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 May 2019

 

 

Taiwan Semiconductor Manufacturing Company Ltd.

(Translation of Registrant’s Name Into English)

 

 

No. 8, Li-Hsin Rd. 6,

Hsinchu Science Park,

Taiwan

(Address of Principal Executive Offices)

 

 

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

Form 20-F  ☒            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  ☒

(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: May 20, 2019     By  

/s/ Lora Ho

      Lora Ho
      Senior Vice President & Chief Financial Officer

  

Taiwan Semiconductor Manufacturing

Company Limited and Subsidiaries

  
                               

Consolidated Financial Statements for the

Three Months Ended March 31, 2019 and 2018 and

Independent Auditors’ Review Report

  

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Shareholders

Taiwan Semiconductor Manufacturing Company Limited

Introduction

We have reviewed the accompanying consolidated balance sheets of Taiwan Semiconductor Manufacturing Company Limited and its subsidiaries (collectively, the “Company”) as of March 31, 2019 and 2018 and the consolidated statements of comprehensive income, changes in equity and cash flows for the three-month periods then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

We conducted our reviews in accordance with Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects the consolidated financial position of the Company as of March 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the three-month periods then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

 

- 1 -

The engagement partners on the reviews resulting in this independent auditors’ review report are Mei Yen Chiang and Yu Feng Huang.

Deloitte & Touche

Taipei, Taiwan

Republic of China

May 14, 2019

Notice to Readers

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

For the convenience of readers, the independent auditors’ review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ review report and consolidated financial statements shall prevail.

 

- 2 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

 

 

     March 31, 2019
(Reviewed) 		     December 31, 2018
(Audited) 		     March 31, 2018
(Reviewed) 		 
     Amount      %      Amount      %      Amount      %  

ASSETS

                 

CURRENT ASSETS

                 

Cash and cash equivalents (Note 6)

   $ 645,670,527        30      $ 577,814,601        28      $ 577,782,963        28  

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

     3,084,399        —        3,504,590        —        963,915        —  

Financial assets at fair value through other comprehensive income (Note 8)

     107,313,205        5        99,561,740        5        95,713,446        4  

Financial assets at amortized cost (Note 9)

     4,179,386        —        14,277,615        1        9,888,741        1  

Hedging financial assets (Note 10)

     969        —        23,497        —        26,357        —  

Notes and accounts receivable, net (Note 11)

     106,431,149        5        128,613,391        6        106,601,372        5  

Receivables from related parties (Note 31)

     309,821        —        584,412        —        1,179,312        —  

Other receivables from related parties (Note 31)

     48,674        —        65,028        —        130,070        —  

Inventories (Note 12)

     108,682,382        5        103,230,976        5        85,215,899        4  

Other financial assets (Note 32)

     10,521,565        —        18,597,448        1        11,667,264        1  

Other current assets (Note 17)

     5,082,738        —        5,406,423        —        39,947,321        2  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total current assets

     991,324,815        45        951,679,721        46        929,116,660        45  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

NONCURRENT ASSETS

                 

Financial assets at fair value through other comprehensive income (Note 8)

     3,837,734        —        3,910,681        —        6,035,904        —  

Financial assets at amortized cost (Note 9)

     7,864,421        —        7,528,277        —        10,033,241        1  

Investments accounted for using equity method (Note 13)

     18,336,458        1        17,865,838        1        18,307,517        1  

Property, plant and equipment (Note 14)

     1,107,651,816        51        1,072,050,279        51        1,055,366,207        51  

Right-of-use assets (Notes 4 and 15)

     19,043,554        1        —        —        —        —  

Intangible assets (Note 16)

     17,974,017        1        17,002,137        1        13,674,295        1  

Deferred income tax assets (Note 4)

     16,959,414        1        16,806,387        1        12,987,042        1  

Refundable deposits

     2,839,161        —        1,700,071        —        2,121,209        —  

Other noncurrent assets (Note 17)

     1,605,395        —        1,584,647        —        1,513,731        —  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total noncurrent assets

     1,196,111,970        55        1,138,448,317        54        1,120,039,146        55  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

   $ 2,187,436,785        100      $ 2,090,128,038        100      $ 2,049,155,806        100  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

LIABILITIES AND EQUITY

                 

CURRENT LIABILITIES

                 

Short-term loans (Notes 18 and 29)

   $ 76,592,550        4      $ 88,754,640        4      $ 56,731,350        3  

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

     151,079        —        40,825        —        170,673        —  

Hedging financial liabilities (Note 10)

     111,374        —        155,832        —        79,182        —  

Accounts payable

     27,100,909        1        32,980,933        2        27,817,670        1  

Payables to related parties (Note 31)

     560,941        —        1,376,499        —        1,224,307        —  

Salary and bonus payable

     8,896,829        —        14,471,372        1        10,201,325        1  

Accrued profit sharing bonus to employees and compensation to directors and supervisors (Notes 21 and 28)

     28,088,332        1        23,981,154        1        29,529,009        1  

Payables to contractors and equipment suppliers

     76,970,966        4        43,133,659        2        47,828,289        2  

Income tax payable (Note 4)

     45,719,763        2        38,987,053        2        44,096,800        2  

Long-term liabilities - current portion (Notes 19 and 29)

     48,100,000        2        34,900,000        2        49,356,740        2  

Accrued expenses and other current liabilities (Notes 15, 20, 22 and 29)

     65,974,891        3        61,760,619        3        75,199,897        4  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total current liabilities

     378,267,634        17        340,542,586        17        342,235,242        16  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

NONCURRENT LIABILITIES

                 

Bonds payable (Notes 19 and 29)

     35,300,000        2        56,900,000        3        83,400,000        4  

Deferred income tax liabilities (Note 4)

     204,933        —        233,284        —        285,644        —  

Lease liabilities (Notes 4, 15 and 29)

     16,907,533        1        —        —        —        —  

Net defined benefit liability (Note 4)

     9,389,230        —        9,651,405        —        8,818,705        1  

Guarantee deposits (Notes 20 and 29)

     1,820,748        —        3,353,378        —        5,991,361        —  

Others

     2,029,105        —        1,950,989        —        1,819,825        —  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total noncurrent liabilities

     65,651,549        3        72,089,056        3        100,315,535        5  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

     443,919,183        20        412,631,642        20        442,550,777        21  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT

                 

Capital stock (Note 21)

     259,303,805        12        259,303,805        12        259,303,805        13  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Capital surplus (Note 21)

     56,320,688        2        56,315,932        3        56,305,751        3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Retained earnings (Note 21)

                 

Appropriated as legal capital reserve

     276,033,811        13        276,033,811        13        241,722,663        12  

Appropriated as special capital reserve

     26,907,527        1        26,907,527        1        —        —  

Unappropriated earnings

     1,135,004,816        52        1,073,706,503        52        1,082,967,237        53  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     1,437,946,154        66        1,376,647,841        66        1,324,689,900        65  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Others (Note 21)

     (10,725,023 )       —        (15,449,913 )       (1 )       (34,401,067 )       (2 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Equity attributable to shareholders of the parent

     1,742,845,624        80        1,676,817,665        80        1,605,898,389        79  

NON - CONTROLLING INTERESTS

     671,978        —        678,731        —        706,640        —  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total equity

     1,743,517,602        80        1,677,496,396        80        1,606,605,029        79  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

TOTAL

   $ 2,187,436,785        100      $ 2,090,128,038        100      $ 2,049,155,806        100  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

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

 

- 3 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

(Reviewed, Not Audited)

 

 

    Three Months Ended March 31  
    2019     2018  
    Amount     %     Amount     %  

NET REVENUE (Notes 22, 31 and 37)

  $ 218,704,469       100     $ 248,078,671       100  

COST OF REVENUE (Notes 12, 28, 31 and 35)

    128,352,344       59       123,103,977       50  
 

 

 

   

 

 

   

 

 

   

 

 

 

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

    90,352,125       41       124,974,694       50  

REALIZED (UNREALIZED) GROSS PROFIT ON SALES TO ASSOCIATES

    5,432       —       (117,155 )      —  
 

 

 

   

 

 

   

 

 

   

 

 

 

GROSS PROFIT

    90,357,557       41       124,857,539       50  
 

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EXPENSES (Notes 28 and 31)

       

Research and development

    20,417,311       9       20,428,594       8  

General and administrative

    4,140,729       2       4,851,708       2  

Marketing

    1,459,973       1       1,448,092       1  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    26,018,013       12       26,728,394       11  
 

 

 

   

 

 

   

 

 

   

 

 

 

OTHER OPERATING INCOME AND EXPENSES, NET (Notes 14, 15 and 28)

    (73,521 )      —       (1,302,199 )      —  
 

 

 

   

 

 

   

 

 

   

 

 

 

INCOME FROM OPERATIONS (Note 37)

    64,266,023       29       96,826,946       39  
 

 

 

   

 

 

   

 

 

   

 

 

 

NON-OPERATING INCOME AND EXPENSES

       

Share of profits of associates

    433,491       —       681,791       —  

Other income (Note 23)

    4,408,776       2       3,154,642       1  

Foreign exchange gain (loss), net (Note 34)

    230,682       —       (676,980 )      —  

Finance costs (Note 24)

    (899,065 )      —       (807,966 )      —  

Other gains and losses, net (Note 25)

    (258,255 )      —       765,188       —  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total non-operating income and expenses

    3,915,629       2       3,116,675       1  
 

 

 

   

 

 

   

 

 

   

 

 

 

INCOME BEFORE INCOME TAX

    68,181,652       31       99,943,621       40  

INCOME TAX EXPENSE (Notes 4 and 26)

    6,794,342       3       10,156,047       4  
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME

    61,387,310       28       89,787,574       36  
 

 

 

   

 

 

   

 

 

   

 

 

 

(Continued)

 

- 4 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

(Reviewed, Not Audited)

 

 

     Three Months Ended March 31  
     2019      2018  
     Amount     %      Amount     %  

OTHER COMPREHENSIVE INCOME (LOSS) (Notes 21 and 26)

         

Items that will not be reclassified subsequently to profit or loss:

         

Unrealized gain/(loss) on investments in equity instruments at fair value through other comprehensive income

   $ 53,541       —      $ (19,507 )      —  

Gain (loss) on hedging instruments

     (94,548 )      —        37,282       —  

Share of other comprehensive income of associates

     248       —        62       —  

Income tax benefit (expense) related to items that will not be reclassified subsequently

     (18,051 )      —        39,206       —  
  

 

 

   

 

 

    

 

 

   

 

 

 
     (58,810 )      —        57,043       —  
  

 

 

   

 

 

    

 

 

   

 

 

 

Items that may be reclassified subsequently to profit or loss:

         

Exchange differences arising on translation of foreign operations

     3,218,078       1        (6,476,486 )      (3 ) 

Unrealized gain/(loss) on investments in debt instruments at fair value through other comprehensive income

     1,448,390       1        (727,410 )      —  

Share of other comprehensive income (loss) of associates

     8,328       —        (39,352 )      —  
  

 

 

   

 

 

    

 

 

   

 

 

 
     4,674,796       2        (7,243,248 )      (3 ) 
  

 

 

   

 

 

    

 

 

   

 

 

 

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

     4,615,986       2        (7,186,205 )      (3 ) 
  

 

 

   

 

 

    

 

 

   

 

 

 

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

   $ 66,003,296       30      $ 82,601,369       33  
  

 

 

   

 

 

    

 

 

   

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO:

         

Shareholders of the parent

   $ 61,393,851       28      $ 89,784,622       36  

Non-controlling interests

     (6,541 )      —        2,952       —  
  

 

 

   

 

 

    

 

 

   

 

 

 
   $ 61,387,310       28      $ 89,787,574       36  
  

 

 

   

 

 

    

 

 

   

 

 

 

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO:

         

Shareholders of the parent

   $ 66,009,819       30      $ 82,596,052       33  

Non-controlling interests

     (6,523 )      —        5,317       —  
  

 

 

   

 

 

    

 

 

   

 

 

 
   $ 66,003,296       30      $ 82,601,369       33  
  

 

 

   

 

 

    

 

 

   

 

 

 

(Continued)

 

- 5 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

(Reviewed, Not Audited)

 

 

    Three Months Ended March 31  
    2019     2018  
   

Income Attributable to

Shareholders of

the Parent

   

Income Attributable to

Shareholders of

the Parent

 

EARNINGS PER SHARE (NT$, Note 27)

   

Basic earnings per share

  $ 2.37     $ 3.46  
 

 

 

   

 

 

 

Diluted earnings per share

  $ 2.37     $ 3.46  
 

 

 

   

 

 

 

 

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

 

- 6 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

 

 

    Equity Attributable to Shareholders of the Parent              
                                              Others                    
                                                    Unrealized                                      
                                                    Gain (Loss) on                                      
                                                    Financial                                      
                                                    Assets at Fair                                      
                                              Foreign     Value Through           Unearned                          
    Capital Stock - Common Stock           Retained Earnings     Currency     Other     Gain (Loss) on     Stock-Based                          
    Shares                 Legal Capital     Special Capital     Unappropriated           Translation     Comprehensive     Hedging     Employee                 Non-controlling     Total  
    (In Thousands)     Amount     Capital Surplus     Reserve     Reserve     Earnings     Total     Reserve     Income     Instruments     Compensation     Total     Total     Interests     Equity  

BALANCE, JANUARY 1, 2019

    25,930,380     $ 259,303,805     $ 56,315,932     $ 276,033,811     $ 26,907,527     $ 1,073,706,503     $ 1,376,647,841     $ (12,042,347 )    $ (3,429,324 )    $ 23,601     $ (1,843 )    $ (15,449,913 )    $ 1,676,817,665     $ 678,731     $ 1,677,496,396  

Net income (loss) for the three months ended March 31, 2019

    —       —       —       —       —       61,393,851       61,393,851       —       —       —       —       —       61,393,851       (6,541 )      61,387,310  

Other comprehensive income (loss) for the three months ended March 31, 2019, net of income tax

    —       —       —       —       —       —       —       3,226,397       1,484,119       (94,548 )      —       4,615,968       4,615,968       18       4,615,986  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) for the three months ended March 31, 2019

    —       —       —       —       —       61,393,851       61,393,851       3,226,397       1,484,119       (94,548 )      —       4,615,968       66,009,819       (6,523 )      66,003,296  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Disposal of investments in equity instruments at fair value through other comprehensive income

    —       —       —       —       —       (95,538 )      (95,538 )      —       95,538       —       —       95,538       —       —       —  

Basis adjustment for gain on hedging instruments

    —       —       —       —       —       —       —       —       —       12,434       —       12,434       12,434       —       12,434  

Adjustments to share of changes in equities of associates

    —       —       4,386       —       —       —       —       —       —       —       950       950       5,336       110       5,446  

From share of changes in equities of subsidiaries

    —       —       370       —       —       —       —       —       —       —       —       —       370       (370 )      —  

Increase in non-controlling interests

    —       —       —       —       —       —       —       —       —       —       —       —       —       30       30  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE, March 31, 2019

    25,930,380     $ 259,303,805     $ 56,320,688     $ 276,033,811     $ 26,907,527     $ 1,135,004,816     $ 1,437,946,154     $ (8,815,950 )    $ (1,849,667 )    $ (58,513 )    $ (893 )    $ (10,725,023 )    $ 1,742,845,624     $ 671,978     $ 1,743,517,602  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE, JANUARY 1, 2018

    25,930,380     $ 259,303,805     $ 56,309,536     $ 241,722,663     $ —     $ 993,195,668     $ 1,234,918,331     $ (26,697,680 )    $ (524,915 )    $ 4,226     $ (10,290 )    $ (27,228,659 )    $ 1,523,303,013     $ 702,452     $ 1,524,005,465  

Net income for the three months ended March 31, 2018

    —       —       —       —       —       89,784,622       89,784,622       —       —       —       —       —       89,784,622       2,952       89,787,574  

Other comprehensive income (loss) for the three months ended March 31, 2018, net of income tax

    —       —       —       —       —       —       —       (6,515,676 )      (705,702 )      32,808       —       (7,188,570 )      (7,188,570 )      2,365       (7,186,205 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) for the three months ended March 31, 2018

    —       —       —       —       —       89,784,622       89,784,622       (6,515,676 )      (705,702 )      32,808       —       (7,188,570 )      82,596,052       5,317       82,601,369  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Disposal of investments in equity instruments at fair value through other comprehensive income

    —       —       —       —       —       (13,053 )      (13,053 )      —       13,053       —       —       13,053       —       —       —  

Adjustments to share of changes in equities of associates

    —       —       (3,825 )      —       —       —       —       —       —       —       3,109       3,109       (716 )      —       (716 ) 

Donation from shareholders

    —       —       40       —       —       —       —       —       —       —       —       —       40       6       46  

Decrease in non-controlling interests

    —       —       —       —       —       —       —       —       —       —       —       —       —       (1,135 )      (1,135 ) 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE, March 31, 2018

    25,930,380     $ 259,303,805     $ 56,305,751     $ 241,722,663     $ —     $ 1,082,967,237     $ 1,324,689,900     $ (33,213,356 )    $ (1,217,564 )    $ 37,034     $ (7,181 )    $ (34,401,067 )    $ 1,605,898,389     $ 706,640     $ 1,606,605,029  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

- 7 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

 

 

     Three Months Ended March 31  
     2019      2018  

CASH FLOWS FROM OPERATING ACTIVITIES

     

Income before income tax

   $ 68,181,652      $ 99,943,621  

Adjustments for:

     

Depreciation expense

     76,192,468        70,462,286  

Amortization expense

     1,355,336        1,035,591  

Reversal of expected credit losses on investments in debt instruments

     (4,885 )       (1,757 ) 

Finance costs

     899,065        807,966  

Share of profits of associates

     (433,491 )       (681,791 ) 

Interest income

     (4,408,776 )       (3,154,189 ) 

Loss on disposal or retirement of property, plant and equipment, net

     421,408        582,384  

Gain on disposal of intangible assets, net

     —        (436 ) 

