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Taiwan Semiconductor
Manufacturing Company, Ltd.
Morris Chang, Chairman
8, Li-Hsin Rd. 6, Hsinchu Science Park, Hsinchu, Taiwan 300-77, R. O. C.
Tel: 886-3-5636688 Fax: 886-3-5637000
http://www.tsmc.com
TSE: 2330
NYSE: TSM
TSMC Annual Report 2006 (I)
(cid:339) Taiwan Stock Exchange Market Observation Post System: http://newmops.tse.com.tw
(cid:339) TSMC annual report is available at http://www.tsmc.com/english/e_investor/e02_annual/e02_annual.htm
Printed on March 12, 2007
TSMC Vision &
Core Values
TSMC’s Vision
Our vision is to be the most advanced and largest technology and foundry services provider to fabless companies and IDMs, and in partnership with
them, to forge a powerful competitive force in the semiconductor industry.
To realize our vision, we must have a trinity of strengths:
(1) be a technology leader, competitive with the leading IDMs
(2) be the lowest-cost manufacturer, and
(3) be the most reputable, service-oriented and maximum-total-benefits silicon foundry.
TSMC Core Values
Integrity – Integrity is our most basic and most important core value. We tell the truth. We believe the record of our accomplishments is the best
proof of our merit. Hence, we do not brag. We do not make commitments lightly. Once we make a commitment, we devote ourselves completely to
meeting that commitment. We compete to our fullest within the law, but we do not slander our competitors and we respect the intellectual property
rights of others. With vendors, we maintain an objective, consistent, and impartial attitude. We do not tolerate any form of corrupt behavior or
politicking. When selecting new employees, we place emphasis on the candidates’ qualifications and character, not connections or access.
Customer Partnership – At TSMC, customers come first. Their success is our success, and we value their ability to compete as we value our own. We
strive to build deep and enduring relationships with our customers, who trust and rely on us to be part of their success over the long term.
Innovation – Innovation is the wellspring of TSMC’s growth, and is a part of all aspects of our business, from strategic planning, marketing and
management, to technology and manufacturing. At TSMC, innovation means more than new ideas, it means putting ideas into practice.
Commitment – TSMC is committed to the welfare of customers, suppliers, employees, shareholders, and society. These stakeholders all contribute to
TSMC’s success, and TSMC is dedicated to serving their best interests. In return, TSMC hopes all these stakeholders will make a mutual commitment
to the Company.
TSMC
20
th
Anniversary Celebration
TSMC was founded on February 21, 1987. In these past 20 years, TSMC has grown to
become the world’s largest provider of semiconductor foundry services and a technology
leader in the semiconductor industry.
TSMC Parent Company
TSMC Subsidiaries and Affiliates
Awards and Recognition
19871987
1988
1990
1991
1993
1994
1995
1997
1998
1999
2000
2001
2002
2003
2004
2006
TSMC founded
TSMC North America
TSMC establishes
Fab 2
Fab 2 completed
TSMC begins
mask manufacturing
TSMC Europe
TSMC establishes
TSMC lists shares
on Taiwan Stock
Fab 3
Fab 3, TSMC’s first eight-inch
TSMC lists ADSs on New
York Stock Exchange
WaferTech
WaferTech fab completed and
TSMC wins Ministry of Economic
Affairs highest honor for industrial
Fab 6
Fab 6, located in the
European subsidiary
Exchange
fab, completed and begins
begins operations
technology development, the
South Taiwan Science Park,
Fab 12
Fab 12, TSMC’s first full-scale
12-inch fab, completed and
Fab 4
Fab 4 merged into Fab 3
TSMC (Shanghai)
TSMC establishes fully-owned
Fab 14
Fab 14, located in the South
TSMC wins Ministry of
Economic Affairs’ “Outstanding
Shanghai subsidiary
Taiwan Science Park, completed
Innovation Achievement Award”
Fab 1
Fab 1, a six-inch fab,
North American
subsidiary
and begins
operations
is leased from ITRI
operations
WaferTech
TSMC establishes subsidiary
WaferTech LLC in Washington
State, USA
BusinessWeek ranks TSMC
among “Taiwan’s New Asian
Giants” as a representative of
“Professional Management”
Fab 4
Fab 4 completed and
begins operations
Fab 5
Fab 5 completed and
begins operations
TSMC Japan
Fully-owned subsidiary TSMC
Japan established
● 20 Years of Technology Innovation
When TSMC was first established, our technology lagged the international semiconductor industry.
SSMC
TSMC, Philips Semiconductor,
and EDBI found SSMC, a joint
venture fab in Singapore
Ministry of Economic Affairs
Bureau of Standards, Metrology
and Inspection awards TSMC the
seventh “National Gold Medal
for Invention”
Asian Business readers’ poll
selects TSMC as company
with “Most Growth Potential”,
With hard work and innovation, TSMC began to catch up with the global semiconductor leaders at
“Most Long-term Profit Potential”,
the 0.13 micron generation, and has joined the front rank of the industry.
“Best Employer”,
“Best Taiwan Company”,
and other honors
“Outstanding Achievement Award”
completed and begins operations
begins operations
TSMC wins IEEE
Fab 7
TSMC completes merger of
TI-Acer and renames its
manufacturing facility Fab 7
SSMC
SSMC’s first fab is completed and
begins operations
“Corporate Innovation Award”
Far Eastern Economic Review
ranks TSMC as top company in
Far Eastern Economic Review
Taiwan for the fifth consecutive
and begins operations
TSMC (Shanghai)
Shanghai fab completed and
Commonwealth Magazine poll
selects TSMC as “Most Admired
Company in Taiwan” for 10th
selects TSMC as number one in
year in its “Review 200: Asia’s
begins operations
consecutive year
Taiwan in its ranking of “Asia’s
Leading Companies”
FinanceAsia selects TSMC as
Benchmark Companies”
TSMC wins Ministry of Economic
TSMC tops Asian Wall Street
Fab 8
TSMC completes merger of
Worldwide Semiconductor and
Taiwan’s best-managed
company of 2001
renames its manufacturing
TSMC enters the Forbes
facility Fab 8
Global 500
BusinessWeek ranks TSMC
number 5 in its “Global Top 100
Technology Companies” for the
year 2000
BusinessWeek ranks TSMC
number 2 in its “Global Top 200
Emerging Market Companies”
for the year 2000
TSMC wins the first “Industrial
Elite Award”
Affairs’ “Gold Medal for
Contribution to Invention
and Creation”
Journal ranking of “Top 10 Most
Respected Companies in Taiwan”
TSMC wins IR Magazine Grand
Prix for “Best Overall Investor
Relations-large cap”, “Best
Annual Report and Other
Corporate Literature”, “Best
Investor Relations Officer”, “Best
Corporate Governance”, “Best
Web Site”, and “Best Investor
Relations by a CEO or Chairman”
for second consecutive year
20,202
Employees Worldwide
as of the End of 2006
● Revenue Growth
TSMC ‘s revenues have grown steadily in the past 20 years, reaching a record high NT$317.41billion in 2006.
317.4
255.9
264.6
Unit: NT$ billion
300
250
200
150
100
50
0
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
F.C. Tseng
Vice Chairman
01
Morris Chang
Chairman
Rick Tsai
President and CEO
Letter to
Shareholders
Dear Shareholders,
As TSMC enters its 20th year as a public company, we take great pride in
continuing our focus on growing shareholder value while maintaining
market leadership in the dedicated semiconductor foundry segment that
we created in 1987. During 2006, TSMC registered double-digit growth
in full-year revenues and earnings from a year earlier. Nevertheless, an
inventory correction that began in the third quarter in 2006 persisted
through the fi rst quarter of 2007. But, we expect demand to improve
steadily through the remainder of the year.
Financial Results
Revenue for 2006 totaled NT$317.41 billion, an increase of 19.1%
compared with NT$266.57 billion in 2005. Net income increased 35.7%
to NT$127.01 billion in 2006 compared with NT$93.58 billion in 2005.
design complexity and utilize the same manufacturing data independent
of the design tools that they select. Therefore, we will be able to assist
our customers to improve effi ciencies, shorten the design cycle, and
accelerate time-to-volume and time-to-market.
● Early in 2006, TSMC’s immersion lithography program produced
nearly defect-free test wafers with acceptable parameters for volume
manufacturing, using our proprietary techniques in 65-nanometer
process. Ongoing efforts to further develop this technology to
commercialize it are underway.
A Vision for Continued Growth
The foundry segment, driven by TSMC’s successes, is of vital importance
to the ongoing viability and growth of the semiconductor industry. Today,
foundry segment revenues are approximately 10% of total semiconductor
revenue, while the revenue generated by foundry customers accounts for
Diluted earnings per share in 2006 increased 35.5% to NT$4.92 compared
nearly 25% of overall semiconductor revenues.
with NT$3.63 the previous year. In US dollars, TSMC in 2006 generated
revenue of US$9.76 billion, an increase of 17.7%, and net income of
While there is every reason to anticipate that foundries will increase their
US$3.91 billion, an increase of 34.2%. Among other highlights in 2006,
TSMC achieved:
● Total average billing utilization of 102%
● Average gross profi t margin of 49.1%
● Average operating profi t margin of 40.1%
During the year, TSMC provided 7.06 million eight-inch equivalent wafer
capacities, representing about 7% of worldwide IC wafer supply, and it
shipped more than 7.2 million eight-inch equivalent wafers, representing
about 8% of global IC wafer shipment.
Major Accomplishments
During 2006, TSMC achieved several noteworthy accomplishments:
● 49% of wafer sales were generated from advanced process technologies
(i.e., 0.13-micron and below), and 65-nanometer process moved into
volume production.
● TSMC’s continual emphasis on cost improvement and manufacturing
effi ciencies generated more than US$3.8 billion free cash fl ow (for
the ninth consecutive year) supporting its strong commitment to cash
dividend.
● TSMC unveiled the industry’s fi rst 65-nm Design-for-Manufacturing (DFM)
Ecosystem. Using TSMC’s DFM platform, our customers can reduce the
02
importance in the semiconductor supply chain, it is equally clear that
growth of the overall IC market has slowed since the beginning of the 21st
Century. In order to sustain growth, we intend to expand into new CMOS
logic IC product markets by providing an increasingly broad portfolio of
CMOS logic and derivative technologies to address memory, analog, high
performance logic or image sensor applications. Concurrently, we will
continue our efforts in strengthening our ability to create a much deeper
and broader relationship with each of our customers. This integrated
relationship with customers will require a much greater information fl ow
between the design and foundry teams, and optimization of both design
and process technology to meet product requirements. TSMC’s robust
DFM platform and effi cient manufacturing capabilities will bring win-win
benefi t to this collaborative partnership and ensure the continual success
of the foundry business model.
Major Events
Corporate Governance, Social Responsibility and Innovation: TSMC is a
model for corporate governance in Taiwan. For example, in 2002, we were
the fi rst Taiwan company to establish an audit committee. Again, in 2006
we were the fi rst Taiwan publicly traded company to see its shareholders
eliminate the Supervisor position (effective January 1, 2007) thereby
consolidating the Supervisor responsibilities into the audit committee.
Today, we have four independent directors.
Also, as you can see in our Annual Report, TSMC proudly received a number
of awards in 2006 for its excellence in corporate governance and social
responsibility. For example, TSMC won the Globalviews Magazine's 2006
Corporate Social Responsibility Award in the Large Cap category for the
second consecutive year. And, during 2006, TSMC was also recognized for
our efforts in innovation when TSMC received the Outstanding Corporate
Innovation Award from the Ministry of Economic Affairs (MOEA) of the
Republic of China.
Change in Employee Profi t Sharing: In light of new government
regulations effective in 2008, TSMC, with the support from its Board of
Directors, decided to take an early leadership position on profi t sharing. In
November 2006 TSMC was the fi rst Taiwan company to announce a change
in its profi t sharing mechanism in order to better balance the interests of
TSMC’s employees and its shareholders.
Outlook
While the semiconductor industry grew between 8% and 9% in 2006 the
outlook for 2007 is for the industry to grow more moderately. Although
TSMC outpaced the industry in 2006, we anticipate a slower growth
environment in the short term. Nevertheless, with our continued leadership
in the foundry segment we are confi dent that we will experience over the
mid-to-long term strong growth and return on investment to shareholders.
Morris Chang
Chairman
Rick Tsai
President and CEO
03
Company
Profile
As the world’s largest dedicated semiconductor foundry, TSMC serves a diverse array of
customers with products ranging across the spectrum of personal computer, consumer electronics,
communications, and automotive applications.
04
1. An Introduction to TSMC
2. Business Activities
TSMC is the world’s largest dedicated semiconductor foundry. Founded on
2.1 Business Scope
February 21, 1987 and headquartered in Hsinchu, Taiwan, TSMC pioneered
the dedicated semiconductor foundry business model of focusing on
manufacturing customers’ product designs. The company does not design,
manufacture, or market semiconductor products under its own brand name,
ensuring that TSMC does not compete directly with its customers.
The core business of TSMC is silicon foundry, or the manufacturing of
semiconductor devices according to customer orders and design. To support
our core manufacturing business, TSMC also provides design services, mask
design and manufacturing services, semiconductor packaging and testing
services, and a portfolio of licensable intellectual property.
TSMC’s diverse global customer base ensures that TSMC-manufactured
microchips are used in a broad variety of applications, including automotive,
consumer electronics, personal computers, and telecommunications.
TSMC
PIONEERED
the Dedicated
Semiconductor Foundry
Business Model
Capacity of TSMC-managed manufacturing facilities, including subsidiaries
and joint ventures, totaled 7.06 million eight-inch equivalent wafers in
2006. In Taiwan, TSMC operates two advanced 12-inch wafer fabs, four
eight-inch wafer fabs, and one six-inch wafer fab. TSMC also manages two
eight-inch fabs at wholly owned subsidiaries: WaferTech in the United States
Total
and TSMC (Shanghai) Company, Ltd. in China. In addition, TSMC obtains
eight-inch wafer capacity from other companies in which TSMC has an equity
2.2 Customer Applications
TSMC manufactures chips for a broad customer base covering a wide range
of applications. Applications using TSMC-manufactured microchips include
mobile phones, computers and peripherals, wireline telecommunications
networks, automotive and industrial equipment, as well as consumer
electronics such as DVD players, digital televisions, game consoles, digital
music players, and digital still cameras.
2.3 Shipments and Sales Amount in 2006 and 2005
Unit: Shipments (8-inch equivalent wafers) / Amount (NT$ thousands)
Wafer
Package
Other
2006
200
Shipments
Amount
Shipments
Amount
Domestic
1,087,883
30,516,433
991,870
26,895,512
Export
Domestic
Export
Domestic
Export
5,670,064
242,605,517
4,356,434
204,286,181
104
8,399
137
10,808
438,599
20,856,989
273,546
14,366,355
13,968
41,045
2,888,520
17,005,777
14,601
40,128
2,103,030
16,926,478
Domestic
1,101,955
33,413,352
1,006,608
29,009,350
Export
6,149,708
280,468,283
4,670,108
235,579,014
interest in.
2.4 Production in 2006 and 2005
Unit: Capacity / Output (8-inch equivalent wafers) / Amount (NT$ thousands)
TSMC provides customer service through account management and
engineering service offices in the United States, Europe, Japan, China,
South Korea, and India. The company employed more than 20,000 people
worldwide as of the end of 2006.
Year
2006
2005
Wafers
Capacity
7,061,856
5,954,600
Output
7,154,333
5,451,384
Amount
147,668,232
138,182,812
TSMC is the first foundry to provide 65nm production capability. In addition
to general-purpose logic process technology, TSMC supports the wide-
ranging needs of its customers with embedded non-volatile memory,
embedded DRAM, mixed signal/RF, high voltage, CMOS image sensor, color
filter, and silicon germanium technologies. In 2006, TSMC received the
Outstanding Corporate Innovation Award from the Ministry of Economic
Affairs (MOEA) of the Republic of China.
The company is listed on the Taiwan Stock Exchange (TSE) under the ticker
number 2330 and its American Depositary Shares trade on the New York
Stock Exchange (NYSE) under the symbol of TSM.
0
3. Organization
3.1 Organization Chart
As of 02/28/2007
Shareholders'
Meeting
Board of Directors
Chairman
Vice Chairman
President & CEO
Research &
Information
Development
Technology
Design &
Technology
Platform
Human
Quality &
Corporate
Resources
Reliability
Planning
Worldwide
Sales &
Service
Materials
Corporate
Management
Operations
Operations
Finance &
Development
& Risk
Organization I
Organization II
Spokesperson
Legal
TSMC
(Shanghai)
Internal
Audit
Management
TSMC
North
America
TSMC
Japan
TSMC
Europe
Asia/Pacifi c
Business
Note: The Audit Committee took over the duties of Supervisors starting from January 1, 2007, and the Supervisors were terminated as of December 31, 2006.
06
3.2 Major Corporate Function
Research & Development
Legal
● Advanced technology research and development, and exploratory
● Corporate legal affairs, contracts and patents, and other intellectual
research development
Information Technology
property management
TSMC (Shanghai)
● Information infrastructure, e-business strategy, and information
● Business strategy and development, manufacturing operations, and
systems development and operation
account services in China
Design & Technology Platform
● Design services and technology platform development
Internal Audit
● Internal audit and process compliance
Human Resources
● Human Resources management and organizational development
Quality & Reliability
● Quality and reliability management
Corporate Planning
● Production planning and control, industrial engineering, and
operational effi ciency
Worldwide Sales & Service
● Brand Management – corporate brand management
● Corporate Pricing – product pricing management
● Customer Service – customer loyalty and solutions management
● Regional Operations – business development and account services
for the North American, European, Japanese, and Asian regions
Corporate Development
● Technology and services marketing
● Corporate strategy and business development
Materials Management & Risk Management
● Purchasing, warehousing, import and export, logistics support,
industrial safety, and environmental protection
Operations Organization I
● Manufacturing Operations (Fabs 2, 3, 5, 6, and 8), product
engineering, back-end operations, and mainstream technology
capacity management
Operations Organization II
● Manufacturing Operations (Fabs 12 and 14), new fab planning,
manufacturing technology integration, manufacturing and
engineering of advanced products, advanced technology operations
development, and mask manufacturing
Finance & Spokesperson
● Finance and accounting services including investor relations, public
relations, treasury, tax, asset management, strategic investment, and
fi nancial and accounting management
● Corporate spokesperson
07
4. Management Team
08
09
4.1 Information Regarding Management Team
Title / Name
President & Chief Executive Offi cer
Rick Tsai
Senior Vice President
Worldwide Sales & Service
Kenneth Kin
Senior Vice President & Chief Information Offi cer
Information Technology & Materials Management/
Risk Management
Stephen T. Tso
Senior Vice President
Operations Organization I
C.C. Wei
Senior Vice President
Operations Organization II
Mark Liu
Vice President
Operations Organization I
M.C. Tzeng
Vice President & General Counsel
Richard Thurston
Vice President
Chief Financial Offi cer & Spokesperson
Lora Ho
Date Effective
(Note)
Shareholding
Spouse & Minor
Shareholding
%
Shareholding
07/01/2005
27,813,033
0.11%
07/04/2001
4,115,712
0.02%
12/31/2004
12,679,960
0.05%
-
-
-
%
-
-
-
12/01/2005
6,575,457
0.03%
258
0.00%
12/01/2005
10,878,953
0.04%
-
-
01/01/2002
6,166,082
0.02%
133,149
0.00%
01/02/2002
2,733,369
0.01%
-
-
09/08/2003
4,549,431
0.02%
190,011
0.00%
Vice President
Human Resources
P.H. Chang
Vice President
Corporate Development
Jason C.S. Chen
Vice President
Design & Technology Platform
Fu-Chieh Hsu
Vice President
Research & Development
Wei-Jen Lo
Vice President
Research & Development
Jack Sun
Senior Director
Corporate Planning
L.C. Tu
Senior Director
Internal Audit
Jan Kees van Vliet
02/17/2004
2,612,397
0.01%
-
-
03/31/2005
930,991
0.00%
4,102
0.00%
03/31/2006
175,000
0.00%
06/05/2006
1,050,576
0.00%
06/23/2006
4,613,385
0.02%
-
-
-
-
-
-
06/25/2002
8,210,400
0.03%
1,233,831
0.00%
10/15/2003
1,033,562
0.00%
-
-
TSMC Shareholding by
Nominee Arrangement
(Shares)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Note: The date effective means the offi cal date for that position.
10
Education & Selected Past Positions
Selected Current Positions
Ph.D., Material Science, Cornell University, USA
Executive Vice President, Worldwide Marketing and Sales, TSMC
COO, TSMC
President, Vanguard International Semiconductor Corp.
Director, TSMC subsidiary companies
Ph.D., Nuclear Engineering and Applied Physics, Columbia University, USA
Vice President, Worldwide Sales & Services, IBM Microelectronics Division
-
Ph.D., Materials Science & Engineering, University of California, Berkeley, USA
President, WaferTech, LLC
Senior Vice President, Operations, TSMC
Ph.D., Electrical Engineering, Yale University, USA
Vice President, South Site Operation, TSMC
Senior Vice President, Chartered Semiconductor Manufacturing Ltd.
Ph.D., Electrical Engineering & Computer Science, University of California, Berkeley, USA
Vice President, South Site Operation, TSMC
President, Worldwide Semiconductor Manufacturing Corp.
Director, TSMC subsidiary companies
Director, TSMC subsidiary companies
Director, TSMC affi liated companies
Director, TSMC affi liated companies
As of 02/28/2007
Managers Who are Spouses or within Second-degree
Relative of Consanguinity to Each Other
Title
Name
Relation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Master, Applied Chemistry, Chungyuan University, Taiwan
Senior Director, Fab 2 Operation, TSMC
-
Department
Manager
M.J. Tzeng
Siblings
J.D., Rutgers School of Law, State University of New Jersey, USA
Ph.D., History, University of Virginia, USA
Partner, Haynes Boone, LLP.
Vice President Corporate Staff, Assistant General Counsel, Texas Instruments Incorporated
Master, Finance, National Taiwan University, Taiwan
Senior Director, Accounting, TSMC
Vice President, TI-Acer Semiconductor Manufacturing Corp.
Director, TSMC subsidiary companies
Director, TSMC affi liated companies
Director and/or Supervisor, TSMC subsidiary
companies
Director and/or Supervisor, TSMC affi liated
companies
Ph.D., Materials Science & Engineering, Purdue University, USA
Senior Director, Materials Management, TSMC
Vice President, Worldwide Semiconductor Manufacturing Corp.
M.S., Business Administration, University of Missouri-Columbia, USA
Vice President & Co-Director of Worldwide Sales & Marketing Group, Intel
Ph.D.,M.S., Electrical Engineering and Computer Sciences, University of California, Berkeley, USA
Chairman and CEO, Monolithic System Technology Inc.
Chairman and President, Myson Technology Inc.
Ph.D., Solid State Physics & Surface Chemistry, University of California, Berkeley, USA
Director, Advanced Technology Development & CTM Plant Manager, Intel
Ph.D., Electrical Engineering, University of Illinois, USA
Senior Director, Logic Technology Division, TSMC
Master, Business Administration, Tulane University, USA
Senior Director, Fab 5 Operation, TSMC
M.S., Management, Delft/Erasmus University, the Netherlands
Senior Director, Pricing & Business Process, TSMC
Chief Financial Offi cer & member of the Board of Management, Philips Taiwan
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
4.2 Compensation Paid to President and Vice Presidents
Salary (NT$ thousands)
Bonus & Perquisite (NT$ thousands) (Note 2)
Employee Profit Sharing (Note 1)
Total Compensation to President & VPs as % of
2006 Net Income (Note 1)
Cumulative ESOP Exercisable Shares
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
Cash Amount
(NT$ thousands)
Consolidated Subsidiaries of TSMC
Stock Market Value
Cash Amount
Stock Market Value
(NT$ thousands)
(NT$ thousands)
(NT$ thousands)
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
(K shares)
Consolidated
Subsidiaries
of TSMC
Compensation or
Fees Received from
Investments Other
than Subsidiary
Title
Name
President &
Chief Executive Officer
Senior Vice President
Worldwide Sales & Service
Rick Tsai
Kenneth Kin
Senior Vice President & Chief Information Officer
Stephen T. Tso
Information Technology & Materials Management/
Risk Management
Senior Vice President
Operations Organization I
Senior Vice President
Operations Organization II
Vice President
Operations Organization I
Vice President &
General Counsel
Vice President,
Chief Financial Officer & Spokesperson
Vice President
Human Resources
Vice President
Corporate Development
Vice President
Design & Technology Platform
Vice President
Research & Development
Vice President
Research & Development
C.C. Wei
Mark Liu
M.C. Tzeng
Richard Thurston
49,224
49,224
17,529
17,529
222,500
1,501,875
222,500
1,501,875
1.41%
1.41%
2,828
2,828
None
Lora Ho
P.H. Chang
Jason C.S. Chen
Fu-Chieh Hsu (Note 3)
Wei-Jen Lo
Jack Sun (Note 4)
Note 1: Total compensation paid to TSMC's President and Vice Presidents in 2005 was NT$1,328,055 thousand (1.42% of 2005 net income). Employee profit sharing distribution in 2007 with respect to 2006 earnings is
preliminary at the time of printing this report, and it has not been approved by shareholders yet. Please visit TSMC's website for an update.
Note 2: Includes allowances for company cars. Compensation paid to the drivers totaled NT$6,998 thousand.
Note 3: Mr. Fu-Chieh Hsu joined TSMC on March 31, 2006.
Note 4: Mr. Jack Sun was promoted on June 23, 2006.
Compensation Paid to Individual President and Vice Presidents (Note)
Under NT$2,000,000
From NT$2,000,000 to NT$5,000,000
From NT$5,000,000 to NT$10,000,000
From NT$10,000,000 to NT$15,000,000
From NT$15,000,000 to NT$30,000,000
From NT$30,000,000 to NT$50,000,000
From NT$50,000,000 to NT$100,000,000
Over NT$100,000,000
Total
President and Vice Presidents
Year 2006
TSMC
Consolidated Subsidiaries of TSMC
0
0
0
0
0
0
5
8
13
0
0
0
0
0
0
5
8
13
Note: Employee profit sharing distribution in 2007 with respect to 2006 earnings is preliminary at the time of printing this report, and it has not been approved by shareholders yet. Please visit TSMC's website for an update.
12
Employee Profi t Sharing (Note 1)
Total Compensation to President & VPs as % of
2006 Net Income (Note 1)
Cumulative ESOP Exercisable Shares
Consolidated Subsidiaries of TSMC
Stock Market Value
(NT$ thousands)
Cash Amount
(NT$ thousands)
Stock Market Value
(NT$ thousands)
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
(K shares)
Consolidated
Subsidiaries
of TSMC
Compensation or
Fees Received from
Investments Other
than Subsidiary
1,501,875
222,500
1,501,875
1.41%
1.41%
2,828
2,828
None
13
4.3 Employee Profit Sharing Granted to Management Team (Note 1)
Profit Sharing Stock
Market Value
(NT$ thousands)
Profit Sharing Cash
Amount
(NT$ thousands)
Total Profit Sharing Value
(NT$ thousands)
Total Profit Sharing Value
to Management Team as
% of 2006 Net Income
1,587,999
235,259
1,823,258
1.44%
Title
President &
Chief Executive Officer
Senior Vice President
Worldwide Sales & Service
Name
Rick Tsai
Kenneth Kin
Senior Vice President & Chief Information Officer
Stephen T. Tso
Information Technology & Materials Management/
Risk Management
Senior Vice President
Operations Organization I
Senior Vice President
Operations Organization II
Vice President
Operations Organization I
Vice President &
General Counsel
Vice President,
Chief Financial Officer & Spokesperson
Vice President
Human Resources
Vice President
Corporate Development
Vice President
Design & Technology Platform
Vice President
Research & Development
Vice President
Research & Development
Senior Director
Corporate Planning
Senior Director
Internal Audit
C.C. Wei
Mark Liu
M.C. Tzeng
Richard Thurston
Lora Ho
P.H. Chang
Jason C.S. Chen
Fu-Chieh Hsu (Note 2)
Wei-Jen Lo
Jack Sun (Note 3)
L.C. Tu
Jan Kees van Vliet
Note 1: Employee profit sharing distribution in 2007 with respect to 2006 earnings is preliminary at the time of printing this report, and it has not been approved by shareholders yet. Please visit TSMC's website for an update.
Note 2: Mr. Fu-Chieh Hsu joined TSMC on March 31, 2006.
Note 3: Mr. Jack Sun was promoted on June 23, 2006.
14
4.4 Net Change in Shareholding and Net Change in Shares Pledged by Directors, Supervisors, Management, and
Shareholders with 10% Shareholding or More (Note 1)
Unit: Share
Title / Name
Chairman
Morris Chang
Director
Koninklijke Philips Electronics N.V.
Representative:
J.C. Lobbezoo (Note 3)
Vice Chairman
F.C. Tseng
Independent Director
Stan Shih
Director
National Development Fund, Executive Yuan
Representative:
Chintay Shih
Independent Director
Sir Peter Leahy Bonfi eld
Independent Director
Lester Carl Thurow
Director & President & CEO
Rick Tsai
Independent Director
Carleton (Carly) S. Fiorina
Senior Vice President
Kenneth Kin
Senior Vice President & CIO
Stephen T. Tso
Senior Vice President
C.C. Wei
Senior Vice President
Mark Liu
Vice President
M.C. Tzeng
Vice President & General Counsel
Richard Thurston
Vice President, CFO & Spokesperson
Lora Ho
Vice President
P.H. Chang
Vice President
Jason C.S. Chen
Vice President
Fu-Chieh Hsu (Note 4)
Vice President
Wei-Jen Lo
Vice President
Jack Sun (Note 4)
Senior Director
L.C. Tu
Senior Director
Jan Kees van Vliet
2006
01/01/2007~02/28/2007
Net Change in Shareholding
Net Change in Shares Pledged
Net Change in Shareholding
Net Change in Shares Pledged
(Note 2)
(Note 2)
3,379,247
121,942,231
(866,244)
42,459
47,434,261
-
-
2,216,238
-
806,852
714,580
1,079,378
1,021,161
847,481
554,158
857,039
779,487
600,991
175,000
588,024
813,495
270,573
228,923
-
-
-
-
-
-
-
-
-
-
-
-
-
1,200,000
-
-
-
-
-
-
-
-
-
-
-
(250,000)
-
-
-
-
(250,000)
-
(51,000)
(71,000)
(54,000)
(170,000)
(27,000)
(75,000)
-
-
(40,000)
-
(60,000)
-
(46,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Note 1: The tenure of Mr. Michel Besseau, our former Supervisor (representative of Koninklijke Philips Electronics N.V.), expired on May 16, 2006; and the tenure of Mr. James C. Ho (representative of National Development Fund,
Executive Yuan) and Mr. Michael E. Porter, our former Supervisors, expired on December 31, 2006.
Note 2: This refers to the creation of security interest over TSMC shares in favor of creditors, usually in connection with a shareholder's own fi nancing activities.
Note 3: Koninklijke Philips Electronics N.V. resigned from TSMC's Board on March 9, 2007.
Note 4: Net change in shareholding or shares pledged from 05/16/2006 to 12/31/2006.
15
Ownership by TSMC (1)
Direct/Indirect Ownership by Directors,
Supervisor & Management (2)
Total Ownership
(1) + (2)
As of 12/31/2006
Shares
%
Shares
%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0
0
0
0
0
0
0
0
0
0
0
437,918,380
26.5% (Note 1)
0
0
0
0
0%
0%
0%
0%
Not Available (Note 3)
Not Available (Note 3)
Not Available
(Note 3)
Not Available
(Note 3)
Not Available
(Note 3)
Not Available
(Note 3)
Not Available
(Note 3)
Not Available
(Note 3)
Shares
%
987,968,244
300,000
1,284
11,000,000
200
6,000
80,000
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Not Applicable (Note 2)
35.7% (Note 4)
Not Applicable (Note 2)
35.7% (Note 5)
Not Applicable (Note 2)
100.0%
463,350
880,180,184
41,263,171
Not Applicable (Note 2)
Not Applicable (Note 2)
Not Applicable (Note 2)
16,782,937
10,500,000
38.8%
53.3%
37.9%
99.5%
98.0%
98.0%
9.9%
7.0%
2,632,867
10.5%
4,000,000
1.9%
Not Applicable (Note 2)
12.1%
Not Applicable (Note 2)
1.1%
4.5 Stock Trade with Related Party: None.
4.6 Stock Pledge with Related Party: None.
5. Long-term Investments Ownership
Long-term Investment
Equity Method:
TSMC International Investment, Ltd.
987,968,244
100.0%
TSMC Partners, Ltd.
TSMC Global, Ltd.
TSMC North America
TSMC Europe B.V.
TSMC Japan Limited
TSMC Korea Limited
300,000
1,284
11,000,000
200
6,000
80,000
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Chi Cherng Investment Co., Ltd.
Hsin Ruey Investment Co., Ltd.
Not Applicable (Note 2)
35.7% (Note 4)
Not Applicable (Note 2)
35.7% (Note 5)
TSMC (Shanghai) Company Limited
Not Applicable (Note 2)
100.0%
Systems on Silicon Manufacturing Co. Pte Ltd.
Vanguard International Semiconductor Corp.
Global UniChip Corp.
Emerging Alliance Fund, L.P.
VentureTech Alliance Fund II, L.P.
VentureTech Alliance Fund III, L.P.
Cost Method:
Non-Publicly Traded
United Industrial Gases Co. Ltd.
Shin-Etsu Handotai Taiwan Company Ltd.
463,350
442,261,804
41,263,171
Not Applicable (Note 2)
Not Applicable (Note 2)
Not Applicable (Note 2)
16,782,937
10,500,000
38.8%
26.8%
37.9%
99.5%
98.0%
98.0%
9.9%
7.0%
Hontung Venture Capital Co., Ltd.
2,632,867
10.5%
Not Available (Note 3)
W.K. Technology Fund IV
4,000,000
1.9%
Not Available (Note 3)
Funds:
Horizon Ventures Fund
Not Applicable (Note 2)
12.1%
Not Applicable (Note 2)
Crimson Asia Capital
Not Applicable (Note 2)
1.1%
Not Applicable (Note 2)
Note 1: 26.5% represents the shareholding owned by National Development Fund, Executive Yuan
Note 2: Not applicable. These fi rms do not issue shares. TSMC's investment is measured as a percentage of ownership.
Note 3: Not available. Not all information is available to TSMC as of the report date.
Note 4: TSMC directly owns 35.7% and indirectly owns 64.3% in Chi Cherng Investment Co. Ltd., through Hsin Ruey Investment Co., Ltd.
Note 5: TSMC directly owns 35.7% and indirectly owns 64.3% in Hsin Ruey Investment Co., Ltd., through Chi Cherng Investment Co. Ltd.
16
6. Employees
6.1 Human Capital
TSMC encourages all of its employees to constantly expand their professional
knowledge, project a positive work attitude, demonstrate affi rmative values,
exhibit ethical conduct, and make a fi rm and genuine commitment to
succeed as a member of the TSMC team. Believing that an inspiring work
environment promotes innovation. TSMC strives to provide its employees
with productive workplace conditions, rewarding professional challenges,
and substantial career development support.
In 2006, TSMC was designated “Most Admired Company in Taiwan” by
Commonwealth Magazine for a tenth consecutive year and ranked by a
Cheers Magazine poll as the most desired workplace for new graduates.
6.2 Recruitment
Attracting and retaining the right talent is one of the key objectives of TSMC’s
human resources strategies. TSMC believes in equal opportunity employment
and values the diversity in our staff’s contributions toward our corporate culture
and our spirit of innovation. Recruitment is conducted via open selection and is
based on the candidate’s ability to fulfi ll the needs of each position, regardless
of race, gender, age, religion, nationality, or political affi liation.
In order to seek out talented people around the world who share the
company’s values, TSMC employs innovative methods involving campus
programs, summer internships, and employment seminars or fairs.
6.3 People Development
Continuous learning is the cornerstone of TSMC’s employee development policy.
TSMC provides employees with a wide range of technical, professional and
TSMC’s workforce numbered 20,202 people at the end of 2006, refl ecting
management training programs. Each employee has an individual development
an increase of 2.9 percent from the end of 2005. In 2006, TSMC recruited
plan, customized to their development needs. Employee development is
152 managers, 1,210 professionals and 1,044 technicians during the year.
further supported and enforced by a comprehensive and integrated network
By the end of February 2007, TSMC’s total workforce stood at 20,181.
of resources including on-the-job training, coaching, mentoring, job rotation,
At the end of 2006, TSMC employed a total of 2,243 managers and 7,550
professionals. Of the managers, 10.9 percent were female. Non-Taiwanese
nationals comprised 3.1 percent of TSMC’s workforce at the managerial and
professional level. By the end of February 2007, there were 2,255 managers
and 7,594 professionals.
Among TSMC’s staff, 2.7 percent hold Ph.D. degrees, 29.7 percent hold
Masters degrees, 19.1 percent hold Bachelors degrees, 21.5 percent hold
other higher education degrees, and 27 percent hold a high school diploma.
The following tables summarize TSMC’s workforce structure:
TSMC Workforce Structure by Education Degree
Ph.D.
Master
Bachelor
Other Higher Education
High School
Total
12/31/2005
12/31/2006
02/28/2007
475
5,464
3,601
4,510
5,592
553
6,002
3,856
4,331
5,460
568
6,064
3,835
4,294
5,420
19,642
20,202
20,181
TSMC Workforce Structure by Job Title
Managers
Professionals
Assistant Engineer/Clerical
Technician
Total
12/31/2005
12/31/2006
02/28/2007
2,012
7,145
684
9,801
19,642
2,243
7,550
620
9,789
20,202
2,255
7,594
616
9,716
20,181
on-site courses, e-learning, and external learning opportunities. TSMC not only
engages external experts to be trainers, but also educates and arranges for
hundreds of internal trainers to offer training courses.
6.4 Employee Satisfaction
TSMC is committed to fostering a dynamic and fun work environment. In line
with this commitment, a number of programs have been launched to enhance
employee motivation, promote employee welfare, and facilitate communication
between the company and its employees. These programs include:
● Multifaceted Employee Welfare: TSMC offers a number of employee
welfare programs and benefi ts such as fl exible work hours, paid holidays
and variety of employee activities such as TSMC Sports Day, Family Day,
the Engineer Festival, and various social clubs.
TSMC Workforce Structure by Gender, Age, and Years Served
● Employee Recognition: TSMC recognizes employee contributions in different
12/31/2005
12/31/2006
02/28/2007
areas through a number of programs. In addition to TSMC’s internal
Male
Female
Gender
Average Age
Average Years of Service
45.7%
54.3%
31.0
5.1
46.5%
53.5%
31.7
5.6
46.7%
53.3%
31.87
5.76
Employee Role Model Awards, Innovation & Customer Partnership Award,
employees are also encouraged to apply for certain external awards. In 2006,
TSMC employees won the Top 10 National Outstanding Manager Award, the
Outstanding Young Engineer Award, and the Ministry of Economic Affairs’
Team and Individual Awards for Industrial and Technology Development.
17
6.6 Compensation
TSMC’s compensation program includes cash compensation and profi t sharing.
Cash compensation includes the monthly salary, and a quarterly variable
incentive bonus. Employees are entitled to no less than one percent of our net
income after a deduction based on losses of previous years and contributions to
legal and special reserves. The purpose of this profi t-sharing bonus is to reward
employees’ contributions appropriately, to encourage employees to work
consistently to ensure the success of TSMC, and to link employees’ interests with
those of TSMC’s shareholders. The amount and form of the distribution are
determined by the Board of Directors based on the Compensation Committee’s
recommendation and are subject to shareholders’ approval at the Annual
General Meeting. The company’s earlier practice was to determine the amount
of the profi t-sharing bonus based on operating results and industry practice
in the Republic of China. Individual awards are based on each employee’s job
responsibility, contribution, and performance.
In addition to providing employees of TSMC’s overseas subsidiaries with a
locally competitive base salary, the company grants short-term and long-
term bonuses as a part of total compensation. The performance bonus is
a short-term incentive and is granted in line with local regulations, market
practices, and the overall operating performance of each subsidiary. The
long-term incentive bonus is awarded based on TSMC fi nancial performance
and is vested over the course of several years in order to encourage long-
term employee commitment and development within the company.
6.7 Retirement Policy
TSMC’s retirement policy is in accordance with the provisions in the Labor
Standards Law and Labor Pension Act of the Republic of China.
TSMC is Committed
to Fostering a
DYNAMIC
AND FUN
Work Environment
● Open Communications: TSMC conducts regular communication activities
with employees, including regular communication meetings at different
levels, Executive & Manager Communications Kits, and the bimonthly
Silicon Garden Magazine to engage employees and their families. We
respect our employees’ views; they can offer suggestions to the Company
through channels such as the Employee Suggestion Box, Employee Voice
Collection Network, the “Fab Caring Circle” for work environment related
issues, and the Corporate Ombudsman system and Board of Directors’
audit committee for feedback regarding signifi cant management issues or
fi nance related concerns. In addition, TSMC conducts an annual Employee
Satisfaction Survey to understand and measure the involvement and
engagement of employees at various levels.
6.5 Retention
TSMC believes talent is its most important resource and retention of talent
is the common goal and responsibility of managers at all levels. TSMC has
implemented retention programs such as a “Buddy System” that helps new
employees learn and become integrated into their teams by pairing them
up with a more experienced partner. The Human Resources department also
maintains a call center to help its employees with work and life issues. TSMC
encourages all management to offer employees opportunities to cultivate
professional knowledge and career opportunities, as well as help them
maintain a healthy work/life balance.
Between January 1, 2006 and February 28, 2007, there were no labor
disputes that resulted in loss to TSMC.
18
7. TSMC Worldwide
TSMC Europe B.V.
TSMC (Shanghai) Company Limited
TSMC Liaison Office in India
SSMC
TSMC Japan Limited
WaferTech
TSMC Korea Limited
TSMC North America
TSMC Headquarters & Fab 12
Fab 2, Fab 3
Fab 5, Fab 6
Fab 8, Fab 14
19
TSMC’s Trinity of
Strengths
TSMC’s value proposition comes from its trinity of strengths: technology leadership, manufacturing
excellence, and customer partnership. These three strengths are the pillars that support the success of
TSMC and all its customers.
20
21
Technology Leadership
The 65nm embedded DRAM process is built on up to 10 metal layers using
copper low-k interconnect and nickel silicide transistor interconnect. It
features a cell size less than a quarter of its SRAM counterpart, and macro
1. R&D Organization and Investment
densities ranging from 4Mbits to 256Mbits.
TSMC increased its research and development investment and expanded its
world-class R&D organization in 2006 to provide best-in-class semiconductor
technologies and design solutions to our customers. R&D expenditure reached
NT$14.6 billion, while R&D staff grew by 13.5 percent during the same period.
We plan to continue to invest signifi cant amounts on research and development
in 2007, with the goal of maintaining a leading position in the development
of advanced process technologies. TSMC also strengthened the capabilities
and expanded the capacity of our 300mm R&D pilot line for advanced process
development in 2006 to accommodate our growing R&D development activities.
65nm Technology
Qualifi ed and
Production-ready
in 2006: First in Foundry
TSMC continued to accelerate the development of transistor, memory, and
interconnect technologies. During 2006, the R&D organization was reorganized
into exploratory research and platform development organizations to better
support TSMC’s technology development. We also expanded our external R&D
partnership and alliance activities with tool and materials vendors. For example,
TSMC is a core member of IMEC, a world-class CMOS R&D consortium in
Europe. In addition, TSMC and Freescale completed joint development of cutting
edge 65 nanometer SOI technology. TSMC also strengthened its collaborative
research effort with key partners for design-process co-optimization, which
enables the best technology and design solutions for product success in the
complex and challenging nanometer era. Since 2001, TSMC has been funding
nanotechnology research at major universities worldwide to promote innovation
and the advancement of technology.
2. R&D Accomplishments in 2006
2.1 R&D Highlights
Sixty-fi ve Nanometer Technology
Immersion Lithography
TSMC’s immersion lithography program used proprietary techniques to
produce nearly defect-free test wafers well within acceptable parameters for
volume manufacturing. On initial tests, TSMC’s techniques produced less than
seven immersion-induced defects on many 12-inch wafers, a defect density
of 0.014/cm2. Some wafers have yielded defects as low as three per wafer, or
0.006/cm2. This compares to several hundred thousand defects produced by
a prototype immersion scanner without these proprietary techniques and is
signifi cantly better than published champion data in double digits.
TSMC is now focusing on throughput improvement for high-volume
manufacturing and cooperating with equipment manufacturers to develop
production-ready immersion lithography equipment. TSMC’s immersion
lithography technology is targeted at our 45 nanometer manufacturing process.
Forty-fi ve Nanometer Technology
TSMC’s 45 nanometer technology development made a strong start in
2006. Our test vehicles achieved defect densities of less than 10 per wafer
TSMC was the fi rst foundry to qualify production-ready 65 nanometer
by the end of the year, reaching this important milestone two quarters
technology in 2006, beginning with low-power process technology. We
earlier compared with our 65 nanometer technology development timeline.
continued to expand our 65 nanometer portfolio, successfully completing
technology qualifi cation and customer product pilot runs for various
Our 45 nanometer technology development also highlights the intimate
technology families including general purpose and triple gate oxide processes.
collaboration between manufacturing and design at this advanced
technology node. Having made substantial progress in technology
TSMC’s 65 nanometer technology is the company’s third-generation
development, we were able to offer our fi rst 45 nanometer low-power design
semiconductor process employing both copper interconnects and low-k
verifi cation shuttle in 2006. This shuttle was the foundry industry’s fi rst 45
dielectrics. It is a nine-layer metal process with core voltages of 1.0 or 1.2
nanometer design verifi cation shuttle and also the earliest shuttle compared
volts, and I/O voltages of 1.8, 2.5 or 3.3 volts. The new technology offering
with TSMC’s past technology generations. TSMC expects to begin risk
supports a standard cell gate density twice that of
production of 45 nanometer technology in the second half of 2007.
R&D Expenditures
(Amount: NT$ thousands)
14,601,385
13,395,801
2,302,035
TSMC’s 90 nanometer process.
Sixty-fi ve Nanometer Embedded DRAM
TSMC developed the foundry sector’s fi rst functional
65 nanometer embedded DRAM customer product
in 2006. TSMC’s 65 nanometer embedded DRAM
features improved retention time and a low thermal
budget module that can be added to the company’s
standard CMOS process. It is compatible with all
65 nanometer logic libraries making it an effi cient
process for IP reuse. The process also offers special
power saving features for low power applications
including sleep mode, partial power cut-off and on-
2005
2006
01/01/2007~
02/28/2007
chip temperature compensation.
22
2.2 Spectrum of Technologies
In addition to the highlights above, TSMC continued to introduce a rich mix
of new technologies. For example:
Mixed Signal/Radio Frequency Technology
TSMC developed and qualifi ed mixed signal/radio frequency (MS/RF)
technologies at both 90 nanometer and 65 nanometer generations. The
technologies feature a 2.0Ff/µm2 high-density Metal-Insulator-Metal (MIM)
capacitor, a 3.3 micron Ultra Thick Metal (UTM) for high quality inductor,
and a patented Kaleidoscopic Metal-Over-Metal (K-MOM) capacitor with a
greatly improved mismatch compared with traditional MOMs.
Mask Technology
Mask technology is an integral part of advanced lithography. TSMC has
developed proprietary resolution-enhancement techniques that are closely
optimized with our in-house mask-making technology, including optical
proximity correction, phase-shifting, and subresolution-assist mask features.
In 2006, we popularized fast Lithography Process Check technology, which
is a critical element of Design For Manufacturing. TSMC mask facilities
feature state-of-the-art E-beam mask writers, etchers, inspection and repair
tools for both R&D and production use. TSMC’s strength in mask technology
R&D and production provides signifi cant benefi ts to our customers in
terms of technical excellence, quality, fast cycle time, and one-stop service.
In 2006, the Company successfully developed high-quality, cost-effective
55 nanometer mask making technology for production, X-metal mask
technology, as well as mask technology for the 45 nanometer generation.
The Company also developed metrology using e-beam, scatterometry, and
electrical techniques to support wafer lithography and mask making.
Silicon Germanium BiCMOS Technology
3. Intellectual Property
TSMC developed a high-voltage version of 0.18 micron Silicon Germanium
(SiGe) BiCMOS technology to serve the needs of power amplifi er product
A strong portfolio of intellectual property rights strengthens TSMC’s
customers. TSMC’s 0.18 micron SiGe technology enables high performance
technology leadership. In 2006, TSMC received 470 U.S. patents, 463 Taiwan
power amplifi er applications and provides an integrated solution that is
patents, 143 PRC patents, and other patents around the world. TSMC has
more cost effective compared to GaAs technology.
CMOS Image Sensor Technology
Following the successful mass production of 0.13 micron 4T CMOS image
sensors, TSMC developed a high-performance and low-cost 0.11 micron
4T CMOS image sensor process with AlCu backend. This new process is
been ranked by a Ministry of Economic Affairs Special Project on Technology
as the number-one Taiwan company in procuring U.S. patents. We have taken
initiatives in building the various elements of a model for TSMC’s intellectual
capital management. Management and use of our intellectual property rights
are driven by strategic considerations and business objectives.
aimed at high-end imaging applications with small pixel size of 1.75 micron
At TSMC, we have built a process to extract value from our intellectual
and high resolutions of greater than three megapixels. It is compatible
property rights. Our IP strategy works in conjunction with our R&D,
with TSMC’s 0.13 micron CMOS logic and embedded memory processes,
marketing, and corporate development strategies. Intellectual property
enabling System-on-Chip (SoC) platforms for consumer and industrial
rights protect our freedom to operate, enhance our competitive position,
applications in mobile phones, digital cameras, security sensors and other
and give us leverage to participate in many profi t-generating activities. We
have worked continuously to improve the quality of our IP portfolio, reduce
cost of maintenance, align business strategies with IP strategies, and extract
value from our portfolio. IP is an essential element for our ability to attract
customers and partners and the basis of collaboration with them. We expect
to continue investing in our IP portfolio and the management system to
ensure that we receive maximum value from our intellectual property rights.
image sensor markets.
45nm Design
Verifi cation Shuttle: First
in Foundry
Flash/Embedded Flash Technology
TSMC demonstrated excellent intrinsic reliability data for automotive
applications using fl ash/embedded fl ash technology at the 0.18 micron
technology node. Our test vehicles achieved very low failure rates for
both cycling test and data retention after a bake at 250 degree Celsius.
In addition, a programmable fuse IP has been verifi ed on silicon for 0.18
micron high voltage technology. We developed and verifi ed IP with read
functionality at 3.3 volt and 1.5 volt Vcc for 0.13 micron embedded fl ash
technology, which meets endurance specifi cations. TSMC also worked out a
very competitive split-gate Flash device for 90 nanometer embedded fl ash.
With this new cell architecture, TSMC can continue the scaling trend of
split-gate fl ash at the 90 nanometer node, improving density by four times
compared with the 0.18 micron technology node. A test vehicle has been
taped out to verify the new fl ash device.
23
4. R&D Plans for 2007
Moving forward, TSMC intends to focus on qualifi cation and production
of the 45 nanometer logic/mixed signal technology platforms as well as
development of a 32 nanometer logic platform. In addition, we will devote
intense efforts to qualify the 45 nanometer node with superior transistor
performance featuring a strong strained silicon process, in both bulk and
silicon-on-insulator. Other development projects include, but are not limited
to: 45 nanometer and 65 nanometer embedded DRAM; 65 nanometer
mixed signal/RF for communication applications; embedded Flash IP
development in 0.13 micron and 90 nanometer technologies; 0.11 micron
and 90 nanometer 4T CMOS image sensor technologies.
Our re-organization of R&D in 2006 emphasizes our commitment to
maintain our long-term technology lead over competitors in the foundry
sector through a strong exploratory technology research program. Also,
TSMC will continue its exploratory research team plans to focus on the
22 nanometer node and beyond. We plan to continue exploratory work
on new transistors and process technologies such as 3D structures,
MRAM, strained-layer CMOS, and novel SoC features. The study of the
Manufacturing Excellence
1. TSMC’s Manufacturing Capabilities
TSMC is the foundry sector’s capacity leader. In 2006, TSMC managed
capacity of 7.06 million eight-inch equivalent wafers, an increase of 18.6
percent from 2005. However, capacity is not the only foundation for TSMC’s
manufacturing excellence. Our fl exibility in assurance of supply for diverse
customer needs, best-in-class cycle time, agility in meeting customers’
capacity needs, ability to quickly ramp up and maintain high yield, accurate
delivery, and in-house mask service make manufacturing excellence one of
TSMC’s core strengths.
Flexible Manufacturing
To serve a diverse customer base, TSMC’s fabs have the fl exibility to support
numerous customers, products, and technologies. Each individual fab can
support over one hundred customers and over one thousand different
products.
fundamental physics of nanometer CMOS transistors is now a core facet of
Best-in-class Cycle Time
our efforts both to improve the understanding and to guide the design of
the transistors at advanced nodes. The fi ndings of these studies are being
applied to ensure our leadership at the 32 nanometer and 22 nanometer
nodes. One of TSMC's goals is to extend Moore's law through innovative
in-house work, as well as by collaborating with industry leaders and
academia to push the envelope in fi nding cost effective technology and
manufacturing solutions.
Our customers depend on TSMC’s ability to deliver products with short
demand fulfi llment cycles. TSMC’s production cycle time is the fastest
in the foundry sector and is competitive with the leading benchmark
manufacturers in the semiconductor industry. TSMC’s advanced 12-inch
fabs continued to break cycle time records in 2006, supported by integrated
planning systems as well as a high degree of automation.
TSMC plans to continue working closely with international consortia and
photolithography equipment suppliers to ensure the timely development of
193 nanometer high NA scanner technology, liquid immersion lithography,
and massively parallel E-Beam direct write and EUV scanner technologies.
TSMC adapts to surges in customer demand with large-capacity 12-inch
GigaFabsSM and fab clusters, supporting each other with seamless
technology transfer. Customers can usually quickly qualify their products in
multiple fabs. TSMC’s technology transfer requires the second fab to match
These technologies are now the mainstay of our process development efforts
the fi rst fab’s yield and device performance and strive further for higher
at the 45 nanometer node and beyond.
performance.
Manufacturing Agility
TSMC also plans to continue to collaborate with mask inspection equipment
Fast Yield Ramp Up
suppliers to develop aerial image inspection techniques. This should help
to ensure that we can maintain our leadership position in mask quality
and cycle time, and continue to meet aggressive R&D, prototyping and
production requirements.
Fast yield ramp up for new products is crucial to the success of TSMC and
our customers. We have developed a comprehensive methodology for
transferring technologies from R&D to production to shorten the yield
learning curve of leading edge technologies.
Overall, TSMC plans to continue to invest heavily to expand its R&D capabilities.
TSMC’s seamless technology transfer also enables consistent yield when
With a highly competent and dedicated R&D team and unwavering
commitment to innovation, we are confi dent of our ability to deliver the
best and most cost effective SoC technologies for our customers and to
customers transfer production to a second fab. In addition, TSMC vigilantly
seeks to maintain yield stability with our effective Yield Loss Prevention
System and Yield Deviation Analysis System.
support our business growth.
Accurate Delivery
TSMC has a proven record of providing customers with consistent on-time
delivery. TSMC has re-engineered its demand fulfi llment system and has
developed a state-of-the-art manufacturing planning and dispatching system
that further enhances the accuracy of deliveries. TSMC’s stringent demands
for accuracy require that deliveries be neither too late nor too early, as both
could affect a customer’s just-in-time supply chain management. In 2006,
we were able to make over 90 percent of our deliveries within one day of
the scheduled delivery date.
24
3. Quality
TSMC is committed to providing customers with the best quality wafers
for their products. Our Quality and Reliability (Q&R) services champion the
partnership between customers and the entire TSMC organization to achieve
“quality-on-demand”. The goal of quality on demand is to fulfi ll customers’
needs regarding time to market and market competition, over a broad range
of products.
In the design stage, Q&R technical services assist customers to design-in
their product reliability requirements. Q&R also works with R&D on process
development in order to assure reliability performance, not only for a
variety of circuit devices, but also for different types of IC packages. Q&R
has deployed systems to ensure robust quality in managing production
dynamics as the company meets customers’ business requirements. To
sustain production quality and minimize risks to customers when deviations
occur, manufacturing quality monitoring and event management span all
critical stages, from raw material supply, mask-making, and real-time in-
Mask Production
Mask technology is an integral part of advanced lithography, and TSMC's
process monitoring, to wafer sort and assembly and customer fi eld quality
in-house mask shop is one of the world's largest mask making facilities,
performance. Advanced failure analysis techniques are also used in every
providing our customers with one-stop service for prototyping with short
instance, from process development to customer production issues.
TSMC Q&R is also responsible for leading the company towards the ultimate
goal of zero defect production, using continuous improvement programs.
Periodic customer feedback indicates that products shipped from TSMC
have consistently met or exceeded their fi eld quality requirements in the
marketplace. In 2006, TSMC conformed to ISO/TS 16949 requirements
for a fi fth consecutive year, continuing to meet the automotive industry’s
stringent quality requirements.
cycle time. TSMC's mask shop is process-integrated and synchronized with
TSMC's manufacturing facilities through a coupled computer-integrated
manufacturing system. All high-end masks are Optical Proximity Correction
(OPC) optimized, and undergo routine characterization for quality. We provide
the highest mask quality with the shortest mask cycle time in the industry.
TSMC’s CyberShuttleSM is the foundry sector's fi rst and most used prototyping
program with multiple customers sharing mask costs through multi-project
wafers. It has proven cost effective for both product prototyping and IP
development. Designers see CyberShuttleSM as the cornerstone of product
development methodology for managing design quality and achieving faster
time-to-revenue.
2. GigaFabSM
TSMC’s 12-inch fabs are a key part of our manufacturing excellence, and
will continue to grow more important in the future. TSMC operates two
300mm fabs - Fab 12 and Fab 14. Fab 12 is located in Hsinchu, Taiwan
with a capacity of 166,000 12-inch wafers in the fourth quarter of 2006,
is the primary site for TSMC’s R&D. Fab 14, located in Tainan, Taiwan, had
capacity of 105,000 wafers in the fourth quarter of 2006. These advanced
facilities will continue to be the focus of our capacity expansion in the
near future.
These “GigaFabsSM” are centers of our unceasing effort to improve
manufacturing excellence and to continue to deliver breakthroughs. Our
gigafabs attain lower operating costs by achieving near 100 percent
automation, such as real-time wafer dispatching, a search engine
optimizing route for Automated Materials Handling Systems (AMHS), full
automation of production wafers and non-product wafers, as well as lean
work-in-progress control.
25
4. Raw Materials and Supply Chain Risk Management
In 2006, TSMC brought together fab operations, Materials Management, Risk Management and the Quality System Management Division in a project to
improve supply chain risk management. TSMC worked together with suppliers throughout 2006 to prepare safety inventory, improve their quality, and share
supply chain risk management knowledge.
Raw Materials Supply
Major Materials
Raw Wafers
Major Suppliers
Market Status
Procurement Strategy
F.S.T.
MEMC
S.E.H.
Siltronic
SUMCO
These fi ve suppliers provide over 85% of
the world's wafer supply on a combined
basis.
Each supplier has multiple
manufacturing sites in order to meet
customer demands, including plants in
North America, Asia, and Europe.
Chemicals
BASF
Tai-Young High Tech (TYS)
These two companies are the major
suppliers for bulk chemical.
TSMC's suppliers of silicon wafers are required to pass
stringent quality certifi cation procedures.
TSMC procures wafers from multiple sources to ensure
adequate supplies for volume manufacturing and to
appropriately manage supply risk.
TSMC maintains competitive price and service
agreements with its wafer suppliers, and when
necessary enters into strategic and collaborative
agreements with key suppliers.
TSMC regularly reviews the quality, delivery, cost and
service performance of its wafer suppliers. The results
of these reviews are incorporated in TSMC's subsequent
purchasing decisions.
A periodic audit of each wafer supplier's quality
assurance systems ensures that TSMC can maintain the
highest quality for its own products.
Both suppliers have relocated many of their operations
closer to TSMC's major manufacturing facilities,
therefore improving the procurement logistics
signifi cantly.
The suppliers' products are reviewed regularly to ensure
that TSMC's specifi cations are met and product quality
is satisfactory.
TSMC works closely with its suppliers to ensure that
they have adequate production lead-time to supply the
required products to TSMC.
TSMC conducts periodic audits of the suppliers' quality
assurance systems to ensure that they meet TSMC's
standards.
These four companies are the major
suppliers for photoresist.
These four companies are the major
suppliers for specialty gas.
Majority of the four suppliers are located in different
geographic locations, minimizing supply risk to TSMC.
The products of these four suppliers are
interchangeable.
TSMC has long-term contracts with these suppliers to
ensure supply stability and service quality. In addition,
the availability of other domestic suppliers also enables
TSMC to secure better purchase terms for the gases.
TSMC conducts periodic audits of the suppliers' quality
assurance systems to ensure that they meet TSMC's
standards.
AZ
Shin-Etsu Chemical
Sumitomo
T.O.K.
Air Liquide
Air Products
BOC
Taiyo Nippon Sanso
Photoresist
Gases
26
Customer Partnership
1. Semiconductor Market Analysis
Global semiconductor revenues increased about 8.9 percent in 2006 to
US$247.7 billion. Fabless company revenues grew about 16 percent in
2006 to US$42.3 billion. The value of dedicated foundry output at the
semiconductor market level is roughly three times foundry revenues and
accounted for about 24 percent of semiconductor revenues in 2006. TSMC
maintained its leading position in the dedicated foundry segment of the
semiconductor industry with an estimated market share of 50 percent.
Market research fi rm IC Insights estimates that the largest geographic
market for dedicated foundry services by corporate headquarter location,
is North America, which accounted for 63 percent of overall dedicated
foundry revenue in 2006. The second largest geographic market is Asia-
Pacifi c (excluding Japan), which accounted for 21 percent of total dedicated
foundry revenue in 2006. Europe made up 10 percent, and Japan
contributed six percent.
1.1 Semiconductor Industry Growth Analysis
Analysts' consensus forecast for semiconductor market growth in 2007 is a
mid-single digit percentage rise. The semiconductor market is forecasted to
continue growing in 2008 with a consensus forecast of a low double digit
percentage increase.
1.2 Foundry Sector Outlook: Opportunities and
Threats
TSMC believes foundry services will play an increasingly important role as
Integrated Device Manufacturers, or IDMs, become increasingly reliant
on outsourced manufacturing, and as fabless semiconductor companies
continue to grow.
IC insights forecasts that by 2010, 30 percent of global semiconductor revenue
will come from dedicated foundries, compared with 24 percent in 2006.
Accordingly, TSMC plans to continue capacity expansion in 2007, with capital
investment of approximately US$2.6 billion to US$2.8 billion. In addition to
increasing capacity in Fab 12 and Fab 14, TSMC’s two 12-inch GigaFabsSM,
TSMC is expanding capacity at its eight-inch fab in China, TSMC (Shanghai).
TSMC will continue to focus on creating value for customers to capitalize on
opportunities and maintain competitiveness.
2. Customers
2.1 Customer Service
TSMC is committed to providing the best services to our customers and
believes that customer service is critical to enhancing customer loyalty. In
turn, customer loyalty leads to higher levels of customer retention and to
expansion of business relationships. TSMC’s goal is to maintain its position
as the most advanced and largest provider of semiconductor manufacturing
technologies and foundry services. TSMC believes that achieving this goal
will help retain existing customers, attract new customers, and strengthen
customer partnerships.
To facilitate customer interaction and information access on a real-time
basis, TSMC has established a wide range of web-based services covering
applications in design, engineering, and logistic collaborations. They are
collectively branded as eFoundrySM.
2.2 Customer Satisfaction
TSMC regularly conducts surveys and reviews to ensure that customers’
needs and wants are being adequately understood and then addressed.
Continual improvement plans supplemented by customer feedback are an
integral part of this business process.
2.3 Market Expansion and Penetration
TSMC continues to diversify its customer base while supporting the growth
of our existing customers. TSMC engaged more than 50 new customers in
2006. In addition, TSMC has opened offi ces in Korea and India to support
local customers as well as branch offi ces of global customers.
3. Customer-driven Design and Technology Platform
In 2006, TSMC separated its Technology Platform and Design Services
operations from R&D into an independent Design and Technology Platform
organization. This reorganization tightens the link between TSMC’s
R&D capabilities with the needs of our customers and ensures that our
technology road map is driven by customer applications.
Design is becoming increasingly intertwined with manufacturing as technology
advances into deep sub-micron nodes. TSMC is dedicated to serving its
customers by lowering the barriers to advanced technology design. In June
2006, TSMC announced its Reference FlowSM 7.0, which features a powerful
statistical static timing analyzer, a set of new power management techniques
and an array of design for manufacturing enhancements. Reference FlowSM
7.0 further strengthens the Reference FlowSM 6.0 released in 2005, which fi rst
opened the doors to 65 nanometer design.
TSMC also collaborated with design tool vendors to set up a design for
manufacturing ecosystem that ensures our customers can design with the
same manufacturing data regardless of the design tools that they select.
TSMC’s global customers have diverse product specialties and excellent
We believe that providing our customers with a robust DFM environment
performance records in various segments of the semiconductor industry.
will become a more and more important factor in shortening the design
Fabless customers include Altera Corporation, ATI Technologies Inc. (now part of
cycle and accelerating time-to-volume and time-to-market with each
Advanced Micro Devices, Inc.), Broadcom Corporation, Marvell Semiconductor
technology generation.
Inc., NVIDIA Corporation, Qualcomm Inc. and VIA Technologies Inc. IDM
customers include Analog Devices Inc., Freescale Semiconductor Inc., NXP
Semiconductors (formerly Philips Semiconductors), and Texas Instruments
Incorporated. Revenue from NVIDIA Corporation accounted for more than
10 percent of our revenue in 2006. In 2005, revenue from ATI Technologies
Inc. amounted to over 10 percent of our revenue.
27
Financial
Strength
TSMC’s trinity of strengths of technology leadership, manufacturing excellence, and customer
partnership are built on a foundation of fi nancial strength. In 2006, we generated positive free cash fl ow
to both invest in the future with US$2.46 billion in capital spending, and at the same time return value
to shareholders with a NT$2.50 cash dividend per share.
