Form 6-K

 

1934 Act Registration No. 1-14700

 

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 


 

FORM 6-K

 


 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of April 2003

 


Taiwan Semiconductor Manufacturing Company Ltd.

(Translation of Registrant’s Name into English)

 


 

No.121 Park Avenue III

Science-Based Industrial Park

Hsin-chu, Taiwan

(Address of Principal Executive Offices)

 

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

 

Form 20-F     X     Form 40-F             

 

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

 

Yes              No     X    

 

(If “Yes” is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82:             .)

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

       

Taiwan Semiconductor Manufacturing Company Ltd.

   

Date: April 29, 2003

     

By

 

/S/    Harvey Chang


               

Harvey Chang

Senior Vice President & Chief Financial Officer

 


 

Taiwan Semiconductor Manufacturing Company Ltd.

 

 

Financial Statements as of December 31, 2002 and 2001

 

Together with Independent Auditors’ Report

 

 


 

English Translation of a Report Originally Issued in Chinese

 

Independent Auditors’ Report

 

January 16, 2003

 

The Board of Directors and Shareholders

Taiwan Semiconductor Manufacturing Company Ltd.

 

We have audited the accompanying balance sheets of Taiwan Semiconductor Manufacturing Company Ltd. as of December 31, 2002 and 2001, and the related statements of income, changes in shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with Regulations for Auditing of Financial Statements by Certified Public Accountants, and auditing standards generally accepted in the Republic of China. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Taiwan Semiconductor Manufacturing Company Ltd. as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with the Guidelines for Securities Issuers’ Financial Reporting and accounting principles generally accepted in the Republic of China.

 

As disclosed in Note 3 to the financial statements, the Company adopted Statement of Financial Accounting Standards No. 30, “Accounting for Treasury Stock” (SFAS 30) on January 1, 2002. SFAS 30 requires a parent company to record stock held by its subsidiary as treasury stock. The adoption of SFAS 30 resulted in the decrease of long-term investments and simultaneous increase of the book value of treasury stock by NT$1,923,492 thousand as of December 31, 2002. Furthermore, net income increased by NT$25,909 thousand for the year ended December 31, 2002.

 


 

We have also audited the consolidated financial statements of Taiwan Semiconductor Manufacturing Company Ltd. as of and for the years ended December 31, 2002 and 2001, and have expressed a modified unqualified opinion and an unqualified opinion on such financial statements, respectively.

 

 

 

T N Soong & Co

An Associate Member Firm of Deloitte Touche Tohmatsu

    Effective April 22, 2002

(Formerly a Member Firm of Andersen Worldwide, SC)

Taipei, Taiwan

The Republic of China

 

 

 

 

Notice to Readers

 

The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdiction. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

 

 


 

English Translation of Financial Statements Originally Issued in Chinese

 

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

 

BALANCE SHEETS

December 31, 2002 and 2001

(In Thousand New Taiwan Dollars, Except Par Value)

 

    

2002


    

2001


 

ASSETS


  

Amount


    

%


    

Amount


    

%


 

CURRENT ASSETS

                               

Cash and cash equivalents (Notes 2 and 4)

  

$

61,656,795

 

  

16

 

  

$

33,403,706

 

  

10

 

Receivables from related parties (Note 16)

  

 

10,183,488

 

  

3

 

  

 

523,861

 

  

—  

 

Notes receivable

  

 

60,240

 

  

—  

 

  

 

176,582

 

  

—  

 

Accounts receivable

  

 

9,495,447

 

  

3

 

  

 

19,957,636

 

  

6

 

Allowance for doubtful receivables (Note 2)

  

 

(929,864

)

  

—  

 

  

 

(1,100,492

)

  

—  

 

Allowance for sales returns and others (Note 2)

  

 

(2,363,067

)

  

(1

)

  

 

(2,581,551

)

  

(1

)

Inventories—net (Notes 2 and 5)

  

 

10,340,336

 

  

3

 

  

 

8,504,418

 

  

2

 

Deferred income tax assets (Notes 2 and 12)

  

 

3,320,000

 

  

1

 

  

 

2,347,000

 

  

1

 

Prepaid expenses and other current assets (Notes 2, 16 and 19)

  

 

2,984,030

 

  

1

 

  

 

2,421,566

 

  

1

 

    


  

  


  

Total Current Assets

  

 

94,747,405

 

  

26

 

  

 

63,652,726

 

  

19

 

    


  

  


  

LONG-TERM INVESTMENTS (Notes 2, 3, 6 and 18)

  

 

34,978,495

 

  

9

 

  

 

32,869,391

 

  

10

 

    


  

  


  

PROPERTY, PLANT AND EQUIPMENT (Notes 2, 7 and 16)

                               

Cost

                               

Buildings

  

 

68,488,180

 

  

18

 

  

 

52,527,184

 

  

16

 

Machinery and equipment

  

 

303,334,232

 

  

82

 

  

 

242,347,119

 

  

72

 

Office equipment

  

 

5,697,828

 

  

2

 

  

 

4,754,183

 

  

1

 

    


  

  


  

    

 

377,520,240

 

  

102

 

  

 

299,628,486

 

  

89

 

Accumulated depreciation

  

 

(188,447,604

)

  

(51

)

  

 

(140,224,640

)

  

(42

)

Advance payments and construction in progress

  

 

28,119,627

 

  

8

 

  

 

56,095,396

 

  

17

 

    


  

  


  

Net Property, Plant and Equipment

  

 

217,192,263

 

  

59

 

  

 

215,499,242

 

  

64

 

    


  

  


  

GOODWILL (Note 2)

  

 

2,612,926

 

  

1

 

  

 

2,961,317

 

  

1

 

    


  

  


  

OTHER ASSETS

                               

Deferred charges—net (Notes 2, 8 and 18)

  

 

9,792,490

 

  

3

 

  

 

3,239,723

 

  

1

 

Deferred income tax assets (Notes 2 and 12)

  

 

9,712,567

 

  

2

 

  

 

16,175,070

 

  

5

 

Refundable deposits (Notes 16 and 18)

  

 

543,469

 

  

—  

 

  

 

772,912

 

  

—  

 

Idle assets (Note 2)

  

 

339,400

 

  

—  

 

  

 

—  

 

  

—  

 

Assets leased to others (Note 2)

  

 

87,246

 

  

—  

 

  

 

555,053

 

  

—  

 

Miscellaneous

  

 

9,250

 

  

—  

 

  

 

9,250

 

  

—  

 

    


  

  


  

Total Other Assets

  

 

20,484,422

 

  

5

 

  

 

20,752,008

 

  

6

 

    


  

  


  

TOTAL ASSETS

  

$

370,015,511

 

  

100

 

  

$

335,734,684

 

  

100

 

    


  

  


  

    

2002


    

2001


 

LIABILITIES AND SHAREHOLDERS’ EQUITY


  

Amount


    

%


    

Amount


    

%


 

CURRENT LIABILITIES

                               

Payable to related parties (Note 16)

  

$

2,466,998

 

  

1

 

  

$

2,082,606

 

  

1

 

Accounts payable

  

 

4,849,234

 

  

1

 

  

 

1,123,894

 

  

—  

 

Payable to contractors and equipment suppliers

  

 

14,004,383

 

  

4

 

  

 

12,367,319

 

  

4

 

Accrued expenses and other current liabilities (Notes 2, 6, 10 and 19)

  

 

5,839,488

 

  

1

 

  

 

4,636,800

 

  

1

 

Current portion of bonds (Note 9)

  

 

4,000,000

 

  

1

 

  

 

5,000,000

 

  

1

 

    


  

  


  

Total Current Liabilities

  

 

31,160,103

 

  

8

 

  

 

25,210,619

 

  

7

 

    


  

  


  

LONG-TERM LIABILITIES

                               

Bonds—net of current portion (Note 9)

  

 

35,000,000

 

  

10

 

  

 

24,000,000

 

  

7

 

Other long-term payables (Notes 10 and 18)

  

 

4,281,665

 

  

1

 

  

 

—  

 

  

—  

 

Accrued pension cost (Notes 2 and 11)

  

 

2,210,542

 

  

1

 

  

 

1,854,853

 

  

1

 

Guarantee deposits (Note 18)

  

 

1,395,066

 

  

—  

 

  

 

7,210,972

 

  

2

 

Deferred gain on sales and leaseback (Note 2)

  

 

114,928

 

  

—  

 

  

 

268,165

 

  

—  

 

    


  

  


  

Total Long-term Liabilities

  