Reversal of impairment loss on property, plant and equipment

     (301,384 )       —  

Loss on financial instruments at fair value through profit or loss, net

     338,047        28,142  

Loss on disposal of investments in debt instruments at fair value through other comprehensive income, net

     53,105        252,328  

Loss from disposal of subsidiaries

     4,598        —  

Unrealized (realized) gross profit on sales to associates

     (5,432 )       117,155  

Loss (gain) on foreign exchange, net

     22,722        (1,205,272 ) 

Dividend income

     —        (453 ) 

Gain arising from fair value hedges, net

     (11,758 )       (352 ) 

Changes in operating assets and liabilities:

     

Financial instruments at fair value through profit or loss

     72,734        602,734  

Notes and accounts receivable, net

     20,639,442        13,296,988  

Receivables from related parties

     274,591        4,812  

Other receivables from related parties

     16,354        40,988  

Inventories

     (5,451,406 )       (11,335,152 ) 

Other financial assets

     2,545,236        (3,143,144 ) 

Other current assets

     193,059        (1,402,930 ) 

Other noncurrent assets

     —        25,301  

Accounts payable

     (6,105,106 )       (984,571 ) 

Payables to related parties

     (815,558 )       (432,049 ) 

Salary and bonus payable

     (5,574,543 )       (4,053,546 ) 

Accrued profit sharing bonus to employees and compensation to directors and supervisors

     4,107,178        6,109,874  

Accrued expenses and other current liabilities

     965,357        (5,776,314 ) 

Net defined benefit liability

     (262,175 )       (31,999 ) 
  

 

 

    

 

 

 

Cash generated from operations

     152,907,838        161,106,215  

Income taxes paid

     (237,560 )       (380,297 ) 
  

 

 

    

 

 

 

Net cash generated by operating activities

     152,670,278        160,725,918  
  

 

 

    

 

 

 

(Continued)

 

- 8 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

 

 

     Three Months Ended March 31  
     2019      2018  

CASH FLOWS FROM INVESTING ACTIVITIES

     

Acquisitions of:

     

Financial instruments at fair value through profit or loss - debt instruments

   $ —      $ (183,026 ) 

Financial assets at fair value through other comprehensive income

     (34,445,259 )       (24,382,829 ) 

Financial assets at amortized cost

     (313,958 )       —  

Property, plant and equipment

     (75,942,118 )       (71,847,185 ) 

Intangible assets

     (2,101,026 )       (222,548 ) 

Proceeds from disposal or redemption of:

     

Financial instruments at fair value through profit or loss - debt instruments

     93,328        49,438  

Financial assets at fair value through other comprehensive income

     31,684,346        20,123,921  

Financial assets at amortized cost

     10,138,090        498,542  

Property, plant and equipment

     75,142        47,376  

Intangible assets

     —        492  

Derecognition of hedging financial instruments

     (227,383 )       177,209  

Interest received

     4,575,286        3,139,610  

Proceeds from government grants - property, plant and equipment

     2,565,338        —  

Proceeds from government grants - land use right and others

     850,623        —  

Other dividends received

     —        453  

Refundable deposits paid

     (1,320,312 )       (1,048,245 ) 

Refundable deposits refunded

     179,430        187,602  
  

 

 

    

 

 

 

Net cash used in investing activities

     (64,188,473 )       (73,459,190 ) 
  

 

 

    

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

     

Decrease in short-term loans

     (12,262,255 )       (5,774,830 ) 

Repayment of bonds and interest - prepaid

     —        (33,998,915 ) 

Repayment of bonds

     (8,400,000 )       (16,800,000 ) 

Repayment of the principal portion of lease liabilities

     (588,088 )       —  

Interest paid

     (1,188,528 )       (998,257 ) 

Guarantee deposits received

     28,652        3,095  

Guarantee deposits refunded

     (2,456 )       (57,230 ) 

Donation from shareholders

     —        46  

Increase (decrease) in non-controlling interests

     30        (1,135 ) 
  

 

 

    

 

 

 

Net cash used in financing activities

     (22,412,645 )       (57,627,226 ) 
  

 

 

    

 

 

 

 

(Continued)

 

- 9 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

 

 

     Three Months Ended March 31  
     2019        2018  

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

   $ 1,786,766        $ (5,248,235 ) 
  

 

 

      

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

     67,855,926          24,391,267  

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

     577,814,601          553,391,696  
  

 

 

      

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

   $ 645,670,527        $ 577,782,963  
  

 

 

      

 

 

 

 

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

 

- 10 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2019 and 2018

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

(Reviewed, Not Audited)

 

 

1.

GENERAL

Taiwan Semiconductor Manufacturing Company Limited (TSMC), a Republic of China (R.O.C.) corporation, was incorporated on February 21, 1987. TSMC is a dedicated foundry in the semiconductor industry which engages mainly in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of masks.

On September 5, 1994, TSMC’s shares were listed on the Taiwan Stock Exchange (TWSE). On October 8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form of American Depositary Shares (ADSs).

The address of its registered office and principal place of business is No. 8, Li-Hsin Rd. 6, Hsinchu Science Park, Taiwan. The principal operating activities of TSMC’s subsidiaries are described in Note 4.

 

2.

THE AUTHORIZATION OF FINANCIAL STATEMENTS

The accompanying consolidated financial statements were reported to the Board of Directors and issued on May 14, 2019.

 

3.

APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

 

  a.

Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC did not have a significant effect on TSMC and its subsidiaries’ (collectively as the “Company”) accounting policies:

 

  1)

IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that supersedes IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations. Refer to Note 4 for information relating to the relevant accounting policies.

Definition of a lease

The Company applies the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 are not reassessed and are accounted for in accordance with the transitional provisions under IFRS 16.

 

- 11 -

The Company as lessee

Except for payments for short-term leases which are recognized as expenses on a straight-line basis, the Company recognizes right-of-use assets and lease liabilities for all leases on the consolidated balance sheets. On the consolidated statements of comprehensive income, the Company presents the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities and computed using the effective interest method. On the consolidated statements of cash flows, cash payments for both the principal portion and the interest portion of lease liabilities are classified within financing activities.

The Company applies IFRS 16 retrospectively with the cumulative effect of the initial application recognized at the date of initial application but does not restate comparative information.

Leases agreements classified as operating leases under IAS 17, except for short-term leases, are measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments. Right-of-use assets are subject to impairment testing under IAS 36.

The Company applies the following practical expedients to measure right-of-use assets and lease liabilities on January 1, 2019 :

 

  a)

The Company applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.

 

  b)

The Company accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.

 

  c)

Except for lease payments, the Company excludes incremental costs of obtaining the lease from right-of-use assets on January 1, 2019.

 

  d)

The Company determines lease terms (e.g. lease periods) based on the projected status on January 1, 2019, to measure lease liabilities.

The weighted average lessee’s incremental borrowing rate used by the Company to calculate lease liabilities recognized on January 1, 2019 is 1.46%. The reconciliation between the lease liabilities recognized and the future minimum lease payments of non-cancellable operating lease on December 31, 2018 is presented as follows:

 

The future minimum lease payments of non-cancellable operating lease on December 31, 2018

   $ 20,849,585  

Less: Recognition exemption for short-term leases

     (3,189,821 ) 
  

 

 

 

Undiscounted gross amounts on January 1, 2019

   $ 17,659,764  
  

 

 

 

Discounted using the incremental borrowing rate on January 1, 2019

   $ 16,465,599  

Add: Adjustments as a result of a different treatment of extension and purchase options

     3,438,016  
  

 

 

 

Lease liabilities recognized on January 1, 2019

   $ 19,903,615  
  

 

 

 

 

- 12 -

The Company as lessor

Except for sublease transactions, the Company does not make any adjustments for leases in which it is a lessor, and accounts for those leases under IFRS 16 starting from January 1, 2019. On the basis of the remaining contractual terms and conditions on January 1, 2019, all of the Company’s subleases are classified as operating leases.

Impact on assets, liabilities and equity on January 1, 2019

 

    

Carrying

Amount as of

December 31,

2018

    

Adjustments

Arising from

Initial

Application

    

Adjusted

Carrying

Amount as of

January 1, 2019

 

Other current assets

   $ 5,406,423      $ (118,242 )     $ 5,288,181  

Right-of-use assets

     —        20,082,875        20,082,875  

Other noncurrent assets

     1,584,647        (77,171 )       1,507,476  
     

 

 

    

Total effect on assets

      $ 19,887,462     
     

 

 

    

Accrued expenses and other current liabilities

     61,760,619      $ 2,627,334        64,387,953  

Lease liabilities - noncurrent

     —        17,269,317        17,269,317  

Other noncurrent liabilities

     1,950,989        (9,189 )       1,941,800  
     

 

 

    

Total effect on liabilities

      $ 19,887,462     
     

 

 

    

Total effect on equity

      $ —     
     

 

 

    

 

  b.

The IFRSs issued by IASB but not yet endorsed and issued into effect by FSC

 

New, Revised or Amended Standards and Interpretations

  

Effective Date Issued

by IASB

Amendments to IFRS 3 “Definition of a Business”

  

January 1, 2020 (Note 1)

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture”

  

To be determined by IASB

Amendments to IAS 1 and IAS 8 “Definition of Material”

  

January 1, 2020 (Note 2)

 

  Note 1:

The Company shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.

  Note 2:

The Company shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

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

 

- 13 -

4.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Except for the following, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2018.

For the convenience of readers, the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the R.O.C. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language consolidated financial statements shall prevail.

Statement of Compliance

The accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34, “Interim Financial Reporting,” endorsed and issued into effect by the FSC. The consolidated financial statements do not present all the disclosures required for a complete set of annual consolidated financial statements prepared under the IFRSs endorsed and issued into effect by the FSC (collectively, “Taiwan-IFRSs”).

Basis of Consolidation

The basis of preparation and the basis for the consolidated financial statements

The basis of preparation and the basis for the consolidated financial statements applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2018.

The subsidiaries in the consolidated financial statements

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

 

           

Establishment

and Operating

Location

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

March 31,

2019

  December 31,
2018 		 

March 31,

2018

  Note

TSMC

 

TSMC North America

 

Selling and marketing of integrated circuits and other semiconductor devices

  San Jose, California, U.S.A.   100%   100%   100%   —
 

TSMC Europe B.V. (TSMC Europe)

 

Customer service and supporting activities

  Amsterdam, the Netherlands   100%   100%   100%   a)
 

TSMC Japan Limited (TSMC Japan)

 

Customer service and supporting activities

  Yokohama, Japan   100%   100%   100%   a)
 

TSMC Korea Limited (TSMC Korea)

 

Customer service and supporting activities

  Seoul, Korea   100%   100%   100%   a)
 

TSMC Partners, Ltd. (TSMC Partners)

 

Investing in companies involved in the design, manufacture, and other related business in the semiconductor industry and other investment activities

 

Tortola, British Virgin Islands

  100%   100%   100%   a)
 

TSMC Global, Ltd. (TSMC Global)

 

Investment activities

 

Tortola, British Virgin Islands

  100%   100%   100%   —
 

TSMC China Company Limited (TSMC China)

 

Manufacturing, selling, testing and computer-aided design of integrated circuits and other semiconductor devices

 

Shanghai, China

  100%   100%   100%   —
 

TSMC Nanjing Company Limited (TSMC Nanjing)

 

Manufacturing, selling, testing and computer-aided design of integrated circuits and other semiconductor devices

 

Nanjing, China

  100%   100%   100%   b)
 

VisEra Technologies Company Ltd. (VisEra Tech)

 

Engaged in manufacturing electronic spare parts and in researching, developing, designing, manufacturing, selling, packaging and testing of color filter

 

Hsin-Chu, Taiwan

  87%   87%   87%   —
 

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

 

Investing in new start-up technology companies

 

Cayman Islands

  98%   98%   98%   a)
 

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

 

Investing in new start-up technology companies

 

Cayman Islands

  98%   98%   98%   a)
 

TSMC Solar Europe GmbH

 

Selling of solar related products and providing customer service

 

Hamburg, Germany

  —   100%   100%   a), c)

(Continued)

 

- 14 -

           

Establishment

and Operating

Location

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

March 31,

2019

  December 31,
2018 		 

March 31,

2018

  Note

TSMC Partners

 

TSMC Development, Inc. (TSMC Development)

 

Investing in companies involved in the manufacturing related business in the semiconductor industry

 

Delaware, U.S.A.

  100%   100%   100%   —
 

TSMC Technology, Inc. (TSMC Technology)

 

Engineering support activities

 

Delaware, U.S.A.

  100%   100%   100%   a)
 

TSMC Design Technology Canada Inc. (TSMC Canada)

 

Engineering support activities

 

Ontario, Canada

  100%   100%   100%   a)
 

InveStar Semiconductor Development Fund, Inc. (ISDF)

 

Investing in new start-up technology companies

 

Cayman Islands

  97%   97%   97%   a), d)
 

InveStar Semiconductor Development Fund, Inc. (II) LDC. (ISDF II)

 

Investing in new start-up technology companies

 

Cayman Islands

  97%   97%   97%   a), d)

TSMC Development

 

WaferTech, LLC (WaferTech)

 

Manufacturing, selling and testing of integrated circuits and other semiconductor devices

 

Washington, U.S.A.

  100%   100%   100%   —

VTAF III

 

Growth Fund Limited (Growth Fund)

 

Investing in new start-up technology companies

 

Cayman Islands

  100%   100%   100%   a)

(Concluded)

 

  Note a:

This is an immaterial subsidiary for which the consolidated financial statements are not reviewed by the Company’s independent auditors.

  Note b:

Under the investment agreement entered into with the municipal government of Nanjing, China, the Company will make an investment in Nanjing in the amount of approximately US$3 billion to establish a subsidiary operating a 300mm wafer fab with the capacity of 20,000 12-inch wafers per month, and a design service center.

  Note c:

TSMC Solar Europe GmbH has completed the liquidation procedures in March 2019.

  Note d:

The subsidiary is under liquidation procedures.

Leases

2019

For a contract that contains a lease component and non-lease component, the Company may elect to account for the lease and non-lease components as a single lease component.

The Company as lessor

Rental income from operating lease is recognized on a straight-line basis over the term of the lease.

The Company as lessee

Except for payments for low-value asset leases and short-term leases which are recognized as expenses on a straight-line basis, the Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of the lease.

Right-of-use assets are measured at cost. The cost of right-of-use assets comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus an estimate of costs needed to restore the underlying assets. Subsequent measurement is calculated as cost less accumulated depreciation and accumulated impairment loss and adjusted for changes in lease liabilities as a result of lease term modifications or other related factors. Right-of use assets are presented separately in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms. If the lease transfers ownership of the underlying assets to the Company by the end of the lease terms or if the cost of right-of-use assets reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use assets from the commencement dates to the end of the useful lives of the underlying assets.

 

- 15 -

Lease liabilities are measured at the present value of the lease payments. Lease payments comprise fixed payments, variable lease payments which depend on an index or a rate and the exercise price of a purchase option if the Company is reasonably certain to exercise that option. The lease payments are discounted using the lessee’s incremental borrowing rates.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, a change in future lease payments resulting from a change in an index or a rate used to determine those payments, or a change in the assessment of an option to purchase an underlying asset, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use assets. Lease liabilities are presented on a separate line in the consolidated balance sheets.

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred.

2018

Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Company as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the lease.

The Company as lessee

Operating lease payments are recognized as an expense on a straight-line basis over the lease term.

Retirement Benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. The interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the pre-tax income of the interim period. When tax rate changes during the interim period, the effect of the change in tax rate relating to transactions recognized outside scope of profit or loss is recognized in full in the period in which the change in tax rate occurs. The effect of the change in tax rate relating to transactions recognized in profit or loss is incorporated into estimation of the average annual income tax rate, with corresponding effect recognized throughout the interim periods.

 

5.

CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY

Except for the following paragraphs, the same critical accounting judgments and key sources of estimates and uncertainty have been followed in these consolidated financial statements as were applied in the preparation of the Company’s consolidated financial statements for the year ended December 31, 2018.

 

- 16 -

  a.

Lease terms - 2019

In determining a lease term, the Company considers all facts and circumstances that create an economic incentive to exercise or not to exercise an option, including any expected changes in facts and circumstances from the commencement date until the exercise date of the option. Main factors considered include contractual terms and conditions for the optional periods, the importance of the underlying asset to the lessee’s operations, etc. The lease term is reassessed if a significant change in circumstances that are within the control of the Company occurs.

 

  b.

Lessees’ incremental borrowing rates - 2019

In determining a lessee’s incremental borrowing rate used in discounting lease payments, the Company mainly takes into account the market risk-free rates, the estimated lessee’s credit spreads and secured status in a similar economic environment.

 

6.

CASH AND CASH EQUIVALENTS

 

    

March 31,

2019

    

December 31,

2018

    

March 31,

2018

 

Cash and deposits in banks

   $ 643,465,797      $ 575,825,502      $ 577,028,289  

Government bonds

     1,585,376        —        —  

Commercial paper

     496,779        759,499        754,674  

Agency bonds

     122,575        —        —  

Repurchase agreements collateralized by corporate bonds

     —        1,229,600        —  
  

 

 

    

 

 

    

 

 

 
   $ 645,670,527      $ 577,814,601      $ 577,782,963  
  

 

 

    

 

 

    

 

 

 

Deposits in banks consisted of highly liquid time deposits that were readily convertible to known amounts of cash and were subject to an insignificant risk of changes in value.

 

7.

FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

 

    

March 31,

2019

     December 31,
2018 		    

March 31,

2018

 

Financial assets

        

Mandatorily measured at FVTPL

        

Agency mortgage-backed securities

   $ 2,973,659      $ 3,419,287      $ 754,545  

Forward exchange contracts

     110,740        85,303        113,426  

Asset-backed securities

     —        —        95,944  
  

 

 

    

 

 

    

 

 

 
   $     3,084,399      $     3,504,590      $        963,915  
  

 

 

    

 

 

    

 

 

 

Financial liabilities

        

Held for trading

        

Forward exchange contracts

   $ 151,079      $ 40,825      $ 170,673  
  

 

 

    

 

 

    

 

 

 

The Company entered into derivative contracts to manage exposures due to fluctuations of foreign exchange rates. These derivative contracts did not meet the criteria for hedge accounting. Therefore, the Company did not apply hedge accounting treatment for these derivative contracts.

 

- 17 -

Outstanding forward exchange contracts consisted of the following:

 

          Contract Amount
     Maturity Date    (In Thousands)
March 31, 2019      
Sell NT$/Buy EUR    April 2019    NT$17,360,304/EUR496,000
Sell NT$/Buy JPY    April 2019 to May 2019    NT$22,192,001/JPY79,650,134
Sell US$/Buy JPY    April 2019    US$19,577/JPY2,155,000
Sell US$/Buy RMB    April 2019    US$322,000/RMB2,160,945
Sell US$/Buy NT$    April 2019 to May 2019    US$11,000/NT$338,078
Sell RMB/Buy US$    April 2019    RMB651,023/US$97,000
December 31, 2018      
Sell NT$/Buy EUR    January 2019 to March 2019    NT$18,545,854/EUR527,000
Sell NT$/Buy JPY    January 2019 to March 2019    NT$4,757,858/JPY17,200,000
Sell US$/Buy EUR    January 2019    US$495/EUR434
Sell US$/Buy JPY    January 2019    US$175,591/JPY19,389,014
Sell US$/Buy RMB    January 2019    US$318,000/RMB2,188,747
Sell US$/Buy NT$    January 2019 to February 2019    US$127,000/NT$3,908,635
Sell RMB/Buy US$    January 2019    RMB667,539/US$97,000
March 31, 2018      
Sell NT$/Buy EUR    April 2018 to May 2018    NT$3,561,313/EUR99,000
Sell NT$/Buy JPY    April 2018    NT$9,009,251/JPY32,550,000
Sell US$/Buy RMB    April 2018 to May 2018    US$629,000/RMB3,965,590
Sell US$/Buy NT$    April 2018 to June 2018    US$1,002,500/NT$29,129,055
Sell US$/Buy JPY    April 2018    US$4,923/JPY523,000
Sell RMB /Buy EUR    April 2018    RMB11,165/EUR1,432
Sell RMB/Buy JPY    April 2018 to May 2018    RMB215,531/JPY3,614,848
Sell RMB/Buy GBP    April 2018    RMB1,669/GBP187
Sell RMB/Buy US$    April 2018 to May 2018    RMB1,245,344/US$197,000

 

8.

FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

 

    

March 31,

2019

    

December 31,

2018

    

March 31,

2018

 

Investments in debt instruments at FVTOCI

        

Corporate bonds

   $ 42,703,270      $ 40,753,582      $ 37,980,277  

Agency bonds/Agency mortgage-backed securities

     34,371,268        31,288,762        32,189,767  

Asset-backed securities

     15,764,847        15,670,295        13,671,612  

Government bonds

     13,815,264        11,151,359        9,494,204  

Commercial paper

     —        107,590        57,877  
  

 

 

    

 

 

    

 

 

 
     106,654,649        98,971,588        93,393,737  
  

 

 

    

 

 

    

 

 

 

(Continued)

 

- 18 -

    

March 31,

2019

    

December 31,

2018

    

March 31,

2018

 

Investments in equity instruments at FVTOCI

        

Non-publicly traded equity investments

   $ 3,837,734      $ 3,910,681      $ 6,035,904  

Publicly traded stocks

     658,556        590,152        2,319,709  
  

 

 

    

 

 

    

 

 

 
     4,496,290        4,500,833        8,355,613  
  

 

 

    

 

 

    

 

 

 
   $ 111,150,939      $ 103,472,421      $ 101,749,350  
  

 

 

    

 

 

    

 

 

 

Current

   $ 107,313,205      $ 99,561,740      $ 95,713,446  

Noncurrent

     3,837,734        3,910,681        6,035,904  
  

 

 

    

 

 

    

 

 

 
   $ 111,150,939      $ 103,472,421      $ 101,749,350  
  

 

 

    

 

 

    

 

 

 

(Concluded)

These investments in equity instruments are held for medium to long-term purposes and therefore are accounted for as FVTOCI.

For the three months ended March 31, 2019 and 2018, as the Company adjusted its investment portfolio or the non-publicly traded investee was merged, equity investments designated at FVTOCI were divested for NT$98,188 thousand and NT$45,210 thousand, respectively. The related other equity-unrealized gain/loss on financial assets at FVTOCI of NT$95,538 thousand and NT$13,053 thousand were transferred to decrease retained earnings.

For dividends from equity investments designated as at FVTOCI recognized during the three months ended March 31, 2019 and 2018, please refer to Note 23. All the dividends are from investments held at the end of the reporting period.

As of March 31, 2019 and 2018, the cumulative loss allowance for expected credit loss of NT$29,299 thousand and NT$29,792 thousand are recognized under investments in debt instruments at FVTOCI, respectively. Refer to Note 30 for information relating to their credit risk management and expected credit loss.

 

9.

FINANCIAL ASSETS AT AMORTIZED COST

 

    

March 31,

2019

    

December 31,

2018

    

March 31,

2018

 

Investments in debt instruments at FVTOCI

        

Corporate bonds

   $   10,950,408      $ 19,519,941      $   18,473,964  

Commercial paper

     1,097,194        2,294,098        —  

Structured product

     —        —        1,454,650  

Less: Allowance for impairment loss

     (3,795 )       (8,147 )       (6,632 ) 
  

 

 

    

 

 

    

 

 

 
   $ 12,043,807      $ 21,805,892      $ 19,921,982  
  

 

 

    

 

 

    

 

 

 

Current

   $ 4,179,386      $ 14,277,615      $ 9,888,741  

Noncurrent

     7,864,421        7,528,277        10,033,241  
  

 

 

    

 

 

    

 

 

 
   $ 12,043,807      $ 21,805,892      $ 19,921,982  
  

 

 

    

 

 

    

 

 

 

Refer to Note 30 for information relating to credit risk management and expected credit loss for financial assets at amortized cost.

 

- 19 -

10.

HEDGING FINANCIAL INSTRUMENTS

 

    

     March 31,     

2019

    

     December 31,     

2018

    

     March 31,     

2018

 

Financial assets- current

        

Cash flow hedges

        

Forward exchange contracts

   $ 969      $ 23,497      $ 26,357  
  

 

 

    

 

 

    

 

 

 

Financial liabilities- current

        

Fair value hedges

        

Interest rate futures contracts

   $ 57,247      $ 153,891      $ 74,811  

Cash flow hedges

        

Forward exchange contracts

     54,127        1,941        4,371  
  

 

 

    

 

 

    

 

 

 
   $ 111,374      $ 155,832      $ 79,182  
  

 

 

    

 

 

    

 

 

 

Fair value hedge

The Company entered into interest rate futures contracts, which are used to partially hedge against the price risk caused by changes in interest rates in the Company’s investments in fixed income securities. The hedge ratio is adjusted in response to the changes in the financial market and capped at 100%.

On the basis of economic relationships, the Company expects that the value of the interest rate futures contracts and the value of the hedged financial assets will change in opposite directions in response to movements in interest rates.

The main source of hedge ineffectiveness in these hedging relationships is the credit risk of the hedged financial assets, which is not reflected in the fair value of the interest rate futures contracts. No other sources of ineffectiveness emerged from these hedging relationships. Amount of hedge ineffectiveness recognized in profit or loss is classified under other gains and losses.

The following tables summarize the information relating to the hedges of interest rate risk.

March 31, 2019

 

Hedging Instruments   

Contract Amount

(US$ in Thousands)

     Maturity  

US treasury bonds interest rate futures contracts

   US$ 140,600        June 2019  
Hedged Items   

Asset Carrying
Amount as of
March 31,

2019

    

Asset
Accumulated

Amount of Fair

Value Hedge
Adjustments

 

Financial assets at FVTOCI

   $ 18,404,220      $ 128,179  

 

- 20 -

December 31, 2018

 

Hedging Instruments   

Contract Amount

(US$ in Thousands)

     Maturity  

US treasury bonds interest rate futures contracts

   US$         330,300        March 2019  
Hedged Items    Asset Carrying
Amount as of
December 31, 2018 		    

Asset
Accumulated

Amount of Fair
Value Hedge
Adjustments

 

Financial assets at FVTOCI

   $ 23,229,530      $ (13,508 ) 

March 31, 2018

 

Hedging Instruments   

Contract Amount

(US$ in Thousands)

     Maturity  

US treasury bonds interest rate futures contracts

   US$         264,400        June 2018  
Hedged Items   

Asset Carrying
Amount as of
March 31,

2018

    

Asset
Accumulated

Amount of Fair
Value

Hedge
Adjustments

 

Financial assets at FVTOCI

   $     13,990,841      $     (86,646 ) 

The effect on comprehensive income for the three months ended March 31, 2019 and 2018 are detailed below:

 

Hedging Instruments/Hedged Items    Increase
(Decrease) in Value Used for
Calculating Hedge Ineffectiveness 		 
          Three Months Ended March 31       
     2019      2018  

Hedging Instruments

     

US treasury bonds interest rate futures contracts

   $ (125,581 )     $ 53,811  

Hedged Items

     

Financial assets at FVTOCI

     137,339        (53,459 ) 
  

 

 

    

 

 

 
   $ 11,758      $ 352  
  

 

 

    

 

 

 

 

- 21 -

Cash flow hedge

The Company entered into forward exchange contracts to partially hedge foreign exchange rate risks associated with certain highly probable forecast transactions (capital expenditures). The hedge ratio is adjusted in response to the changes in the financial market and capped at 100%. The forward exchange contracts have maturities of 12 months or less.

On the basis of economic relationships, the Company expects that the value of forward exchange contracts and the value of hedged transactions will change in opposite directions in response to movements in foreign exchange rates.

The main source of hedge ineffectiveness in these hedging relationships is driven by the effect of the counterparty’s own credit risk on the fair value of forward exchange contracts. No other sources of ineffectiveness emerged from these hedging relationships. For the three months ended March 31, 2019 and 2018, refer to Note 21(d) for gain or loss arising from changes in the fair value of hedging instruments and the amount transferred to initial carrying amount of hedged items.

The following tables summarize the information relating to the hedges for foreign currency risk.

March 31, 2019

 

Hedging Instruments   

Contract Amount

(in Thousands)

   Maturity   

Balance in

Other Equity
(Continuing
Hedges)

Forward exchange contracts

   NT$8,081,167 /EUR 231,000    April 2019 to
May 2019 		   $(58,513)

December 31, 2018

 

Hedging Instruments   

Contract Amount

(in Thousands)

   Maturity   

Balance in

Other Equity
(Continuing
Hedges)

Forward exchange contracts

   NT$3,917,657 /EUR 112,000    February 2019
to April 2019 		   $23,601

March 31, 2018

 

Hedging Instruments   

Contract Amount

(in Thousands)

   Maturity   

Balance in

Other Equity
(Continuing
Hedges)

Forward exchange contracts

   NT$3,239,853 /EUR91,000    April 2018 to
August 2018 		   $37,034

 

- 22 -

The effect on comprehensive income for the three months ended March 31, 2019 and 2018 are detailed below:

 

Hedging Instruments/Hedged Items          Increase
(Decrease) in Value Used for
Calculating Hedge
Ineffectiveness 		 
           Three Months Ended March 31  
           2019      2018  

Hedging Instruments

       

Forward exchange contracts

                                      $ (94,548 )     $ 37,282  
    

 

 

    

 

 

 

Hedged Items

       

Forecast transaction (capital expenditures)

     $ 94,548      $ (37,282 ) 
    

 

 

    

 

 

 

 

11.

NOTES AND ACCOUNTS RECEIVABLE, NET

 

    

March 31,

2019

    

 December 31, 

2018

    

March 31,

2018

 

At amortized cost

        

Notes and accounts receivable

   $ 103,904,657      $ 125,025,575      $  106,771,905  

Less: Loss allowance

     (11,457 )       (7,253 )       (170,533 ) 
  

 

 

    

 

 

    

 

 

 
     103,893,200        125,018,322        106,601,372  

At FVTOCI

     2,537,949        3,595,069        —  
  

 

 

    

 

 

    

 

 

 
   $ 106,431,149      $ 128,613,391      $ 106,601,372  
  

 

 

    

 

 

    

 

 

 

The Company signed a contract with the bank to sell certain accounts receivable without recourse and transaction cost required. These accounts receivable are classified as at FVTOCI because they are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

In principle, the payment term granted to customers is due 30 days from the invoice date or 30 days from the end of the month when the invoice is issued. Aside from recognizing impairment loss for credit-impaired accounts receivable, the Company recognizes loss allowance based on the expected credit loss ratio of customers by different risk levels. Such risk levels are determined with factors of historical loss ratios and customers’ financial conditions, competitiveness and business outlook. For accounts receivable past due over 90 days without collaterals or guarantees, the Company recognizes loss allowance at full amount.

Aging analysis of notes and accounts receivable, net

 

     March 31,
2019 		     December
31, 2018 		     March 31,
2018 		 

Not past due

   $ 95,582,954      $ 113,126,484      $ 95,872,716  

Past due

        

Past due within 30 days

     10,500,221        15,006,461        8,723,608  

Past due 31-60 days

     205,899        472,833        295,558  

Past due 61-120 days

     110,202        4,654        891,464  

Past due over 121 days

     31,873        2,959        818,026  
  

 

 

    

 

 

    

 

 

 
   $ 106,431,149      $ 128,613,391      $ 106,601,372  
  

 

 

    

 

 

    

 

 

 

 

- 23 -

Movements of the loss allowance for accounts receivable

 

           Three Months Ended March 31  
                 2019               2018     

Balance, beginning of period

     $ 7,253      $ 226,968  

Provision (Reversal)

       4,204        (56,398 ) 

Effect of exchange rate changes

                                  —        (37 ) 
    

 

 

    

 

 

 

Balance, end of period

     $ 11,457      $ 170,533  
    

 

 

    

 

 

 

For the three months ended March 31, 2019 and 2018, the changes in loss allowance were mainly due to the variations from accounts receivable balance of different risk levels and the decrease in the balance of accounts receivable, respectively.

 

12.

INVENTORIES

 

    

  March 31,  

2019

        December 31,   
2018 		    

  March 31,  

2018

 

Finished goods

   $ 12,243,089      $ 11,329,802      $ 15,165,977  

Work in process

     75,641,271        72,071,861        57,012,785  

Raw materials

     16,060,259        15,233,877        8,940,795  

Supplies and spare parts

     4,737,763        4,595,436        4,096,342  
  

 

 

    

 

 

    

 

 

 
   $ 108,682,382      $ 103,230,976      $ 85,215,899  
  

 

 

    

 

 

    

 

 

 

Reversal of write-down of inventories resulting from the increase in net realizable value (excluding wafer contamination losses) and write-down of inventories to net realizable value in the amount of NT$519,868 thousand and NT$700,440 thousand, respectively, were included in the cost of revenue for the three months ended March 31, 2019 and 2018. Please refer to wafer contamination losses in Note 35.

 

13.

INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Associates consisted of the following:

 

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

March 31,

2019

    December 31,
2018 		   

March 31,

2018

   

March 31,

2019

    December 31,
2018 		   

March 31,

2018

 

Vanguard International Semiconductor Corporation (VIS)

 

Manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing and design service of masks

    Hsinchu, Taiwan     $ 9,402,933     $ 9,006,126     $ 8,860,765       28 %      28 %      28 % 

Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)

 

Manufacturing and selling of integrated circuits and other semiconductor devices

    Singapore       5,912,533       5,772,815       5,923,979       39 %      39 %      39 % 

Xintec Inc. (Xintec)

 

Wafer level chip size packaging and wafer level post passivation interconnection service

    Taoyuan, Taiwan       1,633,475       1,764,607       2,246,049       41 %      41 %      41 % 
Global Unichip Corporation (GUC)  

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

    Hsinchu, Taiwan       1,359,341       1,299,423       1,255,013       35 %      35 %      35 % 
Mutual-Pak  

Manufacturing of electronic parts, wholesaling and retailing of electronic materials, and researching, developing and testing of RFID

   
New
Taipei, Taiwan 		 
  		    28,176       22,867       21,711       30 %      39 %      39 % 
     

 

 

   

 

 

   

 

 

       
      $ 18,336,458     $ 17,865,838     $ 18,307,517        
     

 

 

   

 

 

   

 

 

       

 

- 24 -

The market prices of the investments accounted for using the equity method in publicly traded stocks calculated by the closing price at the end of the reporting period are summarized as follows. The closing price represents the quoted price in active markets, the level 1 fair value measurement.

 

Name of Associate   

March 31,

2019

    

December 31,

2018

    

March 31,

2018

 

VIS

   $ 30,870,862      $ 27,621,298      $ 31,102,974  
  

 

 

    

 

 

    

 

 

 

GUC

   $ 9,594,355      $ 9,617,699      $ 14,846,739  
  

 

 

    

 

 

    

 

 

 

Xintec

   $ 4,451,277      $ 3,783,585      $ 7,366,863  
  

 

 

    

 

 

    

 

 

 

 

14.

PROPERTY, PLANT AND EQUIPMENT

2019

 

    

March 31,

2019

 

Assets used by the Company

   $ 1,107,570,228  

Assets subject to operating leases

     81,588  
  

 

 

 
   $ 1,107,651,816  
  

 

 

 

 

  a.

