
0.30
TSMC Partners, Ltd.
9,923
11,559,563
11,024,401
535,162
2,559
2,532
494,966
1,649.89
TSMC Development, Inc.
24,293,323
30,319,876
8,873,708
21,446,168
0
(879)
(258,770)
N.A.
TSMC Technology, Inc.
0.033
210,091
693,187
(483,097)
615,401
51,896
(121,520)
N.A.
InveStar Semiconductor
Development Fund Inc.
InveStar Semiconductor
Development Fund(II) Inc.
1,533,212
2,101,401
275,106
1,826,295
861,148
621,341
615,978
13.29
475,296
478,798
215
478,583
-
-
3,101
0.22
Wafertech, LLC
25,468,409
41,150,153
20,255,685
20,894,467
13,071,741
568,893
(168,294)
Po Cherng Investment Co., Ltd.
400,000
699,483
151,546
547,936
137,030
136,749
135,869
Chi Hsin Investment Co., Ltd.
400,000
557,084
1,083
556,001
144,212
143,971
143,951
Cherng Huei Investment Co., Ltd.
400,000
730,345
177,545
552,800
142,152
141,910
140,781
Hsin Ruey Investment Co., Ltd.
400,000
512,485
83
512,402
113,509
113,271
100,391
Kung Cherng Investment Co., Ltd.
400,000
636,089
1,083
635,006
224,167
223,649
223,915
Chi Cherng Investment Co., Ltd.
400,000
523,317
142
523,175
111,736
111,493
112,094
Vanguard Int'l
Semiconductor Corp.
22,000,000
39,696,661
17,645,880
22,050,781
19,345,762
2,939,078
2,573,745
VIS Associates Inc.
737,741
785,117
19,588
765,530
364,497
9,763
7,091
VIS Investment Holding, Inc.
211,275
244,491
19,588
224,903
371,617
17,446
14,773
VIS Micro, Inc.
6,260
11,542
3,798
7,744
29,307
1,396
863
Vanguard International
Semiconductor- America
* For the year ended December 31, 2000
203,450
232,206
15,674
216,532
342,309
16,300
14,087
N.A.
3.40
3.60
3.52
2.51
5.60
2.80
1.17
0.30
2.19
4.32
2.17
125
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD., AND
VANGUARD INTERNATIONAL SEMICONDUCTOR CORPORATION
COMBINED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2000
Representation Letter
The combined financial statements of Taiwan Semiconductor Manufacturing Company Ltd., and Vanguard
International Semiconductor Corporation for the period January 1, 2000 to December 31, 2000 were prepared in
conformity with "Regulations Governing the Preparation of Affiliates' Combined Operating Report, Combined
Financial Statements and Relationship Report" in the Republic of China, the ROC regulations governing the
preparation of financial statements of public companies and accounting standards generally accepted in the
Republic of China.
The accounting records underlying the combined balance sheet and the combined statement of income
accurately and faily reflect, in reasonable detail, the transactions of the Taiwan Semiconductors Manufacturing
Company, Ltd., its consolidated subsidiaries and Vaguard International Semiconductor Corporation. There are
no plans or intentions that may materially affect the carrying values or classifications of assets and liabilities.
Very truly yours,
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
By
MORRIS CHANG
Chairman
126
English Translation of a Report Originally Issued in Chinese
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Ltd.
We have reviewed combined balance sheets as of December 31, 2000 and the related combined statement of
income for the year then ended of Taiwan Semiconductor Manufacturing Company Ltd. and Vanguard
International Semiconductor Corporation. Our reviews was made in accordance with the Guidelines for the
Review of Combined Financial Statements of Affiliates. It is substantially less in scope than an examination in
accordance with auditing standards generally accepted in the Republic of China, the objective of which is the
expression of an opinion regarding the combined balance sheet and the combined statement of income taken as
a whole. Accordingly, we do nont express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the combined
balance sheet and the combined statement of income refered to above in order for them to be in conformity with
"Regulations Governing the Preparation of Affiliates' Combined Operating Report, Combined Financial
Statements and Relationship Report" in the Republic of China, and the ROC regulation governing the preparation
of financial statements of public company and the ROC generally accepted accounting principles.
T N Soong & Co
Taiwan, ROC
A Member Firm of Andersen Worldwide S.C.
January, 29 2001
Notice to Readers
The combined financial statements were not prepared with a view to complying with the published guidelines of
the United States Securities and Exchange Commission or the American Institute of Certified Public Accountants
("AICPA") and have not been examined or otherwise reported upon under AICPA guidelines. They are not
presented in accordance with generally accepted accounting principles in the United States of America for
consolidated financial statements.
127
English Translation of Financial Statements Originally Issued in Chinese
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND
VANGUARD INTERNATIONAL SEMICONDUCTOR CORPORATION
COMBINED BALANCE SHEET
December 31, 2000
(In Thousand New Taiwan Dollars, Except Par Value)
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)
Pledged time deposits (Note 19)
Short-term investments (Notes 2, 5 and 19)
Receivables from related parties (Note 17)
Notes receivable
Accounts receivable
Allowance for doubtful receivables (Note 2)
Allowance for sales returns and others (Note 2)
Inventories (Notes 2 and 6)
Deferred income tax assets (Notes 2 and 16)
Prepaid expenses and other current assets (Notes 17 and 21)
Total Current Assets
LONG-TERM INVESTMENTS (Notes 2 and 22)
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 8, 17 and 19)
Cost
Land and land improvements
Buildings
Machinery and equipment
Office and other equipment
Total cost
Accumulated depreciation
Advance payments and construction in progress
Net property, plant and equipment
COMBINED DEBIT (Note 2)
OTHER ASSETS
Leased assets
Deferred charges - net (Notes 2 and 9)
Deferred income taxes assets (Notes 2 and 16)
Refundable deposits
Miscellaneous
Total Other Assets
TOTAL ASSETS
Amount
%
$44,718,006
11
10,000
2,351,560
788,836
158,502
32,086,793
(1,030,286)
(2,628,901)
15,541,195
8,677,463
3,497,394
104,170,562
8,309,783
829,239
61,572,769
274,176,958
5,581,180
342,160,146
-
1
-
-
8
-
(1)
4
2
1
26
2
-
15
68
1
84
(126,277,454)
(31)
47,895,602
263,778,294
11,571,460
625,647
4,878,588
8,627,357
41,410
40,654
14,213,656
12
65
3
1
1
2
-
-
4
$402,043,755
100
128
LIABILITIES AND SHAREHOLDERS' EQUITY
Amount
%
CURRENT LIABILITIES
Short-term bank loans (Notes 10 and 19)
Payable to related parties (Note 17)
Accounts payable
Payable to contractors and equipment suppliers
Income tax payable (Notes 2 and 16)
Current portion of long-term debt (Notes 11, 12 and 13)
Accrued expenses and other current liabilities (Note 21)
Total Current Liabilities
LONG-TERM LIABILITIES
Long-term bank loans (Notes 12 and 19)
Long-term bonds (Notes 2 and 13)
Total Long-term Liabilities
OTHER LIABILITIES
Guarantee deposits (Note 21)
Accrued pension costs (Notes 2 and 15)
Deferred gain on sale-leaseback (Note 2)
Obligation under capital lease (Note 11)
Other noncurrent liabilities
Total Other Liabilities
MINORITY INTEREST IN AFFILIATES (Note 2)
$4,630,978
958,105
9,528,743
26,107,865
3,298
3,369,055
7,967,651
52,565,695
31,117,367
30,500,000
61,617,367
7,086,429
1,774,107
434,183
3,316
11,040
9,309,075
16,797,919
1
-
2
7
-
1
2
13
7
8
15
3
-
-
-
-
3
4
Total Liabilities
140,290,056
35
SHAREHOLDER'S EQUITY (Notes 2 and 14)
Capital stock - $10 par value
Authorized: 17,800,000 thousand shares
Issued: Common - 11,689,365 thousand shares
Preferred - 1,300,000 thousand shares
Capital surplus
Retained earnings:
Appropriated as legal reserve
Appropriated as special reserve
Unappropriated earnings
Unrealized loss on long-term investments
Cumulative translation adjustments
Total Shareholder's Equity
TOTAL LABILITIES AND SHAREHOLDERS' EQUITY
The accompanying notes are an integral part of the combined financial statements.