 

43,002,201

 

  

12

 

  

 

33,333,990

 

  

10

 

    


  

  


  

Total Liabilities

  

 

74,162,304

 

  

20

 

  

 

58,544,609

 

  

17

 

    


  

  


  

SHAREHOLDERS’ EQUITY (Notes 2 and 13)

                               

Capital stock—$10 par value

                               

Authorized: 24,600,000 thousand shares

                               

Issued:

                               

Preferred—1,300,000 thousand shares

  

 

13,000,000

 

  

4

 

  

 

13,000,000

 

  

4

 

Common—18,622,887 thousand shares in 2002 and 16,832,554 thousand shares in 2001

  

 

186,228,867

 

  

50

 

  

 

168,325,531

 

  

50

 

Capital surplus:

                               

Merger and others (Note 2)

  

 

56,961,753

 

  

15

 

  

 

57,128,433

 

  

17

 

Treasury stock (Note 3)

  

 

43,036

 

  

—  

 

  

 

—  

 

  

—  

 

Retained earnings:

                               

Appropriated as legal reserve

  

 

18,641,108

 

  

5

 

  

 

17,180,067

 

  

5

 

Appropriated as special reserve

  

 

—  

 

  

—  

 

  

 

349,941

 

  

—  

 

Unappropriated earnings

  

 

22,151,089

 

  

6

 

  

 

19,977,402

 

  

6

 

Unrealized loss on long-term investments (Note 2)

  

 

(194,283

)

  

—  

 

  

 

—  

 

  

—  

 

Cumulative translation adjustments (Note 2)

  

 

945,129

 

  

—  

 

  

 

1,228,701

 

  

1

 

Treasury stock (at cost)—42,001 thousand shares (Notes 2, 3 and 14)

  

 

(1,923,492

)

  

—  

 

  

 

—  

 

  

—  

 

    


  

  


  

Total Shareholders’ Equity

  

 

295,853,207

 

  

80

 

  

 

277,190,075

 

  

83

 

    


  

  


  

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

  

$

370,015,511

 

  

  100

 

  

$

335,734,684

 

  

  100

 

    


  

  


  

 

The accompanying notes are an integral part of the financial statements.

 

(With T N Soong & Co. report dated January 16, 2003)

 


 

English Translation of Financial Statements Orginally Issued in Chinese

 

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

 

STATEMENTS OF INCOME

For the Years Ended December 31, 2002 and 2001

(In Thousand New Taiwan Dollars, Except Earnings Per Share)

 

    

2002


  

2001


    

Amount


    

%


  

Amount


    

%


GROSS SALES (Notes 2 and 16)

  

$

164,805,296

 

       

$

128,563,819

 

    

SALES RETURNS AND ALLOWANCES (Note 2)

  

 

(3,843,967

)

       

 

(2,675,816

)

    
    


       


    

NET SALES

  

 

160,961,329

 

  

100

  

 

125,888,003

 

  

100

COST OF SALES (Note 16)

  

 

108,994,184

 

  

68

  

 

89,506,952

 

  

71

    


  
  


  

GROSS PROFIT

  

 

51,967,145

 

  

32

  

 

36,381,051

 

  

29

    


  
  


  

OPERATING EXPENSES (Note 16)

                           

Research and development

  

 

11,725,035

 

  

7

  

 

10,649,019

 

  

8

General and administrative

  

 

5,164,907

 

  

3

  

 

6,048,665

 

  

5

Marketing

  

 

900,897

 

  

1

  

 

2,341,081

 

  

2

    


  
  


  

Total Operating Expenses

  

 

17,790,839

 

  

11

  

 

19,038,765

 

  

15

    


  
  


  

INCOME FROM OPERATIONS

  

 

34,176,306

 

  

21

  

 

17,342,286

 

  

14

    


  
  


  

NON-OPERATING INCOME

                           

Interest (Note 2)

  

 

1,008,147

 

  

1

  

 

1,365,919

 

  

1

Gain on sales of property, plant and equipment (Note 2)

  

 

273,998

 

  

—  

  

 

52,376

 

  

—  

Technical service income (Notes 16 and 18)

  

 

204,350

 

  

—  

  

 

55,077

 

  

—  

Insurance compensation—net

  

 

—  

 

  

—  

  

 

860,835

 

  

1

Amortization of premium income from option contracts—net (Notes 2 and 19)

  

 

—  

 

  

—  

  

 

234,732

 

  

—  

Other (Note 16)

  

 

276,398

 

  

—  

  

 

322,618

 

  

—  

    


  
  


  

Total Non-operating Income

  

 

1,762,893

 

  

1

  

 

2,891,557

 

  

2

    


  
  


  

NON-OPERATING EXPENSES

                           

Investment loss recognized by equity method—net (Notes 2 and 6)

  

 

5,716,510

 

  

4

  

 

6,429,631

 

  

5

Interest (Notes 2, 7 and 19)

  

 

2,119,935

 

  

1

  

 

1,951,830

 

  

2

Amortization of premium expense from option contracts—net (Notes 2 and 19)

  

 

419,513

 

  

—  

  

 

—  

 

  

—  

 

(Forward)

 


 

English Translation of Financial Statements Originally Issued in Chinese

 

    

2002


    

2001


    

Amount


    

%


    

Amount


  

%


Loss on sales of and provision for loss on property, plant and equipment (Note 2)

  

$

221,955

 

  

—  

 

  

$

234,862

  

—  

Foreign exchange loss—net (Notes 2 and 19)

  

 

120,568

 

  

—  

 

  

 

695,620

  

—  

Casualty loss—net (Note 2)

  

 

119,485

 

  

—  

 

  

 

—  

  

—  

Amortization of bond issuance cost (Note 2)

  

 

18,523

 

  

—  

 

  

 

12,504

  

—  

Loss on sales of long-term investments (Note 2)

  

 

2,403

 

  

—  

 

  

 

102,978

  

—  

Other

  

 

87,852

 

  

—  

 

  

 

147,703

  

—  

    


  

  

  

Total Non-operating Expenses

  

 

8,826,744

 

  

5

 

  

 

9,575,128

  

7

    


  

  

  

INCOME BEFORE INCOME TAX

  

 

27,112,455

 

  

17

 

  

 

10,658,715

  

9

INCOME TAX BENEFIT (EXPENSE) (Notes 2 and 12)

  

 

(5,502,164

)

  

(4

)

  

 

3,824,459

  

3

    


  

  

  

NET INCOME

  

$

21,610,291

 

  

    13

 

  

$

14,483,174

  

12

    


  

  

  

 

    

Before

Income

Tax


  

After

Income

Tax


  

Before

Income

Tax


  

After

Income

Tax


EARNINGS PER SHARE (Note 15)

                           

Basic earnings per share

  

$

1.43

  

$

1.14

  

$

0.55

  

$

0.75

    

  

  

  

Diluted earnings per share

  

$

1.43

  

$

1.14

  

$

0.55

  

$

0.75

    

  

  

  

 

The pro forma net income and earnings per share, on the assumption that the stock of parent company held by its subsidiary is treated as an investment instead of the treasury stock, are shown as follows (Note 14):

 

    

Before

Income

Tax


  

After

Income

Tax


NET INCOME

  

$

27,086,546

  

$

21,584,382

    

  

EARNINGS PER SHARE

             

Basic earnings per share

  

$

1.43

  

$

1.13

    

  

Diluted earnings per share

  

$

1.43

  

$

1.13

    

  

 

The accompanying notes are an integral part of the financial statements.