Financial Status and Operating Results
1. Financial Status
Unit: NT$ thousands
Item
Current Assets
Fixed Assets
Other Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Capital Stock
Capital Surplus
Retained Earnings
Total Shareholders' Equity
2006
193,676,010
228,235,359
14,295,330
573,584,904
42,905,154
22,698,466
65,603,620
258,296,879
54,107,498
197,124,532
507,981,284
2005
197,562,416
214,145,633
15,172,165
507,539,815
32,184,415
29,725,051
61,909,466
247,300,246
57,117,886
142,771,034
445,630,349
Difference
(3,886,406)
14,089,726
(876,835)
66,045,089
10,720,739
(7,026,585)
3,694,154
10,996,633
(3,010,388)
54,353,498
62,350,935
%
-2%
7%
-6%
13%
33%
-24%
6%
4%
-5%
38%
14%
1.1 Analysis of Deviation over 20%
● The increase in current liabilities was mainly due to reclassifi cation of bonds payable due within one year from noncurrent portion to current and increase of
income tax payable.
● Long-term liabilities decreased as a result of the afore-mentioned reclassifi cation to current liabilities.
● The increase in retained earnings was due to the operating results in 2006, partially offset by 2005 earnings distribution.
1.2 Major Impact on Financial Position
The above deviations over 20 percent had no major impact on TSMC’s fi nancial position.
1.3 Future Plan on Financial Position: Not applicable.
28
29
2. Operating Results
Unit: NT$ thousands
Item
Gross Sales
Sales Returns & Allowances
Net Sales
Cost of Sales
Gross Profi t
Operating Expenses
Income from Operations
Non-operating Income & Gains (Note)
Non-operating Expenses & Losses (Note)
Income before Income Tax
Income Tax Expenses
Income before Cumulative Effect of Changes in Accounting Principles
Cumulative Effect of Changes in Accounting Principles
Income after Income Tax
Note: Certain accounts for year 2005 has been reclassifi ed to conform to year 2006 classifi cations.
2.1 Analysis of Deviation over 20%
2006
319,210,148
(5,328,513)
313,881,635
(164,163,235)
149,718,400
(23,418,541)
126,299,859
11,596,727
(3,090,087)
134,806,499
(7,550,582)
127,255,917
(246,186)
127,009,731
2005
270,315,064
(5,726,700)
264,588,364
(149,344,315)
115,244,049
(22,230,225)
93,013,824
7,381,360
(6,575,761)
93,819,423
(244,388)
93,575,035
-
93,575,035
Difference
48,895,084
398,187
49,293,271
(14,818,920)
34,474,351
(1,188,316)
33,286,035
4,215,367
3,485,674
40,987,076
(7,306,194)
33,680,882
(246,186)
33,434,696
%
18%
-7%
19%
10%
30%
5%
36%
57%
-53%
44%
2,990%
36%
-
36%
● Increase in gross profi t: The improved gross profi t was primarily due to higher capacity utilization and continuous cost reduction activities.
● Increase in non-operating income and gains: The increase was primarily due to investment income recognized in 2006, partially offset by foreign exchange
income recognized in 2005.
● Decrease in non-operating expenses and losses: The decrease was mainly due to less loss on disposal of fi nancial instruments and investment loss recognized
in 2005.
● Increase in income tax expenses: The increase was primarily due to higher taxable income and a lower tax credit rate in 2006.
2.2 Sales Volume Forecast and Related Information
Capacity Plan
2005
2006
24(cid:395)
19(cid:395)
2007
17(cid:395)
6.0 million
7.1 million
2005
2006
2007
8.3 million
0(cid:395)
(cid:22)(cid:20)(cid:23)(cid:27)
(cid:22)(cid:20)(cid:23)(cid:25)
45(cid:395)
49(cid:395)
53(cid:395)
100(cid:395)
Annual Growth Rate
Capacity: 8-inch equivalent wafer
2007 wafer shipment is expected to be approimately 8 million 8-inch equivalent wafers.
For additional details, please refer to “Letter to Shareholders” on page 2.
2.3 Gross Profi t Deviation Analysis
Unit: NT$ millions
Gross Profi t in 2006
Gross Profi t in 2005
149,718
115,244
Difference
34,474
Price Difference
(28,264)
Cost Difference
Mix & Volume Difference
20,254
42,484
Unfavorable pricing attributions due to
signifi cant market competition.
Favorable cost variance came from
continuous cost reduction activities and
lower depreciation as a result of fully-
depreciated assets.
1. Revenue from advanced technology
(<=0.13µm) increased from 30% in
2005 to 33% in 2006. The product mix
improvement and higher utilization
resulted in higher gross profi t.
2. Wafer shipment grew 28% in 2006.
This quantity difference resulted in
higher gross profi t.
30
2.4 Consolidated Financial Analysis
● Net sales of NT$317.41 billion in 2006 increased by 19.1 percent from 2005. It was mainly attributable to an increase in wafer shipment.
● Gross margin increased to 49.1 percent of net sales in 2006 from 44.3 percent of net sales in 2005. The higher margin was primarily driven by higher
capacity utilization and continued cost reduction.
● Net income of NT$127.01 billion in 2006 increased by 35.7 percent from 2005. It was mainly due to an increase in wafer shipment and higher gross
margin, partially offset by an increase in income tax expense.
● Diluted earnings per share of NT$4.92 in 2006 increased by 35.5 percent from 2005, primarily as the result of an increase in net income.
3. Cash Flow
Unit: NT$ thousands
Cash Balance 12/31/2005
Net Cash Provided by Operating
Activities in 2006
Net Cash Outfl ows from Investing &
Financing Activities in 2006
Cash Balance 12/31/2006
Remedy for Cash Shortfall
Investment Plan
Financing Plan
85,383,583
196,080,297
(181,324,171)
100,139,709
-
-
3.1 Analysis of Cash Flow
● NT$196 billion net cash provided by operating activities: Mainly from profi table operating results.
● NT$117.3 billion net cash used in investing activities: Primarily for capital expenditures and investments in fi nancial assets .
● NT$64 billion net cash used in fi nancial activities: Mostly for the payout of cash dividends and employees' profi t sharing.
3.2 Remedial Actions for Cash Shortfall: As a result of positive cash fl ows and ample cash on-hand, remedial actions are not required.
3.3 Cash Flow Projection for Next Year: Not applicable.
4. Major Capital Expenditure
4.1 Major Capital Expenditure and Sources of Funding
Unit: NT$ thousands
Plan
Actual or Planned Source of Capital
Production Facilities and Equipment
Cash fl ow generated from operations
R&D Equipment
Cash fl ow generated from operations
Total Amount
as of 12/31/2006
212,216,265
9,501,919
Status of Actual or Projected Use of Capital
2004
71,078,377
2,000,055
2005
68,862,618
3,840,251
2006
2007 (Note)
72,275,270
3,661,613
- (Note)
- (Note)
Note: 2007 capital expenditures will be in the range of US$2.6 billion to US$2.8 billion for TSMC and its subsidiaries, including production facilities and equipment, R&D equipment and other assets.
4.2 Expected Future Benefi ts
With the above-mentioned capital expenditures, it is estimated that TSMC’s annual production capacity will increase by approximately 700 thousand eight-
inch equivalent wafers in 2007. In addition, 2008 and 2009 production capacity will also increase.
5. Investments Exceeding 5% of Company's Paid-in Capital in 2006
Unit: NT$ millions
Item
TSMC Global Ltd.
Amount (Note)
Policy
Reasons for Profi t/Loss
Improvement Plan
Other Future Investment Projects
42,327
To reduce foreign
Fixed income securities
Not applicable
No
exchange hedging costs
investment income
Note: The annual investment amount exceeding 5% of company's paid-in capital.
31
Capital and Shares
Price
1,000
1,000
1,000
-
1,000
-
10
10
-
-
-
-
-
-
-
-
-
220
-
10
-
-
10
-
-
-
-
-
-
-
-
-
-
-
-
-
Par Value
1,000
1,000
1,000
1,000
1,000
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
Authorized
Paid-in
Shares
5,510,000
5,510,000
5,510,000
5,510,000
5,510,000
551,000,000
551,000,000
551,000,000
780,000,000
780,000,000
3,000,000,000
3,000,000,000
8,500,000,000
8,500,000,000
9,100,000,000
9,100,000,000
Amount
5,510,000,000
5,510,000,000
5,510,000,000
5,510,000,000
5,510,000,000
5,510,000,000
5,510,000,000
5,510,000,000
7,800,000,000
7,800,000,000
30,000,000,000
30,000,000,000
85,000,000,000
85,000,000,000
91,000,000,000
91,000,000,000
17,800,000,000
178,000,000,000
17,800,000,000
17,800,000,000
17,800,000,000
24,600,000,000
24,600,000,000
24,600,000,000
24,600,000,000
24,600,000,000
24,600,000,000
24,600,000,000
24,600,000,000
27,050,000,000
27,050,000,000
27,050,000,000
27,050,000,000
178,000,000,000
178,000,000,000
178,000,000,000
246,000,000,000
246,000,000,000
246,000,000,000
246,000,000,000
246,000,000,000
246,000,000,000
246,000,000,000
246,000,000,000
270,500,000,000
270,500,000,000
270,500,000,000
270,500,000,000
Shares
1,377,500
2,204,000
3,306,000
3,360,797
3,911,797
391,179,700
473,829,700
551,000,000
608,304,000
780,000,000
1,439,000,000
2,654,200,000
4,081,300,000
6,047,175,967
7,548,483,035
7,670,881,717
9,990,849,423
10,105,849,423
11,689,364,587
12,989,364,587
18,132,553,051
19,922,886,745
18,622,886,745
20,266,618,984
23,376,597,005
23,251,877,005
23,252,048,432
23,252,863,457
24,724,087,405
24,726,128,803
24,727,347,637
24,730,024,647
Amount
1,377,500,000
2,204,000,000
3,306,000,000
3,360,797,000
3,911,797,000
3,911,797,000
4,738,297,000
5,510,000,000
6,083,040,000
7,800,000,000
14,390,000,000
26,542,000,000
40,813,000,000
60,471,759,670
75,484,830,350
76,708,817,170
99,908,494,230
101,058,494,230
116,893,645,870
129,893,645,870
181,325,530,510
199,228,867,450
186,228,867,450
202,666,189,840
233,765,970,050
232,518,770,050
232,520,484,320
232,528,634,570
247,240,874,050
247,261,288,030
247,273,476,370
247,300,246,470
27,050,000,000
270,500,000,000
24,733,052,975
247,330,529,750
27,050,000,000
270,500,000,000
25,818,166,583
258,181,665,830
27,050,000,000
270,500,000,000
25,823,356,941
258,233,569,410
27,050,000,000
270,500,000,000
25,825,839,775
258,258,397,750
1. Capitalization
Unit: Share/NT$
Month / Year
02/1987
12/1988
11/1989
07/1990
12/1990
07/1991
12/1991
12/1992
08/1993
07/1994
06/1995
05/1996
07/1997
07/1998
07/1999
11/1999
06/2000
06/2000
08/2000
12/2000
07/2001
07/2002
06/2003
07/2003
07/2004
09/2004
03/2005
06/2005
07/2005
09/2005
12/2005
03/2006
07/2006
07/2006
09/2006
12/2006
32
Sources of Capital
Founding
Cash Offering
Cash Offering
Capitalization of Profi ts
Cash Offering
Par Value Change from NT$1000 to NT$10
Cash Offering
Cash Offering: NT$582,171,120
Capitalization of Profi ts: NT$189,531,880
Capitalization of Profi ts
Capitalization of Profi ts
Capitalization of Profi ts
Capitalization of Profi ts
Capitalization of Profi ts
Capitalization of Profi ts
Capitalization of Profi ts
Conversion of ECB
Capitalization of Profi ts: NT$21,320,311,040 and
Capital Surplus: NT$1,879,366,020
Cash Offering (ADR)
Merger with WSMC & TSMC-ACER
Cash Offering (Preferred Stock)
Capitalization of Profi ts
Capitalization of Profi ts
Redemption of Preferred Stock
Capitalization of Profi ts
Capitalization of Profi ts
Capital Reduction: Cancellation of Treasury Shares
Exercise of Employee Stock Options
Exercise of Employee Stock Options
Capitalization of Profi ts
Exercise of Employee Stock Options
Exercise of Employee Stock Options
Exercise of Employee Stock Options
Exercise of Employee Stock Options
Capitalization of Profi ts: NT$7,141,632,380 and
Capital Surplus: NT$3,709,503,700
Exercise of Employee Stock Options
Exercise of Employee Stock Options
Remark
Capital Increase by Assets Other than Cash
Date of Approval & Approval Document No.
As of 02/28/2007
None
None
None
None
None
-
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
-
-
-
-
-
-
-
10/30/1992 (81) Tai Tsai Cheng (1) No. 02818
07/05/1993 (82) Tai Tsai Cheng (1) No. 01624
06/15/1994 (83) Tai Tsai Cheng (1) No. 26945
05/19/1995 (84) Tai Tsai Cheng (1) No. 29799
04/16/1996 (85) Tai Tsai Cheng (1) No. 24544
05/26/1997 (86) Tai Tsai Cheng (1) No. 40772
05/26/1998 (87) Tai Tsai Cheng (1) No. 46156
05/26/1999 (88) Tai Tsai Cheng (1) No. 48906
-
04/27/2000 (89) Tai Tsai Cheng (1) No. 34058
05/09/2000 (89) Tai Tsai Cheng (1) No. 34440
06/07/2000 (89) Tai Tsai Cheng (1) No. 47200
09/22/2000 (89) Tai Tsai Cheng (1) No. 80344
06/05/2001 (90) Tai Tsai Cheng (1) No. 135268
05/28/2002 (91) Tai Tsai Cheng (1) No. 128948
-
06/18/2003 Tai Tsai Cheng 1 Tzu No. 0920127023
05/25/2004 Tai Tsai Cheng 1 Tzu No. 0930123135
-
06/25/2002 Tai Tsai Cheng 1 Tzu No. 0910134577
06/25/2002 Tai Tsai Cheng 1 Tzu No. 0910134577
05/23/2005 Jin Guan Cheng 1 Tzu No. 0940120519
06/25/2002 Tai Tsai Cheng 1 Tzu No. 0910134577
06/25/2002 Tai Tsai Cheng 1 Tzu No. 0910134577
06/25/2002 Tai Tsai Cheng 1 Tzu No. 0910134577
10/29/2003 Tai Tsai Cheng 1 Tzu No. 0920150554
06/25/2002 Tai Tsai Cheng 1 Tzu No. 0910134577
10/29/2003 Tai Tsai Cheng 1 Tzu No. 0920150554
05/30/2006 Jin Guan Cheng 1 Tzu No. 0950122027
06/25/2002 Tai Tsai Cheng 1 Tzu No. 0910134577
10/29/2003 Tai Tsai Cheng 1 Tzu No. 0920150554
06/25/2002 Tai Tsai Cheng 1 Tzu No. 0910134577
10/29/2003 Tai Tsai Cheng 1 Tzu No. 0920150554
33
2. Capital and Shares
2.1 Capital and Shares
Unit: Share
Type of Stock
Common Stock
2.2 Shelf Registration: None.
3. Composition of Shareholders
3.1 Status of Shareholders
Common Share
Authorized Capital
Issued Shares
Listed
Non-Listed
Total
Unissued Shares
As of 02/28/2007
Total
25,832,119,918
0
25,832,119,918
1,217,880,082
27,050,000,000
Type of Shareholders
Government Agencies
Financial Institutions
Other Juridical Persons
Foreign Institutions
& Natural Persons
Number of Shareholders
Shareholding
Holding Percentage (%)
8
1,864,707,449
7.22%
81
380,760,499
1.47%
874
1,932
813,403,232
18,506,913,182
4,257,297,975
25,823,082,337
3.15%
71.67%
16.49%
100.00%
As of 06/26/2006 (last record date)
Domestic
Natural Persons
460,241
Total
463,136
Ownership
46,875,977
460,870,677
376,503,342
292,492,645
172,838,649
300,401,223
182,858,884
148,437,421
418,963,013
404,709,152
424,323,205
251,806,500
175,368,009
167,627,779
21,999,005,861
25,823,082,337
As of 06/26/2006 (last record date)
Ownership (%)
0.18%
1.78%
1.46%
1.13%
0.67%
1.16%
0.71%
0.58%
1.62%
1.57%
1.64%
0.98%
0.68%
0.65%
85.19%
100.00%
3.2 Distribution Profi le of Shareholder Ownership
Common Share
Shareholder Ownership (Unit: Share)
Number of Shareholders
143,241
196,493
55,056
24,343
10,014
12,543
5,333
3,340
6,117
2,983
1,530
519
255
188
1,181
463,136
1 ~ 999
1,000 ~ 5,000
5,001 ~ 10,000
10,001 ~ 15,000
15,001 ~ 20,000
20,001 ~ 30,000
30,001 ~ 40,000
40,001 ~ 50,000
50,001 ~ 100,000
100,001 ~ 200,000
200,001 ~ 400,000
400,001 ~ 600,000
600,001 ~ 800,000
800,001 ~ 1,000,000
Over 1,000,001
Total
Preferred Shares: Not applicable.
34
4. Major Shareholders
4.1 Major Shareholders
Common Share
Rank
Shareholders
1
2
3
4
5
6
7
8
9
ADR-Taiwan Semiconductor Manufacturing Company, Ltd.
Koninklijke Philips Electronics N.V.
National Development Fund, Executive Yuan
The Growth Fund of America, Inc.
JP Morgan Chase Bank N.A. Taipei Branch in Custody for Europacifi c Growth Fund
JP Morgan Chase Bank N.A. Taipei Branch in Custody for the New Perspective Fund, Inc.
Government of Singapore Investment Corp. PFE. Ltd.
Bureau of Labor Insurance
JP Morgan Chase Bank N.A. Taipei Branch in Custody for ABU DHABI Investment
10
GMO Emerging Markets Fund
Total Shares Owned
Ownership (%)
As of 06/26/2006 (last record date)
4,448,702,206
4,187,989,024
1,629,084,227
581,716,927
457,126,622
323,587,686
294,462,412
235,615,859
180,488,171
178,542,448
17.23%
16.22%
6.31%
2.25%
1.77%
1.25%
1.14%
0.91%
0.70%
0.69%
4.2 Information on Our 10 Largest Shareholders Who are Related Parties to Each Other: None of TSMC’s 10 largest
shareholders are related parties to each other.
5. Share Information
TSMC’s earnings per share grew 35.5 percent in 2006 to NT$4.92 per share. The following table details TSMC’s net worth, earnings, dividends and market
price per common share in 2006, as well as other data regarding return on investment.
Net Worth, Earnings, Dividends, and Market Price Per Common Share
Item
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 (thousand shares)
Diluted Earnings Per Share
Adjusted Diluted Earnings Per Share (Note 2)
Dividends Per Share
Cash Dividends
Stock Dividends
Dividends from Retained Earnings
Dividends from Capital Surplus
Accumulated Undistributed Dividend
Return on Investment
Price/Earnings Ratio (Note 3)
Price/Dividend Ratio (Note 4)
Cash Dividend Yield (Note 5)
Note 1: Pending shareholders' approval
Note 2: Retroactively adjusted for stock dividends and stock bonuses to employees
Note 3: Price / Earnings Ratio = Average Market Price / Adjusted Diluted Earnings Per Share
Note 4: Price / Dividend Ratio = Average Market Price / Cash Dividends Per Share
Note 5: Cash Dividend Yield = Cash Dividends Per Share / Average Market Price
2005
2006
01/01/2007 ~ 02/28/2007
59.34 (Note 2)
37.68 (Note 2)
47.54 (Note 2)
18.02
15.37
24,693,112
3.79
3.63
2.50
0.15
0.15
-
13.10
19.02
5%
64.80 (Note 2)
52.30 (Note 2)
59.14 (Note 2)
19.67
(Note 1)
25,813,183
4.92
(Note 1)
3.00
0.02
0.03
-
(Note 1)
(Note 1)
(Note 1)
71.70
64.00
68.32
-
-
-
-
-
-
-
-
-
-
-
-
35
6. Dividend Policy
2005 Profi t Distribution Set Aside as Directors and Supervisors
Compensation, and Employee Profi t Sharing
TSMC’s Profi ts may be distributed by way of cash dividend and/or stock
dividend. The preferred method of distributing profi ts is by way of cash
dividend. Under TSMC’s articles of incorporation, stock dividend shall not
exceed 50 percent of the total dividend distribution in any given fi scal year.
Except under certain conditions specifi ed in its Articles of Incorporation, TSMC
does not pay dividends when there is no profi t for a particular fi scal year.
7. Distribution of Profi t
The Board adopted a proposal for 2006 profi t distribution at its meeting on
February 6, 2007. The proposed profi t distribution will be effected upon the
approval of shareholders at the Annual Shareholder Meeting in May 7, 2007.
Board
Resolution
(02/14/2006)
Amount (NT$)
Amount (NT$)
257,409,650
257,409,650
3,432,128,678
3,432,128,678
Actual Result
Underlying
Number of
Shares
-
-
Dilution (%)
-
-
3,432,128,680
3,432,128,680
343,212,868
1.33％
Directors &
Supervisors
Compensation
(Cash)
Employee Profi t
Sharing in Cash
Employee Profi t
Sharing in Stock
Total
7,121,667,008
7,121,667,008
-
-
Proposal to Distribute 2006 Profi ts
Unit: NT$
Bonus to Directors & Supervisors
Cash Dividends to Common Shareholders (NT$3.0 Per Share)
Stock Dividends to Common Shareholders (NT$0.02 Per Share
at Par Value, i.e., 2 Shares for Each 1,000 Shares Owned)
(Note 1, 3)
Employees' Profi t Sharing in Cash
Employees' Profi t Sharing in Stock (Note 2)
Note 1: Equivalent to underlying number of shares: 51,659,376
Note 2: Equivalent to underlying number of shares: 457,279,801
285,799,875
77,489,063,538
2005 and 2006 Diluted EPS under Different Accounting Treatments for
"Director and Supervisors' Compensation" and "Employee Profi t Sharing"
Unit: NT$
516,593,760
Accounting Treatments
2005 Diluted EPS
2006 Diluted EPS
4,572,797,994
4,572,798,010
Treatment as Profi t Distribution
Treatment as Expenses (Employee Profi t
Sharing in Stock Expensed at Par Value)
3.79
3.50
4.92
4.56
Note 3: In addition, it is proposed to capitalize a portion of capital surplus in the amount of NT$774,890,640.
Each common share holder will be entitled to receive 3 shares from such capitalization of capital
surplus, and together with the 2 shares of stock dividend as mentioned above, 5 shares in total for
each 1,000 shares owned.
8. Impact to 2007 Business Performance, EPS, and ROE
Resulting from Stock Dividend Distribution:
Not applicable.
According to the Company’s Articles of Incorporation, TSMC shall allocate
9. Buyback of Treasury Stock: None.
no more than 0.3 percent of income available for distribution (income after
a regulatorily required deduction for prior years’ losses and contributions to
legal and special reserves) as a bonus to directors and supervisors, and not
less than one percent as a profi t-sharing bonus to employees.
36
10. Issuance of Corporate Bonds
10.1 Corporate Bonds
Issuance
Issuing Date
Denomination
Offering Price
Total Amount
Coupon Rate
Tenure
Guarantor
Trustee
Underwriter
Legal Counsel
Auditor
Repayment
Outstanding
Redemption or Early Repayment Clause
Covenants
Credit Rating
As of 02/28/2007
Domestic Unsecured Bond (IV)
12/04/2000 - 12/15/2000
NT$ 1,000,000
NT$10,000,000
Par
NT$15,000,000,000
Tranche A: 5.25% p.a.
Tranche B: 5.36% p.a.
Tranche A: 5 years
Maturity: 12/04/2005 -12/15/2005
Tranche B: 7 years
Maturity: 12/04/2007-12/14/2007
None
The International
Commercial Bank of China
Not Applicable
Domestic Unsecured Bond (V)
01/10/2002 - 01/24/2002
NT$1,000,000
NT$5,000,000
Par
NT$15,000,000,000
Tranche A: 2.60% p.a.
Tranche B: 2.75% p.a.
Tranche C: 3.00% p.a.
Tranche A: 5 years
Maturity: 01/10/2007 - 01/22/2007
Tranche B: 7 years
Maturity: 01/10/2009 - 01/24/2009
Tranche C: 10 years
Maturity: 01/10/2012 - 01/24/2012
None
TC Bank
Not Applicable
Eluvzy International Law Offi ce
Yan-an International Law Offi ce
TN Soong & Co
Bullet
NT$4,500,000,000
None
Customary Covenants
TN Soong & Co
Bullet
NT$12,500,000,000
None
Customary Covenants
twAAA (Taiwan Ratings Corporation, 06/07/2004)
twAAA (Taiwan Ratings Corporation, 06/07/2004)
Other Rights of Bondholders
Conversion Right
None
Amount of Converted or
Exchanged Common Shares,
ADRs or Other Securities as of
02/28/2007
Not Applicable
Dilution Effect and Other Adverse Effects on Existing Shareholders
Custodian
None
None
None
Not Applicable
None
None
10.2 Convertible Bond: Not applicable.
10.3 Exchangeable Bond: Not applicable.
10.4 Shelf Registration: Not applicable.
10.5 Bond with Warrants: Not applicable.
11. Preferred Shares
11.1 Preferred Share: Not applicable.
11.2 Preferred Share with Warrants: Not applicable.
37
12. Issuance of American Depositary Shares
Issuing Date
10/08/1997
11/20/1998
01/12/1999 -
01/14/1999
07/15/1999
NYSE
NYSE
NYSE
NYSE
Issuance & Listing
Total Amount (US$)
08/23/1999 -
09/09/1999
NYSE
02/22/2000 -
03/08/2000
04/17/2000
NYSE
NYSE
594,720,000
184,554,440
35,500,000
296,499,641
158,897,089
379,134,599
224,640,000
Offering Price Per ADS (US$)
24.78
15.26
17.75
24.516
Units Issued
Underlying Securities
24,000,000
12,094,000
2,000,000
12,094,000
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
28.964
5,486,000
57.79
6,560,000
56.16
4,000,000
TSMC Common
Shares from Selling
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
TSMC Common
Shares from Selling
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
TSMC Common
Shares from Selling
Shareholders
Common Shares Represented
120,000,000
60,470,000
10,000,000
60,470,000
27,430,000
32,800,000
20,000,000
Rights & Obligations of ADS Holders
Trustee
Depositary Bank
Custodian Bank
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
ADSs Outstanding (Note1)
24,000,000
46,222,650
48,222,650
71,407,859
76,893,859
83,453,859
87,453,859
Apportionment of Expenses for the
Issuance & Maintenance
Terms & Conditions in the Deposit
Agreement & Custody Agreement
Closing Price Per ADS (US$)
See Deposit
Agreement
and Custody
Agreement
for Details
2006
01/01/2007 -
02/28/2007
See Deposit
Agreement
and Custody
Agreement
for Details
High
Low
Average
High
Low
Average
(Note 2)
See Deposit
Agreement
and Custody
Agreement
for Details
See Deposit
Agreement
and Custody
Agreement
for Details
See Deposit
Agreement
and Custody
Agreement
for Details
See Deposit
Agreement
and Custody
Agreement
for Details
See Deposit
Agreement
and Custody
Agreement
for Details
11.18
7.95
9.48
11.55
10.62
11.06
Note 1: TSMC has in aggregate issued 573,544,500 ADSs since 1997, which, if taking into consideration of stock dividend distributed over the period, would amount to 891,254,093 ADSs. As of February 28, 2007, total number
of outstanding ADSs was 889,740,439 after 1,513,654 ADSs were redeemed. Stock dividend distributed in 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005 and 2006 was 45%, 23%, 28%, 40%, 10%, 8%, 14.08668%,
4.99971% and 2.99903% respectively.
Note 2: All fees and expenses such as underwriting fees, legal fees, listing fees and other expenses related to issuance of ADSs were borne by the selling shareholders, while maintenance expenses such as annual listing fees and
accountant fees were borne by TSMC.
Note 3: All fees and expenses such as underwriting fees, legal fees, listing fees and other expenses related to issuance of ADSs were borne by TSMC and the selling shareholders, while maintenance expenses such as annual listing
fees and accountant fees were borne by TSMC.
38
06/07/2000 -
06/15/2000
05/14/2001 -
06/11/2001
06/12/2001
11/27/2001
02/07/2002 -
02/08/2002
11/21/2002 -
12/19/2002
07/14/2003 -
07/21/2003
11/14/2003
08/10/2005 -
09/08/2005
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
1,167,873,850
240,999,660
297,649,640
320,600,000
1,001,650,000
160,097,914
908,514,880
1,077,000,000
1,402,036,500
35.75
20.63
20.63
16.03
16.75
8.73
10.40
10.77
8.6
32,667,800
11,682,000
14,428,000
20,000,000
59,800,000
18,348,000
87,357,200
100,000,000
163,027,500
Cash Offering and
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
163,339,000
58,410,000
72,140,000
100,000,000
299,000,000
91,740,000
436,786,000
500,000,000
815,137,500
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
144,608,739
156,290,739
170,718,739
259,006,235
318,806,235
369,019,413
485,898,166
585,898,166
864,210,597
(Note 3)
See Deposit
Agreement
and Custody
Agreement
for Details
(Note 2)
See Deposit
Agreement
and Custody
Agreement
for Details
See Deposit
Agreement
and Custody
Agreement
for Details
See Deposit
Agreement
and Custody
Agreement
for Details
See Deposit
Agreement
and Custody
Agreement
for Details
See Deposit
Agreement
and Custody
Agreement
for Details
See Deposit
Agreement
and Custody
Agreement
for Details
See Deposit
Agreement
and Custody
Agreement
for Details
See Deposit
Agreement
and Custody
Agreement
for Details
39
13. Status of Employee Stock Option Plan (ESOP)
13.1 Issuance of Employee Stock Options
ESOP Granted
Approval Date by the Securities & Futures Bureau
Issue (Grant) Date
Number of Options Granted
Percentage of Shares Exercisable to Outstanding Common Shares
Option Duration
Source of Option Shares
Vesting Schedule
Shares Exercised
Value of Shares Exercised (NT$)
Shares Unexercised
Original Grant Price Per Share (NT$)
Adjusted Exercise Price Per Share (NT$)
Percentage of Shares Unexercised to Outstanding Common Shares
Impact to Shareholders' Equity
First Grant
06/25/2002
08/22/2002
18,909,700
0.10154%
10 years
Second Grant
06/25/2002
11/08/2002
1,085,000
0.00583%
10 years
Third Grant
06/25/2002
03/07/2003
6,489,514
0.03485%
10 years
New Common Share
New Common Share
New Common Share
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
10,522,294
397,345,003
9,739,668
NT$53.0
NT$35.0
0.03771%
604,883
21,996,107
789,706
NT$51.0
NT$33.8
0.00306%
732,553
22,923,929
6,562,343
NT$41.6
NT$27.6
0.02541%
Dilution to Shareholders'
Equity is Limited
Dilution to Shareholders'
Equity is Limited
Dilution to Shareholders'
Equity is Limited
13.2 ESOP Granted to Management Team and to Top 10 Employees with an Individual Grant Value over
NT$30,000,000
Title
Chairman
President & Chief Executive Offi cer
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Name
Morris Chang (Note 1)
Rick Tsai (Note 1)
Kenneth Kin (Note 1)
Stephen T. Tso (Note 1)
C.C. Wei (Note 1)
Mark Liu (Note 1)
Number of Options Granted
(Note 2)
% of Shares Exercisable to
Outstanding Common Shares
3,732,224
0.01445％
Vice President & General Counsel
Richard Thurston (Note 1)
Vice President
Jack Sun (Note 1)
Note 1: TSMC granted options to certain of its offi cers (as listed above) as a result of their voluntary selection to exchange part of their profi t sharing for stock options in 2003. This includes a voluntary exchange by Chairman
Morris Chang in his capacity as Chief Executive Offi cer.
Note 2: Number of Options Granted includes the additional shares due to stock dividend distributed in 2004, 2005 and 2006.
14. Status of New Share Issuance in Connection with Mergers and Acquisitions
TSMC did not issue new shares in connection with mergers or acquisitions in 2006.
15. Financing Plans and Implementation
TSMC raised NT$15 billion through a corporate bond issue in January 2002. Plans for use of the proceeds of this corporate bond were completed in the third
quarter of 2006 and achieved the expected benefi ts.
40
As of 12/31/2006
Fourth Grant
06/25/2002
06/06/2003
23,090,550
0.12399%
10 years
Fifth Grant
10/29/2003
12/03/2003
842,900
0.00416%
10 years
Sixth Grant
10/29/2003
02/19/2004
15,720
0.00008%
10 years
Seventh Grant
10/29/2003
05/11/2004
11,167,817
0.05510%
10 years
Eighth Grant
10/29/2003
08/11/2004
135,300
0.00058%
10 years
Ninth Grant
01/06/2005
05/17/2005
10,742,350
0.04620%
10 years
New Common Share
New Common Share
New Common Share
New Common Share
New Common Share
New Common Share
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
6,891,895
282,084,192
17,404,431
NT$58.5
NT$38.8
0.06738%
161,281
8,556,257
498,528
NT$66.5
NT$52.3
0.00193%
0
0
15,012
NT$63.5
NT$49.9
0.00006%
2,516,371
115,097,837
8,017,230
NT$57.5
NT$45.1
0.03104%
44,008
1,747,121
87,486
NT$43.8
NT$39.7
0.00034%
0
0
9,699,414
NT$54.3
NT$49.2
0.03755%
Dilution to Shareholders'
Equity is Limited
Dilution to Shareholders'
Equity is Limited
Dilution to Shareholders'
Equity is Limited
Dilution to Shareholders'
Equity is Limited
Dilution to Shareholders'
Equity is Limited
Dilution to Shareholders'
Equity is Limited
Exercised
Unexercised
Shares Exercised
Exercise Price Per
Share
Value of Shares
Exercised (NT$)
% of Shares Exercised
to Outstanding
Common Shares
Shares Unexercised
Adjusted Grant Price
Per Share
Value of Shares
Unexercised (NT$)
As of 12/31/2006
% of Shares
Unexercised to
Outstanding
Common Shares
116,662
29.9
3,488,194
0.00045％
3,615,562
27.6
99,789,511
0.01400％
41
Risk Management
effect on our fi nancial condition. TSMC hedged its foreign exchange
exposure resulting from its assets and liabilities mainly through currency
1. Environmental, Safety and Health (ESH) Risk,
Emergencies, and Natural Disasters
forward contracts.
3.3 Infl ation
TSMC is committed to maintaining a comprehensive risk management
system dedicated to the conservation of natural resources, safety of people,
and protection of property. In order to effectively handle emergencies and
natural disasters at each facility, management has developed comprehensive
plans and procedures that focus on loss prevention, emergency response,
Infl ation in Taiwan was approximately 0.6 percent in 2006. It did not have a
signifi cant impact on our operations and profi ts.
4. Political and Regulatory Environment
crisis management, and business recovery. TSMC has adopted international
TSMC’s management team closely monitors political and regulatory
standards for ESH management. All TSMC fabs (Fab 2, 3, 5, 6, 8, 12, and
14) have been ISO 14001 certifi ed (Environmental Management System)
and OHSAS 18001 certifi ed (Occupational Health and Safety Management
developments that could have a material impact on TSMC’s business and
operations, and sets related risk management procedures. Political and
regulatory developments did not have a material impact on TSMC during
System).
2006.
2. Management of Financial Operations
2.1 Internal Policies and Procedures Regarding
High-risk/High-leveraged Investment; Lending,
Endorsements, and Guarantees for Other Parties;
and Financial Derivative Transactions
TSMC did not make high-risk or high-leveraged fi nancial investments
during 2006 and up to the date of this report. To control various types
of fi nancial transactions, the company has established internal policies
and procedures based on sound fi nancial and business practices, all in
compliance with he relevant rules and regulations issued by the Taiwan
Securities and Futures Bureau. TSMC policies and procedures include
“Policies and Procedures for Financial Derivative Transactions”, “Procedures for
Lending Funds to Other Parties”, “Procedures for Acquisition or Disposal
of Assets”, and “Procedures for Endorsement and Guarantee”. The fi nancial
transactions of a “derivative” nature that TSMC enters into are strictly for
hedging purposes and not for any trading or speculative purpose.
2.2 Covenants
As of December 31, 2006, TSMC provided no guarantees for subsidiary’s
fi nancing.
Since TSMC is also a NYSE-listed company, TSMC is required to comply with
the provisions of the relevant U.S. regulations applicable to non-U.S. companies
(including the Sarbanes-Oxley Act). TSMC has taken measures to monitor
its compliance with applicable regulatory developments, and will continue to
update itself on regulatory developments and implement changes in policies
and procedures as necessary with a view to maintain compliance.
5. Contingent Plans for Events That May Have a
Signifi cant Adverse Impact on the Company’s
Business and Image
TSMC pays special attention to emergency preparedness for disasters
such as typhoons, earthquakes, environmental contamination, large-scale
product returns, disruption of IT systems, strikes, and disruptions to the
supply of raw materials or water, electricity, gases, and public utilities.
We have established contingency plans, which include the establishment
of emergency task forces when necessary, the preparation of a thorough
analysis of the emergency, its impact, alternatives, and solution for each
possible scenario, and appropriate precautionary and/or recovery measures.
Each task force is given the responsibility to ensure TSMC’s ability to conduct
business while minimizing personal injuries, business disruption, and
fi nancial impact under the circumstances. For the year 2006 and up to the
date of this Annual Report, there are no reportable material events that have
3. Internal Management of Economic Risk
necessitated the activation of such contingency plans.
3.1 Interest Rate Fluctuation
6. Litigation Proceedings
TSMC’s exposure to interest rate risks derives primarily from long-term debt
obligations that are incurred in the normal course of business. In order to
limit its exposure to interest rate risks, TSMC fi nances its funding needs
through issuance of long-term, fi xed-rate debt. On the asset side, the
primary objective of our investments in fi xed income securities is to preserve
principal in highly liquid markets. In order to maintain our liquidity profi le,
the majority of fi xed income securities are at the short end of the yield curve.
3.2 Foreign Exchange Volatility
Over half of our capital expenditures and manufacturing costs are
denominated in currencies other than NT dollars, primarily U.S. dollars,
Japanese yen, and Euros. A larger portion of our sales is denominated in
U.S. dollars and currencies other than NT dollars. Therefore, any signifi cant
fl uctuation to our disadvantage in such exchange rates may have an adverse
42
To protect its intellectual property rights, trade secrets and other intellectual
assets, TSMC may initiate, as appropriate, litigation against former
employees or third parties. As is the case for most companies in the high-
technology industry, TSMC receives from time to time notices from third
parties alleging that TSMC's technologies, designs, and manufacturing
processes may infringe patents or other intellectual property rights. TSMC
takes these matters seriously, investigates all such claims, and takes
appropriate action as the circumstances require.
In August, TSMC, TSMC North America, and WaferTech fi led a complaint
with the Superior Court of the State of California in the County of Alameda
against Semiconductor Manufacturing International Corporation (SMIC),
SMIC (Shanghai), SMIC (Beijing) and SMIC Americas, alleging breach of
a settlement agreement reached in 2005 and misappropriation of trade
secrets. The suit seeks injunctive relief along with monetary damages. In
September 2006, SMIC fi led a cross-complaint against us in the same court
11. Potential Impact and Risks Associated with Sales
of Signifi cant Numbers of Shares by TSMC’s
Directors, Supervisors, and Major Shareholders
Who Own 10% or More of TSMC’s Total
Outstanding Shares
alleging breach of settlement agreement, implied covenant of good faith
The value of TSMC shareholders' investment may be reduced by possible
and fair dealing. SMIC also fi led a civil action against us in November 2006
future sales of TSMC shares by the major shareholders.
with the Beijing People’s High Court alleging defamation and breach of
good faith. The matters are pending in both courts. The specifi c outcome
One or more of TSMC's existing shareholders may, from time to time,
of the litigation matters cannot be determined at this time. Management
dispose of signifi cant numbers of their shares. For example, the National
intends to vigorously protect its intellectual property rights to maintain
Development Fund, one of TSMC's largest shareholders, has sold TSMC
shareholder value.
shares in form of ADSs in several transactions since 1997. In May 2005,
Philips, another major shareholder of TSMC, reiterated its intention, fi rst
Other than the matter(s) provided above, TSMC was not involved in any
announced in October 2003, to gradually and orderly reduce its equity
other material litigation in 2006.
interest in TSMC.
7. Potential Benefi ts and Risks Associated with
Mergers and Acquisitions
TSMC usually work closely with the major shareholders to accomplish their
contemplated disposals of TSMC shares in a way that would minimize the
negative impact on the price of TSMC shares and other shareholders.
In 2006, and as of the date of this Annual Report, TSMC did not
consummate any merger and acquisition activities.
8. Potential Benefi ts and Risks Associated with
Capacity Expansion
For example, on March 9, 2007, TSMC and Philips jointly announced a
multi-phased plan to facilitate an orderly exit by Philips from its current
shareholding in TSMC. Specifi cally, the announced plan contemplates that
Philips will divest its current TSMC shareholding through one or more block
trades on the Taiwan Stock Exchange, a public offering of TSMC common
shares in the form of ADS, and through participation in share buy-backs
To meet customer demand, TSMC increased its annual production capacity
conducted by TSMC in the period beginning in 2007 and ending in 2010.
by approximately 1.1 million eight-inch equivalent wafers in 2006. The
total average billing utilization rate for 2006 was 102%. As of the date of
this Annual Report, the benefi ts brought about by such capacity expansion
have been in line with TSMC’s expectations. TSMC has established systems
to evaluate and forecast market demand and refers to these forecasts and
evaluations when expanding capacity.
9. Potential Risks Associated with Purchase or Sales
Concentration
TSMC procures raw materials from multiple sources whenever possible to
ensure adequate supplies for volume production and to mitigate purchase
concentration risk. However, we procure some of our raw materials from
sole-source suppliers. TSMC evaluates the risk of supply disruptions from
single-source suppliers and assists those suppliers in lowering production
and transportation risk. TSMC also continues to look for additional sources
for single-sourced materials.
In 2005 and 2006, our 10 largest customers have accounted for 52 percent
and 53 percent, respectively, of our net sales. In particular, our largest
customer in 2006 accounted for 11 percent of our net sales in 2006. The fact
that a relatively limited number of customers constitute a signifi cant portion
of our revenue may remain a business characteristic inherent to our extensive
presence in the dedicated foundry segment of the semiconductor market.
10. Future R&D Plans and Expected R&D Spending
For additional details, please refer to “R&D Organization and Investment” on
page 22.
12. Potential Impact and Risks Associated with Change
in Management or Governance Personnel
In 2006, and as of the date of this Annual Report, there were no such risks
for TSMC.
13. Other Material Risks
During 2006 and as of the date of this Annual Report, TSMC’s management
has not become aware of any other risk event with a material impact on the
fi nancial status of the company.
43
Important Contracts
Technology Cooperation Agreement
Technology Cooperation Agreement
Term of Agreement:
2004 - 2008
Contracting Party:
Term of Agreement:
03/30/1999 - 03/29/2009
Contracting Party:
Koninklijke Philips Electronics N.V. (Philips)
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
(In September 2006, Philips assigned its rights and obligations under this
Summary:
agreement to Philips Semiconductors International B.V. which was renamed
TSMC agreed to transfer certain of its process technologies to SSMC, and
as NXP B.V. Philips is no longer the contracting party of this agreement.)
SSMC agreed to pay TSMC a certain percentage of the net selling price of
Summary:
SSMC products.
TSMC is obliged to pay to Philips (now NXP B.V.) fi xed amounts of licensing
fees for third party patent cross licenses obtained through Philips (now NXP
B.V.). TSMC and Philips (now NXP B.V.) have agreed to cross license the
patents owned by each party.
Manufacturing Agreement
Term of Agreement:
02/16/1996 - 12/31/2005, automatically renewed for one year terms, unless
terminated with a six-month prior written notice by TSMC
Contracting Party:
WaferTech, LLC (WaferTech)
Summary:
TSMC has the right to purchase the entire installed capacity of WaferTech
during the production period.
Shareholders Agreement
Term of Agreement:
Effective as of 03/30/1999 and may be terminated as provided in the
agreement
Contracting Parties:
Koninklijke Philips Electronics N.V. (Philips) and EDB Investments
Pte Ltd. (EDBI)
(In September 2006, Philips assigned its rights and obligations under this
Sale and Purchase Agreement
Term of Agreement:
Effective on 11/15/2006
Contracting Parties:
EDB Investments Pte Ltd. (EDBI), NXP B.V., TSMC
Summary:
EDBI agreed to sell its all shares in SSMC to TSMC and NXP B.V. on
November 15, 2007.
Patent License Agreement
Term of Agreement:
10/26/2001 - 12/31/2006
Contracting Party:
A multinational company
Summary:
The parties entered into cross license arrangements for certain
semiconductor patents. TSMC pays license fees to the said company.
Foundry Related Agreements
Term of Agreement:
1995 - 2006
agreement to Philips Semiconductors International B.V. which was renamed
Contracting Parties:
as NXP B.V. In November 2006, NXP B.V. and TSMC purchased all SSMC
Several multinational companies
shares EDBI owned; EDBI is no longer contracting party of this agreement.)
Summary:
Summary:
TSMC guarantees a pre-determined capacity for a set number of years to
TSMC, Philips and EDBI agreed to form a joint venture "Systems on Silicon
customers. In return, customers deposit a certain amount of money with
Manufacturing Company Pte Ltd." (SSMC) to build an IC foundry in
TSMC.
Singapore. Philips (now NXP B.V.) and TSMC are committed to purchasing a
certain percentage of SSMC's capacity.
44
Manufacturing Agreement
Term of Agreement:
The Second Amendment to the Amended and
Restated Joint Technology Cooperation Agreement
04/01/2004 - 03/31/2006, automatically renewable for successive one year
Term of Agreement:
terms until both parties decide otherwise by mutual consent in writing
Contracting Party:
07/16/2001 - 12/31/2008
Contracting Parties:
Vanguard International Semiconductor Corporation (VIS)
STMicroelectronics N.V., Philips Semiconductors International B.V. (now NXP
Summary:
B.V.), Freescale Semiconductor, Inc.
VIS reserves certain capacity to manufacture certain TSMC products at terms
Summary:
as agreed by the parties. TSMC agreed to transfer certain technology to VIS
and to receive compensation from VIS in the form of royalty payments.
The parties entered into a joint technology cooperation arrangement for
the development of certain high-performance and advanced semiconductor
technologies.
Patent License Agreement
Term of Agreement:
11/01/2002 - 10/31/2012
Contracting Party:
A multinational company
Summary:
Technology Development and License Agreement
Term of Agreement:
12/04/2003 - 12/03/2007
Contracting Party:
Freescale Semiconductor, Inc.
The parties entered into cross license arrangements for certain
Summary:
semiconductor patents. TSMC pays licensing fees to the said company.
The parties agreed jointly to develop certain advanced SOI process
technologies and to cross license related intellectual property rights.
Patent License Agreement
Term of Agreement:
07/01/2002 - 06/30/2009
Contracting Party:
A multinational company
Summary:
Settlement Agreement
Term of Agreement:
01/30/2005 - 12/31/2010
Contracting Party:
Semiconductor Manufacturing International Corp. (SMIC) and certain of its
The parties entered into cross licensing arrangements for certain
semiconductor patents. TSMC pays license fees to the said company.
subsidiaries
Summary:
Patent License Agreement
Term of Agreement:
01/01/2001 - 12/31/2011
Contracting Party:
A multinational company
Summary:
The parties entered into cross license arrangements for certain
The parties settled their patent infringement and trade secret
misappropriation disputes, wherein SMIC agrees to pay TSMC US$175
million over six years.
Patent License Agreement
Term of Agreement:
2005 - End of patent terms
Contracting Party:
semiconductor patents. TSMC pays license fees to the said company.
Industrial Technology Research Institute (ITRI)
Summary:
The parties entered into an exclusive license arrangement for certain
semiconductor-related patents, wherein TSMC pays license fees to ITRI for
such license rights.
45
Corpor ate
Governance
TSMC holds itself to the highest standards of integrity and fairness, and we measure our transparency
and disclosure against the best companies in the world. Maintaining the highest standards of corporate
governance has been integral to TSMC’s core values since its founding.
46
TSMC advocates and acts upon the principles of operational transparency and respect for shareholder rights. We believe that the basis for successful corporate
governance is a sound and effective Board of Directors. In line with this principle, TSMC's Board of Directors established an Audit Committee in 2002 and
a Compensation Committee in 2003. TSMC was recognized for its corporate governance in 2006 with the Best Corporate Governance Award for the Hong
Kong and Taiwan Regions from IR Magazine and the Best Corporate Governance Award from FinanceAsia for the Taiwan region.
1. Board of Directors
We believe that the cornerstone for successful corporate governance is a sound and effective Board of Directors. TSMC’s Board of Directors consists of eight
(Note) distinguished members with a great breadth of experience as world-class business leaders or scholars. Four of the eight members are independent
directors: former British Telecommunications Chief Executive Officer, Sir Peter Bonfield; Massachusetts Institute of Technology, Professor Lester Thurow; former
Acer Group Chairman, Mr. Stan Shih; and former Hewlett-Packard Chairman and CEO, Ms. Carly Fiorina. Ms. Fiorina was elected to the Board of Directors in
May 2006, adding her wealth of experience in leading world-class companies and raising the number of independent directors to four from three.
The Board’s primary duty is to oversee the overall business and corporate affairs of TSMC. Day-to-day operations, preparation of financial statements, fund
raising, and investments remain the responsibility of the company’s management.
In conjunction with the company’s management, the Board also monitors regulatory activities, such as amendments to Taiwan’s laws, amendments to SEC
rules and regulations in the United States, and changes to New York Stock Exchange and Taiwan Stock Exchange listing requirements.
Note: Mr. J.C. Lobbezoo, the representative of Koninklijke Philips Electronics N.V., resigned from the Board on March 9, 2007.
1.1 Audit Committee
The Audit Committee assists the Board in carrying out its financial oversight responsibilities, which include reviewing the company’s financial reports, the
company’s auditing and accounting policies and procedures, and internal control systems.
TSMC’s Audit Committee is empowered to conduct any study or investigation it deems appropriate to fulfill its responsibilities. It has direct access to TSMC’s
internal auditors, the company’s independent external auditors, and all employees of the company. The committee is authorized to retain and oversee special
legal, accounting, or other consultants as it deems appropriate to fulfill its mandate.
As of March 2007, the Audit Committee comprised of all four independent directors and had engaged a financial expert consultant. Sir Peter Bonfield was
the Chairman of the Audit Committee, who convened four regular meetings and four special meetings in 2006.
In accordance with Taiwan's Securities and Exchange Law, TSMC's 2006 Shareholders' Meeting approved the amendments to the Articles of Incorporation to
eliminate the Supervisors, and the expiration of tenure for TSMC's Supervisors on December 31, 2006. Beginning on January 1, 2007, the Audit Committee is
responsible for the duties of the Supervisors specified under Taiwan's Company Law, Securities and Exchange Law, and other relevant regulations.
Audit Committee Meeting Status
The Audit Committee consists of all of the independent directors of the Company. Four regular meetings and four special meetings were convened in 2006.
The committee members’ attendance status is as follows:
Title
Chair
Member
Member
Member
Annotation: None
Name
Sir Peter Leahy Bonfield
Lester Carl Thurow
Stan Shih
Carleton (Carly) S. Fiorina
1.2 Compensation Committee
Attendance in Person
By Proxy
Attendance Rate (%)
Notes
8
5
8
3
-
-
-
-
100％ Renewal of office (Re-elected on May 16)
63％ Renewal of office (Re-elected on May 16)
100％ Renewal of office (Re-elected on May 16)
75％ New office assumed (Elected on May 16)
The Compensation Committee assists the Board in discharging its responsibilities related to the compensation and benefits policies, plans and programs of
TSMC, and in the evaluation and compensation of TSMC’s executives.
As of March 2007, the Compensation Committee comprised of five members. All four independent directors served as voting members of the committee and
the Chairman of the Board, Dr. Morris Chang, was a non-voting member. Mr. Stan Shih was the Chairman of the Compensation Committee, who convened
four regular meetings in 2006.
47
2. Board Members
2.1 Information Regarding Board Members
Title
Name
Chairman
Morris Chang
Vice Chairman
F.C. Tseng
Koninklijke Philips Electronics N.V.
Representative: (Note 1, 3, 4, 5)
Director
J.C. Lobbezoo
National Development Fund, Executive
Yuan
Representative: (Note 2, 4, 5)
Director
Chintay Shih
Director
Rick Tsai
Independent Director
Lester Carl Thurow
Independent Director
Stan Shih
Independent Director
Carleton (Carly) S. Fiorina
Date
Elected
Term
Expires
Date
First Elected
Shareholding When Elected
Current Shareholding
Spouse & Minor Shareholding
Shares
%
Shares
%
05/16/2006
05/15/2009
12/10/1986
112,677,772
0.46%
116,057,019
0.45%
Shares
120,826
%
0.00%
05/16/2006
05/15/2009
05/13/1997
39,010,891
0.16%
38,204,647
0.15%
130,878
0.00%
05/16/2006
05/15/2009
12/10/1986
4,066,046,793
16.44%
4,187,989,024
16.21%
-
-
05/16/2006
05/15/2009
12/10/1986
1,581,649,966
6.39%
1,629,084,227
6.31%
153,907
0.00%
05/16/2006
05/15/2009
06/03/2003
25,466,795
0.10%
27,813,033
0.11%
Independent Director
Sir Peter Leahy Bonfi eld
05/16/2006
05/15/2009
05/07/2002
05/16/2006
05/15/2009
05/07/2002
-
-
-
-
-
-
-
-
-
-
-
-
-
-
05/16/2006
05/15/2009
04/14/2000
1,415,785
0.01%
1,458,244
0.01%
15,877
0.00%
05/16/2006
05/15/2009
05/16/2006
-
-
-
-
-
-
No member of the Board of Directors held TSMC shares by nominee arrangement.
No member of the Board of Directors had a spouse or relative within two degrees of consanguinity serving as a manager at TSMC.
Note 1: The tenure of Mr. Michel Besseau, our former Supervisor (representative of Koninklijke Philips Electronics N.V.), expired on May 16, 2006.
Note 2: The tenure of Mr. James C. Ho (representative of National Development Fund, Executive Yuan) and Dr. Michael E. Porter, our former Supervisors, expired on December 31, 2006.
Starting from January 1, 2007, the Audit Committee took over the duties of Supervisors specifi ed under the relevant laws and regulations.
Note 3: Koninklijke Philips Electronics N.V. (representative, Mr. J.C. Lobbezoo) resigned from TSMC's Board on March 9, 2007 and sold approximately 887 million TSMC shares to long-term fi nancial investors in Taiwan on March 12, 2007.
Note 4: Information on Directors that are Representatives of Juridical Person Shareholders
Directors/That are
Representatives of Juridical
Person Shareholders
Juridical Person Shareholders
Top 10 Shareholders of Juridical Person Shareholders, or Shareholders Owning More than 10% of Juridical Person
Shareholders
Director: J.C. Lobbezoo
Koninklijke Philips Electronics N.V.
Top 10 Shareholders: Not Available
Shareholders Owned More than 10% Shares: None
Director: Chintay Shih
National Development Fund,
Executive Yuan
Not Applicable
Note 5: Major shareholders of Juridical Person Shareholders as stated in note 4: Not Applicable.
48
As of 02/28/2007
Education & Selected Positions
Selected Positions in TSMC & Other Companies
● Ph.D., Electrical Engineering, Stanford University, USA
● Chairman, Industrial Technology Research Institute
● Senior Vice-President for Texas Instrument
● CEO, TSMC
None
● President & COO, General Instrument Corporation
● Supervisor, Industrial Technology Research Institute
● Ph.D., Electrical Engineering, National Chengkung
University, Taiwan
● President, Vanguard International Semiconductor Corp.
● President, TSMC
● Deputy CEO, TSMC
● Chairman, TSMC (Shanghai) Company Ltd.
● Chairman, Global Unichip Corp.
● Director, Prosperity Venture Capital Corp.
● Director, digimax, Inc.
● Director, Allegro Manufacturing Pte, Ltd.
● Master Degree, Business Economics, Erasmus
● Chairman, Systems on Silicon Manufacturing
● Executive Vice President, Philips International B.V.
University, the Netherlands
● CFO, Philips Semiconductors B.V.
Company Pte Ltd.
● Director, FEI Company
● Ph.D., Electrical Engineering, Princeton University, USA
● President, Industrial Technology Research Institute
● Professor and Dean, College of Technology
Management, National Tsinghua University
● Director, Industrial Technology Investment
Corporation
● Director of Vanguard International Semiconductor
Corp.
● Managing Director and Special Advisor, Industrial
Technology Research Institute
● Ph.D., Material Science, Cornell University, USA
● Executive Vice President, Worldwide Marketing and
● President, Vanguard International Semiconductor
Corp.
● President & CEO, TSMC
● Director, TSMC subsidiary companies
● Director, MIT Corporation Board of Trustees
● Non Executive Director, Department of Constitutional
● Senior Non-Executive Director, AstraZeneca Group Plc,
● Member of the Sony Corporation Advisory Board
Affairs
London
● Director, L.M. Ericsson
● Director, Mentor Graphics Corporation Inc.
● Member of the Citigroup International Advisory Board
● Director, Sony Corporation (Japan)
● Non Executive Member of Actis LLP Supervisory Board
● Chairman of Supervisory Board, NXP B.V.
● Non Executive Director, Dubai International Capital
● Ph.D., Economics, Harvard University, USA
● Jerome and Dorothy Lemelson Professor of
● Director, Analog Devices Inc.
● Dean, Sloan School of Management, M.I.T.
Management and Economics, Sloan School of
Management, M.I.T.
● Honorary Doctor of International Law, Thunderbird,
● Honorary EE Ph.D., MSEE, BSEE, National Chiaotung
University, Taiwan
● Co-Founder, Chairman Emeritus of the Acer Group
● Group Chairman, iD SoftCapital
● Director, ABW (Acer, BenQ, Wistron) Family
● Director, Nan Shan Life Insurance Company, Ltd.
Sales, TSMC
● COO, TSMC
● Bachelor Degree in Engineering, Loughborough
University of Technology, UK
● CEO and Chairman of the Executive Committee, British
Telecommunications Plc
● Vice President, the British Quality Foundation
American Graduate School of International
Management, USA
● Honorary Fellowship, University of Wales, Cardiff, UK
● Honorary Doctor of Technology, the Hong Kong
Polytechnic University, Hong Kong
● Master Degree in Business Administration, Robert H.
Smith School of Business, University of Maryland at
College Park, Md.
● Master Degree, Science, MIT's Sloan School
● Bachelor Degree in Medieval History and Philosophy,
Stanford University, USA
● Senior Management, AT&T and Lucent Technologies
● Chairman and Chief Executive Offi cer, Hewlett-
● Director, CyberTrust, Inc.
Packard
● Director, Revolution Healthcare Group
● Director, MIT Corporation Board of Trustees
49
2.2 Remuneration Paid to Directors and Supervisors
Remuneration Paid to Directors (Supervisors)
Salary (A)
Compensation (B) (Note 3)
Allowance (C) (Note 4)
Directors (Supervisors) Salary,
Compensation, and Allowance
(A+B+C) as % 2006 Net
Income
Salary, Bonus..etc. (D)
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
Consolidated
Subsidiaries
of TSMC
25,294
25,294
285,800
285,800
2,650
2,650
0.25％
0.25％
8,922
8,922
Unit: NT$ thousands
Title / Name
Chairman
Morris Chang
Vice Chairman
F.C. Tseng
Koninklijke Philips Electronics
N.V.
Representatives:
Director
J.C. Lobbezoo
Supervisor
Michel Besseau (Note 1)
National Development Fund,
Executive Yuan
Representatives:
Director
Chintay Shih
Supervisor
James. C. Ho
Director
Rick Tsai
Independent Director
Sir Peter Leahy Bonfi eld
Independent Director
Lester Carl Thurow
Independent Director
Stan Shih
Independent Director
Carleton (Carly) S. Fiorina
(Note 2)
Supervisor
Michael E. Porter
Note 1: The tenure of Mr. Michel Besseau, our former Supervisors (representative of Koninklijke Philips Electronics N.V.), expired on May 16, 2006.
Note 2: Ms. Carly Fiorina was elected to the Board of Directors on May 16, 2006
Note 3: The Board adopted a proposal for 2006 compensation to TSMC’s directors and supervisors in the amount of NT$285,800 thousand at its meeting on February 6, 2007. The proposed compensation will be effected upon
the approval of shareholders at the Annual Shareholder Meeting in May 2007.
Note 4: Includes allowances for company cars. Compensation paid to company drivers totalled NT$4,868 thousand.
Note 5: Directors and supervisors' compensation disclosed in the 2005 annual report was NT$282,867 thousand, accounting for 0.3 percent of 2005 net income.
Remuneration Paid to Directors and Supervisors
Directors and Supervisors
Year 2006
Total Compensation Paid to Directors and Supervisors as % 2006 Net Income
(A+B+C)
Total Compensation Paid to Directors and Supervisors as % 2006 Net Income
(A+B+C+D+E)
TSMC
Consolidated Subsidiaries of TSMC
TSMC
Consolidated Subsidiaries of TSMC
1
0
1
0
6
4
0
0
12
1
0
1
0
6
4
0
0
12
0
0
1
0
6
4
0
1
12
0
0
1
0
6
4
0
1
12
Under NT$ 2,000,000
NT$2,000,000 〜 NT$5,000,000
NT$5,000,000 〜 NT$10,000,000
NT$10,000,000 〜 NT$15,000,000
NT$15,000,000 〜 NT$30,000,000
NT$30,000,000 〜 NT$50,000,000
NT$50,000,000 〜 NT$100,000,000
Over NT$100,000,000
Total
50
Compensation Earned as Employee of TSMC or of TSMC Subsidiary Affi liates
Employee Profi t Sharing (E)
ESOP (F)
Total Compensation Paid to Directors
(Supervisors) (A+B+C+D+E) as % 2006
Net Income (Note 5)
TSMC
Consolidated Subsidiaries of TSMC
Cash
Stock
Cash
Stock
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
Consolidated
Subsidiaries
of TSMC
Other
Compensation
from Non-
Subsidiary
Affi liates
44,000
297,000
44,000
297,000
1,576
1,576
0.52％
0.52％
None
51
2.3 Net Change in Shareholding and Net Change in Shares Pledged by Directors and Supervisors
For a summary of net changes in shareholding and shares pledged by Directors and Supervisors, please refer to "Net Change in Shareholding and Net Change
in Shares Pledged by Directors, Supervisors, Management, and Shareholders with 10% Shareholding or More" on page 15.
3. Directors and Supervisors' Professional Qualifi cations and Independence Analysis
According to the relevant requirements set by Taiwan's Securities and Futures Bureau, the professional qualifi cations and independence status of the
Company's Board members are listed in the table below.
Information Regarding Directors and Supervisors
Meet One of the Following Professional Qualifi cation Requirements,
Together with at Least Five Years Work Experience
Criteria (Note)
Have Work
Experience in the
Area of Commerce,
Law, Finance, or
Accounting, or
Otherwise Necessary
for the Business of
the Company
An Instructor or
Higher Position in
a Department of
Commerce, Law,
Finance, Accounting,
or Other Academic
Department Related
to the Business Needs
of the Company in
a Public or Private
Junior College,
College or University
A Judge, Public
Prosecutor, Attorney,
Certifi ed Public
Accountant, or
Other Professional or
Technical Specialists
Who Has Passed a
National Examination
and Been Awarded
a Certifi cate in a
Profession Necessary
for the Business of
the Company
1
2
3
4
5
6
7
8
9
10
Selected Current
Positions/Number
of Other Public
Companies
Concurrently Serving
as an Independent
Director
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ ˇ
ˇ ˇ ˇ ˇ ˇ ˇ ˇ
ˇ
ˇ ˇ ˇ ˇ ˇ ˇ ˇ
ˇ ˇ
ˇ ˇ ˇ ˇ
ˇ ˇ
ˇ ˇ ˇ ˇ
ˇ ˇ ˇ ˇ ˇ ˇ ˇ
ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ
ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ
ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ
ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ
ˇ ˇ ˇ ˇ
ˇ ˇ ˇ ˇ
ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ
0
0
0
0
0
0
0
0
0
0
0
ˇ
ˇ
ˇ
ˇ
Name / Criteria
Chairman
Morris Chang
Vice Chairman
F.C. Tseng
Director
J.C. Lobbezoo
Director
Chintay Shih
Director
Rick Tsai
Independent Director
Sir Peter Leahy Bonfi eld
Independent Director
Lester Carl Thurow
Independent Director
Stan Shih
Independent Director
Carleton (Carly) S.
Fiorina
Supervisor
James C. Ho
Supervisor
Michael E. Porter
Note: Directors or Supervisors, during the two years before being elected or during the term of offi ce, have been or be any of the following, please tick the appropriate corresponding boxes:
1. Not an employee of the company or any of its affi liates;
2. Not a director or supervisor of the company or any of its affi liates. The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary in which
the company holds, directly or indirectly, more than 50％ of the voting shares;
3. Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of 1％ or more of the total
number of issued shares of the company or ranking in the top 10 in holdings;
4. Not a spouse, relative within the second degree of kinship, or lineal relative within the fi fth degree of kinship, of any of the persons in the preceding three subparagraphs;
5. Not a director, supervisor, or employee of a corporate shareholder that directly holds 5％ or more of the total number of issued shares of the company or that holds shares ranking in the top fi ve in holdings;
6. Not a director, supervisor, offi cer, or shareholder holding 5％ or more of the shares, of a specifi ed company or institution that has a fi nancial or business relationship with the company;
7. Not a professional individual who, or an owner, partner, director, supervisor, or offi cer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, fi nancial, accounting services or
consultation to the company or to any affi liate of the company, or a spouse thereof;
8. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the company;
9. Not been a person of any conditions defi ned in Article 30 of the Company Law; and
10. Not a governmental, juridical person or its representative as defi ned in Article 27 of the Company Law.
52
4. Major Decisions of Shareholder Meeting and Board Meetings
4.1 Review of Shareholder Meeting
TSMC’s 2006 regular Shareholder Meeting was held at the auditorium of the Activity Center of the Hsinchu Science Park on May 16, 2006. At the meeting,
shareholders present in person or by proxy approved the following resolutions: (1) Acceptance of the 2005 business report and fi nancial statements; (2)
Distribution of 2005 profi ts; (3) Amendments to the Articles of Incorporation; (4) Election of the 10th Board of Directors and Supervisors.