Assets used by the Company

 

     Land and Land
Improvements 		     Buildings      Machinery and
Equipment 		     Office Equipment      Equipment under
Installation and
Construction in
Progress 		     Total  

Cost

                 

Balance at January 1, 2019

   $ 4,011,353      $ 418,151,675      $ 2,728,760,127      $ 48,382,279      $ 172,910,989      $ 3,372,216,423  

Additions

     —        11,387,156        27,140,490        2,227,282        68,891,426        109,646,354  

Disposals or retirements

     —        —        (2,041,731 )       (164,929 )       —        (2,206,660 ) 

Transfers from right-of-use assets

     —        —        619,779        —        —        619,779  

Effect of disposal of subsidiary

     —        —        —        (508 )       —        (508 ) 

Effect of exchange rate changes

     2,340        746,366        2,770,566        61,095        (82,251 )       3,498,116  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at March 31, 2019

   $ 4,013,693      $ 430,285,197      $ 2,757,249,231      $ 50,505,219      $ 241,720,164      $ 3,483,773,504  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Accumulated depreciation and impairment

                 

Balance at January 1, 2019

   $ 550,575      $ 217,899,243      $ 2,049,278,908      $ 32,525,129      $ —      $ 2,300,253,855  

Additions

     408        6,415,223        67,586,999        1,517,848        —        75,520,478  

Disposals or retirements

     —        —        (1,552,273 )       (164,782 )       —        (1,717,055 ) 

Transfers from right-of-use assets

     —        —        20,659        —        —        20,659  

Reversal of impairment

     —        —        (301,384 )       —        —        (301,384 ) 

Effect of disposal of subsidiary

     —        —        —        (508 )       —        (508 ) 

Effect of exchange rate changes

     1,611        327,550        2,075,968        22,102        —        2,427,231  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at March 31, 2019

   $ 552,594      $ 224,642,016      $ 2,117,108,877      $ 33,899,789      $ —      $ 2,376,203,276  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Carrying amounts at January 1, 2019

   $ 3,460,778      $ 200,252,432      $ 679,481,219      $ 15,857,150      $ 172,910,989      $ 1,071,962,568  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Carrying amounts at March 31, 2019

   $ 3,461,099      $ 205,643,181      $ 640,140,354      $ 16,605,430      $ 241,720,164      $ 1,107,570,228  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

- 25 -

The significant part of the Company’s buildings includes main plants, mechanical and electrical power equipment and clean rooms, and the related depreciation is calculated using the estimated useful lives of 20 years, 10 years and 10 years, respectively.

In the first quarter of 2019, the Company recognized a reversal of impairment loss of NT$301,384 thousand due to redeployment of certain idle machinery and equipment. Such reversal of impairment loss was recognized in other operating income and expenses.

 

  b.

Assets subject to operating leases

 

     Buildings  

Cost

  

Balance at January 1, 2019

   $ 562,610  
  

 

 

 

Balance at March 31, 2019

   $ 562,610  
  

 

 

 

Accumulated depreciation and impairment

  

Balance at January 1, 2019

   $ 474,899  

Additions

     6,123  
  

 

 

 

Balance at March 31, 2019

   $ 481,022  
  

 

 

 

Carrying amounts at January 1, 2019

   $ 87,711  
  

 

 

 

Carrying amounts at March 31, 2019

   $ 81,588  
  

 

 

 

Operating leases relate to leases of buildings with lease terms between 1 to 5 years. The lessees do not have purchase options to acquire the assets at the expiry of the lease periods.

The maturity analysis of operating lease payments receivable for the buildings is as follows:

 

    

  March 31,  

2019

 

Year 1

   $ 29,155  

Year 2

     16,992  

Year 3

     16,992  

Year 4

     12,744  
  

 

 

 
   $ 75,883  
  

 

 

 

The buildings subject to operating leases are depreciated using the estimated useful lives of 20 years.

 

- 26 -

2018

 

     Land and Land
Improvements 		     Buildings      Machinery and
Equipment 		     Office Equipment      Equipment under
Installation and
Construction in
Progress 		     Total  

Cost

                 
Balance at January 1, 2018    $ 3,983,243      $ 379,134,613      $ 2,487,752,265      $ 42,391,516      $ 167,353,490      $ 3,080,615,127  
Additions      —        18,168,937        36,110,432        1,904,943        6,903,141        63,087,453  
Disposals or retirements      —        (12,295 )       (1,727,577 )       (50,750 )       —        (1,790,622 ) 
Effect of exchange rate changes      (14,718 )       259,417        1,292,667        (15,246 )       (88,994 )       1,433,126  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Balance at March 31, 2018    $ 3,968,525      $ 397,550,672      $ 2,523,427,787      $ 44,230,463      $ 174,167,637      $ 3,143,345,084  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Accumulated depreciation and impairment                  
Balance at January 1, 2018    $ 510,498      $ 194,446,521      $ 1,795,448,842      $ 27,666,944      $ —      $ 2,018,072,805  
Additions      6,688        5,841,659        63,281,950        1,331,989        —        70,462,286  
Disposals or retirements      —        (2,922 )       (1,107,367 )       (50,573 )       —        (1,160,862 ) 
Effect of exchange rate changes      (9,795 )       93,243        537,380        (16,180 )       —        604,648  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Balance at March 31, 2018    $ 507,391      $ 200,378,501      $ 1,858,160,805      $ 28,932,180      $ —      $ 2,087,978,877  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Carrying amounts at January 1, 2018    $ 3,472,745      $ 184,688,092      $ 692,303,423      $ 14,724,572      $ 167,353,490      $ 1,062,542,322  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
Carrying amounts at March 31, 2018    $ 3,461,134      $ 197,172,171      $ 665,266,982      $ 15,298,283      $ 174,167,637      $ 1,055,366,207  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The significant part of the Company’s buildings includes main plants, mechanical and electrical power equipment and clean rooms, and the related depreciation is calculated using the estimated useful lives of 20 years, 10 years and 10 years, respectively.

 

15.

LEASE ARRANGEMENTS

2019

 

  a.

Right-of-use assets

 

     March 31, 2019  

Carrying amounts

  

Land

   $ 14,838,235  

Buildings

     2,505,993  

Machinery and equipment

     1,648,596  

Office equipment

     50,730  
  

 

 

 
   $ 19,043,554  
  

 

 

 

 

     For the Three
Months Ended
March 31, 2019 		 

Additions to right-of-use assets

   $ 211,300  
  

 

 

 

Depreciation of right-of-use assets

  

Land

   $ 242,645  

Buildings

     106,108  

Machinery and equipment

     311,587  

Office equipment

     5,527  
  

 

 

 
   $ 665,867  
  

 

 

 

Income from subleasing right-of-use assets (classified under other operating income and expenses, net)

   $ 13,472  
  

 

 

 

 

- 27 -

  b.

Lease liabilities

 

       March 31, 2019    

Carrying amounts

  

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

   $ 2,699,608  

Noncurrent portion

     16,907,533  
  

 

 

 
   $ 19,607,141  
  

 

 

 

Ranges of discount rates for lease liabilities are as follows:

 

       March 31, 2019  

Land

   0.71%-2.14%

Buildings

   0.71%-3.88%

Machinery and equipment

   3.24%

Office equipment

   0.71%-3.88%

 

  c.

Material terms of right-of-use assets

The Company leases land and buildings mainly for the use of plants and offices with lease terms of 1 to 36 years. The lease contracts for land located in R.O.C. specify that lease payments will be adjusted every 2 years on the basis of changes in announced land value prices. The Company does not have purchase options to acquire the leasehold land and buildings at the end of the lease terms.

The Company leases machinery and equipment for operation use with lease terms of 2 years. The Company has purchase options to acquire leasehold machine and equipment at the end of the lease terms.

 

  d.

Subleases of right-of-use assets

The Company subleases its right-of-use assets for buildings under operating leases with lease terms of 1 to 5 years.

The maturity analysis of lease payments receivable under operating subleases is as follows:

 

     March 31, 2019  

Year 1

   $ 48,895  

Year 2

     37  
  

 

 

 
   $ 48,932  
  

 

 

 

 

- 28 -

  e.

Other lease information

 

    

For the Three

Months Ended

March 31, 2019

 

Expenses relating to short-term leases

   $ 1,447,573  
  

 

 

 

Expenses relating to low-value asset leases

   $ 204  
  

 

 

 

Expenses relating to variable lease payments not included in the measurement of lease liabilities

   $ 50,658  
  

 

 

 

Total cash outflow for leases

   $ 1,583,732  
  

 

 

 

The Company applies the recognition exemption to leases of machinery and equipment and others qualifying as short-term leases and low-value asset leases and does not recognize right-of-use assets and lease liabilities for these leases.

2018

Future minimum lease payments under non-cancellable operating leases are as follows:

 

    

December 31,

2018

    

March 31,

2018

 

Not later than 1 year

   $ 5,824,119      $ 4,853,387  

Later than 1 year and not later than 5 years

     5,834,884        5,088,935  

Later than 5 years

     9,190,582        9,318,985  
  

 

 

    

 

 

 
   $ 20,849,585      $ 19,261,307  
  

 

 

    

 

 

 

 

16.

INTANGIBLE ASSETS

 

     Goodwill     

Technology

License Fees

    

Software and

System Design

Costs

    

  Patent and  

Others

            Total         

Cost

              

Balance at January 1, 2019

   $ 5,795,488      $ 10,974,458      $ 29,594,483      $ 7,656,524      $ 54,020,953  

Additions

     —        899,935        1,398,798        7,802        2,306,535  

Disposals or retirements

     —        —        (11,122 )       —        (11,122 ) 

Effect of exchange rate changes

     12,221        861        11,246        1,318        25,646  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at March 31, 2019

   $ 5,807,709      $ 11,875,254      $ 30,993,405      $ 7,665,644      $ 56,342,012  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Accumulated amortization and impairment

              

Balance at January 1, 2019

   $ —      $ 8,756,005      $ 23,023,498      $ 5,239,313      $ 37,018,816  

Additions

     —        260,444        921,248        173,644        1,355,336  

Disposals or retirements

     —        —        (11,122 )       —        (11,122 ) 

Effect of exchange rate changes

     —        861        3,549        555        4,965  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at March 31, 2019

   $ —      $ 9,017,310      $ 23,937,173      $ 5,413,512      $ 38,367,995  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Carrying amounts at January 1, 2019

   $ 5,795,488      $ 2,218,453      $ 6,570,985      $ 2,417,211      $ 17,002,137  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Carrying amounts at March 31, 2019

   $ 5,807,709      $ 2,857,944      $ 7,056,232      $ 2,252,132      $ 17,974,017  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(Continued)

 

- 29 -

     Goodwill     

Technology

License Fees

    

Software and

System Design

Costs

    

  Patent and  

Others

            Total         

Cost

              

Balance at January 1, 2018

   $ 5,648,702      $ 10,443,257      $ 25,186,218      $ 5,716,146      $ 46,994,323  

Additions

     —        2,806        271,067        332,608        606,481  

Disposals or retirements

     —        —        (1,193 )       —        (1,193 ) 

Effect of exchange rate changes

     (76,856 )       (2,328 )       4,795        3,020        (71,369 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at March 31, 2018

   $ 5,571,846      $ 10,443,735      $ 25,460,887      $ 6,051,774      $ 47,528,242  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Accumulated amortization and impairment

              

Balance at January 1, 2018

   $ —      $ 7,694,857      $ 20,376,693      $ 4,747,633      $ 32,819,183  

Additions

     —        281,528        626,140        127,923        1,035,591  

Disposals or retirements

     —        —        (1,137 )       —        (1,137 ) 

Effect of exchange rate changes

     —        (2,328 )       1,729        909        310  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance at March 31, 2018

   $ —      $ 7,974,057      $ 21,003,425      $ 4,876,465      $ 33,853,947  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Carrying amounts at January 1, 2018

   $ 5,648,702      $ 2,748,400      $ 4,809,525      $ 968,513      $ 14,175,140  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Carrying amounts at March 31, 2018

   $ 5,571,846      $ 2,469,678      $ 4,457,462      $ 1,175,309      $ 13,674,295  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(Concluded)

The Company’s goodwill has been tested for impairment at the end of the annual reporting period and the recoverable amount is determined based on the value in use. The value in use was calculated based on the cash flow forecast from the financial budgets covering the future five-year period, and the Company used annual discount rates of 9.0% in its test of impairment as of December 31, 2018 to reflect the relevant specific risk in the cash-generating unit.

 

17.

OTHER ASSETS

 

    

                

    

                

    

    March 31,    

2019

    

December 31,

2018

    

    March 31,    

2018

 

Tax receivable

         $ 2,874,513      $ 3,780,293      $ 4,471,031  

Prepaid expenses

           1,851,850        1,298,710        1,467,439  

Repayment of bonds and interest - prepaid

           —        —        33,728,788  

Others

           1,961,770        1,912,067        1,793,794  
        

 

 

    

 

 

    

 

 

 
         $ 6,688,133      $ 6,991,070      $ 41,461,052  
        

 

 

    

 

 

    

 

 

 

Current portion

         $ 5,082,738      $ 5,406,423      $ 39,947,321  

Noncurrent portion

           1,605,395        1,584,647        1,513,731  
        

 

 

    

 

 

    

 

 

 
         $ 6,688,133      $ 6,991,070      $ 41,461,052  
        

 

 

    

 

 

    

 

 

 

Based on the contract terms of corporate bonds issued, prior to the date on which the principal or interests become due, the Company needs to transfer such amount in advance to a designated agent for repayment of principal and interest. The agent will repay the funds to the bond holders at maturity date.

 

- 30 -

18.

SHORT-TERM LOANS

 

    

    March 31,    

2019

    

    December 31,    

2018

    

    March 31,    

2018

 

Unsecured loans

        

Amount

   $ 76,592,550      $ 88,754,640      $ 56,731,350  
  

 

 

    

 

 

    

 

 

 

Original loan content

        

US$ (in thousands)

   $ 2,265,000      $ 2,610,000      $ 1,950,000  

EUR (in thousands)

     195,000        242,000        —  

Annual interest rate

     0.01%-2.87%        0.01%-3.22%        1.92%-2.22%  

Maturity date

    
Due by April
2019 		 
  		    
Due by
January 2019 		 
  		    

Due by

May 2018

 

 

 

19.

BONDS PAYABLE

 

      

    March 31,    

2019

    

    December 31,    

2018

    

    March 31,    

2018

 

Domestic unsecured bonds

     $ 83,400,000      $ 91,800,000      $ 99,300,000  

Overseas unsecured bonds

       —        —        33,456,950  
    

 

 

    

 

 

    

 

 

 
       83,400,000        91,800,000        132,756,950  

Less: Discounts on bonds payable

       —        —        (210 ) 

Less: Current portion

       (48,100,000 )       (34,900,000 )       (49,356,740 ) 
    

 

 

    

 

 

    

 

 

 
     $ 35,300,000      $ 56,900,000      $ 83,400,000  
    

 

 

    

 

 

    

 

 

 

The major terms of overseas unsecured bonds are as follows:

 

Issuance Period   

Total Amount
(US$

in Thousands)

   Coupon Rate  

Repayment and Interest

Payment

April 2013 to April 2018

   US$1,150,000    1.625%  

Bullet repayment; interest payable semi-annually

 

20.

GUARANTEE DEPOSITS

 

    

    March 31,    

2018

    

    December 31,    

2018

    

    March 31,    

2018

 

Capacity guarantee

   $ 7,775,326      $ 9,289,628      $ 11,637,200  

Receivables guarantee

     669,804        653,686        2,475,412  

Others

     273,308        245,731        251,267  
  

 

 

    

 

 

    

 

 

 
   $ 8,718,438      $ 10,189,045      $ 14,363,879  
  

 

 

    

 

 

    

 

 

 

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

   $ 6,897,690      $ 6,835,667      $ 8,372,518  

Noncurrent portion

     1,820,748        3,353,378        5,991,361  
  

 

 

    

 

 

    

 

 

 
   $ 8,718,438      $ 10,189,045      $ 14,363,879  
  

 

 

    

 

 

    

 

 

 

Some of guarantee deposits were refunded to customers by offsetting related accounts receivable.

 

- 31 -

21.

EQUITY

 

  a.

Capital stock

 

    

March 31,

2019

     December 31,
2018 		    

March 31,

2018

 

Authorized shares (in thousands)

     28,050,000        28,050,000        28,050,000  
  

 

 

    

 

 

    

 

 

 

Authorized capital

   $ 280,500,000      $ 280,500,000      $ 280,500,000  
  

 

 

    

 

 

    

 

 

 

Issued and paid shares (in thousands)

     25,930,380        25,930,380        25,930,380  
  

 

 

    

 

 

    

 

 

 

Issued capital

   $ 259,303,805      $ 259,303,805      $ 259,303,805  
  

 

 

    

 

 

    

 

 

 

A holder of issued common shares with par value of NT$10 per share is entitled to vote and to receive dividends.

The authorized shares include 500,000 thousand shares allocated for the exercise of employee stock options.

As of March 31, 2019, 1,068,051 thousand ADSs of TSMC were traded on the NYSE. The number of common shares represented by the ADSs was 5,340,257 thousand shares (one ADS represents five common shares).

 

  b.

Capital surplus

 

    

March 31,

2019

    

December 31,

2018

    

March 31,

2018

 

Additional paid-in capital

   $   24,184,939      $ 24,184,939      $   24,184,939  

From merger

     22,804,510        22,804,510        22,804,510  

From convertible bonds

     8,892,847        8,892,847        8,892,847  

From share of changes in equities of subsidiaries

     121,843        121,473        118,792  

From share of changes in equities of associates

     287,206        282,820        285,415  

Donations

     29,343        29,343        19,248  
  

 

 

    

 

 

    

 

 

 
   $ 56,320,688      $ 56,315,932      $ 56,305,751  
  

 

 

    

 

 

    

 

 

 

Under the relevant laws, 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 and convertible bonds) may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or stock dividends up to a certain percentage of TSMC’s paid-in capital. The capital surplus from share of changes in equities of subsidiaries and associates and dividend of a claim extinguished by a prescription may be used to offset a deficit; however, when generated from issuance of restricted shares for employees, such capital surplus may not be used for any purpose.

 

- 32 -

  c.