 

(With T N Soong & Co. report dated January 16, 2003)

 


 

English Translation of Financial Statements Originally Issued in Chinese

 

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

 

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the Years Ended December 31, 2002 and 2001

(In Thousand New Taiwan Dollars)

 

    

CAPITAL STOCK ISSUED


  

CAPITAL SURPLUS (Notes 2 and 13)


 
    

Preferred Stock


  

Common Stock


  

From

Merger


  

Additional

Paid-in

Capital


  

From Long-term

Investments


    

Excess on

Foreign Bond

Investment


  

Gain on

Sales of

Properties


    

Donation


  

Treasury

Stock


  

Total


 
    

Shares

(Thousand)


  

Amount


  

Shares

(Thousand)


  

Amount


                       
                                     

BALANCE, JANUARY 1, 2001

  

1,300,000

  

$

13,000,000

  

11,689,365

  

$

116,893,646

  

$

22,329,129

  

$

23,172,550

  

$

246,219

 

  

$

9,410,632

  

$

127,236

 

  

$

55

  

$

—  

  

$

55,285,821

 

Appropriations of prior year’s earnings

                                                                                     

Legal reserve

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Special reserve

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Bonus to employees—stock

  

—  

  

 

—  

  

467,443

  

 

4,674,426

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Cash dividends paid for preferred stocks

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Stock dividends—40%

  

—  

  

 

—  

  

4,675,746

  

 

46,757,459

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Remuneration to directors and supervisors

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Net income in 2001

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Reclassification of the accumulated deficits from the merged company

  

—  

  

 

—  

  

—  

  

 

—  

  

 

1,803,168

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

1,803,168

 

Gain on sales of property, plant and equipment

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

39,282

 

  

 

—  

  

 

—  

  

 

39,282

 

Gain on sales of property, plant and equipment from investees

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

162

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

162

 

Reversal of the unrealized loss on long-term investments

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Translation adjustments

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

    
  

  
  

  

  

  


  

  


  

  

  


BALANCE, DECEMBER 31, 2001

  

1,300,000

  

 

13,000,000

  

16,832,554

  

 

168,325,531

  

 

24,132,297

  

 

23,172,550

  

 

246,381

 

  

 

9,410,632

  

 

166,518

 

  

 

55

  

 

—  

  

 

57,128,433

 

Appropriations of prior year’s earnings

                                                                                     

Legal reserve

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Special reserve

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Bonus to employees—stock

  

—  

  

 

—  

  

107,078

  

 

1,070,783

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Cash dividends paid for preferred stocks

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Stock dividends—10%

  

—  

  

 

—  

  

1,683,255

  

 

16,832,553

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Remuneration to directors and supervisors

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Net income in 2002

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Transfer of the capital surplus from gain on sales of property, plant and equipment to retained earnings

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

(166,518

)

  

 

—  

  

 

—  

  

 

(166,518

)

Transfer of the capital surplus from gain on sales of property, plant and equipment of investees to retained earnings

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

(162

)

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

(162

)

Unrealized loss on long-term investments from subsidiaries

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Translation adjustments

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Reclassification of stocks of a parent company held by subsidiaries from long-term investments to treasury stock

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

  

 

—  

 

Capital surplus resulted from sales of treasury stock

  

—  

  

 

—  

  

—  

  

 

—  

  

 

—  

  

 

—  

  

 

—  

 

  

 

—  

  

 

—  

 

  

 

—  

  

 

43,036

  

 

43,036

 

    
  

  
  

  

  

  


  

  


  

  

  


BALANCE, DECEMBER 31, 2002

  

1,300,000

  

$

13,000,000

  

18,622,887

  

$

186,228,867

  

$

24,132,297

  

$

23,172,550

  

$

246,219

 

  

$

9,410,632

  

$

—  

 

  

$

55

  

$

43,036

  

$

57,004,789

 

    
  

  
  

  

  

  


  

  


  

  

  


 

    

RETAINED EARNINGS (Note 13)


    

UNREALIZED LOSS ON LONG-TERM

INVESTMENTS

(Note 2)


    

CUMULATIVE

TRANSLATION

ADJUSTMENTS

(Note 2)


    

TREASURY

STOCK (Notes 2, 3

and 14)


    

TOTAL

SHAREHOLDERS’

EQUITY


 
    

Legal

Reserve


  

Special

Reserve


    

Unappropriated

Earnings


    

Total


             
                         
                         

BALANCE, JANUARY 1, 2001

  

$

10,689,323

  

$

1,091,003

 

  

$

65,143,847

 

  

$

76,924,173

 

  

($

71,564

)

  

($

278,377

)

  

$

—  

 

  

$

261,753,699

 

Appropriations of prior year’s earnings

                                                                     

Legal reserve

  

 

6,490,744

  

 

—  

 

  

 

(6,490,744

)

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

Special reserve

  

 

—  

  

 

(741,062

)

  

 

741,062

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

Bonus to employees—stock

  

 

—  

  

 

—  

 

  

 

(4,674,426

)

  

 

(4,674,426

)

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

Cash dividends paid for preferred stocks

  

 

—  

  

 

—  

 

  

 

(41,137

)

  

 

(41,137

)

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

(41,137

)

Stock dividends—40%

  

 

—  

  

 

—  

 

  

 

(46,757,459

)

  

 

(46,757,459

)

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

Remuneration to directors and supervisors

  

 

—  

  

 

—  

 

  

 

(584,303

)

  

 

(584,303

)

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

(584,303

)

Net income in 2001

  

 

—  

  

 

—  

 

  

 

14,483,174

 

  

 

14,483,174

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

14,483,174

 

Reclassification of the accumulated deficits from the merged company

  

 

—  

  

 

—  

 

  

 

(1,803,168

)

  

 

(1,803,168

)

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

Gain on sales of property, plant and equipment

  

 

—  

  

 

—  

 

  

 

(39,282

)

  

 

(39,282

)

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

Gain on sales of property, plant and equipment from investees

  

 

—  

  

 

—  

 

  

 

(162

)

  

 

(162

)

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

Reversal of the unrealized loss on long-term investments

  

 

—  

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

71,564

 

  

 

—  

 

  

 

—  

 

  

 

71,564

 

Translation adjustments

  

 

—  

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

1,507,078

 

  

 

—  

 

  

 

1,507,078

 

    

  


  


  


  


  


  


  


BALANCE, DECEMBER 31, 2001

  

 

17,180,067

  

 

349,941

 

  

 

19,977,402

 

  

 

37,507,410

 

  

 

—  

 

  

 

1,228,701

 

  

 

—  

 

  

 

277,190,075

 

Appropriations of prior year’s earnings

                                                                     

Legal reserve

  

 

1,448,317

  

 

—  

 

  

 

(1,448,317

)

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

Special reserve

  

 

—  

  

 

(349,941

)

  

 

349,941

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

Bonus to employees—stock

  

 

—  

  

 

—  

 

  

 

(1,070,783

)

  

 

(1,070,783

)

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

Cash dividends paid for preferred stocks

  

 

—  

  

 

—  

 

  

 

(455,000

)

  

 

(455,000

)

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

(455,000

)

Stock dividends—10%

  

 

—  

  

 

—  

 

  

 

(16,832,553

)

  

 

(16,832,553

)

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

Remuneration to directors and supervisors

  

 

—  

  

 

—  

 

  

 

(133,848

)

  

 

(133,848

)

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

(133,848

)

Net income in 2002

  

 

—  

  

 

—  

 

  

 

21,610,291

 

  

 

21,610,291

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

21,610,291

 

Transfer of the capital surplus from gain on sales of property, plant and equipment to retained earnings

  

 

12,724

  

 

—  

 

  

 

153,794

 

  

 

166,518

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

Transfer of the capital surplus from gain on sales of property, plant and equipment of investees to retained earnings

  

 

—  

  

 

—  

 

  

 

162

 

  

 

162

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

Unrealized loss on long-term investments from subsidiaries

  

 

—  

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

(194,283

)

  

 

—  

 

  

 

—  

 

  

 

(194,283

)

Translation adjustments

  

 

—  

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

(283,572

)

  

 

—  

 

  

 

(283,572

)

Reclassification of stocks of a parent company held by subsidiaries from long-term investments to treasury stock

  

 

—  

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

(1,923,492

)

  

 

(1,923,492

)

Capital surplus resulted from sales of treasury stock

  

 

—  

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

—  

 

  

 

43,036

 

    

  


  


  


  


  


  


  


BALANCE, DECEMBER 31, 2002

  

$

18,641,108

  

$

—  

 

  

$

22,151,089

 

  

$

40,792,197

 

  

($

194,283

)

  

$

945,129

 

  

($

1,923,492

)

  

$

295,853,207

 

    

  


  


  


  


  


  


  


The accompanying notes are an integral part of the financial statements.