4.2 Review of Board Meetings
During the 2006 calendar year, through the period from January 1 to February 28, 2007, fi ve regular meetings and one special meeting were convened.
Major resolutions passed at these meetings are summarized below: (1) The 2005 business report and fi nancial statements; (2) Distribution of 2005 profi ts
and capitalization of capital surplus; (3) Convening the 2006 Annual Shareholder Meeting; (4) 2006 R&D projects and sustaining capital appropriation; (5)
Election of Dr. Morris Chang as Chairman and Dr. F.C. Tseng as Vice Chairman of TSMC; (6) Capital injection into a TSMC wholly-owned foreign subsidiary
for the purpose of holding TSMC’s fi xed income investment portfolio and reducing foreign exchange hedging costs; (7) Promotion of Dr. Jack Sun and the
appointment of Dr. Fu-Chieh Hsu as Vice Presidents of TSMC; (8) Appointment of Sir Peter L. Bonfi eld, Professor Lester Thurow, Mr. Stan Shih and Ms. Carly
Fiorina as members of the Audit Committee, and designated Sir Peter L. Bonfi eld as the Chairman of the Committee; (9) The 2006 semi-annual fi nancial
statement; (10) Increase of investment in VisEra Technologies; (11) Purchase of additional 6.8% of shares in Systems on Silicon Manufacturing Company; (12)
The 2006 business report and fi nancial statements; (13) Distribution of 2006 profi ts and capitalization of capital surplus; (14) Convening the 2007 Annual
Shareholder Meeting; (15) 2007 R&D projects and sustaining capital appropriation.
4.3 Board of Directors Meeting Status
Four regular meetings and one special meeting were convened in 2006. The directors and supervisors’ attendance status is as follows:
Title
Chairman
Name
Morris Chang
Vice Chairman
F.C. Tseng
Director
Director
Director
Director
Koninklijke Philips Electronics N.V. Representative:
J.C. Lobbezoo
Koninklijke Philips Electronics N.V. Representative:
Mario Alberto Rivas
National Development Fund, Executive Yuan
Representative:
Chintay Shih
Rick Tsai
Independent Director
Sir Peter Leahy Bonfi eld
Independent Director
Lester Carl Thurow
Independent Director
Stan Shih
Independent Director
Carleton (Carly) S. Fiorina
Supervisor
National Development Fund, Executive Yuan
Representative:
James C. Ho
Supervisor
Michael E. Porter*
Annotation(cid:237)
I. Recusals of Directors due to confl icts of interests:
1. Name of Director: Sir Peter Leahy Bonfi eld
Attendance in Person
By Proxy
Attendance Rate (%)
Notes
5
5
4
-
5
5
3
3
5
1
4
1
0
0
1
-
0
0
2
2
0
2
-
-
100%
Renewal of offi ce (Re-elected on May 16)
100%
Renewal of offi ce (Re-elected on May 16)
80%
Renewal of offi ce (Re-elected on May 16)
-
Resigned in January 2006
100%
Renewal of offi ce (Re-elected on May 16)
100%
Renewal of offi ce (Re-elected on May 16)
60%
60%
Renewal of offi ce (Re-elected on May 16)
Renewal of offi ce (Re-elected on May 16)
100%
Renewal of offi ce (Re-elected on May 16)
33%
New offi ce assumed (Elected on May 16)
80%
Renewal of offi ce (Re-elected on May 16)
20%
Renewal of offi ce (Re-elected on May 16)
Resolution: To approve amendment to TSMC’s “Rules for Distribution of Compensation to Directors and Supervisors”
Reason for the confl ict of interests and voting status: As the resolution primarily intends to adjust the compensation for overseas independent directors. Since Sir Peter Bonfi eld is an overseas independent
director, he recused himself from the discussion and voting. (Note: Another overseas independent director, Lester Carl Thurow, did not attend the meeting in person)
2. Name of Director: Sir Peter Leahy Bonfi eld
Resolution: To approve the purchase of an additional 6.8% of SSMC shares from NXP Semiconductors
Reason for the confl ict of interests and voting status: Since Sir Peter Bonfi eld is the Chairman of Supervisory Board of NXP Semiconductors, he recused himself from the discussion and voting.
II. The Audit Committee comprised of all independent directors. Starting from January 1, 2007, the Audit Committee took over the duties of Supervisors specifi ed under the relevant laws and regulations, and the
Supervisors were terminated as of December 31, 2006.
* Supervisor Michael E. Porter met regularly with the Company's management team in Taiwan. The management also reported to him periodically in the U.S. on the Company's business operations and fi nancial statements, and
sought his advice on the Company's business strategy from time to time.
4.4 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important
Resolutions Passed by the Board of Directors from January 1, 2006 to February 28, 2007: None.
53
5. Taiwan Corporate Governance Implementation as Required by Taiwan Financial Supervisory Commission
Item
Implementation Status
1. Shareholding Structure & Shareholders’ Rights
(1) The way of handling shareholder suggestions or disputes
TSMC has designated relevant departments, such as Investor Relations, Public Relations, Legal, etc., to handle
shareholder's suggestions or disputes.
(2) The Company’s possession of major shareholder’s list and the
list of ultimate owners of these major shareholders
TSMC tracks the shareholdings of directors, supervisors, offi cers, and shareholders holding more than 10% of the
outstanding shares of TSMC.
(3) Risk Management Mechanism and Fire Wall between the
TSMC has established relevant guidelines in its "Internal Control System" policy and procedures.
Reason for
Non-Implementation
None
Company and its affi liates
2. Composition and Responsibilities of the Board of Directors
(1) Independent Directors
Sir Peter Leahy Bonfi eld, Prof. Lester Carl Thurow, Mr. Stan Shih and Ms. Carly S. Fiorna are independent directors
of TSMC.
(2) Regular evaluation of external auditors’ independency
The Audit Committee regularly evaluates the independency of external auditors.
3. Composition and Responsibilities of Supervisors
(1) Independent Supervisor(s)
Prof. Michael E. Porter was an independent supervisor of TSMC.
(2) Communication channel with employees or shareholders
The employees and managers of relevant departments regularly report and present Company information to the
Independent Supervisor; all Supervisors have access to Company employees or managers for information they need.
4. Communication channel with stakeholders
TSMC designates relevant departments to communicate with stakeholders on a case by case basis.
Note: The Audit Committee took over the duties of Supervisors starting from January 1, 2007. The Supervisors were
terminated as of December 31, 2006.
None
None
None
None
5. Information Disclosure
(1) Establishment of corporate website to disclose information
regarding the Company’s fi nancials, business and corporate
governance status
(2) Other information disclosure channels (e.g. English website,
appointing responsible people to handle information
collection and disclosure, appointing spokesperson,
webcasting investors conference)
6. Operations of the Company’s nomination committee,
Compensation Committee, or other committees of the Board
of Directors
TSMC discloses information through its website http://www.tsmc.com.
Since TSMC is a foreign private issuer with American Depository Receipts listed on the New York Stock Exchange
(“NYSE”), TSMC is subject to various NYSE regulations, one of which requires TSMC to disclose the signifi cant
ways in which its corporate governance practices differ from those followed by US domestic companies under
NYSE listing standards. You may fi nd such disclosure information at the following web address:
http://www.tsmc.com/download/english/e03_governance/NYSE_Section_303A.pdf
TSMC has designated relevant departments (e.g. Investor Relations, Public Relations, Legal, etc.) to handle
the collection and disclosure of information as required by relevant laws and regulations of Taiwan and other
jurisdictions.
TSMC has designated spokespersons as required by relevant regulations.
TSMC webcasts live investor conferences.
TSMC's Board of Directors has established an Audit Committee and a Compensation Committee. Please refer to
“Corporate Governance” section on page 46-55 of this Annual Report for the details.
None
7. If the Company has established corporate governance policies based on TSE Corporate Governance Best Practice Principles, please describe discrepancy between the policies and their implementation.
For the status of TSMC’s corporate governance, please refer to the section titled “Corporate Governance” on pages 46-55 of this Annual Report.
8. Please describe the company’s corporate social responsibility (such as human rights, employee rights, employee wellness, community participation, social contribution, community service, investor relations, supplier
relations and rights of shareholders) policy and implementation.
For the status of TSMC’s corporate social responsibility, please refer to the section titled “Corporate Social Responsibility” on pages 56-59 of this Annual Report.
9. Other important information to facilitate better understanding of the Company's corporate governance practices (e.g. directors' and supervisors' training records, the implementation of risk management policies
and risk evaluation measures, the implementation of consumers/customers protection policies, and purchasing insurance for directors and supervisors.):
(1) From time to time, TSMC provides directors and supervisors information concerning regulatory requirements and developments as related to directors' and supervisors' activities. TSMC management also
regularly present Company's business and other information to directors and supervisors.
TSMC's independent director, Sir Peter Leahy Bonfi eld, has completed an Institutional Shareholder Services (ISS)-accredited board education program and a certifi cation by ISS has been received.
(2) TSMC conducts risk management and risk evaluation pursuant to the internal policies established in accordance with relevant laws and regulations, and has employed a professional consulting company in
August 2006 to assist TSMC in operation related risk evaluation and execution of improvement plans.
(3) TSMC maintains D&O Insurance for its directors, supervisors, and offi cers.
10. If the Company has a self corporate governance evaluation or has authorized any other professional organization to conduct such an evaluation, the evaluation results, major defi ciency or suggestion, and
improvement are stated as follows:
The Company participated in 2006 "CG6002 Corporate Governance Compliance Evaluation" performed by the Corporate Governance Association in Taiwan, and has been granted by the same Association a
"CG6002 Corporate Governance Compliance Evaluation Validation Certifi cate".
54
6. Status of Personnel Responsible for Preparing Financial Reports
No personnel responsible for preparing fi nancial reports resigned or were dismissed in 2006.
7. Information Regarding TSMC’s Independent Auditor
Audit Fees: Not applicable. Non-audit fees paid to TSMC’s independent audit fi rm and its affi liates did not exceed 25 percent of the audit fees paid in 2006.
The 2006 audit fees paid to TSMC’s independent auditor were not reduced by more than 15 percent compared with 2005.
TSMC did not replace its independent auditor during 2005, 2006, and as of February 28, 2007.
TSMC’s Chairman, Chief Executive Offi cer, Chief Financial Offi cer, and managers in charge of its fi nance and accounting operations did not hold any positions
within TSMC’s independent audit fi rm or its affi liates during 2006.
8. Internal Control System Execution Status
Date: February 6, 2007
Statement of Internal Control System
Based on the fi ndings of a self-assessment, Taiwan Semiconductor Manufacturing
5. Based on the fi ndings of the evaluation mentioned in the preceding paragraph,
Company Limited (TSMC) states the following with regard to its internal control system
TSMC believes that, during the year 2006, its internal control system (including
during the period from January 1, 2006 to December 31, 2006:
its supervision and management of subsidiaries), as well as its internal controls
1. TSMC is fully aware that establishing, operating, and maintaining an internal
to monitor the achievement of its objectives concerning operational effectiveness
and effi ciency, reliability of fi nancial reporting, and compliance with applicable
control system are the responsibility of its Board of Directors and management.
laws and regulations, were effective in design and operation, and reasonably
TSMC has established such a system aimed at providing reasonable assurance
assured the achievement of the above-stated objectives.
regarding the achievement of objectives in the following categories: (1)
effectiveness and effi ciency of operations (including profi tability, performance,
6. This Statement will be an integral part of TSMC's Annual Report for the year
and safeguarding of assets), (2) reliability of fi nancial reporting, and (3)
2006 and Prospectus, and will be made public. Any falsehood, concealment, or
compliance with applicable laws and regulations.
other illegality in the content made public will entail legal liability under Articles
20, 32, 171, and 174 of the Securities and Exchange Law.
2. An internal control system has inherent limitations. No matter how perfectly
designed, an effective internal control system can provide only reasonable
7. This Statement has been passed by the Board of Directors in their meeting
assurance of accomplishing the three objectives mentioned above. Moreover,
held on February 6, 2007, with zero of the nine attending directors expressing
the effectiveness of an internal control system may be subject to changes of
dissenting opinions, and the remainder all affi rming the content of this
environment or circumstances. Nevertheless, the internal control system of
Statement.
TSMC contains self-monitoring mechanisms, and TSMC takes corrective actions
whenever a defi ciency is identifi ed.
Taiwan Semiconductor Manufacturing Company Limited
3. TSMC evaluates the design and operating effectiveness of its internal control system
based on the criteria provided in the Regulations Governing the Establishment of
Internal Control Systems by Public Companies (hereinbelow, the “Regulations”). The
criteria adopted by the Regulations identify fi ve components of internal control based
on the process of management control: (1) control environment, (2) risk assessment,
(3) control activities, (4) information and communication, and (5) monitoring. Each
component further contains several items. Please refer to the Regulations for details.
4. TSMC has evaluated the design and operating effectiveness of its internal control
system according to the aforesaid criteria.
Morris Chang
Chairman of the Board of Directors
Rick Tsai
President and CEO
The Securities and Futures Bureau did not request TSMC to commission an independent auditor to audit its internal control system in 2006.
55
TSMC’s core value of commitment extends to all aspects of its business, including commitment to the
welfare of employees, society, and the environment. TSMC was honored with Globalviews Magazine’s
highest award for Corporate Social Responsibility in 2006.
56
1. Environmental, Safety, and Health Management
Air and Water Pollution Control
TSMC believes its environmental, safety, and health practices should not
only comply with legal requirements, but also measure up to recognized
international practices. The company aims to prevent pollution, effi ciently
use all resources, prevent accidents, improve employee safety and health,
protect property, and establish a work environment that promotes the well-
being of our employees and the communities in which we operate.
All TSMC manufacturing facilities have received ISO 140001 certifi cation
for environmental management systems and OHSAS 180001 certifi cation
for occupational health and safety management systems. TSMC strives
for continuous improvement and actively seeks to enhance pollution
prevention, power and resource conservation, waste reduction, health and
safety management, fi re and explosion prevention and other risks such as
earthquakes in order to reduce environmental, health, and safety risk. In
2006, TSMC began to adopt the IECQ QC080000 Hazardous Substance
Process Management (HSPM) System in order to meet customer needs for
management of hazardous materials and to meet the European Union’s
Restriction of Hazardous Substance (RoHS) directive. TSMC expects all
manufacturing facilities will meet QC080000 requirements in 2007.
1.1 Environmental Protection
Inventory of Greenhouse Gases and Emission Reduction
TSMC is committed to environmental protection and actively participates
in international environmental protection programs. In 2005, TSMC was
Taiwan’s fi rst semiconductor company to make a complete inventory of its
greenhouse gases and to gain ISO14064 certifi cation for its procedure and
results. The purpose of the inventory was to serve as a reference for TSMC’s
strategy to reduce greenhouse gases, to meet future domestic regulatory
requirements, and to prepare for carbon trading and corporate carbon asset
management.
TSMC is also taking measures to reduce emission of greenhouse gases,
particularly perfl uorinated compounds (PFCs), the chief greenhouse gas
emissions produced in the semiconductor manufacturing process. TSMC
has endorsed a memorandum of understanding between the Taiwan
Semiconductor Industry Association, the R.O.C. Environmental Protection
Administration, and the World Semiconductor Council, whereby TSMC is
committed to reducing PFC emissions to 10 percent below the average
of 1997 and 1999 by 2010. This emissions target remains fi xed as TSMC
continues to grow and expand its manufacturing facilities, and we are taking
the following measures to reduce emissions in line with recommendations
provided by the Intergovernmental Panel on Climate Change (IPCC):
● Accurate measurement of PFC gas production and the effectiveness
of exhaust gas abatement equipment in order to calculate actual PFC
emission volumes
● Evaluation of feasible alternatives to greenhouse gases and gradually
replacing greenhouse gases at all manufacturing facilities
● Evaluation of the effectiveness and safety of PFC exhaust gas abatement
equipment and progressive installation and use of such equipment
TSMC has installed effective air and water pollution control equipment in
each wafer fab to meet regulatory emissions standards. In addition, TSMC
maintains backup pollution control systems, including emergency power
supplies, to lower the risk of pollutant emission in the event of equipment
breakdown. TSMC monitors the operations of air and water pollution
control equipment centrally around the clock and tracks system effectiveness
to ensure emitted air and discharged water quality.
Water Conservation
To effectively use Taiwan’s limited water resources, all TSMC fabs make an
effort to increase water reclamation rates by adjusting the water usage of
manufacturing equipment and improving wastewater reclamation systems.
New fabs are able to reclaim 85 percent of process water, meeting or
exceeding the standards of the Science Park Administration and outperforming
most semiconductor fabs around the world. TSMC also strives to reduce
non-manufacturing related water consumption including water used in air
conditioning systems, sanitary facilities, cleaning, landscaping and kitchens.
Waste Management and Recycling
TSMC has established a designated unit responsible for waste recycling
and disposal. To meet the goal of sustainable resource utilization, TSMC’s fi rst
priority is to reduce process waste before considering recycling or disposal.
TSMC carefully selects waste disposal and recycling contractors and performs
annual audits of certifi cation documents, site operations and transportation
routes to ensure legal and proper disposal of waste.
Other Environmental Protection Programs
TSMC has implemented an environmental accounting system, allowing each fab
to calculate cost savings or profi ts created by each environmental program.
In addition, TSMC conducts “Product Life Cycle Assessments” (Product LCAs),
collecting and analyzing data from the entire semiconductor manufacturing
chain from raw materials suppliers to fi nished products, including statistics
for such items as energy, raw materials consumption, and pollution. The
product LCA study has established “Eco-Profi les” for all TSMC fabs and
will help the company meet future international regulations such as the
European Union’s “Energy-Using Product” directive. These “Eco-Profi les” can
also be provided to customers who require such documentation.
57
TSMC also maintains “green procurement” procedures, requiring raw
Environmental, Safety, and Health-related Awards in 2006
materials suppliers to declare that the materials they supply to TSMC do not
● Executive Yuan National Council for Sustainable Development “National
contain any prohibited substances. This ensures that products manufactured
Sustainable Development Award”
by TSMC comply with customer requirements and the regulatory
● Environmental Protection Administration’s “Enterprise Environmental
requirements of the European Union’s RoHS directive.
Protection Award”
Environmental Compliance Record
for “Excellence in Water Conservation”
The Tainan County Environmental Protection Bureau fi ned TSMC NT$100,000
● Environmental Protection Administration’s “Award for Outstanding
in 2006 for violation of air pollution regulations by one of TSMC’s
Achievement in Industrial Waste Disposal, Resources Reduction, and
construction contractors. TSMC not only has required the contractor to fully
Recycling”
comply with the relevant regulations, we have fi led an appeal against the fi ne,
● Recognized by the Tainan Science Park for “Outstanding Achievement in
as we believe that the contractor, not TSMC, is liable for the penalty.
Environmental Protection”
● Recognized by the Ministry of Economic Affairs Water Resources Agency
1.2 Safety and Health
Safety and Health Management
● Recognized by the Executive Yuan Council of Labor Affairs for “Excellence
in Safety and Health”
● Recognized by Hsinchu and Tainan Science Parks for “Excellence in Labor
TSMC’s safety and health management is built on the framework of the
Safety and Health”
OHSAS 18001 system, and adheres to the management principle of “Plan,
● Chosen for membership in the Dow Jones Sustainability World Index for a
Do, Check, Act” to prevent accidents and protect employee safety and
sixth consecutive year, and the only Taiwan member since 2003
health as well as company assets.
Besides accident prevention, TSMC has established emergency response
procedures to protect the lives of employees and contractors if disasters
should occur, as well as minimize the impact on society and the
environment. TSMC communicates to suppliers to reduce potential risks in
operation of production equipment and follows safety control procedures
when installing production equipment. The company places stringent
controls on high-risk operations and also evaluates the seismic tolerance of
facilities and equipment to reduce the risk of earthquake damage.
In heath management, TSMC maintains regular wellness and professional
health programs and also establishes company-level prevention committees
when infectious diseases such as Severe Acute Respiratory Syndrome (SARS)
or Avian Infl uenza pose a potential risk to the company.
Employee Wellness
TSMC is committed to achieving the highest standards of wellness for
employees. Employees have access to on-site clinics, 24-hour nursing
services, annual physical exams, women’s health services, cancer screening,
on-site fi tness facilities and programs, weight management programs, and
various health awareness programs. Employees also have access to stress
management programs, counseling services, and other assistance programs.
Supplier and Contractor Management
TSMC is committed to communicating with and encouraging its
contractors and suppliers to improve their environmental, safety, and health
performance. TSMC audits the environmental, safety, and health practices
of major raw materials suppliers and contractors and asks for continual
improvement. Contractors performing high-risk works must lay out
clearly-defi ned safety precautions and preventative measures. In addition,
contractors working on high-risk engineering must establish OHSAS 18001
occupational safety and health management systems before July 2007.
2. TSMC Education and Culture Foundation
TSMC is dedicated to becoming Taiwan’s leading corporate citizen, and to
sharing the values and business philosophies that led to the company’s
success. In 1998, the company established the TSMC Education and Culture
Foundation to organize and consolidate its contributions and to sponsor
educational, cultural, and community activities in Taiwan. The TSMC
Foundation believes long-term commitments make a longer-lasting impact
than one-time events, and its programs refl ect this belief. Led by TSMC Vice
Chairman Dr. F.C. Tseng, the Foundation works in four areas: commitment
to education, sponsorship of the arts and aesthetic education, contribution
to local communities, and the TSMC employee volunteer program.
2.1 Commitment to Education
TSMC is committed to nurturing future leaders by supporting top institutions
of learning. In 2006, National Taiwan University broke ground on construction
of a NT$120 million chemistry research center funded by the TSMC
Foundation. The foundation also continued to support the construction of
a new building complex for the MIT Sloan School of Business and disbursed
the fi rst payment of a grant for construction of a headquarters building for
University of California Berkeley’s Center for Information Technology Research
in the Interest of Society (CITRIS). In addition, TSMC completed its third year
of a program to provide NT$5 million in scholarships to help youth from low-
income families attend elite universities in Taiwan.
58
LONG-TERM
Commitments Make
a Longer-lasting Impact than
One-time Events
Part of the TSMC Foundation’s educational mission is to develop scientifi c
talent. The foundation sponsors the Wu Chien-Shiung Science Camp and the
Wu Ta-You Science Camp, which give talented high school and university
students an opportunity to learn from outstanding scientists from Taiwan,
Hong Kong, China, and around the world. In 2006, teachers included 2004
Nobel Chemistry Prize Laureate Aaron Ciechanover and three U.S. National
Academy of Science fellows.
The Foundation also sponsors international education by providing students
from National Tsinghua University and National Chiaotung University with
scholarships to study abroad for one year. The foundation also works closely
with leading universities on a wide-ranging program of chair professors
positions and lecture series.
2.2 Sponsorship of the Arts and Aesthetic Education
In 2006, the TSMC Foundation sponsored the Netherlands’ Royal
Concertgebouw Orchestra under chief conductor Mariss Janson to Taiwan
for two performances. The opening night of Beethoven was broadcast
outdoors due to popular demand, and TSMC invited schoolchildren from
remote school districts of Hsinchu and Tainan to the National Concert Hall
in Taipei. This year the Foundation also sponsored the fi rst Taipei-Beijing City
Arts Festival, a week of Taipei artists’ performances and exhibitions in Beijing
and a week of Beijing artists’ exhibitions and performances in Taipei. Other
ongoing aesthetic education programs include the TSMC Youth Literature
Award, and the “TSMC Aesthetic Education Tour“, a project organizing
tours for 10,000 elementary school children from rural areas around Taiwan
to visit National Palace Museum and other fi ne arts institutes.
The Taipei City Government Department of Cultural Affairs recognize TSMC
The TSMC Foundation participates in social service through employee
as an outstanding corporate sponsor of the arts in September 2006.
volunteer programs. We initiated and organized the "TSMC Guide Volunteer
2.4 The Employee Volunteer Program
Program" at the National Museum of Natural Science in Taichung for TSMC
employees and family to serve as guides on weekends at the IC exhibition
sponsored by TSMC. The number of volunteer guides has continued to
increase as in 2006 the program was opened to employee children aged
12-18, encouraging teenagers to start volunteering work at younger age.
The volunteer guides have served more than 300,000 visitors to the museum
and have been recognized as an “Outstanding Volunteer Team” by the
National Museum of Science.
In addition, the Foundation has organized a “TSMC Reading Volunteer
Program”, now its third year, where employees and their families read stories
to elementary school children in remote townships. In 2006, the program
expanded with some 50 volunteer readers serving elementary schools in
Tainan, in addition to some 70 volunteers serving schools in Hsinchu.
2.3 Contribution to Local Communities
For the past several years, the Foundation has focused on art and cultural
activities in Hsinchu and Tainan, where nearly twenty thousand TSMC
families are located. The foundation has organized a TSMC Arts Festival
each year since 2003. The festival hosted 18 events in 2006 including
performances by violinist Anne-Sophie Mutter and Vienna Philharmonic
Orchestra musicians. In all, nearly 30,000 people from the community
attended festival performances.
59
Affiliate Information
and other
Special Notes
TSMC’s affi liates support our core foundry business with related services such as design service
and back-end assembly and test, enabling TSMC to provide customers with the most complete set of
solutions for their needs.
60
1. Affi liates
1.1 TSMC Affi liated Companies Chart
As of 12/31/2006
Taiwan Semiconductor
Manufacturing
Company, Ltd.
TSMC North America
Shareholding: 100%
TSMC Europe B.V.
Shareholding: 100%
TSMC Japan Limited
Shareholding: 100%
TSMC Korea Limited
Shareholding: 100%
TSMC (Shanghai)
Company Limited
Shareholding: 100%
TSMC International
Investment, Ltd.
Shareholding: 100%
TSMC Partners, Ltd.
Shareholding: 100%
TSMC Global, Ltd.
Shareholding: 100%
Global Unichip Corp.
Shareholding: 37.88%
Chi Cherng
Investment Co., Ltd.
Shareholding:
TSMC: 35.71%
Hsin Ruey: 64.29%
Hsin Ruey
Investment Co., Ltd.
Shareholding:
TSMC: 35.71%
Chi Cherng: 64.29%
Emerging Alliance
Fund, L.P.
Shareholding: 99.5%
VentureTech
Alliance Fund II, L.P.
Shareholding: 98%
VentureTech
Alliance Fund III, L.P.
Shareholding: 98%
TSMC
Technology, Inc.
Shareholding: 100%
TSMC
Development, Inc.
Shareholding: 100%
WaferTech, LLC.
Shareholding:
99.996%
InveStar
Semiconductor
Development Fund,
Inc.
Shareholding:
97.09%
Investar
Semiconductor
Development Fund,
Inc. (II) LDC.
Shareholding:
97.09%
Global Unichip
Corp.-NA
Shareholding: 100%
Global Unichip
Corp.-JP
Shareholding: 100%
61
1.2 Business Scope of TSMC and Its Affi liated Companies
TSMC’s affi liates support the company’s core business of providing dedicated foundry services to customers around the world. Several of TSMC’s
affi liate companies are focused on investing in companies involved in design, manufacturing, and other related businesses in the semiconductor industry.
TSMC and its affi liates provide mutual support in technology, capacity, marketing and services to maximize synergy within the group, enabling TSMC to
provide its customers with the most complete dedicated foundry services worldwide and ensure TSMC’s leading position in the global foundry market.
1.3 TSMC Affi liated Companies
Unit: NT (US, EUR, JPY, KRW)$ thousands
As of 02/28/2007
Company
TSMC North America
TSMC Europe B.V.
TSMC Japan Limited
TSMC Korea Limited
TSMC (Shanghai) Company Limited
Date of Incorporation
Place of Registration
Capital Stock
Business Activities
Jan. 18, 1988
San Jose, California, USA
US$
11,000
Sales and marketing of integrated circuits and
semiconductor devices
Mar. 04, 1994
Sep. 10, 1997
May. 02, 2006
Aug. 04, 2003
Amsterdam, The Netherlands
Yokohama, Japan
Seoul, Korea
Shanghai, China
EUR
JPY
KRW
US$
90.76
Marketing activities
300,000 Marketing activities
400,000 Marketing activities
371,000 Manufacturing and marketing of integrated circuits and
TSMC International Investment, Ltd.
Apr. 09, 1996
Tortola, British Virgin Islands
US$
987,968
semiconductor devices
Providing investment in companies involved in the
design, manufacture and other related business in the
semiconductor industry
TSMC Technology, Inc.
WaferTech, LLC
Feb. 20, 1996
Jun. 03, 1996
Delaware, USA
Washington, USA
TSMC Partners, Ltd.
TSMC Global, Ltd.
Global Unichip Corporation
Global Unichip Corporation-JP
Global Unichip Corporation-NA
XinTec Inc.
Hsin Ruey Investment Co., Ltd.
Chi Cherng Investment Co., Ltd.
TSMC Development, Inc.
InveStar Semiconductor Development Fund, Inc.
InveStar Semiconductor Development Fund, Inc.(II) LDC.
Aug. 25, 2000
Emerging Alliance Fund, L.P.
VentureTech Alliance Fund II, L.P.
VentureTech Alliance Fund III, L.P.
Jan. 10, 2001
Feb. 27, 2004
Mar. 25, 2006
Mar. 26, 1998
Tortola, British Virgin Islands
Jul. 13, 2006
Jan. 22, 1998
Jun. 16, 2005
Feb. 02, 2004
Tortola, British Virgin Islands
Hsinchu, Taiwan
Yokohama, Japan
San Jose, California, USA
Sep. 11, 1998
Chungli, Taiwan
Jul. 13, 1998
Jul. 15, 1998
Feb. 16, 1996
Sep. 10, 1996
Taipei, Taiwan
Taipei, Taiwan
Delaware, USA
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
US$
US$
US$
US$
NT$
JPY
US$
NT$
NT$
NT$
US$
US$
US$
US$
US$
US$
0.001
Engineering support activities
530,000 Manufacturing, selling, testing and computer-aided
designing of integrated circuits and other semiconductor
devices
300
Investment activities
1,284,000
Investment activities
1,089,176
Researching, developing, manufacturing, testing and
marketing of integrated circuits
10,000 Marketing activities
100
Providing consulting services for products in the North
America region
2,105,260
Wafer level chip size package
840,000
Investment activities
840,000
Investment activities
0.001
Investment activities
9,483
Investing in new start-up technology companies
52,839
Investing in new start-up technology companies
42,248
Investing in new start-up technology companies
24,100
Investing in new start-up technology companies
7,700
Investing in new start-up technology companies
1.4 Common Shareholders of TSMC and Its Subsidiaries or Its Affi liates with Actual of Deemed Control: None.
62
1.5 Rosters of Directors, Supervisors and Presidents of TSMC’s Affi liated Companies
Unit: NT$, except shareholding
Company
TSMC North America
TSMC Europe B.V.
TSMC Japan Limited
TSMC Korea Limited
TSMC (Shanghai) Company Limited
TSMC International Investment, Ltd.
TSMC Partners, Ltd.
TSMC Global, Ltd.
TSMC Technology, Inc.
TSMC Development, Inc.
WaferTech, LLC
Title
Director
Director
President
Director
Director
Director
President
Chairman
Director
Director
Supervisor
President
Director
Director
Chairman
Director
Director
Supervisor
President
Director
Director
President
Director
Director
President
None
Chairman
Director
President
Chairman
Director
President
Chairman
Director
President
Name
Kenneth Kin
Rick Cassidy
Rick Cassidy
Kenneth Kin
Wendell Huang
Kees den Otter
Kees den Otter
Rick Tsai
Kenneth Kin
Makoto Onodera
Lora Ho
Makoto Onodera
Wang Ta Ming
Chih-Chun Tsai
F.C. Tseng
C.C. Wei
Y.C. Chao
Lora Ho
Y.C. Chao
Lora Ho
Richard Thurston
Lora Ho
Lora Ho
Richard Thurston
Lora Ho
None
Lora Ho
Richard Thurston
Lora Ho
Lora Ho
Richard Thurston
Lora Ho
Rick Tsai
Steve Tso
Kuo-Chin Hsu
InveStar Semiconductor Development Fund, Inc.
Director
Wendell Huang
Shareholding
Amount
-
-
-
As of 12/31/2006
%
-
-
-
(TSMC holds 11,000,000 shares)
(100%)
-
-
-
-
-
-
-
-
(TSMC holds 200 shares)
(100%)
-
-
-
-
-
(TSMC holds 6,000 shares)
-
-
(TSMC holds 80,000 shares)
-
-
-
-
-
-
-
-
-
-
(100%)
-
-
(100%)
-
-
-
-
-
(TSMC's investment US$371,000,000)
(100%)
-
-
-
-
-
-
(TSMC holds 987,968,244 shares)
(100%)
-
-
-
(TSMC holds 300,000 shares)
(TSMC's investment US$1,284,000,000)
-
-
-
(TSMC International Investment Ltd. holds
1,000 shares)
-
-
-
(TSMC International Investment Ltd. holds 1,000
shares)
-
-
-
(TSMC Development, Inc. holds 293,636,833
preferred shares)
(TSMC International Investment Ltd. Holds
9,206,796 shares)
-
-
-
-
(100%)
(100%)
-
-
-
(100%)
-
-
-
(100%)
-
-
-
( 99.996%)
-
( 97.09%)
(continued)
63
Company
InveStar Semiconductor Development Fund,
Inc.(II) LDC.
Emerging Alliance Fund, L.P.
VentureTech Alliance Fund II, L.P.
VentureTech Alliance Fund III, L.P.
Hsin Ruey Investment Co., Ltd.
Chi Cherng Investment Co., Ltd.
Global Unichip Corporation (Note)
Global Unichip Corporation-NA
Global Unichip Corporation-JP
Title
Director
None
None
None
Director
Director
Chairman
Vice Chairman
Director
Director
Director
Director
Director
Director
Director
Supervisor
Supervisor
Supervisor
President
Director
Director
Supervisor
President
Director
Director
Director
Supervisor
President
Name
Wendell Huang
None
None
None
Shareholding
Amount
-
(TSMC International Investment Ltd. holds
51,300,000 shares)
(TSMC's investment US$42,036,394)
(TSMC's investment US$23,618,000)
(TSMC's investment US$7,546,000)
Wendell Huang (Representative of Chi Cherng
Investment Co., Ltd.)
(Chi Cherng's investment NT$540,000,080)
(TSMC's investment NT$299,999,880)
(Hsin Ruey's investment NT$540,000,080)
(TSMC's investment NT$299,999,880)
(TSMC holds 41,263,171 shares)
(K.C. Shih holds 3,489,201 shares)
(Chin Yu holds 1,229,849 shares)
-
-
-
0
0
0
-
0
0
0
-
-
-
-
James Chen (Representative of Hsin Ruey
Investment Co., Ltd.)
F.C. Tseng (Representative of TSMC)
K.C. Shih
C.C. Lu (Representative of Chin Yu Investment
Ltd.)
Ping Yang (Representative of TSMC)
Jim Lai (Representative of TSMC)
Jason Chen (Representative of TSMC)
C.T. Hsing
W.C. Liu
S.C. Li
Lora Ho (Representative of TSMC)
C.H. Kao
Yu Lin
Jim Lai
S.H. Cheng
Jim Lai
K.C. Shih
Jim Lai
Jim Lai
Chung-Lin Tsai
S.H. Cheng
K.C. Shih
Chung-Lin Tsai
%
-
( 97.09%)
(99.50%)
(98%)
(98%)
(64.29%)
(35.71%)
(64.29%)
(35.71%)
(37.88%)
(3.20%)
(1.12%)
-
-
-
0%
0%
0%
-
0%
0%
0%
-
-
-
-
(GUC holds 100,000 shares)
(100%)
-
-
-
-
-
-
-
-
-
-
(GUC holds 200 shares)
(100%)
Note: On February 8, 2007, TSMC appointed Ms. Lora Ho to replace Mr. Yang Ping as a director and Mr. Wendell Huang to replace Ms. Lora Ho as a supervisor.
64
1.6 Operational Highlights of TSMC Affi liated Companies (Note)
Unit: NT$ thousands, except EPS($)
Company
Capital Stock
Assets
Liabilities
Net Worth
Net Sales
Income
Net Income
Basic EPS
from Operation
(Net of Tax)
(Net of Tax)
As of 12/31/2006
Remark
TSMC North America
TSMC Europe B.V.
TSMC Japan Limited
TSMC Korea Limited
358,556
20,587,907
18,361,163
2,226,744
192,268,961
200,782
162,006
14.73
3,910
82,350
14,000
88,810
109,316
14,779
39,069
13,559
73
49,741
95,757
14,706
250,424
229,826
7,820
32,760
10,493
722
2,963
685
23,164
115,822.08
TSMC (Shanghai) Company Limited
12,816,780
18,565,489
9,537,504
9,027,985
5,181,420
(814,454)
(637,220)
TSMC International Investment, Ltd.
32,203,805
37,371,660
10,777,911
26,593,749
3,805,727
2,802,648
2,802,637
493.88
8.57
N/A
2.84
TSMC Technology, Inc.
InveStar Semiconductor Development
Fund, Inc.
InveStar Semiconductor Development
Fund, Inc.(II) LDC.
0.033
309,108
935,015
979,345
737,547
100,214
197,468
879,131
80,159
10,839
13,366
13,365.84
1,180,812
1,002,637
975,341
102.85
1,722,340
1,551,402
470
1,550,932
547,308
512,276
368,502
6.97
TSMC Development, Inc.
0.033
14,862,485
(8,945)
14,871,430
3,450,384
3,448,741
3,441,085
3,441,085.13
17,275,880
10,338,023
1,033,007
9,305,016
12,491,934
3,365,579
3,367,215
N/A
WaferTech, LLC
TSMC Partners, Ltd.
9,779
13,248,649
8,814,830
4,433,819
308,054
Emerging Alliance Fund, L.P.
1,377,116
803,184
Hsin Ruey Investment Co., Ltd.
Chi Cherng Investment Co., Ltd.
840,000
840,000
2,300,569
2,300,101
5,611
7,331
7,325
797,573
2,293,238
2,292,776
0
108,879
108,892
Global Unichip Corporation
1,089,176
2,786,238
1,077,444
1,708,794
3,358,747
TSMC Global, Ltd.
41,853,264
43,523,317
1,026,726
42,496,591
631,303
VentureTech Alliance Fund II, L.P.
VentureTech Alliance Fund III, L.P.
Global Unichip Corporation-JP
Global Unichip Corporation-NA
* Base on U.S. GAAP
785,564
250,989
2,745
3,259
746,742
230,148
2,949
6,964
0
0
263
568
746,742
230,148
2,685
6,396
0
0
7,830
42,022
Note: Foreign exchange rates for balance sheet amounts are as follows:
$1 USD = $32.596 NT, $1 EUR = $42.97 NT, $1 JPY = $0.2745 NT, $1 RMB = $4.174 NT, $1 KRW = $0.035 NT
Foreign exchange rates for income statement amounts are as follows:
$1 USD = $32.523 NT, $1 EUR = $40.9 NT, $1 JPY = $0.28 NT, $1 RMB = $4.079 NT, $1 KRW = $0.034 NT
308,010
(31,440)
108,668
108,682
220,137
616,328
(23,151)
(21,382)
373
2,001
308,009
1,026.70
(2,644)
98,605
99,647
237,295
N/A
N/A
N/A
2.44
616,171
479,884.40
(37,339)
(20,794)
(61)
1,714
N/A
N/A
(304.16)
17.14
*
*
*
*
*
65
2. Status of TSMC Common Shares /ADRs Acquired, Disposed of and Held by Subsidiaries
(In thousands of NTD except number of shares)
Name of
Subsidiary
(Note 1)
Chi Cherng
Investment
Co., Ltd.
Hsin Ruey
Investment
Co., Ltd.
Paid-in
Capital
Source of
Funding
Percentage
Owned by
TSMC
Transaction
Date
Acquisition (Note 2)
Disposal
Investment
Balance (Note 1)
Number of
Shares
Amount
Number of
Shares
Amount
Income
(Loss)
Number of
Shares
Amount
(Note 3)
Balance of
Pledged
Shares
Balance of
Balance of
Guarantee
Financing
Provided
Provided
by TSMC
by TSMC
840,000
840,000
Retained
earnings
Retained
earnings
36% Year 2006
493,455
Year 2007
(Note 1)
0
36% Year 2006
494,380
Year 2007
(Note 1)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
16,947,271
458,564
16,947,271
458,564
16,979,038
459,511
16,979,038
459,511
0
0
0
0
0
0
0
0
0
0
0
0
Note 1: As of 02/28/2007
Note 2: Stock dividend distributed in 2006
Note 3: Carrying cost of TSMC shares
3. Special Notes
3.1 Private Placement Securities: None.
3.2 Regulatory Authorities' Legal Penalties to the Company, and the Company's Resulting Punishment on Its
Employees: None.
3.3 Any Events in 2006 That Had Signifi cant Impacts on Shareholders' Right or Security Prices as Stated in Item 2
Paragraph 2 of Article 36 of Securities and Exchange Law of Taiwan: None.
3.4 Other Necessary Supplement: None.
66
Financial Information
6767
1. Condensed Balance Sheet
2. Condensed Statement of Income
Financial Analysis from 2002-2006
Financial Analysis from 2002-2006
Item
Current Assets
2002
2003
2004
2005
2006
94,747,405
158,526,272
173,667,311
197,562,416
193,676,010
Item
Net Sales
2002
2003
2004
2005
2006
160,961,329
201,904,341
255,992,427
264,588,364
313,881,635
Long-term Investments
34,978,495
37,965,353
73,292,863
80,659,601
137,378,205
Gross Profit
51,967,145
72,891,637
110,160,584
115,244,049
149,718,400
Unit: NT$ thousands
Unit: NT$ thousands (Except EPS: NT$)
217,192,263
188,286,752
227,976,400
214,145,633
228,235,359
Income from Operations
34,176,306
52,647,577
86,822,778
93,013,824
126,299,859
23,097,348
11,638,485
12,616,636
15,172,165
14,295,330
Non-operating Income and Gains
1,762,893
2,665,799
6,785,048
7,381,360 ***
11,596,727
Non-operating Expenses and Losses
8,826,744
4,285,101
1,829,242
6,575,761 ***
3,090,087
Interest Revenue
Interest Expense
Income from Operations of Continued
Segments - before Tax
Income from Operations of Continued
Segments - after Tax
Net Income
Earnings Per Share
Adjusted Earnings Per Share
Capitalized Interest
1,008,147
819,377
1,687,681
2,506,769 ***
3,382,868
2,119,935
1,576,343
1,278,072
1,180,484 ***
661,200
27,112,455
51,028,275
91,778,584
93,819,423
134,806,499
21,610,291
47,258,700
92,316,115
93,575,035
127,255,917
21,610,291
47,258,700
92,316,115
93,575,035
127,009,731
1.14 *
0.82 **
2.33 *
1.82 **
165,857
138,668
3.97 *
3.58 **
262,109
3.79 *
3.63 **
-
4.93 *
-
-
* Based on weighted average shares outstanding in each year
** Retroactive adjustment for capitalization of unappropriated earnings and bonus to employees
*** Certain accounts of year 2005 have been reclassified to conform to year 2006 classifications.
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
31,160,103
30,537,984
60,638,852
32,184,415
42,905,154
31,673,588
43,691,881
110,460,630
97,699,015
*
39,281,665
33,300,829
23,752,940
22,111,575
14,175,271
3,720,536
3,363,740
4,196,119
7,613,476
8,523,195
199,228,867
202,666,189
232,519,637
247,300,246
258,296,879
57,004,789
56,855,885
56,537,259
57,117,886
54,107,498
40,792,197
71,100,090
113,730,016
142,771,034
197,124,532
23,841,390
26,846,412
49,195,999
70,114,801
*
-
Unrealized Loss on Long-term Investment
Cumulative Transaction Adjustments
Unrealized Gains on Financial Instruments
(194,283)
945,129
-
(35)
-
-
225,408
(2,226,427)
(640,742)
(1,191,165)
-
-
-
561,615
Total Assets
Total Liabilities
Before Distribution
After Distribution
Total Equity
Before Distribution
After Distribution
370,015,511
396,416,862
487,553,210
507,539,815
573,584,904
74,162,304
67,202,553
88,587,911
61,909,466
65,603,620
74,675,789
80,356,450
138,409,689
127,424,066
*
295,853,207
329,214,309
398,965,299
445,630,349
507,981,284
295,339,722
316,060,412
349,143,521
380,115,749
*
* Subject to change after shareholders' meeting resolution
68
3. Financial Analysis
3.1 Financial Analysis from 2002-2006 (Unconsolidated)
Capital Structure Analysis
Debt Ratio (%)
Liquidity Analysis
Long-term Fund to Fixed Assets Ratio (%)
Current Ratio (%)
Quick Ratio (%)
Times Interest Earned (times)
Operating Performance Analysis
Average Collection Turnover (times)
Days Sales Outstanding
Average Inventory Turnover (times)
Average Inventory Turnover Days
Average Payment Turnover (times)
Fixed Assets Turnover (times)
Total Assets Turnover (times)
Profitability Analysis
Return on Total Assets (%)
Return on Equity (%)
Operating Income to Paid-in Capital Ratio (%)
Pre-tax Income to Paid-in Capital Ratio (%)
Net Margin (%)
Basic Earnings Per Share (NT$) (Note 1)
Diluted Earnings Per Share (NT$) (Note 1)
Cash Flow
Cash Flow Ratio (%)
Leverage
Cash Flow Adequacy Ratio (%)
Cash Flow Reinvestment Ratio (%)
Operating Leverage
Financial Leverage
2002
20.04
154.30
304.07
264.11
12.79
9.09
40.15
11.57
31.55
20.72
0.74
0.44
6.63
7.54
17.15
13.61
13.43
0.82
0.82
302.59
122.72
17.88
3.88
1.07
2003
16.95
192.53
519.11
478.38
30.67
9.19
39.74
12.14
30.06
14.41
1.07
0.51
12.67
15.12
25.98
25.18
23.41
1.82
1.82
355.85
145.42
17.71
3.21
1.03
2004
18.17
185.42
286.40
261.92
57.67
9.35
39.04
11.63
31.39
14.39
1.12
0.53
21.16
25.36
37.34
39.47
36.06
3.58
3.58
236.94
149.94
18.12
2.46
1.02
2005
12.20
218.42
613.84
560.93
80.48
8.08
45.18
9.82
37.19
14.24
1.24
0.52
19.01
22.16
37.61
37.94
35.37
3.63
3.63
468.02
150.88
12.50
2.30
1.01
2006
11.44
228.78
451.40
404.49
204.39
9.26
39.40
9.27
39.37
15.81
1.38
0.55
23.60
26.64
48.90
52.06
40.46
4.93
4.92
457.01
153.75
14.18
2.04
1.01
Ananlysis of Deviation over 20% - 2006 vs. 2005:
1. The current ratio and the quick ratio both decreased by 26% and 28%, which was primarily due to reclassification of bonds payable from noncurrent
3. The return on total assets ratio and return on equity ratio increased by 24% and 20% was mainly due to an increase in net income.
4. The operating income to paid-in capital ratio and pre-tax income to paid in capital ratio increased by 30% and 37% was mainly due to higher
portion to current and increase of income tax payable.
operating income and higher pre-tax income.
2. The times interest earned increased by 154% was mainly due to an increase of operating income and a decrease in interest expense.
5. EPS increased by 36% mainly due to an increase of net income.
Note 1: Retroactively adjusted for capitalization of unappropriated earnings and bonuses to employees.
(3) Average inventory turnover
= Cost of Sales / Average Inventory
Note 2: Certain accounts of year 2005 have been reclassified to conform to year 2006 classifications.
(4) Average inventory turnover days
= 365 / Average Inventory Turnover
5. Cash Flow
(1) Cash flow ratio
= Net Cash Provided by Operating Activities / Current Liabilities
(5) Average payment turnover
= Cost of Sales / Average Trade Payables
(2) Cash flow adequacy ratio
= Five-year sum of cash from operations / Five-year sum of
*Glossary
1. Capital Structure Analysis
(1) Debt ratio
= Total Liabilities / Total Assets
(6) Fixed assets turnover
(7) Total assets turnover
4. Profitability Analysis
= Net Sales / Net Fixed Assets
= Net Sales / Total Assets
(3) Cash flow reinvestment ratio
= ( Cash Provided by Operating Activities - Cash Dividends ) /
capital expenditures, inventory additions, and cash dividend
( Gross Fixed Assets + Investments + Other Assets + Working
(2) Long-term fund to fixed assets ratio = (Shareholders' Equity + Long-term Liabilities) / Net Fixed Assets
(1) Return on total assets
= ( Net Income + Interest Expenses * (1 - Effective tax rate ) ) /
Capital )
2. Liquidity Analysis
(1) Current ratio
(2) Quick ratio
= Current Assets / Current Liabilities
(2) Return on equity
= Net Income / Average Shareholders' Equity
= (Current Assets - Inventories - Prepaid Expenses) / Current
(3) Operating income to paid-in capital = Operating Income / Paid-in Capital
Liabilities
ratio
Average Total Assets
(3) Times interest earned
= Earnings before Interest and Taxes / Interest Expenses
(4) Pre-tax income to paid-in capital ratio = Income before Tax / Paid-in Capital
3. Operating Performance Analysis
(1) Average collection turnover
= Net Sales / Average Trade Receivables
(2) Days sales outstanding
= 365 / Average Collection Turnover
(5) Net margin
= Net Income / Net Sales
(6) Earnings per share
= ( Net Income - Preferred Stock Dividend ) / Weighted
Average Number of Shares Outstanding
6. Leverage
(1) Operating leverage
(2) Financial leverage
= ( Net Sales - Variable Cost ) / Income from Operations
= Income from Operations / ( Income from Operations - Interest
Expenses )
69
3.2 Financial Analysis from 2002-2006 (Consolidated)
Capital Structure Analysis
Debts Ratio (%)
Liquidity Analysis
Long-term Fund to Fixed Assets Ratio (%)
Current Ratio (%)
Quick Ratio (%)
Times Interest Earned (times)
Operating Performance Analysis
Average Collection Turnover (times)
Days Sales Outstanding
Average Inventory Turnover (times)
Average Inventory Turnover Days
Average Payment Turnover (times)
Fixed Assets Turnover (times)
Total Assets Turnover (times)
Profitability Analysis
Return on Total Assets (%)
Return on Equity (%)
Operating Income to Paid-in Capital Ratio (%)
Pre-tax Income to Paid-in Capital Ratio (%)
Net Margin (%)
Basic Earnings Per Share (NT$) (Note 1)
Diluted Earnings Per Share (NT$) (Note 1)
Cash Flow
Cash Flow Ratio (%)
Leverage
Cash Flow Adequacy Ratio (%)
Cash Flow Reinvestment Ratio (%)
Operating Leverage
Financial Leverage
2002
24.22
140.48
257.43
223.68
10.54
9.09
40.15
10.46
34.89
23.50
0.66
0.42
6.33
7.54
15.86
13.66
13.30
0.82
0.82
247.31
106.37
17.81
4.15
1.09
2003
19.17
175.65
547.46
502.20
26.14
9.03
40.41
10.98
33.24
15.43
0.96
0.50
12.30
15.12
25.31
25.25
23.28
1.82
1.82
381.44
132.59
17.97
3.23
1.04
2004
20.10
166.58
288.57
261.62
53.92
9.22
39.60
10.21
35.74
14.75
0.99
0.51
20.68
25.36
38.05
39.55
35.90
3.58
3.58
239.60
146.18
18.54
2.38
1.02
2005
14.10
194.69
604.46
549.94
67.69
7.84
46.54
8.91
40.94
14.37
1.09
0.51
18.89
22.16
36.78
38.12
35.13
3.63
3.63
447.65
154.53
12.64
2.31
1.02
2006
13.34
209.38
555.51
506.39
152.46
8.84
41.28
8.25
44.22
15.41
1.25
0.54
23.12
26.64
49.27
52.22
40.07
4.93
4.92
437.46
156.75
14.36
1.99
1.01
Analysis of Deviation over 20% - 2006 vs. 2005:
1. The times interest earned increased by 123%, primarily due to 41% increase in income before tax, and 37% decrease in interest expense.
2. Return on total assets and Return on equity increased by 22% and 20% respectively, maily due to 36% increase in net income.
3. Operating income to capital stock increased by 34%, primarily due to 40% increase in operating income.
4. Profit before tax to capital stock increased by 35%, mainly due to 41% increase in income before tax.
5. Earnings per share increased by 36%, mainly due to increase in net income.
Note 1: Retroactive adjustment for capitalization of unappropriated earnings and bonus to employees.
(2) Days sales outstanding
= 365 / Average Collection Turnover
Note 2: Certain accounts of prior years have been reclassified to conform to current year classifications.
(3) Average inventory turnover
= Cost of Sales / Average Inventory
5. Cash Flow
(1) Cash flow ratio
*Glossary :
1. Capital Structure Analysis
(1) Debts ratio
= Total Liabilities / Total Assets
(4) Average inventory turnover days
= 365 / Average Inventory Turnover
(5) Average payment turnover
= Cost of Sales / Average Trade Payables
(6) Fixed assets turnover
(7) Total assets turnover
= Net Sales / Frxed Assets
= Net Sales / Total Assets
= Net Cash Provided by Operating Activities / Current
Liabilities
(2) Cash flow adequacy ratio
= Five-year sum of cash from operations / Five-year sum of
(3) Cash flow reinvestment ratio
= ( Cash Provided by Operating Activities - Cash Dividends ) /
capital expenditures, inventory additions, and cash dividend
(2) Long-term fund to fixed assets ratio
= (Shareholders' Equity + Long-term Liabilities) / Net Fixed
4. Profitability Analysis
2. Liquidity Analysis
(1) Current ratio
(2) Quick ratio
Assets
(1) Return on total assets
= ( Net Income + Interest Expenses * (1 - Effective tax rate)) /
Average Total Assets
= Current Assets / Current Liabilities
(2) Return on equity
= Net Income / Average Shareholders' Equity
= (Current Assets - Inventories - Prepaid Expenses) /
(3) Operating income to paid-in capital ratio = Operating Income / Paid-in Capital
Current Liabilities
(4) Pre-tax income to paid-in capital ratio = Income before Tax / Paid-in Capital
6. Leverage
(1) Operating leverage
(2) Financial leverage
(3) Times interest earned
= Earnings before Interest and Taxes / Interest Expenses
3. Operating Performance Analysis
(1) Average collection turnover
= Net Sales / Average Trade Receivables
(5) Net margin
(6) Earnings per share
= Net Income / Net Sales
= ( Net Income - Preferred Stock Dividend ) / Weighted
Average Number of Shares Outstanding
( Gross Fixed Assets + Investment + Other Assets + Working
Capital )
= ( Net Sales - Variable Cost ) / Income from Operations
= Income from Operations / ( Income from Operations -
Interest Expenses )
70
4. Auditors' Opinions from 2002 to 2006
6. Financial Difficulties
Year
2002
2003
2004
2005
2006
CPA
Audit Opinion
Shu-Chieh Huang, Yung-Do Way
Yu-Feng Huang, Yung-Do Way
Hung-Wen Huang, Ming-Cheng Chang
Hung-Wen Huang, Ming-Cheng Chang
Hung-Wen Huang, Ming-Cheng Chang
An Unqualified Opinion with explantory
An Unqualified Opinion with explantory
An Unqualified Opinion
An Unqualified Opinion
An Unqualified Opinion
Deloitte Touche Tohmatsu
12F, No. 156, Sec. 3, Min-Sheng E. Rd., Taipei, Taiwan, R.O.C.
Tel: 886-2-2545-9988
5. Audit Committee's Report
The Board of Directors has prepared the Company's 2006 Business Report, Financial Statements, and
proposal for allocation of profits. The CPA firm of Deloitte & Touche was retained to audit TSMC's
Financial Statements and has issued an audit report relating to the Financial Statements. The Business
Report, Financial Statements, and profit allocation proposal have been reviewed and determined to
be correct and accurate by the undersigned, the Audit Committee members of Taiwan Semiconductor
Manufacturing Company Limited. According to Article 14-4 of the Securities and Exchange Act and
Article 219 of the Company Law, we hereby submit this report.
Taiwan Semiconductor Manufacturing Company Limited
Independent Director Sir Peter Leahy Bonfield
Independent Director Lester Carl Thurow
Independent Director Stan Shih
Independent Director Carleton (Carly) S. Fiorina
February 26, 2007
The Company should disclose the financial impact to the Company if the Company and its affiliated
companies have incurred any financial or cash flow difficulties from January 1, 2006 through until
February 28, 2007: None.
71
7. Financial Statements for the Years Ended December 31, 2006 and 2005 and Independent Auditors’ Report
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Limited
Notice to Readers
We have audited the accompanying balance sheets of Taiwan Semiconductor Manufacturing
Company Limited as of December 31, 2006 and 2005, and the related statements of income, changes
in shareholders’ equity and cash flows for the years then ended. These financial statements are the
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 any other jurisdiction. The standards, procedures and
practices to audit such financial statements are those generally accepted and applied in the Republic
responsibility of the Company’s management. Our responsibility is to express an opinion on these
of China.
financial statements based on our audits.
We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements
by Certified Public Accountants and auditing standards generally accepted in the Republic of
China. Those rules and standards require that we plan and perform the audit to obtain reasonable
For the convenience of readers, the auditors’ report and the accompanying financial statements have
been translated into English from the original Chinese version prepared and used in the Republic
of China. If there is any conflict between the English version and the original Chinese version or
any difference in the interpretation of the two versions, the Chinese-language auditors’ report and
assurance about whether the financial statements are free of material misstatement. An audit
financial statements shall prevail.
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 Limited as of December
31, 2006 and 2005, and the results of its operations and its cash flows for the years then ended in
conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers,
requirements of the Business Accounting Law and Guidelines Governing Business Accounting with
respect to financial accounting standards, and accounting principles generally accepted in the
Republic of China.
We have also audited, in accordance with the Rules Governing the Audit of Financial Statements by
Certified Public Accountants and auditing standards generally accepted in the Republic of China, the
consolidated financial statements of Taiwan Semiconductor Manufacturing Company Limited and
subsidiaries as of and for the years ended December 31, 2006 and 2005, and have expressed an
unqualified opinion on the consolidated financial statements.
January 11, 2007
72
Taiwan Semiconductor Manufacturing Company Limited
BALANCE SHEETS
DECEMBER 31, 2006 AND 2005
(In Thousands of New Taiwan Dollars, Except Par Value)
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)
Financial assets at fair value through profit or loss (Notes 2, 3 and 5)
Available-for-sale financial assets (Notes 2, 3 and 6)
Held-to-maturity financial assets (Notes 2, 3 and 7)
Notes and accounts receivable
Receivables from related parties (Note 23)
Allowance for doubtful receivables (Note 2)
Allowance for sales returns and others (Note 2)
Other receivables from related parties (Note 23)
Other financial assets (Note 3)
Inventories, net (Notes 2 and 8)
Deferred income taxes assets (Notes 2 and 16)
Prepaid expenses and other current assets (Note 3)
2006
Amount
$ 100,139,709
44,601
25,967,061
8,510,823
16,278,164
16,869,509
(690,931)
(2,751,065)
449,266
653,460
19,152,214
7,832,000
1,221,199
2005
Amount
$ 85,383,583
1,380,905
46,452,838
602,509
20,591,818
21,050,604
(976,344)
(4,269,969)
1,797,714
1,106,030
16,257,955
7,013,000
1,171,773
%
17
-
5
2
3
3
-
-
-
-
3
1
-
%
17
1
9
-
4
4
-
(1)
1
-
3
1
-
Total current assets
193,676,010
34
197,562,416
39
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
2006
2005
Amount
%
Amount
%
Financial liabilities at fair value through profit or loss (Notes 2, 3 and 5)
Accounts payable
Payables to related parties (Note 23)
Income tax payable (Notes 2 and 16)
Accrued expenses and other current liabilities (Notes 3 and 14)
Payables to contractors and equipment suppliers
Current portion of bonds payable (Note 13)
$ 10,751
6,143,679
3,326,916
7,850,418
7,903,867
10,669,523
7,000,000
-
1
1
1
1
2
1
$ 234,279
8,052,106
3,242,197
3,815,888
7,980,715
8,859,230
-
-
1
1
1
1
2
-
Total current liabilities
42,905,154
7
32,184,415
6
LONG-TERM LIABILITIES
Bonds payable (Note 13)
Other long-term payables (Note 14)
Other payables to related parties (Notes 23 and 25)
12,500,000
1,271,896
403,375
2
-
-
19,500,000
1,511,100
1,100,475
4
-
-
Total long-term liabilities
14,175,271
2
22,111,575
4
LONG-TERM INVESTMENTS (Notes 2, 3, 6, 7, 9 and 10)
Investments accounted for using equity method
Available-for-sale financial assets
Held-to-maturity financial assets
Financial assets carried at cost
101,044,356
6,647,511
28,973,495
712,843
18
1
5
-
51,076,803
-
28,775,308
807,490
10
-
6
-
OTHER LIABILITIES
Accrued pension cost (Notes 2 and 15)
Guarantee deposits (Note 25)
Deferred credits (Notes 2 and 23)
3,530,116
3,809,961
1,183,118
1
1
-
3,461,392
2,892,945
1,259,139
1
1
-
Total long-term investments
137,378,205
24
80,659,601
16
Total other liabilities
8,523,195
2
7,613,476
2
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 11 and 23)
Total liabilities
65,603,620
11
61,909,466
12
Cost
Buildings
Machinery and equipment
Office equipment
Accumulated depreciation
Advance payments and construction in progress
96,961,851
527,850,728
8,659,225
633,471,804
(417,467,250)
12,230,805
17
92
2
111
(73)
2
90,769,622
459,850,773
7,850,035
558,470,430
(359,191,829)
14,867,032
18
91
1
110
(71)
3
CAPITAL STOCK - NT$10 PAR VALUE
Authorized: 27,050,000 thousand shares
Issued: 25,829,688 thousand shares in 2006
24,730,025 thousand shares in 2005
258,296,879
45
247,300,246
49
CAPITAL SURPLUS (Notes 2 and 18)
54,107,498
10
57,117,886
11
Net property, plant and equipment
228,235,359
40
214,145,633
42
RETAINED EARNINGS (Note 18)
GOODWILL (Note 2)
OTHER ASSETS
Deferred income tax assets (Notes 2 and 16)
Deferred charges, net (Notes 2 and 12)
Refundable deposits
Assets leased to others, net (Note 2)
Others
1,567,756
-
1,567,756
-
Appropriated as legal capital reserve
Appropriated as special capital reserve
Unappropriated earnings
5,761,127
5,593,068
1,306,234
67,145
-
1
1
-
-
-
6,759,955
6,681,144
83,642
72,879
6,789
2
1
-
-
-
OTHERS (Notes 2, 3 and 22)
Cumulative translation adjustments
Unrealized gains on financial instruments
Total other assets
12,727,574
2
13,604,409
3
43,705,711
640,742
152,778,079
8
-
26
34,348,208
2,226,427
106,196,399
7
-
21
197,124,532
34
142,771,034
28
(1,191,165)
561,615
-
-
(640,742)
-
-
-
(629,550)
-
(640,742)
-
TREASURY STOCK (AT COST, Notes 2 and 20)
33,926 thousand shares in 2006 and 32,938 thousand shares in 2005
(918,075)
-
(918,075)
-
Total shareholders’ equity
507,981,284
89
445,630,349
88
TOTAL
$ 573,584,904
100
$ 507,539,815
100
TOTAL
$ 573,584,904
100
$ 507,539,815
100
The accompanying notes are an integral part of the financial statement.
73
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
GROSS SALES (Notes 2 and 23)
$ 319,210,148
$ 270,315,064
INCOME BEFORE INCOME TAX
SALES RETURNS AND ALLOWANCES (Note 2)
5,328,513
5,726,700
INCOME TAX EXPENSE (Notes 2 and 16)
2006
2005
Amount
%
Amount
%
NET SALES
COST OF SALES (Notes 17 and 23)
GROSS PROFIT
OPERATING EXPENSES (Notes 17 and 23)
Research and development
General and administrative
Marketing
Total operating expenses
313,881,635
100
264,588,364
100
NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES,
NET OF TAX BENEFIT OF NT$82,062 THOUSAND (Note 3)
164,163,235
149,718,400
14,601,385
7,190,422
1,626,734
23,418,541
52
48
5
2
1
8
149,344,315
115,244,049
13,395,801
7,485,011
1,349,413
22,230,225
56
44
5
3
1
9
2006
Amount
$ 134,806,499
(7,550,582)
127,255,917
(246,186)
2005
Amount
$ 93,819,423
(244,388)
93,575,035
-
%
43
(2)
41
-
%
35
-
35
-
NET INCOME
$ 127,009,731
41
$ 93,575,035
35
EARNINGS PER SHARE (NT$, Note 21)
Basic earnings per share
Diluted earnings per share
2006
2005
Before
Income Tax
After
Income Tax
Before
Income Tax
After
Income Tax
$ 5.21
$ 5.21
$ 4.93
$ 4.92
$ 3.64
$ 3.64
$ 3.63
$ 3.63
Certain pro forma information (after income tax) is shown as follows, based on the assumption that the Company’s stock held by subsidiaries is
treated as an investment instead of treasury stock (Notes 2 and 20):
NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES
NET INCOME
EARNINGS PER SHARE (NT$)
Basic earnings per share
Diluted earnings per share
2006
2005
$ 127,338,237
$ 93,881,698
$ 127,092,051
$ 93,881,698
$ 4.92
$ 4.92
$ 3.64
$ 3.64
The accompanying notes are an integral part of the financial statements.