116,893,646
13,000,000
55,285,821
10,689,323
1,091,003
65,143,847
(71,564)
(278,377)
261,753,699
$402,043,755
29
3
14
3
-
16
-
-
65
100
129
English Translation of Financial Statements Originally Issued in Chinese
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND
VANGUARD INTERNATIONAL SEMICONDUCTOR CORPORATION
COMBINED STATEMENTS OF INCOME
For the Year Ended December 31, 2000
(In Thousand New Taiwan Dollars, Except combined Earnings Per Share)
GROSS SALES
SALES RETURNS AND ALLOWANCES
NET SALES (Notes 2,17 and 22)
COST OF SALES (Note 17)
GROSS PROFIT
OPERATING EXPENSES (Notes 17 and 22)
General and administrative
Marketing
Research and development
Total Operating Expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME(Note 22)
Insurance compensation
Interest
Gain on sale of short-term investments - net
Foreign exchange gain - net (Notes 2 and 21)
Premium income (Notes 2 and 21)
Technology service income
Gain on sale of long-term investments
Gain on disposal of property, plant and equipment
Other
Total Non-Operating Income
NON-OPERATING EXPENSES(Note 22)
Interest (Notes 2, 8, 17 and 21)
Equity in net losses of investee companies - net (Notes 2 and 7)
Loss on disposal of property, plant and equipment
Premium expense
Employee separatrion benefits
Bond issue cost
Other
Total Non-Operating Expenses
INCOME BEFORE INCOME TAX ( Note 22)
INCOME TAX BENEFIT (Notes 2 and 16)
INCOME BEFORE MINORITY INTEREST
MINORITY INTEREST IN LOSS OF AFFILIATES(Note 22)
COMBINED NET INCOME
COMBINED EARNINGS PER SHARE
Amount
%
$182,260,420
(3,347,516)
178,912,904
97,826,450
81,086,454
9,415,130
1,506,380
5,771,904
16,693,414
64,393,040
1,981,554
1,872,028
1,108,008
844,281
640,442
132,910
121,969
89,426
209,270
6,999,888
3,653,435
1,110,218
119,102
108,133
85,776
32,658
$661,974
5,771,296
65,621,632
1,370,909
66,992,541
(1,886,347)
$65,106,194
100
55
45
5
1
3
9
36
1
1
1
1
-
-
-
-
-
4
2
1
-
-
-
1
4
36
1
37
(1)
36
Based on weighted-average shares outstanding of 11,400,882 thousand shares in 2000
$5.71
The accompanying notes are an integral part of the combined financial statements.
130
English Translation of Financial Statements Originally Issued in Chinese
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
AND VANGUARD INTERNATIONAL SEMICONDUCTOR CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
(Amounts in Thousand New Taiwan Dollars, Except Per Share and Unless Specified Otherwise)
1. GENERAL
Taiwan Semiconductor Manufacturing Company Ltd. (TSMC), corporation incorporated in the Republic of China,
and Vanguard International Semiconductor Corporation (VIS), TSMC's 25% owned affiliated are engaged mainly
in the: (a) manufacture, sale, packaging, testing and computer-aided design of integrated circuits and other
semiconductor devices; and, (b) manufacture and design of masks.
Notice to Readers:
The combined financial statements include the consolidated accounts of TSMC plus the accounts of VIS, not a
consolidated subsidiaries of TSMC. TSMC's consolidated financial statements prepared in accordance with U.S.
generally accepted accounting principles, would not include the assets, liabilities, revenues or expenses of VIS.
TSMC's shares are listed and traded on the Taiwan Stock Exchange. On October 8, 1997, TSMC sold shares of
stock in the New York Stock Exchange in the form of American Depositary Receipts (ADRs). VIS's shares are
traded on the Republic of China (ROC) Over-the-Counter Securities Exchange starting March 25, 1998.
TSMC had acquired TSMC-Acer Semiconductor Manufacturing Corp. (TASMC). It also merged with Worldwide
Semiconductor Manufacturing Corporation (WSMC) with TSMC as the surviving company. TASMC and WSMC
were subsequently dissolved. The acquisition of TASMC and the merger with WSMC took effect on June 30,
2000, and, on that date, TSMC issued a total of 1,583,515 thousand common shares to the former shareholders
of TASMC and WSMC. The additional shares issued were based on the agreed exchange ratio of three point
nine TASMC shares and two WSMC shares for every share of TSMC. Also, the holders of the additional shares
issued have the same rights and the obligation as the holders of the previously issued common stock of TSMC.
TSMC has eleven wholly-owned subsidiaries, namely, TSMC-North America, Taiwan Semiconductor
Manufacturing Company Europe B.V (TSMC-Europe), TSMC-Japan, TSMC international Investment, TSMC
Partners, and has 25% indirectly wholly-owned subsidiaries Po Cherng Investment, Chi Hsin Investment, Kung
Cherng Investment, Chi Cherng Investment, Hsin Ruey Investment, and Cherng Huei Investment (Collectively
referred to as the "investment companies").
TSMC-North America, TSMC-Europe and TSMC-Japan are engaged mainly in marketing and engineering
support activieies. TSMC Partners and the investment companies are engaged in investments. TSMC
International Investment and its subsidiaries are engaged in investing in affairs focused on the design,
manufacture, and other related business of semiconductors. WaferTech, LLC. is a foundry, and VIS's
subsidiaries are engaged in marketing, research, development and investment.
The following diagram presents information of relations and percentage of holding shares among TSMC, VIS and
their affiliates as of December 31, 2000.
131
TSMC
25%
100%
100%
100%
100%
100%
25%
VIS
TSMC-North
Ameria
TSMC-Japan
TSMC International
Investment
TSMC-Europe
TSMC Partners
Kung Cherng
Investment etc.
100%
Vanguard
Associations Inc.
100%
VIS Investment
Holding Inc.
100%
100%
97%
97%
TSMC-
Technology
TSMC-
Development
InveStar
InveStar (II)
97%
WAFERTECH
100%
100%
VIS-Micro
VIS-America
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Combination
The combined financial statements include the accounts of TSMC and the aforementioned affiliates (hereinafter,
referred to individually or collectively as "Company"). All significant inter-company accounts and transactions
have been eliminated. Minority interests in the affiliates, including InveStar, InveStar(II), WaferTech, VIS are
presented separately in the financial statements.
The total assets and/or revenues of VIS's investment in VIS Associates Inc. and its subsidiaries are less than
10% of those of Corporation and, therefore, TSMC is not required to, and did not prepare combined financial
statement.
As stated in Note 1, TASMC, a affiliate in 1999, was dissolved by merged with TSMC on June 30, 2000,
therefore, its accounts is not include in the combined financial statements.
Cash equivalents
Government bonds acquired under repurchase agreements, with original maturity of less than three months are
classified as cash equivalents.
Short-term investments
Short-term investments are stated at the lower cost or market value. The costs of investments sold are
determined by the specific identification method.
Allowance for doubtful receivables
Allowance for doubtful receivables are provided on the basis of a review of the collectibility of individual
receivables.
Sales and allowance for sales returns and others
Sales are recognized when products are shipped to customers. Allowance and the related provision for sales
returns and others are provided based on experience. Such provision is accounted for as reduction from sales
and the related costs are deducted from cost of sales.
Inventories
Inventories are stated at the lower of standard cost (adjusted to approximate weighted average cost) or market
value. Market value represents net realizable value for finished goods and work in process, and replacement
value for raw materials, supplies and spare parts.
132
Long-term investments
Investments in shares of stock in which the Company exercises significant influences on the investee companies
are accounted for using equity method. The increase in the Company's proportionate share in the net assets of
its investee company resulting from its subscription to additional shares of stock, issued by such investee
company, at the rate not proportionate to its existing equity ownership in such investee companies, is credited to
a capital surplus account while any decrease in the Company's proportionate share in the net asset of investee
companies is debited against the existing balance of the similar capital surplus account with the difference
debited against unappropriated retained earnings.
Other stock investments are accounted by the cost method. These investments are stated at cost less decline in
market value of listed stocks or decline in value of unlisted stocks which is considered irrecoverable; such
reductions are charged to shareholders' equity or current income, respectively. Cash dividends are recognized
as income in the year received but are accounted for as reduction in the carrying value of the long-term
investment if the dividends are received in the same year that the related investments are acquired.
Investments in foreign mutual funds are stated at the lower of cost or net asset value (NAV). Write-downs of cost
and write-ups to original acquisition cost resulting from subsequent recovery in NAV are debited or credited to
shareholders' equity.
Convertible notes and stock purchase warrants are carried at cost.
The costs of investments sold are determined by the weighted average method.
The Company's proportionate share in the gains from disposal of property, plant and equipment, net of the
applicable income tax, included as part of its share in the earnings or losses of investee companies accounted for
using the equity method for the current year is transferred in to capital surplus from retained earnings. When the
Company subsequently disposed such investment in shares of stock, such capital surplus shall be transferred
back to retain earnings. Also, if an investee company has unrealized loss on long-term investment which is
evaluated by lower-of-cost-or-market method, the Company shall recognize that unrealized loss in proportion to
the Company's equity interest and recorded in an account as a component of shareholders' equity.
Gains or losses on transactions with investee companies wherein the Company owned at least 20% of the
outstanding common stock but less than a controlling interest are deferred in proportion to ownership percentage
until realized through a subsequent transaction with a third party. If the gains or losses stated above are arose
from transactions involving sales by the affiliate to the parent, an adjustment should be made in accordance with
ownership percentage.
Property, plant and equipment and rental assets
Property, plant and equipment and rental assets are stated at cost less accumulated depreciation. Major
additions, renewals and betterment, and interest expense incurred during the construction period are capitalized.
Maintenance and repairs are expensed currently.
Property, plant and equipment covered by agreements qualifying as capital leases are carried at the lower of the
present value of all minimum future rental payments, or the leased property's market value at the inception date
of the lease. The periodic rental payment made by the Company includes the purchase price of the leased
property, and the interest expense.
Depreciation is provided on the straight-line method over these estimated service lives: buildings - 5 to 55 years;
machinery and equipment - 5 to 10 years; and office and other equipment - 2 to 7 years.
Upon sale or disposal of property, plant and equipment, the related cost and accumulated depreciation are
removed from the accounts, and any gain or loss is credited or charged to income. Any such gain, less
applicable income tax, is transferred to capital surplus at the-end of the year.
Combined debits
Combined debits arosen from the business merger and the difference between the investment cost and the
133
Company's proportionate share in the net asset of the investee companies at the date of acquisition. The
combined debits are amortized using the straight-line methos over 5 to 15 years.