 

(With T N Soong & Co. report dated January 16, 2003)

 

 


 

English Translation of Financial Statements Originally Issued in Chinese

 

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

 

STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2002 and 2001

(In Thousand New Taiwan Dollars)

 

    

2002


    

2001


 

CASH FLOWS FROM OPERATING ACTIVITIES

                 

Net income

  

$

21,610,291

 

  

$

14,483,174

 

Adjustments to reconcile net income to net cash provided by operating activities:

                 

Depreciation and amortization

  

 

57,621,462

 

  

 

48,875,754

 

Deferred income taxes

  

 

5,489,503

 

  

 

(3,840,777

)

Investment loss recognized by equity method—net

  

 

5,716,510

 

  

 

6,429,631

 

Loss on sales of long-term investments—net

  

 

2,403

 

  

 

102,978

 

Loss (gain) on sales of and provision for loss on property, plant and equipment—net

  

 

(52,043

)

  

 

182,486

 

Accrued pension cost

  

 

355,689

 

  

 

345,318

 

Allowance for doubtful receivables

  

 

(170,628

)

  

 

153,758

 

Allowance for sales returns and others

  

 

(218,484

)

  

 

377,384

 

Changes in operation assets and liabilities:

                 

Decrease (increase) in:

                 

Receivable from related parties

  

 

(9,659,627

)

  

 

470,954

 

Notes receivable

  

 

116,342

 

  

 

(51,407

)

Accounts receivable—net

  

 

10,462,189

 

  

 

10,377,678

 

Inventories—net

  

 

(1,835,918

)

  

 

2,463,517

 

Prepaid expenses and other current assets

  

 

(148,120

)

  

 

359,342

 

Forward exchange contract receivable

  

 

(199,609

)

  

 

49,480

 

Increase (decrease) in:

                 

Payable to related parties

  

 

384,392

 

  

 

(2,263,972

)

Accounts payable

  

 

3,725,340

 

  

 

(6,866,059

)

Forward exchange contracts payable

  

 

(379,579

)

  

 

218,165

 

Accrued expenses and other current liabilities

  

 

1,467,988

 

  

 

(201,096

)

    


  


Net Cash Provided by Operating Activities

  

 

94,288,101

 

  

 

71,666,308

 

    


  


CASH FLOWS FROM INVESTING ACTIVITIES

                 

Acquisitions of:

                 

Property, plant and equipment

  

 

(54,443,595

)

  

 

(68,002,448

)

Long-term investments

  

 

(10,187,730

)

  

 

(4,563,682

)

Proceeds from sales of:

                 

Property, plant and equipment

  

 

494,805

 

  

 

298,231

 

Long-term investments

  

 

1,402

 

  

 

162,334

 

Increase in deferred charges

  

 

(5,724,583

)

  

 

(1,465,703

)

Decrease in refundable deposits

  

 

229,443

 

  

 

195,073

 

    


  


Net Cash Used in Investing Activities

  

 

(69,630,258

)

  

 

(73,376,195

)

    


  


 

(Forward)

 

 


 

English Translation of Financial Statements Originally Issued in Chinese

 

    

2002


    

2001


 

CASH FLOWS FROM FINANCING ACTIVITIES

                 

Proceeds from issuance of bonds

  

$

10,000,000

 

  

$

—  

 

Payments on lease obligation

  

 

—  

 

  

 

(50,000

)

Increase (decrease) in guarantee deposits

  

 

(5,815,906

)

  

 

124,593

 

Remuneration paid to directors and supervisors

  

 

(133,848

)

  

 

(584,303

)

Cash dividends paid for preferred stocks

  

 

(455,000

)

  

 

(41,137

)

    


  


Net Cash Provided by (Used in) Financing Activities

  

 

3,595,246

 

  

 

(550,847

)

    


  


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

  

 

28,253,089

 

  

 

(2,260,734

)

CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR

  

 

33,403,706

 

  

 

35,664,440

 

    


  


CASH AND CASH EQUIVALENTS, END OF THE YEAR

  

$

61,656,795

 

  

$

33,403,706

 

    


  


SUPPLEMENTAL INFORMATION

                 

Interest paid (excluding capitalized interest of NT$165,857 thousand and NT$207,297 thousand in 2002 and 2001, respectively)

  

$

1,771,682

 

  

$

1,980,399

 

    


  


Income tax paid

  

$

12,661

 

  

$

16,318

 

    


  


Noncash investing and financing activities:

                 

Reclassification of stocks of a parent company held by subsidiaries from long-term investments to treasury stocks

  

$

1,923,492

 

  

$

—  

 

    


  


Effect of exchange rate changes on cash and cash equivalents

  

($

142,438

)

  

$

1,258,395

 

    


  


Current portion of bonds

  

$

4,000,000

 

  

$

5,000,000

 

    


  


Cash paid for acquisitions of property, plant and equipment:

                 

Total acquisitions

  

$

56,080,659

 

  

$

55,977,367

 

Decrease (increase) in payables to contractors and equipment suppliers

  

 

(1,637,064

)

  

 

12,025,081

 

    


  


    

$

54,443,595

 

  

$

68,002,448

 

    


  


Cash paid for acquisitions of deferred charges:

                 

Total acquisition

  

$

10,401,176

 

  

$

1,465,703

 

Other long-term payable (including current portion)

  

 

(4,676,593

)

  

 

—  

 

    


  


    

$

5,724,583

 

  

$

1,465,703

 

    


  


 

The accompanying notes are an integral part of the financial statements.

 

(With T N Soong & Co. report dated January 16, 2003)

 


 

English Translation of Financial Statements Originally Issued in Chinese

 

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

 

NOTES TO FINANCIAL STATEMENTS

(Amounts in Thousand New Taiwan Dollars, Unless Specified Otherwise)

 

1.    GENERAL

 

Taiwan Semiconductor Manufacturing Company Ltd. (the “Company” or “TSMC”), a Republic of China corporation, was incorporated as a venture among the Government of the Republic of China, acting through the Development Fund of the Executive Yuan; Philips Electronics N.V. and certain of its affiliates (Philips); and certain other private investors. In September 1994, its shares were listed on the Taiwan Stock Exchange. In October 8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange in the form of American Depositary Shares.

 

TSMC is engaged mainly in the manufacturing, selling, packaging, and testing and designing of integrated circuits and other semiconductor devices, and the manufacturing of masks.

 

2.    SIGNIFICANT ACCOUNTING POLICIES

 

Cash and cash equivalents

 

Government bonds acquired under agreements that provide for their repurchase within less than three months from date of purchase are classified as cash equivalents.

 

Allowance for doubtful receivables

 

Allowance for doubtful receivables are provided based on a review of the collectibility of accounts receivables.

 

Sales and sales returns and allowances

 

Sales are recognized when titles of products and risks of ownerships are transferred to customers, primarily upon shipment. Allowance and related provisions for sales returns and others are estimated based on historical experience. Such provisions are deducted from sales in the year the products are sold and the estimated related costs are deducted from cost of sales.

 

Inventories

 

Inventories are stated at the lower of cost (standard cost and adjusted to approximate weighted-average cost at the end of each period) or market value. Market value represents net realizable value for finished goods and work in process, and replacement value for raw materials, supplies and spare parts.

 

 


 

Long-term investments

 

Investments in shares of stock of companies wherein the Company exercises significant influence on the operating and financial policy decisions are accounted for using the equity method. The Company’s proportionate share in the net income or net loss of investee companies are recognized as components of the “Investment income/loss recognized by equity method—net” account. The Company adopted Statements of Financial Accounting Standards No. 30, “Accounting for Treasury Stock” (SFAS 30) on January 1, 2002. SFAS 30 requires a parent company to record stock held by its subsidiary as treasury stock. The recorded value of treasury stock is based upon the carrying values of the short/long-term investments on the subsidiaries’ books as of January 1, 2002.

 

When the Company subscribes to additional investee shares at a percentage different from its existing equity interest, the resulting carrying amount of the investment in equity investee differs from the amount of Company’s proportionate share in the investee’s net equity. The Company records such difference as an adjustment to “capital surplus” as well as the “long-term investments” accounts. In the event an investee has an accumulated deficit, it will record an offset to its capital surplus, excluding the reserve for asset revaluation, through retained earnings. The Company will also record a corresponding entry equivalent to its proportionate share of the investee capital surplus, excluding the reserve for asset revaluation, that was generated subsequent to any acquisition of equity interest in the investee. If an investee’s functional currency is a foreign currency, “cumulative translation adjustments” would result from the process of translating the investees’ financial statements into the functional currency of the Company.

 

Other stock investments are accounted for using the cost method. Cash dividends are recognized as income in the year received but are accounted for as reduction in the carrying values of the long-term investments if the dividends are received in the same year that the related investments are acquired. Stock dividends are recognized neither as investment income nor increase of long-term investment but recorded only as an increase in the number of shares held. An allowance is recognized for any decline in the market value of investments using quoted market prices with the corresponding amount debited to shareholders’ equity. A reversal of the allowance will result from a subsequent recovery of the market value. The carrying values of investments with no quoted market price are reduced to reflect another than temporary decline in their values with the related impairment loss charged to income.