(Concluded)
INCOME FROM OPERATIONS
126,299,859
40
93,013,824
35
NON-OPERATING INCOME AND GAINS
Equity in earnings of equity method investees, net (Notes 2 and 9)
Interest income (Notes 2 and 3)
Settlement income (Note 25)
Technical service income (Notes 23 and 25)
Gain on disposal of property, plant and equipment and other assets
(Notes 2 and 23)
Valuation gain on financial instruments, net (Notes 2, 3, 5 and 22)
Foreign exchange gain, net (Notes 2 and 3)
Others (Note 23)
Total non-operating income and gains
NON-OPERATING EXPENSES AND LOSSES
Loss on settlement and disposal of financial instruments, net
(Notes 2, 3 and 5)
Interest expense (Note 3)
Foreign exchange loss, net (Note 2)
Loss on disposal of property, plant and equipment (Note 2)
Equity in losses of equity method investees, net (Notes 2 and 9)
Valuation loss on financial instruments, net (Notes 2, 3, 5 and 22)
Others
5,526,727
3,382,868
967,506
670,297
596,459
33,850
-
419,020
11,596,727
1,623,882
661,200
412,726
240,985
-
-
151,294
2
1
1
-
-
-
-
-
4
1
-
-
-
-
-
-
-
2,506,769
950,046
491,267
494,374
-
2,572,560
366,344
7,381,360
3,742,312
1,180,484
-
59,992
1,052,045
337,160
203,768
Total non-operating expenses and losses
3,090,087
1
6,575,761
-
1
-
-
-
-
1
-
2
2
-
-
-
-
-
-
2
(Continued)
74
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
Capital Stock
Retained Earnings
Shares
(In Thousands)
Amount
Capital
Surplus
Legal Capital
Reserve
Special Capital
Reserve
Unappropriated
Earnings
Total
Cumulative
Translation
Adjustments
Others
Unrealized
Gain on
Financial
Instruments
BALANCE, JANUARY 1, 2005
23,251,964
$ 232,519,637
$ 56,537,259
$ 25,528,007
$
-
$ 88,202,009
$ 113,730,016
$ (2,226,427)
$
Appropriations of prior year’s earnings
Legal capital reserve
Special capital reserve
Employees’ profit sharing - in cash
Employees’ profit sharing - in stock
Cash dividends to shareholders - NT$2.00 per share
Stock dividends to shareholders - NT$0.50 per share
Bonus to directors and supervisors
Net income in 2005
Adjustment arising from changes in percentage of
ownership in investees
Translation adjustments
Issuance of stock from exercising stock options
Cash dividends received by subsidiaries from the
Company
Treasury stock transactions - sales of the Company’s
stock held by subsidiaries
-
-
-
308,622
-
1,162,602
-
-
-
-
6,837
-
-
-
-
-
3,086,215
-
11,626,024
-
-
-
-
68,370
-
-
-
-
-
-
-
-
-
-
71,405
-
202,559
84,285
222,378
8,820,201
-
-
-
-
-
-
-
-
-
-
-
-
-
2,226,427
-
-
-
-
-
-
(8,820,201)
(2,226,427)
(3,086,215)
(3,086,215)
(46,504,097)
(11,626,024)
(231,466)
93,575,035
-
-
(3,086,215)
(3,086,215)
(46,504,097)
(11,626,024)
(231,466)
93,575,035
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,585,685
-
-
-
BALANCE, DECEMBER 31, 2005
24,730,025
247,300,246
57,117,886
34,348,208
2,226,427
106,196,399
142,771,034
(640,742)
Appropriations of prior year’s earnings
Legal capital reserve
Special capital reserve
Employees’ profit sharing - in cash
Employees’ profit sharing - in stock
Cash dividends to shareholders - NT$2.50 per share
Stock dividends to shareholders - NT$0.15 per share
Bonus to directors and supervisors
Capital surplus transferred to capital stock
Net income in 2006
Adjustment arising from changes in percentage of
ownership in investees
Translation adjustments
Issuance of stock from exercising stock options
Cash dividends received by subsidiaries from the
Company
Valuation gain on available-for-sale financial assets
Equity in the valuation gain on available-for-sale
financial assets of equity method investees
-
-
-
343,213
-
370,950
-
370,950
-
-
-
14,550
-
-
-
-
-
-
3,432,129
-
3,709,504
-
3,709,504
-
-
-
145,496
-
-
-
-
-
-
-
-
-
-
(3,709,504)
-
187,095
-
429,701
82,320
-
-
9,357,503
-
-
-
-
-
-
-
-
-
(1,585,685)
-
-
-
-
-
-
-
(9,357,503)
1,585,685
(3,432,129)
(3,432,129)
(61,825,061)
(3,709,504)
(257,410)
-
127,009,731
-
-
(3,432,129)
(3,432,129)
(61,825,061)
(3,709,504)
(257,410)
-
127,009,731
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(550,423)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
242,248
319,367
Total
Treasury
Stock
Total
Shareholders’
Equity
$ (2,226,427)
$ (1,595,186)
$ 398,965,299
-
-
-
-
-
-
-
-
-
1,585,685
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,086,215)
-
(46,504,097)
-
(231,466)
93,575,035
71,405
1,585,685
270,929
84,285
677,111
899,489
(640,742)
(918,075)
445,630,349
-
-
-
-
-
-
-
-
-
-
(550,423)
-
-
242,248
319,367
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,432,129)
-
(61,825,061)
-
(257,410)
-
127,009,731
187,095
(550,423)
575,197
82,320
242,248
319,367
BALANCE, DECEMBER 31, 2006
25,829,688
$ 258,296,879
$ 54,107,498
$ 43,705,711
$ 640,742
$ 152,778,079
$ 197,124,532
$ (1,191,165)
$ 561,615
$ (629,550)
$ (918,075)
$ 507,981,284
The accompanying notes are an integral part of the financial statements.
75
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
(In Thousands of New Taiwan Dollars)
2006
2005
2006
2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Amortization of premium/discount of financial assets
Loss on disposal of available-for-sale financial assets, net
Equity in losses (earnings) of equity method investees, net
Dividends received from equity method investees
Gain on disposal of investments accounted for using equity method
investees, net
Gain on disposal of financial assets carried at cost, net
Loss on impairment of financial assets carried at cost
Gain on disposal of property, plant and equipment and other assets, net
Deferred income taxes
Loss on idle assets
Donation of idle assets
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets and liabilities at fair value through profit or loss
Notes and accounts receivable
Receivables from related parties
Allowance for doubtful receivables
Allowance for sales returns and others
Other receivables from related parties
Other financial assets
Inventories
Prepaid expenses and other current assets
Increase (decrease) in:
Accounts payable
Payables to related parties
Income tax payable
Accrued expenses and other current liabilities
Accrued pension cost
Deferred credits
$ 127,009,731
$ 93,575,035
66,699,455
2,399
485
(5,526,727)
626,367
(26,031)
(212)
36,608
(355,474)
179,828
44,072
-
1,112,776
4,313,654
4,181,095
(285,413)
(1,518,904)
985,419
(99,109)
(2,894,259)
(49,426)
(1,908,427)
(612,381)
4,034,530
157,262
68,724
(95,745)
67,991,423
120,872
150,081
1,052,045
668,464
(583)
(2,919)
-
(434,382)
(3,278,952)
131,849
7,207
10,739
(5,264,937)
(4,914,565)
(4,117)
942,055
(1,243,126)
64,288
(2,086,010)
(84,341)
1,563,489
(1,224,371)
3,435,985
(1,001,293)
360,196
95,744
Net cash provided by operating activities
196,080,297
150,629,876
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Available-for-sale financial assets
Held-to-maturity financial assets
Financial assets carried at cost
Investments accounted for using equity method
Property, plant and equipment
(98,679,832)
(18,554,027)
(12,940)
(5,515,466)
(77,215,811)
(99,436,242)
(14,199,142)
(48,536)
(3,392,619)
(73,659,014)
Proceeds from disposal of:
Available-for-sale financial assets
Financial assets carried at cost
Investments accounted for using equity method
Property, plant and equipment and other assets
Redemption of held-to-maturity financial assets upon maturity
Proceeds from return of capital by investee
Increase in deferred charges
Decrease (increase) in refundable deposits
$ 73,212,019
71,191
37,946
1,277,729
10,410,000
162,354
(1,272,355)
(1,222,592)
$ 101,609,384
16,599
65,076
2,087,236
14,595,394
-
(847,721)
1,771
Net cash used in investing activities
(117,301,784)
(73,207,814)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid for common stock
Cash bonus paid to employees
Increase in guarantee deposits
Proceeds from exercise of employee stock options
Bonus to directors and supervisors
Repayment of long-term bonds payable
Net cash used in financing activities
NET DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
(61,825,061)
(3,432,129)
917,016
575,197
(257,410)
-
(64,022,387)
14,756,126
85,383,583
(46,504,097)
(3,086,215)
2,480,552
270,929
(231,466)
(10,500,000)
(57,570,297)
19,851,765
65,531,818
CASH AND CASH EQUIVALENTS, END OF YEAR
$ 100,139,709
$ 85,383,583
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid
Income tax paid
INVESTING ACTIVITIES AFFECTING BOTH CASH AND NON-CASH ITEMS
Acquisition of property, plant, and equipment
Decrease (increase) in payables to contractors and equipment suppliers
Cash paid
NON-CASH INVESTING AND FINANCING ACTIVITIES
Current portion of bonds payable
Current portion of other payables to related parties (under payables to
related parties)
Current portion of other long-term payable (under accrued expenses and
other current liabilities)
Transfer of available-for-sale financial assets and other net assets
to investments accounted for using equity method (Note 6)
$ 661,200
$ 3,189,528
$ 1,212,449
$ 87,351
$ 79,026,104
(1,810,293)
$ 77,215,811
$ 51,363,935
22,295,079
$ 73,659,014
$ 7,000,000
$ -
$ 688,591
$ 693,956
$ 617,892
$ 869,072
$ 39,687,637
$ -
(Continued)
The accompanying notes are an integral part of the financial statements.
(Concluded)
76
Taiwan Semiconductor Manufacturing Company Limited
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
1. GENERAL
Classification of Current and Noncurrent Assets and Liabilities
Current assets are asstes held for trading purposes and assets expected to be converted to cash, sold
or consumed within one year from the balance sheet date. Current liabilities are obligations incurred
for trading purposes and obligations expected to be settled within one year from the balance sheet
date. Assets and liabilities that are not classified as current are noncurrent assets and liabilities,
respectively.
Cash Equivalents
Repurchase agreements collateralized by government bonds and corporate notes acquired with
Taiwan Semiconductor Manufacturing Company Limited (the Company or TSMC), a Republic of China
maturities of less than three months from the date of purchase are classified as cash equivalents. The
(R.O.C.) corporation, was incorporated as a venture among the Government of the R.O.C., acting
through the Development Fund of the Executive Yuan; Philips Electronics N.V. and certain of its
affiliates (Philips); and certain other private investors. On September 5, 1994, its shares were listed on
the Taiwan Stock Exchange (TSE). On October 8, 1997, TSMC listed some of its shares of stock on the
New York Stock Exchange (NYSE) in the form of American Depositary Shares (ADSs).
carrying amount approximates fair value.
Financial Assets/Liabilities at Fair Value Through Profit or Loss
Derivatives that do not meet the criteria for hedge accounting are initially recognized at fair value,
with transaction costs expensed as incurred. The derivatives are remeasured at fair value subsequently
with the changes in fair value recognized in earnings. A regular way purchase or sale of financial
The Company is engaged mainly in the manufacturing, selling, packaging, testing and computer-
assets is accounted for using settlement date accounting.
aided designing of integrated circuits and other semiconductor devices and the manufacturing of
masks.
Fair value is estimated using valuation techniques incorporating estimates and assumptions that
are consistent with prevailing market conditions. When the fair value is positive, the derivative is
As of December 31, 2006 and 2005, the Company had 20,202 and 19,460 employees, respectively.
recognized as a financial asset; when the fair value is negative, the derivative is recognized as a
2. SIGNIFICANT ACCOUNTING POLICIES
financial liability.
The financial statements are presented in conformity with the Guidelines Governing the Preparation
of Financial Reports by Securities Issuers, Business Accounting Law, Guideline Governing Business
Accounting, and accounting principles generally accepted in the R.O.C.
For the convenience of readers, the accompanying financial statements have been translated into
English from the original Chinese version prepared and used in the R.O.C. If there is any conflict
between the English version and the original Chinese version or any difference in the interpretation of
the two versions, the Chinese-language financial statements shall prevail.
Significant accounting policies are summarized as follows:
Use of Estimates
The preparation of financial statements in conformity with the aforementioned guidelines, law and
principles requires management to make reasonable assumptions and estimates of matters that are
inherently uncertain. The actual results may differ from management’s estimates.
Available-for-sale Financial Assets
Investments designated as available-for-sale financial assets include debt securities and equity
securities. Available-for-sale financial assets are initially recognized at fair value plus transaction costs
that are directly attributable to the acquisition. Changes in fair value from subsequent remeasurement
are reported as a separate component of shareholders’ equity. The corresponding accumulated gains
or losses are recognized in earnings when the financial asset is derecognized from the balance sheet.
A regular way purchase or sale of financial assets is accounted for using settlement date accounting.
Except structured time deposits whose fair value is estimated using valuation techniques, fair values of
open-end mutual funds and publicly traded stocks are determined using the net assets value and the
closing-price at the end of the year, respectively. For debt securities, fair value is determined using the
average of bid and asked prices at the end of the year.
Cash dividends are recognized as investment income upon resolution of shareholders of an investee
but are accounted for as reductions to the original cost of investments if such dividends are declared
on the earnings of the investees attributable to periods prior to the purchase of the investments. Stock
dividends are recorded as an increase in the number of shares held and do not affect investment
income. The cost per share is recalculated based on the new total number of shares. Any difference
between the initial carrying amount of a debt security and the amount due at maturity is amortized
using the effective interest method, with the amortization recognized in earnings.
77
If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized.
If, in a subsequent period, the amount of the impairment loss decreases, for equity securities, the
Inventories
Inventories are stated at the lower of cost or market value. Inventories are recorded at standard cost
previously recognized impairment loss is reversed to the extent of the decrease and recorded as an
and adjusted to the approximate weighted-average cost at the balance sheet date. Market value
adjustment to shareholders’ equity; for debt securities, the amount of the decrease is recognized
represents replacement cost for raw materials, supplies and spare parts and net realizable value for
in earnings, provided that the decrease is clearly attributable to an event which occurred after the
work in process and finished goods. The Company assesses the impact of changing technology on
impairment loss was recognized.
Held-to-maturity Financial Assets
Debt securities for which the Company has a positive intention and ability to hold to maturity are
categorized as held-to-maturity financial assets and are carried at amortized cost under the effective
interest method. Those financial assets are initially recognized at fair value plus transaction costs that
are directly attributable to the acquisition. Gains or losses are recognized at the time of derecognition,
its inventories on hand and writes off inventories that are considered obsolete. Year-end inventories
are evaluated for estimated excess quantities and obsolescence based on a demand forecast within a
specific time horizon, which is generally 180 days or less. Estimated losses on scrap and slow-moving
items are recognized and included in the allowance for losses.
Investments Accounted for Using Equity Method
Investments in companies wherein the Company exercises significant influence over the operating
impairment or amortization. A regular way purchase or sale of financial assets is accounted for using
and financial policy decisions are accounted for using the equity method. The Company’s share of
settlement date accounting.
If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease is clearly
attributable to an event which occurred after the impairment loss was recognized, the previously
recognized impairment loss is reversed to the extent of the decrease. The reversal may not result
in a carrying amount that exceeds the amortized cost that would have been determined as if no
impairment loss had been recognized.
Allowance for Doubtful Receivables
An allowance for doubtful receivables is provided based on a review of the collectibility of accounts
receivable. The Company determines the amount of allowance for doubtful receivables by examining
the aging analysis of outstanding accounts receivable and current trends in the credit quality of its
customers as well as its internal credit policies.
Revenue Recognition and Allowance for Sales Returns and Others
The Company recognizes revenue when evidence of an arrangement exists, shipment is made, price
is fixed or determinable, and collectibility is reasonably assured. Revenues from the design and
manufacture of photo masks, which are used as manufacturing tools in the fabrication process, are
recognized when the photo masks are qualified by customers. Provisions for estimated sales returns
and others are generally recorded in the period the related revenue is recognized based on historical
experience, management’s judgment, and any known factors that would significantly affect the
allowance.
Sales prices are determined using fair value taking into account related sales discounts agreed to by
the Company and its customers. Sales agreements typically provide that payment is due 30 days from
invoice date for a majority of the customers and 30 to 45 days after the end of the month in which
sales occur for some customers. Since the receivables from sales are collectible within one year and
such transactions are frequent, fair value of the receivables is equivalent to the nominal amount of
the cash to be received.
78
the net income or net loss of an investee is recognized in the “equity in earnings/losses of equity
method investees, net” account. Prior to January 1, 2006, the difference, if any, between the cost
of investment and the Company’s proportionate share of the investee’s equity was amortized by
the straight-line method over five years, with the amortization recorded in the “equity in earnings/
losses of equity method investees, net” account. Effective January 1, 2006, pursuant to the revised
Statement of Financial Accounting Standards No. 5, “Long-term Investments in Equity Securities”
(SFAS No. 5), the cost of an investment shall be analyzed and the difference between the cost of
investment and the fair value of identifiable net assets acquired, representing goodwill, shall not be
amortized and instead shall be tested for impairment annually. The accounting treatment for the
investment premiums acquired before January 1, 2006 is the same as that for goodwill which is no
longer being amortized; while investment discounts continue to be amortized over the remaining
periods. When an indication of impairment is identified, the carrying amount of the investment is
reduced, with the related impairment loss recognized in earnings.
When the Company subscribes for additional investee’s shares at a percentage different from its
existing ownership percentage, the resulting carrying amount of the investment in the investee
differs from the amount of the Company’s share of the investee’s equity. The Company records such
a difference as an adjustment to long-term investments with the corresponding amount charged or
credited to capital surplus.
Gains or losses on sales from the Company to equity method investees are deferred in proportion to
the Company’s ownership percentage in the investees until such gains or losses are realized through
transactions with third parties. The entire amount of the gains or losses on sales to investees over
which the Company has a controlling interest is deferred until such gains or losses are realized
through subsequent sales of the related products to third parties. Gains or losses on sales from
equity method investees to the Company are deferred in proportion to the Company’s ownership
percentages in the investees until they are realized through transactions with third parties.
Gains or losses on sales between equity method investees are deferred in proportion to the Company’s
occurs or circumstances change which indicated that the fair value of goodwill is more likely than not
weighted-average ownership percentages in the investees that record such gains or losses until they
below its carrying amount, an impairment loss is recognized. A subsequent recovery in fair value of
are realized through transactions with third parties.
goodwill is not allowed.
If an investee’s functional currency is a foreign currency, translation adjustments will result from the
translation of the investee’s financial statements into the reporting currency of the Company. Such
Deferred Charges
Deferred charges consist of technology license fees, software and system design costs and
adjustments are accumulated and reported as a separate component of shareholders’ equity.
other charges. The amounts are amortized over the following periods: Technology license
Financial Assets Carried at Cost
Investments in which the Company does not exercise significant influence and that do not have
fees - the shorter of the estimated life of the technology or the term of the technology transfer
contract; software and system design costs and other charges - 3 years. When an indication of
impairment is identified, any excess of the carrying amount of an asset over its recoverable amount
a quoted market price in an active market and whose fair value cannot be reliably measured are
is recognized as a loss. If the recoverable amount increases in a subsequent period, the previously
carried at their original cost, such as non-publicly traded stocks and mutual funds. The costs of
recognized impairment loss would be reversed and recognized as a gain. However, the adjusted
mutual funds and non-publicly traded stocks are determined using the weighted-average method.
amount may not exceed the carrying amount that would have been determined, net of amortization,
If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. A
as if no impairment loss had been recognized.
subsequent reversal of such impairment loss is not allowed.
The accounting treatment for cash dividends and stock dividends arising from financial assets carried
Pension Costs
For employees under defined contribution pension plans, pension costs are recorded based on the
at cost is the same as that for cash and stock dividends arising from available-for-sale financial assets.
actual contributions made to employees’ individual pension accounts during their service periods.
For employees under defined benefit pension plans, pension costs are recorded based on actuarial
Property, Plant and Equipment and Assets Leased to Others
Property, plant, and equipment and assets leased to others are stated at cost less accumulated
calculations.
depreciation. When an indication of impairment is identified, any excess of the carrying amount of
an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases
Income Tax
The Company applies intra-period and inter-period allocations for its income tax, whereby
in a subsequent period, the amount previously recognized as impairment would be reversed and
(1) a portion of current income tax expense is allocated to the cumulative effect of changes in
recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would
accounting principles; and (2) deferred income tax assets and liabilities are recognized for the tax
have been determined, net of depreciation, as if no impairment loss had been recognized. Significant
effects of temporary differences and unused tax credits. Valuation allowances are provided to the
additions, renewals and betterments incurred during the construction period are capitalized.
extent, if any, that it is more likely than not that deferred income tax assets will not be realized. A
Maintenance and repairs are expensed as incurred.
Depreciation is computed using the straight-line method over the following estimated service lives:
buildings - 10 to 20 years; machinery and equipment - 5 years; and office equipment - 3 to 5 years.
deferred tax asset or liability is classified as current or noncurrent in accordance with the classification
of its related asset or liability. However, if a deferred tax asset or liability does not relate to an asset
or liability in the financial statements, then it is classified as either current or noncurrent based on the
expected length of time before it is realized or settled.
Upon sale or disposal of property, plant and equipment, the related cost and accumulated
depreciation are deducted from the corresponding accounts, with any gain or loss recorded as to
Any tax credits arising from purchases of machinery, equipment and technology, research and
development expenditures, personnel training, and investments in important technology-based
non-operating gains or losses in the period of sale or disposal.
enterprises are recognized using the flow-through method.
Goodwill
Goodwill represents the excess of the consideration paid for acquisition over the fair value of
identifiable net assets acquired. Prior to January 1, 2006, goodwill was amortized using the straight-
line method over the estimated life of 10 years. Effective January 1, 2006, pursuant to the newly
revised SFAS No. 25, “Business Combinations - Accounting Treatment under Purchase Method” (SFAS
No. 25), goodwill is no longer amortized and instead is tested for impairment annually. If an event
79
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s
3. ACCOUNTING CHANGES
tax provision.
Income tax on unappropriated earnings at a rate of 10% is expensed in the year of shareholder
Standards No. 34, “Financial Instruments: Recognition and Measurement” (SFAS No. 34) and No.
approval which is the year subsequent to the year the earnings are generated.
36, “Financial Instruments: Disclosure and Presentation” and related revisions of previously released
On January 1, 2006, the Company adopted the newly released Statements of Financial Accounting
SFASs.
The R.O.C. government enacted the Alternative Minimum Tax Act (the AMT Act), which became
effective on January 1, 2006. The alternative minimum tax (AMT) imposed under the AMT Act is
a. Effect of adopting the newly released SFASs and related revisions of previously released SFASs
a supplemental tax levied at a rate of 10% which is payable if the income tax payable determined
pursuant to the Income Tax Law is below the minimum amount prescribed under the AMT Act. The
The Company had categorized its financial assets and liabilities upon initial adoption of the newly
taxable income for calculating the AMT includes most of the income that is exempted from income
released SFASs. The adjustments made to the carrying amounts of the financial instruments
tax under various laws and statutes. The Company has considered the impact of the AMT Act in the
categorized as financial assets or financial liabilities at fair value through profit or loss were
determination of its tax liabilities.
Stock-based Compensation
Employee stock option plans that are amended or have options granted on or after January 1,
included in the cumulative effect of changes in accounting principles; the adjustments made to
the carrying amounts of those categorized as available-for-sale financial assets were recognized as
adjustments to shareholders’ equity.
2004 are accounted for by the interpretations issued by the Accounting Research and Development
The effect of adopting the newly released SFASs is summarized as follows:
Foundation. The Company adopted the intrinsic value method and any compensation cost determined
using this method is recognized in earnings over the employee vesting period.
Treasury Stock
The Company’s stock held by subsidiaries is treated as treasury stock and reclassified from investments
accounted for using equity method to treasury stock. The gains resulted from disposal of the treasury
stock held by subsidiaries and cash dividends received by subsidiaries from the Company are recorded
under capital surplus - treasury stock transactions.
Foreign-currency Transactions
Foreign-currency transactions are recorded in New Taiwan dollars at the rates of exchange in effect
when the transactions occur. Exchange gains or losses derived from foreign-currency transactions or
monetary assets and liabilities denominated in foreign currencies are recognized in earnings. At the
Recognized as Cumulative
Effect of Changes in
Accounting Principles
(Net of Tax)
Recognized as a
Separate Component of
Shareholders’ Equity
Financial assets or liabilities at fair value through profit or loss
Available-for-sale financial assets
$ (246,186)
-
$ -
-
$ (246,186)
$ -
The adoption of the newly released SFASs resulted in a increase in net income before cumulative
effect of changes in accounting principles of NT$280,036 thousand, a increase in net income of
NT$33,850 thousand, and a increase in basic earnings per share (after income tax) of NT$0.001,
for the year ended December 31, 2006.
balance sheet date, monetary assets and liabilities denominated in foreign currencies are revalued at
Effective January 1, 2006, the Company adopted the newly revised SFAS No. 5 and SFAS No. 25,
prevailing exchange rates with the resulting gains or losses recognized in earnings.
which prescribe that investment premiums, representing goodwill, be assessed for impairment at
least on an annual basis instead of being amortized. Such a change in accounting principle did
not have a material effect on the Company’s financial statements as of and for the year ended
December 31, 2006.
80
b. Reclassifications
Upon adoption of SFAS No. 34, certain accounts in the financial statements as of and for the year
ended December 31, 2005 were reclassified to conform with the financial statements as of and for
balance sheet date was recorded as an adjustment to the interest income or expense associated
with the hedged items. Any resulting gain or loss upon settlement was credited or charged to
income in the year of settlement.
the year ended December 31, 2006. The previously issued financial statements as of and for the
The Company entered into interest rate swap contracts to manage exposures to changes in
year ended December 31, 2005 need not be restated.
interest rates on existing assets or liabilities. These transactions were accounted for on an accrual
basis, in which the cash settlement receivable or payable was recorded as an adjustment to
Certain accounting policies prior to the adoption of the newly released SFASs are summarized as
interest income or expense associated with the hedged items.
follows:
1) Short-term investments
Short-term investments that were publicly-traded, easily converted to cash, and not acquired
for the purpose of controlling the investees or establishing close business relationship with
Certain accounts in the financial statements as of and for the year ended December 31, 2005
have been reclassified to conform to the classifications prescribed by the newly released SFASs.
The reclassifications of the whole or a part of the account balances of certain accounts are
summarized as follows:
the investees were carried at the lower of cost or market value at the balance sheet date, with
Balance sheet
any temporary decline in value charged to current income. The market value of publicly-traded
stocks was determined using the average-closing prices for the last month of the year.
2) Derivative financial instruments
The Company entered into forward exchange contracts to manage foreign exchange exposures
on foreign-currency-denominated assets and liabilities. The contracts were recorded in New
Taiwan dollars at the current rate of exchange at the contract date. The differences in the New
Taiwan dollar amounts translated using the current rates and the amounts translated using
the contracted forward rates were amortized over the terms of the forward contracts using the
straight-line method. At the end of each year, the receivables or payables arising from forward
contracts were restated using the prevailing exchange rates with the resulting differences
credited or charged to income. In addition, the receivables and payables related to the same
forward contracts were netted with the resulting amount presented as either an asset or a
liability. Any resulting gain or loss upon settlement was credited or charged to income in the
year of settlement.
The Company entered into cross currency swap contracts to manage currency exposures on
foreign-currency-denominated assets and liabilities. The principal amount was recorded using
the current rates of exchange at the contract date. The differences in the New Taiwan dollar
amounts translated using the current rates and the amounts translated using the contracted
rates were amortized over the terms of the contracts using the straight-line method. At the
end of each year, the receivables or payables arising from cross-currency swap contracts were
restated using prevailing exchange rate with the resulting differences credited or charged to
income. In addition, the receivables and payables related to the contracts of the same counter
party were netted with the resulting amount presented as either an asset or a liability. The
difference in interest computed pursuant to the contracts on each settlement date or the
Short-term investments, net
Other financial assets
Prepaid expenses and other current assets
Long-term investments accounted for using cost method
Long-term bond investments
Other long-term investments
Accrued expenses and other current liabilities
Financial assets at fair value through profit or loss
Financial liabilities at fair value through profit or loss
Available-for-sale financial assets
Held-to-maturity financial assets
Financial assets carried at cost
Statement of income
Interest income
Foreign exchange gain (loss), net
Interest expense
Unrealized valuation loss on short-term investments
Loss on disposal of investments, net
Valuation loss on financial instruments, net
Loss on settlement and disposal of financial instruments, net
Before Reclassification
After Reclassification
$ 47,055,347
2,403,929
1,254,779
807,490
18,548,308
10,227,000
(8,214,994)
-
-
-
-
-
$ -
1,106,030
1,171,773
-
-
-
(7,980,715)
1,380,905
(234,279)
46,452,838
29,377,817
807,490
$ 72,081,859
$ 72,081,859
$ 2,769,978
(34,379)
(2,429,568)
(337,160)
(149,498)
-
-
$ 2,506,769
2,572,560
(1,180,484)
-
-
(337,160)
(3,742,312)
$ (180,627)
$ (180,627)
81
4. CASH AND CASH EQUIVALENTS
Outstanding cross currency swap contracts as of December 31, 2006 and 2005:
Cash and deposits in banks
Repurchase agreements collaterized by government bonds
Corporate notes
December 31
2006
$ 68,898,115
31,241,594
-
$ 100,139,709
2005
$ 37,007,192
47,963,226
413,165
$ 85,383,583
Maturity Date
December 31, 2006
Contract Amount
(In Thousands)
Range of
Interest Rates Paid
Range of
Interest Rates Received
January 2007 to February 2007
US$ 820,000
3.19% - 5.91%
0.90% - 3.25%
December 31, 2005
January 2006 to March 2006
US$ 2,089,000
4.15% - 4.54%
0.02% - 2.12%
5. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR
LOSS
Derivatives - financial assets
Forward exchange contracts
Cross currency swap contracts
Derivatives - financial liabilities
Cross currency swap contracts
December 31
2006
2005
$ -
44,601
$ 26,720
1,354,185
$ 44,601
$ 1,380,905
$ 10,751
$ 234,279
The Company did not enter into any interest rate swap contract during the year ended December 31,
2006. The Company rescinded all interest rate swap contracts in the first quarter of 2005 before their
original maturities. The rescission loss of NT$28,295 thousand has been reclassified and included in
the “loss on settlement and disposal of financial instruments” account.
Net losses arising from derivative financial instruments for the year ended December 31, 2006 were
NT$1,615,796 thousand (including realized settlement losses of NT$1,649,646 thousand and a
valuation gain of NT$33,850 thousand).
6. AVAILABLE-FOR-SALE FINANCIAL ASSETS
The Company entered into derivative contracts during the years ended December 31, 2006 and 2005
to manage exposures due to fluctuations of foreign exchange rates. The derivative contracts entered
into by the Company did not meet the criteria for hedge accounting prescribed by SFAS No. 34.
Therefore, effective from January 1, 2006, the Company discontinued applying hedge accounting
treatment for its derivative contracts.
Outstanding forward contracts as of December 31, 2005:
Open-end mutual funds
Corporate bonds
Government bonds
Structured time deposits
Agency bonds
Corporate issued asset-backed securities
Corporate notes
Money market funds
Publicly-traded stocks
Currency
Maturity Date
Contract Amount
(In Thousands)
Current portion
December 31, 2005
Sell
US$/NT$
January 2006
US$ 60,000
December 31
2006
$ 25,967,061
4,150,202
1,998,067
499,242
-
-
-
-
-
32,614,572
(25,967,061)
2005
$ 6,198,982
11,853,044
1,776,279
-
14,496,728
11,582,590
263,249
260,686
21,280
46,452,838
(46,452,838)
$ 6,647,511
$ -
82
Starting from 2004, the Company entered into investment management agreements with three well-
Structured time deposits categorized as held-to-maturity financial assets consisted of the following:
known financial institutions (fund managers) to manage its investment portfolios. In accordance with the
investment guidelines and terms specified in these agreements, the securities invested by the fund
managers cannot be below a pre-defined credit rating. Beginning from the third quarter of 2006,
the Company transferred investment portfolios managed by the fund managers of US$1,277,789
thousand to TSMC Global Ltd. (TSMC-Global), a subsidiary of TSMC. The transferred investment
portfolios held by TSMC Global are still being managed by the same fund managers in accordance
with the aforementioned investment guidelines and terms.
Principal
Amount
Interest
Receivable
Range of
Interest Rates
Maturity Date
December 31, 2006
Step-up callable deposits
Domestic deposits
Callable range accrual deposits
Domestic deposits
Foreign deposits
$ 4,500,000
$ 13,928
1.40% - 1.83%
June 2007 to October 2008
3,911,520
3,259,600
4,808
4,998
(See below)
(See below)
September 2009 to December 2009
October 2009 to January 2010
As of December 31, 2006, structured time deposits categorized as available-for-sale financial assets
$ 11,671,120
$ 23,734
consisted of the following:
Step-up callable deposits
Principal
Amount
Carrying
Amount
Range of
Interest Rates
Maturity Date
Domestic deposits
$ 500,000
$ 499,242
1.76%
March 2008
December 31, 2005
Step-up callable deposits
Domestic deposits
Callable range accrual deposits
Domestic deposits
Foreign deposits
$ 3,000,000
$ 8,145
1.40% - 1.50%
June 2007 to October 2007
3,942,000
3,285,000
4,928
5,023
(See below)
(See below)
September 2009 to December 2009
October 2009 to January 2010
$ 10,227,000
$ 18,096
The interest rate of the step-up callable deposits was pre-determined by the Company and the banks.
7. HELD-TO-MATURITY FINANCIAL ASSETS
Corporate bonds
Structured time deposits
Government bonds
Current portion
December 31
2006
$ 13,742,541
11,671,120
12,070,657
37,484,318
(8,510,823)
2005
$ 8,927,317
10,227,000
10,223,500
29,377,817
(602,509)
The amount of interest earned by the Company for the callable range accrual deposits is based on a
pre-defined range as determined by the 3-month or 6-month LIBOR plus an agreed upon rate ranging
between 2.10% and 3.45%. Based on the terms of the contracts, if the 3-month or 6-month LIBOR
moves outside of the pre-defined range, the interest paid to the Company is at a fixed rate between
zero and 1.5%. Under the terms of the contracts, the bank has the right to cancel the contracts prior
to the maturity date.
As of December 31, 2006 and 2005, the principal of the deposits that resided in banks located
in Hong Kong amounted to US$80,000 thousand; those resided in banks located in Singapore
$ 28,973,495
$ 28,775,308
amounted to US$20,000 thousand.
8. INVENTORIES, NET
Finished goods
Work in process
Raw materials
Supplies and spare parts
Allowance for losses
December 31
2006
$ 4,754,342
13,251,174
1,515,996
421,648
19,943,160
(790,946)
2005
$ 2,768,575
12,407,286
1,700,314
786,772
17,662,947
(1,404,992)
$ 19,152,214
$ 16,257,955
83
9. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
11. PROPERTY, PLANT AND EQUIPMENT
December 31
2006
2005
Carrying
Amount
% of
Ownership
Carrying
Amount
% of
Ownership
Accumulated depreciation consisted of the following:
Buildings
Machinery and equipment
Office equipment
TSMC Global (Note 6)
TSMC International Investment Ltd. (TSMC International)
TSMC (Shanghai) Company Limited (TSMC-Shanghai)
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
Vanguard International Semiconductor Corporation (VIS)
TSMC Partners, Ltd. (TSMC Partners)
TSMC North America (TSMC-North America)
Emerging Alliance Fund, L.P. (Emerging Alliance)
VentureTech Alliance Fund II, L.P. (VTAF II)
Global UniChip Corporation (GUC)
VentureTech Alliance Fund III, L.P. (VTAF III)
Chi Cherng Investment Co., Ltd. (Chi Cherng)
Hsin Ruey Investment Co., Ltd. (Hsin Ruey)
TSMC Japan K.K. (TSMC-Japan)
Taiwan Semiconductor Manufacturing Company Europe B.V. (TSMC-Europe)
Taiwan Semiconductor Manufacturing Company Korea (TSMC-Korea)
$ 42,496,592
26,593,749
9,027,984
7,960,869
5,741,870
4,433,819
2,014,990
793,585
733,130
629,755
228,005
115,507
114,297
95,757
49,741
14,706
100
100
100
39
27
100
100
99
98
38
98
36
36
100
100
100
$ -
23,912,812
9,438,856
4,215,200
5,419,747
4,091,166
1,790,186
850,534
642,479
442,233
-
78,139
77,415
94,949
23,087
-
-
100
100
32
27
100
100
99
98
46
-
36
36
100
100
-
$ 101,044,356
$ 51,076,803
Technology license fees
Software and system design costs
Others
In November 2006, the Company acquired 81 thousand shares in SSMC from EDB Investments Pte
Ltd. under a Shareholders Agreement. After the acquisition, the number of SSMC shares owned by
the Company increased from 382 thousand to 463 thousand; the percentage of ownership increased
from 32% to 39%.
13. BONDS PAYABLE
For the years ended December 31, 2006 and 2005, net equity in earnings of NT$5,526,727 thousand
and net equity in losses of NT$1,052,045 thousand were recognized, respectively. The carrying
amounts of the investments accounted for using the equity method and the related equity in earnings
Domestic unsecured bonds:
or losses of equity method investees were determined based on the audited financial statements of
the investees as of and for the same periods ended as the Company.
10. FINANCIAL ASSETS CARRIED AT COST
Issued in December 2000 and repayable in December 2005 and 2007 in two
installments, 5.25% and 5.36% interest payable annually, respectively
Issued in January 2002 and repayable in January 2007, 2009 and 2012
in three installments, 2.60%, 2.75% and 3.00% interest payable annually,
respectively
Current portion
December 31
2006
$ 49,595,917
361,401,800
6,469,533
2005
$ 42,902,526
310,626,317
5,662,986
$ 417,467,250
$ 359,191,829
December 31
2006
$ 4,038,551
1,517,575
36,942
2005
$ 4,985,806
1,623,276
72,062
$ 5,593,068
$ 6,681,144
December 31
2006
2005
$ 4,500,000
$ 4,500,000
15,000,000
19,500,000
(7,000,000)
15,000,000
19,500,000
-
$ 12,500,000
$ 19,500,000
No interest was capitalized during the years ended December 31, 2006 and 2005.
12. DEFERRED CHARGES, NET
As of December 31, 2006, future principal repayments for the Company’s bonds were as follows:
Year of Repayment
2007
2009
2012
Amount
$ 7,000,000
8,000,000
4,500,000
$ 19,500,000
Non-publicly traded stocks
Mutual funds
84
December 31
2006
2005
$ 364,913
347,930
$ 472,500
334,990
$ 712,843
$ 807,490
B 0.3mm
Service costs
Interest costs
Projected return on plan assets
Amortization
Net periodic pension costs
2006
2005
$ 178,432
163,740
(49,115)
12,339
$ 468,044
163,294
(49,627)
8,300
$ 305,396
$ 590,011
b. Reconciliation of funded status of the plan and accrued pension cost at December 31, 2006 and
14. OTHER LONG-TERM PAYABLES
a. Components of net periodic pension cost for the year
Most of the payables resulted from license agreements for certain semiconductor-related patents. As of
December 31, 2006, future payments for other long-term payables were as follows:
Year of Payment
2007
2008
2009
2010
2011
Current portion (classified under accrued expenses and other current liabilities)
15. PENSION PLANS
Amount
$ 617,892
337,043
337,043
337,043
260,767
1,889,788
(617,892)
$ 1,271,896
The Labor Pension Act (the Act) became effective on July 1, 2005. The employees who were subject
to the Labor Standards Law prior to July 1, 2005 were allowed to choose to be subject to the pension
mechanism under the Act with their seniority as of July 1, 2005 retained or continue to be subject to
the pension mechanism under the Labor Standards Law. Employees who joined the Company after
July 1, 2005 can only be subject to the pension mechanism under the Act.
The pension mechanism under the Act is deemed a defined contribution plan. Pursuant to the
Act, the Company has made monthly contributions equal to 6% of each employee’s monthly
salary to employees’ pension accounts starting from July 1, 2005, and recognized pension costs
of NT$618,975 thousand and NT$261,096 thousand for the years ended December 31, 2006 and
2005, respectively.
The Company has a defined benefit plan under the Labor Standards Law that provides benefits based
on an employee’s length of service and average monthly salary for the six-month period prior to
retirement. The Company contributes an amount equal to 2% of salaries paid each month to a pension
fund (the Fund), which is administered by the pension fund monitoring committee (the Committee)
and deposited in the Committee’s name in the Central Trust of China.
2005
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 net transition obligation
Unrecognized net loss
Accrued pension cost
Vested benefits
c. Actuarial assumptions at December 31, 2006 and 2005
Discount rate used in determining present values
Future salary increase rate
Expected rate of return on plan assets
d. Contributions to the Fund for the year
Pension information on the defined benefit plan is summarized as follows:
e. Payments from the Fund for the year
2006
2005
$ 102,920
3,873,239
3,976,159
2,964,923
6,941,082
(1,945,572)
4,995,510
(116,191)
(1,349,203)
$ 62,302
3,356,213
3,418,515
2,546,186
5,964,701
(1,681,365)
4,283,336
(124,491)
(697,453)
$ 3,530,116
$ 3,461,392
$ 106,645
$ 67,752
2006
2.25%
3.00%
2.50%
2005
2.75%
3.00%
2.75%
2006
2005
$ 230,577
$ 223,654
2006
2005
$ 10,823
$ 8,419
85
16. INCOME TAX
The estimated creditable ratio for distribution of earnings of 2006 and 2005 was 0.54% and
2.88%, respectively.
a. A reconciliation of income tax expense based on “income before income tax” at statutory rate and
income tax currently payable was as follows:
Years Ended December 31
2006
2005
The imputation credit allocated to shareholders is based on its balance as of the date of dividend
distribution. The estimated creditable ratio may change when the actual distribution of imputation
credit is made.
$ (33,701,625)
$ (23,454,856)
e. All earnings generated prior to December 31, 1997 have been appropriated.
Income tax expense based on “income before income tax” at
statutory rate (25%)
Tax effect of the following:
Tax-exempt income
Temporary and permanent differences
Cumulative effect of changes in accounting principles
Additional tax at 10% on unappropriated earnings
Income tax credits
12,274,041
2,080,110
82,062
(1,156,130)
12,715,377
12,243,435
(860,918)
-
(1,489,709)
10,110,561
Income tax currently payable
$ (7,706,165)
$ (3,451,487)
b. Income tax expense consisted of the following:
f. As of December 31, 2006, investment tax credits consisted of the following:
Regulation
Item
Statute for Upgrading
Industries
Purchase of machinery and
equipment
Income tax currently payable
Other income tax adjustments
Net change in deferred income tax assets
Investment tax credits
Temporary differences
Adjustment in valuation allowance
Years Ended December 31
2006
2005
$ (7,706,165)
335,411
$ (3,451,487)
(71,853)
Statute for Upgrading
Industries
Research and development
expenditures
(3,908,879)
1,522,734
2,206,317
(2,018,813)
1,768,265
3,529,500
Income tax expense
$ (7,550,582)
$ (244,388)
Statute for Upgrading
Industries
Personnel training
c. Net deferred income tax assets consisted of the following:
Current deferred income tax assets
Investment tax credits
Noncurrent deferred income tax assets, net
Investment tax credits
Temporary differences
Valuation allowance
d. Integrated income tax information:
December 31
2006
2005
$ 7,832,000
$ 7,013,000
$ 12,124,892
840,464
(7,204,229)
$ 16,852,771
(682,270)
(9,410,546)
$ 5,761,127
$ 6,759,955
Statute for Upgrading
Industries
Investments in important
$ 79,804
$ 79,804
2010
technology-based enterprises
g. The profits generated from the following expansion and construction projects are exempt from
income tax:
Construction of Fab 8 - modules B
Expansion of Fab 2 - modules A and B, Fab 3, Fab 4, Fab 5 and Fab 6
Construction of Fab 12
Tax-Exemption Period
2002 to 2005
2003 to 2006
2004 to 2007
The balance of the imputation credit account as of December 31, 2006 and 2005 was NT$
828,612 thousand and NT$20,087 thousand, respectively.
h. The tax authorities have examined income tax returns of the Company through 2003.
86
Total
Creditable
Amount
Remaining
Creditable
Amount
$ 2,685,805
4,113,439
6,802,469
6,030,309
5,114,762
$ -
-
3,955,466
6,030,309
5,114,762
$ 24,746,784
$ 15,100,537
$ 1,780,480
1,245,142
1,627,095
1,534,230
1,534,050
$ -
-
1,627,095
1,534,230
1,534,050
$ 7,720,997
$ 4,695,375
$ 27,311
16,197
40,734
40,442
$ -
-
40,734
40,442
$ 124,684
$ 81,176
Expiry Year
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
2006
2007
2008
2009
17. LABOR COST, DEPRECIATION AND AMORTIZATION
Year Ended December 31, 2006
Year Ended December 31, 2005
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
Classified as
Cost of Sales
Classified as
Operating
Expenses
The Company’s Articles of Incorporation as revised on May 10, 2005 provide that, when allocating
the net profits for each fiscal year, the Company shall first offset its losses in previous years and then
set aside the following items accordingly:
Total
a. Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve has
equaled the Company’s paid-in capital;
Labor cost
Salary
Labor and health insurance
Pension
Meal
Welfare
Others
$ 9,877,603
686,125
610,873
449,505
184,560
225,615
$ 4,172,915
352,085
313,416
159,302
99,323
19,784
$ 14,050,518
1,038,210
924,289
608,807
283,883
245,399
$ 9,160,576
625,744
576,776
429,307
167,218
159,724
$ 3,682,390
297,483
274,280
141,259
95,208
44,783
$ 12,842,966
923,227
851,056
570,566
262,426
204,507
$ 12,034,281
$ 5,116,825
$ 17,151,106
$ 11,119,345
$ 4,535,403
$ 15,654,748
Depreciation
Amortization
$ 61,028,727
$ 1,430,069
$ 3,296,764
$ 918,011
$ 64,325,491
$ 2,348,080
$ 61,576,001
$ 1,763,527
$ 3,031,796
$ 1,603,496
$ 64,607,797
$ 3,367,023
18. SHAREHOLDERS’ EQUITY
b. Special capital reserve in accordance with relevant laws or regulations or as requested by the
authorities in charge;
c. Bonus to directors and supervisors and bonus to employees of the Company of not more than
0.3% and not less than 1% of the remainder, respectively. Directors who also serve as executive
officers of the Company are not entitled to receive the bonus to directors and supervisors. The
Company may issue stock bonuses to employees of an affiliated company meeting the conditions
set by the Board of Directors or, by the person duly authorized by the Board of Directors;
d. Any balance left over shall be allocated according to the resolution of the shareholders’ meeting.
As of December 31, 2006, 889,740 thousand ADSs of the Company were traded on the NYSE. The
number of common shares represented by the ADSs is 4,448,702 thousand (one ADS represents five
common shares).
Capital surplus can only be used to offset a deficit under the Company Law. However, the capital
surplus generated from donations and the excess of the issuance price over the par value of capital
stock (including the stock issued for new capital, mergers, convertible bonds and the surplus from
The Company’s Articles of Incorporation also provide that profits of the Company may be distributed
by way of cash dividend and/or stock dividend. However, distribution of profits shall be made
preferably by way of cash dividend. Distribution of profits may also be made by way of stock dividend;
provided that the ratio for stock dividend shall not exceed 50% of the total distribution.
Any appropriations of the profits are recorded in the year of shareholder approval and given effect to
treasury stock transactions) may be appropriated as stock dividends, which are limited to a certain
in the financial statements of that year.
percentage of the Company’s paid-in capital.
Capital surplus consisted of the following:
From merger
Additional paid-in capital
From convertible bonds
From treasury stock transactions
From long-term investments
Donations
December 31
2006
$ 24,003,546
19,974,431
9,360,424
389,188
379,854
55
2005
$ 24,003,546
23,254,234
9,360,424
306,868
192,759
55
The appropriation for legal capital reserve shall be made until the reserve equals the Company’s
paid-in capital. The reserve may be used to offset a deficit, or be distributed as dividends and bonuses
for the portion in excess of 50% of the paid-in capital if the Company has no unappropriated
earnings and the reserve balance has exceeded 50% of the Company’s paid-in capital. The Company
Law also prescribes that, when the reserve has reached 50% of the Company’s paid-in capital, up to
50% of the reserve may be transferred to capital.
A special capital reserve equivalent to the net debit balance of the other components of shareholders’
equity (for example, cumulative translation adjustments and unrealized loss on financial assets,
$ 54,107,498
$ 57,117,886
but excluding treasury stock) shall be made from unappropriated earnings pursuant to existing
regulations promulgated by the Securities and Futures Bureau (SFB). Any special reserve appropriated
may be reversed to the extent that the net debit balance reverses.
87
The appropriations of earnings for 2005 and 2004 had been approved in the shareholders’ meetings
19. STOCK-BASED COMPENSATION PLANS
held on May 16, 2006 and May 10, 2005, respectively. The appropriations and dividends per share
were as follows:
Legal capital reserve
Special capital reserve
Employees’ profit sharing - in cash
Employees’ profit sharing - in stock
Cash dividends to shareholders
Stock dividends to shareholders
Bonus to directors and supervisors
Appropriation of Earnings
Dividends Per Share (NT$)
For Fiscal Year 2005
For Fiscal Year 2004
For Fiscal Year 2005
For Fiscal Year 2004
$ 9,357,503
(1,585,685)
3,432,129
3,432,129
61,825,061
3,709,504
257,410
$ 8,820,201
2,226,427
3,086,215
3,086,215
46,504,097
11,626,024
231,466
$ 80,428,051
$ 75,580,645
$ 2.50
0.15
$ 2.00
0.50
The Company’s Employee Stock Option Plans under the 2004 Plan, 2003 Plan and 2002 Plan were
approved by the SFB on January 6, 2005, October 29, 2003 and June 25, 2002, respectively. The
maximum number of options authorized to be granted under the 2004 Plan, 2003 Plan and 2002
Plan was 11,000 thousand, 120,000 thousand and 100,000 thousand, respectively, with each option
eligible to subscribe for one common share when exercisable. The options may be granted to qualified
employees of the Company or any of its domestic or foreign subsidiaries, in which the Company’s
shareholding with voting rights, directly or indirectly, is more than fifty percent (50%). The options of
all the plans are valid for ten years and exercisable at certain percentages subsequent to the second
anniversary of the grant date. Under the terms of the plans, the options are granted at an exercise
price equal to the closing price of the Company’s common shares listed on the TSE on the grant date.
The shareholders’ meeting held on May 16, 2006 also resolved to distribute stock dividends out of
Options of the aforementioned plans that had never been granted or had been granted but
capital surplus in the amount of NT$3,709,504 thousand.
subsequently cancelled had expired as of December 31, 2006.
The amounts of the above appropriations of earnings for 2005 and 2004 are consistent with the
Information about outstanding options for the years ended December 31, 2006 and 2005 was as
resolutions of the meetings of the Board of Directors held on February 14, 2006 and February 22,
follows:
2005, respectively. If the above bonus to employees, directors and supervisors had been paid entirely
in cash and charged to earnings of 2005 and 2004, the basic earnings per share (after income tax)
for the years ended December 31, 2005 and 2004 shown in the respective financial statements would
Year ended December 31, 2006
have decreased from NT$3.79 to NT$3.50 and NT$3.97 to NT$3.70, respectively.
The shares distributed as a bonus to employees represented 1.39% and 1.33% of the Company’s total
outstanding common shares as of December 31, 2005 and 2004, respectively.
As of January 11, 2007, the Board of Directors had not resolved the appropriation for earnings of
2006.
The above information about the appropriations of bonus to employees, directors and supervisors is
available at the Market Observation Post System website.
Under the Integrated Income Tax System that became effective on January 1, 1998, R.O.C. resident
shareholders are allowed a tax credit for their proportionate share of the income tax paid by the
Company on earnings generated since January 1, 1998.
Balance, beginning of year
Options granted
Options exercised
Options cancelled
Balance, end of year
Year ended December 31, 2005
Balance, beginning of year
Options granted
Options exercised
Options cancelled
Balance, end of year
Number of Options
(In Thousands)
Weighted-Average
Exercise Price (NT$)
67,758
2,758
(14,550)
(3,152)
52,814
64,367
14,864
(6,837)
(4,636)
67,758
$ 39.4
40.1
40.1
43.7
39.6
$ 40.5
48.4
39.6
44.1
42.1
88
The number of outstanding options and exercise prices have been adjusted to reflect the
Proceeds from sales of treasury stock for the year ended December 31, 2005 were NT$899,489
appropriations of dividends in accordance with the plans.
As of December 31, 2006, information about outstanding and exercisable options was as follows:
Options Exercisable
thousand. As of December 31, 2006 and 2005, the book value of the treasury stock was NT$918,075
thousand; the market value was NT$2,290,026 thousand and NT$2,047,126 thousand, respectively.
The Company’s stock held by subsidiaries is treated as treasury stock and the holders are entitled to
the rights of shareholders, except that starting from June 24, 2005, pursuant to the revised Company
Law, the holders are no longer entitled to vote in shareholders’ meetings.
Options Outstanding
Weighted-average
Remaining
Contractual
Life (Years)
Range of Exercise
Price (NT$)
Number of Options
(In Thousands)
$27.6 - $39.7
45.1 - 52.3
34,584
18,230
52,814
Weighted-average
Exercise Price (NT$)
Number of Options
(In Thousands)
Weighted-average
Exercise Price (NT$)
21. EARNINGS PER SHARE
5.15
6.88
$ 35.5
47.5
$ 35.5
45.7
28,351
4,390
32,741
No compensation cost was recognized under the intrinsic value method for the years ended
December 31, 2006 and 2005. Had the Company used the fair value based method (based on the
Black-Scholes model) to evaluate the options granted after January 1, 2004, the assumptions and pro
forma results of the Company for the years ended December 31, 2006 and 2005 would have been as
follows:
Assumptions:
Expected dividend yield
Expected volatility
Risk free interest rate
Expected life
Net income:
Net income as reported
Pro forma net income
Earnings per share (EPS) - after income tax (NT$):
Basic EPS as reported
Pro forma basic EPS
Diluted EPS as reported
Pro forma diluted EPS
20. TREASURY STOCK
Years Ended December 31
2006
2005
1.00% - 3.44%
43.77% - 46.15%
3.07% - 3.85%
5 years
1.00% - 3.44%
43.77% - 46.15%
3.07% - 3.85%
5 years
$ 127,009,731
126,889,209
$ 93,575,035
93,458,191
$ 4.93
4.92
4.92
4.92
$ 3.63
3.63
3.63
3.63
Beginning
Shares
Stock
Dividends
Disposal
Ending
Shares
(Shares in Thousands)
Year ended December 31, 2006
Parent company stock held by subsidiaries
32,938
988
-
33,926
Year ended December 31, 2005
Parent company stock held by subsidiaries
45,521
2,242
14,825
32,938
Years Ended December 31
2006
2005
Before
Income Tax
After
Income Tax
Before
Income Tax
After
Income Tax
Basic EPS (NT$)
Income before cumulative effect of changes in
accounting principles
Cumulative effect of changes in accounting principles
$ 5.22
(0.01)
$ 4.94
(0.01)
$ 3.64
-
$ 3.63
-
Income for the year
$ 5.21
$ 4.93
$ 3.64
$ 3.63
Diluted EPS (NT$)
Income before cumulative effect of change in
accounting principles
Cumulative effect of changes in accounting principles
$ 5.22
(0.01)
$ 4.93
(0.01)
$ 3.64
-
$ 3.63
-
Income for the year
$ 5.21
$ 4.92
$ 3.64
$ 3.63
EPS is computed as follows:
Year ended December 31, 2006
Basic EPS
Amounts (Numerator)
Before
Income Tax
After
Income Tax
Number of
Shares
(Denominator)
(In Thousands)
EPS (NT$)
Before
Income Tax
After
Income Tax
Income available to common shareholders
Effect of dilutive potential common stock - stock options
$134,478,251
-
$ 127,009,731
-
25,788,555
24,628
$ 5.21
$ 4.93
Diluted EPS
Income available to common shareholders (including
effect of dilutive potential common stock)
$134,478,251
$ 127,009,731
25,813,183
$ 5.21
$ 4.92
Year ended December 31, 2005
Basic EPS
Income available to common shareholders
Effect of dilutive potential common stock - stock
options
Diluted EPS
$ 93,819,423
-
$ 93,575,035
-
25,763,320
12,647
$ 3.64
$ 3.63
Income available to common shareholders (including
$ 93,819,423
$ 93,575,035
25,775,967
$ 3.64
$ 3.63
effect of dilutive potential common stock)
89
22. DISCLOSURES FOR FINANCIAL INSTRUMENTS
a. Fair values of financial instruments were as follows:
December 31
2006
Carrying
Amount
Fair Value
2005
Carrying
Amount
Fair Value
$ 44,601
32,614,572
37,484,318
$ 44,601
32,614,572
37,375,517
$ 1,380,905
46,452,838
29,377,817
$ 818,550
46,452,838
29,063,831
6,371,625
17,044,040
5,419,747
10,991,064
Assets
Financial assets at fair value through profit or loss
Available-for-sale financial assets
Held-to-maturity financial assets
Investments accounted for using equity method
(with market price)
Liabilities
d. As of December 31, 2006 and 2005, financial assets exposed to fair value interest rate risk were
NT$70,143,491 thousand and NT$77,190,280 thousand, respectively, financial liabilities exposed
to fair value interest rate risk were NT$10,751 thousand and NT$234,279 thousand, respectively,
and financial assets exposed to cash flow interest rate risk were NT$7,171,120 thousand and
NT$7,227,000 thousand, respectively.
e. The Company recognized an unrealized gain of NT$242,248 thousand in shareholders’ equity for
the changes in fair value of available-for-sale financial assets for the year ended December 31,
2006. The Company also recognized an unrealized gain of NT$319,367 thousand in shareholders’
equity for the changes in available-for-sale financial assets held by equity method investees for the
year ended December 31, 2006.
f. Information about financial risks
Financial liabilities at fair value through profit or loss
Bonds payable (including current portion)
Other long-term payables (including current portion)
10,751
19,500,000
2,981,754
10,751
19,817,149
2,981,754
234,279
19,500,000
4,174,603
173
19,924,923
4,174,603
b. Methods and assumptions used in the determination of fair values of financial instruments
1) The aforementioned financial instruments do not include cash and cash equivalents, receivables,
other financial assets, payables, and payables to contractors and equipment suppliers. The carrying
amounts of these financial instruments approximate their fair values.
2) Fair values of financial assets/liabilities at fair value through profit or loss were determined using
valuation techniques incorporating estimates and assumptions that were consistent with prevailing
market conditions.
1) Market risk. The derivative financial instruments categorized as financial assets/liabilities at fair
value through profit or loss are mainly used to hedge the exchange rate fluctuations of foreign-
currency-denominated assets and liabilities. Therefore, the market risk of derivatives will be offset
by the foreign exchange risk of these assets and liabilities. Available-for-sale financial assets held
by the Company are mainly fixed-interest-rate debt securities. Therefore, the fluctuations in market
interest rates would result in changes in fair values of these debt securities.
2) Credit risk. Credit risk represents the potential loss that would be incurred by the Company if the
counter-parties or third-parties breached contracts. Financial instruments with positive fair values
at the balance sheet date are evaluated for credit risk. The counter-parties or third-parties to the
foregoing financial instruments are reputable financial institutions, business organizations, and
government agencies. Management believes that the Company’s exposure to default by those
parties is low.
3) Fair values of available-for-sale and held-to-maturity financial assets were based on their quoted
market prices; while fair values of structured time deposits were estimated using valuation
techniques.
3) Liquidity risk. The Company has sufficient operating capital to meet cash needs upon settlement of
derivative financial instruments and bonds payable. Therefore, the liquidity risk is low.
4) Cash flow interest rate risk. The Company mainly engages in investments in fixed-interest-rate
debt securities. Therefore, cash flows are not expected to fluctuate significantly due to changes in
market interest rates.
4) Fair value of bonds payable was based on their quoted market price.
5) Fair value of other long-term payables was based on the present value of expected cash flows,
which approximates their carrying amount.
c. Gains recognized for the changes in fair value of derivatives estimated using valuation techniques
were NT$33,850 thousand for the year ended December 31, 2006.
90
23. RELATED PARTY TRANSACTIONS
Transactions with the aforementioned parties, other than those disclosed in other notes, are
The Company engages in business transactions with the following related parties:
a. Industrial Technology Research Institute (ITRI), the chairman of the Company was one of its
supervisors, who resigned in October 2006.
b. Philips, a major shareholder of the Company.
c. Subsidiaries
TSMC-North America
TSMC-Shanghai
TSMC-Europe
TSMC-Japan
TSMC-Korea
d. Investees
GUC (with a controlling interest)
VIS (accounted for using equity method)
SSMC (accounted for using equity method)
e. Indirect subsidiaries
WaferTech, LLC (WaferTech)
TSMC Technology, Inc. (TSMC Technology)
f. Indirect investee
VisEra, originally an investee over which the Company had a controlling interest; beginning in
November 2005, VisEra became an indirect investee accounted for using the equity method due to
changes in investment structure.
summarized as follows:
For the year
Sales
TSMC-North America
Philips
Others
Purchases
WaferTech
SSMC
TSMC-Shanghai
VIS
2006
2005
Amount
%
Amount
%
$ 190,459,073
4,024,990
972,872
60
1
-
$ 153,618,916
3,298,770
650,239
57
1
-
$ 195,456,935
61
$ 157,567,925
58
$ 12,530,552
6,820,632
4,405,843
3,911,838
27
15
10
8
$ 11,137,313
5,729,672
1,405,030
4,142,457
28
15
4
10
$ 27,668,865
60
$ 22,414,472
57
Manufacturing expenses - technical assistance fees
Philips (Note 25a)
$ 755,904
1
$ 581,059
Marketing expenses - commission
TSMC-Japan
TSMC-Europe
TSMC-Korea
General and administrative expenses - rental expense
GUC
Research and development expenses
GUC
TSMC Technology
Sales of property, plant and equipment
TSMC-Shanghai
VisEra
Non-operating income and gains
SSMC (primarily technical service income, see Note 25e)
TSMC-Shanghai
VIS (primarily technical service income, see Note 25h)
VisEra
-
18
16
-
$ 254,758
236,454
9,981
16
15
-
$ 243,646
221,164
-
$ 501,193
31
$ 464,810
34
$ 14,606
$ 39,421
37,559
-
-
-
$ 16,744
$ 19,467
-
$ 76,980
-
$ 19,467
-
-
-
-
$ 401,561
-
44
-
$ 125,381
534,279
13
52
$ 401,561
44
$ 659,660
65
$ 314,953
278,295
261,237
246,242
$ 1,100,727
3
2
2
2
9
$ 316,243
180,234
210,720
308,071
4
3
3
4
$ 1,015,268
14
(Continued)
91
As of December 31
Receivables
TSMC-North America
Philips
Others
Other receivables
TSMC-Shanghai
VIS
SSMC
TSMC-North America
VisEra
TSMC Technology
Others
Payables
WaferTech
VIS
Philips
TSMC-Shanghai
SSMC
Others
Other long-term payables
Philips (Note 25a)
Deferred credits
TSMC-Shanghai
VisEra
2006
2005
Amount
%
Amount
%
The Company leased part of its office space from GUC with a quarterly rental of NT$4,186 thousand;
beginning from June 2006, the renewed quarterly rental was NT$3,473 thousand. The Company also
leased certain buildings and facilities to VisEra with a monthly rental of NT$7,684 thousand (classified
$ 16,461,956
250,919
156,634
97
2
1
$ 20,407,621
573,565
69,418
97
3
-
$ 16,869,509
100
$ 21,050,604
100
$ 123,853
121,911
69,568
59,547
58,980
3,785
11,622
28
27
15
13
13
1
3
$ 28,593
74,457
149,251
198,505
374,202
972,563
143
2
4
8
11
21
54
-
$ 449,266
100
$ 1,797,714
100
$ 864,733
717,562
688,591
478,714
459,305
118,011
26
22
21
14
14
3
$ 1,133,217
563,240
693,956
274,820
485,873
91,091
35
17
21
9
15
3
under the non-operating income and gains).
24. SIGNIFICANT LONG-TERM LEASES
The Company leases several parcels of land from the Science Park Administration. These operating
leases expire on various dates from March 2008 to December 2020 and can be renewed upon
expiration.
As of December 31, 2006, future lease payments were as follows:
Year
2007
2008
2009
2010
2011
2012 and thereafter
Amount
$ 291,646
260,249
251,671
204,603
203,089
1,487,039
$ 2,698,297
$ 3,326,916
100
$ 3,242,197
100
25. SIGNIFICANT COMMITMENTS AND CONTINGENCIES
$ 403,375
100
$ 1,100,475
100
The significant commitments and contingencies of the Company as of December 31, 2006, excluding
those disclosed in other notes, were as follows:
$ 723,661
124,350
61
11
$ 641,762
186,525
51
15
$ 848,011
72
$ 828,287
66
(Concluded)
a. On June 20, 2004, the Company and Philips amended the Technical Cooperation Agreement, which
was originally signed on May 12, 1997. The amended Technical Cooperation Agreement is for
five years beginning from January 1, 2004. Upon expiration, this amended Technical Cooperation
Agreement will be terminated and will not be automatically renewed; however, the patent cross
license arrangement between the Company and Philips will survive the expiration of the amended
The terms of sales to related parties were not significantly different from those of sales to third
Technical Cooperation Agreement. Under this amended Technical Cooperation Agreement, the
parties. For other related party transactions, prices were determined in accordance with mutual
Company will pay Philips royalties based on a fixed amount mutually agreed-on, rather than under
agreements.
The Company deferred the gains (classified under the deferred credits) derived from sales of property,
plant and equipment to TSMC-Shanghai and VisEra, and then recognized such gains (classified under
a certain percentage of the Company’s annual net sales. The Company and Philips agreed to cross
license the patents owned by each party. The Company also obtained through Philips a number of
cross patent licenses.
the non-operating income and gains) over the depreciable lives of the disposed assets.
b. Under a technical cooperation agreement with ITRI, the R.O.C. Government or its designee
approved by TSMC can use up to 35% of TSMC’s capacity if TSMC’s outstanding commitments
to its customers are not prejudiced. The term of this agreement is for five years beginning from
January 1, 1987 and is automatically renewed for successive periods of five years unless otherwise
terminated by either party with one year prior notice. The agreement was automatically renewed in
1992, 1997, 2002 and on January 1, 2007.