Deferred charges
Deffered charges, cosisting of technology, software and system design costs, bond issuance costs, credit
instruments and technology know how, are amortized over three years, five years, the term of credit instruments,
and the term of the contract valid period or economic useful lives, respectively.
Pension costs
Net periodic pension costs are recorded on the basis of actuarial caculations. Unrecognized net transition
obligation and unrecognized net gain are amortized over 25 years, and unrecognized net transition asset is
amoritized over 26 years.
Deferred gain on sale-leaseback
The gain resulting from the sale of leased property is deferred. Such deferred gain is then amortized as follows:
(a) operating lease - adjustment of rental expenses over leasing period, and (b) capital lease - adjustment of
depreciation over the estimate useful life or leasing period.
Income tax
The Company adopted inter-period tax allocation. Deferred income taxes are recognized for the tax effects of
temporary differences, unused tax credits, and operating loss carry forwards. Valuation allowance is provided for
deferred income tax assets that are not certain to be realized. A deferred tax asset or liability should, according
to the classification of its related asset or liability, be classified as current or non-current. However, if a deferred
asset or liability cannot be related to an asset or liability in the financial statements, it should be classified as
current or non-current based on the expected reversal date of temporary difference.
Adjustments of prior years' tax liabilities are added to or deducted from the current year's tax provision.
Income taxes (10%) on unappropriated earnings generated starting January 1, 1998 are recorded as expense in
the year when the shareholders have resolved that the earnings shall be retained.
Derivative financial instruments
Foreign currency forward exchange contracts are recorded in New Taiwan dollars as assets or liabilities at spot
rates on the inception dates of the contracts. The difference in the New Taiwan dollar amounts translated using
the spot rates and the amounts translated using the contracted forward rates are also recognized as premiums or
discounts on the inception dates of the forward contracts. Premiums or discounts are amortized by the straight-
line method over the terms of the forward contracts. Such amortization is recognized as income. At the balance
sheet dates, the receivables or payables arising from forward contracts are restated at the prevailing spot rates,
and the resulting differences are recognized in income. Also, the receivables and payable related to the forward
contracts are netted out, and the resulting net amount is presented as either an asset or liability.
Under interest rate swap contracts, the Company pays an amount equal to the interest rates based on notional
principal amount and receives a specified variable-rate of interest also based on the same notional principal
amount; with the notional amounts of the contracts are not exchanged. The net amounts paid or received under
the contracts are reported as adjustments to interest income or expense.
The notional amounts of the foreign currency option contracts entered into for hedging purposes are not
recognized as either assets or liabilities on the contract dates. However, amounts paid on options bought are
recognized as assets and amounts received on options written are recognized as liabilities. Such amounts are
amortized using the straight-line method over the period of the contracts and charged to current income. Gains
or losses on the exercise of the options are also recognized in current income.
Foreign-currency transactions
Foreign-currency transactions, except derivative financial instruments, are recorded in New Taiwan dollars at the
rates of exchange in effect when the transactions occur. Gains or losses resulting from the application of
different foreign exchange rates when cash in foreign currency is converted into New Taiwan dollar, or when
134
foreign-currency receivables and payables are settled, are credited or charged to income in the year of
conversion or settlement.
Translation of financial statements of foreign companies
The financial statements of the foreign subsidiaries are translated into New Taiwan dollars at the following
exchange rates: assets and liabilities-current rate; shareholders' equity-historical rates; income and expenses-
weighted average rate during the year. The resulting translation adjustments recorded as a separate component
of shareholders' equity.
Mergers
The acquisition of TASMC was accounted under the Statement of Financial Accounting Standards No. 25
"Business Combination - Purchase Method". On the other hand, the merger with WSMC was accounted for as
pooling of interest with the results of operations of WSMC included in the statement of income for the year ended
December 31, 2000.
3. SIGNIFICANT ELIMINATING ENTRIES
Company
TSMC
Account
Amount Transaction Entity
Payable to related parties
$1,808,964 VIS
1,487,181 WAFERTECH, LLC
166,063 TSMC-North America
66,343 TSMC-Europe
16,165 TSMC-Japan
4,487 TSMC-Technology
Receivable from related parties
159,890 VIS
Sales
25,728 TSMC-Technology
20,361 WAFERTECH, LLC
370,762 WSMC
30,816 WAFERTECH, LLC
17,012 VIS
Purchase
13,296,633 WAFERTECH, LLC
6,572,110 VIS
General and administrative
expenses - premium
14,095 TSMC-Technology
Marketing expenses - service
charges
118,852 TSMC-North America
Marketing Expenses - commissions
994,686 TSMC-North America
143,461 TSMC-Europe
165,087 TSMC-Japan
Deferred revenue
5,837 WAFERTECH, LLC
Gain on disposal of properties
Non-operating income
Accounts receivable
Accounts payable
Interest receivable
Notes receivable
Interest revenue
2,240 VIS
5,604 VIS
1,670 TASMC
768,677 TASMC
128,594 TSMC-Technology
330,790 TSMC-Technology
24,181 TSMC-Technology
WSMC
TSMC International
Investment
(Forward)
135
TSMC - Partners
TSMC - Technology
Deferred revenue
Royalty revenue
Notes receivable
Deferred revenue
Licensing fee
Sales
Other receivable
10,791,704 TSMC International Investment
491,733 TSMC International Investment
11,313,018 TSMC International Investment
40,962 WAFERTECH, LLC
13,323 WAFERTECH, LLC
63,727 WAFERTECH, LLC
17,669 WAFERTECH, LLC
4. CASH AND CASH EQUIVALENTS
Cash and bank deposits
Government bonds acquired under repurchase agreements
5. SHORT TERM INVESTMENTS
Listed stocks
Mutual funds
Less-allowance for losses
6.
INVENTORIES
Finished goods
Work in process
Raw materials
Supplies and spare parts
Less-allowance for losses
7. LONG-TERM INVESTMENTS
Shares of stocks
Equity method
VIS Associates Inc.
System on Silicon Manufacturing Pte Ltd. (SSMC)
(Forward)
136
2000
$43,194,039
1,523,967
$44,718,006
2000
$1,502,098
959,561
2,461,659
(110,099)
$2,351,560
2000
$2,174,015
11,468,169
932,576
1,681,850
16,256,610
(715,415)
$15,541,195
2000
Carrying
% of
Value
OwnerShip
464,077
935,870
1,399,947
100
32
Cost Method
Listed
Powerchip Semiconductor Corporation
Etron Technology Inc.
Taiwan Mask
Non-listed
Taiwan Semiconductor Technology
Walsin Advanced Electronics
Global Test
Megic
United Industrial Gases Co., Ltd.
Hong Tung Venture Capital
Shin-Etsu Handotai Taiwan
ChipStrate Technology
Form Factor Inc.
APE
W.K. Technology Fund IV
Programmable Microelectronics
Ritch Technology
3Dfx Interactive
Scenix Semiconductor
Equator Technologies
Capella Microsystems
Preferred stocks
Empower Tel Networks
Sonics
LightSpeed Semiconductor
Equator Technologies
Memsic
Tropian, Inc. (Premier R. F.)
Lara Networks Inc.
RapidStream
Monolithic Power System
Formfactor
Reflectivity
NanoAmp Solutions
Integrated Memory Logic
Rise Technology
Match Lab
Signia
Creosys
Scenix Semiconductor
T-Span System
SiRF Technology
Capella Microsystems
Sensory
Pico Turbo
(Forward)
2,651,216
310,132
32,129
500,000
414,481
183,896
177,000
175,500
120,000
105,000
70,854
64,360
50,222
50,000
49,619
10,338
9,826
5,697
2,978
345
4,983,593
169,634
116,752
101,368
93,908
82,689
77,209
75,151
69,708
66,158
66,158
66,158
61,281
59,845
49,619
49,619
49,619
49,619
45,023
45,829
44,105
42,949
41,349
41,349
9
3
2
19
10
10
15
12
10
7
9
1
6
4
4
9
-
2
-
-
7
7
6
2
24
5
7
6
17
1
6
3
10
2
11
22
8
2
3
1
8
6
9
137
Seagull Semiconductor
HINT Corporation
Oepic
Divio
Incentia Design Systems
FabCentric
Convertible note
Advanced Analogic Technology
Signia Technologies
Rise
FabCentric
Funds
Crimson Asia Capital
Horizon Ventures
Cumulative translation adjustments
41,349
33,079
24,809
16,540
16,539
8,270
1,705,685
41,349
16,540
9,924
8,270
76,083
64,547
93,304
157,851
8,323,159
(13,376)
$8,309,783
14
5
-
4
2
-
-
-
-
-
-
-
-
The carrying values of investments accounted for using the equity method and the related investment losses for
the year ended December 31 2000 were based on audited financial statements in the same year.