Retained earnings and dividend policy

TSMC’s Articles of Incorporation provide that, when allocating the net profits for each fiscal year, TSMC shall first offset its losses in previous years and then set aside the following items accordingly:

 

  1)

Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve equals TSMC’s paid-in capital;

 

  2)

Special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge;

 

  3)

Any balance left over shall be allocated according to the resolution of the shareholders’ meeting.

TSMC’s Articles of Incorporation provide the policy about the profit sharing bonus to employees, please refer to Note 28.

TSMC’s Articles of Incorporation also provide that profits of TSMC may be distributed by way of cash dividend and/or stock dividend. However, distribution of earnings shall be made preferably by way of cash dividend. Distribution of earnings may also be made by way of stock dividend, provided that the ratio for stock dividend shall not exceed 50% of the total distribution.

Any appropriations of the profits are subject to shareholders’ approval in the following year.

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 in cash or stocks for the portion in excess of 25% of the paid-in capital if the Company incurs no loss.

Pursuant to existing regulations, the Company is required to set aside additional special capital reserve equivalent to the net debit balance of the other components of stockholders’ equity, such as the accumulated balance of foreign currency translation reserve, unrealized valuation gain or loss from fair value through other comprehensive income financial assets, unrealized valuation gain or loss from available-for-sale financial assets, gain or loss from changes in fair value of hedging instruments in cash flow hedges, etc. For the subsequent decrease in the deduction amount to stockholders’ equity, any special reserve appropriated may be reversed to the extent that the net debit balance reverses.

The appropriations of 2018 and 2017 earnings have been approved by TSMC’s Board of Directors in its meeting held on February 19, 2019 and by TSMC’s shareholders in its meeting held on June 5, 2018, respectively. The appropriations and dividends per share were as follows:

 

     Appropriation of Earnings      Dividends Per Share
(NT$) 		 
     For Fiscal
Year 2018 		     For Fiscal
Year 2017 		     For Fiscal
Year 2018 		     For Fiscal
Year 2017 		 

Legal capital reserve

   $ 35,113,088      $ 34,311,148        

Special capital reserve

     (11,459,458 )       26,907,527        

Cash dividends to shareholders

     207,443,044        207,443,044      $ 8      $ 8  
  

 

 

    

 

 

       
   $ 231,096,674      $ 268,661,719        
  

 

 

    

 

 

       

The appropriations of earnings for 2018 are to be presented for approval in the TSMC’s shareholders’ meeting to be held on June 5, 2019 (expected).

 

- 33 -

  d.

Others

Changes in others were as follows:

 

     Three Months Ended March 31, 2019  
    

Foreign

Currency

Translation

Reserve

    

Unrealized
Gain (Loss) on

Financial
Assets at
FVTOCI

    

Gain (Loss) on

Hedging

Instruments

     Unearned
Stock-Based
Compensation 		     Total  

Balance, beginning of period

   $ (12,042,347 )     $ (3,429,324 )     $ 23,601      $ (1,843 )     $ (15,449,913 ) 

Exchange differences arising on translation of foreign operations

     3,213,471        —        —        —        3,213,471  

Unrealized gain (loss) on financial assets at FVTOCI

              

Equity instruments

     —        53,532        —        —        53,532  

Debt instruments

     —        1,395,796        —        —        1,395,796  

Cumulative unrealized gain (loss) of equity instruments transferred to retained earnings due to disposal

     —        95,538        —        —        95,538  

Cumulative unrealized gain (loss) of debt instruments transferred to profit or loss due to disposal

     —        53,105        —        —        53,105  

Loss allowance adjustments from debt instruments

     —        (511 )       —        —        (511 ) 

Other comprehensive income transferred to profit or loss due to disposal of subsidiary

     4,598        —        —        —        4,598  

Gain (loss) arising on changes in the fair value of hedging instruments

     —        —        (94,548 )       —        (94,548 ) 

Transferred to initial carrying amount of hedged items

     —        —        12,434        —        12,434  

Share of other comprehensive income (loss) of associates

     8,328        248        —        —        8,576  

Share of unearned stock-based employee compensation of associates

     —        —        —        950        950  

Income tax effect

     —        (18,051 )       —        —        (18,051 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance, end of period

   $ (8,815,950 )     $ (1,849,667 )     $ (58,513 )     $ (893 )     $ (10,725,023 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     Three Months Ended March 31, 2018  
     Foreign
Currency
Translation
Reserve 		     Unrealized
Gain (Loss) on
Financial
Assets at
FVTOCI 		    

Gain (Loss) on

Hedging

Instruments

     Unearned
Stock-Based
Compensation 		     Total  

Balance, beginning of period

   $ (26,697,680 )     $ (524,915 )     $ 4,226      $ (10,290 )     $ (27,228,659 ) 

Exchange differences arising on translation of foreign operations

     (6,476,324 )       —        —        —        (6,476,324 ) 

Unrealized gain (loss) on financial assets at FVTOCI

              

Equity instruments

     —        (22,034 )       —        —        (22,034 ) 

Debt instruments

     —        (979,455 )       —        —        (979,455 ) 

Cumulative unrealized gain (loss) of equity instruments transferred to retained earnings due to disposal

     —        13,053        —        —        13,053  

Cumulative unrealized gain (loss) of debt instruments transferred to profit or loss due to disposal

     —        252,328        —        —        252,328  

Loss allowance adjustments from debt instruments

     —        (283 )       —        —        (283 ) 

Gain (loss) arising on changes in the fair value of hedging instruments

     —        —        37,282        —        37,282  

Share of other comprehensive income (loss) of associates

     (39,352 )       62        —        —        (39,290 ) 

Share of unearned stock-based employee compensation of associates

     —        —        —        3,109        3,109  

Income tax effect

     —        43,680        (4,474 )       —        39,206  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Balance, end of period

   $ (33,213,356 )     $ (1,217,564 )     $ 37,034      $ (7,181 )     $ (34,401,067 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The aforementioned other equity includes the changes in other equities of TSMC and TSMC’s share of its subsidiaries and associates.

 

- 34 -

22.

NET REVENUE

 

  a.

Disaggregation of revenue from contracts with customers

 

     Three Months Ended March 31  
Product    2019      2018  

Wafer

   $ 190,100,011      $ 219,179,396  

Others

     28,604,458        28,899,275  
  

 

 

    

 

 

 
   $ 218,704,469      $ 248,078,671  
  

 

 

    

 

 

 

 

     Three Months Ended March 31  
Geography    2019      2018  

Taiwan

   $ 17,358,562      $ 18,829,835  

United States

     129,023,339        148,828,202  

China

     39,551,859        44,969,564  

Europe, the Middle East and Africa

     16,279,553        17,691,973  

Japan

     13,187,925        14,685,352  

Others

     3,303,231        3,073,745  
  

 

 

    

 

 

 
   $ 218,704,469      $ 248,078,671  
  

 

 

    

 

 

 

The Company categorized the net revenue mainly based on the countries where the customers are headquartered.

 

     Three Months Ended March 31  
Platform    2019      2018  

Smartphone

   $ 103,210,269      $ 113,267,915  

High Performance Computing

     62,824,973        78,988,359  

Internet of Things

     16,717,625        15,379,027  

Automotive

     10,626,515        12,907,788  

Digital Consumer Electronics

     14,627,749        15,723,792  

Others

     10,697,338        11,811,790  
  

 

 

    

 

 

 
   $ 218,704,469      $ 248,078,671  
  

 

 

    

 

 

 

 

     Three Months Ended March 31  
Resolution    2019      2018  

7-nanometer

   $ 42,208,718      $ —  

10-nanometer

     6,981,206        40,758,293  

16-nanometer

     30,049,700        39,678,483  

20-nanometer

     2,763,835        7,534,063  

28-nanometer

     37,142,360        44,053,726  

40/45-nanometer

     23,286,880        25,290,974  

65-nanometer

     15,828,535        20,397,546  

90-nanometer

     6,300,002        10,014,738  

0.11/0.13 micron

     5,048,576        5,436,097  

0.15/0.18 micron

     15,672,766        19,248,357  

0.25 micron and above

     4,817,433        6,767,119  
  

 

 

    

 

 

 

Wafer revenue

   $ 190,100,011      $ 219,179,396  
  

 

 

    

 

 

 

 

- 35 -

Starting the first quarter of 2019, the Company will report its net revenue breakdown by platform, instead of by application. The Company believes this change will better represent the Company’s results.

Commencing in the fourth quarter of 2018, the Company began to break down the net revenue by product, by geography and by resolution based on a new method which associates most estimated sales returns and allowances with individual sales transactions, as opposed to the previous method which allocated sales returns and allowances based on the aforementioned gross revenue. The Company believes the new method provides a more relevant breakdown than the previous one. On a comparable basis, the classifications of three months ended March 31, 2018 have been revised accordingly.

 

  b.

Contract balances

 

    

March 31,

2019

     December 31,
2018 		    

March 31,

2018

     January 1,
2018 		 

Contract liabilities (classified under accrued expenses and other current liabilities)

   $ 6,027,843      $ 4,684,024      $ 27,076,312      $ 32,434,829  
  

 

 

    

 

 

    

 

 

    

 

 

 

The changes in the contract liability balances primarily result from the timing difference between the satisfaction of performance obligation and the customer’s payment.

For the three months ended March 31, 2019 and 2018, the Company recognized NT$2,568,026 thousand and NT$26,965,981 thousand as revenue from the beginning balance of contract liability, respectively.

 

23.

OTHER INCOME

 

     Three Months Ended March 31  
     2019      2018  

Interest income

     

Bank deposits

   $ 3,150,272      $ 2,173,827  

Financial assets at FVTPL

     186,317        30,736  

Financial assets at FVTOCI

     785,216        711,807  

Financial assets at amortized cost

     286,971        237,819  
  

 

 

    

 

 

 
     4,408,776        3,154,189  

Dividend income

     —        453  
  

 

 

    

 

 

 
   $ 4,408,776      $ 3,154,642  
  

 

 

    

 

 

 

 

24.

FINANCE COSTS

 

     Three Months Ended March 31  
     2019      2018  

Interest expense

     

Bank loans

   $ 506,581      $ 283,410  

Corporate bonds

     325,002        524,521  

Lease liabilities

     67,325        —  

Others

     157        35  
  

 

 

    

 

 

 
   $ 899,065      $ 807,966  
  

 

 

    

 

 

 

 

- 36 -

25.

OTHER GAINS AND LOSSES, NET

 

     Three Months Ended March 31  
     2019      2018  

Loss on disposal of financial assets, net

     

Investments in debt instruments at FVTOCI

   $ (53,105 )     $ (252,328 ) 

Loss on disposal of subsidiaries

     (4,598 )       —  

Net gain (loss) on financial instruments at FVTPL

     

Mandatorily measured at FVTPL

     (496,763 )       1,108,710  

Gain arising from fair value hedges, net

     11,758        352  

The reversal of expected credit loss of financial assets

     

Investments in debt instruments at FVTOCI

     511        283  

Financial assets at amortized cost

     4,374        1,474  

Other gains (losses), net

     279,568        (93,303 ) 
  

 

 

    

 

 

 
   $ (258,255 )     $ 765,188  
  

 

 

    

 

 

 

 

26.

INCOME TAX

 

  a.

Income tax expense recognized in profit or loss

Income tax expense consisted of the following:

 

     Three Months Ended March 31  
     2019      2018  

Current income tax expense

     

Current tax expense recognized in the current period

   $ 6,986,063      $ 10,984,946  

Income tax adjustments on prior years

     (1,666 )       —  

Other income tax adjustments

     (1,743 )       39,385  
  

 

 

    

 

 

 
     6,982,654        11,024,331  
  

 

 

    

 

 

 

Deferred income tax benefit

     

Effect of tax rate changes

     —        (376,065 ) 

The origination and reversal of temporary differences

     (188,312 )       (492,219 ) 
  

 

 

    

 

 

 
     (188,312 )       (868,284 ) 
  

 

 

    

 

 

 

Income tax expense recognized in profit or loss

   $ 6,794,342      $ 10,156,047  
  

 

 

    

 

 

 

In 2018, the Income Tax Law in the R.O.C. was amended and, starting from 2018, the corporate income tax rate was adjusted from 17% to 20%. For the year ended December 31, 2018, the effect of the change in tax rate on deferred tax income to be recognized in profit or loss was NT$1,474,808 thousand, of which NT$1,098,743 thousand had not been recognized as of March 31, 2018, with corresponding effect recognized throughout the interim periods of 2018. In addition, the tax rate for 2018 unappropriated earnings was reduced from 10% to 5%.

For other jurisdictions, taxes are calculated using the applicable tax rate for each individual jurisdiction.

 

- 37 -

  b.

Income tax expense recognized in other comprehensive income

 

            Three Months Ended March 31  
            2019      2018  

Deferred income tax benefit (expense)

        

Related to unrealized gain/loss on investments in equity instruments at FVTOCI

                           $ (18,051 )     $ 43,680  

Related to gain/loss on cash flow hedges

        —        (4,474 ) 
     

 

 

    

 

 

 
      $ (18,051 )     $ 39,206  
     

 

 

    

 

 

 

 

  c.

Income tax examination

The tax authorities have examined income tax returns of TSMC through 2016. All investment tax credit adjustments assessed by the tax authorities have been recognized accordingly.

 

27.

EARNINGS PER SHARE

 

          Three Months Ended March 31  
          2019     2018  

Basic EPS

                         $ 2.37     $ 3.46  
   

 

 

   

 

 

 

Diluted EPS

    $ 2.37     $ 3.46  
   

 

 

   

 

 

 

EPS is computed as follows:

 

     Amounts
(Numerator) 		    Number of
Shares
(Denominator)
(In Thousands) 		       EPS (NT$)    

Three months ended March 31, 2019

       

Basic/Diluted EPS

       

Net income available to common shareholders of the parent

   $ 61,393,851       25,930,380      $ 2.37  
  

 

 

   

 

 

    

 

 

 

Three months ended March 31, 2018

       

Basic/Diluted EPS

       

Net income available to common shareholders of the parent

   $ 89,784,622       25,930,380      $ 3.46  
  

 

 

   

 

 

    

 

 

 

 

- 38 -

28.

ADDITIONAL INFORMATION OF EXPENSES BY NATURE

 

     Three Months Ended March 31  
     2019      2018  

a. Depreciation of property, plant and equipment and right-of-use assets

     

Recognized in cost of revenue

   $ 69,934,176      $ 64,798,902  

Recognized in operating expenses

     6,252,169        5,652,531  

Recognized in other operating income and expenses

     6,123        10,853  
  

 

 

    

 

 

 
   $ 76,192,468      $ 70,462,286  
  

 

 

    

 

 

 

b. Amortization of intangible assets

     

Recognized in cost of revenue

   $ 713,093      $ 484,597  

Recognized in operating expenses

     642,243        550,994  
  

 

 

    

 

 

 
   $ 1,355,336      $ 1,035,591  
  

 

 

    

 

 

 

c. Research and development costs expensed as incurred

   $ 20,417,311      $ 20,428,594  
  

 

 

    

 

 

 

d. Employee benefits expenses

     

Post-employment benefits

     

Defined contribution plans

   $ 653,319      $ 619,490  

Defined benefit plans

     64,880        70,436  
  

 

 

    

 

 

 
     718,199        689,926  

Other employee benefits

     22,953,464        26,391,042  
  

 

 

    

 

 

 
   $ 23,671,663      $ 27,080,968  
  

 

 

    

 

 

 

Employee benefits expense summarized by function

     

Recognized in cost of revenue

   $ 14,074,980      $ 15,878,407  

Recognized in operating expenses

     9,596,683        11,202,561  
  

 

 

    

 

 

 
   $ 23,671,663      $ 27,080,968  
  

 

 

    

 

 

 

According to TSMC’s Articles of Incorporation, TSMC shall allocate compensation to directors and profit sharing bonus to employees of TSMC not more than 0.3% and not less than 1% of annual profits during the period, respectively.

TSMC accrued profit sharing bonus to employees based on a percentage of net income before income tax, profit sharing bonus to employees and compensation to directors during the period, which amounted to NT$4,119,681 thousand and NT$6,023,994 thousand for the three months ended March 31, 2019 and 2018, respectively; compensation to directors was expensed based on estimated amount payable. If there is a change in the proposed amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in accounting estimate.

TSMC’s profit sharing bonus to employees and compensation to directors in the amounts of NT$23,570,040 thousand and NT$349,272 thousand in cash for 2018, respectively, and profit sharing bonus to employees and compensation to directors in the amounts of NT$23,019,082 thousand and NT$368,919 thousand in cash for 2017, respectively, had been approved by the Board of Directors of TSMC held on February 19, 2019 and February 13, 2018, respectively. There is no significant difference between the aforementioned approved amounts and the amounts charged against earnings of 2018 and 2017, respectively.

 

- 39 -

The information about the appropriations of TSMC’s profit sharing bonus to employees and compensation to directors is available at the Market Observation Post System website.

 

29.

CASH FLOW INFORMATION

Reconciliation of liabilities arising from financing activities

 

                   Non-cash changes         
    

Balance as of

January 1, 2019

    

Financing Cash

Flow

     Foreign
Exchange
Movement 		     New Leases     

Other Changes

(Note 1)

    

Balance as of

March 31, 2019

 

Short-term loans

   $ 88,754,640      $ (12,262,255 )     $ 100,165      $ —      $ —      $ 76,592,550  

Guarantee deposits

     10,189,045        26,196        45,997        —        (1,542,800 )       8,718,438  

Lease liabilities

     19,903,615        (589,592 )       17,141        208,652        67,325        19,607,141  

Bonds payable

     91,800,000        (8,400,000 )       —        —        —        83,400,000  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 210,647,300      $ (21,225,651 )     $ 163,303      $ 208,652      $ (1,475,475 )     $ 188,318,129  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

                   Non-cash changes         
    

Balance as of

January 1, 2018

    

Financing Cash

Flow

     Foreign
Exchange
Movement 		    

Other Changes

(Note 2)

    

Balance as of

March 31, 2018

 

Short-term loans

   $ 63,766,850      $ (5,774,830 )     $ (1,260,670 )     $ —      $ 56,731,350  

Guarantee deposits

     16,080,619        (54,135 )       (182,905 )       (1,479,700 )       14,363,879  

Bonds payable

     150,201,122        (16,800,000 )       (650,823 )       6,441        132,756,740  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 230,048,591      $ (22,628,965 )     $ (2,094,398 )     $ (1,473,259 )     $ 203,851,969  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

  Note 1:

Other changes include financial cost of lease liabilities and guarantee deposits refunded to customers by offsetting related accounts receivable.