92
c. Under several foundry agreements, the Company shall reserve a portion of its production capacity
for certain major customers that have guarantee deposits with the Company. As of December 31,
h. The Company provides a technology transfer to VIS under a Manufacturing License and Technology
Transfer Agreement entered into on April 1, 2004. The Company receives compensation for such
2006, the Company had a total of US$116,297 thousand of guarantee deposits.
technology transfer in the form of royalty payments from VIS computed at specific percentages
d. Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March
30, 1999, the parties formed a joint venture company, SSMC, which is an integrated circuit foundry
of net selling price of certain products sold by VIS. VIS agreed to reserve its certain capacity to
manufacture for the Company certain products at prices as agreed by the parties.
in Singapore. The Company’s equity interest in SSMC was 32%. Nevertheless, Philips parted with its
i. TSMC, TSMC-North America and WaferTech filed a series of lawsuits in late 2003 and 2004
semiconductor company which was renamed as NXP B.V. in September, 2006. The Company and
against Semiconductor Manufacturing International Corporation (“SMIC”), SMIC (Shanghai) and
NXP purchased all the SSMC shares owned by EDB Investments Pte Ltd. Pro rata according to the
SMIC Americas. The lawsuits alleged that SMIC companies infringed multiple TSMC patents and
Shareholders Agreement on November 15, 2006. After the purchase, the Company and NXP B.V.
misappropriated TSMC’s trade secrets. These suits were settled out of court on January 30, 2005.
currently own approximately 39% and 61% of the SSMC shares respectively. The Company and
As part of the settlement, SMIC shall pay TSMC US$175,000 thousand over six years to resolve
Philips (now NXP) committed to buy specific percentages of the production capacity of SSMC. The
TSMC’s claims. As of December 31, 2006, SMIC had paid US$60,000 thousand in accordance
Company and Philips (now NXP) are required, in the aggregate, to purchase up to 70% of SSMC's
with the terms of this settlement agreement. In August 2006, TSMC, TSMC-North America
capacity, but the Company alone is not required to purchase more than 28% of the capacity. If any
and Wafertech filed a lawsuit against SMIC in Alameda County Superior Court in California for
party defaults on the commitment and the capacity utilization of SSMC fall below a specific percentage
breach of aforementioned settlement agreement, breach of promissory notes and trade secret
of its capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs.
misappropriation, seeking injunctive relief and monetary damages. In September 2006, SMIC filed
e. The Company provides technical services to SSMC under a Technical Cooperation Agreement (the
Agreement) entered into on May 12, 1999. The Company receives compensation for such services
computed at a specific percentage of net selling price of all products sold by SSMC. The Agreement
a cross-complaint against TSMC in the same court, alleging TSMC of breach of the settlement
agreement and implied covenant of good faith and fair dealing, in response to TSMC's August
complaint. The outcome of this litigation cannot be determined at this time.
shall remain in force for ten years and may be automatically renewed for successive periods of five
j. Amounts available under unused letters of credit as of December 31, 2006 were NT$6,480
years each unless pre-terminated by either party under certain conditions.
thousand.
f. Under a Technology Transfer Agreement (TTA) with National Semiconductor Corporation
26. ADDITIONAL DISCLOSURES
(National) entered into on June 27, 2000, the Company shall receive payments for the licensing
of certain technology to National. The agreement was to remain in force for ten years and could
be automatically renewed for successive periods of two years thereafter unless either party gives
written notice for early termination under certain conditions. In January 2003, the Company and
National entered into a Termination Agreement whereby the TTA was terminated. Under the
Termination Agreement, the Company will be relieved of any further obligation to transfer any
additional technology. In addition, the Company granted National an option to request the transfer
of certain technologies under the same terms and conditions as the terminated TTA. The option will
expire in January 2008.
g. In December 2003, the Company entered into a Technology Development and License Agreement
with Freescale Semiconductor, Inc. to jointly develop 65-nm SOI (silicon on insulator) technology.
The Company will also license related 90-nm SOI technology from Freescale Semiconductor, Inc. Any
Following are the additional disclosures required by the SFB for the Company and its investees:
a. Financing provided: Please see Table 1 attached;
b. Endorsement/guarantee provided: Please see Table 2 attached;
c. Marketable securities held: Please see Table 3 attached;
d. Marketable securities acquired or disposed of at costs or prices of at least NT$100 million or 20%
of the paid-in capital: Please see Table 4 attached;
intellectual properties arising out of the co-development project shall be jointly owned by the parties.
e. Acquisition of individual real estate properties at costs of at least NT$100 million or 20% of the
In accordance with the agreement, the Company will pay royalties to Freescale Semiconductor, Inc.
paid-in capital: Please see Table 5 attached;
and will share a portion of the costs associated with the joint development project.
f. Disposal of individual real estate properties at prices of at least NT$100 million or 20% of the paid-
in capital: None;
93
g. Total purchases from or sales to related parties of at least NT$100 million or 20% of the
27. SEGMENT FINANCIAL INFORMATION
paid-in capital: Please see Table 6 attached;
a. Industry financial information
h. Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital:
Please see Table 7 attached;
The Company operates in one industry. Therefore, the disclosure of industry financial information is
not applicable to the Company.
i. Names, locations, and related information of investees on which the Company exercises significant
influence: Please see Table 8 attached;
b. Export sales
j. Information about derivatives of investees over which the Company has a controlling interest:
Area
TSMC-Shanghai entered into forward exchange contracts during the year ended December 31,
2006 to manage exposures due to foreign exchange rate fluctuations.
Americas
Asia
Europe and others
Outstanding forward exchange contracts as of December 31, 2006:
Years Ended December 31
2006
2005
$ 153,974,683
102,121,046
29,109,649
$ 119,838,520
99,594,071
20,041,920
$ 285,205,378
$ 239,474,511
Currency
Maturity Date
Contract Amount
(In Thousands)
The export sales information is based on the amounts billed to customers within the areas.
December 31, 2006
c. Major customers representing at least 10% of gross sales
Buy
US$/JPY
January 2007
JPY 38,610
Net realized settlement gains arising from TSMC-Shanghai’s forward transactions for the year
ended December 31, 2006 were NT$2,543 thousand.
Customer A
Customer B
k. Information on investment in Mainland China
1) The name of the investee in mainland China, the main businesses and products, its issued capital,
method of investment, information on inflow or outflow of capital, percentage of ownership,
equity in the net gain or net loss, ending balance, amount received as dividends from the investee,
and the limitation on investee: Please see Table 9 attached.
2) Significant direct or indirect transactions with the investee, its prices and terms of payment,
unrealized gain or loss, and other related information which is helpful to understand the impact of
investment in mainland China on financial reports: Please see Note 23.
Years Ended December 31
2006
Amount
$ 190,459,073
25,214,878
2005
Amount
$ 153,618,916
29,258,338
%
60
8
%
57
11
94
TABLE 1
Taiwan Semiconductor Manufacturing Company Limited and Investees
FINANCING PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
No.
Financing Name
Counter-party
Financial Statement Account
1
TSMC International
TSMC Development
Other receivables
Note 1: The type No. 2 represents necessary for short-term financing.
Note 2: Not exceeding the issued capital of the Company.
Maximum
Balance for
the Period
(US$ in
Thousands)
$ 1,140,860
(US$ 35,000)
Ending
Balance
(US$ in
Thousands)
Interest Rate
Type of
Financing
(Note 1)
Transaction
Amounts
Reasons for
Short-term
Financing
Allowance for
Bad Debt
Collateral
Item
Value
Financing
Limit for Each
Borrowing
Company
$
-
1.50%
2
$
-
Operating
capital
$
-
-
$
-
N/A
Financing
Company's
Financing
Amount Limits
(US$ in
Thousands)
$ 32,203,805
(US$ 987,968)
(Note 2)
TABLE 2
Taiwan Semiconductor Manufacturing Company Limited
ENDORSEMENT/GUARANTEE PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
No.
Endorsement/
Guarantee Provider
Name
Counter-party
Nature of
Relationship
(Note 2)
Limits on Each Counter-
party’s Endorsement/
Guarantee Amounts
Maximum Balance for the Period
(US$ in Thousands)
Ending Balance
(US$ in Thousands)
Value of Collateral Property,
Plant and Equipment
Ratio of Accumulated Amount of
Collateral to Net Equity of the
Latest Financial Statement
Maximum Collateral/Guarantee
Amounts Allowable (Note 1)
0
TSMC
TSMC-North America
TSMC Development
2
3
Not exceed 10% of the net
worth of the Company,
and be also limited to
the paid-in capital of the
endorsement/guarantee
company, unless
otherwise approved by
Board of Directors.
$ 1,303,840
(US$ 40,000)
$ 1,955,760
(US$ 60,000)
Note 1: 25% of the net worth of the Company as of December 31, 2006.
Note 2: The No. 2 represents a subsidiary in which the Company holds directly over 50% of the equity interest.
The No. 3 represents an investee in which the Company holds directly and indirectly over 50% of the equity interest.
$ -
$ -
-
-
$ 126,995,321
-
-
95
TABLE 3
Taiwan Semiconductor Manufacturing Company Limited and Investees
MARKETABLE SECURITIES HELD
DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
The Company
Government bond
2004 Government Bond Series B
2003 Government Bond Series B
2006 Government Bond Series D
2005 Government Bond Series A
2003 Government Bond Series B
2003 Asian Development Bank Govt. Bond
2003 Government Bond Series F
2004 Kaohsiung Municipal Series A
2003 Government Bond Series H
European Investment Bank Bonds
2002 Government Bond Series B
2004 Kaohsiung Municipal Series B
2003 European Bank for Recomspruction and
Developement Govt. Bond Series A
Open-end mutual funds
NITC Bond Fund
ABN AMRO Bond Fund
Fuh Hwa Bond
Mega Diamond Bond Fund
Prudential Financial Bond Fund
NITC Taiwan Bond
JF Taiwan Bond Fund
Cathay Bond
Jih Sun Bond Fund
Dresdner Bond DAM Fund
ABN AMRO Income
President James Bond
AIG Taiwan Bond Fund
JF Taiwan First Bond Fund
Shinkong Chi Shin Bond Fund
ABN AMRO Select Bond Fund
Taishin Lucky Fund
Polaris De-Bao Fund
TIIM High Yield
HSBC Taiwan Money Management
Invesco Bond Fund
Corporate bond
Hua Nan Bank
Cathay Bank
Taiwan Power Company
Formosa Petrochemical Corporation
Taiwan Power Company
Formosa Petrochemical Corporation
Nan Ya Plastics Corporation
Chinese Petroleum Corporation
China Steel Corporation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
Held-to-maturity financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale financial assets
〃
〃
〃
Hold-to-maturity financial assets
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 999,779
998,288
3,657,320
3,049,919
1,647,851
835,840
797,299
620,000
401,568
372,265
350,399
249,998
88,198
22,219
175,156
125,122
139,333
103,751
93,312
85,145
109,720
88,165
95,553
63,947
65,496
78,629
66,826
62,183
76,593
78,624
63,273
44,685
34,093
27,176
-
-
-
-
-
-
-
-
-
3,655,939
2,639,459
1,667,908
1,602,947
1,516,294
1,314,669
1,299,088
1,265,092
1,202,901
1,107,206
1,012,377
1,010,426
1,002,595
939,082
890,660
868,076
806,386
701,069
554,863
506,250
403,774
1,545,864
1,159,576
1,046,799
397,963
4,080,391
3,566,946
2,773,810
1,451,378
1,000,000
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$ 999,779
998,288
3,657,446
3,049,726
1,645,179
875,103
796,354
618,760
400,920
400,000
350,378
250,004
90,000
3,655,939
2,639,459
1,667,908
1,602,947
1,516,294
1,314,669
1,299,088
1,265,092
1,202,901
1,107,206
1,012,377
1,010,426
1,002,595
939,082
890,660
868,076
806,386
701,069
554,863
506,250
403,774
1,545,864
1,159,576
1,046,799
397,963
4,087,276
3,563,249
2,781,223
1,450,722
999,689
96
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
Shares/Units
(In Thousands)
Formosa Plastic Corporation
Shanghai commercial & Saving Bank
Formosa Chemicals & Fiber Corporation
Stocks
TSMC Global
TSMC International
SSMC
VIS
TSMC Partners
TSMC-North America
GUC
TSMC-Japan
TSMC-Europe
TSMC-Korea
United Industrial Gases Co., Ltd.
Shin-Etsu Handotai Taiwan Co., Ltd.
W.K. Technology Fund IV
Hontung Venture Capital Co., Ltd.
Fund
Horizon Ventures Fund
Crimson Asia Capital
Capital
TSMC-Shanghai
Emerging Alliance
VTAF II
VTAF III
Chi Cheng
Hsin Ruey
Stock
TSMC
VIS
Stock
TSMC
Chi Cherng
Hsin Ruey
-
-
-
Subsidiary
Hold-to-maturity financial assets
〃
〃
Invest accounted for using
equity method
Subsidiary
Investee accounted for using
equity method
Investee accounted for using
equity method
Subsidiary
Subsidiary
Investee with controlling
financial interest
〃
〃
〃
〃
〃
〃
Subsidiary
Subsidiary
Subsidiary
-
-
-
-
-
-
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
〃
〃
〃
Financial assets carried at cost
〃
〃
〃
Financial assets carried at cost
〃
Investment accounted for using
equity method
〃
〃
〃
〃
〃
442,262
5,741,870
December 31, 2006
Carrying Value
(US$ in
Thousands)
$ 516,663
286,497
66,856
42,496,592
26,593,749
7,960,869
4,433,819
2,014,990
629,755
95,757
49,741
14,706
193,584
105,000
40,000
26,329
280,179
67,751
Percentage of
Ownership
N/A
N/A
N/A
100
100
39
27
100
100
38
100
100
100
10
7
2
10
12
1
Note
Market Value or
Net Asset Value
(US$ in
Thousands)
$ 519,076
286,408
68,123
42,496,592
26,593,749
6,794,726
10,813,301
4,433,819
2,014,990
6,230,739
95,757
49,741
14,706
299,493
223,062
51,398
26,310
280,179
67,751
9,027,984
100
9,027,984
793,585
733,130
228,005
115,507
114,297
99
98
98
36
36
793,585
731,808
225,545
574,071
573,809
-
-
-
1
987,968
463
300
11,000
41,263
6
-
80
16,783
10,500
4,000
2,633
-
-
-
-
-
-
-
-
Parent Company
Available-for-sale financial assets
16,947
1,143,941
N/A
1,143,941
Equity method investee
Investments accounted for using
5,032
107,224
-
107,224
equity method
Parent Company
Available-for-sale financial assets
16,979
1,146,085
N/A
1,146,085
Treasury stock of NT$458,564
thousand is deducted from
the carrying value
Treasury stock of NT$459,511
thousand is deducted from
the carrying value
(Continued)
97
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
TSMC International
VIS
Stock
InveStar
InveStar II
TSMC Development
TSMC Technology
TSMC Development
WaferTech
Partners
Common stock
VisEra Holdings
Equity method investee
Investments accounted for using
3,711
$
82,661
-
$
82,661
equity method
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Investments accounted for using
9,207
US$
26,185
97
US$
26,185
equity method
〃
〃
〃
51,300
1
1
US$
US$
US$
46,195
659,356
6,058
97
100
100
US$
US$
US$
46,195
659,356
4,473
Investments accounted for using
-
US$
282,420
100
US$
282,420
equity method
Equity method investee
Investments accounted for using
25,000
US$
34,000
49
US$
34,000
Emerging Alliance
VTAF II
98
Common stock
NetLogic Microsystems, Inc.
Pixim, Inc.
RichWave Technology Corp.
Global Investment Holding Inc.
Preferred stock
Ikanos Communication, Inc.
Audience, Inc.
Axiom Microdevices, Inc.
Centrality Comunications
Miradia, Inc.
Mobilygen
Mosaic Systems, Inc.
Next IO, Inc.
NuCORE Technology Inc.
Optichron, Inc.
Optimal Corporation
Pixim, Inc.
Reflectivity, Inc.
Teknovus, Inc.
Zenasis Technologies, Inc.
Option
Pixim, Inc.
Common stock
Beceem Communications
Leadtrend
Yobon
Sentelic
Preferred stock
5V Technologies, Inc.
Ageia Technologies, Inc.
Aquantia Corporation
Audience, Inc.
Axiom Microdevices, Inc.
GemFire Corporation
Impinj, Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
equity method
Financial assets at fair value
through profit or loss
Financial assets carried at cost
〃
〃
Available-for-sale financial assets
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Financial assets carried at cost
Financial assets carried at cost
〃
〃
〃
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
84
US$
1,828
-
US$
1,828
1,924
4,247
10,800
515
1,654
1,000
1,325
3,040
1,415
2,481
800
2,254
714
582
2,193
4,848
6,977
2,410
242
650
1,150
1,675
1,200
2,357
2,030
1,264
2,208
3,015
600
257
US$
US$
$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
512
1,648
100,000
4,473
250
1,000
1,800
1,000
750
12
500
1,455
1,000
600
583
531
1,327
1,399
4
13
6
2
1
3
3
3
1
6
2
2
4
4
-
4
3
5
-
N/A
1,600
660
787
2,040
1,768
2,074
1,150
474
1,466
68
500
1
6
13
15
11
2
5
1
2
1
-
US$
US$
$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
512
1,648
100,000
4,473
250
1,000
1,800
1,000
750
12
500
1,455
1,000
600
583
531
1,327
1,399
-
1,600
660
787
2,040
1,768
2,074
1,150
474
1,466
68
500
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
( US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
VTAF III
Investar
Investar II
Miradia, Inc.
Next IO, Inc.
Optichron, Inc.
Power Analog Microelectronics
Powerprecise Solutions, Inc.
RichWave Technology Corp.
Teknovus, Inc.
Tzero Technologies, Inc.
Xceive
Common stock
M2000, Inc.
Mutual-Pak Limited
Quellan, Inc.
SynDiTec, Inc.
Validity-Pak Limited
Common stock
Monolithic Power Systems, Inc.
Broadtek Electronics Corp.
Broadtek Electronics Corp.
Capella Microsystems (Taiwan), Inc.
Preferred stock
Integrated Memory Logic,Inc.
IP Unity, Inc.
Memsic, Inc.
NanoAmp Solutions, Inc.
Sonics, Inc.
Common stock
Monolithic Power Systems, Inc.
RichTek Technology Corp.
Geo Vision, Inc.
RichTek Technology Corp.
Geo Vision, Inc.
eChannelOpen Holding, Inc.
eLCOS Microdisplay Technology, Ltd.
EoNEX Technologies, Inc.
Sonics, Inc.
Epic Communications, Inc.
EON Technology, Corp.
Goyatek Technology, Corp.
Capella Microsystems (Taiwan), Inc.
Trendchip Technologies Corp.
Ralink Technology (Taiwan), Inc.
Auden Technology MFG Co., Ltd.
Preferred stock
eLCOS Microdisplay Technology, Ltd.
Alchip Technologies Limited
FangTek, Inc.
Kilopass Technology, Inc.
Memsic, Inc.
NanoAmp Solutions, Inc.
Sonics, Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
Financial assets carried at cost
〃
〃
〃
〃
Financial assets at fair value
through profit or loss
〃
Available-for-sale financial assets
Financial assets carried at cost
Financial assets carried at cost
〃
〃
〃
〃
Financial assets at fair value
through profit or loss
〃
〃
Available-for-sale financial assets
〃
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
2,740
216
353
2,000
1,445
500
518
730
714
1,500
170
2,231
4,332
5,333
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,424
182
869
1,500
1,400
231
119
1,500
1,000
1,500
52
2,500
720
2,000
1,975
US$
21,939
29
116
530
1,831
1,008
2,724
541
1,843
US$
US$
US$
US$
US$
US$
US$
US$
10
40
154
1,221
494
1,500
853
3,530
864
US$
9,604
255
46
227
15
358
270
55
2,220
191
4,247
2,088
534
2,000
1,833
953
2,667
3,531
6,930
3,887
2,289
375
2,115
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,045
229
1,824
73
251
27
3,048
32
37
1,175
545
210
574
791
223
3,500
2,950
3,250
2,000
1,560
1,500
3,082
3
-
2
13
11
2
-
2
2
4
13
7
7
7
7
-
-
2
9
1
9
2
2
3
-
-
-
-
4
1
5
-
1
7
7
2
4
3
4
8
15
20
6
7
1
6
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,424
182
869
1,500
1,400
231
119
1,500
1,000
1,500
52
2,500
720
2,000
21,939
10
40
154
1,221
494
1,500
853
3,530
9,604
2,045
229
1,824
73
251
27
3,048
32
37
1,175
545
210
574
791
223
3,500
2,950
3,250
2,000
1,560
1,500
3,082
(Continued)
99
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
GUC
TSMC Global
100
Open-end mutual funds
ABN AMRO Bond Fund
Ta chong Bond Fund
Dresdner Bond DAM Fund
NITC Taiwan Bond
AIG Taiwan Bond Fund
Fuh Hwa You Li Bond Fund
Stock
Global Unichip Corporation-North America
Global Unichip Japan
Government bond
United States Treas Nts
Corporate bonds
Abbott Labs
Abbott Labs
Ace Ltd.
Aig Sunamerica Global Fing Ix
Allstate Life Global Fdg Secd
American Express Co.
American Gen Fin Corp.
American Gen Fin Corp. Mtn
American Gen Fin Corp. Mtn
American Gen Fin Corp. Mtn
American Honda Fin Corp. Mtn
American Honda Fin Corp. Mtn
Ameritech Capital Funding Co.
Amgen Inc.
Anz Cap Tr I
Associates Corp. North Amer
Axa Finl Inc.
Bank New York Inc.
Bank One Corp.
Bank One Corp.
Bank Utd Houston Tx Mtbn
Bear Stearns Cos Inc.
Beneficial Corp. Mtn Bk Entry
Berkshire Hathaway Fin Corp.
Chase Manhattan Corp. New
Chase Manhattan Corp. New
Chubb Corp.
Cit Group Hldgs Inc.
Citicorp
Cogentrix Energy Inc.
Colonial Pipeline Co.
Consolidated Edison Inc.
Countrywide Fdg Corp. Mtn
Credit Suisse Fincl Products
Credit Suisse First Boston
Credit Suisse First Boston Usa
Daimlerchrysler North Amer
Daimlerchrysler North Amer Hld
Dayton Hudson Corp.
Deere John Cap Corp.
Dell Computer Corp.
-
-
-
-
-
-
Subsidiary
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
Investments accounted for using
equity method
〃
Available-for-sale financial assets
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
$
2,325
2,306
2,592
2,132
2,355
2,018
100
35,041
30,037
30,036
30,035
30,031
25,035
6,396
2,681
$
N/A
N/A
N/A
N/A
N/A
N/A
100
100
35,041
30,037
30,036
30,035
30,031
25,035
6,396
2,681
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
151,045
N/A
US$
151,045
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,505
2,547
1,001
1,000
2,956
3,452
1,620
3,448
1,971
1,001
3,092
801
483
2,905
972
2,541
2,151
1,487
3,365
2,045
528
3,379
2,297
1,486
5,077
2,115
2,116
3,027
1,372
3,751
1,494
2,910
2,037
1,500
734
2,177
977
751
2,020
4,928
2,820
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,505
2,547
1,001
1,000
2,956
3,452
1,620
3,448
1,971
1,001
3,092
801
483
2,905
972
2,541
2,151
1,487
3,365
2,045
528
3,379
2,297
1,486
5,077
2,115
2,116
3,027
1,372
3,751
1,494
2,910
2,037
1,500
734
2,177
977
751
2,020
4,928
2,820
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
Den Danske Bk Aktieselskab
Diageo Plc
Emerson Elec Co.
European Invt Bk
European Invt Bk
Federal Home Ln Bks
Fifth Third Bk Cincinnati Oh
Fleet Boston Corp.
Fleet Finl Group Inc. New
Fpl Group Cap Inc.
Ge Global Ins Hldg Corp.
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Re Corp.
Goldman Sachs Group Inc.
Goldman Sachs Group Inc.
Greenpoint Finl Corp.
Hancock John Global Fdg Ii Mtn
Hancock John Global Fdg Ii Mtn
Hancock John Global Fdg Mtn
Hartford Finl Svcs Group Inc.
Hartford Finl Svcs Group Inc.
Hbos Plc Medium Term Sr Nts
Hbos Plc Medium Term Sr Nts
Heller Finl Inc.
Hershey Foods Corp.
Household Fin Corp.
Household Fin Corp.
Household Intl Inc.
Hsbc Fin Corp.
Hsbc Fin Corp. Mtn
Huntington National Bank
Ing Sec Life Instl Fdg
International Business Machs
Intl Lease Fin Corp. Mtn
Intl Lease Fin Corp. Mtn
JP Morgan Chase + Co.
Jackson Natl Life Global Fdg
Key Bk Na Med Term Nts Bk Entr
KeyCorp. Mtn Book Entry
Kraft Foods Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lincoln Natl Corp. In
Marshall + Ilsley Corp.
Mbna America Bank Na Y
Merita Bk Ltd. Ny Brh
Merrill Lynch + Co. Inc.
Merrill Lynch + Co. Inc.
Merrill Lynch + Co. Inc.
Metropolitan Life Global Mtn
Mgic Invt Corp.
Monumental Global Fdg Ii
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,019
3,444
3,215
3,970
6,057
7,937
2,427
2,643
905
849
1,915
3,888
8,759
8,282
2,119
3,292
4,989
3,456
968
2,896
5,132
975
5,037
1,345
3,205
2,952
1,929
1,504
2,903
501
2,851
3,028
5,096
1,886
2,483
2,217
2,939
4,138
3,298
1,000
4,401
3,010
1,000
1,626
487
989
3,150
1,077
500
8,420
6,403
501
3,453
1,985
4,865
3,369
1,204
1,468
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,019
3,444
3,215
3,970
6,057
7,937
2,427
2,643
905
849
1,915
3,888
8,759
8,282
2,119
3,292
4,989
3,456
968
2,896
5,132
975
5,037
1,345
3,205
2,952
1,929
1,504
2,903
501
2,851
3,028
5,096
1,886
2,483
2,217
2,939
4,138
3,298
1,000
4,401
3,010
1,000
1,626
487
989
3,150
1,077
500
8,420
6,403
501
3,453
1,985
4,865
3,369
1,204
1,468
(Continued)
101
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
Monumental Global Fdg Ii 2002a
Monunmetal Global Fdg Ii
Mony Group Inc.
Morgan Stanley
Morgan Stanley
National City Corp.
National Westminster Bk Plc
Nationwide Bldg Soc
Nationwide Life Global Fdg I
Nationwide Life Global Mtn
Nucor Corp.
Oracle Corp. / Ozark Hldg Inc.
Pepsico Inc. Mtn Book Entry
Pnc Fdg Corp.
Popular North Amer Inc.
Praxair Inc.
Premark Intl Inc.
Pricoa Global Fdg I Mtn
Principal Finl Group Australia
Principal Life Global Fdg I Gl
Protective Life Secd Trs
Protective Life Secd Trs Mtn
Prudential Ins Co. Amer
Public Svc Elec Gas Co.
Regions Finl Corp. New
Safeco Corp.
Sbc Communications Inc.
Sbc Communications Inc.
Simon Ppty Group Lp
Slm Corp. Medium Term Nts
Sp Powerassests Ltd. Global
St Paul Cos Inc. Mtn Bk Ent
Suntrust Bk Atlanta Ga Medium
Tiaa Global Mkts Inc.
Unitedhealth Group Inc.
Us Bk Natl Assn Cincinnati Oh
Vodafone Airtouch Plc
Wachovia Corp. New
Washington Mut Bk Fa
Washington Mut Inc.
Washington Mut Inc.
Washington Post Co.
Wells Fargo + Co. New
Wells Fargo + Co. New Med Trm
Westfield Cap Corp. Ltd.
Wps Resources Corp.
Corporate issued asset - backed securities
American Home Mtg Invt Tr
Americredit Auto Rec Tr
Americredit Automobile Rec Tr
Americredit Automobile Rec Tr
Americredit Automobile Rec Tr
Americredit Automobile Receiva
Americredit Automobile Receivb
Atlantic City Elc Trns Fdgllc
Ba Cr Card Tr
Banc Amer Coml Mtg Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,000
1,961
2,175
1,926
2,126
3,410
1,323
3,537
3,501
1,485
3,797
1,973
3,619
1,007
2,910
3,138
2,729
3,401
1,013
1,165
2,913
3,390
2,629
3,682
2,371
715
1,041
697
1,009
8,998
969
2,550
3,442
500
3,000
2,915
4,449
2,040
3,997
1,692
1,000
3,001
2,943
4,311
2,005
1,047
116
1,004
1,116
2,598
3,269
4,609
2,891
420
4,300
2,869
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,000
1,961
2,175
1,926
2,126
3,410
1,323
3,537
3,501
1,485
3,797
1,973
3,619
1,007
2,910
3,138
2,729
3,401
1,013
1,165
2,913
3,390
2,629
3,682
2,371
715
1,041
697
1,009
8,998
969
2,550
3,442
500
3,000
2,915
4,449
2,040
3,997
1,692
1,000
3,001
2,943
4,311
2,005
1,047
116
1,004
1,116
2,598
3,269
4,609
2,891
420
4,300
2,869
102
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
Banc Amer Fdg 2006 I Tr
Bank Of Amer Lease Equip Tr
Bear Stearns Alt A Tr
Bear Stearns Arm Tr
Bear Stearns Arm Tr
Bear Stearns Coml Mtg Secs Inc.
Bear Stearns Coml Mtg Secs Inc.
Capital Auto Receivables Asset
Capital One Auto Fin Tr
Capital One Auto Fin Tr
Capital One Auto Fin Tr
Capital One Multi Asset Execut
Capital One Multi Asset Execut
Capital One Prime Auto Rec
Capitial One Prime Auto Receiv
Caterpillar Finl Asset Tr
Caterpillar Finl Asset Tr
Cbass Tr
Cendant Rent Car Fdg Aesop Llc
Cit Equip Coll Tr
Cit Equip Coll Tr
Citibank Cr Card Issuance Tr
Citibank Cr Card Issuance Tr
CitiCorp. Mtg Secs
Cnh Equip Tr
Credit Suisse First Boston Mtg
Credit Suisse First Boston Mtg
Credit Suisse First Boston Mtg
Cwabs
Cwabs Inc.
Cwmbs Inc.
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
Deere John Owner Tr
Drive Auto Receivables Tr
Fifth Third Auto Tr
First Franklin Mtg Ln Tr
First Horizon Abs Tr
First Union Lehman Bros Mtg Tr
Ford Credit Auto Owner Trust
Ge Cap Cr Card Master Nt Tr
Granite Mtgs Plc
Gs Mtg Secs Corp.
Gsamp Tr
Harley Davidson Motorcycle Tr
Harley Davidson Motorcycle Tr
Hertz Veh Fing Llc
Holmes Fing No 8 Plc
Home Equity Mtg Tr 2006 4
Hsbc Automotive Tr
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Impac Cmb Tr
Impac Cmb Tr
Lb Ubs Coml Mtg Tr
Long Beach Mtg Ln Tr
Mastr Asset Backed
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,332
1,057
628
3,480
1,951
6,358
3,541
3,243
2,618
2,986
4,998
3,941
2,963
3,981
2,507
1,525
8,142
4,262
9,297
1,899
3,985
9,864
2,688
582
1,984
3,740
3,576
444
4,261
224
893
4,315
1,695
2,452
3,191
12
4,290
528
1,715
4,324
2,846
564
4,145
4,251
150
5,825
5,319
5,000
4,222
2,980
5,537
3,212
3,928
308
238
3,493
3,203
4,224
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,332
1,057
628
3,480
1,951
6,358
3,541
3,243
2,618
2,986
4,998
3,941
2,963
3,981
2,507
1,525
8,142
4,262
9,297
1,899
3,985
9,864
2,688
582
1,984
3,740
3,576
444
4,261
224
893
4,315
1,695
2,452
3,191
12
4,290
528
1,715
4,324
2,846
564
4,145
4,251
150
5,825
5,319
5,000
4,222
2,980
5,537
3,212
3,928
308
238
3,493
3,203
4,224
(Continued)
103
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
Mbna Master Cr Card Tr Ii
Merrill Lynch Mtg Invs Inc.
Morgan Stanley Ixis Estate Tr
National City Auto Receivables
Navistar Finl 2003 A Owner Tr
Nissan Auto Receivables
Nissan Auto Receivables
Nomura Asset Accep Corp.
Onyx Accep Owner Tr
Pg+E Energy Recovery Fdg Llc
Providian Gateway Owner Tr
Reliant Energy Transition Bd
Residential Asset Mtg Prods
Residential Asset Sec Mtg Pass
Residential Asset Sec Mtg Pass
Residential Fdg Mtg Secs I Inc.
Residential Fdg Mtg Secs I Inc.
Sequoia Mtg Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Structured Adj Rate Mtg Ln Tr
Structured Adj Rate Mtg Ln Tr
Terwin Mtg Tr
Tw Hotel Fdg 2005 Llc
Txu Elec Delivery Transition
Usaa Auto Owner Tr
Wamu Mtg Pass Thru Ctfs
Wamu Tr
Washington Mut Mtg Pass
Washington Mut Mtg Secs Corp.
Wells Fargo Finl Auto Owner Tr
Wells Fargo Finl Auto Owner Tr
Wells Fargo Mtg Backed Secs
Wells Fargo Mtg Bkd Secs
Wells Fargo Mtg Bkd Secs
Wells Fargo Mtg Bkd Secs Tr
Wfs Finl
Wfs Finl 2004 4 Owner Tr
Wfs Finl 2005 2 Oner Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
Agency bond
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Mtg Corp.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
7,605
5,887
4,110
41
2,956
72
3,928
4,150
3,774
3,997
3,942
2,486
2,484
1,865
2,711
2,014
4,058
548
496
737
1,389
472
4,065
4,103
2,219
4,238
1,002
975
1,759
2,984
4,986
4,926
4,367
2,856
3,399
2,748
620
932
2,220
1,219
2,955
8,768
4,920
8,743
4,856
5,851
7,952
4,885
2,991
6,099
12,279
6,905
5,898
7,506
2,386
1,976
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
7,605
5,887
4,110
41
2,956
72
3,928
4,150
3,774
3,997
3,942
2,486
2,484
1,865
2,711
2,014
4,058
548
496
737
1,389
472
4,065
4,103
2,219
4,238
1,002
975
1,759
2,984
4,986
4,926
4,367
2,856
3,399
2,748
620
932
2,220
1,219
2,955
8,768
4,920
8,743
4,856
5,851
7,952
4,885
2,991
6,099
12,279
6,905
5,898
7,506
2,386
1,976
104
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Loan Banks
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Medium
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Tennessee Valley Auth
Fed Hm Ln Pc Pool 1H2520
Fed Hm Ln Pc Pool 1H2524
Fed Hm Ln Pc Pool 781959
Fed Hm Ln Pc Pool 847628
Fed Hm Ln Pc Pool B19205
Fed Hm Ln Pc Pool E89857
Fed Hm Ln Pc Pool G11295
Fed Hm Ln Pc Pool M80855
Federal Home Ln Mtg
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Gtd
Federal Natl Mtg Assn Gtd
Fnma Pool 254507
Fnma Pool 254834
Fnma Pool 255883
Fnma Pool 555549
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
5,948
6,440
8,049
4,365
5,915
3,943
7,868
19,766
14,973
10,467
6,511
3,000
3,415
2,914
2,900
5,318
6,024
3,100
2,354
6,040
3,796
8,560
1,595
1,371
3,287
3,019
2,208
3,917
3,626
3,076
4,464
1,389
3,176
3,738
3,216
1,356
8,535
3,409
2,976
4,502
2,965
3,743
4,381
4,223
2,807
259
3,158
2,465
4,290
1,994
4,339
632
2,215
2,239
1,616
1,417
3,490
1,616
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
5,948
6,440
8,049
4,365
5,915
3,943
7,868
19,766
14,973
10,467
6,511
3,000
3,415
2,914
2,900
5,318
6,024
3,100
2,354
6,040
3,796
8,560
1,595
1,371
3,287
3,019
2,208
3,917
3,626
3,076
4,464
1,389
3,176
3,738
3,216
1,356
8,535
3,409
2,976
4,502
2,965
3,743
4,381
4,223
2,807
259
3,158
2,465
4,290
1,994
4,339
632
2,215
2,239
1,616
1,417
3,490
1,616
(Continued)
105
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
Fnma Pool 632399
Fnma Pool 662401
Fnma Pool 667766
Fnma Pool 680932
Fnma Pool 681393
Fnma Pool 685116
Fnma Pool 687863
Fnma Pool 696485
Fnma Pool 703711
Fnma Pool 725095
Fnma Pool 730033
Fnma Pool 740934
Fnma Pool 790828
Fnma Pool 793025
Fnma Pool 793932
Fnma Pool 794040
Fnma Pool 795548
Fnma Pool 806642
Fnma Pool 813641
Fnma Pool 815626
Fnma Pool 816594
Fnma Pool 825395
Fnma Pool 825398
Fnma Pool 841069
Fnma Pool 879906
Gnma Ii Pool 081150
Gnma Ii Pool 081153
Money market funds
SSGA Cash Mgmt Global Offshore
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale financial assets
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
434
659
1,574
1,307
2,749
629
2,647
3,194
538
1,204
1,470
1,415
2,559
2,466
631
825
411
1,235
3,720
2,945
2,067
2,818
4,224
2,882
1,636
613
2,119
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
434
659
1,574
1,307
2,749
629
2,647
3,194
538
1,204
1,470
1,415
2,559
2,466
631
825
411
1,235
3,720
2,945
2,067
2,818
4,224
2,882
1,636
613
2,119
US$
20,488
N/A
US$
20,488
(Concluded)
106
TABLE 4
Taiwan Semiconductor Manufacturing Company Limited and Investees
MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Company
Name
Marketable Securities
Type and Name
Financial
Statement
Account
Counter-party
Nature of
Relationship
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
The Company
Government bond
Kreditanatalt Fur Wiederaufbau
Available-for-sale
financial assets
-
United States Treas NTS
2004 Government Bond Series B
2003 Government Bond Series B
〃
〃
〃
2006 Government Bond Series D
2005 Government Bond Series A
2003 Government Bond Series B
2003 Asian Development Bank
Govt. Bond Series
2003 Government Bond Series F
2003 Government Bond Series H
European Investment Bank Bonds
2004 Kachsiung Municipal Series B
2003 European Bank for
Recomspruction and
Development Govt Bond Series A
Open-end mutual funds
NITC Bond Fund
ABN AMRO Bond Fund
Fuh Hwa Bond
Mega Diamond Bond Fund
Prudential Financial Bond Fund
NITC Taiwan Bond
JF Taiwan Bond Fund
Cathay Bond
JIH SUN Bond Fund
Dresdner Bond DAM Fund
ABN AMRO Income
President James Bond
AGI Taiwan Bond Fund
JF Taiwan First Bond Fund
Held-to-maturity
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
KGI Securities Co., Ltd. and
several financial institutions
KGI Securities Co., Ltd. and
several financial institutions
KGI Securities Co., Ltd. and
several financial institutions
KGI Securities Co., Ltd. and
several financial institutions
KGI Securities Co., Ltd. and
several financial institutions
JP Morgan Chase Bank
KGI Securities Co., Ltd. and
several financial institutions
KGI Securities Co., Ltd. and
several financial institutions
KGI Securities Co., Ltd. and
several financial institutions
KGI Securities Co., Ltd. and
several financial institutions
JP Morgan Chase Bank
National Investment Trust Co., Ltd.
ABN-AMRO Securities Investment
Trust (Taiwan) Ltd.
Fuh Hwa Investment Trust Co.
Mega Investment Trust Corporation
Cathay Securities Investment Trust
Co., Ltd.
Allianz Dresdner Securities
Investment Consulting Co.,Ltd.
JF Asset Management (Taiwan) Ltd.
National Investment Trust Co., Ltd.
JIH SUN Investment Trust
(Taiwan) Ltd.
JF Asset Management (Taiwan) Ltd.
Fuh Hwa Investment Trust Co.
HSBC Investment (Taiwan) Ltd.
AGI Securities Investment Trust
(Taiwan) Ltd.
ABN-AMRO Securities Investment
Trust (Taiwan) Ltd.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 6,881
US$ 46,173
$ -
-
-
2,548,977
-
-
149,441
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ -
US$ 268,521
$ 1,005,115
998,324
3,658,659
499,084
1,647,823
827,820
647,445
401,728
367,600
249,998
87,461
3,764
610,864
18,455
3,000,000
134,906
2,004,862
40,250
600,000
-
-
-
-
125,122
139,333
103,751
1,655,781
1,600,000
1,500,000
93,312
1,300,000
-
-
-
-
62,009
-
-
69,303
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 6,866
US$ 6,881
US$ (15)
US$ 310,469
-
$
US$ 311,106
$ -
US$ (638)
$ -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ -
-
$ 999,779
998,288
3,657,320
3,049,919
1,647,851
835,840
797,299
401,568
372,265
249,998
88,198
22,219
3,655,939
175,156
2,639,459
125,122
139,333
103,751
1,667,908
1,602,947
1,516,294
93,312
1,314,669
85,145
109,720
88,165
95,553
63,947
65,496
78,629
1,299,088
1,265,092
1,202,901
1,107,206
1,012,377
1,010,426
1,002,595
933,430
-
-
792,068
-
-
-
23,136
122,762
88,165
34,914
63,947
72,002
78,629
350,000
1,400,000
1,200,000
400,000
1,000,000
1,100,000
1,000,000
-
13,042
-
8,664
-
6,506
-
-
150,000
-
100,000
-
100,000
-
-
148,736
-
99,103
-
99,401
-
-
1,264
-
897
-
599
-
63,131
875,416
14,399
200,000
10,704
150,000
148,472
1,528
66,826
939,082
(Continued)
107
Company
Name
Marketable Securities
Type and Name
Financial
Statement
Account
Counter-party
Nature of
Relationship
Shinkong Chi Shin Bond Fund
ABN AMRO Select Bond Fund
Taishin Lucky Fund
Polaris De-Bao Fund
TIIM High Yield
HSBC Taiwan Money Management
Invesco R.O.C. Bond Rund
Fuhwa Albatross Fund
Invesco Income Fund
Available-for-sale
financial assets
Fuh Hwa Investment Trust Co.
〃
〃
〃
〃
〃
〃
〃
〃
ABN-AMRO Securities Investment
Trust (Taiwan) Ltd.
Uni-President Assets Management
Corp.
Polaris International Securities
Investment Trust Co., Ltd.
Shinkong Securities Investment
Trust (Taiwan) Ltd.
Taiwan International
Securities Corp.
Taishin Securities Investment Trust
(Taiwan) Ltd.
Invesco Asset management Taiwan
Taishin Securities Investment Trust
(Taiwan) Ltd.
Stock
SSMC
Capital
VTAF II
VTAF III
Investment
accounted for
using equity
method
Investment
accounted for
using equity
method
〃
-
-
-
-
-
-
-
-
-
-
-
-
Equity
method
investee
Subsidiary
〃
Corporate bond
Taiwan Power Company
Formosa Petrochemical Corporation
Nan Ya Plastics Corporation
Chinese Petroleum Corporation
China Steel Corporation
Formosa Plastic Corporation
Shanghai commercial & Saving
Bank
Hua Nan Bank
Cathay Bank
Taiwan Power Company
Formosa Petrochemical Corporation
American Express Co.
American Gen Fin Corp. Mtn
American Honda Fin Corp. Mtn
American Honda Fin Corp. Mtn
Bank One Corp.
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Cargill Inc.
Caterpillar Finl Svcs Mtn
Chase Manhattan Corp. New
Cit Group Hldgs Inc.
Held-to-maturity
financial assets
KGI Securities Co., Ltd.
〃
〃
〃
〃
〃
〃
KGI Securities Co., Ltd.
KGI Securities Co., Ltd.
KGI Securities Co., Ltd. and several
financial institutions
KGI Securities Co., Ltd.
KGI Securities Co., Ltd. and several
financial institutions
KGI Securities Co., Ltd.
Available-for-sale
financial assets
HSBC
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
HSBC
KGI Securities Co., Ltd.
KGI Securities Co., Ltd.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
108
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
55,063
$ 778,482
17,617
$ 250,000
10,497
$ 150,000
$ 148,542
$ 1,458
62,183
$ 890,660
18,235
203,860
93,738
1,050,000
35,380
400,000
396,179
3,821
76,593
868,076
-
-
-
-
-
-
-
-
-
-
-
-
-
78,624
800,000
-
63,273
700,000
-
-
-
-
-
-
56,812
700,000
12,127
150,000
149,276
47,667
700,000
13,574
200,007
199,327
27,176
403,727
-
-
-
-
-
724
680
-
78,624
806,386
63,273
701,069
44,685
554,863
34,093
506,250
27,176
403,774
89,510
44,180
1,000,000
500,000
89,510
44,180
1,005,781
503,727
1,000,000
500,000
5,781
3,727
-
-
-
-
382
4,215,200
81
2,432,705
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
642,479
-
3,263,349
1,093,283
2,150,842
705,436
1,010,532
268,855
-
-
-
-
-
US$ 3,550
-
-
US$ 3,800
-
US$ 3,329
US$ 3,757
-
US$ 5,721
US$ 1,628
US$ 3,203
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
130,956
243,545
1,690,567
2,769,533
1,097,943
1,000,441
1,000,000
379,809
283,996
1,526,049
1,144,877
1,046,302
397,076
-
US$ 3,415
US$ 3,087
-
US$ 3,326
-
-
US$ 3,337
-
US$ 3,540
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,432
US$ 3,446
US$ 3,095
US$ 3,805
US$ 3,325
US$ 3,340
US$ 3,575
US$ 3,370
US$ 5,761
US$ 5,091
US$ 3,036
-
-
-
US$ 3,550
US$ 3,415
US$ 3,087
US$ 3,800
US$ 3,326
US$ 3,329
US$ 3,757
US$ 3,337
US$ 5,721
US$ 5,168
US$ 3,203
-
-
-
US$ (118)
US$ 31
US$ 8
US$ 5
US$ (1)
US$ 11
US$ (182)
US$ 33
US$ 40
US$ (77)
US$ (167)
463
7,960,869
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
733,130
228,005
4,080,391
3,566,946
2,773,810
1,451,378
1,000,000
516,663
286,497
1,545,864
1,159,576
1,046,799
397,963
-
-
-
-
-
-
-
-
-
-
-
(Continued)
Company
Name
Marketable Securities
Type and Name
Cogentrix Energy Inc.
Countrywide Home Lns Inc.
Credit Suisse Fb Usa Inc.
Deere John Cap Corp.
Deere John Cap Corp.
Diageo Plc
European Invt Bk
European Invt Bk
European Invt Bk
Federal Home Ln Bks
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Re Corp.
Genworth Finl Inc.
Goldman Sachs Group Inc.
Goldman Sachs Group Inc.
Hancock John Global Fdg Ii Mtn
Hancock John Global Fdg Ii Mtn
Hartford Finl Svcs Group Inc.
Hbos Plc Medium Term Sr Nts
Hewlett Packard Co.
Honeywell Inc.
Hsbc Fin Corp. Mtn
Intl Lease Fin Corp. Mtn
Jp Morgan Chase + Co.
Jp Morgan Chase + Co.
Key Bk Na Med Term Nts Bk Entr
Keycorp Mtn Book Entry
Keycorp Mtn Book Entry
Merrill Lynch + Co. Inc.
Merrill Lynch + Co. Inc.
Metropolitan Life Global Mtn
Monumental Global Fdg Ii 2
Morgan Stanley Group Inc.
National City Corp.
Nationwide Bldg Soc
Nationwide Bldg Soc Mtn
Nationwide Life Global Fdg I
Nucor Corp.
Pepsico Inc. Mtn Book Entry
Praxair Inc.
Pricoa Global Fdg 1 Mtn
Pricoa Global Fdg I Mtn
Public Svc Elec Gas Co.
Santander Us Debt S A Uniperso
Slm Corp. Medium Term Nts
Suntrust Bk Atlanta Ga Medium
Washington Mut Inc.
Washington Post Co.
Wells Fargo + Co. New
Wells Fargo + Co. New
Corporate issued
asset-backed securities
Americredit Automobile Rec Tr
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale
financial assets
Americredit Automobile Receiva
〃
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
2,885
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
5,210
4,141
-
5,079
3,459
8,315
3,918
-
-
-
3,989
8,862
3,500
3,412
4,981
3,477
3,566
-
-
3,201
3,373
3,284
5,097
2,471
3,406
3,663
4,450
3,500
-
3,486
4,900
1,907
-
4,507
3,426
3,457
3,000
-
-
3,818
-
3,500
-
3,225
4,998
2,950
-
4,735
3,182
3,697
-
-
US$
5,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
1,132
-
-
4,911
-
-
-
-
5,995
7,937
3,351
-
-
-
-
-
-
-
3,808
5,016
-
-
-
-
4,100
-
-
-
-
3,006
-
-
1,419
3,348
-
-
-
-
3,491
3,828
-
3,180
-
3,394
483
-
6,012
3,409
-
-
-
6,076
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,249
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
3,777
US$
4,017
US$
(239)
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
5,001
4,003
4,899
5,013
3,436
8,002
3,930
5,994
7,937
3,399
3,893
8,716
3,319
3,415
4,941
3,453
3,486
3,808
5,048
3,182
3,177
3,017
5,066
6,578
3,310
3,519
4,393
3,508
3,016
3,426
4,842
3,361
3,382
4,386
3,402
3,495
3,004
3,520
3,811
3,624
3,147
3,504
3,403
3,684
4,957
8,949
3,448
4,505
3,007
3,512
6,073
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
5,210
4,141
4,911
5,079
3,459
8,315
3,918
5,995
7,937
3,351
3,989
8,862
3,500
3,412
4,981
3,477
3,566
3,808
5,016
3,201
3,373
3,284
5,097
6,571
3,406
3,663
4,450
3,500
3,006
3,486
4,900
3,326
3,348
4,507
3,426
3,457
3,000
3,491
3,828
3,818
3,180
3,500
3,394
3,708
4,998
8,962
3,409
4,735
3,182
3,697
6,076
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
(209)
(138)
(12)
(66)
(23)
(313)
12
(1)
-
48
(96)
(146)
(181)
3
(40)
(24)
(80)
-
32
(19)
(196)
(267)
(31)
7
(96)
(143)
(57)
8
10
(60)
(58)
35
34
(121)
(24)
38
4
29
(17)
(194)
(33)
4
9
(24)
(41)
(13)
39
(230)
(175)
(185)
(3)
US$
3,261
US$
3,249
US$
12
US$
4,959
US$
5,000
US$
(41)
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
109
Company
Name
Marketable Securities
Type and Name
Americredit Automobile Receivb
Banc Amer Coml Mtg Inc.
Bear Stearns Arm Tr
Bear Stearns Coml Mtg Secs Inc.
Capital Auto Receivables Asset
Capital One Auto Fin Tr
Capital One Multi Asset Execut
Capital One Multi Asset Execut
Caterpillar Finl Asset Tr
Cendant Rent Car Fdg Aesop Llc
Cit Equip Coll Tr
Citibank Cr Card Issuance Tr
Cnh Equip Tr
Credit Suisse First Boston Mtg
Credit Suisse First Boston Mtg
Credit Suisse First Boston Mtg
Drive Auto Receivables Tr
Federal Natl Mtg Assn
Ford Cr Auto Owner Tr
Gs Mtg Secs Corp.
Gsamp Tr
Harley Davidson Motorcycle Tr
Hertz Veh Fing Llc
Holmes Fing No 8 Plc
Home Equity Mtg Tr 2006 4
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Lb Ubs Coml Mtg Tr
Long Beach Mtg Ln Tr
Massachusetts Rrb Spl Purp Tr
Mastr Asset Backed Secs Tr
Mbna Master Cr Card Tr Ii
Merrill Lynch Mtg Invs Inc.
Navistar Finl 2003 A Owner Tr
Nissan Auto Receivables
Nomura Asset Accep Corp.
Onyx Accep Owner Tr
Pg+E Energy Recovery Fdg Llc
Providian Gateway Owner Tr
Reliant Energy Transition Bd
Residential Asset Sec Mtg Pass
Residential Fdg Mtg Secs I Inc.
Terwin Mtg Tr
Toyota Auto Receivables 2003 B
Tw Hotel Fdg 2005 Llc
Usaa Auto Owner Tr
Washington Mut Mtg Secs Corp.
Wells Fargo Finl Auto Owner Tr
Wells Fargo Finl Auto Owner Tr
Wells Fargo Mtg Bkd Secs
Wells Fargo Mtg Bkd Secs
Wfs Finl 2004 2 Owner Tr
Wfs Finl 2004 4 Owner Tr
World Omni Auto Receivables Tr
Agency bond
Fed Hm Ln Pc Pool 1h2520
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale
financial assets
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
4,949
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,462
-
6,350
-
-
4,957
3,974
8,219
11,626
-
9,782
5,000
-
-
-
3,200
-
10,908
-
-
5,999
5,350
5,001
-
6,442
3,250
3,999
4,001
-
3,900
3,499
8,108
-
4,928
7,000
-
4,913
4,749
3,992
4,973
3,780
4,817
-
4,970
8,197
3,718
4,067
5,299
-
3,661
-
4,994
5,399
5,963
US$
3,753
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
3,826
-
3,250
5,000
-
-
-
-
3,975
-
-
4,773
3,750
3,572
-
4,828
-
4,150
4,250
-
-
-
4,200
-
-
-
-
3,200
-
-
-
6,665
-
-
4,150
-
-
-
-
-
-
4,050
-
(4,100)
-
-
-
4,893
-
3,772
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
3,826
US$
3,856
US$
(30)
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,254
3,597
6,362
3,232
5,008
4,879
3,932
8,121
11,412
3,996
9,797
3,457
4,834
3,728
3,566
3,183
4,577
5,782
4,134
4,241
5,793
5,284
5,000
4,200
6,202
3,208
3,904
3,733
3,195
3,830
3,083
7,653
6,561
3,994
6,132
4,144
4,885
4,646
3,911
3,994
3,052
4,224
4,033
4,963
4,116
3,696
3,261
5,235
4,932
3,020
3,488
4,913
4,883
5,869
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,325
3,609
6,350
3,250
5,000
4,957
3,974
8,219
11,626
3,975
9,782
3,500
4,773
3,750
3,572
3,200
4,561
5,836
4,150
4,250
5,999
5,350
5,001
4,200
6,279
3,250
3,999
3,779
3,200
3,900
3,079
8,108
6,558
4,035
6,194
4,150
4,913
4,749
3,992
4,162
3,100
4,309
4,050
4,970
4,097
3,718
3,302
5,299
4,893
3,054
3,500
4,994
4,955
5,963
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
(71)
(12)
12
(18)
8
(78)
(42)
(98)
(214)
21
15
(43)
61
(22)
(6)
(17)
16
(54)
(16)
(9)
(206)
(66)
-
-
(77)
(42)
(95)
(46)
(5)
(70)
4
(455)
3
(41)
(62)
(6)
(28)
(103)
(81)
(168)
(48)
(85)
(17)
(7)
19
(22)
(41)
(64)
39
(34)
(12)
(81)
(72)
(94)
US$
3,329
US$
3,345
US$
(16)
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
110
(Continued)
Company
Name
Marketable Securities
Type and Name
Fed Hm Ln Pc Pool 781959
Fed Hm Ln Pc Pool M80855
Federal Home Ln Mtg
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Loan Mtg
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Fnma Pool 255883
Fnma Pool 696485
Fnma Pool 813641
Fnma Pool 815626
Fnma Pool 825398
Fnma Pool 841069
Federal Farm Cr Bks
Federal Home Ln Bank
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
7,112
-
3,848
-
3,954
6,096
-
-
-
4,098
9,905
4,902
3,755
-
-
-
-
-
-
-
4,030
4,051
3,771
4,175
-
3,622
4,949
3,673
3,985
3,962
3,976
8,594
3,932
4,927
-
4,136
4,939
8,672
4,965
4,808
-
7,558
-
7,886
6,110
-
3,972
7,887
19,846
6,908
6,098
9,134
3,379
-
3,388
9,997
6,980
5,929
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
3,882
-
3,898
-
-
4,962
3,351
4,317
-
-
-
-
4,481
3,349
3,857
5,380
4,631
4,488
5,009
-
-
-
-
3,906
-
-
-
-
-
-
-
-
-
8,628
-
-
-
-
-
5,740
-
4,823
-
-
12,227
-
-
-
-
-
-
-
7,490
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
6,577
US$
6,553
US$
24
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,381
3,308
3,919
3,909
4,316
4,665
3,299
3,893
3,388
8,812
4,069
3,308
4,476
3,114
3,789
4,574
4,450
4,444
4,937
3,515
3,131
3,559
3,393
3,916
3,189
4,562
3,134
3,940
3,955
3,964
8,519
3,980
4,930
8,716
4,140
4,872
8,735
4,944
4,850
5,825
7,515
4,882
7,960
6,061
12,233
3,951
7,758
19,800
6,881
5,907
8,968
3,296
7,490
3,481
9,788
6,941
5,930
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,462
3,336
3,898
3,920
4,424
4,683
3,294
3,883
3,402
8,851
4,159
3,362
4,481
3,089
3,776
4,565
4,435
4,406
4,889
3,568
3,196
3,581
3,403
3,906
3,203
4,672
3,156
3,985
3,962
3,976
8,594
3,932
4,927
8,628
4,136
4,939
8,672
4,965
4,808
5,740
7,558
4,823
7,886
6,110
12,227
3,972
7,887
19,846
6,908
6,098
9,134
3,379
7,490
3,388
9,997
6,980
5,929
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
(81)
(28)
21
(11)
(108)
(18)
5
10
(14)
(39)
(90)
(54)
(5)
25
13
9
15
38
48
(53)
(65)
(22)
(10)
10
(14)
(110)
(22)
(45)
(7)
(12)
(75)
47
3
88
4
(67)
63
(21)
42
85
(43)
59
74
(49)
6
(21)
(129)
(46)
(27)
(191)
(166)
(83)
-
93
(209)
(39)
1
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
111
Company
Name
Marketable Securities
Type and Name
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp. Mtn
Federal Home Loan Bank
Federal Home Loan Mtg Assn
Federal Home Loan Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Medium
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Freddie Mac
Tennessee Valley Auth
Chi Cheng
Stock
VIS
TSMC
Global
Government bond
United States Treas Nts
Corporate bond
American Express Co.
American Gen Fin Corp. Mtn
American Honda Fin Corp. Mtn
Bank One Corp.
Bear Stearns Cos Inc.
Cit Group Hldgs Inc.
Chase Manhattan Corp. New
Cogentrix Energy Inc.
Counrywide Finl Corp.
Deere John Cap Corp.
Diageo Plc
Emerson Elec Co.
European Invt Bk
European Invt Bk
Federal Home Ln Bks
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
112
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Investment
accounted for
using equity
method
Available-for-sale
financial assets
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Equity
method
investee
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
4,930
3,475
4,847
4,903
4,943
8,971
4,921
7,892
4,430
17,888
5,928
-
7,926
-
-
-
-
-
15,787
9,758
7,000
-
5,740
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
6,415
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
14,175
9,974
-
-
-
-
-
-
-
-
-
-
-
7,800
-
19,539
14,901
10,430
7,966
3,353
-
-
-
5,255
-
9,391
6,039
5,032
$
100,116
-
US$
501,897
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
3,432
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,446
3,095
3,325
3,340
3,036
5,091
3,777
5,005
4,899
3,436
3,222
3,930
5,994
7,937
8,716
3,893
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
6,410
US$
6,415
US$
(5)
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
14,269
9,929
4,912
3,459
4,901
4,927
4,944
8,940
4,916
7,908
4,364
17,782
5,885
7,832
7,834
19,702
14,931
10,459
7,979
3,417
15,851
9,781
6,925
5,292
5,562
9,314
6,038
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
14,175
9,974
4,930
3,475
4,847
4,903
4,943
8,971
4,921
7,892
4,430
17,888
5,928
7,800
7,926
19,539
14,901
10,430
7,966
3,353
15,787
9,758
7,000
5,255
5,740
9,391
6,039
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
94
(45)
(18)
(16)
54
24
1
(31)
(5)
16
(66)
(106)
(43)
32
(92)
163
30
29
13
64
64
23
(75)
37
(178)
(77)
(1)
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,032
$
107,224
US$
351,917
US$
351,594
US$
323
-
US$
151,045
-
-
-
-
-
-
-
-
5,005
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,005
-
-
-
-
-
-
-
-
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
3,452
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,448
3,092
3,365
3,379
3,027
5,077
3,751
-
4,928
3,444
3,215
3,970
6,057
7,937
8,759
3,888
(Continued)
Company
Name
Marketable Securities
Type and Name
General Elec Cap Corp. Mtn
General Re Corp.
Goldman Sachs Group Inc.
Goldman Sachs Group Inc.
Hbos Plc Medium Term Sr Nts
Hsbc Fin Corp. Mtn
Hsbc Fin Corp.
Hancock John Global Fdg Ii Mtn
Hartford Finl Svcs Group Inc.
Intl Lease Fin Corp. Mtn
JP Morgan Chase + Co.
Key Bk Na Med Term Nts Bk Entr
Keycorp Mtn Book Entry
Lehman Brothers Hldgs Inc.
Mbna America Bank Na Y
Marshall + Ilsley Corp.
Merrill Lynch + Co. Inc.
Merrill Lynch + Co. Inc.
Metropolitan Life Global Mtn
Morgan Stanley Group Inc.
National City Corp.
Nationwide Bldg Soc
Nationwide Life Global Fdg I
Nucor Corp.
Pepsico Inc. Mtn Book Entry
Praxair Inc.
Pricoa Global Fdg I Mtn
Protective Life Secd Trs Mtn
Public Svc Elec Gas Co.
Slm Corp. Medium Term Nts
Suntrust Bk Atlanta Ga Medium
Vodafone Airtouch Plc
Washington Mut Inc.
Washington Mut Bk Fa
Washington Post Co.
Wells Fargo + Co. New
Wells Fargo + Co. New Med Trm
Corporate issued
asset-backed securities
Americredit Automobile Rec Tr
Americredit Automobile Receivb
Americredit Automobile Receiva
Ba Cr Card Tr
Banc Amer Coml Mtg Inc.
Banc Amer Fdg 2006 I Tr
Bear Stearns Coml Mtg Secs Inc.
Bear Stearns Arm Tr
Bear Stearns Coml Mtg Secs Inc.
Cit Equip Coll Tr
Cnh Equip Tr
Cwabs
Capital Auto Receivables Asset
Capital One Auto Fin Tr
Capital One Multi Asset Execut
Capital One Multi Asset Execut
Capital One Prime Auto Rec
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
8,268
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,319
3,453
4,941
3,182
5,066
3,028
5,170
5,048
4,118
3,310
4,393
3,016
3,150
6,437
8,453
3,426
4,842
3,361
4,386
3,402
3,495
3,520
3,811
3,624
3,147
3,403
3,396
3,684
8,949
3,448
4,477
4,505
5,000
3,007
6,073
4,282
US$
3,261
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,826
4,959
4,350
3,254
4,336
3,551
3,597
6,362
3,996
3,457
4,300
3,232
5,008
4,879
3,932
3,999
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
US$
-
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,384
-
-
-
-
-
-
-
-
-
-
-
-
3,500
1,000
-
3,167
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,883
-
-
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,386
-
-
-
-
-
-
-
-
-
-
-
-
3,504
1,000
-
3,148
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,879
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2)
-
-
-
-
-
-
-
-
-
-
-
-
(4)
-
-
19
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Amount (US$
in Thousands)
(Note 2)
US$
8,282
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,292
3,456
4,989
3,205
5,096
3,028
5,132
5,037
4,138
3,298
4,401
3,010
3,150
6,403
8,420
3,453
4,865
3,369
-
3,410
3,537
3,501
3,797
3,619
3,138
3,401
3,390
3,682
8,998
3,442
4,449
1,000
3,997
3,001
2,943
4,311
US$
3,269
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,891
4,609
4,300
2,869
4,332
3,541
3,480
6,358
3,985
1,984
4,261
3,243
4,998
-
3,941
3,981
(Continued)
113
Company
Name
Marketable Securities
Type and Name
Caterpillar Finl Asset Tr
Cbass Tr
Cendant Rent Car Fdg Aesop Llc
Citibank Cr Card Issuance Tr
Credit Suisse First Boston Mtg
Credit Suisse First Boston Mtg
Daimlerchrysler Auto Tr
Drive Auto Receivables Tr
First Franklin Mtg Ln Tr
Ford Credit Auto Owner Trust
Gs Mtg Secs Corp.
Gsamp Tr
Harley Davidson Motorcycle Tr
Hertz Veh Fing Llc
Holmes Fing No 8 Plc
Home Equity Mtg Tr 2006 4
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Lb Ubs Coml Mtg Tr
Long Beach Mtg Ln Tr
Mbna Master Cr Card Tr Ii
Massachusetts Rrb Spl Purp Tr
Mastr Asset Backed Secs Tr
Mastr Asset Backed
Merrill Lynch Mtg Invs Inc.
Morgan Stanley Ixis Estate Tr
Navistar Finl 2003 A Owner Tr
Nissan Auto Receivables
Nomura Asset Accep Corp.
Onyx Accep Owner Tr
Pg+E Energy Recovery Fdg Llc
Providian Gateway Owner Tr
Reliant Energy Transition Bd
Residential Asset Sec Mtg Pass
Residential Fdg Mtg Secs I Inc.
Tw Hotel Fdg 2005 Llc
Terwin Mtg Tr
Usaa Auto Owner Tr
Washington Mut Mtg Secs Corp.
Wells Fargo Mtg Backed Secs
Wells Fargo Finl Auto Owner Tr
Wells Fargo Finl Auto Owner Tr
Wells Fargo Mtg Bkd Secs
Wells Fargo Mtg Bkd Secs
Agency Bonds
Fed Hm Ln Pc Pool M80855
Fed Hm Ln Pc Pool 847628
Fed Hm Ln Pc Pool 1h2520
Fed Hm Ln Pc Pool B19205
Federal Home Ln Mtg Corp.