 

Investments in foreign mutual funds are stated at the lower of aggregate cost or net asset value (NAV). An allowance is recognized when the cost of the funds are lower than their net asset values, with the corresponding amount debited to shareholders’ equity. A reversal of the allowance will result from a subsequent recovery of the net asset value.

 

The costs of investments sold are determined using the weighted-average method.

 

If an investee company has an unrealized loss on a long-term investment evaluated using the lower-of-cost-or-market method, the Company recognizes a corresponding unrealized loss in proportion to its equity interest and records the amount as a component of its own shareholders’ equity.

 


 

Gain or loss on transactions with investee companies wherein the Company owned at least 20% of the outstanding common stock but less than a controlling interest are deferred in proportion to the ownership percentage until realized through a transaction with a third party. The entire amount of the gains or losses on sales to majority-owned subsidiaries are deferred until such gains or losses are realized through the subsequent sale of the related products to third parties. Gains or losses from sales by investee companies to the Company are deferred in proportion to the ownership percentage until realized through transactions with third parties.

 

Property, plant and equipment, assets leased to others and idle assets

 

Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation. Idle assets are stated at the lower of book value or net realized value. Significant additions, renewals, betterments and interest expense incurred during the construction period are capitalized. Maintenance and repairs are expensed in the period incurred. Property, plant and equipment covered by agreements qualifying as capital leases are carried at the lower of the present value of future minimum rent payments, or the market value of the property at the inception date of the lease. The lessee’s periodic rent payment includes the purchase price of the leased property and the interest expense.

 

Depreciation is computed using the straight-line method over these estimated service lives: Buildings—10 to 20 years; machinery and equipment—5 years; and office equipment—3 to 5 years.

 

Upon sale or disposal of property, plant and equipment, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss is credited or charged to income in the period of disposal.

 

Goodwill

 

Goodwill represents the excess of fair market value of identifiable net assets acquired and consideration paid in connection with a business combination. The amount is amortized using the straight-line method over the estimated useful life of 10 years.

 

Deferred charges

 

Deferred charges consist of software and system design costs, technology know-how, bond issuance costs, and technology license fees. The amounts are amortized as follows: Software and system design costs—3 years, technology know-how—5 years; bond issuance costs—the term of the bonds; technology license fee—the shorter of the estimated life of the technology or the term of the technology transfer contract.

 

Pension costs

 

Net periodic pension costs are recorded on the basis of actuarial calculations. Unrecognized net transition obligation and unrecognized net gain/loss are amortized over 25 years.

 

Deferred gain on sales and leaseback

 

The gain on the sale of property by the Company that it simultaneously leased back is deferred. This deferred gain on sales and leaseback transactions is amortized as follows: (a) operating leases—adjustment of rental expenses over the term of the leases and (b) capital leases—adjustment of depreciation expenses over the estimated useful life or term of the lease; whichever is shorter.

 

 


 

Casualty loss

 

Casualty loss consists of the accrued loss caused by the earthquake on March 31, 2002 less the estimated insurance compensation.

 

Income tax

 

The Company uses an inter-period tax allocation method for income tax. Deferred income tax assets and liabilities are recognized for the tax effects of temporary differences, unused tax credits, and operating loss carry forwards. 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, according to the classification of its related asset or liability, classified as current or non-current. 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 current or non-current based on the expected length of time before it is realized.

 

Any tax credit arising from the purchase of machinery, equipment and technology, research and development expenditures, personnel training, investments in important technology-based enterprise are recognized using the current method.

 

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

 

As of January 1, 1998, income taxes on unappropriated earnings of 10% are expensed in the year of shareholder approval which is usually the year subsequent to the year incurred.

 

Derivative financial instruments

 

The Company enters into foreign currency forward contracts to manage currency exposures in cash flow and in foreign currency-denominated assets and liabilities. The differences in the New Taiwan dollar amounts translated using the current rate and the amounts translated using the contracted forward rates are amortized over the terms of the forward contracts using the straight-line method. At the balance sheet dates, the receivables or payables arising from forward contracts are restated using the prevailing current rate and the resulting differences are recognized in income. Also, the receivables and payables related to the forward contract are netted with the resulting amount presented as either an asset or liability.

 

The Company enters into interest rate swap transactions to manage exposures from changes in interest rates on existing liabilities. These transactions are accounted for on an accrual basis, in which the cash settlement receivable or payable is recorded as an adjustment to interest income or expense.

 

The notional amount of foreign currency option contracts entered into for hedging purposes are not recognized as an asset or liability on the contract dates. The premiums paid or received for the call or put options are amortized to income on a straight-line basis over the term of the related contract.

 


 

Foreign-currency transactions

 

Foreign-currency transactions are recorded in New Taiwan dollars at the current rate of exchange in effect when the transaction occurs. Gains or losses derived from foreign currency transactions or monetary assets and liabilities denominated in a foreign currency are recognized in current operations. At year-end, foreign-currency assets and liabilities are revalued at the prevailing exchange rate with the resulting gain or loss recognized in current operations.

 

3.    NEW ACCOUNTING PRONOUNCEMENTS

 

In accordance with the Statement of Financial Accounting Standards No. 30, “Accounting for Treasury Stock” (SFAS 30) and other relevant regulations from Securities and Futures Commission (SFC), the Company is required to reclassify its common stock held by subsidiaries from short/long-term investments to treasury stock. The reclassification is based on the carrying value of NT$2,115,695 thousand as recorded by the Company’s subsidiaries as of January 1, 2002. The adoption of SFAS 30 resulted in the decrease of long-term investments and the increase of treasury stock by NT$1,923,492 thousand as of December 31, 2002, and an increase in net income for the year ended December 31, 2002 by NT$25,909 thousand.

 

4.    CASH AND CASH EQUIVALENTS

 

    

2002


  

2001


Cash and bank deposits

  

$

58,917,928

  

$

31,678,047

Government bonds acquired under repurchase agreements

  

 

2,738,867

  

 

1,725,659

    

  

    

$

61,656,795

  

$

33,403,706

    

  

 

5.    INVENTORIES—NET

 

    

2002


    

2001


 

Finished goods

  

$

3,610,547

 

  

$

1,618,635

 

Work in process

  

 

7,227,129

 

  

 

6,685,094

 

Raw materials

  

 

389,164

 

  

 

521,680

 

Supplies and spare parts

  

 

693,526

 

  

 

870,780

 

    


  


    

 

11,920,366

 

  

 

9,696,189

 

Less—allowance for losses

  

 

(1,580,030

)

  

 

(1,191,771

)

    


  


    

$

10,340,336

 

  

$

8,504,418

 

    


  


 


6.    LONG-TERM INVESTMENTS

 

    

2002


  

2001


    

Carrying

Value


  

% of

Owner-

ship


  

Carrying

Value


  

% of

Owner-

ship


Shares of stock

                       

Equity method

                       

TSMC International Investment

  

$

22,265,157

  

100

  

$

19,987,814

  

100

TSMC Partners

  

 

3,753,733

  

100

  

 

3,032,376

  

100

Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)

  

 

3,136,115

  

32

  

 

2,907,967

  

32

Vanguard International Semiconductor (VIS)

  

 

2,415,297

  

25

  

 

3,377,526

  

25

Emerging Alliance Fund

  

 

767,239

  

99

  

 

741,617

  

99

Ya-Shin Technology

  

 

341,250

  

100

  

 

—  

  

—  

TSMC—North America

  

 

173,601

  

100

  

 

786,062

  

100

TSMC—Japan

  

 

94,258

  

100

  

 

80,156

  

100

Chi Cherng Investment

  

 

41,894

  

36

  

 

156,694

  

25

Hsin Ruey Investment

  

 

39,815

  

36

  

 

157,352

  

25

TSMC—Europe

  

 

13,670

  

100

  

 

10,147

  

100

Kung Cherng Investment

  

 

—  

  

—  

  

 

177,812

  

25

Cherng Huei Investment

  

 

—  

  

—  

  

 

166,639

  

25

Po Cherng Investment

  

 

—  

  

—  

  

 

164,724

  

25

Chi Hsin Investment

  

 

—  

  

—  

  

 

158,252

  

25

    

       

    
    

 

33,042,029

       

 

31,905,138

    
    

       

    

Prepayment for subscribed stocks VIS

  

 

849,360

       

 

—  

    
    

       

    
    

 

849,360

       

 

—  

    
    

       

    

Cost method

                       

Traded

                       

Amkor Technology

  

 

280,748

  

—  

  

 

280,748

  

—  

Monolithic System Tech.