  Note 2:

Other changes include amortization of bonds payable and guarantee deposits refunded to customers by offsetting related accounts receivable.

 

30.

FINANCIAL INSTRUMENTS

 

  a.

Categories of financial instruments

 

    

March 31,

2019

    

December 31,

2018

    

March 31,

2018

 

Financial assets

        

FVTPL (Note 1)

   $ 3,084,399      $ 3,504,590      $ 963,915  

FVTOCI (Note 2)

     113,688,888        107,067,490        101,749,350  

Hedging financial assets

     969        23,497        26,357  

Amortized cost (Note 3)

     775,326,755        745,585,774        719,404,172  
  

 

 

    

 

 

    

 

 

 
   $ 892,101,011      $ 856,181,351      $ 822,143,794  
  

 

 

    

 

 

    

 

 

 

Financial liabilities

        

FVTPL (Note 4)

   $ 151,079      $ 40,825      $ 170,673  

Hedging financial liabilities

     111,374        155,832        79,182  

Amortized cost (Note 5)

     323,693,554        318,475,704        320,473,302  
  

 

 

    

 

 

    

 

 

 
   $ 323,956,007      $ 318,672,361      $ 320,723,157  
  

 

 

    

 

 

    

 

 

 

 

- 40 -

  Note 1:

Financial assets mandatorily measured at FVTPL.

  Note 2:

Including notes and accounts receivable (net), debt and equity investments.

  Note 3:

Including cash and cash equivalents, financial assets at amortized cost, notes and accounts receivable (including related parties), other receivables and refundable deposits.

  Note 4:

Held for trading.

  Note 5:

Including short-term loans, accounts payable (including related parties), payables to contractors and equipment suppliers, accrued expenses and other current liabilities, bonds payable, and guarantee deposits.

 

  b.

Financial risk management objectives

The Company seeks to ensure sufficient cost-efficient funding readily available when needed. The Company manages its exposure to foreign currency risk, interest rate risk, equity price risk, credit risk and liquidity risk with the objective to reduce the potentially adverse effects the market uncertainties may have on its financial performance.

The plans for material treasury activities are reviewed by Audit Committees and/or Board of Directors in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, Corporate Treasury function must comply with certain treasury procedures that provide guiding principles for overall financial risk management and segregation of duties.

 

  c.

Market risk

The Company is exposed to the financial market risks, primarily changes in foreign currency exchange rates, interest rates and equity investment prices. A portion of these risks is hedged.

Foreign currency risk

More than 90% of the Company’s revenue is denominated in U.S. dollar and over one-half of its capital expenditures are denominated in currencies other than NT dollar, primarily in U.S. dollar, Japanese yen and Euro. As a result, any significant fluctuations to its disadvantage in exchanges rate of NT dollar against such currencies, in particular a weakening of U.S. dollar against NT dollar, would have an adverse impact on the revenue and operating profit as expressed in NT dollar. The Company uses foreign currency derivative contracts, such as currency forwards or currency swaps, to protect against currency exchange rate risks associated with non-NT dollar-denominated assets and liabilities and certain forecasted transactions. The Company utilizes U.S. dollar denominated debt to partially offset currency risk arising from U.S. dollar denominated receivables for balance sheet hedges. These hedges reduce, but do not entirely eliminate, the financial impact on the Company caused by the effect of foreign currency exchange rate movements on the assets and liabilities.

Based on a sensitivity analysis performed on the Company’s total monetary assets and liabilities for the three months ended March 31, 2019 and 2018, a hypothetical adverse foreign currency exchange rate change of 10% would have decreased its net income by NT$1,069,244 thousand and NT$1,060,765 thousand, respectively, and decreased its other comprehensive income by NT$613,142 thousand and NT$326,872 thousand, respectively, after taking into account hedges and offsetting positions.

 

- 41 -

Interest rate risk

The Company is exposed to interest rate risk primarily related to its investments in fixed income securities and outstanding debt.

Financial assets at amortized costs are measured at amortized cost, and therefore changes in interest rates would not affect the fair value. On the other hand, financial assets at FVTPL and financial assets at FVTOCI are exposed to fair value fluctuations caused by changes in interest rates. The Company entered into interest rate futures to partially hedge the interest rate risk on its financial assets at FVTPL and financial assets at FVTOCI. These hedges can offset only a small portion of the financial impact from movements in interest rates.

Based on a sensitivity analysis performed on fixed income investments at the end of the reporting period, interest rate increase of 100 basis points (1.00%) across all maturities would have decreased the fair value by NT$2,515,345 thousand and NT$2,317,212 thousand for the three months ended March 31, 2019 and 2018, respectively. The decreases were composed of NT$3,000,289 thousand decrease and NT$2,243,927 thousand decrease in other comprehensive income, and NT$484,944 thousand increase and NT$73,285 thousand decrease in net income for the three months ended March 31, 2019 and 2018, respectively.

All of the Company’s long-term debts are fixed-rate, NT dollar denominated bonds and measured at amortized cost. As such, changes in interest rates would not affect the future cash flows and fair value.

Other price risk

The Company is exposed to equity price risk for 2019 and 2018 arising from financial assets at FVTOCI.

Assuming a hypothetical decrease of 10% in prices of the equity investments at the end of the reporting period for the three months ended March 31, 2019 and 2018, the other comprehensive income would have decreased by NT$424,983 thousand and NT$791,372 thousand, respectively.

 

  d.

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial losses to the Company. The Company is exposed to credit risks from operating activities, primarily trade receivables, and from investing activities, primarily deposits, fixed-income investments and other financial instruments with banks. Credit risk is managed separately for business related and financial related exposures. As of the end of the reporting period, the Company’s maximum credit risk exposure is equal to the carrying amount of financial assets.

Business related credit risk

The Company’s trade receivables are from its customers worldwide. The majority of the Company’s outstanding trade receivables are not covered by collaterals or guarantees. While the Company has procedures to monitor and manage credit risk exposure on trade receivables, there is no assurance such procedures will effectively eliminate losses resulting from its credit risk. This risk is heightened during periods when economic conditions worsen.

As of March 31, 2019, December 31, 2018 and March 31, 2018, the Company’s ten largest customers accounted for 74%, 79% and 76% of accounts receivable, respectively. The Company believes the concentration of credit risk is not material for the remaining accounts receivable.

 

- 42 -

Financial credit risk

The Company mitigates its financial credit risk by selecting counterparties with investment-grade credit ratings and by limiting the exposure to any individual counterparty. The Company regularly monitors and reviews the limit applied to counterparties and adjusts the limit according to market conditions and the credit standing of the counterparties.

The risk management of expected credit loss for financial assets at amortized cost and investments in debt instruments at FVTOCI is as follows:

The Company only invests in debt instruments that are rated as investment grade or higher. The credit rating information is supplied by external rating agencies. The Company assesses whether there has been a significant increase in credit risk since initial recognition by reviewing changes in external credit ratings, financial market conditions and material information of the bond-issuers.

The Company assesses the 12-month expected credit loss and lifetime expected credit loss based on the probability of default and loss given default provided by external credit rating agencies. The current credit risk assessment policies are as follows:

 

Category   Description  

Basis for Recognizing

Expected Credit Loss

 

Expected

Credit Loss

Ratio

Performing  

Credit rating on trade date and valuation date:

(1) Within investment grade

(2) Between BB+ and BB-

 

12 months expected credit loss

  0-0.1%
Doubtful  

Credit rating on trade date and valuation date:

(1) From investment grade to non-investment grade

(2) From BB+~BB- to B+~CCC-

 

Lifetime expected credit loss-not credit impaired

  —
In default  

Credit rating CC or below

 

Lifetime expected credit loss-credit impaired

  —
Write-off  

There is evidence indicating that the debtor is in severe financial difficulty and the Company has no realistic prospect of recovery

  Amount is written off   —

For the three months ended March 31, 2019 and 2018, the expected credit loss decreases NT$4,776 thousand and NT$2,486 thousand, respectively, mainly attributed to asset allocation adjustment to debt investments of higher credit rating.

 

  e.

Liquidity risk management

The objective of liquidity risk management is to ensure the Company has sufficient liquidity to fund its business operations over the next 12 months. The Company manages its liquidity risk by maintaining adequate cash and cash equivalent, debt investment at FVTPL, financial assets at FVTOCI-current, and financial assets amortized at cost-current.

 

- 43 -

The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments, including principal and interest.

 

    

Less Than

1 Year

     2-3 Years      4-5 Years      5+ Years      Total  

March 31, 2019

              

Non-derivative financial liabilities

              

Short-term loans

   $ 76,638,209      $ —      $ —      $ —      $ 76,638,209  

Accounts payable (including related parties)

     27,661,850        —        —        —        27,661,850  

Payables to contractors and equipment suppliers

     76,970,966        —        —        —        76,970,966  

Accrued expenses and other current liabilities

     50,349,750        —        —        —        50,349,750  

Bonds payable

     49,080,086        13,673,294        22,881,721        —        85,635,101  

Lease liabilities (including those classified under accrued expenses and other current liabilities)

     2,704,611        3,411,829        2,498,203        11,897,443        20,512,086  

Guarantee deposits (including those classified under accrued expenses and other current liabilities)

     6,897,690        1,357,681        463,067        —        8,718,438  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     290,303,162        18,442,804        25,842,991        11,897,443        346,486,400  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments

              

Forward exchange contracts

              

Outflows

     59,765,345        —        —        —        59,765,345  

Inflows

     (59,580,087 )       —        —        —        (59,580,087 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     185,258        —        —        —        185,258  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 290,488,420      $ 18,442,804      $ 25,842,991      $ 11,897,443      $ 346,671,658  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Additional information about the maturity analysis for lease liabilities:

 

 

    

Less than

5 Years

     6-10 Years      11-15 Years      16-20 Years      20+ Years  

Lease liabilities

   $ 8,614,643      $ 5,776,436      $ 4,001,755      $ 1,928,816      $ 190,436  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
    

Less Than

1 Year

     2-3 Years      4-5 Years      5+ Years      Total  

December 31, 2018

              

Non-derivative financial liabilities

              

Short-term loans

   $ 88,810,737      $ —      $ —      $ —      $ 88,810,737  

Accounts payable (including related parties)

     34,357,432        —        —        —        34,357,432  

Payables to contractors and equipment suppliers

     43,133,659        —        —        —        43,133,659  

Accrued expenses and other current liabilities

     50,240,928        —        —        —        50,240,928  

Bonds payable

     36,039,935        35,340,742        22,979,426        —        94,360,103  

Guarantee deposits (including those classified under accrued expenses and other current liabilities)

     6,835,667        2,891,663        461,715        —        10,189,045  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     259,418,358        38,232,405        23,441,141        —        321,091,904  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments

              

Forward exchange contracts

              

Outflows

     49,302,325        —        —        —        49,302,325  

Inflows

     (49,393,679 )       —        —        —        (49,393,679 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     (91,354 )       —        —        —        (91,354 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 259,327,004      $ 38,232,405      $ 23,441,141      $ —      $ 321,000,550  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(Continued)

 

- 44 -

     Less Than
1 Year 		     2-3 Years      4-5 Years      5+ Years      Total  

March 31, 2018

              

Non-derivative financial liabilities

              

Short-term loans

   $ 56,787,188      $ —      $ —      $ —      $ 56,787,188  

Accounts payable (including related parties)

     29,041,977        —        —        —        29,041,977  

Payables to contractors and equipment suppliers

     47,828,289        —        —        —        47,828,289  

Accrued expenses and other current liabilities

     39,751,067        —        —        —        39,751,067  

Bonds payable

     51,058,202        62,362,560        17,128,725        6,143,816        136,693,303  

Guarantee deposits (including those classified under accrued expenses and other current liabilities)

     8,372,518        5,908,158        83,203        —        14,363,879  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     232,839,241        68,270,718        17,211,928        6,143,816        324,465,703  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Derivative financial instruments

              

Forward exchange contracts

              

Outflows

     69,663,091        —        —        —        69,663,091  

Inflows

     (69,633,869 )       —        —        —        (69,633,869 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     29,222        —        —        —        29,222  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 232,868,463      $ 68,270,718      $ 17,211,928      $ 6,143,816      $ 324,494,925  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(Concluded)

 

  f.

Fair value of financial instruments

 

  1)

Fair value measurements recognized in the consolidated balance sheets

Fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

 

  •  

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

 

  •  

Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

 

  •  

Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

  2)

Fair value of financial instruments that are measured at fair value on a recurring basis

Fair value hierarchy

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis:

 

     March 31, 2019  
     Level 1      Level 2      Level 3      Total  

Financial assets at FVTPL

           

Mandatorily measured at FVTPL

           

Agency mortgage-backed securities

   $               —      $   2,973,659      $               —      $ 2,973,659  

Forward exchange contracts

     —        110,740        —        110,740  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ —      $ 3,084,399      $ —      $     3,084,399  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(Continued)

 

- 45 -

     March 31, 2019  
     Level 1      Level 2      Level 3      Total  

Financial assets at FVTOCI

           

Investments in debt instruments

           

Corporate bonds

   $ —      $ 42,703,270      $ —      $ 42,703,270  

Agency bonds/Agency mortgage-backed securities

     —        34,371,268        —        34,371,268  

Asset-backed securities

     —        15,764,847        —        15,764,847  

Government bonds

     13,667,515        147,749        —        13,815,264  

Investments in equity instruments

           

Non-publicly traded equity investments

     —        —        3,837,734        3,837,734  

Publicly traded stocks

     658,556        —        —        658,556  

Notes and accounts receivable, net

     —        2,537,949        —        2,537,949  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 14,326,071      $ 95,525,083      $   3,837,734      $ 113,688,888  
  

 

 

    

 

 

    

 

 

    

 

 

 

Hedging financial assets

           

Cash flow hedges

           

Forward exchange contracts

   $ —      $ 969      $ —      $ 969  
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities at FVTPL

           

Held for trading

           

Forward exchange contracts

   $ —      $ 151,079      $ —      $ 151,079  
  

 

 

    

 

 

    

 

 

    

 

 

 

Hedging financial liabilities

           

Fair value hedges

           

Interest rate futures contracts

   $ 57,247      $ —      $ —      $ 57,247  

Cash flow hedges

           

Forward exchange contracts

     —        54,127        —        54,127  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 57,247      $ 54,127      $ —      $ 111,374  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(Concluded)

 

 

     December 31, 2018  
     Level 1      Level 2      Level 3      Total  

Financial assets at FVTPL

           

Mandatorily measured at FVTPL

           

Agency mortgage-backed securities

   $ —      $ 3,419,287      $ —      $ 3,419,287  

Forward exchange contracts

     —        85,303        —        85,303  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ —      $ 3,504,590      $ —      $ 3,504,590  
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial assets at FVTOCI

           

Investments in debt instruments

           

Corporate bonds

   $ —      $ 40,753,582      $ —      $ 40,753,582  

Agency bonds/Agency mortgage-backed securities

     —        31,288,762        —        31,288,762  

Asset-backed securities

     —        15,670,295        —        15,670,295  

Government bonds

     11,006,167        145,192        —        11,151,359  

Commercial paper

     —        107,590        —        107,590  

 

(Continued)

 

- 46 -

     December 31, 2018  
     Level 1      Level 2      Level 3      Total  

Investments in equity instruments

           

Non-publicly traded equity investments

   $ —      $ —      $ 3,910,681      $ 3,910,681  

Publicly traded stocks

     590,152        —        —        590,152  

Notes and accounts receivable, net

     —        3,595,069        —        3,595,069  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 11,596,319      $ 91,560,490      $ 3,910,681      $ 107,067,490  
  

 

 

    

 

 

    

 

 

    

 

 

 

Hedging financial assets

           

Cash flow hedges

           

Forward exchange contracts

   $ —      $ 23,497      $ —      $ 23,497  
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities at FVTPL

           

Held for trading

           

Forward exchange contracts

   $ —      $ 40,825      $ —      $ 40,825  
  

 

 

    

 

 

    

 

 

    

 

 

 

Hedging financial liabilities

           

Fair value hedges

           

Interest rate futures contracts

   $ 153,891      $ —      $ —      $ 153,891  

Cash flow hedges

           

Forward exchange contracts

     —        1,941        —        1,941  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 153,891      $ 1,941      $ —      $ 155,832  
  

 

 

    

 

 

    

 

 

    

 

 

 
(Concluded)

 

     March 31, 2018  
     Level 1      Level 2      Level 3      Total  

Financial assets at FVTPL

           

Mandatorily measured at FVTPL

           

Agency mortgage-backed securities

   $ —      $ 754,545      $ —      $ 754,545  

Forward exchange contracts

     —        113,426        —        113,426  

Asset-backed securities

     —        95,944        —        95,944  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ —      $ 963,915      $ —      $ 963,915  
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial assets at FVTOCI

           

Investments in debt instruments

           

Corporate bonds

   $ —      $ 37,980,277      $ —      $ 37,980,277  

Agency bonds/Agency mortgage-backed securities

     —        32,189,767        —        32,189,767  

Asset-backed securities

     —        13,671,612        —        13,671,612  

Government bonds

     9,395,235        98,969        —        9,494,204  

Commercial paper

     —        57,877        —        57,877  

Investments in equity instruments

           

Non-publicly traded equity investments

     —        —        6,035,904        6,035,904  

Publicly traded stocks

     2,319,709        —        —        2,319,709  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 11,714,944      $ 83,998,502      $   6,035,904      $ 101,749,350  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(Continued)

 

- 47 -

     March 31, 2018  
     Level 1      Level 2      Level 3      Total  

Hedging financial assets

           

Cash flow hedges

           

Forward exchange contracts

   $               —      $ 26,357      $               —      $ 26,357  
  

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities at FVTPL

           

Held for trading

           

Forward exchange contracts

   $ —      $      170,673      $ —      $        170,673  
  

 

 

    

 

 

    

 

 

    

 

 

 

Hedging financial liabilities

           

Fair value hedges

           

Interest rate futures contracts

   $ 74,811      $ —      $ —      $ 74,811  

Cash flow hedges

           

Forward exchange contracts

     —        4,371        —        4,371  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 74,811      $ 4,371      $ —      $ 79,182  
  

 

 

    

 

 

    

 

 

    

 

 

 

(Concluded)

Reconciliation of Level 3 fair value measurements of financial assets

The financial assets measured at Level 3 fair value were equity investments classified as financial assets at FVTOCI. Reconciliations for the three months ended March 31, 2019 and 2018 were as follows:

 

     Three Months Ended March 31  
     2019      2018  

Balance, beginning of period

   $ 3,910,681      $ 5,841,384  

Additions

     31,437        128,951  

Recognized in other comprehensive income

     (37,567 )       205,421  

Disposals and proceeds from return of capital of investments

     (75,425 )       (45,210 ) 

Effect of exchange rate changes

     8,608        (94,642 ) 
  

 

 

    

 

 

 

Balance, end of period

   $ 3,837,734      $ 6,035,904  
  

 

 

    

 

 

 

Valuation techniques and assumptions used in Level  2 fair value measurement

The fair values of financial assets and financial liabilities are determined as follows:

 

  •  

The fair values of corporate bonds, agency bonds, agency mortgage-backed securities, asset-backed securities, government bonds and commercial papers are determined by quoted market prices provided by third party pricing services.