Fed Hm Ln Pc Pool 781959
Fnma Pool 255883
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Home Ln Mtg Corp.
114
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
8,121
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,260
9,249
9,797
3,566
3,728
4,334
3,183
4,301
4,310
4,134
4,241
5,793
5,284
5,000
4,200
6,202
3,208
3,904
3,733
3,195
7,653
3,830
3,083
4,300
6,561
4,300
3,994
3,943
4,144
4,885
4,646
3,911
3,994
3,052
4,224
4,116
4,033
4,246
3,261
4,426
5,235
4,932
3,020
3,488
US$
3,381
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,884
3,286
8,626
4,574
6,472
3,559
4,375
4,577
3,919
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
US$
-
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,416
3,082
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,396
3,083
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20
(1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Amount (US$
in Thousands)
(Note 2)
US$
8,142
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,262
9,297
9,864
3,576
3,740
4,315
3,191
4,290
4,324
4,145
4,251
5,825
5,319
5,000
4,222
5,537
3,212
3,928
3,493
3,203
7,605
-
-
4,224
5,887
4,110
2,956
3,928
4,150
3,774
3,997
3,942
2,486
2,711
4,058
4,103
4,065
4,238
2,984
4,367
4,986
4,926
2,856
3,399
US$
3,287
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,796
3,100
8,560
4,381
6,040
3,490
4,338
4,290
3,917
(Continued)
Company
Name
Marketable Securities
Type and Name
Federal Home Ln Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg
Federal Home Ln Mtg Corp.
Federal Home Loan Mtg
Federal Home Ln Mtg Corp.
Fnma Pool 696485
Fnma Pool 813641
Fnma Pool 815626
Fnma Pool 825398
Fnma Pool 841069
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp. Mtn
Federal Home Loan Mtg Assn
Federal Home Loan Mtg Corp.
Federal Home Ln Mtg Corp.
Freddie Mac
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Farm Cr Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Loan Bank
Federal Home Ln Bank
Federal Home Ln Bks
Federal Home Loan Banks
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
4,316
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,515
3,131
3,909
3,789
3,388
4,450
4,069
3,893
3,114
3,299
4,665
3,308
3,308
8,812
4,937
4,476
3,393
3,916
3,189
4,562
3,134
3,481
4,912
4,901
4,927
9,789
9,314
6,410
5,930
9,929
14,269
3,940
4,851
3,296
4,930
4,882
8,735
8,716
5,825
5,907
7,960
4,872
6,061
4,140
12,233
7,515
6,881
3,459
3,955
7,490
8,081
14,931
7,979
4,364
6,516
5,885
7,834
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
US$
-
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,868
-
-
-
-
-
-
-
4,953
4,951
4,968
7,906
9,378
-
-
10,000
14,304
3,946
-
3,297
4,971
-
-
-
-
-
-
-
-
4,141
-
7,520
-
3,463
3,967
-
-
-
5,001
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,858
-
-
-
-
-
-
-
4,912
4,901
4,927
7,831
9,314
-
-
9,929
14,269
3,940
-
3,296
4,930
-
-
-
-
-
-
-
-
4,140
-
7,515
-
3,459
3,955
-
-
-
4,987
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
-
-
-
-
-
-
-
41
50
41
75
64
-
-
71
35
6
-
1
41
-
-
-
-
-
-
-
-
1
-
5
-
4
12
-
-
-
14
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Amount (US$
in Thousands)
(Note 2)
US$
3,076
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,158
2,465
3,626
3,743
3,216
4,223
3,409
3,738
2,965
3,176
4,464
2,976
3,019
8,535
-
4,502
3,194
3,720
2,945
4,224
2,882
-
-
-
-
1,976
-
6,440
5,948
-
-
-
4,856
-
-
4,885
8,743
8,768
5,851
5,898
7,952
4,920
6,099
-
12,279
-
6,905
-
-
7,506
8,049
14,973
3,000
4,365
6,511
5,915
7,868
(Continued)
115
Company
Name
Marketable Securities
Type and Name
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Medium
Tennessee Valley Auth
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
3,950
US$
US$
US$
US$
US$
US$
19,702
10,459
5,562
5,292
3,417
6,038
-
-
-
-
-
-
-
US$
-
US$
-
US$
US$
-
-
5,560
-
-
-
US$
-
-
5,562
-
-
-
US$
-
-
-
(2)
-
-
-
-
-
-
-
-
-
-
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Amount (US$
in Thousands)
(Note 2)
US$
3,943
US$
US$
US$
US$
US$
19,766
10,467
-
5,318
3,415
6,024
(Concluded)
Note 1: The proceeds of bond investments matured are excluded.
Note 2: The ending balance included the amortization of premium or discount on bonds investments and unrealized valuation gains or losses on financial assets.
116
TABLE 5
Taiwan Semiconductor Manufacturing Company Limited
ACQUISITION OF INDIVIDUAL REAL ESTATES AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Company
Name
Types of
Property
Transaction Date
Transaction
Amount
Payment Term
Counter-party
Nature of
Relationships
Prior Transaction of Related Counter-party
Owner
Relationships
Transfer Date
Amount
Price
Reference
Purpose of
Acquisition
Other Terms
The Company
Fab. 14
January 6, 2006
$ 854,000
By the construction progress
M+W Zander Facility Engineering Co., Ltd.
Fab. 12
March 30, 2006
US$ 3,340
By the construction progress
M+W Zander Facility Engineering Co., Ltd.
Fab. 12
June 1, 2006
$ 487,000
By the construction progress
United Integrated Services Co., Ltd.
Fab. 12
June 1, 2006
US$ 3,770
By the construction progress
Celerity, Inc.
Fab. 14
June 2, 2006
$ 197,500
By the construction progress
China Steel Structure Co., Ltd.
Fab. 12
June 6, 2006
192,000
By the construction progress
Marketech International Corp.
Fab. 12
June 9, 2006
142,000
By the construction progress
Uangyih-tech Industrial Co., Ltd.
Fab. 14
June 26, 2006
EUR 2,733
By the construction progress
Siemens Limited
Fab. 14
June 30, 2006
$ 517,500
By the construction progress
United Steel Engineering & Construction
Fab. 14
August 7, 2006
453,000
By the construction progress
China Steel Structure Co., Ltd.
Corp.
Fab. 14
August 25, 2006
1,365,000
By the construction progress
Fu Tsu Construction Co., Ltd.
Fab. 14
September 28, 2006
JPY 1,080,000
By the construction progress
Organo Corporation
Fab. 14
September 28, 2006
$ 407,000
By the construction progress
Organo Technology Co., Ltd.
Fab. 14
September 29, 2006
US$ 4,250
By the construction progress
York Internation Corp.
Fab. 14
October 12, 2006
$ 278,950
By the construction progress
Shihlin Electric & Engineering Corp.
Fab. 14
November 20, 2006
US$ 9,150
By the construction progress
Mega Union Technology Inc.
Fab. 14
November 23, 2006
$ 179,573
By the construction progress
United Integrated Services Co., Ltd.
Fab. 14
November 24, 2006
US$ 9,890
By the construction progress
Marketech International Corp.
Fab. 14
November 28, 2006
US$ 29,750
By the construction progress
United Integrated Services Co., Ltd.
Fab. 14
November 29, 2006
US$ 15,000
By the construction progress
M+W Zander Facility Engineering Co., Ltd.
Fab. 14
November 29, 2006
$ 847,365
By the construction progress
M+W Zander Facility Engineering Co., Ltd.
Fab. 14
November 29, 2006
123,000
By the construction progress
Desiccant Technology Corp.
Fab. 14
December 7, 2006
177,200
By the construction progress
Uangyih-tech Industrial Co., Ltd.
Fab. 14
December 8, 2006
US$ 12,900
By the construction progress
Marketech International Corp.
Fab. 14
December 28, 2006
US$ 9,100
By the construction progress
Celerity, Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
117
TABLE 6
Taiwan Semiconductor Manufacturing Company Limited and Investees
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars)
Company
Name
Related Party
Nature of Relationships
The Company
TSMC-North America
Philips
Subsidiary
Major shareholder
GUC
WaferTech
SSMC
TSMC-Shanghai
VIS
TSMC-North America
GUC
Investee over which the Company had a
controlling interest
Indirect subsidiary
Investee accounted for using equity method
Subsidiary
Investee accounted for using equity method
The same parent
Transaction Details
Amount
% to
Total
Payment Terms
$ 190,459,073
4,024,990
60
1
Net 30 days after invoice date
Net 30 days/Net 45 days (since 12/27/2006)
755,710
-
Net 30 days after monthly closing
after monthly closing
12,530,552
6,820,632
4,405,843
3,911,838
920,045
27
15
10
8
60
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after invoice date
Abnormal Transaction
Unit Price
(Note)
Payment
Terms
(Note)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Notes/Accounts Payable or
Receivable
Ending Balance
$ 16,461,956
250,919
155,216
(864,733)
(459,305)
(478,714)
(717,562)
(301,507)
Note
% to
Total
50
1
-
9
5
5
8
40
Purchase/
Sale
Sales
Sales
Sales
Purchases
Purchases
Purchases
Purchases
Purchases
Note: The terms of sales to related parties are not significantly different from those to third parties. For purchase transactions, prices are determined in accordance with the related contractual agreements and no other similar transaction could be compared with.
TABLE 7
Taiwan Semiconductor Manufacturing Company Limited
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars)
Company
Name
The Company
Related Party
Nature of Relationships
Ending Balance
Turnover Rate
Overdue
Amounts
Action Taken
TSMC-North America
Philips
GUC
TSMC-Shanghai
VIS
Subsidiary
Major shareholder
Investee over which the Company had a
controlling interest
Subsidiary
Investee accounted for using equity method
$ 16,521,503
257,313
155,216
36 days
38 days
49 days
$ 4,721,288
11,304
117
-
-
-
123,853
121,911
Note
Note
21,089
3,064
Accelerate demand on account receivables
-
Note: The ending balance primarily consisted of other receivables, it is not applicable for the calculation of the turnover rate.
Amounts Received in
Subsequent Period
$ 5,883,939
18,648
38,062
-
3,064
Allowance for Bad Debts
$ -
-
-
-
-
118
TABLE 8
Taiwan Semiconductor Manufacturing Company Limited
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE
DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars)
Investor
Company
Investee Company
Location
Main Businesses and Products
Original Investment Amount
Balance as of December 31, 2006
December
31, 2006
December
31, 2005
Shares
(In Thousands)
Percentage of
Ownership
Carrying
Value (Note)
Net Income
(Losses) of
the Investee
Equity in
the Earnings
(Losses)
Note
The Company
TSMC Global
TSMC International
Tortola, British Virgin Islands
Tortola, British Virgin Islands
Investment activities
Providing investment in companies involved in the
$ 42,327,245
31,445,780
$ -
31,445,780
1
987,968
100
100
$ 42,496,592
26,593,749
$ 616,171
2,802,637
$ 616,171
2,802,637
Subsidiary
Subsidiary
TSMC-Shanghai
Shanghai, China
Manufacturing and sales of integrated circuits at the order
12,180,367
12,180,367
design, manufacture, and other related business in the
semiconductor industry
Singapore
Fabrication and supply of integrated circuits
8,840,895
6,408,190
of and pursuant to product design specifications provided
by customers
-
463
SSMC
VIS
Hsinchu, Taiwan
TSMC Partners
TSMC-North America
Tortola, British Virgin Islands
San Jose, California, U.S.A.
Emerging Alliance
VTAF II
GUC
Cayman Islands
Cayman Islands
Hsinchu, Taiwan
Research, design, development, manufacture, packaging,
testing and sale of memory integrated circuits, LSI, VLSI
and related parts
Investment activities
Sales and marketing of integrated circuits and
semiconductor devices
Investing in new start-up technology companies
Investing in new start-up technology companies
Researching, developing, manufacturing, testing
and marketing of integrated circuits
VTAF III
Chi Cherng
Hsin Ruey
TSMC-Japan
TSMC-Europe
TSMC-Korea
Cayman Islands
Taipei, Taiwan
Taipei, Taiwan
Yokohama, Japan
Amsterdam, the Netherlands
Seoul, Korea
Investing in new start-up technology companies
Investment activities
Investment activities
Marketing activities
Marketing activities
Marketing activities
Note: The treasury stock is deducted from the carrying value.
8,119,816
8,119,816
442,262
10,350
333,718
1,418,717
785,465
386,568
243,545
300,000
300,000
83,760
15,749
13,656
10,350
333,718
1,526,074
654,509
409,920
-
300,000
300,000
83,760
15,749
-
300
11,000
-
-
41,263
-
-
-
6
-
80
100
9,027,984
(637,220)
(637,220)
Subsidiary
39
27
100
100
99
98
38
98
36
36
100
100
100
7,960,869
4,437,059
1,394,921
5,741,870
3,018,694
748,006
Investee accounted for
using equity method
Investee accounted for
using equity method
4,433,819
2,014,990
793,585
733,130
629,755
228,005
115,507
114,297
95,757
49,741
14,706
308,009
238,111
(2,644)
(37,339)
237,295
(20,794)
99,647
98,605
2,963
23,164
685
308,009
238,111
Subsidiary
Subsidiary
(2,631)
(36,592)
100,396
Subsidiary
Subsidiary
Investee over which
the Company has a
controlling interest
(20,378)
(5,533)
(5,982)
2,963
23,164
685
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
119
TABLE 9
Taiwan Semiconductor Manufacturing Company Limited
INFORMATION OF INVESTMENT IN MAINLAND CHINA
FOR THE YEAR ENDED DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Investee Company
Main Businesses and Products
TSMC (Shanghai)
Company Limited
Manufacturing and sales of integrated circuits
at the order of and pursuant to product
design specifications provided by customers
Total Amount of
Paid-in Capital
(RMB in Thousand)
Method of
Investment
Accumulated Outflow
of Investment from
Taiwan as of
January 1, 2006
(US$ in Thousand)
Investment Flows
Outflow
(US$ in Thousand)
Accumulated Outflow of
Investment from Taiwan
as of December 31,2006
(US$ in Thousand)
Percentage
of
Ownership
Equity in
the Earnings
(Losses)
(Note 2)
Carrying
Value as of
December
31, 2006
Accumulated Inward
Remittance of Earnings
as of
December 31, 2006
Inflow
$ 12,180,367
(RMB 3,070,623)
(Note 1)
$ 12,180,367
(US$ 371,000)
$
-
$
-
$ 12,180,367
(US$ 371,000)
100%
$ (637,220)
$ 9,027,984
$ -
Accumulated Investment in Mainland China as of December 31, 2006 (US$ in Thousand)
Investment Amounts Authorized by Investment Commission, MOEA (US$ in Thousand)
Upper Limit on Investment (US$ in Thousand)
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
Note 1: Direct investments US$371,000 thousand in TSMC-Shanghai.
Note 2: Amount was recognized based on the audited financial statements.
120
8. Consolidated Financial Statements for the Years Ended December 31, 2006 and 2005 and Independent Auditors' Report
REPRESENTATION LETTER
The entities included in the combined financial statements of Taiwan Semiconductor Manufacturing
Company Limited as of and for the year ended December 31, 2006, which are required under
the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and
Consolidated Financial Statements of Affiliated Enterprises, are the same as those included in the
consolidated financial statements prepared in conformity with the revised Statement of Financial
Accounting Standards No. 7, “Consolidated Financial Statements”. In addition, the information
required to be disclosed in the combined financial statements is included in the consolidated financial
statements. Consequently, Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
do not prepare a separate set of combined financial statements.
Accumulated Investment in Mainland China as of December 31, 2006 (US$ in Thousand)
Investment Amounts Authorized by Investment Commission, MOEA (US$ in Thousand)
Upper Limit on Investment (US$ in Thousand)
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
Very truly yours,
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
By
MORRIS CHANG
Chairman
January 11, 2007
121
INDEPENDENT AUDITORS’ REPORT
Notice to Readers
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Limited
We have audited the accompanying consolidated balance sheets of Taiwan Semiconductor
Manufacturing Company Limited and subsidiaries as of December 31, 2006 and 2005, and the
related consolidated statements of income, changes in shareholders’ equity and cash flows for the
The accompanying consolidated financial statements are intended only to present the consolidated
financial position, results of operations and cash flows in accordance with accounting principles
and practices generally accepted in the Republic of China and not those of any other jurisdiction.
The standards, procedures and practices to audit such consolidated financial statements are those
generally accepted and applied in the Republic of China.
years then ended. These consolidated financial statements are the responsibility of the Company’s
For the convenience of readers, the auditors’ report and the accompanying financial statements have
management. Our responsibility is to express an opinion on these consolidated financial statements
been translated into English from the original Chinese version prepared and used in the Republic
of China. If there is any conflict between the English version and the original Chinese version or
any difference in the interpretation of the two versions, the Chinese-language auditors’ report and
financial statements shall prevail.
based on our audits.
We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements
by Certified Public Accountants and auditing standards generally accepted in the Republic of
China. Those rules and 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 consolidated financial position of Taiwan Semiconductor Manufacturing Company
Limited and subsidiaries as of December 31, 2006 and 2005, and the results of their consolidated
operations and their consolidated cash flows for the years then ended in conformity with the
Guidelines Governing the Preparation of Financial Reports by Securities Issuers, requirements of the
Business Accounting Law and Guidelines Governing Business Accounting with respect to financial
accounting standards, and accounting principles generally accepted in the Republic of China.
January 11, 2007
122
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2006 AND 2005
(In Thousands of New Taiwan Dollars, Except Par Value)
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)
Financial assets at fair value through profit or loss (Notes 2, 3 and 5)
Available-for-sale financial assets (Notes 2, 3 and 6)
Held-to-maturity financial assets (Notes 2, 3 and 7)
Notes and accounts receivable
Receivables from related parties (Note 25)
Allowance for doubtful receivables (Note 2)
Allowance for sales returns and others (Note 2)
Other receivables from related parties (Note 25)
Other financial assets (Note 3)
Inventories, net (Notes 2 and 8)
Deferred income tax assets, net (Notes 2 and 18)
Prepaid expenses and other current assets (Note 3)
Total current assets
LONG-TERM INVESTMENTS (Notes 2, 3, 6, 7, 9 and 10)
Investments accounted for using equity method
Available-for-sale financial assets
Held-to-maturity financial assets
Financial assets carried at cost
Total long-term investments
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 11 and 25)
Cost
Land and land improvements
Buildings
Machinery and equipment
Office equipment
Leased assets
Accumulated depreciation
Advance payments and construction in progress
Net property, plant and equipment
GOODWILL (Note 2)
OTHER ASSETS
Deferred charges, net (Notes 2, and 12)
Deferred income tax assets, net (Notes 2 and 18)
Refundable deposits
Others
Total other assets
2006
Amount
$ 117,837,192
1,206,854
67,523,858
8,510,823
34,957,650
252,339
(749,888)
(2,870,802)
256,863
2,356,542
21,430,728
8,013,992
1,591,017
260,317,168
15,000,891
6,648,485
28,973,495
3,272,280
53,895,151
844,644
112,595,124
579,825,289
10,646,725
612,941
704,524,723
(463,038,084)
12,607,551
254,094,190
5,984,993
5,936,915
5,802,142
1,331,245
123,355
13,193,657
2005
Amount
$ 96,483,707
1,770,445
46,452,838
602,509
43,082,275
693,266
(980,594)
(4,317,413)
597,910
1,617,797
17,728,303
7,149,306
1,420,441
212,300,790
10,287,424
117,247
28,775,308
3,202,515
42,382,494
851,225
105,832,028
510,922,064
9,670,611
597,669
627,873,597
(398,124,607)
15,074,302
244,823,292
6,010,601
7,006,250
6,788,418
106,802
90,942
13,992,412
%
20
-
12
2
6
-
-
(1)
-
1
4
1
-
45
2
1
5
1
9
-
19
99
2
-
120
(79)
2
43
1
1
1
-
-
2
%
19
-
9
-
8
-
-
(1)
-
1
3
2
-
41
2
-
5
1
8
-
21
98
2
-
121
(77)
3
47
1
2
1
-
-
3
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Short-term bank loans (Note 13)
Financial liabilities at fair value through profit or loss (Notes 2, 3 and 5)
Accounts payable
Payables to related parties (Note 25)
Income tax payable (Notes 2 and 18)
Accrued expenses and other current liabilities (Notes 2, 3 and 16)
Payables to contractors and equipment suppliers
Current portion of bonds payable and long-term liabilities (Notes 14 and 15)
$
Total current liabilities
LONG-TERM LIABILITIES
Bonds payable (Note 14)
Long-term bank loans (Note 15)
Other long-term payables (Notes 16 and 27)
Other payables to related parties (Notes 25 and 27)
Obligations under capital leases (Note 2)
Total long-term liabilities
OTHER LIABILITIES
Accrued pension cost (Notes 2 and 17)
Guarantee deposits (Note 27)
Deferred credits (Notes 2 and 25)
Others
Total other liabilities
2006
2005
Amount
%
Amount
%
-
10,864
7,934,388
1,867,728
7,946,473
11,328,350
10,768,591
7,004,137
46,860,531
12,500,000
653,959
8,703,267
403,375
612,941
22,873,542
3,540,060
3,817,132
1,177,138
78,640
8,612,970
-
-
1
-
2
2
2
1
8
2
-
2
-
-
4
1
1
-
-
2
$ 328,500
234,279
9,421,452
1,743,069
4,015,451
10,307,951
9,066,036
5,489
35,122,227
19,500,000
663,140
8,548,887
1,100,475
597,669
30,410,171
3,474,384
2,896,430
1,343,959
23,710
7,738,483
-
-
2
-
1
2
2
-
7
4
-
2
-
-
6
1
-
-
-
1
Total liabilities
78,347,043
14
73,270,881
14
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT
Capital stock - $10 par value
Authorized: 27,050,000 thousand shares
Issued: 25,829,688 thousand shares in 2006 and
24,730,025 thousand shares in 2005
Capital surplus (Notes 2 and 20)
Retained earnings (Note 20)
Appropriated as legal capital reserve
Appropriated as special capital reserve
Unappropriated earnings
Others (Notes 2 and 3)
Cumulative translation adjustments
Unrealized gain on financial instruments
Treasury stock (at cost) -33,926 thousand shares in 2006 and 32,938
thousand shares in 2005 (Notes 2 and 22)
Equity attributable to shareholders of the parent
MINORITY INTERESTS (Note 2)
Total shareholders’ equity
258,296,879
54,107,498
43,705,711
640,742
152,778,079
197,124,532
(1,191,165)
561,615
(629,550)
(918,075)
507,981,284
1,156,832
509,138,116
44
9
7
-
26
33
-
-
-
-
86
-
86
247,300,246
57,117,886
34,348,208
2,226,427
106,196,399
142,771,034
(640,742)
-
(640,742)
(918,075)
445,630,349
608,359
446,238,708
48
11
7
-
20
27
-
-
-
-
86
-
86
TOTAL
$ 587,485,159
100
$ 519,509,589
100
TOTAL
$ 587,485,159
100
$ 519,509,589
100
The accompanying notes are an integral part of the consolidated financial statements.
123
2006
Amount
$ 133,362,208
(7,773,711)
125,588,497
1,606,749
2005
Amount
$ 94,263,247
(630,579)
93,632,668
-
%
42
2
40
-
%
35
-
35
-
$ 127,195,246
40
$ 93,632,668
35
$ 127,009,731
185,515
40
-
$ 93,575,035
57,633
35
-
$ 127,195,246
40
$ 93,632,668
35
2006
2005
Income Attributable
to Shareholders of the Parent
Income Attributable
to Shareholders of the Parent
Before
Income Tax
After
Income Tax
Before
Income Tax
After
Income Tax
$ 5.22
$ 5.22
$ 4.93
$ 4.92
$ 3.66
$ 3.66
$ 3.63
$ 3.63
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES, NET OF TAX
BENEFITOF NT$82,062 THOUSAND (Note 3)
NET INCOME
ATTRIBUTABLE TO:
Shareholders of the parent
Minority interests
CONSOLIDATED EARNINGS PER SHARE (Note 23)
Basic earnings per share
Diluted earnings per share
The accompanying notes are an integral part of the consolidated financial statements.
(Concluded)
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
(In Thousands of New Taiwan Dollars, Except Consolidated Earnings Per Share)
GROSS SALES (Notes 2 and 25)
$ 322,883,499
$ 271,801,696
INCOME BEFORE INCOME TAX
SALES RETURNS AND ALLOWANCES (Note 2)
5,476,328
5,236,626
INCOME TAX EXPENSE (Notes 2 and 18)
2006
2005
Amount
%
Amount
%
317,407,171
100
266,565,070
100
NET INCOME BEFORE CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES
NET SALES
COST OF SALES (Notes 19 and 25)
GROSS PROFIT
OPERATING EXPENSES (Note 19)
Research and development
General and administrative
Marketing
Total operating expenses
161,597,081
155,810,090
16,076,432
8,716,653
3,752,311
28,545,396
51
49
5
3
1
9
148,362,196
118,202,874
14,016,506
9,085,536
4,132,273
27,234,315
INCOME FROM OPERATIONS
127,264,694
40
90,968,559
NON-OPERATING INCOME AND GAINS
Interest income (Notes 2 and 3)
Equity in earnings of equity method investees, net (Notes 2 and 9)
Settlement income (Note 27)
Technical service income (Notes 25 and 27)
Gain on disposal of property, plant and equipment and other assets
(Notes 2 and 25)
Subsidy income (Note 2)
Foreign exchange gain, net (Notes 2 and 3)
Others (Note 25)
Total non-operating income and gains
NON-OPERATING EXPENSES AND LOSSES
Interest expense (Note 3)
Valuation loss on financial instruments, net (Notes 2, 3, 5 and 24)
Loss on settlement and disposal of financial instruments, net
(Notes 2, 3 and 5)
Foreign exchange loss, net (Notes 2 and 3)
Loss on impairment of financial assets (Note 2)
Loss on disposal of property, plant and equipment (Note 2)
Others
Total non-operating expenses and losses
4,542,149
2,347,153
979,214
571,500
421,051
334,478
-
510,047
9,705,592
890,602
812,937
798,610
400,863
279,690
241,397
183,979
3,608,078
2
1
-
-
-
-
-
-
3
1
-
-
-
-
-
-
1
2,806,226
1,433,226
964,710
462,624
342,756
321,850
2,609,979
457,989
9,399,360
1,413,374
337,160
3,602,799
-
128,900
60,109
562,330
6,104,672
124
56
44
5
3
2
10
34
1
1
-
-
-
-
1
-
3
-
-
2
-
-
-
-
2
(Continued)
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
Equity Attributable to Shareholders of the Parent (Notes 2, 16, 17 and 18)
Capital Stock
Retained Earnings
Others
Shares
(Thousands)
Amount
Capital
Surplus
Legal Capital
Reserve
Special
Capital
Reserve
Unappropriated
Earnings
Total
Cumulative
Translation
Adjustments
Unrealized
Gain on
Financial
Instruments
BALANCE, JANUARY 1, 2005
23,251,964
$ 232,519,637
$ 56,537,259
$ 25,528,007
$
-
$ 88,202,009
$ 113,730,016
$ (2,226,427)
$
Appropriations of prior year’s earnings
Legal capital reserve
Special capital reserve
Employees’ profit sharing - in cash
Employees’ profit sharing - in stock
Cash dividends to shareholders - NT$2.00 per share
Stock dividends to shareholders - NT$0.50 per share
Bonus to directors and supervisors
Net income in 2005
Adjustment arising from changes in percentage of
ownership in investees
Translation adjustments
Issuance of stock from exercising stock options
Cash dividends received by subsidiaries from parent
company
Treasury stock transactions - sales of parent
company’s stock held by subsidiaries
Increase in minority interests
-
-
-
308,622
-
1,162,602
-
-
-
-
6,837
-
-
-
-
-
-
3,086,215
-
11,626,024
-
-
-
-
68,370
-
-
-
-
-
-
-
-
-
-
-
71,405
-
202,559
84,285
222,378
-
8,820,201
-
-
-
-
-
-
-
-
2,226,427
-
-
-
-
-
-
(8,820,201)
(2,226,427)
(3,086,215)
(3,086,215)
(46,504,097)
(11,626,024)
(231,466)
93,575,035
-
-
(3,086,215)
(3,086,215)
(46,504,097)
(11,626,024)
(231,466)
93,575,035
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,585,685
-
-
-
-
BALANCE, DECEMBER 31, 2005
24,730,025
247,300,246
57,117,886
34,348,208
2,226,427
106,196,399
142,771,034
(640,742)
Appropriations of prior year’s earnings
Legal capital reserve
Reversal of special capital reserve
Employees’ profit sharing - in cash
Employees’ profit sharing - in stock
Cash dividends to shareholders - NT$2.50 per share
Stock dividends to shareholders - NT$0.15 per share
Bonus to directors and supervisors
Capital surplus transferred to capital stock
Net income in 2006
Adjustment arising from changes in percentage of
ownership in investees
Translation adjustments
Issuance of stock from exercising stock options
Cash dividends received by subsidiaries from parent
company
Valuation gain on available-for-sale financial assets
Equity in the valuation gain on available-for-sale
financial assets of equity method investees
Increase in minority interests
-
-
-
343,213
-
370,950
-
370,950
-
-
-
14,550
-
-
-
-
-
-
-
3,432,129
-
3,709,504
-
3,709,504
-
-
-
145,496
-
-
-
-
-
-
-
-
-
-
-
(3,709,504)
-
187,095
-
429,701
82,320
-
-
-
9,357,503
-
-
-
-
-
-
-
-
-
(1,585,685)
-
-
-
-
-
-
-
(9,357,503)
1,585,685
(3,432,129)
(3,432,129)
(61,825,061)
(3,709,504)
(257,410)
-
127,009,731
-
-
(3,432,129)
(3,432,129)
(61,825,061)
(3,709,504)
(257,410)
-
127,009,731
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(550,423)
-
-
-
-
-
-
386,017
175,598
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Treasury
Stock
Total
Minority
Interests
Total
Shareholders’
Equity
$ (1,595,186)
$ 398,965,299
$ 75,737
$ 399,041,036
-
-
-
-
-
-
-
-
-
-
-
-
677,111
-
-
-
(3,086,215)
-
(46,504,097)
-
(231,466)
93,575,035
71,405
1,585,685
270,929
84,285
899,489
-
-
-
-
-
-
-
-
57,633
-
(51,795)
-
-
-
(3,086,215)
-
(46,504,097)
-
(231,466)
93,632,668
71,405
1,533,890
270,929
-
84,285
-
526,784
899,489
526,784
(918,075)
445,630,349
608,359
446,238,708
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,432,129)
-
(61,825,061)
-
(257,410)
-
127,009,731
187,095
(550,423)
575,197
82,320
386,017
175,598
-
-
-
-
-
-
-
-
-
185,515
-
(126,206)
-
-
2,147
-
487,017
-
-
(3,432,129)
-
(61,825,061)
-
(257,410)
-
127,195,246
187,095
(676,629)
575,197
82,320
388,164
175,598
487,017
BALANCE, DECEMBER 31, 2006
25,829,688
$ 258,296,879
$ 54,107,498
$ 43,705,711
$ 640,742
$ 152,778,079
$ 197,124,532
$ (1,191,165)
$ 561,615
$ (918,075)
$ 507,981,284
$ 1,156,832
$ 509,138,116
The accompanying notes are an integral part of the consolidated financial statements.
125
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
(In Thousands of New Taiwan Dollars)
2006
2005
2006
2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net income attributable to shareholders of the parent
Net income attributable to minority interests
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Amortization of premium/discount of financial assets
Loss (gain) on disposal of available-for-sale financial assets, net
Equity in earnings of equity method investees, net
Dividends received from equity method investees
Gain on disposal of investments accounted for using equity method
Gain on disposal of financial assets carried at cost, net
Loss on impairment of financial assets
Gain on disposal of property, plant and equipment and other assets, net
Deferred income taxes
Loss on idle assets
Donation of idle assets
Net changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets and liabilities at fair value through profit or loss
Notes and accounts receivable
Receivables from related parties
Allowance for doubtful receivables
Allowance for sales returns and others
Other receivables from related parties
Other financial assets
Inventories, net
Prepaid expenses and other current assets
Increase (decrease) in:
Accounts payable
Payables to related parties
Income tax payable
Accrued expenses and other current liabilities
Accrued pension cost
Deferred credits
$ 127,009,731
185,515
$ 93,575,035
57,633
73,715,242
2,399
(90,826)
(2,347,153)
614,567
-
(16,210)
279,690
(179,654)
121,590
44,072
-
340,176
8,124,625
440,927
(230,706)
(1,446,611)
341,047
(738,745)
(3,702,425)
(170,576)
(1,487,064)
(572,441)
3,931,022
862,428
65,676
(99,310)
75,649,429
120,872
150,081
(1,433,226)
668,464
(583)
(14,721)
128,900
(282,647)
(3,353,013)
131,849
7,207
72,842
(11,572,809)
(101,915)
(3,145)
974,963
(87,979)
(305,881)
(2,006,165)
119,985
2,088,582
(1,629,217)
3,611,486
181,748
360,128
117,335
Net cash provided by operating activities
204,996,986
157,225,238
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Available-for-sale financial assets
Held-to-maturity financial assets
Financial assets carried at cost
Investments accounted for using equity method
Property, plant and equipment
Proceeds from disposal of:
Available-for-sale financial assets
Financial assets carried at cost
Investments accounted for using equity method
Property, plant and equipment and other assets
Redemption of held-to-maturity financial assets upon maturity
Increase in deferred charges
Decrease (increase) in refundable deposits
Decrease (increase) in other assets
Net cash used in investing activities
126
(119,291,685)
(18,554,027)
(511,632)
(2,613,009)
(78,737,265)
(99,436,242)
(14,199,142)
(456,897)
(621,883)
(79,878,724)
91,620,367
126,465
-
518,705
10,410,000
(1,414,742)
(1,224,443)
(52,086)
(119,723,352)
102,577,763
76,186
65,076
480,707
14,595,394
(855,967)
771
741
(77,652,217)
(Continued)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments on:
Short-term bank loans
Bonds payable
Long-term bank loans
Increase in guarantee deposits
Cash bonus paid to employees
Cash dividends
Bonus to directors and supervisors
Proceeds from:
Exercise of employee stock options
Disposal of treasury stock
Increase in minority interests
Net cash used in financing activities
NET INCREASE IN CASH AND CASH EQUIVALENTS
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS
EFFECT OF FIRST INCLUSION FOR CONSOLIDATION OF CERTAIN
SUBSIDIARIES
$ (328,500)
-
(5,489)
920,702
(3,432,129)
(61,742,741)
(257,410)
575,197
-
487,017
(63,783,353)
21,490,281
$ (54,504)
(10,500,000)
(1,337,489)
2,483,549
(3,086,215)
(46,419,812)
(231,466)
270,929
899,489
6,832
(57,968,687)
21,604,334
(136,796)
348,921
-
228,101
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
96,483,707
74,302,351
CASH AND CASH EQUIVALENTS, END OF YEAR
$ 117,837,192
$ 96,483,707
SUPPLEMENTAL INFORMATION
Interest paid
Income tax paid
INVESTING ACTIVITIES AFFECTING BOTH CASH AND NON-CASH ITEMS
Acquisition of property, plant and equipment
Decrease (increase) in payables to contractors and equipment suppliers
Increase in other long-term payables
Cash paid
NONCASH FINANCING ACTIVITIES
Current portion of long-term liabilities
Current portion of other long-term payables (under accrued expenses and
other current liabilities)
Current portion of other payables to related parties (under payables to
$ 951,450
$ 3,630,029
$ 1,378,610
$ 341,671
$ 80,675,310
(1,702,555)
(235,490)
$ 78,737,265
$ 56,166,205
24,361,666
(649,147)
$ 79,878,724
$ 7,004,137
$ 5,489
$ 617,892
$ 869,072
related parties)
$ 688,591
$ 693,956
The accompanying notes are an integral part of the consolidated financial statements.
(Concluded)
Taiwan Semiconductor Manufacturing Company Limited and
Subsidiaries
The consolidated entities were as follows:
Name of Investor
Name of Investee
Percentage of
Ownership at
December 31, 2006
Remark
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
TSMC
1. GENERAL
Taiwan Semiconductor Manufacturing Company Limited (TSMC), a Republic of China (R.O.C.)
corporation, was incorporated as a venture among the Government of the R.O.C., acting through the
Development Fund of the Executive Yuan; Philips Electronics N.V. and certain of its affiliates (Philips);
and certain other private investors. On September 5, 1994, its shares were listed on the Taiwan Stock
Exchange (TSE). On October 8, 1997, TSMC listed some of its shares of stock on the New York Stock
Exchange (NYSE) in the form of American Depositary Shares (ADSs).
TSMC Global, Ltd. (TSMC Global)
TSMC North America (TSMC-NA)
TSMC Japan K.K. (TSMC-Japan)
Taiwan Semiconductor
Manufacturing Company
Korea (TSMC-Korea)
TSMC International Investment
Ltd. (TSMC International)
Taiwan Semiconductor
Manufacturing Company
Europe B.V. (TSMC-Europe)
TSMC Partners, Ltd. (TSMC
Partners)
TSMC (Shanghai) Company
Limited (TSMC-Shanghai)
Chi Cherng Investment Co., Ltd.
(Chi Cherng)
100%
100%
100%
100%
100%
100%
100%
100%
36%
TSMC is engaged mainly in the manufacturing, selling, packaging, testing and computer-aided
designing of integrated circuits and other semiconductor devices and the manufacturing of masks.
Hsin Ruey Investment Co., Ltd.
36%
(Hsin Ruey)
TSMC Global was acquired in August 2006.
-
-
TSMC-Korea was established in May 2006.
-
-
-
-
TSMC and Hsin Ruey held in aggregate a 100%
ownership of Chi Cherng. As of December
31, 2006, Chi Cherng held 16,947
thousand common shares in TSMC
(approximately 0.07% of outstanding
common shares).
TSMC and Chi Cherng held in aggregate
a 100% ownership of Hsin Ruey. As of
December 31, 2006, Hsin Ruey held
16,979 thousand common shares in TSMC
(approximately 0.07% of outstanding
common shares).
As of December 31, 2006 and 2005, TSMC and its subsidiaries had 22,969 and 21,950 employees,
respectively.
2. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements are presented in conformity with the Guidelines Governing the
Preparation of Financial Reports by Securities Issuers, Business Accounting Law, Guideline Governing
Business Accounting, and accounting principles generally accepted in the R.O.C.
For the convenience of readers, the accompanying consolidated financial statements have been
translated into English from the original Chinese version prepared and used in the R.O.C. If there is
any conflict between the English version and the original Chinese version or any difference in the
interpretation of the two versions, the Chinese-language consolidated financial statements shall
prevail.
Emerging Alliance Fund, L.P.
(Emerging Alliance)
VentureTech Alliance Fund II, L.P.
(VTAF II)
99.5%
98%
-
-
VentureTech Alliance Fund III, L.P.
98%
VTAF III was established in April 2006.
(VTAF III)
Global Unichip Corporation (GUC)
38%
VisEra Technology Company, Ltd.
-
(VisEra)
GUC became a consolidated entity of TSMC as
GUC’s president was assigned by TSMC
and TSMC has control over the financial,
operating and personnel hiring decisions of
GUC.
Due to the changes in investment structure,
TSMC no longer had a controlling interest
in VisEra beginning in November 2005
resulting in VisEra being deconsolidated.
TSMC Partners
VisEra Holding Company (VisEra
49%
Due to the changes in investment structure,
Holding)
TSMC no longer had a controlling
interest in VisEra beginning in November
2005 resulting in VisEra Holding being
deconsolidated.
Significant accounting policies are summarized as follows:
TSMC International
TSMC Technology, Inc. (TSMC
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of all directly and indirectly
majority owned subsidiaries of TSMC, and the accounts of investees in which TSMC’s ownership
percentage is less than 50% but over which TSMC has a controlling interest. All significant
intercompany balances and transactions are eliminated upon consolidation.
Technology)
TSMC Development, Inc. (TSMC
Development)
InveStar Semiconductor
Development Fund, Inc. (ISDF)
InveStar Semiconductor
Development Fund, Inc. (II)
LDC (ISDF II)
100%
100%
97%
97%
-
-
-
-
(Continued)
127
Name of Investor
Name of Investee
Percentage of
Ownership at
December 31, 2006
Remark
TSMC Development
WaferTech, LLC (WaferTech)
99.996%
-
GUC
Global Unichip Corp.-North
America (GUC-NA)
Global Unichip Japan Co., Ltd.
100%
(GUC-Japan)
100%
GUC-NA, a subsidiary of GUC, became a
consolidated entity of TSMC since TSMC
has control over GUC.
GUC-Japan, a subsidiary of GUC, became a
consolidated entity of TSMC since TSMC
has control over GUC.
(Concluded)
The following diagram presents information regarding the relationship and ownership percentages
between TSMC and its consolidated subsidiaries as of December 31, 2006:
TSMC
100%
100%
100%
100%
100%
100%
100%
100%
36%
36%
99.5%
38%
98%
98%
TSMC
Global
TSMC-NA
TSMC-Japan
TSMC-Korea
TSMC
International
TSMC-
Europe
TSMC
Partners
TSMC-
Shanghai
Chi Cherng
64%
64%
Hsin Ruey
Emerging
Alliance
GUC
VTAF II
VTAF III
100%
100%
97%
97%
TSMC
Technology
TSMC
Development
ISDF
ISDF II
99.996%
WaferTech
100%
100%
GUC-NA
GUC-Japan
128
TSMC-NA is engaged in selling and marketing of integrated circuits and semiconductor devices.
Fair value is determined as follows: Publicly-traded stocks - closing price at the end of the year; and
TSMC-Japan, TSMC-Korea and TSMC-Europe are engaged mainly in marketing activities. TSMC
derivatives - using valuation techniques incorporating estimates and assumptions that are consistent
International is engaged in investment in companies involved in the design, manufacture, and other
with prevailing market conditions. When the fair value is positive, the derivative is recognized as a
related business in the semiconductor industry. TSMC Global, TSMC Partners, TSMC Development,
financial asset; when the fair value is negative, the derivative is recognized as a financial liability.
Chi Cherng and Hsin Ruey are engaged in investing activities. TSMC-Shanghai is engaged in the
manufacturing and selling of integrated circuits pursuant to the orders from and product design
specifications provided by customers. Emerging Alliance, VTAF II, VTAF III, ISDF and ISDF II are
engaged in investing in new start-up technology companies. TSMC Technology is engaged mainly
in engineering support activities. WaferTech is engaged in the manufacturing, selling, testing and
computer-aided designing of integrated circuits and other semiconductor devices. GUC is engaged in
researching, developing, manufacturing, testing and marketing of integrated circuits. GUC-NA and
GUC-Japan are engaged in providing products consulting in North America and Japan, respectively.
TSMC together with its consolidated subsidiaries are hereinafter referred to collectively as the
“Company”.
Available-for-sale Financial Assets
Investments designated as available-for-sale financial assets include debt securities and equity
securities. Available-for-sale financial assets are initially recognized at fair value plus transaction costs
that are directly attributable to the acquisition. Changes in fair value from subsequent remeasurement
are reported as a separate component of shareholders’ equity. The corresponding accumulated gains
or losses are recognized in earnings when the financial asset is derecognized from the balance sheet.
A regular way purchase or sale of financial assets is accounted for using settlement date accounting.
Fair value is determined as follows: Structured time deposits - using valuation techniques; open-end
mutual funds and money market funds - net asset value at the end of the year; publicly-traded stocks
- closing prices at the end of the year; and other debt securities - average of bid and asked prices at
Minority interests in the aforementioned subsidiaries are presented as a separate component of
the end of the year.
shareholders’ equity.
Use of Estimates
The preparation of consolidated financial statements in conformity with the aforementioned
Cash dividends are recognized as investment income upon resolution of shareholders of an investee
but are accounted for as reductions to the original cost of investments if such dividends are declared
on the earnings of the investees attributable to periods prior to the purchase of the investments. Stock
guidelines, law and principles requires management to make reasonable assumptions and estimates
dividends are recorded as an increase in the number of shares held and do not affect investment
of matters that are inherently uncertain. The actual results may differ from management’s estimates.
income. The cost per share is recalculated based on the new total number of shares. Any difference
Classification of Current and Noncurrent Assets and Liabilities
Current assets are assets held for trading purposes and assets expected to be converted to cash, sold
between the initial carrying amount of a debt security and the amount due at maturity is amortized
using the effective interest method, with the amortization recognized in earnings.
or consumed within one year from the balance sheet date. Current liabilities are obligations incurred
If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized.
for trading purposes and obligations expected to be settled within one year from the balance sheet
If, in a subsequent period, the amount of the impairment loss decreases, for equity securities, the
date. Assets and liabilities that are not classified as current are noncurrent assets and liabilities,
previously recognized impairment loss is reversed to the extent of the decrease and recorded as an
respectively.
Cash Equivalents
Repurchase agreements collateralized by government bonds, corporate notes and treasury bills
acquired with maturities of less than three months from the date of purchase are classified as cash
equivalents. The carrying amount approximates fair value.
Financial Assets/Liabilities at Fair Value Through Profit or Loss
Derivatives that do not meet the criteria for hedge accounting and financial assets acquired principally
for the purpose of selling them in the near term are initially recognized at fair value, with transaction
costs expensed as incurred. The derivatives and financial assets are remeasured at fair value
subsequently with changes in fair value recognized in earnings. A regular way purchase or sale of
financial assets is accounted for using settlement date accounting.
adjustment to shareholders’ equity; for debt securities, the amount of the decrease is recognized
in earnings, provided that the decrease is clearly attributable to an event which occurred after the
impairment loss was recognized.
Held-to-maturity Financial Assets
Debt securities for which the Company has a positive intention and ability to hold to maturity are
categorized as held-to-maturity financial assets and are carried at amortized cost under the effective
interest method. Those financial assets are initially recognized at fair value plus transaction costs that
are directly attributable to the acquisition. Gains or losses are recognized at the time of derecognition,
impairment or amortization. A regular way purchase or sale of financial assets is accounted for using
settlement date accounting.
129
If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized.
method investees, net” account. Prior to January 1, 2006, the difference, if any, between the cost
If, in a subsequent period, the amount of the impairment loss decreases and the decrease is clearly
of investment and the Company’s proportionate share of the investee’s equity was amortized by
attributable to an event which occurred after the impairment loss was recognized, the previously
the straight-line method over five years, with the amortization recorded in the “equity in earnings/
recognized impairment loss is reversed to the extent of the decrease. The reversal may not result
losses of equity method investees, net” account. Effective January 1, 2006, pursuant to the revised
in a carrying amount that exceeds the amortized cost that would have been determined as if no
Statement of Financial Accounting Standards No. 5, “Long-term Investments in Equity Securities”
impairment loss had been recognized.
Allowance for Doubtful Receivables
An allowance for doubtful receivables is provided based on a review of the collectibility of accounts
receivable. The Company determines the amount of allowance for doubtful receivables by examining
the aging analysis of outstanding accounts receivable and current trends in the credit quality of its
customers as well as its internal credit policies.
(SFAS No. 5), the cost of an investment shall be analyzed and the difference between the cost of
investment and the fair value of identifiable net assets acquired, representing goodwill, shall not be
amortized and instead shall be tested for impairment annually. The accounting treatment for the
investment premiums acquired before January 1, 2006 is the same as that for goodwill which is no
longer being amortized; while investment discounts continue to be amortized over the remaining
periods. When an indication of impairment is identified, the carrying amount of the investment is
reduced, with the related impairment loss recognized in earnings.
Revenue Recognition and Allowance for Sales Returns and Others
The Company recognizes revenue when evidence of an arrangement exists, shipment is made, price
is fixed or determinable, and collectibility is reasonably assured. Revenues from the design and
manufacture of photo masks, which are used as manufacturing tools in the fabrication process, are
When the Company subscribes for additional investee’s shares at a percentage different from its
existing ownership percentage, the resulting carrying amount of the investment in the investee
differs from the amount of the Company’s share of the investee’s equity. The Company records such
a difference as an adjustment to long-term investments with the corresponding amount charged or
recognized when the photo masks are qualified by customers. Provisions for estimated sales returns
credited to capital surplus.
and others are generally recorded in the period the related revenue is recognized based on historical
experience, management’s judgment, and any known factors that would significantly affect the
Gains or losses on sales from the Company to equity method investees are deferred in proportion to
allowance.
Sales prices are determined using fair value taking into account related sales discounts agreed to by
the Company’s ownership percentage in the investees until such gains or losses are realized through
transactions with third parties. Gains or losses on sales from equity method investees to the Company
are deferred in proportion to the Company’s ownership percentages in the investees until they are
the Company and its customers. Sales agreements typically provide that payment is due 30 days from
realized through transactions with third parties.
invoice date for a majority of the customers and 30 to 45 days after the end of the month in which
sales occur for some customers. Since the receivables from sales are collectible within one year and
If an investee’s functional currency is a foreign currency, translation adjustments will result from the
such transactions are frequent, fair value of the receivables is equivalent to the nominal amount of
translation of the investee’s financial statements into the reporting currency of the Company. Such
the cash to be received.
adjustments are accumulated and reported as a separate component of shareholders’ equity.
Inventories
Inventories are stated at the lower of cost or market value. Inventories are recorded at standard cost
Financial Assets Carried at Cost
Investments in which the Company does not exercise significant influence and that do not have
and adjusted to the approximate weighted-average cost at the balance sheet date. Market value
a quoted market price in an active market and whose fair value cannot be reliably measured are
represents replacement cost for raw materials, supplies and spare parts and net realizable value for
carried at their original cost, such as non-publicly traded stocks and mutual funds. The costs of non-
work in process and finished goods. The Company assesses the impact of changing technology on
publicly traded stocks and mutual funds are determined using the weighted-average method. If
its inventories on hand and writes off inventories that are considered obsolete. Year-end inventories
are evaluated for estimated excess quantities and obsolescence based on a demand forecast within a
specific time horizon, which is generally 180 days or less. Estimated losses on scrap and slow-moving
items are recognized and included in the allowance for losses.
there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. A
subsequent reversal of such impairment loss is not allowed.
The accounting treatment for cash dividends and stock dividends arising from financial assets carried
at cost is the same as that for cash and stock dividends arising from available-for-sale financial assets.
Investments Accounted for Using Equity Method
Investments in companies wherein the Company exercises significant influence over the operating
and financial policy decisions are accounted for using the equity method. The Company’s share of
the net income or net loss of an investee is recognized in the “equity in earnings/losses of equity
130
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation. Properties covered
Pension Costs
For employees under defined contribution pension plans, pension costs are recorded based on the
by agreements qualifying as capital leases are carried at the lower of the leased equipment’s market
actual contributions made to employees’ individual pension accounts during their service periods.
value or the present value of the minimum lease payments at the inception date of the lease, with
For employees under defined benefit pension plans, pension costs are recorded based on actuarial
the corresponding amount recorded as obligations under capital leases. When an indication of
calculations.
impairment is identified, any excess of the carrying amount of an asset over its recoverable amount
is recognized as a loss. If the recoverable amount increases in a subsequent period, the amount
previously recognized as impairment would be reversed and recognized as a gain. However, the
Government Subsidies
Income-related subsidies from foreign governments are recognized in earnings when the requirements
adjusted amount may not exceed the carrying amount that would have been determined, net of
for subsidies are met.
depreciation, as if no impairment loss had been recognized. Significant additions, renewals and
betterments incurred during the construction period are capitalized. Maintenance and repairs are
expensed as incurred.
Depreciation is computed using the straight-line method over the following estimated service lives:
Land improvements - 20 years; buildings - 10 to 20 years; machinery and equipment - 3 to 10 years;
office equipment - 3 to 15 years; and leased assets - 20 years.
Income Tax
The Company applies intra-period and inter-period allocations for its income tax, whereby (1) a
portion of current income tax expense is allocated to the cumulative effect of changes in accounting
principles; and (2) deferred income tax assets and liabilities are recognized for the tax effects of
temporary differences and unused tax credits. Valuation allowances are provided to the extent, if any,
that it is more likely than not that deferred income tax assets will not be realized. A deferred tax asset
or liability is classified as current or noncurrent in accordance with the classification of its related asset
Upon sale or disposal of property, plant and equipment, the related cost and accumulated
or liability. However, if a deferred tax asset or liability does not relate to an asset or liability in the
depreciation are deducted from the corresponding accounts, with any gain or loss recorded as non-
financial statements, then it is classified as either current or noncurrent based on the expected length
operating gains or losses in the year of sale or disposal.
of time before it is realized or settled.
Goodwill
Goodwill represents the excess of the consideration paid for an acquisition over the fair value of
Any tax credits arising from purchases of machinery, equipment and technology, research and
development expenditures, personnel training, and investments in important technology-based
identifiable net assets acquired. Prior to January 1, 2006, goodwill was amortized using the straight-
enterprises are recognized using the flow-through method.
line method over the estimated life of 10 years. Effective January 1, 2006, pursuant to the newly
revised SFAS No. 25, “Business Combinations - Accounting Treatment under Purchase Method” (SFAS
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax
No. 25), goodwill is no longer amortized and instead is tested for impairment annually. If an event
provision.
occurs or circumstances change which indicated that the fair value of goodwill is more likely than not
below its carrying amount, an impairment loss is recognized. A subsequent recovery in fair value of
goodwill is not allowed.
Deferred Charges
Deferred charges consist of technology license fees, software and system design costs and other
charges. The amounts are amortized over the following periods: Technology license fees - the shorter
of the estimated life of the technology or the term of the technology transfer contract; software and
system design costs and other charges - 2 to 5 years. When an indication of impairment is identified,
any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If
the recoverable amount increases in a subsequent period, the previously recognized impairment loss
would be reversed and recognized as a gain. However, the adjusted amount may not exceed the
carrying amount that would have been determined, net of amortization, as if no impairment loss had
been recognized.
Income tax on unappropriated earnings (excluding earnings from foreign consolidated subsidiaries)
at a rate of 10% is expensed in the year of shareholder approval which is the year subsequent to the
year the earnings are generated.
The R.O.C. government enacted the Alternative Minimum Tax Act (the AMT Act), which became
effective on January 1, 2006. The alternative minimum tax (AMT) imposed under the AMT Act is
a supplemental tax levied at a rate of 10% which is payable if the income tax payable determined
pursuant to the Income Tax Law is below the minimum amount prescribed under the AMT Act. The
taxable income for calculating the AMT includes most of the income that is exempted from income
tax under various laws and statutes. The Company has considered the impact of the AMT Act in the
determination of its tax liabilities.
131
Stock-based Compensation
Employee stock option plans that are amended or have options granted on or after January 1,
2004 are accounted for by the interpretations issued by the Accounting Research and Development
Foundation. The Company adopted the intrinsic value method and any compensation cost determined
using this method is recognized in earnings over the employee vesting period.
Treasury Stock
TSMC’s stock held by subsidiaries is treated as treasury stock and reclassified from investments
accounted for using equity method to treasury stock. The gains resulted from disposal of the treasury
The effect of adopting the newly released SFASs is summarized as follows:
Financial assets/liabilities at fair value through profit or loss
Available-for-sale financial assets
Recognized as Cumulative
Effect of Changes in
Accounting Principles
(Net of Tax)
Recognized as a
Separate Component of
Shareholders’ Equity
$ 1,606,749
-
$ -
306,531
$ 1,606,749
$ 306,531
stock held by subsidiaries and cash dividends received by subsidiaries from TSMC are recorded under
The adoption of the newly released SFASs resulted in a decrease in net income before cumulative
capital surplus - treasury stock transactions.
Foreign-currency Transactions
Foreign-currency transactions are recorded in New Taiwan dollars at the rates of exchange in effect
effect of changes in accounting principles of NT$1,083,574 thousand, an increase in net income of
NT$ 523,175 thousand, and an increase in basic earnings per share (after income tax) of NT$0.02
for the year ended December 31, 2006.
when the transactions occur. Exchange gains or losses derived from foreign-currency transactions or
Effective January 1, 2006, the Company adopted the newly revised SFAS No. 5 and SFAS No. 25,
monetary assets and liabilities denominated in foreign currencies are recognized in earnings. At the
which prescribe that investment premiums, representing goodwill, be assessed for impairment at
balance sheet date, monetary assets and liabilities denominated in foreign currencies are revalued at
least on an annual basis instead of being amortized. Such a change in accounting principle did not
prevailing exchange rates with the resulting gains or losses recognized in earnings.
have a material effect on the Company’s consolidated financial statements as of and for the year
Translation of Foreign-currency Financial Statements
Statements of Financial Accounting Standards No. 14, “Accounting for Foreign-currency Translation”
applies to foreign subsidiaries that use the local currency as their functional currency. The financial
ended December 31, 2006.
b. Reclassifications
statements of foreign subsidiaries are translated into New Taiwan dollars at the following exchange
Upon adoption of SFAS No. 34, certain accounts in the consolidated financial statements as of and
rates: Assets and liabilities - spot rates at year-end; shareholders’ equity - historical rates; income
for the year ended December 31, 2005 were reclassified to conform with the consolidated financial
and expenses - average rates during the year. The resulting translation adjustments are recorded as a
statements as of and for the year ended December 31, 2006. The previously issued consolidated
separate component of shareholders’ equity.
financial statements as of and for the year ended December 31, 2005 were not required to be
3. ACCOUNTING CHANGES
restated.
Certain accounting policies prior to the adoption of the newly released SFASs are summarized as
On January 1, 2006, the Company adopted the newly released Statements of Financial Accounting
follows:
Standards No. 34, “Financial Instruments: Recognition and Measurement” (SFAS No. 34) and No.
36, “Financial Instruments: Disclosure and Presentation” and related revisions of previously released
1) Short-term investments
SFASs.
a. Effect of adopting the newly released SFASs and related revisions of previously released SFASs
The Company had categorized its financial assets and liabilities upon initial adoption of the newly
released SFASs. The adjustments made to the carrying amounts of the financial instruments
categorized as financial assets or financial liabilities at fair value through profit or loss were
included in the cumulative effect of changes in accounting principles; the adjustments made to
the carrying amounts of those categorized as available-for-sale financial assets were recognized as
adjustments to shareholders’ equity.
132
Short-term investments that were publicly-traded, easily converted to cash, and not acquired
for the purpose of controlling the investees or establishing close business relationship with the
investees were carried at the lower of cost or market value at the balance sheet date, with any
temporary decline in value charged to current income. The market value of publicly-traded stocks
was determined using the average-closing prices for the last month of the year.
2) Derivative financial instruments
The Company entered into forward exchange contracts to manage foreign exchange exposures
on foreign-currency-denominated assets and liabilities. The contracts were recorded in New
Taiwan dollars at the current rate of exchange at the contract date. The differences in the New
Taiwan dollar amounts translated using the current rates and the amounts translated using
the contracted forward rates were amortized over the terms of the forward contracts using the
straight-line method. At the end of each year, the receivables or payables arising from forward
contracts were restated using the prevailing exchange rates with the resulting differences
credited or charged to income. In addition, the receivables and payables related to the same
forward contracts were netted with the resulting amount presented as either an asset or a
liability. Any resulting gain or loss upon settlement was credited or charged to income in the
year of settlement.
The Company entered into cross currency swap contracts to manage currency exposures on
foreign-currency-denominated assets and liabilities. The principal amount was recorded using
the current rates of exchange at the contract date. The differences in the New Taiwan dollar
amounts translated using the current rates and the amounts translated using the contracted
rates were amortized over the terms of the contracts using the straight-line method. At the
end of each year, the receivables or payables arising from cross-currency swap contracts were
restated using prevailing exchange rate with the resulting differences credited or charged to
income. In addition, the receivables and payables related to the contracts of the same counter
party were netted with the resulting amount presented as either an asset or a liability. The
difference in interest computed pursuant to the contracts on each settlement date or the
balance sheet date was recorded as an adjustment to the interest income or expense associated
with the hedged items. Any resulting gain or loss upon settlement was credited or charged to
income in the year of settlement.
The Company entered into interest rate swap contracts to manage exposures to changes in
interest rates on existing assets or liabilities. These transactions were accounted for on an
accrual basis, in which the cash settlement receivable or payable was recorded as an adjustment
to interest income or expense associated with the hedged items.
Certain accounts in the consolidated financial statements as of and for the year ended
December 31, 2005 have been reclassified to conform to the classifications prescribed by the
newly released SFASs. The reclassifications of the whole or a part of the account balances of
certain accounts are summarized as follows:
Balance sheet
Short-term investments, net
Other financial assets
Prepaid expenses and other current assets
Long-term investments accounted for using cost method
Long-term bond investments
Other long-term investments
Accrued expenses and other current liabilities
Financial assets at fair value through profit or loss
Financial liabilities at fair value through profit or loss
Available-for-sale financial assets
Held-to-maturity financial assets
Financial assets carried at cost
Statement of income
Interest income
Foreign exchange gain, net
Interest expense
Unrealized valuation loss on short-term investments
Loss on disposal of investment, net
Valuation loss on financial instruments, net
Loss on settlement and disposal of financial instruments, net
4. CASH AND CASH EQUIVALENTS
Cash and deposits in banks
Repurchase agreements collaterized by government bonds
Corporate notes
Treasury bills
Before Reclassification
After Reclassification
$ 47,399,308
2,915,696
1,503,447
3,365,341
18,548,308
10,227,000
(10,542,230)
-
-
-
-
-
$ -
1,617,797
1,420,441
-
-
-
(10,307,951)
1,770,445
(234,279)
46,570,085
29,377,817
3,202,515
$ 73,416,870
$ 73,416,870
$ 3,069,435
3,040
(2,662,458)
(337,160)
(9,985)
-
-
$ 2,806,226
2,609,979
(1,413,374)
-
-
(337,160)
(3,602,799)
$ 62,872
$ 62,872
December 31
2006
$ 85,496,085
31,241,594
1,026,522
72,991
2005
$ 48,107,316
47,963,226
413,165
-
$ 117,837,192
$ 96,483,707
133
5. FINANCIAL ASSETS/LIABILITIES AT FAIR VALUE THROUGH PROFIT OR
The Company did not enter into any interest rate swap contracts during the year ended December 31,
LOSS
Trading financial assets
Publicly-traded stocks
Forward exchange contracts
Cross currency swap contracts
Trading financial liabilities
Forward exchange contracts
Cross currency swap contracts
December 31
2006
2005
$ 1,162,253
-
44,601
$ 389,540
26,720
1,354,185
$ 1,206,854
$ 1,770,445
$ 113
10,751
$ -
234,279
$ 10,864
$ 234,279
The Company entered into derivative contracts during the years ended December 31, 2006
and 2005 to manage exposures due to the fluctuations of foreign exchange rates. The derivative
contracts entered into by the Company did not meet the criteria for hedge accounting prescribed by
SFAS No. 34. Therefore, effective from January 1, 2006, the Company discontinued applying hedge
accounting treatment for its derivative financial contracts.
Outstanding forward contracts as of December 31, 2006 and 2005:
Currency
Maturity Date
Contract Amount
(In Thousands)
December 31, 2006
Buy
US$/JPY$
January 2007
JPY$ 38,610
December 31, 2005
Sell
US$/NT$
January 2006
US$ 60,000
2006. The Company rescinded all interest rate swap contracts in the first quarter of 2005 before their
original maturities. The rescission loss of NT$28,295 thousand has been reclassified and included in
the “loss on settlement and disposal of financial instruments” account.
Net losses arising from derivative financial instruments for the year ended December 31, 2006 were
NT$1,613,366 thousand (including realized settlement losses of NT$1,647,103 thousand and a
valuation gain of NT$33,737 thousand).
6. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Open-end mutual funds
Corporate bonds
Agency bonds
Corporate issued asset-backed securities
Government bonds
Money market funds
Structured time deposits
Publicly-traded stocks
Corporate notes
Current portion
December 31
2006
$ 26,147,276
16,494,244
12,691,612
10,541,679
6,921,532
667,828
499,242
208,930
-
74,172,343
(67,523,858)
2005
$ 6,198,982
11,853,044
14,496,728
11,582,590
1,776,279
260,686
-
138,527
263,249
46,570,085
(46,452,838)
$ 6,648,485
$ 117,247
Starting from 2004, the Company entered into investment management agreements with three well-
known financial institutions (fund managers) to manage its investment portfolios. In accordance with
the investment guidelines and terms specified in these agreements, the securities invested by the fund
managers cannot be below a pre-defined credit rating. As of December 31, 2006, the Company’s
investment portfolios managed by these fund managers aggregated to an original amount of
US$1,206,211 thousand. The investment portfolios included securities such as corporate bonds,
agency bonds, asset-backed securities, government bonds and others. Securities acquired with
Outstanding cross currency swap contracts as of December 31, 2006 and 2005:
maturities of less than three months from the date of purchase were classified as cash equivalents.
Maturity Date
December 31, 2006
Contract Amount
(In Thousands)
Range of
Interest Rates Paid
Range of
Interest Rates Received
As of December 31, 2006, structured time deposits categorized as available-for-sale financial assets
January 2007 to February 2007
US$ 820,000
3.19% - 5.91%
0.90% - 3.25%
December 31, 2005
consisted of the following:
Step-up callable deposits
Principal Amount
Carrying Amount
Range of
Interest Rates
Maturity Date
January 2006 to March 2006
US$ 2,089,000
4.15% - 4.54%
0.02% - 2.12%
Domestic deposits
$ 500,000
$ 499,242
1.76%
March 2008
The interest rate of the step-up callable deposits was pre-determined by the Company and the banks.