Equity in net losses were as follows:
VIS Associate
SSMC
TASMC
Information on long-term investments is as follows:
Market value of listed stocks
Equity in the net assets of unlisted stocks
Net asset value of funds
8. PROPERTY, PLANT AND EQUIPMENT
Accumulated depreciation consists of the following:
Land improvements
Buildings
Machinery and equipment
Office and other equipment
2000
$325,227
473,661
311,330
$1,110,218
2000
$3,681,280
7,506,791
157,851
2000
$64,006
13,542,134
109,889,527
2,781,787
$126,277,454
138
Information on the status of the construction of the manufacturing facilities of TSMC, VIS as of December 31,
2000 is as follows:
Manufacturing Plant
Estimated Cost Accumulated Expenditures Expected Date of Start of Operations
TSMC's Fab 6
TSMC's Fab 7
TSMC's Fab 8
$76,889,000
22,540,400
28,314,300
$67,565,100 March 2000
11,121,100 March 2001
15,217,800 March 2001
TSMC's Fab 12 - 1st stage
38,280,800
21,372,000 November 2001
TSMC's Fab 14 - 1st stage
VIS's Fab 2
9,711,000
6,912,000
7,946,600 May 2002
260,448
January 2003
Interest expense capitalized for the year ended December 31, 2000 was $614,817.
9. DEFERRED CHARGES - NET
Software and system design costs
Technology licensing fee
Patent
Technology know how
Bond issue costs
Others
10. SHORT-TERM LOANS
Loan for import of materials, US$ 24,098 thousand, repayable by October 2001,
annual interest 7.13%-7.48%
Secured loan, repayable by October 2000, annual interest of 5.8%
Loan secured by mortgage and credit, US$ 105,942 thousand, repayable by December 2001,
annual interest 7.53%~9.25%
Unused credit lines as of December 31, 2000 were $8,079,625 and US$41,000 thousand.
11. OBLIGATION UNDER CAPITAL LEASE
Repayable through between June 30, 2001 and 2003
Current portion
2000
$1,550,539
2,172,095
675,302
157,500
150,795
172,357
$4,878,588
2000
$797,137
329,375
3,504,466
$4,630,978
2000
$54,371
(51,055)
$3,316
139
12. LONG-TERM BANK LOANS
Loans secured by mortgage-US$ 705,564 thousand repayable by March 2005,
interest at 6.91% ~ 7.663% in 2000
Loans for facility and import of equipment-Repayable in semi-annual installments
Starting from November 1999 to June 2004, floating Interest 6.35%
Loans for import of equipment-Repayable in semi-annual installments
Starting from October 2000 to October 2005, Interest at 6.42%
Loans for import equipment-Repayable in semi-annual installments starting from
February 2000 to February 2005, Interest at 6.505% ~ 6.765%
Loans for import of equipment-Repayable in semi-annual installments starting from
July 1999 to July 2004, Interest at 6.63% ~ 6.765%
Loans for import of equipment-Repayable in semi-annual installments starting from
February 1998 to February 2003, interest at 6.755% ~ 6.765%
Loans for import of equipment-Repayable in semi-annual installments starting from
May 1997 to May 2002, interest at 6.755%~6.765%
Loans for import of equipment-Repayable in semi-annual installments starting from
January 2003 to July 2007, Interest at floating rate 6.755%~6.765%
Current portion
2000
$23,339,367
5,460,000
3,640,000
328,000
292,000
184,000
112,000
330,000
33,685,367
(2,568,000)
$31,117,367
Bonds and loan agreements require, except for foreign currency loan, among other things, the maintenance of
specific financial ratios. As of December 31, 2000, the company was in compliance with those ratios.
Unused credit lines as of December 31, 2000 were $ 70,000 and US$ 62,436 thousand.
13. LONG-TERM BONDS
Domestic unsecured bonds:
Repayable in March 2003, 7.71% annual interest payable semi-annually.
Repayable in October 2002 and 2004, 5.67% and 5.95% annual interest payable annually,
respectively.
Repayable in December 2005 and 2007, 5.25% and 5.36% annual interest payable annually,
respectively.
Repayable in annual installments from November 6, 2000 to November 6, 2003, interest at
6.59%, guaranteed by financial instruments.
Current portion
14. SHAREHOLDERS' EQUITY
2000
4,000,000
10,000,000
15,000,000
2,250,000
31,250,000
(750,000)
$30,500,000
According to the ROC Company Law, capital surplus can only be used to offset a deficit or transferred to capital.
TSMC's Articles of Incorporation provide that the following shall be appropriated from the annual net income (less
any deficit):
a. 10% legal reserve;
140
b. Special reserve according to t he relevant laws or the regulating authorities;
c. Bonus to directors and supervisors and to employees equals to 1% and at least 1% of the remainder,
respectively;
d. Dividends to shareholders of preferred stock equal to 3.5% annual rate, based on outstanding period;
e. These appropriations and the disposition of the remaining net income should be resolved by the shareholders
in the following year and given effect to in the financial statements of that year.
The aforementioned appropriation for legal reserve shall be made until the reserve equals aggregate par value of
TSMC's outstanding capital stock. The reserve can only be used to offset a deficit; or, when it has reached 50%
of the aggregate par value of TSMC's outstanding capital stock, up to 50% thereof can be distributed as stock
dividend.
TSMC issued nonpublic 1,300,000 thousand preferred stock - Series A to certain investors. The following are the
rights and obligations of the holders of the preferred stock and other terms and conditions.
a. Entitled to receive cumulative cash dividends at an annual rate of 3.5%.
b. Not be entitled participating any additional shares of stock upon transfer of unappropriated earnings and
capital surplus to stock.
c. Have priority over the holders of common shares to the assets of the Corporation available for distribution to
stockholders upon liquidation or dissolution of TSMC Corporation; however, the preemptive rights to the
assets shall not excess the issue value of the shares.
d. Have voting rights similar to that of the holders of common stock.
e. No right to convert their shares into common stock. The preferred shares will be redeemed within thirty
months from its issuance. The holders will have the foregoing rights and TSMC's related obligations will
remain the same until the preferred shares are actually redeemed by TSMC.
VIS's Articles of Incorporation provide that the following shall be appropriated from the annual net income after
deducting any deficit and 10% legal reserve:
a. Special reserve;
b. 1% as bonus to directors and supervisors;
c. At least 1% of the remainder as bonus to employees.
These appropriations and the disposition of the remaining net income should be resolved by the shareholders in
the following year and given effect to in the financial statements of that year.
The aforementioned appropriation for legal reserve shall be made until the reserve equals aggregate par value of
outstanding capital stock. The reserve can only be used to offset a deficit; or, when it has reached 50% of the
aggregate par value of outstanding capital stock, up to 50% thereof can be distributed as stock dividend.
The Company shall record a special reserve of $1,091,003 from unappropriated retained earnings equivalent to
the net debit balance of any item, other than a deficit, in the shareholders' equity as of December 31, 1999. The
special reserve will be adjusted in proportion to the change in the net debit balance of any item in the
shareholders' equity.
Pursuant to existing regulations promulgated by the Securities and Futures Commission, a special reserve
equivalent to the debit balance of any account shown in the shareholders' equity section of the balance sheets,
other than the deficit, shall be made from unappropriated retained earnings. The special reserve shall be
adjusted accordingly based on the debit balance of such accounts as at year-end.
Under the Integrated Income Tax System that became effective on January 1, 1998, resident shareholders are
allowed a tax credit for the income tax paid by the Company on earnings generated starting January 1, 1998. An
Imputation Credit Account (ICA) is maintained by the Company for such income tax and the tax credit allocated
to each shareholder. The maximum credit available for allocation to each shareholder cannot exceed the
balance shown in the ICA on the date of distribution of dividends.
141
15. PENSION PLAN
TSMC and its affiliates has a pension plan for all regular employees, which provides benefits based on length of
service and average monthly salary for the final six months prior to retirement.
The companies make monthly contributions, equal to 2% of salaries to a pension fund is administered by the
pension fund monitoring committee and deposited in the committee's name in the Central Trust of China. VIS's
pension cost accrues at a percentage (currently 6%) of salaries and wages.
Pension information are summarized as follows:
a. Components of pension cost
Service cost
Interest cost
Projected return on plan assets
Amortization
b. Reconciliation of the fund status of the plan and accrued
pension cost
Benefit obligation
Vested benefit obligation
Nonvested benefit obligation
Accumulated benefit obligation
Additional benefits based on future salaries
Projected benefit obligation
Fair value of plan assets
Funded status
Unrecognized prior service cost
Unrecognized net transitional assets
Unrecognized net transitional obligation
Unrecognized net gain
Additional liability
Accrued pension cost
c. Actuarial assumptions
Discount rate used in determining present values
Future salary increase rate
Expected rate of return on plan assets
d. Contributions to pension fund
e. Funds transferred from TASMC and WSMC
f. Payments from pension fund
16. INCOME TAX
2000
$434,590
104,711
(32,397)
5,594
$512,498
$-
830,688
830,688
1,703,596
2,534,284
(760,627)
1,773,657
-
7,511
(165,991)
157,189
-
$1,772,366
6%
6%
6%
$144,417
$173,339
$1,458
a. A reconciliation of income tax expense - current before tax credits and income tax expense on income before
income tax at statutory rate is shown below:
142
Income tax expense on "income before income tax" at statutory rate (20%)
Tax-exempt income
Temporary difference
Permanent difference
Assess additional income tax on the unappropriated earning
Income tax expense - current
b.
Income tax credits as of December 31, 2000 consists of:
Income tax expense - current before tax credits
Tax credits
Net change in deferred income tax assets (liabilities) for the period
Investment tax credits
Loss carried forward
Temporary differences
Others
Valuation allowance
Adjustment of prior years' taxes
c. Deferred income tax assets (liabilities) consisted of the following:
Current
Investment tax credits
Loss carried forward
Accrued liabilities and others
Valuation allowance
Noncurrent
Investment tax credits
Loss carried forward
Interest expense
Depreciation
Deferred revenue
Others
Valuation allowance
d.