 

  •  

Forward exchange contracts are measured using forward exchange rates and the discounted yield curves that are derived from quoted market prices.

 

  •  

The fair value of accounts receivables classified as at FVTOCI are determined by the present value of future cash flows based on the discount rate that reflects the credit risk of counterparties.

 

- 48 -

Valuation techniques and assumptions used in Level  3 fair value measurement

The fair values of non-publicly traded equity investments are mainly determined by using the asset approach, income approach and market approach.

The asset approach takes into account the net asset value measured at the fair value by independent parties. On March 31, 2019, December 31, 2018 and March 31, 2018, the Company uses unobservable inputs derived from discount for lack of marketability by 10%. When other inputs remain equal, the fair value will decrease by NT$30,782 thousand, NT$31,420 thousand and NT$31,078 thousand if discounts for lack of marketability increase by 1%.

The income approach utilizes discounted cash flows to determine the present value of the expected future economic benefits that will be derived from the investment. On March 31, 2019, December 31, 2018 and March 31, 2018, the Company uses significant unobservable inputs, which include expected returns, discount rate of 10%, 10% and 8.5%, respectively, discount for lack of marketability of 10%, and discounts for lack of control of 10%. On March 31, 2018, when other inputs remain equal, if discount rate increases by 1%, the fair value will decrease by NT$75,000 thousand; if discount for lack of marketability increases by 1%, the fair value will decrease by NT$21,520 thousand; if discount for lack of control increases by 1%, the fair value will decrease by NT$21,520 thousand.

For the remaining few investments, the market approach is used to arrive at their fair value, for which the recent financing activities of investees, the market transaction prices of the similar companies and market conditions are considered.

 

  3)

Fair value of financial instruments that are not measured at fair value

Except as detailed in the following table, the Company considers that the carrying amounts of financial instruments in the consolidated financial statements that are not measured at fair value approximate their fair values.

Fair value hierarchy

The table below sets out the fair value hierarchy for the Company’s assets and liabilities which are not required to measure at fair value:

 

     March 31, 2019  
     Carrying      Fair Value  
     Amount      Level 2  

Financial assets

     

Financial assets at amortized costs

     

Corporate bonds

   $ 10,946,613      $ 11,031,635  

Commercial paper

     1,097,194        1,099,932  
  

 

 

    

 

 

 
   $ 12,043,807      $ 12,131,567  
  

 

 

    

 

 

 

Financial liabilities

     

Financial liabilities at amortized costs

     

Bonds payable

   $ 83,400,000      $ 84,633,252  
  

 

 

    

 

 

 

 

- 49 -

     December 31, 2018  
     Carrying      Fair Value  
     Amount      Level 2  

Financial assets

     

Financial assets at amortized costs

     

Corporate bonds

   $ 19,511,794      $ 19,554,553  

Commercial paper

     2,294,098        2,296,188  
  

 

 

    

 

 

 
   $ 21,805,892      $ 21,850,741  
  

 

 

    

 

 

 

Financial liabilities

     

Financial liabilities at amortized costs

     

Bonds payable

   $ 91,800,000      $ 93,171,255  
  

 

 

    

 

 

 
     March 31, 2018  
     Carrying      Fair Value  
     Amount      Level 2  

Financial assets

     

Financial assets at amortized costs

     

Corporate bonds

   $ 18,467,935      $ 18,618,060  

Structured product

     1,454,047        1,447,779  
  

 

 

    

 

 

 
   $ 19,921,982      $ 20,065,839  
  

 

 

    

 

 

 

Financial liabilities

     

Financial liabilities at amortized costs

     

Bonds payable

   $ 132,756,740      $ 134,616,063  
  

 

 

    

 

 

 

Valuation techniques and assumptions used in Level  2 fair value measurement

The fair value of corporate bonds is determined by quoted market prices provided by third party pricing services. The fair value of structured product is determined by quoted market prices provided by the counterparty.

The fair value of commercial paper is determined by the present value of future cash flows based on the discounted curves that are derived from the quoted market prices.

The fair value of the Company’s bonds payable is determined by quoted market prices provided by third party pricing services.

 

- 50 -

31.

RELATED PARTY TRANSACTIONS

Intercompany balances and transactions between TSMC and its subsidiaries, which are related parties of TSMC, have been eliminated upon consolidation; therefore those items are not disclosed in this note. The following is a summary of significant transactions between the Company and other related parties:

 

  a.

Related party name and categories

 

Related Party Name

  

Related Party Categories

GUC    Associates
VIS    Associates
SSMC    Associates
Xintec    Associates
Mutual-Pak    Associates
TSMC Education and Culture Foundation    Other related parties
TSMC Charity Foundation    Other related parties

 

  b.

Net revenue

 

               Three Months Ended March 31  
               2019     2018  

Item

  Related Party Categories       

Net revenue from sale of goods

  Associates                                 $ 1,469,598     $ 2,174,536  
      

 

 

   

 

 

 

Net revenue from royalties

  Associates      $ 43,919     $ 126,102  
      

 

 

   

 

 

 

 

  c.

Purchases

 

               Three Months Ended March 31  
               2019     2018  

Related Party Categories

                                   

Associates

       $ 1,550,402     $ 2,223,350  
      

 

 

   

 

 

 

 

  d.

Receivables from related parties

 

        

 March 31,

 2019

    

 December 31,

 2018

    

 March 31,

 2018

 

Item

  Related Party Name/Categories         

Receivables from related parties

 

GUC

   $ 303,556      $ 481,934      $ 1,119,260  
 

Xintec

     6,265        102,478        60,052  
    

 

 

    

 

 

    

 

 

 
     $ 309,821      $ 584,412      $ 1,179,312  
    

 

 

    

 

 

    

 

 

 

Other receivables from related parties

 

SSMC

   $ 44,397      $ 53,780      $ 49,604  
 

VIS

     3,506        10,423        77,843  
 

Other associates

     771        825        2,623  
    

 

 

    

 

 

    

 

 

 
     $ 48,674      $ 65,028      $ 130,070  
    

 

 

    

 

 

    

 

 

 

 

- 51 -

  e.

Payables to related parties

 

        

March 31,

2019

    

December 31,

2018

    

March 31,

2018

 
Item   Related Party Name/Categories                     

Payables to related parties

  VIS    $ 273,032      $ 357,080      $ 452,091  
  SSMC      164,403        362,564        359,001  
  Xintec      101,703        649,812        406,234  
  Others      21,803        7,043        6,981  
    

 

 

    

 

 

    

 

 

 
     $ 560,941      $ 1,376,499      $ 1,224,307  
    

 

 

    

 

 

    

 

 

 

 

  f.

Others

 

                 Three Months Ended March 31      
             2019      2018  

Item

  Related Party Categories                     

Manufacturing expenses

  Associates      $ 196,686      $ 672,932  
      

 

 

    

 

 

 

General and administrative expenses

  Other related parties      $ 30,000      $ 45,074  
      

 

 

    

 

 

 

The sales prices and payment terms to related parties were not significantly different from those of sales to third parties. For other related party transactions, price and terms were determined in accordance with mutual agreements.

The Company leased factory and office from associates. The lease terms and prices were both determined in accordance with mutual agreements. The rental expenses were paid to associates monthly; the related expenses were both classified under manufacturing expenses.

 

  g.

Compensation of key management personnel

The compensation to directors and other key management personnel for the three months ended March 31, 2019 and 2018 were as follows:

 

      Three Months Ended March 31    
    2019     2018  

Short-term employee benefits

  $ 334,198     $ 534,943  

Post-employment benefits

    761       987  
 

 

 

   

 

 

 
  $ 334,959     $ 535,930  
 

 

 

   

 

 

 

The compensation to directors and other key management personnel were determined by the Compensation Committee of TSMC in accordance with the individual performance and the market trends.

 

- 52 -

32.

PLEDGED ASSETS

The Company provided certificate of deposits recorded in other financial assets as collateral mainly for building lease agreements. As of March 31, 2019, December 31, 2018 and March 31, 2018, the aforementioned other financial assets amounted to NT$115,443 thousand, NT$124,244 thousand and NT$117,677 thousand, respectively.

 

33.

SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

Significant contingent liabilities and unrecognized commitments of the Company as of the end of the reporting period, excluding those disclosed in other notes, were as follows:

 

  a.

Under a technical cooperation agreement with Industrial Technology Research Institute, the R.O.C. Government or its designee approved by TSMC can use up to 35% of TSMC’s capacity provided 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. As of March 31, 2019, the R.O.C. Government did not invoke such right.

 

  b.

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 in Singapore. TSMC’s equity interest in SSMC was 32%. Nevertheless, in September 2006, Philips spun-off its semiconductor subsidiary which was renamed as NXP B.V. Further, TSMC and NXP B.V. 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. TSMC and NXP B.V. are required, in the aggregate, to purchase at least 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 falls below a specific percentage of its capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs. There was no default from the aforementioned commitment as of March 31, 2019.

 

  c.

In February 2019, Innovative Foundry Technologies LLC (“IFT”) filed a complaint in the U.S. District Court for the District of Delaware alleging that TSMC and TSMC Technology Inc. infringe five U.S. patents. IFT also filed a complaint in the U.S. International Trade Commission (the “ITC”) alleging that TSMC, TSMC North America, TSMC Technology Inc., and other companies infringe the same patents. The ITC instituted an investigation in March 2019. The outcome cannot be determined and we cannot make a reliable estimate of the contingent liability at this time.

 

  d.

On September 28, 2017, TSMC was contacted by the European Commission (the “Commission”), which has asked us for information and documents concerning alleged anti-competitive practices in relation to semiconductor sales. We are cooperating with the Commission to provide the requested information and documents. In light of the fact that this proceeding is still in its preliminary stage, it is premature to predict how the case will proceed, the outcome of the proceeding or its impact.

 

  e.

TSMC entered into long-term purchase agreements of material with multiple suppliers. The relative minimum purchase quantity and price are specified in the agreements.

 

  f.

TSMC entered into a long-term purchase agreement of equipment. The relative purchase quantity and price are specified in the agreement.

 

  g.

TSMC entered into long-term energy purchase agreements with multiple suppliers. The relative purchase period, quantity and price are specified in the agreements.

 

- 53 -

  h.

Amounts available under unused letters of credit as of March 31, 2019, December 31, 2018 and March 31, 2018 were NT$61,660 thousand, NT$70,702 thousand and NT$66,914 thousand, respectively.

 

34.

EXCHANGE RATE INFORMATION OF FOREIGN-CURRENCY FINANCIAL ASSETS AND LIABILITIES

The following information was summarized according to the foreign currencies other than the functional currency of the Company. The exchange rates disclosed were used to translate the foreign currencies into the functional currency. The significant financial assets and liabilities denominated in foreign currencies were as follows:

 

    

Foreign
Currencies

(In Thousands)

    

Exchange Rate

(Note 1)

   

Carrying
Amount

(In Thousands)

 

March 31, 2019

       

Financial assets

       

Monetary items

       

USD

   $ 3,885,072        30.830     $ 119,776,760  

USD

     348,046        6.720  (Note 2)      10,730,247  

EUR

     7,963        34.68       276,149  

JPY

     961,694        0.2796       268,890  

Non-monetary items

       

HKD

     167,571        3.93       658,556  

Financial liabilities

       

Monetary items

       

USD

     4,368,580        30.830       134,683,321  

EUR

     517,367        34.68       17,942,289  

JPY

     79,536,948        0.2796       22,238,531  

December 31, 2018

       

Financial assets

       

Monetary items

       

USD

     4,618,566        30.740       141,974,734  

USD

     343,132        6.866  (Note 2)      10,547,875  

EUR

     7,561        35.22       266,307  

JPY

     490,635        0.2783       136,544  

Non-monetary items

       

HKD

     144,567        3.93       568,150  

Financial liabilities

       

Monetary items

       

USD

     4,323,763        30.740       132,912,486  

EUR

     477,776        35.22       16,827,260  

JPY

     35,084,436        0.2783       9,763,999  

(Continued)

 

- 54 -

    

Foreign

Currencies

(In Thousands)

    

Exchange Rate

(Note 1)

   

Carrying

Amount

(In Thousands)

 

March 31, 2018

       

Financial assets

       

Monetary items

       

USD

   $ 4,428,364        29.093     $ 128,834,383  

USD

     651,633        6.264  (Note 2)      18,957,968  

EUR

     74,176        35.92       2,664,388  

JPY

     711,970        0.2746       195,507  

Non-monetary items

       

HKD

     216,534        3.71       803,343  

Financial liabilities

       

Monetary items

       

USD

     4,040,810        29.093       117,559,276  

EUR

     184,925        35.92       6,642,497  

JPY

     38,476,708        0.2746       10,565,704  

(Concluded)

 

  Note 1:

Except as otherwise noted, exchange rate represents the number of NT dollar for which one foreign currency could be exchanged.

 

  Note 2:

The exchange rate represents the number of RMB for which one U.S. dollar could be exchanged.

Please refer to the consolidated statements of comprehensive income for the total of realized and unrealized foreign exchange gain and loss for the three months ended March 31, 2019 and 2018, respectively. Since there were varieties of foreign currency transactions and functional currencies within the subsidiaries of the Company, the Company was unable to disclose foreign exchange gain (loss) towards each foreign currency with significant impact.

 

35.

SIGNIFICANT OPERATION LOSSES

On January 19, 2019, the Company discovered a wafer contamination issue in a fab in Taiwan caused by a batch of unqualified photoresist materials. After investigation, the Company immediately stopped using the unqualified materials. An estimated loss of NT$3,400,000 thousand related to this event was recognized in cost of revenue for the three months ended March 31, 2019.

The Company experienced a computer virus outbreak on August 3, 2018, which affected a number of computer systems and fab tools, and consequently impacted wafer production in Taiwan. All the impacted tools have been recovered by August 6, 2018. The Company recognized a loss of NT$2,596,046 thousand related to this incident for the three months ended September 30, 2018, which was included in cost of revenue.

 

- 55 -

36.

ADDITIONAL DISCLOSURES

Following are the additional disclosures required by the Securities and Futures Bureau for TSMC:

 

  a.

Financings provided: Please see Table 1 attached;

 

  b.

Endorsement/guarantee provided: Please see Table 2 attached;

 

  c.

Marketable securities held (excluding investments in subsidiaries and associates): Please see Table 3 attached;

 

  d.

Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: Please see Table 4 attached;

 

  e.

Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: Please see Table 5 attached;

 

  f.

Disposal of individual real estate properties at prices of at least NT$300 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.

Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 7 attached;

 

  i.

Information about the derivative financial instruments transaction: Please see Notes 7 and 10;

 

  j.

Others: The business relationship between the parent and the subsidiaries and significant transactions between them: Please see Table 8 attached;

 

  k.

Names, locations, and related information of investees over which TSMC exercises significant influence (excluding information on investment in mainland China): Please see Table 9 attached;

 

  l.

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, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: Please see Table 10 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 8 attached.

 

37.

OPERATING SEGMENTS INFORMATION

The foundry segment engages mainly in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of masks.

The Company uses the income from operations as the measurement for the basis of performance assessment. The basis for such measurement is the same as that for the preparation of financial statements. Please refer to the consolidated statements of comprehensive income for the related segment revenue and operating results.

 

- 56 -

TABLE 1

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

FINANCINGS PROVIDED

FOR THE THREE MONTHS ENDED MARCH 31, 2019

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

 

 

No.