134
December 31, 2006
Step-up callable deposits
Domestic deposits
Callable range accrual deposits
Domestic deposits
December 31, 2005
Step-up callable deposits
Domestic deposits
Callable range accrual deposits
Domestic deposits
Foreign deposits
7. HELD-TO-MATURITY FINANCIAL ASSETS
8. INVENTORIES, NET
Corporate bonds
Structured time deposits
Government bonds
Current portion
December 31
2006
$ 13,742,541
11,671,120
12,070,657
37,484,318
(8,510,823)
2005
$ 8,927,317
10,227,000
10,223,500
29,377,817
(602,509)
$ 28,973,495
$ 28,775,308
Finished goods
Work in process
Raw materials
Supplies and spare parts
Allowance for losses
December 31
2006
$ 5,146,839
14,688,719
1,673,982
926,120
22,435,660
(1,004,932)
2005
$ 2,963,989
13,359,209
1,765,369
1,325,582
19,414,149
(1,685,846)
$ 21,430,728
$ 17,728,303
Structured time deposits categorized as held-to-maturity financial assets consisted of the following:
Principal Amount
Interest Receivable
Range of
Interest Rates
Maturity Date
9. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
$ 4,500,000
$ 13,928
1.40% - 1.83%
June 2007 to October 2008
Foreign deposits
3,259,600
3,911,520
4,808
4,998
(See below)
September 2009 to December
2009
(See below)
October 2009 to January 2010
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
Vanguard International Semiconductor Corporation (VIS)
VisEra Holding
$ 11,671,120
$ 23,734
December 31
2006
2005
Carrying
Amount
% of
Ownership
Carrying
Amount
% of
Ownership
$ 7,960,869
5,931,755
1,108,267
39
27
49
$ 4,215,200
5,419,747
652,477
32
27
50
$ 15,000,891
$ 10,287,424
$ 3,000,000
$ 8,145
1.40% - 1.50%
June 2007 to October 2007
In November 2006, the Company acquired 81 thousand shares in SSMC from EDB Investments Pte
3,942,000
3,285,000
4,928
5,023
$ 10,227,000
$ 18,096
(See below)
September 2009 to December
Ltd. under a Shareholders Agreement. After the acquisition, the number of SSMC shares owned by the
2009
(See below)
October 2009 to January 2010
Company increased from 382 thousand to 463 thousand; the percentage of ownership increased from
32% to 39%.
The amount of interest earned by the Company for the callable range accrual deposits is based on a
and NT$1,433,226 thousand were recognized, respectively. The carrying amounts of the investments
pre-defined range as determined by the 3-month or 6-month LIBOR plus an agreed upon rate ranging
accounted for using the equity method and the related equity in earnings of equity method investees were
between 2.10% and 3.45%. Based on the terms of the contracts, if the 3-month or 6-month LIBOR
determined based on the audited financial statements of the investees as of and for the same periods
For the years ended December 31, 2006 and 2005, net equity in earnings of NT$2,347,153 thousand
moves outside of the pre-defined range, the interest paid to the Company is at a fixed rate between
ended as the Company.
zero and 1.5%. Under the terms of the contracts, the bank has the right to cancel the contracts prior
to the maturity date.
10. FINANCIAL ASSETS CARRIED AT COST
As of December 31, 2006 and 2005, the principal of the deposits that resided in banks located
in Hong Kong amounted to US$80,000 thousand; those resided in banks located in Singapore
amounted to US$20,000 thousand.
Non-publicly traded stocks
Mutual funds
December 31
2006
2005
$ 2,924,350
347,930
$ 2,867,525
334,990
$ 3,272,280
$ 3,202,515
135
11. PROPERTY, PLANT AND EQUIPMENT
14. BONDS PAYABLE
Accumulated depreciation consisted of the following:
Land improvements
Buildings
Machinery and equipment
Office equipment
Leased assets
December 31
2006
$ 234,377
54,288,225
400,579,587
7,839,303
96,592
2005
$ 206,408
46,560,127
344,431,001
6,862,502
64,569
Domestic unsecured bonds:
Issued in December 2000 and repayable in December 2005 and 2007
in two installments, 5.25% and 5.36% interest payable annually,
respectively
Issued in January 2002 and repayable in January 2007, 2009 and
2012 in three installments, 2.60%, 2.75% and 3.00% interest
payable annually, respectively
$ 463,038,084
$ 398,124,607
Current portion
December 31
2006
2005
$ 4,500,000
$ 4,500,000
15,000,000
19,500,000
(7,000,000)
15,000,000
19,500,000
-
$ 12,500,000
$ 19,500,000
No interest was capitalized during the years ended December 31, 2006 and 2005.
12. DEFERRED CHARGES, NET
As of December 31, 2006, future principal repayments for the Company’s bonds were as follows:
Year of Repayment
2007
2009
2012
December 31
2006
$ 4,132,174
1,669,781
134,960
2005
$ 5,099,227
1,737,384
169,639
$ 5,936,915
$ 7,006,250
15. LONG-TERM BANK LOANS
Technology license fees
Software and system design costs
Others
13. SHORT-TERM BANK LOANS
Unsecured loans:
US$10,000 thousand repayable by June 2006, annual interest at 4.77%
$ -
$ 328,500
Science Park Administration (SPA) SOC loan, repayable by July
2008 in 20 payments, interest-free
SPA DSP loan, repayable by April 2007 in 20 payments, interest-free
Current portion
December 31
2006
Secured loan:
US$20,000 thousand, repayable by November 2008 in 5 payments,
2005
annual interest at 5.91%
Unsecured loans:
136
Amount
$ 7,000,000
8,000,000
4,500,000
$ 19,500,000
December 31
2006
2005
$ 651,871
$ 656,914
4,873
1,352
658,096
(4,137)
7,658
4,057
668,629
(5,489)
$ 653,959
$ 663,140
As of December 31, 2006, assets of TSMC-Shanghai with an aggregate carrying amount
of NT$4,293,595 thousand (RMB1,028,652 thousand) were provided as collateral for the
17. PENSION PLANS
aforementioned secured loan. Pursuant to the loan agreement, the annual audited financial
The Labor Pension Act (the Act) became effective on July 1, 2005. The employees of TSMC and GUC
statements of TSMC-Shanghai must comply with certain financial covenants. As of December 31,
who were subject to the Labor Standards Law prior to July 1, 2005 were allowed to choose to be
2006, TSMC-Shanghai was in compliance with all such financial covenants.
subject to the pension mechanism under the Act with their seniority as of July 1, 2005 retained or
continue to be subject to the pension mechanism under the Labor Standards Law. Employees who
As of December 31, 2006, future principal repayments under the Company’s long-term bank loans
joined TSMC and GUC after July 1, 2005 can only be subject to the pension mechanism under the
were as follows:
Year of Repayment
2007
2008
2009
2010
16. OTHER LONG-TERM PAYABLES
Payables for acquisition of property, plant and equipment (Note 27k)
Payables for royalties
Current portion (under accrued expenses and other current liabilities)
Amount
$ 4,137
132,463
260,748
260,748
$ 658,096
December 31
2006
$ 7,431,371
1,889,788
9,321,159
(617,892)
2005
$ 7,037,787
2,380,172
9,417,959
(869,072)
$ 8,703,267
$ 8,548,887
Act.
The pension mechanism under the Act is deemed a defined contribution plan. Pursuant to the Act,
TSMC and GUC have made monthly contributions equal to 6% of each employee’s monthly salary
to employees’ pension accounts starting from July 1, 2005. Furthermore, TSMC-NA and TSMC-
Shanghai are required by local regulations to make monthly contributions, at a certain percentage
of the monthly basic salary of their local employees. Pursuant to the aforementioned Act and
local regulations, the Company has made monthly contributions and recognized pension costs of
NT$679,919 thousand and NT$305,270 thousand for the years ended December 31, 2006 and 2005,
respectively.
TSMC and GUC have defined benefit plans under the Labor Standards Law that provide benefits
based on an employee’s length of service and average monthly salary at retirement. TSMC and GUC
contribute an amount equal to 2% of salaries paid each month to their respective pension funds (the
Funds), which are administered by the pension fund monitoring committees and deposited by the
names of the committees in the Central Trust of China.
Information about the defined benefit plans is summarized as follows:
The payables for royalties were primarily attributable to several license arrangements that the
Company entered into for certain semiconductor-related patents.
a. Components of net periodic pension cost for the year
As of December 31, 2006, future payments for other long-term payables were as follows:
Year of Payment
2007
2008
2009
2010
2011
2012 and thereafter
Amount
$ 617,892
337,043
337,043
337,043
260,767
7,431,371
$ 9,321,159
Service cost
Interest cost
Projected return on plan assets
Amortization
Net periodic pension cost
2006
2005
$ 178,460
164,168
(49,399)
12,096
$ 470,886
163,854
(49,843)
8,345
$ 305,325
$ 593,242
137
b. Reconciliation of funded status of the plans and accrued pension cost at December 31,
18. INCOME TAX
2006 and 2005
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 net transition obligation
Unrecognized net loss
Accrued pension cost
Vested benefit
2006
2005
a. A reconciliation of income tax expense based on “income before income tax” at statutory rates and
income tax currently payable was as follows:
$ 102,920
3,883,344
3,986,264
2,969,830
6,956,094
(1,958,595)
4,997,499
(118,420)
(1,339,019)
$ 62,302
3,364,333
3,426,635
2,550,307
5,976,942
(1,691,603)
4,285,339
(126,969)
(684,429)
$ 3,540,060
$ 3,473,941
Income tax expense based on “income before income tax” at statutory rates
Tax effect of the following:
Tax-exempt income
Temporary and permanent differences
Additional tax at 10% on unappropriated earnings
Cumulative effect of changes in accounting principles
Investment tax credits used
Years Ended December 31
2006
2005
$ (34,786,278)
$ (23,658,498)
12,281,413
2,817,104
(1,170,108)
82,062
12,769,386
12,243,435
(1,123,735)
(1,494,811)
-
10,133,848
$ 106,645
$ 67,752
Income tax currently payable
$ (8,006,421)
$ (3,899,761)
c. Actuarial assumptions at December 31, 2006 and 2005
b. Income tax expense consisted of the following:
Discount rate used in determining present values
Future salary increase rate
Expected rate of return on plan assets
d. Contributions to the Funds for the year
2006
2.25% - 3.50%
2.00% - 3.00%
2.50%
2005
2.75% - 3.50%
2.00% - 3.00%
2.50% - 2.75%
2006
2005
Income tax currently payable
Other income tax adjustments
Net change in deferred income tax assets
Investment tax credits
Temporary differences
Net operating loss carryforwards
Adjustments in valuation allowance
Years Ended December 31
2006
2005
$ (8,006,421)
328,152
$ (3,899,761)
(117,314)
(3,914,757)
2,181,558
(1,412,946)
3,050,703
(1,965,878)
2,402,406
(690,615)
3,640,583
$ 233,111
$ 226,181
Income tax expense
$ (7,773,711)
$ (630,579)
e. Payments from the Funds for the year
c. Net deferred income tax assets consisted of the following:
2006
2005
$ 7,407
$ 8,419
Current deferred income tax assets, net
Investment tax credits
Temporary differences
Net operating loss carryforwards
Valuation allowance
Non-current deferred income tax assets, net
Investment tax credits
Temporary differences
Net operating loss carryforwards
Valuation allowance
December 31
2006
$ 7,870,800
584,210
-
(441,018)
2005
$ 7,033,622
454,051
15,825
(354,192)
$ 8,013,992
$ 7,149,306
$ 12,252,389
(3,580,754)
4,816,846
(7,686,339)
$ 17,004,324
(5,640,477)
6,261,469
(10,836,898)
$ 5,802,142
$ 6,788,418
138
As of December 31, 2006, the net operating loss carryforwards were generated by WaferTech,
g. The profits generated from the following expansion and construction projects of TSMC are exempt
TSMC Development and TSMC Technology and will expire on various dates through 2026.
from income tax:
d. Integrated income tax information:
The balance of the imputation credit account as of December 31, 2006 and 2005 was NT$828,612
thousand and NT$20,087 thousand, respectively.
Construction of Fab 8 - module B
Expansion of Fab 2 - modules A and B, Fab 3, Fab 4, Fab 5 and Fab 6
Construction of Fab 12
2002 to 2005
2003 to 2006
2004 to 2007
Tax-Exemption Periods
The estimated creditable ratio for distribution of TSMC’s earnings of 2006 and 2005 was 0.54%
and 2.88%, respectively.
19. LABOR COST, DEPRECIATION AND AMORTIZATION
h. The tax authorities have examined income tax returns of TSMC through 2003.
The imputation credit allocated to shareholders is based on its balance as of the date of dividend
distribution. The estimated creditable ratio may change when the actual distribution of imputation
credit is made.
e. All of TSMC’s earnings generated prior to December 31, 1997 have been appropriated.
f. As of December 31, 2006, the Company’s investment tax credits consisted of the following:
Regulation
Item
Statute for Upgrading
Industries
Purchase of machinery and
equipment
Statute for Upgrading
Industries
Research and development
expenditures
Statute for Upgrading
Industries
Personnel training
Total
Creditable
Amount
Remaining
Creditable
Amount
Expiry Year
$ 2,685,977
4,113,439
6,802,983
6,030,309
5,114,762
$ -
-
3,955,980
6,030,309
5,114,762
$ 24,747,470
$ 15,101,051
$ 1,800,884
1,283,760
1,668,780
1,572,164
1,580,589
$ -
38,618
1,668,780
1,572,164
1,580,589
$ 7,906,177
$ 4,860,151
$ 27,357
16,379
40,777
40,628
596
$ -
182
40,777
40,628
596
$ 125,737
$ 82,183
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
Statute for Upgrading
Industries
Investments in important
$ 79,804
$ 79,804
2010
technology-based enterprises
Labor cost
Salary
Labor and health insurance
Pension
Meal
Welfare
Others
Year Ended December 31, 2006
Year Ended December 31, 2005
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
$ 11,713,445
714,170
627,731
460,980
236,022
226,032
$ 6,692,437
404,845
369,398
173,185
211,272
217,045
$ 18,405,882
1,119,015
997,129
634,165
447,294
443,077
$ 11,031,464
633,790
589,342
434,729
167,218
168,959
$ 6,678,630
343,937
320,607
160,175
166,360
225,389
$ 17,710,094
977,727
909,949
594,904
333,578
394,348
$ 13,978,380
$ 8,068,182
$ 22,046,562
$ 13,025,502
$ 7,895,098
$ 20,920,600
Depreciation
Amortization
$ 67,685,744
$ 1,436,908
$ 3,539,472
$ 1,035,482
$ 71,225,216
$ 2,472,390
$ 68,135,117
$ 1,766,702
$ 3,250,651
$ 2,574,566
$ 71,385,768
$ 4,341,268
20. SHAREHOLDERS’ EQUITY
As of December 31, 2006, 889,740 thousand ADSs of TSMC were traded on the NYSE. The number
of common shares represented by the ADSs is 4,448,702 thousand (one ADS represents five common
shares).
Capital surplus can only be used to offset a deficit under the Company Law. However, the capital
surplus generated from donations and the excess of the issuance price over the par value of capital
stock (including the stock issued for new capital, mergers, convertible bonds and the surplus from
treasury stock transactions) may be appropriated as stock dividends, which are limited to a certain
percentage of the Company’s paid-in capital.
139
Capital surplus consisted of the following:
Any appropriations of the profits are recorded in the year of shareholder approval and given effect to
From merger
Additional paid-in capital
From convertible bonds
From treasury stock transactions
From long-term investments
Donations
December 31
2006
$ 24,003,546
19,974,431
9,360,424
389,188
379,854
55
2005
$ 24,003,546
23,254,234
9,360,424
306,868
192,759
55
in the financial statements of that year.
The appropriation for legal capital reserve shall be made until the reserve equals TSMC’s paid-in
capital. The reserve may be used to offset a deficit, or be distributed as dividends and bonuses for
the portion in excess of 50% of the paid-in capital if TSMC has no unappropriated earnings and
the reserve balance has exceeded 50% of TSMC’s paid-in capital. The Company Law also prescribes
that, when the reserve has reached 50% of TSMC’s paid-in capital, up to 50% of the reserve may be
$ 54,107,498
$ 57,117,886
transferred to capital.
TSMC’s Articles of Incorporation as revised on May 10, 2005 provide that, when allocating the net
profits for each fiscal year, TSMC shall first offset its losses in previous years and then set aside the
following items accordingly:
a. Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve has
equaled TSMC’s paid-in capital;
b. Special capital reserve in accordance with relevant laws or regulations or as requested by the
authorities in charge;
c. Bonus to directors and supervisors and bonus to employees of TSMC of not more than 0.3% and
not less than 1% of the remainder, respectively. Directors who also serve as executive officers of
TSMC are not entitled to receive the bonus to directors and supervisors. TSMC may issue stock
bonuses to employees of an affiliated company meeting the conditions set by the Board of
Directors or, by the person duly authorized by the Board of Directors;
d. Any balance left over shall be allocated according to the resolution of the shareholders’ meeting.
The Articles of Incorporation also provide that profits of TSMC may be distributed by way of cash
dividend and/or stock dividend. However, distribution of profits shall be made preferably by way of
cash dividend. Distribution of profits may also be made by way of stock dividend; provided that the
ratio for stock dividend shall not exceed 50% of the total distribution.
A special capital reserve equivalent to the net debit balance of the other components of shareholders’
equity (for example, cumulative translation adjustments and unrealized loss on financial assets, but
excluding treasury stock) shall be made from unappropriated earnings pursuant to existing regulations
promulgated by the Securities and Futures Bureau (SFB). Any special reserve appropriated may be
reversed to the extent that the net debit balance reverses.
The appropriations of earnings for 2005 and 2004 had been approved in the shareholders’ meetings
held on May 16, 2006 and May 10, 2005, respectively. The appropriations and dividends per share
were as follows:
Legal capital reserve
Special capital reserve
Employees’ profit sharing - in cash
Employees’ profit sharing - in stock
Cash dividends to shareholders
Stock dividends to shareholders
Bonus to directors and supervisors
Appropriation of Earnings
Dividends Per Share (NT$)
For Fiscal Year 2005
For Fiscal Year 2004
For Fiscal Year 2005
For Fiscal Year 2004
$ 9,357,503
(1,585,685)
3,432,129
3,432,129
61,825,061
3,709,504
257,410
$ 8,820,201
2,226,427
3,086,215
3,086,215
46,504,097
11,626,024
231,466
$ 80,428,051
$ 75,580,645
$ 2.50
0.15
$ 2.00
0.50
140
The shareholders’ meeting held on May 16, 2006 also resolved to distribute stock dividends out of
Information about TSMC’s outstanding stock options for the years ended December 31, 2006 and
capital surplus in the amount of NT$3,709,504 thousand.
2005 was as follows:
The amounts of the above appropriations of earnings for 2005 and 2004 are consistent with the
resolutions of the meetings of the Board of Directors held on February 14, 2006 and February 22,
Year ended December 31, 2006
2005, respectively. If the above bonus to employees, directors and supervisors had been paid entirely
in cash and charged to earnings of 2005 and 2004, the basic earnings per share (after income tax)
for the years ended December 31, 2005 and 2004 shown in the respective financial statements would
have decreased from NT$3.79 to NT$3.50 and NT$3.97 to NT$3.70, respectively.
Balance, beginning of year
Options granted
Options exercised
Options canceled
Balance, end of year
The shares distributed as a bonus to employees represented 1.39% and 1.33% of TSMC’s total
Year ended December 31, 2005
outstanding common shares as of December 31, 2005 and 2004, respectively.
As of January 11, 2007, the Board of Directors had not resolved the appropriation for earnings of
2006.
The above information about the appropriations of bonus to employees, directors and supervisors is
available at the Market Observation Post System website.
Balance, beginning of year
Options granted
Options exercised
Options canceled
Balance, end of year
Number of Options
(In Thousands)
Weighted-average
Exercise Price (NT$)
67,758
2,758
(14,550)
(3,152)
52,814
64,367
14,864
(6,837)
(4,636)
67,758
$ 39.4
40.1
40.1
43.7
39.6
$ 40.5
48.4
39.6
44.1
42.1
The number of outstanding options and exercise prices have been adjusted to reflect the
appropriations of dividends in accordance with the plans.
Under the Integrated Income Tax System that became effective on January 1, 1998, R.O.C. resident
shareholders are allowed a tax credit for their proportionate share of the income tax paid by TSMC on
As of December 31, 2006, information about TSMC’s outstanding and exercisable options was as
earnings generated since January 1, 1998.
follows:
21. STOCK-BASED COMPENSATION PLANS
TSMC’s Employee Stock Option Plans under the TSMC 2004 Plan, TSMC 2003 Plan and TSMC
2002 Plan were approved by the SFB on January 6, 2005, October 29, 2003 and June 25, 2002,
respectively. The maximum number of options authorized to be granted under the TSMC 2004
Plan, TSMC 2003 Plan and TSMC 2002 Plan was 11,000 thousand, 120,000 thousand and
100,000 thousand, respectively, with each option eligible to subscribe for one common share when
exercisable. The options may be granted to qualified employees of TSMC or any of its domestic or
foreign subsidiaries, in which TSMC’s shareholding with voting rights, directly or indirectly, is more
than fifty percent (50%). The options of all the plans are valid for ten years and exercisable at certain
percentages subsequent to the second anniversary of the grant date. Under the terms of the plans,
the options are granted at an exercise price equal to the closing price of TSMC’s common shares listed
on the TSE on the grant date.
Options of the aforementioned TSMC Plans that had never been granted or had been granted but
subsequently cancelled had expired as of December 31, 2006.
Range of Exercise
Price (NT$)
Number of Options
(In Thousands)
$27.6 - $39.7
45.1 - 52.3
34,584
18,230
52,814
Options Outstanding
Weighted-average
Remaining
Contractual
Life (Years)
Options Exercisable
Weighted-average
Exercise Price (NT$)
Number of Options
(In Thousands)
Weighted-average
Exercise Price (NT$)
5.15
6.88
$ 35.5
47.5
$ 35.5
45.7
28,351
4,390
32,741
GUC’s Employee Stock Option Plans, consisting of the GUC 2003 Plan and GUC 2002 Plan, were
approved by its Board of Directors on January 23, 2003 and July 1, 2002, respectively. The maximum
number of options authorized to be granted under the GUC 2003 Plan and GUC 2002 Plan was
7,535 and 5,000, respectively, with each option eligible to subscribe for one thousand common
shares when exercisable. The options may be granted to qualified employees of GUC. The options of
all the plans are valid for six years and exercisable at certain percentages subsequent to the second
anniversary of the grant date.
141
Moreover, the GUC 2006 Plan and GUC 2004 Plan were approved by the SFB on July 3, 2006 and
No compensation cost was recognized under the intrinsic value method for the years ended
August 16, 2004 to grant a maximum of 3,665 options and 2,500 options, respectively, with each
December 31, 2006 and 2005. Had the Company used the fair value based method (based on the
option eligible to subscribe for one thousand common shares when exercisable. The options may be
Black-Scholes model) to evaluate the options granted after January 1, 2004, the assumptions and pro
granted to qualified employees of GUC or any of its subsidiaries. The options of the GUC 2006 Plan
forma results of the Company for the years ended December 31, 2006 and 2005 would have been as
are valid until August 15, 2011 and the options of the GUC 2004 Plan are valid for six years. Options
follows:
of both Plans are exercisable at certain percentages subsequent to the second anniversary of the grant
date.
Options of the aforementioned GUC Plans, except those of the GUC 2006 Plan, that had never been
granted, or had been granted but subsequently canceled had expired as of December 31, 2006.
Information about GUC’s outstanding stock options for the years ended December 31, 2006 and
2005 was as follows:
Year ended December 31, 2006
Balance, beginning of year
Options granted
Options exercised
Options canceled
Balance, end of year
Year ended December 31, 2005
Balance, beginning of year
Options granted
Options exercised
Options canceled
Balance, end of year
Number of Options
Weighted-Average
Exercise Price (NT$)
7,132
3,689
(2,862)
(617)
7,342
7,889
2,499
(2,641)
(615)
7,132
$ 10.7
19.5
10.5
12.1
14.0
10.5
11.0
10.5
10.6
10.7
Assumptions:
TSMC
GUC
Expected dividend yield
Expected volatility
Risk free interest rate
Expected life
Expected dividend yield
Expected volatility
Risk free interest rate
Expected life
Net income attributable to shareholders of the parent:
As reported
Pro forma
Consolidated earnings per share (EPS) - after income tax (NT$):
Basic EPS as reported
Pro forma basic EPS
Diluted EPS as reported
Pro forma diluted EPS
22. TREASURY STOCK
Year ended December 31, 2006
2006
2005
1.00% - 3.44%
43.77% - 46.15%
3.07% - 3.85%
5 years
-
22.65% - 41.74%
2.23% - 2.56%
3 - 6 years
1.00% - 3.44%
43.77% - 46.15%
3.07% - 3.85%
5 years
-
22.65% - 28.02%
2.56%
6 years
$ 127,009,731
126,887,247
$ 93,575,035
93,456,533
$ 4.93
4.92
4.92
4.92
$ 3.63
3.63
3.63
3.63
Beginning
Shares
Stock
Dividends
Disposal
Ending
Shares
(Shares in Thousands)
As of December 31, 2006, information about GUC’s outstanding and exercisable options was as
Year ended December 31, 2005
follows:
Parent company stock held by subsidiaries
45,521
2,242
14,825
32,938
Range of Exercise
Price (NT$)
Number of Options
Options Outstanding
Weighted-average
Remaining
Contractual
Life (Years)
Options Exercisable
Weighted-average
Exercise Price (NT$)
Number of Options
Weighted-average
Exercise Price (NT$)
Proceeds from sales of treasury stock for the year ended December 31, 2005 were NT$899,489
thousand. As of December 31, 2006 and 2005, the book value of the treasury stock was NT$918,075
thousand, the market value was NT$2,290,026 thousand and NT$2,047,126 thousand, respectively.
$10.0 - $18.4
7,342
1.58 - 4.75
$ 14.0
15
$ 10.5
TSMC’s stock held by subsidiaries is treated as treasury stock and the holders are entitled to the rights
Parent company stock held by subsidiaries
32,938
988
-
33,926
of shareholders, except that starting from June 24, 2005, pursuant to the revised Company Law, the
holders are no longer entitled to vote in shareholders’ meetings.
142
23. CONSOLIDATED EARNINGS PER SHARE
24. DISCLOSURES FOR FINANCIAL INSTRUMENTS
Years Ended December 31
2006
2005
Before
Income Tax
After
Income Tax
Before
Income Tax
After
Income Tax
a. Fair values of financial instruments were as follows:
Consolidated basic EPS (NT$)
Income before cumulative effect of changes in
accounting principles attributable to shareholders of
the parent
Cumulative effect of changes in accounting principles
attributable to shareholders of the parent
$ 5.16
$ 4.87
$ 3.66
$ 3.63
0.06
0.06
-
-
Income attributable to shareholders of the parent
$ 5.22
$ 4.93
$ 3.66
$ 3.63
Consolidated diluted EPS (NT$)
Income before cumulative effect of changes in
accounting principles attributable to shareholders of
the parent
Cumulative effect of changes in accounting principles
attributable to shareholders of the parent
$ 5.16
$ 4.86
$ 3.66
$ 3.63
0.06
0.06
-
-
Income attributable to shareholders of the parent
$ 5.22
$ 4.92
$ 3.66
$ 3.63
Assets
Financial assets at fair value through profit or loss
Available-for-sale financial assets
Held-to-maturity financial assets
Investments accounted for using equity method
(with market price)
Liabilities
Financial liabilities at fair value through profit or loss
Bonds payable (including current portion)
Long-term bank loans (including current portion)
Other long-term payables (including current portion)
Obligations under capital leases
December 31
2006
Carrying
Amount
Fair Value
2005
Carrying
Amount
Fair Value
$ 1,206,854
74,172,343
37,484,318
$ 1,206,854
74,172,343
37,375,517
$ 1,770,445
46,570,085
29,377,817
$ 3,000,839
46,560,924
29,081,927
5,931,755
11,027,066
5,419,747
10,991,064
10,864
19,500,000
658,096
10,413,125
612,941
10,864
19,817,149
658,096
10,413,125
612,941
234,279
19,500,000
668,629
11,212,390
597,669
173
19,924,923
668,629
11,212,390
597,669
Consolidated EPS for the years ended December 31, 2006 and 2005 is computed as follows:
b. Methods and assumptions used in the determination of fair values of financial instruments
Amounts (Numerator)
Before
Income Tax
After
Income Tax
Number of
Shares
(Denominator)
(In Thousands)
EPS (NT$)
Before
Income Tax
After
Income Tax
1) The aforementioned financial instruments do not include cash and cash equivalents, receivables,
other financial assets, short-term bank loans, payables, and payables to contractors and equipment
suppliers. The carrying amounts of these financial instruments approximate their fair values.
Year ended December 31, 2006
Consolidated basic EPS
Consolidated diluted EPS
Income available to common shareholders of the parent
(including effect of dilutive potential common stock)
Year ended December 31, 2005
Consolidated basic EPS
Income available to common shareholders of the parent
Effect of dilutive potential common stock - stock options
$134,698,725
-
$127,009,731
-
25,788,555
24,628
$ 5.22
$ 4.93
2) Fair values of financial assets at fair value through profit or loss, available-for-sale and held-to-
maturity financial assets other than derivatives and structured time deposits were based on their
quoted market prices.
$134,698,725
$127,009,731
25,813,183
$ 5.22
$ 4.92
3) Fair values of derivatives and structured time deposits were determined using valuation techniques
incorporating estimates and assumptions that were consistent with prevailing market conditions.
Income available to common shareholders of the parent
Effect of dilutive potential common stock - stock options
$ 94,214,625
-
$ 93,575,035
-
25,763,320
12,647
$ 3.66
$ 3.63
4) Fair value of bonds payable was based on their quoted market price.
Consolidated diluted EPS
Income available to common shareholders of the parent
(including effect of dilutive potential common stock)
$ 94,214,625
$ 93,575,035
25,775,967
$ 3.66
$ 3.63
were based on the present value of expected cash flows, which approximate their carrying amount.
5) Fair values of long-term bank loans, other long-term payables and obligation under capital leases
143
c. Gains recognized for the changes in fair value of derivatives estimated using valuation techniques
25. RELATED PARTY TRANSACTIONS
were NT$33,739 thousand for the year ended December 31, 2006.
d. As of December 31, 2006 and 2005, financial assets exposed to fair value interest rate risk were
summary of significant related party transactions:
NT$111,492,332 thousand and NT$77,190,280 thousand, respectively, financial liabilities exposed
to fair value interest rate risk were NT$10,864 thousand and NT$234,279 thousand, respectively,
a. Industrial Technology Research Institute (ITRI), the chairman of TSMC was one of ITRI’s supervisors,
Except as disclosed in the consolidated financial statements and other notes, the following is a
and financial assets exposed to cash flow interest rate risk were NT$7,171,120 thousand and
who resigned in October 2006.
NT$7,227,000 thousand, respectively.
e. The Company recognized an unrealized gain of NT$388,164 thousand (NT$386,017 thousand
attributable to shareholders’ equity of the parent and NT$2,147 thousand attributable to minority
interests) in shareholder’s equity for the changes in fair value of available-for-sale financial assets
c. Investees of TSMC
for the year ended December 31, 2006. The Company also recognized an unrealized gain of
NT$175,598 thousand in shareholders’ equity for the changes in fair value of available-for-sale
financial assets held by equity method investees for the year ended December 31, 2006.
VIS (accounted for using equity method)
SSMC (accounted for using equity method)
b. Philips, a major shareholder of TSMC
f. Information about financial risk
d. Indirect investee
1) Market risk. The publicly-traded stocks categorized as financial assets at fair value through profit
or loss are exposed to market risk. The derivative financial instruments categorized as financial
assets/liabilities at fair value through profit or loss are mainly used to hedge the exchange rate
fluctuations of foreign-currency-denominated assets and liabilities. Therefore, the market risk of
derivatives will be offset by the foreign exchange risk of these assets and liabilities. Available-for-
sale financial assets held by the Company are mainly fixed-interest-rate debt securities. Therefore,
the fluctuations in market interest rates would result in changes in fair values of these debt
securities.
2) Credit risk. Credit risk represents the potential loss that would be incurred by the Company if the
counter-parties or third-parties breached contracts. Financial instruments with positive fair values
at the balance sheet date are evaluated for credit risk. The counter-parties or third-parties to the
VisEra, originally an investee over which the Company had a controlling interest; beginning in
November 2005, VisEra became an indirect investee accounted for using the equity method due to
changes in investment structure.
XinTec Corporation (XinTec), the chairman of VisEra was previously one of Xintec’s directors.
Because VisEra has not been a consolidated entity of the Company since November 2005, XinTec is
no longer considered a related party.
e. Omnivision International Holding, Ltd. (Omnivision), originally a shareholder holding a 25%
ownership in VisEra. Because VisEra has not been a consolidated entity of the Company since
November 2005, Omnivision is no longer considered a related party.
foregoing financial instruments are reputable financial institutions, business organizations, and
f. Huawei Semiconductor (Shanghai) Co., Ltd. (Huawei), which has the same president as VisEra.
government agencies. Management believes that the Company’s exposure to default by those
However, because VisEra has not been a consolidated entity of the Company since November 2005,
parties is low.
Huawei is no longer considered a related party.
3) Liquidity risk. The Company has sufficient operating capital to meet cash needs upon settlement of
derivative financial instruments, bonds payable and loans. Therefore, the liquidity risk is low.
4) Cash flow interest rate risk. The Company mainly engages in investments in fixed-interest-rate
debt securities. Therefore, cash flows are not expected to fluctuate significantly due to changes in
market interest rates.
144
2006
2005
Amount
%
Amount
%
The Company leased certain buildings and facilities to VisEra with a monthly rental of NT$7,684
thousand (classified under non-operating incomes and gains). The Company deferred the gains
For the year
Sales
Philips
Omnivision
Others
Purchases
SSMC
VIS
$ 4,024,990
-
162,343
$ 4,187,333
$ 6,820,632
3,919,566
$ 10,740,198
Manufacturing expenses - technical assistance fees Philips (see Note 27a)
$ 755,904
Non-operating income and gains
SSMC (primarily technical service income; see Note 27e)
VIS (primarily technical service income; see Note 27h)
VisEra
$ 314,953
261,245
246,242
$ 822,440
1
-
-
1
4
3
7
-
3
3
2
8
$ 3,298,770
2,489,252
492,683
$ 6,280,705
$ 5,729,672
4,142,457
$ 9,872,129
$ 581,059
$ 316,243
210,720
308,071
1
1
-
2
4
3
7
-
4
3
4
$ 835,034
11
$ 250,919
1,420
99
1
$ 573,565
119,701
83
17
$ 252,339
100
$ 693,266
100
$ 121,911
69,568
58,989
6,395
47
27
23
3
$ 74,457
149,251
374,202
-
12
25
63
-
$ 256,863
100
$ 597,910
100
$ 719,832
688,591
459,305
38
37
25
$ 563,240
693,956
485,873
32
40
28
As of December 31
Receivables
Philips
Others
Other receivables
VIS
SSMC
VisEra
Others
Payables
VIS
Philips
SSMC
Other long-term payables
Philips (see Note 27a)
Deferred credits
VisEra
(classified under deferred credits) derived from sales of property, plant, and equipment to VisEra, and
then recognized such gains (classified under non-operating incomes and gains) over the depreciable
lives of the disposed assets.
26. SIGNIFICANT LONG-TERM LEASES
The Company leases several parcels of land from the SPA. These operating leases expire on various
dates from March 2008 to December 2021 and can be renewed upon expiration.
The Company entered into lease agreements for its office premises and certain equipment located in
North America, Japan and Shanghai. These operating leases expire between 2007 and 2011 and can
be renewed upon expiration.
As of December 31, 2006, future lease payments were as follows:
Year
2007
2008
2009
2010
2011
2012 and thereafter
Amount
$ 945,657
697,264
422,415
306,709
211,051
1,507,005
$ 4,090,101
27. SIGNIFICANT COMMITMENTS AND CONTINGENCIES
Significant commitments and contingencies of the Company as of December 31, 2006, excluding
those disclosed in other notes, were as follows:
a. On June 20, 2004, TSMC and Philips amended the Technical Cooperation Agreement, which was
$ 1,867,728
100
$ 1,743,069
100
originally signed on May 12, 1997. The amended Technical Cooperation Agreement is for five
$ 403,375
100
$ 1,100,475
100
$ 124,350
11
$ 186,525
14
years beginning from January 1, 2004. Upon expiration, this amended Technical Cooperation
Agreement will be terminated and will not be automatically renewed; however, the patent
cross license arrangement between TSMC and Philips will survive the expiration of the amended
Technical Cooperation Agreement. Under this amended Technical Cooperation Agreement, TSMC
will pay Philips royalties based on a fixed amount mutually agreed-on, rather than under a certain
The terms of sales to related parties were not significantly different from those of sales to third
percentage of TSMC’s annual net sales. TSMC and Philips agreed to cross license the patents owned
parties. For other related party transactions, prices were determined in accordance with mutual
by each party. TSMC also obtained through Philips a number of cross patent licenses.
agreements.
145
b. Under a technical cooperation agreement with ITRI, the R.O.C. Government or its designee
properties arising out of the co-development project shall be jointly owned by the parties. In
approved by TSMC can use up to 35% of TSMC’s capacity if TSMC’s outstanding commitments
accordance with the agreement, TSMC will pay royalties to Freescale Semiconductor, Inc. and will
to its customers are not prejudiced. The term of this agreement is for five years beginning from
share a portion of the costs associated with the joint development project.
January 1, 1987 and is automatically renewed for successive periods of five years unless otherwise
terminated by either party with one year prior notice. The agreement was automatically renewed in
1992, 1997, 2002 and on January 1, 2007.
h. TSMC provides a technology transfer to VIS under a Manufacturing License and Technology
Transfer Agreement entered into on April 1, 2004. TSMC receives compensation for such
technology transfer in the form of royalty payments from VIS computed at specific percentages
c. Under several foundry agreements, TSMC shall reserve a portion of its production capacity for
of net selling price of certain products sold by VIS. VIS agreed to reserve its certain capacity to
certain major customers that have guarantee deposits with TSMC. As of December 31, 2006, TSMC
manufacture for TSMC certain products at prices as agreed by the parties.
had a total of US$116,297 thousand of guarantee deposits.
d. Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on
with Philips, Freescale Semiconductor, Inc. and STMicroelectronics to jointly develop 45-nm and
March 30, 1999, the parties formed a joint venture company, SSMC, which is an integrated circuit
beyond advanced CMOS Logic and e-DRAM technologies. The Company will contribute process
foundry in Singapore. TSMC’s equity interest in SSMC was 32%. Nevertheless, Philips parted with
technologies and share a portion of the costs associated with this joint development project. This
its semiconductor company which was renamed as NXP B.V. in September 2006. TSMC and NXP
agreement will expire on December 31, 2008.
i. Effective January 1, 2006, the Company entered into the Joint Technology Cooperation Agreement
purchased all the SSMC shares owned by EDB Investments Pte Ltd. pro rata according to the
Shareholders Agreement on November 15, 2006. After the purchase, TSMC and NXP B.V. currently
own approximately 39% and 61% of the SSMC shares respectively. The Company and Philips (now
NXP) committed to buy specific percentages of the production capacity of SSMC. TSMC and Philips
(now NXP) are required, in the aggregate, to purchase up to 70% of SSMC's capacity, but TSMC
alone is not required to purchase more than 28% of the capacity. If any party defaults on the
commitment and the capacity utilization of SSMC fall below a specific percentage of its capacity,
the defaulting party is required to compensate SSMC for all related unavoidable costs.
j. TSMC, TSMC-North America and WaferTech filed a series of lawsuits in late 2003 and 2004
against Semiconductor Manufacturing International Corporation (“SMIC”), SMIC (Shanghai) and
SMIC Americas. The lawsuits alleged that SMIC companies infringed multiple TSMC patents and
misappropriated TSMC’s trade secrets. These suits were settled out of court on January 30, 2005.
As part of the settlement, SMIC shall pay TSMC US$175,000 thousand over six years to resolve
TSMC’s claims. As of December 31, 2006, SMIC had paid US$60,000 thousand in accordance
with the terms of this settlement agreement. In August 2006, TSMC, TSMC-North America
and Wafertech filed a lawsuit against SMIC in Alameda County Superior Court in California for
e. TSMC provides technical services to SSMC under a Technical Cooperation Agreement (the
breach of aforementioned settlement agreement, breach of promissory notes and trade secret
Agreement) entered into on May 12, 1999. TSMC receives compensation for such services
computed at a specific percentage of net selling price of all products sold by SSMC. The Agreement
misappropriation, seeking injunctive relief and monetary damages. In September 2006, SMIC filed
a cross-complaint against TSMC in the same court, alleging TSMC of breach of the settlement
shall remain in force for ten years and may be automatically renewed for successive periods of five
agreement and implied covenant of good faith and fair dealing, in response to TSMC's August
years each unless pre-terminated by either party under certain conditions.
complaint. The outcome of this litigation cannot be determined at this time.
f. Under a Technology Transfer Agreement (TTA) with National Semiconductor Corporation (National)
k. TSMC-Shanghai entered into an agreement with a certain foreign company. In accordance with the
entered into on June 27, 2000, TSMC shall receive payments for the licensing of certain technology
agreement, TSMC-Shanghai is obligated to purchase certain property, plant and equipment at the
to National. The agreement was to remain in force for ten years and could be automatically
agreed-upon price within the contract period. If the purchase is not completed, TSMC-Shanghai is
renewed for successive periods of two years thereafter unless either party gives written notice for
obligated to compensate the counterparty for the loss incurred.
early termination under certain conditions. In January 2003, TSMC and National entered into a
Termination Agreement whereby the TTA was terminated. Under the Termination Agreement,
l. Amounts available under unused letters of credit as of December 31, 2006 were NT$6,480
TSMC will be relieved of any further obligation to transfer any additional technology. In addition,
thousand.
TSMC granted National an option to request the transfer of certain technologies under the same
terms and conditions as the terminated TTA. The option will expire in January 2008.
g. In December 2003, TSMC entered into a Technology Development and License Agreement with
Freescale Semiconductor, Inc. to jointly develop 65-nm SOI (silicon on insulator) technology. TSMC
will also license related 90-nm SOI technology from Freescale Semiconductor, Inc. Any intellectual
146
28. ADDITIONAL DISCLOSURES
29. SEGMENT FINANCIAL INFORMATION
Following are the additional disclosures required by the SFB for TSMC and its investees:
a. Industry financial information
a. Financing provided: Please see Table 1 attached;
The Company is engaged mainly in the manufacturing, selling, packaging and testing of integrated
circuits. Therefore, the disclosure of industry financial information is not applicable to the
b. Endorsement/guarantee provided: Please see Table 2 attached;
Company.
c. Marketable securities held: Please see Table 3 attached;
b. Geographic information:
d. Marketable securities acquired or disposed of at costs or prices of at least NT$100 million or 20%
of the paid-in capital: Please see Table 4 attached;
2006
North America
and Others
Taiwan
Adjustments and
Elimination
Consolidated
e. Acquisition of individual real estate properties at costs of at least NT$100 million or 20% of the
Sales to other than consolidated entities
Sales among consolidated entities
$ 191,511,929
18,998,614
$ 125,895,242
191,345,140
$
-
(210,343,754)
$ 317,407,171
-
paid-in capital: Please see Table 5 attached;
Total sales
$ 210,510,543
$ 317,240,382
$ (210,343,754)
$ 317,407,171
f. Disposal of individual real estate properties at prices of at least NT$100 million or 20% of the paid-
in capital: None;
g. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in
capital: Please see Table 6 attached;
h. Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital:
Please see Table 7 attached;
Gross profit
Operating expenses
Non-operating income and gains
Non-operating expenses and losses
Income before income tax
Identifiable assets
Long-term investments
Total assets
2005
$ 5,641,405
$ 150,498,038
$ (329,353)
$ 133,341,631
$ 441,339,388
$ (41,091,011)
$ 155,810,090
(28,545,396)
9,705,592
(3,608,078)
$ 133,362,208
$ 533,590,008
53,895,151
$ 587,485,159
i. Names, locations, and related information of investees on which the Company exercises significant
Sales to other than consolidated entities
Sales among consolidated entities
$ 152,517,793
13,513,219
$ 114,047,277
152,132,512
$ -
(165,645,731)
$ 266,565,070
-
influence: Please see Table 8 attached;
Total sales
$ 166,031,012
$ 266,179,789
$ (165,645,731)
$ 266,565,070
j. Information on investment in Mainland China
1) The name of the investee in mainland China, the main businesses and products, its issued capital,
method of investment, information on inflow or outflow of capital, percentage of ownership,
equity in the net gain or net loss, ending balance, amount received as dividends from the investee,
and the limitation on investee: Please see Table 9 attached.
2) Significant direct or indirect transactions with the investee, its prices and terms of payment,
unrealized gain or loss, and other related information which is helpful to understand the impact of
investment in mainland China on financial reports: Please see Table 10 attached.
k. Intercompany relationships and significant intercompany transactions: Please see Table 10 attached.
Gross profit
Operating expenses
Non-operating income and gains
Non-operating expenses and losses
Income before income tax
Identifiable assets
Long-term investments
Total assets
$ 2,858,063
$ 115,722,187
$ (377,376)
$ 92,904,411
$ 430,083,964
$ (45,861,280)
$ 118,202,874
(27,234,315)
9,399,360
(6,104,672)
$ 94,263,247
$ 477,127,095
42,382,494
$ 519,509,589
147
c. Export sales
The export sales were as follows:
Area
Asia
Europe and others
Years Ended December 31
2006
2005
$ 62,434,071
23,764,877
$ 64,942,647
15,932,575
$ 86,198,948
$ 80,875,222
The export sales information is based on the amounts billed to customers within the areas.
d. Major customers representing at least 10% of gross sales
Customer A
Customer B
Years Ended December 31
2006
Amount
$ 33,950,441
25,214,878
2005
Amount
$ 24,718,306
29,855,447
%
11
8
%
9
11
148
TABLE 1
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
FINANCING PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
No.
Financing Name
Counter-party
Financial Statement Account
1
TSMC International
TSMC Development
Other receivables
Note 1: The type No. 2 represents necessary for short-term financing.
Note 2: Not exceeding the issued capital of the Company.
Maximum
Balance for
the Period
(US$ in
Thousands)
$ 1,140,860
(US$ 35,000)
Ending
Balance
(US$ in
Thousands)
Interest Rate
Type of
Financing
(Note 1)
Transaction
Amounts
Reasons for
Short-term
Financing
Allowance for
Bad Debt
Collateral
Item
Value
Financing
Limit for Each
Borrowing
Company
$
-
1.50%
2
$
-
Operating
capital
$
-
-
$
-
N/A
Financing
Company's
Financing
Amount Limits
(US$ in
Thousands)
$ 32,203,805
(US$ 987,968)
(Note 2)
TABLE 2
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
ENDORSEMENT/GUARANTEE PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
No.
Endorsement/
Guarantee Provider
Name
Counter-party
Nature of
Relationship
(Note 2)
Limits on Each Counter-
party’s Endorsement/
Guarantee Amounts
Maximum Balance for the Period
(US$ in Thousands)
Ending Balance
(US$ in Thousands)
Value of Collateral Property,
Plant and Equipment
Ratio of Accumulated Amount of
Collateral to Net Equity of the
Latest Financial Statement
Maximum Collateral/Guarantee
Amounts Allowable (Note 1)
0
TSMC
TSMC-North America
TSMC Development
2
3
Not exceed 10% of the net
worth of the Company,
and be also limited to
the paid-in capital of the
endorsement/guarantee
company, unless
otherwise approved by
Board of Directors.
$ 1,303,840
(US$ 40,000)
$ 1,955,760
(US$ 60,000)
Note 1: 25% of the net worth of the Company as of December 31, 2006.
Note 2: The No. 2 represents a subsidiary in which the Company holds directly over 50% of the equity interest.
The No. 3 represents an investee in which the Company holds directly and indirectly over 50% of the equity interest.
$ -
$ -
-
-
$ 126,995,321
-
-
149
TABLE 3
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
MARKETABLE SECURITIES HELD
DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
The Company
Government bond
2004 Government Bond Series B
2003 Government Bond Series B
2006 Government Bond Series D
2005 Government Bond Series A
2003 Government Bond Series B
2003 Asian Development Bank Govt. Bond
2003 Government Bond Series F
2004 Kaohsiung Municipal Series A
2003 Government Bond Series H
European Investment Bank Bonds
2002 Government Bond Series B
2004 Kaohsiung Municipal Series B
2003 European Bank for Recomspruction and
Developement Govt. Bond Series A
Open-end mutual funds
NITC Bond Fund
ABN AMRO Bond Fund
Fuh Hwa Bond
Mega Diamond Bond Fund
Prudential Financial Bond Fund
NITC Taiwan Bond
JF Taiwan Bond Fund
Cathay Bond
Jih Sun Bond Fund
Dresdner Bond DAM Fund
ABN AMRO Income
President James Bond
AIG Taiwan Bond Fund
JF Taiwan First Bond Fund
Shinkong Chi Shin Bond Fund
ABN AMRO Select Bond Fund
Taishin Lucky Fund
Polaris De-Bao Fund
TIIM High Yield
HSBC Taiwan Money Management
Invesco Bond Fund
Corporate bond
Hua Nan Bank
Cathay Bank
Taiwan Power Company
Formosa Petrochemical Corporation
Taiwan Power Company
Formosa Petrochemical Corporation
Nan Ya Plastics Corporation
Chinese Petroleum Corporation
China Steel Corporation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
Held-to-maturity financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale financial assets
〃
〃
〃
Hold-to-maturity financial assets
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 999,779
998,288
3,657,320
3,049,919
1,647,851
835,840
797,299
620,000
401,568
372,265
350,399
249,998
88,198
22,219
175,156
125,122
139,333
103,751
93,312
85,145
109,720
88,165
95,553
63,947
65,496
78,629
66,826
62,183
76,593
78,624
63,273
44,685
34,093
27,176
-
-
-
-
-
-
-
-
-
3,655,939
2,639,459
1,667,908
1,602,947
1,516,294
1,314,669
1,299,088
1,265,092
1,202,901
1,107,206
1,012,377
1,010,426
1,002,595
939,082
890,660
868,076
806,386
701,069
554,863
506,250
403,774
1,545,864
1,159,576
1,046,799
397,963
4,080,391
3,566,946
2,773,810
1,451,378
1,000,000
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$ 999,779
998,288
3,657,446
3,049,726
1,645,179
875,103
796,354
618,760
400,920
400,000
350,378
250,004
90,000
3,655,939
2,639,459
1,667,908
1,602,947
1,516,294
1,314,669
1,299,088
1,265,092
1,202,901
1,107,206
1,012,377
1,010,426
1,002,595
939,082
890,660
868,076
806,386
701,069
554,863
506,250
403,774
1,545,864
1,159,576
1,046,799
397,963
4,087,276
3,563,249
2,781,223
1,450,722
999,689
150
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
Shares/Units
(In Thousands)
Formosa Plastic Corporation
Shanghai commercial & Saving Bank
Formosa Chemicals & Fiber Corporation
Stocks
TSMC Global
TSMC International
SSMC
VIS
TSMC Partners
TSMC-North America
GUC
TSMC-Japan
TSMC-Europe
TSMC-Korea
United Industrial Gases Co., Ltd.
Shin-Etsu Handotai Taiwan Co., Ltd.
W.K. Technology Fund IV
Hontung Venture Capital Co., Ltd.
Fund
Horizon Ventures Fund
Crimson Asia Capital
Capital
TSMC-Shanghai
Emerging Alliance
VTAF II
VTAF III
Chi Cheng
Hsin Ruey
Stock
TSMC
VIS
Stock
TSMC
Chi Cherng
Hsin Ruey
-
-
-
Subsidiary
Hold-to-maturity financial assets
〃
〃
Invest accounted for using
equity method
Subsidiary
Investee accounted for using
equity method
Investee accounted for using
equity method
Subsidiary
Subsidiary
Investee with controlling
financial interest
〃
〃
〃
〃
〃
〃
Subsidiary
Subsidiary
Subsidiary
-
-
-
-
-
-
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
〃
〃
〃
Financial assets carried at cost
〃
〃
〃
Financial assets carried at cost
〃
Investment accounted for using
equity method
〃
〃
〃
〃
〃
442,262
5,741,870
December 31, 2006
Carrying Value
(US$ in
Thousands)
$ 516,663
286,497
66,856
42,496,592
26,593,749
7,960,869
4,433,819
2,014,990
629,755
95,757
49,741
14,706
193,584
105,000
40,000
26,329
280,179
67,751
Percentage of
Ownership
N/A
N/A
N/A
100
100
39
27
100
100
38
100
100
100
10
7
2
10
12
1
Note
Market Value or
Net Asset Value
(US$ in
Thousands)
$ 519,076
286,408
68,123
42,496,592
26,593,749
6,794,726
10,813,301
4,433,819
2,014,990
6,230,739
95,757
49,741
14,706
299,493
223,062
51,398
26,310
280,179
67,751
9,027,984
100
9,027,984
793,585
733,130
228,005
115,507
114,297
99
98
98
36
36
793,585
731,808
225,545
574,071
573,809
-
-
-
1
987,968
463
300
11,000
41,263
6
-
80
16,783
10,500
4,000
2,633
-
-
-
-
-
-
-
-
Parent Company
Available-for-sale financial assets
16,947
1,143,941
N/A
1,143,941
Equity method investee
Investments accounted for using
5,032
107,224
-
107,224
equity method
Parent Company
Available-for-sale financial assets
16,979
1,146,085
N/A
1,146,085
Treasury stock of NT$458,564
thousand is deducted from
the carrying value
Treasury stock of NT$459,511
thousand is deducted from
the carrying value
(Continued)
151
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
TSMC International
VIS
Stock
InveStar
InveStar II
TSMC Development
TSMC Technology
TSMC Development
WaferTech
Partners
Common stock
VisEra Holdings
Equity method investee
Investments accounted for using
3,711
$
82,661
-
$
82,661
equity method
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Investments accounted for using
9,207
US$
26,185
97
US$
26,185
equity method
〃
〃
〃
51,300
1
1
US$
US$
US$
46,195
659,356
6,058
97
100
100
US$
US$
US$
46,195
659,356
4,473
Investments accounted for using
-
US$
282,420
100
US$
282,420
equity method
Equity method investee
Investments accounted for using
25,000
US$
34,000
49
US$
34,000
Emerging Alliance
VTAF II
152
Common stock
NetLogic Microsystems, Inc.
Pixim, Inc.
RichWave Technology Corp.
Global Investment Holding Inc.
Preferred stock
Ikanos Communication, Inc.
Audience, Inc.
Axiom Microdevices, Inc.
Centrality Comunications
Miradia, Inc.
Mobilygen
Mosaic Systems, Inc.
Next IO, Inc.
NuCORE Technology Inc.
Optichron, Inc.
Optimal Corporation
Pixim, Inc.
Reflectivity, Inc.
Teknovus, Inc.
Zenasis Technologies, Inc.
Option
Pixim, Inc.
Common stock
Beceem Communications
Leadtrend
Yobon
Sentelic
Preferred stock
5V Technologies, Inc.
Ageia Technologies, Inc.
Aquantia Corporation
Audience, Inc.
Axiom Microdevices, Inc.
GemFire Corporation
Impinj, Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
equity method
Financial assets at fair value
through profit or loss
Financial assets carried at cost
〃
〃
Available-for-sale financial assets
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Financial assets carried at cost
Financial assets carried at cost
〃
〃
〃
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
84
US$
1,828
-
US$
1,828
1,924
4,247
10,800
515
1,654
1,000
1,325
3,040
1,415
2,481
800
2,254
714
582
2,193
4,848
6,977
2,410
242
650
1,150
1,675
1,200
2,357
2,030
1,264
2,208
3,015
600
257
US$
US$
$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
512
1,648
100,000
4,473
250
1,000
1,800
1,000
750
12
500
1,455
1,000
600
583
531
1,327
1,399
4
13
6
2
1
3
3
3
1
6
2
2
4
4
-
4
3
5
-
N/A
1,600
660
787
2,040
1,768
2,074
1,150
474
1,466
68
500
1
6
13
15
11
2
5
1
2
1
-
US$
US$
$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
512
1,648
100,000
4,473
250
1,000
1,800
1,000
750
12
500
1,455
1,000
600
583
531
1,327
1,399
-
1,600
660
787
2,040
1,768
2,074
1,150
474
1,466
68
500
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
( US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
VTAF III
Investar
Investar II
Miradia, Inc.
Next IO, Inc.
Optichron, Inc.
Power Analog Microelectronics
Powerprecise Solutions, Inc.
RichWave Technology Corp.
Teknovus, Inc.
Tzero Technologies, Inc.
Xceive
Common stock
M2000, Inc.
Mutual-Pak Limited
Quellan, Inc.
SynDiTec, Inc.
Validity-Pak Limited
Common stock
Monolithic Power Systems, Inc.
Broadtek Electronics Corp.
Broadtek Electronics Corp.
Capella Microsystems (Taiwan), Inc.
Preferred stock
Integrated Memory Logic,Inc.
IP Unity, Inc.
Memsic, Inc.
NanoAmp Solutions, Inc.
Sonics, Inc.
Common stock
Monolithic Power Systems, Inc.
RichTek Technology Corp.
Geo Vision, Inc.
RichTek Technology Corp.
Geo Vision, Inc.
eChannelOpen Holding, Inc.
eLCOS Microdisplay Technology, Ltd.
EoNEX Technologies, Inc.
Sonics, Inc.
Epic Communications, Inc.
EON Technology, Corp.
Goyatek Technology, Corp.
Capella Microsystems (Taiwan), Inc.
Trendchip Technologies Corp.
Ralink Technology (Taiwan), Inc.
Auden Technology MFG Co., Ltd.
Preferred stock
eLCOS Microdisplay Technology, Ltd.
Alchip Technologies Limited
FangTek, Inc.
Kilopass Technology, Inc.
Memsic, Inc.
NanoAmp Solutions, Inc.
Sonics, Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
Financial assets carried at cost
〃
〃
〃
〃
Financial assets at fair value
through profit or loss
〃
Available-for-sale financial assets
Financial assets carried at cost
Financial assets carried at cost
〃
〃
〃
〃
Financial assets at fair value
through profit or loss
〃
〃
Available-for-sale financial assets
〃
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
2,740
216
353
2,000
1,445
500
518
730
714
1,500
170
2,231
4,332
5,333
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,424
182
869
1,500
1,400
231
119
1,500
1,000
1,500
52
2,500
720
2,000
1,975
US$
21,939
29
116
530
1,831
1,008
2,724
541
1,843
US$
US$
US$
US$
US$
US$
US$
US$
10
40
154
1,221
494
1,500
853
3,530
864
US$
9,604
255
46
227
15
358
270
55
2,220
191
4,247
2,088
534
2,000
1,833
953
2,667
3,531
6,930
3,887
2,289
375
2,115
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,045
229
1,824
73
251
27
3,048
32
37
1,175
545
210
574
791
223
3,500
2,950
3,250
2,000
1,560
1,500
3,082
3
-
2
13
11
2
-
2
2
4
13
7
7
7
7
-
-
2
9
1
9
2
2
3
-
-
-
-
4
1
5
-
1
7
7
2
4
3
4
8
15
20
6
7
1
6
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,424
182
869
1,500
1,400
231
119
1,500
1,000
1,500
52
2,500
720
2,000
21,939
10
40
154
1,221
494
1,500
853
3,530
9,604
2,045
229
1,824
73
251
27
3,048
32
37
1,175
545
210
574
791
223
3,500
2,950
3,250
2,000
1,560
1,500
3,082
(Continued)
153
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
GUC
TSMC Global
154
Open-end mutual funds
ABN AMRO Bond Fund
Ta chong Bond Fund
Dresdner Bond DAM Fund
NITC Taiwan Bond
AIG Taiwan Bond Fund
Fuh Hwa You Li Bond Fund
Stock
Global Unichip Corporation-North America
Global Unichip Japan
Government bond
United States Treas Nts
Corporate bonds
Abbott Labs
Abbott Labs
Ace Ltd.
Aig Sunamerica Global Fing Ix
Allstate Life Global Fdg Secd
American Express Co.
American Gen Fin Corp.
American Gen Fin Corp. Mtn
American Gen Fin Corp. Mtn
American Gen Fin Corp. Mtn
American Honda Fin Corp. Mtn
American Honda Fin Corp. Mtn
Ameritech Capital Funding Co.
Amgen Inc.
Anz Cap Tr I
Associates Corp. North Amer
Axa Finl Inc.
Bank New York Inc.
Bank One Corp.
Bank One Corp.
Bank Utd Houston Tx Mtbn
Bear Stearns Cos Inc.
Beneficial Corp. Mtn Bk Entry
Berkshire Hathaway Fin Corp.
Chase Manhattan Corp. New
Chase Manhattan Corp. New
Chubb Corp.
Cit Group Hldgs Inc.
Citicorp
Cogentrix Energy Inc.
Colonial Pipeline Co.
Consolidated Edison Inc.
Countrywide Fdg Corp. Mtn
Credit Suisse Fincl Products
Credit Suisse First Boston
Credit Suisse First Boston USA
Daimlerchrysler North Amer
Daimlerchrysler North Amer Hld
Dayton Hudson Corp.
Deere John Cap Corp.
Dell Computer Corp.
-
-
-
-
-
-
Subsidiary
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
Investments accounted for using
equity method
〃
Available-for-sale financial assets
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
$
2,325
2,306
2,592
2,132
2,355
2,018
100
35,041
30,037
30,036
30,035
30,031
25,035
6,396
2,681
$
N/A
N/A
N/A
N/A
N/A
N/A
100
100
35,041
30,037
30,036
30,035
30,031
25,035
6,396
2,681
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
151,045
N/A
US$
151,045
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,505
2,547
1,001
1,000
2,956
3,452
1,620
3,448
1,971
1,001
3,092
801
483
2,905
972
2,541
2,151
1,487
3,365
2,045
528
3,379
2,297
1,486
5,077
2,115
2,116
3,027
1,372
3,751
1,494
2,910
2,037
1,500
734
2,177
977
751
2,020
4,928
2,820
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,505
2,547
1,001
1,000
2,956
3,452
1,620
3,448
1,971
1,001
3,092
801
483
2,905
972
2,541
2,151
1,487
3,365
2,045
528
3,379
2,297
1,486
5,077
2,115
2,116
3,027
1,372
3,751
1,494
2,910
2,037
1,500
734
2,177
977
751
2,020
4,928
2,820
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
Den Danske Bk Aktieselskab
Diageo Plc
Emerson Elec Co.
European Invt Bk
European Invt Bk
Federal Home Ln Bks
Fifth Third Bk Cincinnati Oh
Fleet Boston Corp.
Fleet Finl Group Inc. New
Fpl Group Cap Inc.
Ge Global Ins Hldg Corp.
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Re Corp.
Goldman Sachs Group Inc.
Goldman Sachs Group Inc.
Greenpoint Finl Corp.
Hancock John Global Fdg Ii Mtn
Hancock John Global Fdg Ii Mtn
Hancock John Global Fdg Mtn
Hartford Finl Svcs Group Inc.
Hartford Finl Svcs Group Inc.
Hbos Plc Medium Term Sr Nts
Hbos Plc Medium Term Sr Nts
Heller Finl Inc.
Hershey Foods Corp.
Household Fin Corp.
Household Fin Corp.
Household Intl Inc.
Hsbc Fin Corp.
Hsbc Fin Corp. Mtn
Huntington National Bank
Ing Sec Life Instl Fdg
International Business Machs
Intl Lease Fin Corp. Mtn
Intl Lease Fin Corp. Mtn
JP Morgan Chase + Co.
Jackson Natl Life Global Fdg
Key Bk Na Med Term Nts Bk Entr
KeyCorp. Mtn Book Entry
Kraft Foods Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lincoln Natl Corp. In
Marshall + Ilsley Corp.
Mbna America Bank Na Y
Merita Bk Ltd. Ny Brh
Merrill Lynch + Co. Inc.
Merrill Lynch + Co. Inc.
Merrill Lynch + Co. Inc.
Metropolitan Life Global Mtn
Mgic Invt Corp.
Monumental Global Fdg II
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,019
3,444
3,215
3,970
6,057
7,937
2,427
2,643
905
849
1,915
3,888
8,759
8,282
2,119
3,292
4,989
3,456
968
2,896
5,132
975
5,037
1,345
3,205
2,952
1,929
1,504
2,903
501
2,851
3,028
5,096
1,886
2,483
2,217
2,939
4,138
3,298
1,000
4,401
3,010
1,000
1,626
487
989
3,150
1,077
500
8,420
6,403
501
3,453
1,985
4,865
3,369
1,204
1,468
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,019
3,444
3,215
3,970
6,057
7,937
2,427
2,643
905
849
1,915
3,888
8,759
8,282
2,119
3,292
4,989
3,456
968
2,896
5,132
975
5,037
1,345
3,205
2,952
1,929
1,504
2,903
501
2,851
3,028
5,096
1,886
2,483
2,217
2,939
4,138
3,298
1,000
4,401
3,010
1,000
1,626
487
989
3,150
1,077
500
8,420
6,403
501
3,453
1,985
4,865
3,369
1,204
1,468
(Continued)
155
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
Monumental Global Fdg II 2002a
Monunmetal Global Fdg II
Mony Group Inc.
Morgan Stanley
Morgan Stanley
National City Corp.
National Westminster Bk Plc
Nationwide Bldg Soc
Nationwide Life Global Fdg I
Nationwide Life Global Mtn
Nucor Corp.
Oracle Corp. / Ozark Hldg Inc.
Pepsico Inc. Mtn Book Entry
Pnc Fdg Corp.
Popular North Amer Inc.
Praxair Inc.
Premark Intl Inc.
Pricoa Global Fdg I Mtn
Principal Finl Group Australia
Principal Life Global Fdg I Gl
Protective Life Secd Trs
Protective Life Secd Trs Mtn
Prudential Ins Co. Amer
Public Svc Elec Gas Co.
Regions Finl Corp. New
Safeco Corp.
Sbc Communications Inc.
Sbc Communications Inc.
Simon Ppty Group Lp
Slm Corp. Medium Term Nts
Sp Powerassests Ltd. Global
St Paul Cos Inc. Mtn Bk Ent
Suntrust Bk Atlanta Ga Medium
Tiaa Global Mkts Inc.
Unitedhealth Group Inc.
Us Bk Natl Assn Cincinnati Oh
Vodafone Airtouch Plc
Wachovia Corp. New
Washington Mut Bk Fa
Washington Mut Inc.
Washington Mut Inc.
Washington Post Co.
Wells Fargo + Co. New
Wells Fargo + Co. New Med Trm
Westfield Cap Corp. Ltd.
Wps Resources Corp.