Integrated income tax information:
Balances of the imputation credit account
TSMC
VIS
2000
($13,261,804)
7,902,733
(176,027)
43,995
(88,024)
($5,579,127)
2000
($5,579,127)
5,551,970
(27,157)
3,151,627
43,800
(234,704)
(73,559)
(1,678,791)
189,693
$1,370,909
2000
$9,139,156
67,478
56,016
9,262,650
(585,187)
$8,677,463
$14,086,176
1,821,125
45,008
(56,033)
46,077
(589,858)
15,352,495
(6,725,138)
$8,627,357
2000
$5,888
$610
143
TSMC and VIS's expected and actual creditable ratio as of December 31, 2000 were 0.009% and 7.18%,
respectively.
The imputation credit allocated to each shareholder shall be based on the balance in the ICA on the date of
distribution of dividends; thus the expected creditable ratio for 2000 may be adjusted according to the
difference between the expected and actual imputation credit allowed under the regulation.
e. The unappropriated retained earnings of TSMC as of December 31, 2000 included the earnings generated up
to December 31, 1997 of $4,827.
The effective tax rates for deferred income tax of TSMC and its affiliates as of December 31, 2000 were
7.54%, and 20%~40%, respectively.
Unused investment tax credits arising from investments in machinery and equipment, and research and
development expenditures as of December 31, 2000 will expire as follows:
Year
2001
2002
2003
2004
Loss Carried Forward
Tax Credits
337,390
1,030,365
5,694,914
2,380,345
4,732,617
5,468,790
6,266,645
6,757,280
$9,443,014
$23,225,332
The income from the following projects and services are exempt from income tax:
Tax-Exemption Period
TSMC's expansion of first manufacturing plant, second manufacturing plant -
modules A and B, third manufacturing plant, and fourth manufacturing plant
1997 to 2000
TSMC's expansion of first manufacturing plant,second manufacturing plants-
modules A and B, third manufacturing plant and fourth manufacturing plant,
and fifth manufacturing plant
VIS's original investment
VIS's first expansion of manufacturing plant
1999 to 2002
1995 to 2000
2000 to 2003
TASMC is entitled to an income tax exemption for a period of four years for the income generated. TASMC
decided to commence such tax exemption from January 1, 1998 to December 31, 2000.
The tax authorities have examined income tax returns of TSMC through 1996 and income tax returns of VIS,
WSMC and TASMC through 1997. However, TASMC is contesting the assessment of tax authority for the
years of 1995 to 1997.
17. RELATED PARTY TRANSACTIONS
TSMC and VIS have business transactions with the following related parties:
a.
Industrial Technology Research Institute (ITRI), the Company's chairman is one of its directors.
b. Philips Electronics N.V., (Philips), a major shareholder of TSMC
c. Systems on Silicon Manufacturing Company Pte Ltd. (SSMC), an investee of TSMC
d. VIS America, an investee of VIS's subsidiary (VIS Associates Inc.)
e. VIS Micro, an investee of VIS's subsidiary (VIS Associates Inc.)
f. Walsin Lihwa Corporation (WLC), a shareholder and director of VIS
g. Powerchip Semiconductor Corpporation (PSC), an investee of VIS
h. Walsin Advanced Electronics (WAE), an investee of VIS.
144
The transactions with the foregoing parties in addition to those disclosed in other notes, are summarized as
follows:
During the year
Sales
Philips and its affiliates
ITRI
PSC
Purchase
PSC
Rental expenses
ITRI
Manufacturing expenses
Philips
WAE
ITRI
WLC
PSC
General and administrative expenses
ITRI
Marketing expenses
VIS Micro
ITRI
Research and development expenses
PSC
VIS America
ITRI
Purchase of machinery and equipment
WLC
VIS America
Non-operating income
SSMC
PSC
Others
(Forward)
2000
Amount
%
$5,289,927
198,146
162
$5,488,235
$379,405
3
-
-
3
1
$161,575
14
$2,137,175
403,245
23,905
1,893
1,722
$2,567,940
$14
$26,604
95
$26,699
$9,082
5,706
28
$14,816
$1,303
3,340
$4,643
$152,347
$255
38
$152,640
3
1
-
-
4
-
12
-
12
-
-
-
-
-
-
-
3
-
-
3
145
At end of year
Receivable
ITRI
Philips and its affiliates
SSMC
Prepayments and other current assets
ITRI(rental)
VIS America
Payable
Philips and its affiliates
WAE
ITRI
PSC
VIS Micro
$56,078
643,604
89,154
$788,836
$42,664
1,232
$43,896
$797,375
118,754
21,192
18,419
2,365
$958,105
7
82
11
100
1
-
1
83
12
3
2
-
100
Transactions with related parties are based on normal prices and collection or payment terms except for that VIS
America and VIS Micro perform research and development and marketing activities for VIS, respectively and VIS
pays actual expenses incurred related to such undertakings plus a 5% mark-up. The research and development
agreement between VIS and VIS America has expired in January 2000.
18. LONG-TERM LEASES
TSMC leases from ITRI the land, building and certain machinery and equipment of its first manufacturing facility
under agreements that will expire in March 2002. The annual rental and other related charges under such
agreement amount to $170,656. The agreements can be renewed upon their expiration.
TSMC leases the lands where its second through fourteen manufacturing facilities are located from the Science-
Based Industrial Park Administration. These agreements will expire on various dates from March 2008 to
November 2019 and have annual rentals aggregating $172,000. The agreements can also be renewable upon
their expiration.
VIS leases the sites of its manufacturing plant and parking lot from the Hsinchu Science-Based Industrial Park
Administration under agreements which will expire on April 2010, June 2015 and March 2018, but renewable
upon expiration. Annual rentals aggregated to $45,677.
VIS also leases machinery and equipment from Condisco Trade Inc. under operating lease agreements through
September 2001, June 2002, November and December 2002 respectively. Annual rentals aggregated to
$292,540 (US$8,263 thousand and NT$ 19,200).
TSMC-North America leases its office premises and certain equipment under a non-cancelable operating
agreement, which will expire in September 2020. TSMC Europe entered into an office lease agreement premise,
which will expire in 2004; annual rental is $57,379.
146
Future annual minimum rentals under the aforementioned leases are as follows:
Year
2001
2002
2003
2004
2005
2006-2020
Amount
$772,009
608,317
314,064
316,793
314,745
2,429,353
$4,755,281
19. PLEDGED OR MORTGAGED ASSETS
Certain assets pledged or mortgaged as collateral for short and long-term loans, derivative financial instruments,
letter of credit, customs duties, and guarantee deposits for foreign workers are as follows:
Pledged time deposits
Short-term investments
Properties (net)
2000
$10,000
937,428
16,389,623
$17,337,051
All of WAFERTECH,LLC's assets (US$1,243,996 thousand) is secured for the long-term bank loans under the
credit facility.
20. COMMITMENTS AS OF DECEMBER 31, 2000
The commitments as of December 31,2000 are as follows:
a. Under a Technical Cooperation Agreement with Philips, as amended on May 12, 1997, TSMC shall pay
technical assistance fee at a percentage of net sales, as defined in the agreement, of certain products. The
agreement shall remain in force up to July 9, 2007 and thereafter be automatically renewed for successive
periods of three years. Under the amended agreement, the fee is subject to deduction by the amounts TSMC
pays to any third party for settling any licensing/infringement issue after the first five-year period of the
amended agreement, provided that the fee after reduction will not be below a certain percentage of the net
selling price.
b. Subject to certain equity ownership and notification requirements, Philips and its affiliates can avail
themselves each year up to 30% of TSMC's production capacity.
c. Under a Submicron Technology License Agreement with ITRI, TSMC shall pay license fees of $129,400
(including 5% value-added tax) to ITRI plus royalty fee at an agreed percentage of net sales of certain
products through December 31, 2000 as amended. In addition, under a technical cooperation agreement with
ITRI, TSMC shall reserve and allocate up to 35% of its production capacity for use by the Ministry of
Economic Affairs (MOEA) or any other party designated by the MOEA.
d. Under several foundry agreements, TSMC shall allocate a portion of its production output for sale to certain
major customers from whom guarantee deposits of US$213,865 thousand had been received as of December
31, 2000.
e. Under a Shareholders Agreement entered into with Philips and EDB Investments Pte. Ltd. dated March 30,
1999, the parties agreed to: (a) form a joint venture company to be named Systems on Silicon Manufacturing
Company Pte Ltd. (SSMC) for the purpose of constructing an integrated circuit foundry in Singapore, (b) set
SSMC's total authorized capital at about US$1.2 billion, and, (c) allow TSMC to invest 32% of SSMC's capital.
147
TSMC and Philips committed to buy a certain percentage of the production capacity of SSMC. If any party
defaults on the agreement and the capacity utilization of SSMC falls below a certain percentage of its total
capacity, the defaulting party should compensate SSMC for all related unavoidable costs.
f. Under a Technical Cooperation Agreement with SSMC entered into on May 12, 1999, SSMC shall
compensate TSMC for technology service provided to SSMC. The compensation shall be a certain
percentage of net selling prices of certain products sold by SSMC. The agreement will remain in force for ten
years and be automatically renewed for successive periods of five years unless pre-terminated by either party
under certain conditions.
g. Under a Technical Transfer Agreement with National Semiconductor Corporation ("National") entered into on
June 27, 2000, TSMC shall receive payments for the technology transferred to National. The agreement will
remain in force for ten years. After expiration, this agreement will be automatically renewed for successive
periods of two years unless pre-terminated by either party under certain conditions.
h. VIS shall pay royalties under various patent/license agreements as follows:
1) ITRI - at a specific percentage of sales of certain products for five years from November 11, 1994.