  

 

104,289

  

2

  

 

—  

  

—  

Taiwan Mask Corp.

  

 

32,129

  

2

  

 

32,129

  

2

Non-traded

                       

United Technology

  

 

193,584

  

11

  

 

193,584

  

11

Shin-Etsu Handotai Taiwan Company Ltd.

  

 

105,000

  

7

  

 

105,000

  

7

Hon Tung Venture Capital

  

 

83,916

  

10

  

 

150,000

  

10

W.K. Technology Fund IV

  

 

50,000

  

2

  

 

50,000

  

2

    

       

    
    

 

849,666

       

 

811,461

    
    

       

    

Funds

                       

Horizon Ventures

  

 

195,452

  

—  

  

 

125,701

  

—  

Crimson Asia Capital

  

 

41,988

  

—  

  

 

27,091

  

—  

    

       

    
    

 

237,440

       

 

152,792

    
    

       

    
    

$

34,978,495

       

$

32,869,391

    
    

       

    

 


 

On January 8, 2003, the Company’s investee company, VIS issued 600,000 thousand shares of common stock at a discounted price of NT$7 per share. The Company prepaid NT$849,360 thousand at the end of 2002 for the share subscription and paid an additional NT$766,815 thousand in January 2003. In this round of equity offering, the Company purchased a total of 230,882 thousand shares of VIS stocks. As a result, its ownership in VIS increased from 25% to 28%.

 

The Company’s investees, Hsin Ruey Investment, Chi Hsin Investment and Kung Cherng Investment were merged at the end of October 2002, with Hsin Ruey Investment as the surviving company. In addition, the Company’s investees, Chi Cherng Investment, Cherng Huei Investment and Po Cherng Investment were also merged at the end of October 2002. Chi Cherng Investment is the surviving company of the merger. The Company’s ownership is approximately 36% in Hsin Ruey Investment and approximately 36% in Chi Cherng Investment subsequent to the merger.

 

The Company established Ya Shin Technology (“Ya Shin”) in November 2002 and subsequently signed a merger agreement with Global UniChip Corp. (“Global UniChip”) in December 2002. The merger was effective on January 4, 2003 and Global UniChip is the surviving company. The Company holds 52% of Global UniChips’ shares after the completion of the merger.

 

The carrying value of the investments accounted for using the equity method and the related investment gains or losses were determined based on the audited financial statements of the investees in the respective year. The investment gains or losses of the investee companies consisted of the following:

    

2002


    

2001


 

TSMC International Investment

  

($

4,714,203

)

  

($

4,855,844

)

SSMC

  

 

(1,155,076

)

  

 

(1,722,080

)

VIS

  

 

(821,771

)

  

 

(2,236,940

)

TSMC Partners

  

 

993,292

 

  

 

2,357,405

 

Others

  

 

(18,752

)

  

 

27,828

 

    


  


    

($

5,716,510

)

  

($

6,429,631

)

    


  


 

The market values and net asset values of the long-term investments is as follows:

 

    

2002


  

2001


Market value of traded stocks

  

$

4,792,108

  

$

7,055,888

Equity in the net assets of non-traded stocks

  

 

33,880,022

  

 

29,124,386

Net asset value of funds

  

 

237,440

  

 

152,792

 


 

7.    PROPERTY, PLANT AND EQUIPMENT

 

Accumulated depreciation consisted of the following:

 

    

2002


  

2001


Buildings

  

$

22,289,909

  

$

15,181,445

Machinery and equipment

  

 

163,208,908

  

 

122,659,129

Office equipment

  

 

2,948,787

  

 

2,384,066

    

  

    

$

188,447,604

  

$

140,224,640

    

  

 

The status of construction of the Company’s manufacturing facilities at December 31, 2002 is as follows:

 

Manufacturing Plant


  

Estimated

Costs


  

Accumulated

Expenditures


  

Expected or Actual

Date of Starting Operations


Fab 6

  

$

93,932,000

  

$

87,054,700

  

March 2000

Fab 12 Phase 1

  

 

80,318,400

  

 

47,095,400

  

March 2002

Fab 14 Phase 1

  

 

30,411,000

  

 

22,169,900

  

June 2003

 

Interest expense (before deducting capitalized amounts of NT$165,857 thousand in 2002 and NT$207,297 thousand in 2001) for the years ended December 31, 2002 and 2001 were NT$2,285,792 thousand and NT$2,159,127 thousand, respectively. The interest rate used for purposes of calculating the capitalized amounts was 5.283% in 2002 and 2001.

 

8.    DEFERRED CHARGES—NET

 

    

2002


  

2001


Technology license fees

  

$

6,519,286

  

$

996,578

Software and system design costs

  

 

3,167,366

  

 

2,073,752

Technology know-how

  

 

49,500

  

 

103,500

Bond issuance costs

  

 

45,908

  

 

33,091

Other

  

 

10,430

  

 

32,802

    

  

    

$

9,792,490

  

$

3,239,723

    

  

 

9.    BONDS

 

    

2002


  

2001


Domestic unsecured bonds:

             

Issued on March 4, 1998 and payable on March 4, 2003 in one lump sum payment, 7.71% annual interest payable semi-annually

  

$

4,000,000

  

$

4,000,000

Issued on October 21, 1999 and payable on October 21, 2002 and 2004 in two equal payments, 5.67% and 5.95% annual interest payable annually, respectively

  

 

5,000,000

  

 

10,000,000

 

(Forward)

 


 

    

2002


  

2001


Issued December 4 to 15, 2000 and payable in December 2005 and 2007 in two equal payments, 5.25% and 5.36% annual interest payable annually, respectively

  

$

15,000,000

  

$

15,000,000

Issued January 10 to 24, 2002 and payable in January 2007, 2009 and 2012 in three equal payments, 2.6%, 2.75% and 3% annual interest payable annually, respectively

  

 

15,000,000

  

 

—  

    

  

    

$

39,000,000

  

$

29,000,000

    

  

 

Future principal payments under the Company’s bonds arrangements as of December 31, 2002 are as follows:

 

Year of Repayment


  

Amount


2003

  

$

4,000,000

2004

  

 

5,000,000

2005

  

 

10,500,000

2006

  

 

—  

2007

  

 

7,000,000

2008 and thereafter

  

 

12,500,000

    

    

$

39,000,000

    

 

10.    OTHER LONG-TERM PAYABLES

 

The Company entered into several license arrangements for certain semiconductor patents. The future payments to be paid under the agreements as of December 31, 2002 are as follows:

 

Year


  

Amount


 

2003

  

$

1,157,299

 

2004

  

 

1,226,805

 

2005

  

 

987,009

 

2006

  

 

469,189

 

2007

  

 

486,566

 

2008 and thereafter

  

 

1,112,096

 

    


    

 

5,438,964

 

Less—current portion

  

 

(1,157,299

)

    


    

$

4,281,665

 

    


 

11.    PENSION PLAN

 

The Company has a pension plan for all regular employees that provide benefits based on 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 every month to a Pension Fund (the “Fund”). The Fund is administered by a pension fund monitoring committee (the “Committee”) and deposited in the Committee’s name in the Central Trust of China.

 

The changes in the fund and accrued pension cost are summarized as follows:

 

a.   Components of pension cost

 

    

2002


    

2001


 

Service cost

  

$

442,294

 

  

$

417,967

 

Interest cost

  

 

121,552

 

  

 

95,920

 

Projected return on plan assets

  

 

(45,102

)

  

 

(43,968

)

Amortization

  

 

1,681

 

  

 

8,300

 

    


  


Net pension cost

  

$

520,425

 

  

$

478,219

 

    


  


 

b.   Reconciliation of the fund status of the plan and accrued pension cost

 

    

2002


    

2001


 

Benefit obligation

                 

Vested benefit obligation

  

$

21,294

 

  

$

739

 

Nonvested benefit obligation

  

 

1,604,027

 

  

 

1,024,525

 

    


  


Accumulated benefit obligation

  

 

1,625,321

 

  

 

1,025,264

 

Additional benefits based on future salaries

  

 

1,300,712

 

  

 

1,407,014

 

    


  


Projected benefit obligation

  

 

2,926,033

 

  

 

2,432,278

 

Fair value of plan assets

  

 

(1,014,086

)

  

 

(835,583

)

    


  


Funded status

  

 

1,911,947

 

  

 

1,596,695

 

Unrecognized net transitional obligation

  

 

(149,391

)

  

 

(157,691

)