Corporate issued asset - backed securities
American Home Mtg Invt Tr
Americredit Auto Rec Tr
Americredit Automobile Rec Tr
Americredit Automobile Rec Tr
Americredit Automobile Rec Tr
Americredit Automobile Receiva
Americredit Automobile Receivb
Atlantic City Elc Trns Fdgllc
Ba Cr Card Tr
Banc Amer Coml Mtg Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,000
1,961
2,175
1,926
2,126
3,410
1,323
3,537
3,501
1,485
3,797
1,973
3,619
1,007
2,910
3,138
2,729
3,401
1,013
1,165
2,913
3,390
2,629
3,682
2,371
715
1,041
697
1,009
8,998
969
2,550
3,442
500
3,000
2,915
4,449
2,040
3,997
1,692
1,000
3,001
2,943
4,311
2,005
1,047
116
1,004
1,116
2,598
3,269
4,609
2,891
420
4,300
2,869
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,000
1,961
2,175
1,926
2,126
3,410
1,323
3,537
3,501
1,485
3,797
1,973
3,619
1,007
2,910
3,138
2,729
3,401
1,013
1,165
2,913
3,390
2,629
3,682
2,371
715
1,041
697
1,009
8,998
969
2,550
3,442
500
3,000
2,915
4,449
2,040
3,997
1,692
1,000
3,001
2,943
4,311
2,005
1,047
116
1,004
1,116
2,598
3,269
4,609
2,891
420
4,300
2,869
156
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
Banc Amer Fdg 2006 I Tr
Bank Of Amer Lease Equip Tr
Bear Stearns Alt A Tr
Bear Stearns Arm Tr
Bear Stearns Arm Tr
Bear Stearns Coml Mtg Secs Inc.
Bear Stearns Coml Mtg Secs Inc.
Capital Auto Receivables Asset
Capital One Auto Fin Tr
Capital One Auto Fin Tr
Capital One Auto Fin Tr
Capital One Multi Asset Execut
Capital One Multi Asset Execut
Capital One Prime Auto Rec
Capitial One Prime Auto Receiv
Caterpillar Finl Asset Tr
Caterpillar Finl Asset Tr
Cbass Tr
Cendant Rent Car Fdg Aesop Llc
Cit Equip Coll Tr
Cit Equip Coll Tr
Citibank Cr Card Issuance Tr
Citibank Cr Card Issuance Tr
CitiCorp. Mtg Secs
Cnh Equip Tr
Credit Suisse First Boston Mtg
Credit Suisse First Boston Mtg
Credit Suisse First Boston Mtg
Cwabs
Cwabs Inc.
Cwmbs Inc.
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
Deere John Owner Tr
Drive Auto Receivables Tr
Fifth Third Auto Tr
First Franklin Mtg Ln Tr
First Horizon Abs Tr
First Union Lehman Bros Mtg Tr
Ford Credit Auto Owner Trust
Ge Cap Cr Card Master Nt Tr
Granite Mtgs Plc
Gs Mtg Secs Corp.
Gsamp Tr
Harley Davidson Motorcycle Tr
Harley Davidson Motorcycle Tr
Hertz Veh Fing Llc
Holmes Fing No 8 Plc
Home Equity Mtg Tr 2006 4
Hsbc Automotive Tr
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Impac Cmb Tr
Impac Cmb Tr
Lb Ubs Coml Mtg Tr
Long Beach Mtg Ln Tr
Mastr Asset Backed
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,332
1,057
628
3,480
1,951
6,358
3,541
3,243
2,618
2,986
4,998
3,941
2,963
3,981
2,507
1,525
8,142
4,262
9,297
1,899
3,985
9,864
2,688
582
1,984
3,740
3,576
444
4,261
224
893
4,315
1,695
2,452
3,191
12
4,290
528
1,715
4,324
2,846
564
4,145
4,251
150
5,825
5,319
5,000
4,222
2,980
5,537
3,212
3,928
308
238
3,493
3,203
4,224
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,332
1,057
628
3,480
1,951
6,358
3,541
3,243
2,618
2,986
4,998
3,941
2,963
3,981
2,507
1,525
8,142
4,262
9,297
1,899
3,985
9,864
2,688
582
1,984
3,740
3,576
444
4,261
224
893
4,315
1,695
2,452
3,191
12
4,290
528
1,715
4,324
2,846
564
4,145
4,251
150
5,825
5,319
5,000
4,222
2,980
5,537
3,212
3,928
308
238
3,493
3,203
4,224
(Continued)
157
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
Mbna Master Cr Card Tr II
Merrill Lynch Mtg Invs Inc.
Morgan Stanley Ixis Estate Tr
National City Auto Receivables
Navistar Finl 2003 A Owner Tr
Nissan Auto Receivables
Nissan Auto Receivables
Nomura Asset Accep Corp.
Onyx Accep Owner Tr
Pg + E Energy Recovery Fdg Llc
Providian Gateway Owner Tr
Reliant Energy Transition Bd
Residential Asset Mtg Prods
Residential Asset Sec Mtg Pass
Residential Asset Sec Mtg Pass
Residential Fdg Mtg Secs I Inc.
Residential Fdg Mtg Secs I Inc.
Sequoia Mtg Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Structured Adj Rate Mtg Ln Tr
Structured Adj Rate Mtg Ln Tr
Terwin Mtg Tr
Tw Hotel Fdg 2005 Llc
Txu Elec Delivery Transition
Usaa Auto Owner Tr
Wamu Mtg Pass Thru Ctfs
Wamu Tr
Washington Mut Mtg Pass
Washington Mut Mtg Secs Corp.
Wells Fargo Finl Auto Owner Tr
Wells Fargo Finl Auto Owner Tr
Wells Fargo Mtg Backed Secs
Wells Fargo Mtg Bkd Secs
Wells Fargo Mtg Bkd Secs
Wells Fargo Mtg Bkd Secs Tr
Wfs Finl
Wfs Finl 2004 4 Owner Tr
Wfs Finl 2005 2 Oner Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
Agency bond
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Mtg Corp.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
7,605
5,887
4,110
41
2,956
72
3,928
4,150
3,774
3,997
3,942
2,486
2,484
1,865
2,711
2,014
4,058
548
496
737
1,389
472
4,065
4,103
2,219
4,238
1,002
975
1,759
2,984
4,986
4,926
4,367
2,856
3,399
2,748
620
932
2,220
1,219
2,955
8,768
4,920
8,743
4,856
5,851
7,952
4,885
2,991
6,099
12,279
6,905
5,898
7,506
2,386
1,976
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
7,605
5,887
4,110
41
2,956
72
3,928
4,150
3,774
3,997
3,942
2,486
2,484
1,865
2,711
2,014
4,058
548
496
737
1,389
472
4,065
4,103
2,219
4,238
1,002
975
1,759
2,984
4,986
4,926
4,367
2,856
3,399
2,748
620
932
2,220
1,219
2,955
8,768
4,920
8,743
4,856
5,851
7,952
4,885
2,991
6,099
12,279
6,905
5,898
7,506
2,386
1,976
158
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Loan Banks
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Medium
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Tennessee Valley Auth
Fed Hm Ln Pc Pool 1H2520
Fed Hm Ln Pc Pool 1H2524
Fed Hm Ln Pc Pool 781959
Fed Hm Ln Pc Pool 847628
Fed Hm Ln Pc Pool B19205
Fed Hm Ln Pc Pool E89857
Fed Hm Ln Pc Pool G11295
Fed Hm Ln Pc Pool M80855
Federal Home Ln Mtg
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Gtd
Federal Natl Mtg Assn Gtd
Fnma Pool 254507
Fnma Pool 254834
Fnma Pool 255883
Fnma Pool 555549
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
5,948
6,440
8,049
4,365
5,915
3,943
7,868
19,766
14,973
10,467
6,511
3,000
3,415
2,914
2,900
5,318
6,024
3,100
2,354
6,040
3,796
8,560
1,595
1,371
3,287
3,019
2,208
3,917
3,626
3,076
4,464
1,389
3,176
3,738
3,216
1,356
8,535
3,409
2,976
4,502
2,965
3,743
4,381
4,223
2,807
259
3,158
2,465
4,290
1,994
4,339
632
2,215
2,239
1,616
1,417
3,490
1,616
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
5,948
6,440
8,049
4,365
5,915
3,943
7,868
19,766
14,973
10,467
6,511
3,000
3,415
2,914
2,900
5,318
6,024
3,100
2,354
6,040
3,796
8,560
1,595
1,371
3,287
3,019
2,208
3,917
3,626
3,076
4,464
1,389
3,176
3,738
3,216
1,356
8,535
3,409
2,976
4,502
2,965
3,743
4,381
4,223
2,807
259
3,158
2,465
4,290
1,994
4,339
632
2,215
2,239
1,616
1,417
3,490
1,616
(Continued)
159
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2006
Shares/Units
(In Thousands)
Carrying Value
(US$ in
Thousands)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in
Thousands)
Note
Fnma Pool 632399
Fnma Pool 662401
Fnma Pool 667766
Fnma Pool 680932
Fnma Pool 681393
Fnma Pool 685116
Fnma Pool 687863
Fnma Pool 696485
Fnma Pool 703711
Fnma Pool 725095
Fnma Pool 730033
Fnma Pool 740934
Fnma Pool 790828
Fnma Pool 793025
Fnma Pool 793932
Fnma Pool 794040
Fnma Pool 795548
Fnma Pool 806642
Fnma Pool 813641
Fnma Pool 815626
Fnma Pool 816594
Fnma Pool 825395
Fnma Pool 825398
Fnma Pool 841069
Fnma Pool 879906
Gnma Ii Pool 081150
Gnma Ii Pool 081153
Money market funds
SSGA Cash Mgmt Global Offshore
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale financial assets
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
434
659
1,574
1,307
2,749
629
2,647
3,194
538
1,204
1,470
1,415
2,559
2,466
631
825
411
1,235
3,720
2,945
2,067
2,818
4,224
2,882
1,636
613
2,119
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
434
659
1,574
1,307
2,749
629
2,647
3,194
538
1,204
1,470
1,415
2,559
2,466
631
825
411
1,235
3,720
2,945
2,067
2,818
4,224
2,882
1,636
613
2,119
US$
20,488
N/A
US$
20,488
(Concluded)
160
TABLE 4
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Company
Name
Marketable Securities
Type and Name
Financial
Statement
Account
Counter-party
Nature of
Relationship
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
The Company
Government bond
Kreditanatalt Fur Wiederaufbau
Available-for-sale
financial assets
-
United States Treas NTS
2004 Government Bond Series B
2003 Government Bond Series B
〃
〃
〃
2006 Government Bond Series D
2005 Government Bond Series A
2003 Government Bond Series B
2003 Asian Development Bank
Govt. Bond Series
2003 Government Bond Series F
2003 Government Bond Series H
European Investment Bank Bonds
2004 Kachsiung Municipal Series B
2003 European Bank for
Recomspruction and
Development Govt Bond Series A
Open-end mutual funds
NITC Bond Fund
ABN AMRO Bond Fund
Fuh Hwa Bond
Mega Diamond Bond Fund
Prudential Financial Bond Fund
NITC Taiwan Bond
JF Taiwan Bond Fund
Cathay Bond
JIH SUN Bond Fund
Dresdner Bond DAM Fund
ABN AMRO Income
President James Bond
AGI Taiwan Bond Fund
JF Taiwan First Bond Fund
Held-to-maturity
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
KGI Securities Co., Ltd. and
several financial institutions
KGI Securities Co., Ltd. and
several financial institutions
KGI Securities Co., Ltd. and
several financial institutions
KGI Securities Co., Ltd. and
several financial institutions
KGI Securities Co., Ltd. and
several financial institutions
JP Morgan Chase Bank
KGI Securities Co., Ltd. and
several financial institutions
KGI Securities Co., Ltd. and
several financial institutions
KGI Securities Co., Ltd. and
several financial institutions
KGI Securities Co., Ltd. and
several financial institutions
JP Morgan Chase Bank
National Investment Trust Co., Ltd.
ABN-AMRO Securities Investment
Trust (Taiwan) Ltd.
Fuh Hwa Investment Trust Co.
Mega Investment Trust Corporation
Cathay Securities Investment Trust
Co., Ltd.
Allianz Dresdner Securities
Investment Consulting Co.,Ltd.
JF Asset Management (Taiwan) Ltd.
National Investment Trust Co., Ltd.
JIH SUN Investment Trust
(Taiwan) Ltd.
JF Asset Management (Taiwan) Ltd.
Fuh Hwa Investment Trust Co.
HSBC Investment (Taiwan) Ltd.
AGI Securities Investment Trust
(Taiwan) Ltd.
ABN-AMRO Securities Investment
Trust (Taiwan) Ltd.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 6,881
US$ 46,173
$ -
-
-
2,548,977
-
-
149,441
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ -
US$ 268,521
$ 1,005,115
998,324
3,658,659
499,084
1,647,823
827,820
647,445
401,728
367,600
249,998
87,461
3,764
610,864
18,455
3,000,000
134,906
2,004,862
40,250
600,000
-
-
-
-
125,122
139,333
103,751
1,655,781
1,600,000
1,500,000
93,312
1,300,000
-
-
-
-
62,009
-
-
69,303
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 6,866
US$ 6,881
US$ (15)
US$ 310,469
-
$
US$ 311,106
$ -
US$ (638)
$ -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ -
-
$ 999,779
998,288
3,657,320
3,049,919
1,647,851
835,840
797,299
401,568
372,265
249,998
88,198
22,219
3,655,939
175,156
2,639,459
125,122
139,333
103,751
1,667,908
1,602,947
1,516,294
93,312
1,314,669
85,145
109,720
88,165
95,553
63,947
65,496
78,629
1,299,088
1,265,092
1,202,901
1,107,206
1,012,377
1,010,426
1,002,595
933,430
-
-
792,068
-
-
-
23,136
122,762
88,165
34,914
63,947
72,002
78,629
350,000
1,400,000
1,200,000
400,000
1,000,000
1,100,000
1,000,000
-
13,042
-
8,664
-
6,506
-
-
150,000
-
100,000
-
100,000
-
-
148,736
-
99,103
-
99,401
-
-
1,264
-
897
-
599
-
63,131
875,416
14,399
200,000
10,704
150,000
148,472
1,528
66,826
939,082
(Continued)
161
Company
Name
Marketable Securities
Type and Name
Financial
Statement
Account
Counter-party
Nature of
Relationship
Shinkong Chi Shin Bond Fund
ABN AMRO Select Bond Fund
Taishin Lucky Fund
Polaris De-Bao Fund
TIIM High Yield
HSBC Taiwan Money Management
Invesco R.O.C. Bond Rund
Fuhwa Albatross Fund
Invesco Income Fund
Available-for-sale
financial assets
Fuh Hwa Investment Trust Co.
〃
〃
〃
〃
〃
〃
〃
〃
ABN-AMRO Securities Investment
Trust (Taiwan) Ltd.
Uni-President Assets Management
Corp.
Polaris International Securities
Investment Trust Co., Ltd.
Shinkong Securities Investment
Trust (Taiwan) Ltd.
Taiwan International Securities Corp.
Taishin Securities Investment Trust
(Taiwan) Ltd.
Invesco Asset management Taiwan
Taishin Securities Investment Trust
(Taiwan) Ltd.
Stock
SSMC
Capital
VTAF II
VTAF III
Investment
accounted for
using equity
method
Investment
accounted for
using equity
method
〃
-
-
-
-
-
-
-
-
-
-
-
-
Equity
method
investee
Subsidiary
〃
Corporate bond
Taiwan Power Company
Formosa Petrochemical Corporation
Nan Ya Plastics Corporation
Chinese Petroleum Corporation
China Steel Corporation
Formosa Plastic Corporation
Shanghai commercial & Saving
Bank
Hua Nan Bank
Cathay Bank
Taiwan Power Company
Formosa Petrochemical Corporation
American Express Co.
American Gen Fin Corp. Mtn
American Honda Fin Corp. Mtn
American Honda Fin Corp. Mtn
Bank One Corp.
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Cargill Inc.
Caterpillar Finl Svcs Mtn
Chase Manhattan Corp. New
Cit Group Hldgs Inc.
Held-to-maturity
financial assets
KGI Securities Co., Ltd.
〃
〃
〃
〃
〃
〃
KGI Securities Co., Ltd.
KGI Securities Co., Ltd.
KGI Securities Co., Ltd. and several
financial institutions
KGI Securities Co., Ltd.
KGI Securities Co., Ltd. and several
financial institutions
KGI Securities Co., Ltd.
Available-for-sale
financial assets
HSBC
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
HSBC
KGI Securities Co., Ltd.
KGI Securities Co., Ltd.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
162
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
55,063
$ 778,482
17,617
$ 250,000
10,497
$ 150,000
$ 148,542
$ 1,458
62,183
$ 890,660
18,235
203,860
93,738
1,050,000
35,380
400,000
396,179
3,821
76,593
868,076
-
-
-
-
-
-
-
-
78,624
800,000
-
63,273
700,000
-
-
-
-
-
-
-
-
-
-
-
56,812
700,000
12,127
150,000
149,276
47,667
27,176
89,510
44,180
700,000
403,727
1,000,000
500,000
13,574
-
89,510
44,180
200,007
-
199,327
-
1,005,781
503,727
1,000,000
500,000
382
4,215,200
81
2,432,705
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
642,479
-
3,263,349
1,093,283
2,150,842
705,436
1,010,532
268,855
-
-
-
-
-
US$ 3,550
-
-
US$ 3,800
-
US$ 3,329
US$ 3,757
-
US$ 5,721
US$ 1,628
US$ 3,203
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
130,956
243,545
1,690,567
2,769,533
1,097,943
1,000,441
1,000,000
379,809
283,996
1,526,049
1,144,877
1,046,302
397,076
-
US$ 3,415
US$ 3,087
-
US$ 3,326
-
-
US$ 3,337
-
US$ 3,540
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,432
US$ 3,446
US$ 3,095
US$ 3,805
US$ 3,325
US$ 3,340
US$ 3,575
US$ 3,370
US$ 5,761
US$ 5,091
US$ 3,036
-
-
-
US$ 3,550
US$ 3,415
US$ 3,087
US$ 3,800
US$ 3,326
US$ 3,329
US$ 3,757
US$ 3,337
US$ 5,721
US$ 5,168
US$ 3,203
-
-
-
US$ (118)
US$ 31
US$ 8
US$ 5
US$ (1)
US$ 11
US$ (182)
US$ 33
US$ 40
US$ (77)
US$ (167)
-
-
724
680
-
5,781
3,727
-
-
-
-
-
-
-
-
-
-
-
78,624
806,386
63,273
701,069
44,685
554,863
34,093
27,176
506,250
403,774
-
-
-
-
463
7,960,869
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
733,130
228,005
4,080,391
3,566,946
2,773,810
1,451,378
1,000,000
516,663
286,497
1,545,864
1,159,576
1,046,799
397,963
-
-
-
-
-
-
-
-
-
-
-
(Continued)
Company
Name
Marketable Securities
Type and Name
Cogentrix Energy Inc.
Countrywide Home Lns Inc.
Credit Suisse Fb USA Inc.
Deere John Cap Corp.
Deere John Cap Corp.
Diageo Plc
European Invt Bk
European Invt Bk
European Invt Bk
Federal Home Ln Bks
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Re Corp.
Genworth Finl Inc.
Goldman Sachs Group Inc.
Goldman Sachs Group Inc.
Hancock John Global Fdg Ii Mtn
Hancock John Global Fdg Ii Mtn
Hartford Finl Svcs Group Inc.
Hbos Plc Medium Term Sr Nts
Hewlett Packard Co.
Honeywell Inc.
Hsbc Fin Corp. Mtn
Intl Lease Fin Corp. Mtn
Jp Morgan Chase + Co.
Jp Morgan Chase + Co.
Key Bk Na Med Term Nts Bk Entr
Keycorp Mtn Book Entry
Keycorp Mtn Book Entry
Merrill Lynch + Co. Inc.
Merrill Lynch + Co. Inc.
Metropolitan Life Global Mtn
Monumental Global Fdg Ii 2
Morgan Stanley Group Inc.
National City Corp.
Nationwide Bldg Soc
Nationwide Bldg Soc Mtn
Nationwide Life Global Fdg I
Nucor Corp.
Pepsico Inc. Mtn Book Entry
Praxair Inc.
Pricoa Global Fdg 1 Mtn
Pricoa Global Fdg I Mtn
Public Svc Elec Gas Co.
Santander Us Debt S A Uniperso
Slm Corp. Medium Term Nts
Suntrust Bk Atlanta Ga Medium
Washington Mut Inc.
Washington Post Co.
Wells Fargo + Co. New
Wells Fargo + Co. New
Corporate issued
asset-backed securities
Americredit Automobile Rec Tr
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale
financial assets
Americredit Automobile Receiva
〃
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
2,885
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
5,210
4,141
-
5,079
3,459
8,315
3,918
-
-
-
3,989
8,862
3,500
3,412
4,981
3,477
3,566
-
-
3,201
3,373
3,284
5,097
2,471
3,406
3,663
4,450
3,500
-
3,486
4,900
1,907
-
4,507
3,426
3,457
3,000
-
-
3,818
-
3,500
-
3,225
4,998
2,950
-
4,735
3,182
3,697
-
-
US$
5,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
1,132
-
-
4,911
-
-
-
-
5,995
7,937
3,351
-
-
-
-
-
-
-
3,808
5,016
-
-
-
-
4,100
-
-
-
-
3,006
-
-
1,419
3,348
-
-
-
-
3,491
3,828
-
3,180
-
3,394
483
-
6,012
3,409
-
-
-
6,076
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,249
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
3,777
US$
4,017
US$
(239)
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
5,001
4,003
4,899
5,013
3,436
8,002
3,930
5,994
7,937
3,399
3,893
8,716
3,319
3,415
4,941
3,453
3,486
3,808
5,048
3,182
3,177
3,017
5,066
6,578
3,310
3,519
4,393
3,508
3,016
3,426
4,842
3,361
3,382
4,386
3,402
3,495
3,004
3,520
3,811
3,624
3,147
3,504
3,403
3,684
4,957
8,949
3,448
4,505
3,007
3,512
6,073
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
5,210
4,141
4,911
5,079
3,459
8,315
3,918
5,995
7,937
3,351
3,989
8,862
3,500
3,412
4,981
3,477
3,566
3,808
5,016
3,201
3,373
3,284
5,097
6,571
3,406
3,663
4,450
3,500
3,006
3,486
4,900
3,326
3,348
4,507
3,426
3,457
3,000
3,491
3,828
3,818
3,180
3,500
3,394
3,708
4,998
8,962
3,409
4,735
3,182
3,697
6,076
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
(209)
(138)
(12)
(66)
(23)
(313)
12
(1)
-
48
(96)
(146)
(181)
3
(40)
(24)
(80)
-
32
(19)
(196)
(267)
(31)
7
(96)
(143)
(57)
8
10
(60)
(58)
35
34
(121)
(24)
38
4
29
(17)
(194)
(33)
4
9
(24)
(41)
(13)
39
(230)
(175)
(185)
(3)
US$
3,261
US$
3,249
US$
12
US$
4,959
US$
5,000
US$
(41)
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
163
Company
Name
Marketable Securities
Type and Name
Americredit Automobile Receivb
Banc Amer Coml Mtg Inc.
Bear Stearns Arm Tr
Bear Stearns Coml Mtg Secs Inc.
Capital Auto Receivables Asset
Capital One Auto Fin Tr
Capital One Multi Asset Execut
Capital One Multi Asset Execut
Caterpillar Finl Asset Tr
Cendant Rent Car Fdg Aesop Llc
Cit Equip Coll Tr
Citibank Cr Card Issuance Tr
Cnh Equip Tr
Credit Suisse First Boston Mtg
Credit Suisse First Boston Mtg
Credit Suisse First Boston Mtg
Drive Auto Receivables Tr
Federal Natl Mtg Assn
Ford Cr Auto Owner Tr
Gs Mtg Secs Corp.
Gsamp Tr
Harley Davidson Motorcycle Tr
Hertz Veh Fing Llc
Holmes Fing No 8 Plc
Home Equity Mtg Tr 2006 4
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Lb Ubs Coml Mtg Tr
Long Beach Mtg Ln Tr
Massachusetts Rrb Spl Purp Tr
Mastr Asset Backed Secs Tr
Mbna Master Cr Card Tr Ii
Merrill Lynch Mtg Invs Inc.
Navistar Finl 2003 A Owner Tr
Nissan Auto Receivables
Nomura Asset Accep Corp.
Onyx Accep Owner Tr
Pg + E Energy Recovery Fdg Llc
Providian Gateway Owner Tr
Reliant Energy Transition Bd
Residential Asset Sec Mtg Pass
Residential Fdg Mtg Secs I Inc.
Terwin Mtg Tr
Toyota Auto Receivables 2003 B
Tw Hotel Fdg 2005 Llc
Usaa Auto Owner Tr
Washington Mut Mtg Secs Corp.
Wells Fargo Finl Auto Owner Tr
Wells Fargo Finl Auto Owner Tr
Wells Fargo Mtg Bkd Secs
Wells Fargo Mtg Bkd Secs
Wfs Finl 2004 2 Owner Tr
Wfs Finl 2004 4 Owner Tr
World Omni Auto Receivables Tr
Agency bond
Fed Hm Ln Pc Pool 1h2520
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale
financial assets
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
4,949
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,462
-
6,350
-
-
4,957
3,974
8,219
11,626
-
9,782
5,000
-
-
-
3,200
-
10,908
-
-
5,999
5,350
5,001
-
6,442
3,250
3,999
4,001
-
3,900
3,499
8,108
-
4,928
7,000
-
4,913
4,749
3,992
4,973
3,780
4,817
-
4,970
8,197
3,718
4,067
5,299
-
3,661
-
4,994
5,399
5,963
US$
3,753
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
3,826
-
3,250
5,000
-
-
-
-
3,975
-
-
4,773
3,750
3,572
-
4,828
-
4,150
4,250
-
-
-
4,200
-
-
-
-
3,200
-
-
-
6,665
-
-
4,150
-
-
-
-
-
-
4,050
-
(4,100)
-
-
-
4,893
-
3,772
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
3,826
US$
3,856
US$
(30)
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,254
3,597
6,362
3,232
5,008
4,879
3,932
8,121
11,412
3,996
9,797
3,457
4,834
3,728
3,566
3,183
4,577
5,782
4,134
4,241
5,793
5,284
5,000
4,200
6,202
3,208
3,904
3,733
3,195
3,830
3,083
7,653
6,561
3,994
6,132
4,144
4,885
4,646
3,911
3,994
3,052
4,224
4,033
4,963
4,116
3,696
3,261
5,235
4,932
3,020
3,488
4,913
4,883
5,869
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,325
3,609
6,350
3,250
5,000
4,957
3,974
8,219
11,626
3,975
9,782
3,500
4,773
3,750
3,572
3,200
4,561
5,836
4,150
4,250
5,999
5,350
5,001
4,200
6,279
3,250
3,999
3,779
3,200
3,900
3,079
8,108
6,558
4,035
6,194
4,150
4,913
4,749
3,992
4,162
3,100
4,309
4,050
4,970
4,097
3,718
3,302
5,299
4,893
3,054
3,500
4,994
4,955
5,963
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
(71)
(12)
12
(18)
8
(78)
(42)
(98)
(214)
21
15
(43)
61
(22)
(6)
(17)
16
(54)
(16)
(9)
(206)
(66)
-
-
(77)
(42)
(95)
(46)
(5)
(70)
4
(455)
3
(41)
(62)
(6)
(28)
(103)
(81)
(168)
(48)
(85)
(17)
(7)
19
(22)
(41)
(64)
39
(34)
(12)
(81)
(72)
(94)
US$
3,329
US$
3,345
US$
(16)
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
164
(Continued)
Company
Name
Marketable Securities
Type and Name
Fed Hm Ln Pc Pool 781959
Fed Hm Ln Pc Pool M80855
Federal Home Ln Mtg
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Loan Mtg
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Fnma Pool 255883
Fnma Pool 696485
Fnma Pool 813641
Fnma Pool 815626
Fnma Pool 825398
Fnma Pool 841069
Federal Farm Cr Bks
Federal Home Ln Bank
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
7,112
-
3,848
-
3,954
6,096
-
-
-
4,098
9,905
4,902
3,755
-
-
-
-
-
-
-
4,030
4,051
3,771
4,175
-
3,622
4,949
3,673
3,985
3,962
3,976
8,594
3,932
4,927
-
4,136
4,939
8,672
4,965
4,808
-
7,558
-
7,886
6,110
-
3,972
7,887
19,846
6,908
6,098
9,134
3,379
-
3,388
9,997
6,980
5,929
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
3,882
-
3,898
-
-
4,962
3,351
4,317
-
-
-
-
4,481
3,349
3,857
5,380
4,631
4,488
5,009
-
-
-
-
3,906
-
-
-
-
-
-
-
-
-
8,628
-
-
-
-
-
5,740
-
4,823
-
-
12,227
-
-
-
-
-
-
-
7,490
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
6,577
US$
6,553
US$
24
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,381
3,308
3,919
3,909
4,316
4,665
3,299
3,893
3,388
8,812
4,069
3,308
4,476
3,114
3,789
4,574
4,450
4,444
4,937
3,515
3,131
3,559
3,393
3,916
3,189
4,562
3,134
3,940
3,955
3,964
8,519
3,980
4,930
8,716
4,140
4,872
8,735
4,944
4,850
5,825
7,515
4,882
7,960
6,061
12,233
3,951
7,758
19,800
6,881
5,907
8,968
3,296
7,490
3,481
9,788
6,941
5,930
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,462
3,336
3,898
3,920
4,424
4,683
3,294
3,883
3,402
8,851
4,159
3,362
4,481
3,089
3,776
4,565
4,435
4,406
4,889
3,568
3,196
3,581
3,403
3,906
3,203
4,672
3,156
3,985
3,962
3,976
8,594
3,932
4,927
8,628
4,136
4,939
8,672
4,965
4,808
5,740
7,558
4,823
7,886
6,110
12,227
3,972
7,887
19,846
6,908
6,098
9,134
3,379
7,490
3,388
9,997
6,980
5,929
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
(81)
(28)
21
(11)
(108)
(18)
5
10
(14)
(39)
(90)
(54)
(5)
25
13
9
15
38
48
(53)
(65)
(22)
(10)
10
(14)
(110)
(22)
(45)
(7)
(12)
(75)
47
3
88
4
(67)
63
(21)
42
85
(43)
59
74
(49)
6
(21)
(129)
(46)
(27)
(191)
(166)
(83)
-
93
(209)
(39)
1
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
165
Company
Name
Marketable Securities
Type and Name
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp. Mtn
Federal Home Loan Bank
Federal Home Loan Mtg Assn
Federal Home Loan Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Medium
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Freddie Mac
Tennessee Valley Auth
Chi Cheng
Stock
VIS
TSMC
Global
Government bond
United States Treas Nts
Corporate bond
American Express Co.
American Gen Fin Corp. Mtn
American Honda Fin Corp. Mtn
Bank One Corp.
Bear Stearns Cos Inc.
Cit Group Hldgs Inc.
Chase Manhattan Corp. New
Cogentrix Energy Inc.
Counrywide Finl Corp.
Deere John Cap Corp.
Diageo Plc
Emerson Elec Co.
European Invt Bk
European Invt Bk
Federal Home Ln Bks
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
166
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Investment
accounted for
using equity
method
Available-for-sale
financial assets
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Equity
method
investee
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
4,930
3,475
4,847
4,903
4,943
8,971
4,921
7,892
4,430
17,888
5,928
-
7,926
-
-
-
-
-
15,787
9,758
7,000
-
5,740
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
6,415
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
14,175
9,974
-
-
-
-
-
-
-
-
-
-
-
7,800
-
19,539
14,901
10,430
7,966
3,353
-
-
-
5,255
-
9,391
6,039
5,032
$
100,116
-
US$
501,897
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
3,432
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,446
3,095
3,325
3,340
3,036
5,091
3,777
5,005
4,899
3,436
3,222
3,930
5,994
7,937
8,716
3,893
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
6,410
US$
6,415
US$
(5)
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
14,269
9,929
4,912
3,459
4,901
4,927
4,944
8,940
4,916
7,908
4,364
17,782
5,885
7,832
7,834
19,702
14,931
10,459
7,979
3,417
15,851
9,781
6,925
5,292
5,562
9,314
6,038
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
14,175
9,974
4,930
3,475
4,847
4,903
4,943
8,971
4,921
7,892
4,430
17,888
5,928
7,800
7,926
19,539
14,901
10,430
7,966
3,353
15,787
9,758
7,000
5,255
5,740
9,391
6,039
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
94
(45)
(18)
(16)
54
24
1
(31)
(5)
16
(66)
(106)
(43)
32
(92)
163
30
29
13
64
64
23
(75)
37
(178)
(77)
(1)
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,032
$
107,224
US$
351,917
US$
351,594
US$
323
-
US$
151,045
-
-
-
-
-
-
-
-
5,005
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,005
-
-
-
-
-
-
-
-
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
3,452
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,448
3,092
3,365
3,379
3,027
5,077
3,751
-
4,928
3,444
3,215
3,970
6,057
7,937
8,759
3,888
(Continued)
Company
Name
Marketable Securities
Type and Name
General Elec Cap Corp. Mtn
General Re Corp.
Goldman Sachs Group Inc.
Goldman Sachs Group Inc.
Hbos Plc Medium Term Sr Nts
Hsbc Fin Corp. Mtn
Hsbc Fin Corp.
Hancock John Global Fdg Ii Mtn
Hartford Finl Svcs Group Inc.
Intl Lease Fin Corp. Mtn
JP Morgan Chase + Co.
Key Bk Na Med Term Nts Bk Entr
Keycorp Mtn Book Entry
Lehman Brothers Hldgs Inc.
Mbna America Bank Na Y
Marshall + Ilsley Corp.
Merrill Lynch + Co. Inc.
Merrill Lynch + Co. Inc.
Metropolitan Life Global Mtn
Morgan Stanley Group Inc.
National City Corp.
Nationwide Bldg Soc
Nationwide Life Global Fdg I
Nucor Corp.
Pepsico Inc. Mtn Book Entry
Praxair Inc.
Pricoa Global Fdg I Mtn
Protective Life Secd Trs Mtn
Public Svc Elec Gas Co.
Slm Corp. Medium Term Nts
Suntrust Bk Atlanta Ga Medium
Vodafone Airtouch Plc
Washington Mut Inc.
Washington Mut Bk Fa
Washington Post Co.
Wells Fargo + Co. New
Wells Fargo + Co. New Med Trm
Corporate issued
asset-backed securities
Americredit Automobile Rec Tr
Americredit Automobile Receivb
Americredit Automobile Receiva
Ba Cr Card Tr
Banc Amer Coml Mtg Inc.
Banc Amer Fdg 2006 I Tr
Bear Stearns Coml Mtg Secs Inc.
Bear Stearns Arm Tr
Bear Stearns Coml Mtg Secs Inc.
Cit Equip Coll Tr
Cnh Equip Tr
Cwabs
Capital Auto Receivables Asset
Capital One Auto Fin Tr
Capital One Multi Asset Execut
Capital One Multi Asset Execut
Capital One Prime Auto Rec
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
8,268
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,319
3,453
4,941
3,182
5,066
3,028
5,170
5,048
4,118
3,310
4,393
3,016
3,150
6,437
8,453
3,426
4,842
3,361
4,386
3,402
3,495
3,520
3,811
3,624
3,147
3,403
3,396
3,684
8,949
3,448
4,477
4,505
5,000
3,007
6,073
4,282
US$
3,261
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,826
4,959
4,350
3,254
4,336
3,551
3,597
6,362
3,996
3,457
4,300
3,232
5,008
4,879
3,932
3,999
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
US$
-
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,384
-
-
-
-
-
-
-
-
-
-
-
-
3,500
1,000
-
3,167
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,883
-
-
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,386
-
-
-
-
-
-
-
-
-
-
-
-
3,504
1,000
-
3,148
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,879
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2)
-
-
-
-
-
-
-
-
-
-
-
-
(4)
-
-
19
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Amount (US$
in Thousands)
(Note 2)
US$
8,282
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,292
3,456
4,989
3,205
5,096
3,028
5,132
5,037
4,138
3,298
4,401
3,010
3,150
6,403
8,420
3,453
4,865
3,369
-
3,410
3,537
3,501
3,797
3,619
3,138
3,401
3,390
3,682
8,998
3,442
4,449
1,000
3,997
3,001
2,943
4,311
US$
3,269
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,891
4,609
4,300
2,869
4,332
3,541
3,480
6,358
3,985
1,984
4,261
3,243
4,998
-
3,941
3,981
(Continued)
167
Company
Name
Marketable Securities
Type and Name
Caterpillar Finl Asset Tr
Cbass Tr
Cendant Rent Car Fdg Aesop Llc
Citibank Cr Card Issuance Tr
Credit Suisse First Boston Mtg
Credit Suisse First Boston Mtg
Daimlerchrysler Auto Tr
Drive Auto Receivables Tr
First Franklin Mtg Ln Tr
Ford Credit Auto Owner Trust
Gs Mtg Secs Corp.
Gsamp Tr
Harley Davidson Motorcycle Tr
Hertz Veh Fing Llc
Holmes Fing No 8 Plc
Home Equity Mtg Tr 2006 4
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Lb Ubs Coml Mtg Tr
Long Beach Mtg Ln Tr
Mbna Master Cr Card Tr Ii
Massachusetts Rrb Spl Purp Tr
Mastr Asset Backed Secs Tr
Mastr Asset Backed
Merrill Lynch Mtg Invs Inc.
Morgan Stanley Ixis Estate Tr
Navistar Finl 2003 A Owner Tr
Nissan Auto Receivables
Nomura Asset Accep Corp.
Onyx Accep Owner Tr
Pg + E Energy Recovery Fdg Llc
Providian Gateway Owner Tr
Reliant Energy Transition Bd
Residential Asset Sec Mtg Pass
Residential Fdg Mtg Secs I Inc.
Tw Hotel Fdg 2005 Llc
Terwin Mtg Tr
Usaa Auto Owner Tr
Washington Mut Mtg Secs Corp.
Wells Fargo Mtg Backed Secs
Wells Fargo Finl Auto Owner Tr
Wells Fargo Finl Auto Owner Tr
Wells Fargo Mtg Bkd Secs
Wells Fargo Mtg Bkd Secs
Agency bonds
Fed Hm Ln Pc Pool M80855
Fed Hm Ln Pc Pool 847628
Fed Hm Ln Pc Pool 1h2520
Fed Hm Ln Pc Pool B19205
Federal Home Ln Mtg Corp.
Fed Hm Ln Pc Pool 781959
Fnma Pool 255883
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Home Ln Mtg Corp.
168
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
8,121
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,260
9,249
9,797
3,566
3,728
4,334
3,183
4,301
4,310
4,134
4,241
5,793
5,284
5,000
4,200
6,202
3,208
3,904
3,733
3,195
7,653
3,830
3,083
4,300
6,561
4,300
3,994
3,943
4,144
4,885
4,646
3,911
3,994
3,052
4,224
4,116
4,033
4,246
3,261
4,426
5,235
4,932
3,020
3,488
US$
3,381
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,884
3,286
8,626
4,574
6,472
3,559
4,375
4,577
3,919
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
US$
-
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,416
3,082
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,396
3,083
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20
(1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Amount (US$
in Thousands)
(Note 2)
US$
8,142
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,262
9,297
9,864
3,576
3,740
4,315
3,191
4,290
4,324
4,145
4,251
5,825
5,319
5,000
4,222
5,537
3,212
3,928
3,493
3,203
7,605
-
-
4,224
5,887
4,110
2,956
3,928
4,150
3,774
3,997
3,942
2,486
2,711
4,058
4,103
4,065
4,238
2,984
4,367
4,986
4,926
2,856
3,399
US$
3,287
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,796
3,100
8,560
4,381
6,040
3,490
4,338
4,290
3,917
(Continued)
Company
Name
Marketable Securities
Type and Name
Federal Home Ln Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg
Federal Home Ln Mtg Corp.
Federal Home Loan Mtg
Federal Home Ln Mtg Corp.
Fnma Pool 696485
Fnma Pool 813641
Fnma Pool 815626
Fnma Pool 825398
Fnma Pool 841069
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp. Mtn
Federal Home Loan Mtg Assn
Federal Home Loan Mtg Corp.
Federal Home Ln Mtg Corp.
Freddie Mac
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Farm Cr Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Loan Bank
Federal Home Ln Bank
Federal Home Ln Bks
Federal Home Loan Banks
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
4,316
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,515
3,131
3,909
3,789
3,388
4,450
4,069
3,893
3,114
3,299
4,665
3,308
3,308
8,812
4,937
4,476
3,393
3,916
3,189
4,562
3,134
3,481
4,912
4,901
4,927
9,789
9,314
6,410
5,930
9,929
14,269
3,940
4,851
3,296
4,930
4,882
8,735
8,716
5,825
5,907
7,960
4,872
6,061
4,140
12,233
7,515
6,881
3,459
3,955
7,490
8,081
14,931
7,979
4,364
6,516
5,885
7,834
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
US$
-
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,868
-
-
-
-
-
-
-
4,953
4,951
4,968
7,906
9,378
-
-
10,000
14,304
3,946
-
3,297
4,971
-
-
-
-
-
-
-
-
4,141
-
7,520
-
3,463
3,967
-
-
-
5,001
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,858
-
-
-
-
-
-
-
4,912
4,901
4,927
7,831
9,314
-
-
9,929
14,269
3,940
-
3,296
4,930
-
-
-
-
-
-
-
-
4,140
-
7,515
-
3,459
3,955
-
-
-
4,987
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
-
-
-
-
-
-
-
41
50
41
75
64
-
-
71
35
6
-
1
41
-
-
-
-
-
-
-
-
1
-
5
-
4
12
-
-
-
14
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Amount (US$
in Thousands)
(Note 2)
US$
3,076
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,158
2,465
3,626
3,743
3,216
4,223
3,409
3,738
2,965
3,176
4,464
2,976
3,019
8,535
-
4,502
3,194
3,720
2,945
4,224
2,882
-
-
-
-
1,976
-
6,440
5,948
-
-
-
4,856
-
-
4,885
8,743
8,768
5,851
5,898
7,952
4,920
6,099
-
12,279
-
6,905
-
-
7,506
8,049
14,973
3,000
4,365
6,511
5,915
7,868
(Continued)
169
Company
Name
Marketable Securities
Type and Name
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Medium
Tennessee Valley Auth
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
3,950
US$
US$
US$
US$
US$
US$
19,702
10,459
5,562
5,292
3,417
6,038
-
-
-
-
-
-
-
US$
-
US$
-
US$
US$
-
-
5,560
-
-
-
US$
-
-
5,562
-
-
-
US$
-
-
-
(2)
-
-
-
-
-
-
-
-
-
-
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Amount (US$
in Thousands)
(Note 2)
US$
3,943
US$
US$
US$
US$
US$
19,766
10,467
-
5,318
3,415
6,024
(Concluded)
Note 1: The proceeds of bond investments matured are excluded.
Note 2: The ending balance included the amortization of premium or discount on bonds investments and unrealized valuation gains or losses on financial assets.
170
TABLE 5
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
ACQUISITION OF INDIVIDUAL REAL ESTATES AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Company
Name
Types of
Property
Transaction Date
Transaction
Amount
Payment Term
Counter-party
Nature of
Relationships
Prior Transaction of Related Counter-party
Owner
Relationships
Transfer Date
Amount
Price
Reference
Purpose of
Acquisition
Other Terms
The Company
Fab. 14
January 6, 2006
$ 854,000
By the construction progress
M+W Zander Facility Engineering Co., Ltd.
Fab. 12
March 30, 2006
US$ 3,340
By the construction progress
M+W Zander Facility Engineering Co., Ltd.
Fab. 12
June 1, 2006
$ 487,000
By the construction progress
United Integrated Services Co., Ltd.
Fab. 12
June 1, 2006
US$ 3,770
By the construction progress
Celerity, Inc.
Fab. 14
June 2, 2006
$ 197,500
By the construction progress
China Steel Structure Co., Ltd.
Fab. 12
June 6, 2006
192,000
By the construction progress
Marketech International Corp.
Fab. 12
June 9, 2006
142,000
By the construction progress
Uangyih-tech Industrial Co., Ltd.
Fab. 14
June 26, 2006
EUR 2,733
By the construction progress
Siemens Limited
Fab. 14
June 30, 2006
$ 517,500
By the construction progress
United Steel Engineering & Construction
Fab. 14
August 7, 2006
453,000
By the construction progress
China Steel Structure Co., Ltd.
Corp.
Fab. 14
August 25, 2006
1,365,000
By the construction progress
Fu Tsu Construction Co., Ltd.
Fab. 14
September 28, 2006
JPY 1,080,000
By the construction progress
Organo Corporation
Fab. 14
September 28, 2006
$ 407,000
By the construction progress
Organo Technology Co., Ltd.
Fab. 14
September 29, 2006
US$ 4,250
By the construction progress
York Internation Corp.
Fab. 14
October 12, 2006
$ 278,950
By the construction progress
Shihlin Electric & Engineering Corp.
Fab. 14
November 20, 2006
US$ 9,150
By the construction progress
Mega Union Technology Inc.
Fab. 14
November 23, 2006
$ 179,573
By the construction progress
United Integrated Services Co., Ltd.
Fab. 14
November 24, 2006
US$ 9,890
By the construction progress
Marketech International Corp.
Fab. 14
November 28, 2006
US$ 29,750
By the construction progress
United Integrated Services Co., Ltd.
Fab. 14
November 29, 2006
US$ 15,000
By the construction progress
M+W Zander Facility Engineering Co., Ltd.
Fab. 14
November 29, 2006
$ 847,365
By the construction progress
M+W Zander Facility Engineering Co., Ltd.
Fab. 14
November 29, 2006
123,000
By the construction progress
Desiccant Technology Corp.
Fab. 14
December 7, 2006
177,200
By the construction progress
Uangyih-tech Industrial Co., Ltd.
Fab. 14
December 8, 2006
US$ 12,900
By the construction progress
Marketech International Corp.
Fab. 14
December 28, 2006
US$ 9,100
By the construction progress
Celerity, Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
Manufacturing
purpose
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
171
TABLE 6
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars)
Company
Name
Related Party
Nature of Relationships
The Company
TSMC-North America
Philips
Subsidiary
Major shareholder
GUC
WaferTech
SSMC
TSMC-Shanghai
VIS
TSMC-North America
GUC
Investee over which the Company had a
controlling interest
Indirect subsidiary
Investee accounted for using equity method
Subsidiary
Investee accounted for using equity method
The same parent
Transaction Details
Amount
% to
Total
Payment Terms
$ 190,459,073
4,024,990
60
1
Net 30 days after invoice date
Net 30 days/Net 45 days (since 12/27/2006)
755,710
-
Net 30 days after monthly closing
after monthly closing
12,530,552
6,820,632
4,405,843
3,911,838
920,045
27
15
10
8
60
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after invoice date
Abnormal Transaction
Unit Price
(Note)
Payment
Terms
(Note)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Notes/Accounts Payable or
Receivable
Ending Balance
$ 16,461,956
250,919
155,216
(864,733)
(459,305)
(478,714)
(717,562)
(301,507)
Note
% to
Total
50
1
-
9
5
5
8
40
Purchase/
Sale
Sales
Sales
Sales
Purchases
Purchases
Purchases
Purchases
Purchases
Note: The terms of sales to related parties are not significantly different from those to third parties. For purchase transactions, prices are determined in accordance with the related contractual agreements and no other similar transaction could be compared with.
TABLE 7
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars)
Company
Name
The Company
Related Party
Nature of Relationships
Ending Balance
Turnover Rate
Overdue
Amounts
Action Taken
TSMC-North America
Philips
GUC
TSMC-Shanghai
VIS
Subsidiary
Major shareholder
Investee over which the Company had a
controlling interest
Subsidiary
Investee accounted for using equity method
$ 16,521,503
257,313
155,216
36 days
38 days
49 days
$ 4,721,288
11,304
117
-
-
-
123,853
121,911
Note
Note
21,089
3,064
Accelerate demand on account receivables
-
Note: The ending balance primarily consisted of other receivables, it is not applicable for the calculation of the turnover rate.
Amounts Received in
Subsequent Period
$ 5,883,939
18,648
38,062
-
3,064
Allowance for Bad Debts
$ -
-
-
-
-
172
TABLE 8
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE
DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars)
Investor
Company
Investee Company
Location
Main Businesses and Products
Original Investment Amount
Balance as of December 31, 2006
December
31, 2006
December
31, 2005
Shares
(In Thousands)
Percentage of
Ownership
Carrying
Value (Note)
Net Income
(Losses) of
the Investee
Equity in
the Earnings
(Losses)
Note
The Company
TSMC Global
TSMC International
Tortola, British Virgin Islands
Tortola, British Virgin Islands
Investment activities
Providing investment in companies involved in the
$ 42,327,245
31,445,780
$ -
31,445,780
1
987,968
100
100
$ 42,496,592
26,593,749
$ 616,171
2,802,637
$ 616,171
2,802,637
Subsidiary
Subsidiary
TSMC-Shanghai
Shanghai, China
Manufacturing and sales of integrated circuits at the order
12,180,367
12,180,367
design, manufacture, and other related business in the
semiconductor industry
Singapore
Fabrication and supply of integrated circuits
8,840,895
6,408,190
of and pursuant to product design specifications provided
by customers
-
463
SSMC
VIS
Hsinchu, Taiwan
TSMC Partners
TSMC-North America
Tortola, British Virgin Islands
San Jose, California, U.S.A.
Emerging Alliance
VTAF II
GUC
Cayman Islands
Cayman Islands
Hsinchu, Taiwan
Research, design, development, manufacture, packaging,
testing and sale of memory integrated circuits, LSI, VLSI
and related parts
Investment activities
Sales and marketing of integrated circuits and
semiconductor devices
Investing in new start-up technology companies
Investing in new start-up technology companies
Researching, developing, manufacturing, testing
and marketing of integrated circuits
VTAF III
Chi Cherng
Hsin Ruey
TSMC-Japan
TSMC-Europe
TSMC-Korea
Cayman Islands
Taipei, Taiwan
Taipei, Taiwan
Yokohama, Japan
Amsterdam, the Netherlands
Seoul, Korea
Investing in new start-up technology companies
Investment activities
Investment activities
Marketing activities
Marketing activities
Marketing activities
Note: The treasury stock is deducted from the carrying value.
8,119,816
8,119,816
442,262
10,350
333,718
1,418,717
785,465
386,568
243,545
300,000
300,000
83,760
15,749
13,656
10,350
333,718
1,526,074
654,509
409,920
-
300,000
300,000
83,760
15,749
-
300
11,000
-
-
41,263
-
-
-
6
-
80
100
9,027,984
(637,220)
(637,220)
Subsidiary
39
27
100
100
99
98
38
98
36
36
100
100
100
7,960,869
4,437,059
1,394,921
5,741,870
3,018,694
748,006
Investee accounted for
using equity method
Investee accounted for
using equity method
4,433,819
2,014,990
793,585
733,130
629,755
228,005
115,507
114,297
95,757
49,741
14,706
308,009
238,111
(2,644)
(37,339)
237,295
(20,794)
99,647
98,605
2,963
23,164
685
308,009
238,111
Subsidiary
Subsidiary
(2,631)
(36,592)
100,396
Subsidiary
Subsidiary
Investee over which
the Company has a
controlling interest
(20,378)
(5,533)
(5,982)
2,963
23,164
685
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
173
TABLE 9
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
INFORMATION OF INVESTMENT IN MAINLAND CHINA
FOR THE YEAR ENDED DECEMBER 31, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Investee Company
Main Businesses and Products
TSMC (Shanghai)
Company Limited
Manufacturing and sales of integrated circuits
at the order of and pursuant to product
design specifications provided by customers
Total Amount of
Paid-in Capital
(RMB in Thousand)
Method of
Investment
Accumulated Outflow
of Investment from
Taiwan as of
January 1, 2006
(US$ in Thousand)
Investment Flows
Outflow
(US$ in Thousand)
Accumulated Outflow of
Investment from Taiwan
as of December 31,2006
(US$ in Thousand)
Percentage
of
Ownership
Equity in
the Earnings
(Losses)
(Note 2)
Carrying
Value as of
December
31, 2006
Accumulated Inward
Remittance of Earnings
as of
December 31, 2006
Inflow
$ 12,180,367
(RMB 3,070,623)
(Note 1)
$ 12,180,367
(US$ 371,000)
$
-
$
-
$ 12,180,367
(US$ 371,000)
100%
$ (637,220)
$ 9,027,984
$ -
Accumulated Investment in Mainland China as of December 31, 2006 (US$ in Thousand)
Investment Amounts Authorized by Investment Commission, MOEA (US$ in Thousand)
Upper Limit on Investment (US$ in Thousand)
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
Note 1: Direct investments US$371,000 thousand in TSMC-Shanghai.
Note 2: Amount was recognized based on the audited financial statements.
174
TABLE 10
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
A. FOR THE YEAR ENDED DECEMBER 31, 2006
No.
0
Company Name
Counter Party
Nature of
Relationship
(Note 1)
Financial Statements Item
Intercompany Transactions
Amount
Terms (Note 2)
Percentage of Consolidated Total
Gross Sales or Total Assets
TSMC
TSMC-NA
1
Sales
$ 190,459,073
Accumulated Investment in Mainland China as of December 31, 2006 (US$ in Thousand)
Investment Amounts Authorized by Investment Commission, MOEA (US$ in Thousand)
Upper Limit on Investment (US$ in Thousand)
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
TSMC-Shanghai
TSMC-Japan
TSMC-Europe
GUC
TSMC Technology
WaferTech
TSMC Development
TSMC Technology
TSMC International
WaferTech
TSMC-NA
GUC-NA
Receivables from related parties
Other receivables from related parties
Payables to related parties
1
Sales
Purchases
Gain on disposal of property, plant and equipment
Technical service income
Proceeds from disposal of property, plant and equipment
Other receivables from related parties
1
1
1
1
1
3
3
3
3
3
Payables to related parties
Deferred credits
Marketing expenses - commission
Payables to related parties
Marketing expenses - commission
Payables to related parties
Sales
General and administrative expenses - rental expense
Research and development expenses
Receivables from related parties
Payables to related parties
Other receivables from related parties
Payables to related parties
Sales
Purchases
Payables to related parties
Interest income
Deferred royalty income
Other receivables
Deferred revenue
Receivables from related parties
Purchases
Manufacturing overhead
Payables to related parties
3
Operating expenses
16,461,956
59,547
27,455
61,951
4,405,843
179,498
98,797
401,561
123,853
478,714
723,661
254,758
20,295
236,454
22,158
755,710
14,606
39,421
155,216
2,117
3,785
42,389
34,517
12,530,552
864,733
8,029
643,679
10,003,652
8,814,830
1,366
920,045
330,129
301,507
41,984
1
2
3
4
TSMC International
TSMC Partners
TSMC Technology
GUC
Note 1: No. 1 represents the transactions from parent company to subsidiary.
No. 3 represents the transactions between subsidiaries.
Note 2: The terms of intercompany sales are not significantly different from those to third parties. For other intercompany transactions, prices are determined in accordance with mutual agreements.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
60%
3%
-
-
-
1%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4%
-
-
-
3%
3%
-
-
-
-
-
(Continued)
175
B. FOR THE YEAR ENDED DECEMBER 31, 2005
No.
Company Name
Counter Party
TSMC-NA
TSMC-Shanghai
TSMC-Japan
TSMC-Europe
GUC
TSMC Technology
WaferTech
VisEra
TSMC Development
TSMC Technology
TSMC Development
TSMC International
0
TSMC
1
2
3
4
5
TSMC-NA
TSMC International
TSMC Partners
TSMC Technology
WaferTech
GUC
TSMC-NA
GUC-NA
Nature of
Relationship
(Note 1)
Financial Statements Item
1
Sales
Receivables from related parties
Other receivables from related parties
Payables to related parties
1
Sales
Purchases
Gain on disposal of property, plant and equipment
Technical service income
Proceeds from disposal of property, plant and equipment
Other receivables from related parties
Payables to related parties
Deferred credits
Sales and marketing expenses - commission
Payables to related parties
Sales and marketing expenses - commission
Payables to related parties
Sales
Research and development expenses
General and administrative expenses - rental expense
Receivables from related parties
Payables to related parties
Other receivables from related parties
Payables to related parties
Purchases
Payables to related parties
Sales
Interest income
Other receivables
Deferred technology income
Interest income
Other receivables
Deferred revenue
Management service income
Purchases
Manufacturing expenses
Operating expenses
Payables to related parties
1
1
1
1
1
3
3
3
3
3
3
3
3
Operating expenses
Intercompany Transactions
Amount
$ 153,618,916
20,407,621
198,505
21,391
5,591
1,405,030
151,591
28,643
125,381
28,593
274,820
641,762
243,646
29,892
221,164
22,963
347,456
19,467
16,744
49,046
6,173
972,563
10,672
11,137,313
1,133,217
661,949
28,352
1,151,238
648,695
25,513
10,081,604
8,883,518
12,625
266,372
345,064
3,333
66,138
27,871
Note 1: No. 1 represents the transactions from parent company to subsidiary.
No. 3 represents the transactions between subsidiaries.
Note 2: The terms of intercompany sales are not significantly different from those to third parties. For other intercompany transactions, prices are determined in accordance with mutual agreements.
176
Terms
(Note 2)
Percentage of Consolidated Total
Gross Sales or Total Assets
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58%
4%
-
-
-
1%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4%
-
-
-
-
-
-
2%
2%
-
-
-
-
-
-
(Concluded)
9. U.S. GAAP Financial Information
Please be advised that our 2006 full annual report that includes complete U.S. GAAP reconciled
financial statements and footnotes will be available when we file Form 20-F with the U.S. SEC. Our
Form 20-F, or our 2006 full annual report, can be found at the U.S. SEC and on TSMC’s website no
later than June 30, 2007.
Taiwan Semiconductor Manufacturing Company Limited and
Subsidiaries
U.S. GAAP RECONCILIATIONS OF NET INCOME
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
(In Thousand New Taiwan Dollars)
Taiwan Semiconductor Manufacturing Company Limited and
Subsidiaries
Net income attributable to shareholders of the parent based on R.O.C. GAAP
$ 127,009,731
$ 93,575,036
2006
2005
U.S. GAAP RECONCILIATIONS OF SHAREHOLDERS’ EQUITY
DECEMBER 31, 2006 AND 2005
(In Thousand New Taiwan Dollars)
Equity attributable to shareholders of the parent based on R.O.C. GAAP
$ 507,981,284
$ 445,630,349
2006
2005
Adjustments
- Marketable securities
- Adjustment of unrealized gain on trading securities
- Unrealized gain (loss) on available-for-sale marketable securities
- TSMC
- Equity-method investees
- Reversal of unrealized loss on marketable securities under R.O.C. GAAP
- U.S. GAAP adjustments on equity-method investees
- Impairment of long-lived assets
- Loss on impairment of assets
- Reversal of depreciation on assets impaired under U.S. GAAP
- 10% tax on undistributed earnings
- Goodwill
- Carrying amount difference for 68% equity interest in TASMC’s share
acquisition
- Reversal of amortization of goodwill recognized under R.O.C. GAAP
- Derivative financial instruments
- Bonuses to employees, directors and supervisors
- Accrued pension cost
- Accrual for accumulated other comprehensive income under U.S. SFAS
No. 158
- Carry Interest
- Income tax effect of U.S. GAAP adjustments
- Minority interest effect of U.S. GAAP adjustments
-
-
-
-
(445,102)
(10,657,618)
8,561,791
(3,278,020)
52,212,732
(11,257,528)
-
(9,488,556)
(43,783)
(1,391,322)
-
208,967
121
24,421,682
1,875,840
(99,733)
21,291
412,372
(463,808)
(10,740,666)
7,223,040
-
52,212,732
(11,229,979)
(328,248)
(7,121,667)
(47,654)
-
(193,285)
194,184
(47,550)
31,666,869
Equity attributable to shareholders of the parent based on U.S. GAAP
$ 532,402,966
$ 477,297,218
Adjustments
- Marketable securities
- Adjustment of unrealized gain on trading securities
- Reversal (realization) of unrealized loss on marketable securities
- Reversal of cumulative effect of changes in accounting principle for
adopting R.O.C. SFAS No. 34
- U.S. GAAP adjustments on equity-method investees
- Reversal of depreciation on assets impaired under U.S. GAAP
- 10% tax on undistributed earnings
- Reversal of amortization of goodwill recognized under R.O.C. GAAP
- Adjustment to market value for derivative financial instruments
- Bonuses to employees, directors and supervisors
- Current year accrual
- Fair market value adjustment of prior year accrual
- Pension expense
- Stock-based compensation
- Stock-based compensation
- Cumulative effect of changes in accounting principle for adopting U.S.
SFAS 123R
- Adjustment of carrying interest
- Income tax effect of U.S. GAAP adjustments
- Minority interest effect of U.S. GAAP adjustments
Net income attributable to shareholders of the parent based on U.S. GAAP
Cumulative preferred dividends
-
(262,032)
(1,606,749)
(42,590)
1,391,478
(3,278,020)
-
-
(9,488,556)
(18,016,360)
3,871
(471,696)
37,935
170,380
98,320
164,997
(31,299,022)
95,710,709
-
1,061,999
337,160
-
(161,871)
1,398,736
-
1,220,316
(225,271)
(7,121,667)
(13,795,382)
(9,948)
(791,425)
-
(193,285)
147,802
(23,846)
(18,156,682)
75,418,354
-
Income attributable to common shareholders of the parent
$ 95,710,709
$ 75,418,354
177
Contact Information
TSMC Spokesperson
Name: Lora Ho
Title: Vice President & CFO
Tel: 886-3-5636688 Fax: 886-3-5637000
Email: spokesperson@tsmc.com
Deputy Spokesperson
Name: J.H. Tzeng
Title: Public Relations Deputy Director
Tel: 886-3-5055028 Fax: 886-3-5670121
Email: jhtzeng@tsmc.com
Auditors
Company: Deloitte & Touche
Auditors: Hung-Wen Huang, Ming-Cheng Chang
Address: 12F, 156, Sec. 3, Min-Sheng E. Rd., Taipei, Taiwan 105, R.O.C.
Tel: 886-2-25459988 Fax: 886-2-25459966
Website: http://www.deloitte.com.tw
Common Share Transfer Agent and Registrar
Company: The Transfer Agency Department of Chinatrust Commercial Bank
Address: 5F, 83, Sec. 1, Chung-Ching S. Rd., Taipei, Taiwan 100, R.O.C.
Tel: 886-2-23613033 Fax: 886-2-23116723
Website: http://www.chinatrust.com.tw
ADR Depositary Bank
Company: Citibank, N.A.
Depositary Receipts Services
Address: 388 Greenwich Street, New York, NY10013, U.S.A.
Website: http://www.citigroup.com/adr
Tel: 1-877-2484237 (toll free)
Tel: 1-781-5754555 (out of US)
Fax: 1-201-3243284
E-mail: citibank@shareholders-online.com
TSMC's depositary receipts of the common shares are listed on New York
Stock Exchange (NYSE) under the symbol TSM. The information relating to
TSM is available at http://www.nyse.com and http://newmops.tse.com.tw
Corporate Headquarters & Fab 12
8, Li-Hsin Rd. 6, Hsinchu Science Park, Hsinchu, Taiwan 300-77, R.O.C.
Tel: 886-3-5636688 Fax: 886-3-5637000
Fab 2, Fab 5
121, Park Ave. 3, Hsinchu Science Park, Hsinchu, Taiwan 300-77, R.O.C.
Tel: 886-3-5636688 Fax: 886-3-5781546
Fab 3
9, Creation Rd. 1, Hsinchu Science Park, Hsinchu, Taiwan 300-77, R.O.C.
Tel: 886-3-5636688 Fax: 886-3-5781548
Fab 6
1, Nan-Ke North Rd., Tainan Science Park, Tainan, Taiwan 741-44, R.O.C.
Tel: 886-6-5056688 Fax: 886-6-5052057
Fab 8
25, Li-Hsin Rd., Hsinchu Science Park, Hsinchu, Taiwan 300-77, R.O.C.
Tel: 886-3-5636688 Fax: 886-3-5662051
Fab 14
1-1, Nan-Ke North Rd., Tainan Science Park, Tainan, Taiwan 741-44, R.O.C.
Tel: 886-6-5056688 Fax: 886-6-5051262
TSMC North America
2585 Junction Avenue, San Jose, CA 95134, U.S.A.
Tel: 408-3828000 Fax: 408-3828008
TSMC Europe B.V.
World Trade Center, Zuidplein 60, 1077 XV Amsterdam, The Netherlands
Tel: 31-20-3059900 Fax: 31-20-3059911
TSMC Japan Limited
21F, Queen's Tower C, 2-3-5, Minato, Mirai, Nishi-ku, Yokohama, Kanagawa
220-6221, Japan
Tel: 81-45-6820670 Fax: 81-45-6820673
TSMC (Shanghai) Company Limited
4000, Wen Xiang Road, Songjiang, Shanghai, China
Postcode: 201616
Tel: 86-21-57768000 Fax: 86-21-57762525
TSMC Korea Limited
15F, AnnJay Tower, 718-2, Yeoksam-dong, Gangnam-gu, Seoul135-080, Korea
Tel: 82-2-20511688 Fax: 82-2-20511669
TSMC Liaison Office in India
1st Floor, Pine Valley, Embassy Golf-Links Business Park, Bangalore-560071, India
Tel: 91-80-41768615 Fax: 91-80-41764568
Copyright © 2007 by Taiwan Semiconductor Manufacturing Company, Ltd. All rights reserved.
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Taiwan Semiconductor
Manufacturing Company, Ltd.
Morris Chang, Chairman
8, Li-Hsin Rd. 6, Hsinchu Science Park, Hsinchu, Taiwan 300-77, R. O. C.
Tel: 886-3-5636688 Fax: 886-3-5637000
http://www.tsmc.com
TSE: 2330
NYSE: TSM
TSMC Annual Report 2006 (I)
(cid:339) Taiwan Stock Exchange Market Observation Post System: http://newmops.tse.com.tw
(cid:339) TSMC annual report is available at http://www.tsmc.com/english/e_investor/e02_annual/e02_annual.htm
Printed on March 12, 2007