2) LUCENT Technologies, Inc. - (1) at a specific percentage of net sales of certain products for five years
from January 1996; (2) at a specific amount in three installments within three years and a percentage of
net sales of certain products for three years from January 1998; (3) at a specific amount and a specific
percentage of net sales of certain products within two years from January 1998.
3) Texas Instruments Incorporated- at a specific percentage of net sales of certain products for ten years from
January 1997.
4) HITACHI Corporation - at a specific amount in semi-annual installments within five years from May 1997.
5) NEC Corporation - at a specific amount in six installments from February 1999 to 2003.
6) MITSUBISHI Corporation - at specific amount and a specific percentage of net sales of certain products
within five years from August 1999.
i. Under a management agreement, InveStar Capital Inc. and InveStar Capital Inc. II., (ISC) of the Cayman
Islands provides investment and administrative services to InveStar Semiconductor Development Fund, Inc.
and InveStar Semiconductor Development Fund, Inc(II). ISC should received quarterly, starting from October
1, 1996 and August 24, 2000 respectively, a management fee of 2% each year of total weighted average paid-
in capital and capital surplus of InveStar Semiconductor Development Fund, Inc. and InveStar Semiconductor
Development Fund, Inc.(II), excluding retained earnings and losses.
j. WaferTech, LLC. had recorded a reserve of US$16,000 thousand for a litigation arising from a charge by
certain contractors that WaferTech, LLC. caused the contractors to incur additional labor and material costs
outside the contracts. The reserve is reflected in accrued construction and equipment payable with the offset
to construction in progress. On January 19, 2000, WaferTech entered into a settlement agreement with one of
the construction contractors and paid US$10,750 thousand. The remaining accrued reserve of US$5,250
thousand is sufficient for payments.
k.
In 1996, WaferTech, LLC adopted an Executive Incentive Plan, which was amended in 1997. Under the 1997
amendment, the Board of Directors approved the Senior Executive Incentive Plan and the Employee Incentive
Plan (hereafter referred to as the Plans) under which officers, key employees and nonemployee directors
may be granted option rights appreciation rights and/or performance units. As WaferTech is a limited liability
company and does not have shares of stock. Thus, each option right granted pursuant to the Plans provides
grantees rights to buy ownership interests in WaferTech. The Plans also provides for approximately 6% of the
total ownership interests to be available for grant, represented by 15.15 million option rights. For option rights
granted to date, the option purchase price was equal to or exceeded the fair value at the date of the grant.
While WaferTech may grant employees option rights that are exercisable at different times or within different
periods, it has generally granted option rights which are exercisable on a cumulative basis in annual
installments of 25% each on the first , second, third, and fourth anniversaries of the date of grant.
148
The following table summarizes information about the Plans:
Outstanding Option Rights
Option Rights
Number of
Exercise Price
Available For Grant
Option Rights
(US$)
Balance, December 31, 1999
4,154,597
8,226,080
Additional option rights authorized
1,650,000
-
Options granted
Option price > fair market value
Options exercised
Options cancelled
Balance, December 31, 2000
(3,203,302)
3,203,302
-
1,180,871
(3,411,867)
(1,180,871)
3,782,166
6,836,644
$0.78
-
1.86
0.74
1.09
1.23
These options will expire if not exercised at specific dates between May 2006 to December 2010.
l. WaferTech, LLC was assessed by the Department of Revenue of the State of Washington deficiency excise
taxes of approximately US$8,800 thousand. WaferTech, LLC intends to appeal the assessment. As of
December 31, 2000, WaferTech, has recorded a reserve that management believes is sufficient to address
any exposure related to this tax assessment.
m. TSMC-North America started a stock appreciation right program whereby the employees received cash
bonuses based on the appreciation of the quoted market price of the shares of stock of TSMC.
Compensation expenses are recorded based on the difference between the grant price and market price at
the end of each period. This expense is recognized ratably over the vesting period and adjusted based on
period fluctuations in the stock. In view of the depreciation of the stock from December 1 to December 31,
2000, TSMC-North America did not have any compensation expense or liability related to this program.
n. TSMC provided a guarantee for loans of US$268,000 thousand and US$40,000 thousand obtained by TSMC
Development, Inc. and TSMC-North America.
o. The unused credit lines for TSMC as of December 31, 2000 was $250,338. VIS was US$6,494 thousand,
JPY376,170 thousand and EUR175 thousand.
21. FINANCIAL INSTRUMENTS
The following are the additional disclosure requirements for TSMC and its affiliates pursuant to SFC
requirements:
a. Financing provided to other parties: Please see table 1 attached.
b. Collateral provided to other parties: Please see table 2 attached.
c. Marketable Securities held: Please see table 3 attached.
d. Balance of marketable securities acquired and disposed of, exceeding 100 million or 20% of the issued
capital: Please see table 4 attached.
e. Acquisition of properties exceeding 100 million or 20% of issued capital: Please see table 5 attached.
f. Disposal of properties exceeding 100 million or 20% of issued capital: None.
g. Transaction of purchase or sales with related parties amounting to more than 100 million or 20% of the issued
capital: Please see table 6 attached.
h. Receivable from related parties amounting to more than 100 million or 20% of the issued capital: Please see
table 7 attached.
i.
Information regarding names, locations and others of investee on which the Company exercises significant
influences: Please see table 8 attached.
j. Transactions of derivative financial instruments:
The relevant information on the derivative financial instruments entered into by TSMC and its affiliates are as
follows:
149
1) Outstanding forward exchange contracts as of December 31, 2000 and 1999:
Contract Amount
Currency
(Thousand)
Fair Value
(Thousand)
Settlement Date
(Thousand)
Maturity Amount
Buy
Buy
Buy
Sell
Sell
Sell
Sell
US$
EUR
JPY
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
60,000
28,968
42,772
106,993
156,875
365,000
43,000
NTD 1,978,998
Jan. 2001
NTD 1,989,006
US$
US$
27,080
Jan. to Sep. 2001
374
Jan. 2001
US$
US$
26,823
374
NTD 3,582,959
Jan. to Feb. 2001
NTD 3,553,080
NTD 5,100,386
Jan. 2001
NTD 5,091,560
NTD 12,105,459
Jan. to Dec. 2001
NTD 12,032,465
NTD 1,413,083
Jan to Mar. 2001
NTD 1,407,809
Receivables from forward exchange contracts (shown in the balance sheet as part of "Other current assets"
account) as of December 31, 2000 aggregated to $119,227 and payables from forward exchange contracts
(shown in the balance sheet as part of "Other current liabilities" account) aggregated to $192,677 as of
December 31, 2000. Net exchange gains for the year ended December 31, 2000 was $198,035.
The net assets or liabilities that have been hedged by the above forward exchange contracts are as follows:
Accounts receivable
Payable to contractors and equipment suppliers
Amount (Thousand )
2000
US$
US$
868,522
571,332
JPY 21,237,708
EUR
62,480
2) Interest rate swaps
TSMC has entered into interest rate swap transactions to hedge exposure to rising interest rates on its
floating rate long-term bank loans. These significant transactions are summarized as follows:
Contract Date
April 28, 1998
April 29, 1998
June 26, 1998
June 26, 1998
Period
Amount (Thousand)
May 21, 1998 to May 21, 2003
May 21, 1998 to May 21, 2003
June 26, 1998 to June 26, 2003
July 6, 1998 to July 6, 2003
NTD 2,000,000
NTD 1,000,000
NTD 1,000,000
NTD 1,000,000
Interest expense on these transactions for the years ended December 31, 2000 was $113,683.
3) Option contracts
Outstanding option contracts as of December 31, 2000 were as follows:
Contract
Currency (Thousand)
Value Fair Value Strike Price
Maturity
Contract Amount Carrying
Put option sell EUR
EUR 525,537
$-
($189,735) 0.8870~0.9680(US$/EUR) May 2001
Call option sell US$
Call option sell US$
Put option buy US$
US$
US$
US$
203,500
20,000
15,000
-
-
-
(264,885) 107.77~110.5(US$/JPY)
Mar. 2001
(1,485) 32.42(US$/NTD)
37
110~110.5(US$/JPY)
Jan. 2001
Feb. 2001
For the year ended December 31, 2000, TSMC recognized premium income of $116,248 on foreign
currency options written and incurred premium expenses of $108,133 on foreign currency options bought.
150
4) Transaction risk
a) Credit risk. The banks, which are the counter-parties to the foregoing derivative financial instruments,
are reputable financial institutions. Management believes its exposures related to the potential default
by those counter parties are low.
b) Market price risk. The Company is exposed to market risks arising from changes in currency exchange
rates due to U.S. dollar-denominated accounts receivable, Yen-dominated accounts payable, Euro-
denominated accounts payables, and U.S. dollar-denominated debt related to its importation of
materials and machinery and equipment and long-term bank loans. The Company enters into forward
contracts and option contracts to manage its exposures. The Company uses interest rate swap
contracts with banks to principally manage the risks arising from the changes in interest rates of its
obligations. It enters into financial derivative contracts based on analysis of specific and known
economic exposures and by policy prohibits entering into such contracts for trading purposes. Its
hedging strategy is to use financial instruments having negative correlation to fair value of the hedged
items as hedging instruments and periodically evaluates the effectiveness of these instruments as
hedges of its interest rate exposures.
c) Liquidity and cash flow requirements. The cash flow requirements with respect to the Company's
derivative financial instruments are as follows: (i) options - the exercise price but the options may not
have to be exercised at all in cases where the strike price is higher than the related market price at
exercise dates, and (ii) interest rate swap agreements - equal to the net difference between the interest
receivable and payables under the agreements.