Unrecognized net gain

  

 

445,759

 

  

 

415,849

 

Accrued pension liabilities

  

 

2,227

 

  

 

—  

 

    


  


Accrued pension cost

  

$

2,210,542

 

  

$

1,854,853

 

    


  


 

c.   Actuarial assumptions

 

Discount rated used in determining present values

  

 

3.75

%

  

 

5.0

%

Future salary increase rate

  

 

3.00

%

  

 

5.0

%

Expected rate of return on plan assets

  

 

3.75

%

  

 

5.0

%

d.     Contributions to pension fund

  

$

164,720

 

  

$

131,894

 

    


  


e.     Payments from pension fund

  

$

5,360

 

  

$

—  

 

    


  


 


 

12.    INCOME TAX BENEFIT (EXPENSE)

 

a.   A reconciliation of income tax expense on income before income tax at the statutory rate and current income tax expense before tax credits is shown below:

 

    

2002


    

2001


 

Income tax expense based on “income before income tax” at statutory rate of 25%

  

($

6,778,114

)

  

($

2,664,679

)

Tax-exempt income

  

 

2,526,500

 

  

 

1,089,000

 

Temporary and permanent differences

  

 

(452,684

)

  

 

(993,679

)

    


  


Current income tax expense—before tax credits

  

($

4,704,298

)

  

($

2,569,358

)

    


  


 

b.   Income tax benefit (expense) consists of:

 

    

2002


    

2001


 

Current income tax expense before tax credits

  

($

4,704,298

)

  

($

2,569,358

)

Additional 10% on unappropriated earnings

  

 

(162,938

)

  

 

(319,000

)

Income tax credits

  

 

4,867,236

 

  

 

2,888,358

 

Other income tax

  

 

(12,661

)

  

 

(16,318

)

    


  


Income tax paid in current year

  

 

(12,661

)

  

 

(16,318

)

Net change in deferred income tax assets (liabilities)

                 

Investment tax credits

  

 

2,510,192

 

  

 

144,925

 

Temporary differences

  

 

(1,072,086

)

  

 

(1,874,945

)

Valuation allowance

  

 

(6,927,609

)

  

 

5,570,797

 

    


  


Income tax benefit (expense)

  

($

5,502,164

)

  

$

3,824,459

 

    


  


 

c.   Deferred income tax assets (liabilities) consist of the following:

 

    

2002


    

2001


 

Current

                 

Investment tax credits

  

$

3,320,000

 

  

$

2,347,000

 

    


  


Noncurrent

                 

Investment tax credits

  

$

23,247,653

 

  

$

21,710,461

 

Temporary differences

  

 

(3,565,841

)

  

 

(2,493,755

)

Valuation allowance

  

 

(9,969,245

)

  

 

(3,041,636

)

    


  


    

$

9,712,567

 

  

$

16,175,070

 

    


  


 

d.   Integrated income tax information:

 

The balances of the imputation credit account (ICA) as of December 31, 2002 and 2001 were NT$6,650 thousand and NT$9,365 thousand, respectively.

 

The expected and actual credible ratio for 2002 and 2001 was 0.03% and 0.04%, respectively.

 


 

The imputation credit allocated to each shareholder shall be based on the balance in the ICA on the date of distribution of dividends; thus the expected creditable ratio for 2002 may be adjusted according to the difference between the expected and actual imputation credit allowed under the regulation.

 

e.   The unappropriated retained earnings as of December 31, 2002 and 2001 included earnings generated through December 31, 1997 was NT$0 and NT$4,827 thousand, respectively.

 

f.   As of December 31, 2002, investment tax credits consisted of the following:

 

Regulation


  

Items


  

Total Creditable

Amounts


  

Remaining Creditable

Amounts


  

Expiry

Year


Statute for Upgrading Industries

  

Purchase of machinery and equipment

  

$

4,237,050

  

$

—  

  

2002

         

 

4,767,347

  

 

4,767,347

  

2003

         

 

8,180,857

  

 

8,180,857

  

2004

         

 

3,110,906

  

 

3,110,906

  

2005

         

 

5,335,558

  

 

2,775,029

  

2006

         

  

    
         

$

25,631,718

  

$

18,834,139

    
         

  

    

Statute for Upgrading Industries

  

Research and development expenditures

  

$

562,158

  

$

—  

  

2002

         

 

671,546

  

 

671,546

  

2003

         

 

1,974,320

  

 

1,974,320

  

2004

         

 

3,111,472

  

 

3,111,472

  

2005

         

 

1,540,000

  

 

1,540,000

  

2006

         

  

    
         

$

7,859,496

  

$

7,297,338

    
         

  

    

Statute for Upgrading Industries

  

Personnel training

  

$

8,822

  

$

—  

  

2002

         

 

16,104

  

 

16,104

  

2003

         

 

43,264

  

 

43,264

  

2004

         

 

28,886

  

 

28,886

  

2005

         

  

    
         

$

97,076

  

$

88,254

    
         

  

    

Statute for Upgrading Industries

  

Reputation setting

  

$

10,133

  

$

—  

  

2002

         

 

319

  

 

319

  

2003

         

  

    
         

$

10,452

  

$

319

    
         

  

    

Statute for Upgrading Industries

  

Investments in important technology based enterprises

  

$

2,878

  

$

—  

  

2002

         

 

5,420

  

 

5,420

  

2003

         

 

201,372

  

 

201,372

  

2004

         

 

138,864

  

 

138,864

  

2005

         

 

1,947

  

 

1,947

  

2006

         

  

    
         

$

350,481

  

$

347,603

    
         

  

    

 


 

g.   Income from the following expansion and construction of the Company’s manufacturing plants is exempt from income tax:

 

      

Tax-Exemption Period


Expansion of Fab 1 and Fab 2—modules A and B, Fab 3 and Fab 4, and construction of Fab 5

    

1999 to 2002

Construction of Fab 6

    

2001 to 2004

 

h.   The tax authorities have examined income tax returns of the Company through 1999. However, the Company is contesting the assessment of the tax authority for 1992, 1993, 1996 and 1997.

 

13.    SHAREHOLDERS’ EQUITY

 

The Company has issued 369,019 thousand American Depositary Shares (ADS) on the New York Stock Exchange as of December 31, 2002. The number of common shares represented by the ADSs is 1,845,097 thousand shares (one ADS represents five common shares).

 

Capital surplus can only be used to offset a deficit under the ROC Company Law. However, the components of capital surplus generated from donations (donated capital) and the excess of the issue price over the par value of capital stock (including the stock issued for new capital, mergers, and the purchase of treasury stock) can be transferred to capital as stock dividends.

 

The Company’s Articles of Incorporation provide that the following shall be appropriated from annual net income (less any deficit):

 

a.   10% legal reserve;

 

b.   Special reserve in accordance with relevant laws or regulations;

 

c.   Remuneration to directors and supervisors and bonus to employees equal to 0.3% and at least 1% of the remainder, respectively. Individuals who receive bonus to employees may include employees of affiliated companies and are approved by the board of directors or a representative of the board of directors.

 

d.   Dividends to holders of preferred shares equal to a 3.5% annual rate, based on the period which the preferred shares have been outstanding;

 

e.   The appropriation of the remaining balance after the above shall be decided at the shareholders’ meeting;

 

Dividends are distributed in cash, shares of common stock or a combination of cash and common stock. Distribution of profits are preferably made in the form of stock dividend. The total of cash dividends paid in any given year should not exceed 50% of total dividends distributed.

 

These appropriations of net income shall be approved by the shareholders in the following year and given effect in the financial statements of that year.

 


 

The bonus to employees and the remuneration to directors and supervisors appropriated from the earnings of 2001 were approved in the shareholders’ meeting on May 7, 2002:

 

    

Amounts


  

Shares

(Thousand)


Bonus to employees—in stock

  

$

1,070,783

  

107,078

Remuneration to directors and supervisors—in cash

  

 

133,848

  

—  

    

    
    

$

1,204,631

    
    

    

 

The shares distributed as a bonus to employees represent 0.64% of the Company’s total outstanding common shares as of December 31, 2001.

 

The above appropriation of the earnings is consistent with the resolution of the meeting of board of directors dated on March 26, 2002. If the above distributable earnings were both paid in cash, and charged against income of 2001, the basic EPS after income tax for the year ended December 31, 2001 would be decreased from NT$0.83 to NT$0.76.

 

As of January 16, 2003, the appropriation of the earnings of 2002 has not been yet resolved by the board of directors.