5) Fair value of financial instruments
Non-derivative financial instruments
Assets
Cash and cash equivalents
Pledge time deposits
Short-term investments
Receivables from related parties
Accounts receivable
Long-term investments
Refundable deposits
Liabilities
Short-term bank loans
Payable to related parties
Accounts payable
Payable to contractor and equipment suppliers
Long-term bank loans (including current portion)
Long-term bonds
Guarantee deposits
Derivative financial instruments
Forward exchange contracts (buy)
Forward exchange contracts (sell)
Interest rate swaps
Option
December 31, 2000
Carrying/
Notional Amount
Fair Value
$44,718,006
$44,718,006
100,00
2,351,560
788,836
28,586,108
8,309,783
41,410
4,630,978
958,105
9,528,743
26,107,865
34,489,738
30,500,000
7,086,429
10,000
2,351,560
788,836
28,586,108
11,345,922
41,410
4,630,978
958,105
9,528,743
26,107,865
34,489,738
30,500,000
7,086,429
2,820,220
2,887,126
22,224,708
22,201,887
1,601
-
234,017
(456,068)
151
Fair values of financial instruments were determined as follows:
a) Short-term financial instruments -- carrying values.
b) Short-term investments -- market values.
c) Long-term investments -- market value for listed companies and net equity value for the others.
d) Refundable deposits and guarantees deposits - - carrying values.
e) Long-term liabilities -- based on forecasted cash flows discounted at interest rates of similar long-term
liabilities. Long-term bonds payable is discounted at present value. Fair values of other long-term
liabilities are also their carrying values as they use floating interest rates.
f) Derivative financial instruments -- based on outright forward rates and interest rate in each contract.
The fair values of non-financial instruments were not included in the fair values disclosed above. Accordingly,
the sum of the fair values of the financial instruments listed above are not equal the fair value of the Company.
22. SEGMENT FINANCIAL INFORMATION
a. Geographic information:
Overseas
Domestic Elimination
Combined
Adjustment and
2000
Sales to unaffiliated customers
$- $178,929,916
($17,102) $178,912,904
Transfers between geographic areas
14,451,231
6,644,266
(21,095,497)
-
Total sales
Gross profit
Operating expenses
Non-operating income
Non-operating expenses
Income before income tax
Minority interest gain
Identifiable assets
Long-term investments
Total assets
b. Gross export sales
Area
America
Asia
Europe
$14,451,231 $185,574,182
($21,112,509) $178,912,904
$3,970,099
$78,336,085
($1,219,730)
$81,086,454
(16,693,414)
6,999,888
(5,771,296)
$65,621,632
$1,886,347
$64,659,712 $354,919,052
($25,844,792) $393,733,972
8,309,783
$402,043,755
2000
$84,606,754
44,921,269
12,596,580
$142,124,603
The export sales information of TSMC is presented by billed regions.
c. No single customer accounts for more than 10% of total sales.
152
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND
VANGUARD INTERNATIONAL SEMICONDUCTOR CORPORATION
FINANCING PROVIDED TO OTHER PARTIES
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 1
No. Financing Transaction Accounts
Limitation
Maximum
Ending
Interest
Financing
Allowance
Mortgage
Transaction Amount
Provider Entity
on Financing
Balance for
Balance
Rate
Reasons
for Bad
Company
Name
the Period
(Thousand)
Debt
Item Value
Amount
Limited on
Financing
2
VIS
VIS
Prepaid
(Note 1)
$6,122
$1,232
-
Prepayments
$-
-
-
$5,706
$4,400,000
America
expenses
for product
development
(Note 2)
Note 1: Not exceeding 10% of the issued capital of VIS for each transaction entity, and also limiting to 30% of the issued capital of each transaction entity.
Note 2: Not exceeding 20% of the issued capital of VIS.
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND
VANGUARD INTERNATIONAL SEMICONDUCTOR CORPORATION
COLLATERAL PROVIDED TO OTHER PARTIES
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 2
No. Collateral
Transaction Entity
Limitation
Maximum
Provider
Name
Name
0
TSMC
TSMC
Development Inc.
TSMC -
North America
Note 1: 30% of the issued capital of TSMC.
Nature
of the
Relationship
(Note 3)
3
2
on Collateral
Balance
for the
Period
(US in
Thousand)
Ending
Balance
(US in
Amount of
% of Accumulated
Amount Limited
Properties
Amount of Collateral on Collateral
Guaranteed
on Net Equity of the
(Note 1)
Thousand)
by Collateral
Latest Financial
Statement
(Note 2)
$8,865,172
$8,865,172
$8,865,172
3.39%
$38,968,094
(USD268,000)
(USD268,000)
1,323,160
1,323,160
1,323,160
0.51%
(USD40,000)
(USD40,000)
Note 2: Not exceeding 10% of the issued capital of the Company, and also limiting to the issued capital of the transaction entity with the exception of approval from BOD.
Note 3: The number 2 represent subsidiary that directly holds exceeding 50% of the issued.
The number 3 represents the investee that has over 50% of the common stocks holds by the parent company and subsidiary.
153
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND
VANGUARD INTERNATIONAL SEMICONDUCTOR CORPORATION
MARKETABLE SECURITIES HELD
December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 3
Marketable Securities
Name & Type
Nature of the
Relationship
Account
December 31, 2000
Note
Shares
Carrying
% of Market Value
(Thousand)
Value
(US in
Owner- or Net Asset
ship
Value (US in
Thousand) (Note 1) Thousand)
Held Company Name: TSMC
SSMC - Stock
Taiwan Mask Corp. - Stock
United Industrial Gases Co., Ltd. - Stock
-
-
Shin-Etsu Handotai Taiwan Co., Ltd. - Stock -
W.K. Technology Fund IV - Stock
Taiwan Semiconductor
Technology Corp. - Stock
Hon Tung Ventures Capital - Stock
Crimson Asia Capital Fund - Equity
Horizon Ventures Fund - Equity
Held Company Name: TSMC-BVI
3DFX. Interactive Inc. - Stock
Held Company Name: VIS
-
-
-
-
-
-
Investee
Long-term investment
90
$935,870
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
6,887
10,058
10,500
5,000
50,000
12,000
-
-
32,129
146,250
105,000
50,000
500,000
120,000
64,547
93,304
32
2
10
7
4
19
10
N/A
N/A
$935,870
87,325
155,041
105,476
81,059
434,385
125,927
64,547
93,304
Long-term investment
68
USD297
-
USD84
VIS Associates Inc. - Stock
Subsidiary
Long-term investment
23,570
464,077
100
464,077
PowerChip Semiconductor Inc.- Stock
Investee
Long-term investment
168,488
2,651,216
Etron Technology Inc. - Stock
-
Long-term investment
Walsin Technology Inc. - Stock
Investee
Long-term investment
MEGIC Corporation - Stock
Form Factor Inc. - Stock
United Industrial Gases Co., Ltd. - Stock
-
-
-
Long-term investment
Long-term investment
Long-term investment
5,590
31,410
16,500
267
2,313
310,132
414,481
177,000
64,360
29,250
9
3
10
15
1
2
3,315,837
278,118
414,481
177,000
64,360
29,250
Note 1: The percentage of ownership in the ended of the year are equal to the highest point of interim ownership percentage.
154
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND
VANGUARD INTERNATIONAL SEMICONDUCTOR CORPORATION
BALANCE OF MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF
EXCEEDING 100 MILLION OR 20% OF THE ISSUED CAPITAL
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 4
Marketable Securities Type
Account
Transaction
Nature of the
Beginning Balance
Acquisition
Disposal
Ending Balance
and Name
Entity
Relationship
Shares
Amount
Shares
Amount
Share
Amount
Carrying
Gain
Shares
Amount
(Thousand)
(Thousand)
(Thousand)
Value
(Loss)
(Thousand)
(Note 1)
Company Name: TSMC
Taipei Bank Stock
The Wan Pao Securities
Investment Trust Fund
Kwang Hua Bond Fund
Jin-sun Bond Fund
Capital Safe Income Securities
Investment Trust Fund
First Global Investment Trust
Wan Tai Bond Fund
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
President Home Run Bond Fund
Short-term
Grand Cathay Bond Fund
The GP ROC Bond Fund
Flemings Taiwan Bond Fund
National Investment Taiwan
Bond Fund
National Investment Bond Fund
United Bond Fund
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
Short-term
investment
President Investment Bond Fund
Short-term
System on Silicon Manufacturing
Company (SSMC) Stock
investment
Long-term
investment
(Forward)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,750
$236,250
-
$-
8,750
$288,719
$236,250
$52,469
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,207
230,000
18,207
231,644
230,000
1,644
25,495
323,000
25,495
326,273
323,000
3,273
26,382
300,000
26,382
302,604
300,000
2,604
24,468
300,000
24,468
302,748
300,000
2,748
25,484
300,000
25,484
302,523
300,000
2,523
28,222
332,000
28,222
333,627
332,000
1,627
57,900
630,000
57,900
633,522
630,000
3,522
26,842
340,000
26,842
341,476
340,000
1,476
25,593
330,000
25,593
332,564
330,000
2,564
25,556
300,000
25,556
301,955
300,000
1,955
2,956
410,000
2,956
411,752
410,000
1,752
30,054
330,000
30,054
331,605
300,000
1,605
46,405
600,000
46,405
603,210
600,000
3,210
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$-
-
-
-
-
-
-
-
-
-
-
-
-
-
SSMC
Investee
26
360,177
64
989,690
-
-
-
-
90
935,870
155
Marketable Securities Type
Account
Transaction
Nature of the
Beginning Balance
Acquisition
Disposal
Ending Balance
and Name
Entity
Relationship
Shares
Amount
Shares
Amount
Share
Amount
Carrying
Gain
Shares
Amount
(Thousand)
(Thousand)
(Thousand)
Value
(Loss)
(Thousand)
(Note 1)
Company Name: VIS
The GP Bond Fund
Kwang Hua Bond Fund
Ta Chong Investment Bond Fund
National Investment Bond Fund
First Global Investment Trust
Wan Tai Bond Fund
Money Mgmt Fund
Grand Cathay Bond Fund
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58,761
$750,000
58,761
$761,731
$750,000
$11,731
42,671
550,000
42,671
558,584
550,000
8,584
16,199
180,000
16,199
182,393
180,000
2,393
3,921
550,000
3,921
558,516
550,000
8,516
45,921
550,000
45,921
558,212
550,000
8,212
31,415
400,000
31,415
404,997
400,000
4,997
21,446
240,000
21,446
242,656
240,000
2,656
-
-
-
-
-
-
-
$-
-
-
-
-
-
-
Note 1: The ending balance included the recognition of the investment income (loss) by the equity method and the accumulated translation adjustment.
156
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND
VANGUARD INTERNATIONAL SEMICONDUCTOR CORPORATION
ACQUISITION OF PROPERTIES EXCEEDING NTD 100 MILLION OR 20% OF ISSUED CAPITAL
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 5
Company Name: TSMC
Properties
Transaction
Transaction
Payment Term
Transaction
Nature of the
Former Transaction Detail when
Reference
Purpose of
Other
Date
Amount
Entity
Relationship
Transacting with Related Parties
of Price
Acquisition
Commitments
Owner Relationship Transfer Amount
Determined
Date
Fab 6
Feb. 16, 2000 ~
$3,254,412
Depend on the progress
Fu Tsu
-
N/A
N/A
N/A
N/A
Public bidding Manufacturing None
and office
Dec. 31, 2000
of the construction
Construction Co. Ltd.
purpose
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND
VANGUARD INTERNATIONAL SEMICONDUCTOR CORPORATION
TRANSACTION OF PURCHASE OR SALES WITH RELATED PARTIES AMOUNTING TO MORE THAN NTD 100 MILLION OR 20% OF
THE ISSUED CAPITAL
For the Year Ended December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 6
Transaction
Nature of the
Entity
Relationship
Company Name: TSMC
Transaction Detail
Abnormal
Notes, Accounts Note
Purchase
Amount
% Collection Terms
or Sales
Transaction
Payable or
Unit
Collection
Price
Terms
Receivables
Ending
Balance
%
ITRI
Its director is
Sales
$198,146
-
Net 45 days from
None None
$56,078
7
TSMC’s chairman
monthly closing date
Phillips and its Major shareholder
Sales
5,289,927
3
Net 30 days from
None None
643,604
82
affiliates
Company Name: VIS
invoice date
PSC
Investee
Purchase
379,405
-
Net 45 days from
monthly closing date
None None
(18,419)
(2)
157
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND
VANUGARD INTERNATIONAL SEMICONDUCTOR CORPORATION
RECEIVABLE FROM RELATED PARTIES AMOUNTING TO
MORE THAN 100 MILLION OR 20% OF THE ISSUED CAPITAL
December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 7
Company Name: TSMC
Transaction Entity
Nature of the
Relationship
Ending Turnover
Overdue
Amounts Received
Allowance
Balance
Amount Management
from Dec. 31, 2000
Up-to-Date
for Bad
Debts
Phillips and its affiliates Major shareholder $643,604 27days $175,828 Accelerate demand on
$193,403
$-
account receivables
158
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND
VANGUARD INTERNATIONAL SEMICONDUCTOR CORPORATION
INFORMATION REGARDING NAMES,LOCATIONS AND OTHERS OF INVESTEE ON WHICH THE COMPANY EXERCISES
SIGNIFICANT INFLUENCES
December 31, 2000
(Amounts in Thousand New Taiwan Dollars, Unless Otherwise Specified)
Table 8
Company Name: TSMC
Investee
Location
Businesses
Activity
Original Investment
Amount
Balance as of
Dec. 31, 2000
Dec. 31,
Dec. 31, Shares
%
Carrying
2000
1999
(Thousand)
Value
Net income Investment Note
Gain (Loss)
(Loss)
of the
Investee
SSMC
Singapore
Manufacture
$1,432,482
$442,792
90
32
$935,870 ($1,480,190) ($473,661)
Investee
of wafer
159
2. Dividend Policy
The dividend shall be allocated according to the following principles per resolution of the meeting of
shareholders:
1) Except distribution of reserve in accordance with item 2) below, this Corporation shall not pay dividends or
bonuses when there is no profit; however, where the legal capital reserve reaches over 50% of the authorized
capital or the sums set aside as capital reserve in profitable years have exceeded 20% of such profits, this
Corporation may, for the purpose of stabilization of market prices of this Corporation’s shares, distribute the
amount in excess as dividends and bonuses. Profits may be distributed in total after taking into consideration
financial, business and operational factors. Profits of this Corporation may be distributed by way of cash
dividend and/or stock dividend. Since this Corporation is in a capital-intensive industry at the developmental
stage of its business, distribution of profits shall be made preferably by way of stock dividend. Distribution of
profits may also be made by way of cash dividend; provided however, the ratio for cash dividend shall not
exceed 50% of total distribution.
2) In case there is no profit for distribution in a certain year, or the profit of a certain year is far less than the profit
actually distributed by this Corporation in the previous year, or considering the financial, business or
operational factors of this Corporation, this Corporation may allocate a portion or all of its reserves for
distribution in accordance with relevant laws or regulations or the orders of the authorities in charge.
The earnings will be distributed based on the aforementioned policy for the coming three years. The Company is
in the stage of growth and most earnings is to be retained for re-investment purpose. Distribution of earnings is
expected to be mostly in the form of stock dividend for the coming three years.
160
3. Statement of Internal Control
Taiwan Semiconductor Manufacturing Co., Ltd.
Statement of Internal Control
(Translation)
Date: March 6, 2001
TSMC has conducted a self-assessment of internal controls for the period of January 1, 2000 to December 31,
2000, based on TSMC's internal control system. The results are as follows:
1. TSMC acknowledges that the Board of Directors and management personnel are responsible for establishing,
performing, and maintaining an internal control system, which has already been established. The purpose of
the internal control system is to provide a reasonable assurance for achieving the company's goals: efficient
and effective operations (including profit, efficiency and the safeguard of assets, etc.), reliability of financial
reports, and compliance with applicable laws and regulations.
2. The internal control system has an inherent constraint. No matter how impeccable the system is, it can only
provide a reasonable assurance of achieving the three goals abovementioned. Due to the changes in the
environment and changing circumstances, the effectiveness of the internal control system may vary
accordingly. However, TSMC's internal control system has self-monitoring functions with which once a
shortcoming is found, action will be taken to cure.
3. TSMC evaluates the effectiveness in the design and performance of its internal control system in accordance
with the items for evaluating the effectiveness of internal control system as indicated in the Points Governing
the Establishment of Internal Control Systems by Public Companies (the "Points") announced by the
Securities and Futures Commission of the Ministry of Finance. Based on management control process, the
items for assessing the internal control system specified in the Points divide internal control into five
components: 1. Control Environment; 2. Risk Assessments; 3. Control Activities; 4. Information and
Communication; 5. Monitoring. Each component comprises certain factors. For the said factors please refer
to the Points.
4. TSMC has evaluated the effectiveness in the design and performance of its internal control system in
accordance with the aforesaid factors.
5. Based upon the results of evaluation abovementioned, TSMC is of the opinion that the design and
performance of its internal control, including the efficiency and effectiveness of operations, reliability of
financial reports, and compliance with applicable laws and regulations, during the period of January 1, 2000 to
December 31, 2000 is effective and provide a reasonable assurance of achieving the abovementioned goals.
6. This Statement of Internal Control will be a prominent feature of TSMC's annual report and prospectus, and
will be released to the public. Should any statement herein involve forgery, concealment or any other
illegality, Articles 20, 32, 171 and 174 of the Security Transaction Law shall apply.
7. This Statement of Internal Control has been approved by TSMC's Board of Directors at the meeting of March
6, 2001 with 7 directors present at the meeting and 0 director disagreeing with this Statement of Internal
Control.
Morris Chang
Chairman of the Board
F.C. Tseng
President
Taiwan Semiconductor Manufacturing Company, Ltd.
161
4. Other Necessary Supplement
Any Events in 2000 which had significant impact on shareholders' rights or the prices for the securities
as stated in Item 2 Paragraph 2 of Article 36 of Securities and Exchange Law of R. O. C.: None
162