 

The above information associated with the appropriation of bonus to employees and remuneration to directors and supervisors is available at Market Observation System website.

 

The aforementioned appropriation for legal reserve shall be made until the reserve equals the aggregate par value of the Company’s outstanding capital stock. The reserve can only be used to offset a deficit; or distribute as stock dividend when the balance is 50% of the aggregate par value of the outstanding capital stock of the Company up to the half amount of the reserve balance.

 

A special reserve equivalent to the debit balance of any account shown in the shareholder’s equity section of the balance sheet (except for the recorded cost of treasury stock held by subsidiaries), other than the deficit, shall be made from unappropriated retained earnings pursuant to existing regulations promulgated by the Securities and Futures Commission. The special reserve is allowed to be appropriated when the debit balance of such accounts are reversed.

 

The gain on sales or disposal of property, plant and equipment generated prior to 2000, less the applicable income tax, was reclassified to capital surplus as of each year-end. A gain in the amount of NT$39,282 thousand, less applicable income tax, was recognized and transferred to the capital surplus at the end of 2001 prior to the amended regulations. To comply with the amended regulations, the aforementioned capital surplus was transferred to retained earnings upon the approval of the shareholders’ meeting on May 7, 2002. The shareholders also approved the accumulated capital surplus of NT$127,236 thousand generated from gains prior to 2000 to be transferred to retained earnings, after appropriating the required 10% legal reserve.

 

Under the Integrated Income Tax System that became effective on January 1, 1998, ROC resident shareholders are allowed a tax credit for the income tax paid by the Company on earnings generated as of January 1, 1998. An Imputation Credit Account (ICA) is maintained by the Company for such income tax and the tax credit allocated to each shareholder.

 


 

On June 25, 2002, the SFC approved the Company’s Employee Stock Option Plan (“the Plan”). The Plan provides qualified employees with 100,000 thousand units of option rights with each unit representing 1 common share of stock. The option rights are valid for 10 years and exercisable at certain percentages subsequent to the second anniversary of issuance. Under the terms of the Plan, stock options are granted at an exercise price equal to the closing price of TSMC’s common shares listed on Taiwan stock exchange at the date of grant. As of December 31, 2002, there were 19,726 thousand shares granted at a weighted average price of approximately NT$53.

 

The Company issued 1,300,000 thousand shares of unlisted Series A—preferred stock to certain investors on November 29, 2000. The following are the rights of the preferred shareholders and other terms and conditions:

 

Preferred shareholders

 

a.   are entitled to receive cumulative cash dividends at an annual rate of 3.5%.

 

b.   are not entitled to receive any common stock dividends (whether declared out of unappropriated earnings or capital surplus).

 

c.   have priority over the holders of common shares to the assets of the Company available for distribution to shareholders upon liquidation or dissolution, however, the preemptive rights to the assets shall not exceed the issue value of the shares.

 

d.   have voting rights similar to that of the holders of common shares.

 

e.   have no right to convert their shares into common shares. The preferred shares are to be redeemed within thirty months from their issuance. The preferred shareholders have the aforementioned rights and the Company’s related obligations remain the same until the preferred shares are redeemed by the Company.

 

14.    TREASURY STOCK (COMMON STOCK)

 

(Shares in Thousand)

Purpose of Purchase


  

Beginning

Shares


  

Increase


  

Decrease


  

Ending

Shares


Year ended December 31, 2002

                   

Reclassification of stocks held by subsidiaries from short/long-term investment to treasury stocks

  

39,270

  

3,818

  

1,087

  

42,001

    
  
  
  

 

On January 1, 2002, the Company reclassified its capital stock held by its subsidiaries with book value of NT$2,115,695 thousand from long-term investments to treasury stock. Proceeds from the sale of treasury stock for the year ended December 31, 2002 were NT$96,501 thousand. As of December 31, 2002, the book value and market value of the treasury stock was NT$1,923,492 thousand and NT$2,048,164 thousand, respectively. Capital stock held by a subsidiary as an investment is recorded as treasury stock with the holder having the same rights as other common shareholders.

 


 

15.    EARNINGS PER SHARE

 

Earnings per share (EPS) is computed as follows:

 

    

Amounts (Numerator)


    

Share

(Denominator)

(Thousand)


  

EPS (Dollars)


    

Before

Income Tax


    

After

Income Tax


       

Before

Income

Tax


  

After

Income

Tax


December 31, 2002

                                    

Income

  

$

27,112,455

 

  

$

21,610,291

 

                  

Less—preferred stock dividends

  

 

(455,000

)

  

 

(455,000

)

                  
    


  


                  

Basic earnings per share

                                    

Income available to common shareholders

  

$

26,657,455

 

  

$

21,155,291

 

  

18,580,700

  

$

1.43

  

$

1.14

    


  


  
  

  

Diluted earnings per share

                                    

Income available to common shareholders

  

$

26,657,455

 

  

$

21,155,291

 

  

18,580,700

  

$

1.43

  

$

1.14

    


  


  
  

  

December 31, 2001

                                    

Income

  

$

10,658,715

 

  

$

14,483,174

 

                  

Less—preferred stock dividends

  

 

(455,000

)

  

 

(455,000

)

                  
    


  


                  

Basic earnings per share

                                    

Income available to common shareholders

  

$

10,203,715

 

  

$

14,028,174

 

  

18,622,887

  

$

0.55

  

$

0.75

    


  


  
  

  

Diluted earnings per share

                                    

Income available to common shareholders

  

$

10,203,715

 

  

$

14,028,174

 

  

18,622,887

  

$

0.55

  

$

0.75

    


  


  
  

  

 

The potential common shares from the employee stock option plan (see Note 13) are not included in the denominator of the diluted earning-per-share computation as such shares are not dilutive using the treasury stock method under the Statement of Financial Accounting Standards No. 24, “Earning Per Share”.

 

The average number of shares outstanding for EPS calculation has been adjusted retroactively for issuance of stock dividends and stock bonuses. The retroactive adjustment caused the basic EPS before income tax and after income tax for the year ended December 31, 2001 to decrease from NT$0.61 and NT$0.83 to NT$0.55 and NT$0.75, respectively.

 

16.    RELATED PARTY TRANSACTIONS

 

The Company engages in business transactions with the following related parties:

 

a.   Industrial Technology Research Institute (ITRI); the Chairman of the Company is a director of ITRI

 

b.   Philips Electronics N.V. (Philips); a major shareholder

 


 

c.   Subsidiaries

 

TSMC—North America

TSMC—Europe

TSMC—Japan

 

d.   Investees

 

VIS

SSMC

 

e.   Indirect subsidiaries

 

TSMC Technology

WAFERTECH, LLC.

 

The transactions with the aforementioned parties, in addition to those disclosed in other notes, are summarized as follows:

 

    

2002


  

2001


    

Amount


  

%


  

Amount


  

%


For the years

                       

Sales

                       

TSMC—North America

  

$

94,433,401

  

57

  

$

—  

  

—  

Philips and its affiliates

  

 

2,909,008

  

2

  

 

2,389,257

  

2

ITRI

  

 

94,409

  

—  

  

 

114,546

  

—  

VIS

  

 

92,119

  

—  

  

 

1,177,094

  

1

SSMC

  

 

7,018

  

—  

  

 

48,972

  

—  

WAFERTECH, LLC

  

 

1,152

  

—  

  

 

3,111

  

—  

    

  
  

  
    

$

97,537,107

  

59

  

$

3,732,980

  

3

    

  
  

  

Purchase

                       

WAFERTECH, LLC

  

 

9,955,154

  

41

  

 

6,797,817

  

37

VIS

  

 

3,469,198

  

14

  

 

3,801,975

  

22

SSMC

  

 

2,751,297

  

11

  

 

42,984

  

—  

    

  
  

  
    

$

16,175,649

  

66

  

$

10,642,776

  

59

    

  
  

  

Rental expense—ITRI

  

$

40,401

  

3

  

$

161,604

  

11

    

  
  

  

Manufacturing expenses

                       

Technical assistance fee—Philips

  

$

2,849,517

  

100

  

$

2,418,276

  

100

    

  
  

  
                         

 

(Forward)

 


 

    

2002


  

2001


    

Amount


  

%


  

Amount


  

%


Marketing expenses

                       

Commission

                       

TSMC—Japan

  

$

208,226

  

23

  

$

194,696

  

8

TSMC—Europe

  

 

132,086

  

15

  

 

124,384

  

5

TSMC—North America

  

 

—  

  

—  

  

 

1,028,725