 

Financing
Company

  Counter-
party 		 

Financial
Statement
Account

  Related
Party 		  Maximum
Balance for the
Period (Foreign
Currencies in
Thousands)
(Note 3) 		    Ending
Balance
(Foreign
Currencies
in Thousands)
(Note 3) 		    Amount
Actually
Drawn
(Foreign
Currencies
in Thousands) 		    Interest
Rate 		 

Nature
for
Financing

(Note 4)

  Transaction
Amounts 		    Reason
for
Financing
(Note 4) 		  Allowance
for Bad
Debt 		   

 

Collateral

    Financing
Limits for
Each
Borrowing
Company
(Notes 1 and 2) 		    Financing
Company’s
Total
Financing
Amount
Limits
(Notes 1 and 2) 		 
  Item     Value  

1

  TSMC China   TSMC
Nanjing 		 

Other receivables from related parties

  Yes   $

(RMB

(USD

46,881,470

 7,000,000)&

479,000

 

 

) 

  $

(RMB

(USD

46,881,470

 7,000,000)&

479,000

 

 

) 

  $

(RMB

(USD

31,503,270

 6,000,000)&

129,000

 

 

) 

  1.50%-1.96%  

The need for long-term financing

  $ —     Operating
capital 		  $ —       —     $ —     $ 57,421,327     $ 57,421,327  

2

  TSMC Global   TSMC  

Other receivables from related parties

  Yes    

(US$

46,245,000

1,500,000

 

) 

   

(US$

46,245,000

1,500,000

 

) 

    —     2.53%  

The need for short-term financing

    —     Operating
capital 		    —       —       —       398,937,616       398,937,616  

 

Note 1:

The total amount available for lending purpose shall not exceed the net worth of TSMC China. The total amount for lending to a company for funding for a short-term period shall not exceed ten percent (10%) of the net worth of TSMC China. In addition, the total amount lendable to any one borrower shall be no more than thirty percent (30%) of the borrower’s net worth. The above restriction does not apply to the subsidiaries whose voting shares are 100% owned, directly or indirectly, by TSMC. However, the total amount lendable to any such subsidiary of TSMC shall not exceed forty percent (40%) of the net worth of TSMC China. When there is a lending for funding needs by TSMC China to TSMC, or to the subsidiaries whose voting shares are 100% owned, directly or indirectly, by TSMC, which are not located in Taiwan, the lending will not be subject to the restriction set forth in the above paragraph of this Article. Notwithstanding the foregoing, the aggregate amount available for lending to such borrowers and the total amount lendable to each of such borrowers still shall not exceed the net worth of TSMC China.

Note 2:

The total amount available for lending purpose shall not exceed the net worth of TSMC Global. The total amount for lending to a company for funding for a short-term period shall not exceed ten percent (10%) of the net worth of TSMC Global. In addition, the total amount lendable to any one borrower shall be no more than thirty percent (30%) of the borrower’s net worth. While TSMC, or foreign subsidiaries whose voting shares are 100% owned, directly or indirectly, by TSMC will not be subject to this restriction, their total borrowing amount still shall not exceed the net worth of TSMC Global. Notwithstanding the foregoing, the aggregate amount for lending to Taiwan companies other than TSMC shall not exceed forty percent (40%) of the net worth of TSMC Global.

Note 3:

The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors.

Note 4:

The restriction of the term of each loan for funding not exceeding one year shall not apply to inter-company loans for funding between offshore subsidiaries in which the Company holds, directly or indirectly, 100% of the voting shares.

 

- 57 -

TABLE 2

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

ENDORSEMENTS/GUARANTEES PROVIDED

FOR THE THREE MONTHS ENDED MARCH 31, 2019

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

 

 

No.

 

Endorsement/

Guarantee Provider

 

 

Guaranteed Party

  Limits on
Endorsement/
Guarantee
Amount
Provided to Each
Guaranteed
Party
(Notes 1 and 2) 		    Maximum
Balance
for the Period
(US$ in
Thousands)
(Note 3) 		    Ending
Balance
(US$ in
Thousands)
(Note 3) 		    Amount
Actually
Drawn
(US$ in
Thousands) 		    Amount of
Endorsement/
Guarantee
Collateralized
by Properties 		    Ratio of
Accumulated
Endorsement/
Guarantee to
Net Equity
per Latest
Financial
Statements 		  Maximum
Endorsement/
Guarantee
Amount
Allowable
(Note 2) 		    Guarantee
Provided
by Parent
Company 		  Guarantee
Provided by
A Subsidiary 		  Guarantee
Provided to
Subsidiaries
in Mainland
China
 

Name

 

Nature of

Relationship

0

  TSMC  

TSMC North America

  Subsidiary   $ 435,711,406     $

(US$

2,565,466

83,213

 

) 

  $

(US$

2,565,466

83,213

 

) 

  $

(US$

2,565,466

83,213

 

) 

  $ —     0.15%   $ 435,711,406     Yes   No   No

 

Note 1:

The total amount of the guarantee provided by TSMC to any individual entity shall not exceed ten percent (10%) of TSMC’s net worth, or the net worth of such entity. However, subsidiaries whose voting shares are 100% owned, directly or indirectly, by TSMC are not subject to the above restrictions after the approval of the Board of Directors.

Note 2:

The total amount of guarantee shall not exceed twenty-five percent (25%) of TSMC’s net worth.

Note 3:

The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors.

 

- 58 -

TABLE 3

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

MARKETABLE SECURITIES HELD

MARCH 31, 2019

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

 

 

Held Company
Name

 

Marketable Securities Type and Name

  Relationship
with the
Company 		   

Financial Statement Account

  March 31, 2019     Note  
  Shares/Units
(In Thousands) 		    Carrying Value
(Foreign
Currencies
in Thousands) 		    Percentage of
Ownership (%) 		    Fair Value
(Foreign
Currencies
in Thousands) 		 

TSMC

 

Commercial paper

             
 

Taiwan Power Company

    —     Financial assets at amortized cost     60     $ 598,357       N/A     $ 599,978    
 

CPC Corporation, Taiwan

    —     ”     50       498,837       N/A       499,954    
 

Non-publicly traded equity investments

             
 

United Industrial Gases Co., Ltd.

    —    

Financial assets at fair value through other comprehensive income

    21,230       520,909       10       520,909    
 

Shin-Etsu Handotai Taiwan Co., Ltd.

    —     ”     10,500       335,580       7       335,580    
 

Global Investment Holding Inc.

    —     ”     11,124       83,672       6       83,672    
 

W.K. Technology Fund IV

    —     ”     806       4,639       2       4,639    
 

Crimson Asia Capital

    —     ”     —       4,568       1       4,568    
 

Horizon Ventures Fund

    —     ”     —       2,310       12       2,310    
 

Publicly traded stocks

             
 

Semiconductor Manufacturing International Corporation

    —    

Financial assets at fair value through other comprehensive income

    21,105       658,556       —       658,556    

TSMC Partners

 

Non-publicly traded equity investments

             
 

Shanghai Walden Venture Capital Enterprise

    —    

Financial assets at fair value through other comprehensive income

    —     US$ 9,590       6     US$ 9,590    
 

China Walden Venture Investments II, L.P.

    —     ”     —     US$ 8,175       9     US$ 8,175    
 

China Walden Venture Investments III, L.P.

    —     ”     —     US$ 2,755       4     US$ 2,755    
 

Tela Innovations

    —     ”     10,440       —       25       —    
 

Mcube Inc.

    —     ”     6,333       —       12       —    

TSMC Global

 

Corporate bond

             
 

Bank of America Corp

    —    

Financial assets at fair value through other comprehensive income

    —     US$ 50,408       N/A     US$ 50,408    
 

JPMorgan Chase & Co

    —     ”     —     US$ 46,319       N/A     US$ 46,319    
 

Morgan Stanley

    —     ”     —     US$ 42,719       N/A     US$ 42,719    
 

Goldman Sachs Group Inc/The

    —     ”     —     US$ 35,185       N/A     US$ 35,185    
 

Citigroup Inc

    —     ”     —     US$ 33,708       N/A     US$ 33,708    
 

CVS Health Corp

    —     ”     —     US$ 23,995       N/A     US$ 23,995    
 

AT&T Inc

    —     ”     —     US$ 20,910       N/A     US$ 20,910    
 

Comcast Corp

    —     ”     —     US$ 20,076       N/A     US$ 20,076    
 

HSBC Holdings PLC

    —     ”     —     US$ 17,545       N/A     US$ 17,545    
 

Verizon Communications Inc

    —     ”     —     US$ 17,515       N/A     US$ 17,515    
 

Mitsubishi UFJ Financial Group Inc

    —     ”     —     US$ 14,238       N/A     US$ 14,238    
 

Apple Inc

    —     ”     —     US$ 12,912       N/A     US$ 12,912    
 

Wells Fargo & Co

    —     ”     —     US$ 12,311       N/A     US$ 12,311    
 

Daimler Finance North America LLC

    —     ”     —     US$ 12,082       N/A     US$ 12,082    
 

BAT Capital Corp

    —     ”     —     US$ 11,988       N/A     US$ 11,988    
 

Nordea Bank Abp

    —     ”     —     US$ 11,903       N/A     US$ 11,903    
 

Sumitomo Mitsui Financial Group Inc

    —     ”     —     US$ 11,669       N/A     US$ 11,669    

(Continued)

 

- 59 -

Held Company
Name

 

Marketable Securities Type and Name

  Relationship
with the
Company 		 

Financial Statement Account

  March 31, 2019     Note  
  Shares/Units
(In Thousands) 		    Carrying Value
(Foreign
Currencies
in Thousands) 		    Percentage of
Ownership (%) 		  Fair Value
(Foreign
Currencies
in Thousands) 		 

TSMC Global

 

AbbVie Inc

  —  

Financial assets at fair value through other comprehensive income

    —     US$ 11,499     N/A   US$ 11,499    
 

Anheuser-Busch InBev Worldwide Inc

  —   ”     —     US$ 11,134     N/A   US$ 11,134    
 

European Investment Bank

  —   ”     —     US$ 11,122     N/A   US$ 11,122    
 

American International Group Inc

  —   ”     —     US$ 10,959     N/A   US$ 10,959    
 

Credit Suisse AG/New York NY

  —   ”     —     US$ 10,946     N/A   US$ 10,946    
 

United Technologies Corp

  —   ”     —     US$ 9,865     N/A   US$ 9,865    
 

Duke Energy Corp

  —   ”     —     US$ 9,437     N/A   US$ 9,437    
 

UBS Group Funding Switzerland AG

  —   ”     —     US$ 9,384     N/A   US$ 9,384    
 

Citizens Bank NA/Providence RI

  —   ”     —     US$ 9,303     N/A   US$ 9,303    
 

Macquarie Group Ltd

  —   ”     —     US$ 9,049     N/A   US$ 9,049    
 

Celgene Corp

  —   ”     —     US$ 9,003     N/A   US$ 9,003    
 

ERAC USA Finance LLC

  —   ”     —     US$ 8,681     N/A   US$ 8,681    
 

Wells Fargo Bank NA

  —   ”     —     US$ 8,368     N/A   US$ 8,368    
 

Ryder System Inc

  —   ”     —     US$ 8,359     N/A   US$ 8,359    
 

Tencent Holdings Ltd

  —   ”     —     US$ 8,278     N/A   US$ 8,278    
 

Intercontinental Exchange Inc

  —   ”     —     US$ 8,051     N/A   US$ 8,051    
 

ANZ New Zealand Int’l Ltd/London

  —   ”     —     US$ 7,959     N/A   US$ 7,959    
 

Huntington National Bank/The

  —   ”     —     US$ 7,921     N/A   US$ 7,921    
 

American Express Credit Corp

  —   ”     —     US$ 7,848     N/A   US$ 7,848    
 

PNC Bank NA

  —   ”     —     US$ 7,740     N/A   US$ 7,740    
 

SunTrust Bank/Atlanta GA

  —   ”     —     US$ 7,544     N/A   US$ 7,544    
 

Cooperatieve Rabobank UA/NY

  —   ”     —     US$ 7,537     N/A   US$ 7,537    
 

Cardinal Health Inc

  —   ”     —     US$ 7,530     N/A   US$ 7,530    
 

BB&T Corp

  —   ”     —     US$ 7,524     N/A   US$ 7,524    
 

Toronto-Dominion Bank/The

  —   ”     —     US$ 7,482     N/A   US$ 7,482    
 

Banco Santander SA

  —   ”     —     US$ 7,467     N/A   US$ 7,467    
 

Reliance Standard Life Global Funding II

  —   ”     —     US$ 7,441     N/A   US$ 7,441    
 

Hewlett Packard Enterprise Co

  —   ”     —     US$ 7,391     N/A   US$ 7,391    
 

Microsoft Corp

  —   ”     —     US$ 7,294     N/A   US$ 7,294    
 

Council Of Europe Development Bank

  —   ”     —     US$ 7,245     N/A   US$ 7,245    
 

ABN AMRO Bank NV

  —   ”     —     US$ 7,207     N/A   US$ 7,207    
 

African Development Bank

  —   ”     —     US$ 7,166     N/A   US$ 7,166    
 

American Express Co

  —   ”     —     US$ 7,060     N/A   US$ 7,060    
 

Tyson Foods Inc

  —   ”     —     US$ 6,941     N/A   US$ 6,941    
 

Mizuho Financial Group Inc

  —   ”     —     US$ 6,892     N/A   US$ 6,892    
 

Welltower Inc

  —   ”     —     US$ 6,804     N/A   US$ 6,804    
 

Cox Communications Inc

  —   ”     —     US$ 6,771     N/A   US$ 6,771    
 

DowDuPont Inc

  —   ”     —     US$ 6,753     N/A   US$ 6,753    
 

Toyota Motor Credit Corp

  —   ”     —     US$ 6,729     N/A   US$ 6,729    
 

Fifth Third Bancorp

  —   ”     —     US$ 6,684     N/A   US$ 6,684    
 

Westpac Banking Corp

  —   ”     —     US$ 6,511     N/A   US$ 6,511    
 

General Dynamics Corp

  —   ”     —     US$ 6,479     N/A   US$ 6,479    
 

QUALCOMM Inc

  —   ”     —     US$ 6,373     N/A   US$ 6,373    
 

Walt Disney Co/The

  —   ”     —     US$ 6,214     N/A   US$ 6,214    
 

KeyBank NA/Cleveland OH

  —   ”     —     US$ 6,042     N/A   US$ 6,042    
 

Fox Corp

  —   ”     —     US$ 5,986     N/A   US$ 5,986    
 

Santander UK Group Holdings PLC

  —   ”     —     US$ 5,964     N/A   US$ 5,964    
 

SMBC Aviation Capital Finance DAC

  —   ”     —     US$ 5,935     N/A   US$ 5,935    
 

NextEra Energy Capital Holdings Inc

  —   ”     —     US$ 5,915     N/A   US$ 5,915    
 

AXA Equitable Holdings Inc

  —   ”     —     US$ 5,896     N/A   US$ 5,896    

(Continued)

 

- 60 -

Held Company
Name

 

Marketable Securities Type and Name

  Relationship
with the
Company 		 

Financial Statement Account

  March 31, 2019     Note  
  Shares/Units
(In Thousands) 		    Carrying Value
(Foreign
Currencies
in Thousands) 		    Percentage of
Ownership (%) 		  Fair Value
(Foreign
Currencies
in Thousands) 		 

TSMC Global

 

KeyCorp

  —  

Financial assets at fair value through other comprehensive income

    —     US$ 5,867     N/A   US$ 5,867    
 

BP Capital Markets America Inc

  —   ”     —     US$ 5,747     N/A   US$ 5,747    
 

Aviation Capital Group LLC

  —   ”     —     US$ 5,745     N/A   US$ 5,745    
 

BNP Paribas SA

  —   ”     —     US$ 5,651     N/A   US$ 5,651    
 

Oracle Corp

  —   ”     —     US$ 5,612     N/A   US$ 5,612    
 

Air Lease Corp

  —   ”     —     US$ 5,611     N/A   US$ 5,611    
 

Analog Devices Inc

  —   ”     —     US$ 5,461     N/A   US$ 5,461    
 

Penske Truck Leasing Co Lp/PTL Finance Corp

  —   ”     —     US$ 5,459     N/A   US$ 5,459    
 

ITC Holdings Corp

  —   ”     —     US$ 5,458     N/A   US$ 5,458    
 

Vodafone Group PLC

  —   ”     —     US$ 5,452     N/A   US$ 5,452    
 

Capital One NA

  —   ”     —     US$ 5,419     N/A   US$ 5,419    
 

Western Union Co/The

  —   ”     —     US$ 5,358     N/A   US$ 5,358    
 

Lloyds Banking Group PLC

  —   ”     —     US$ 5,349     N/A   US$ 5,349    
 

BPCE SA

  —   ”     —     US$ 5,273     N/A   US$ 5,273    
 

Manufacturers & Traders Trust Co

  —   ”     —     US$ 5,178     N/A   US$ 5,178    
 

SunTrust Banks Inc

  —   ”     —     US$ 5,142     N/A   US$ 5,142    
 

Sompo International Holdings Ltd

  —   ”     —     US$ 5,141     N/A   US$ 5,141    
 

Macquarie Bank Ltd

  —   ”     —     US$ 5,061     N/A   US$ 5,061    
 

Jackson National Life Global Funding

  —   ”     —     US$ 5,025     N/A   US$ 5,025    
 

UBS AG/Stamford CT

  —   ”     —     US$ 4,991     N/A   US$ 4,991    
 

Skandinaviska Enskilda Banken AB

  —   ”     —     US$ 4,947     N/A   US$ 4,947    
 

Bayer US Finance II LLC

  —   ”     —     US$ 4,940     N/A   US$ 4,940    
 

Reckitt Benckiser Treasury Services PLC

  —   ”     —     US$ 4,913     N/A   US$ 4,913    
 

Marriott International Inc/MD

  —   ”     —     US$ 4,894     N/A   US$ 4,894    
 

Canadian Imperial Bank of Commerce

  —   ”     —     US$ 4,852     N/A   US$ 4,852    
 

Svenska Handelsbanken AB

  —   ”     —     US$ 4,821     N/A   US$ 4,821    
 

Five Corners Funding Trust

  —   ”     —     US$ 4,759     N/A   US$ 4,759    
 

US Bank NA/Cincinnati OH

  —   ”     —     US$ 4,707     N/A   US$ 4,707    
 

Altria Group Inc

  —   ”     —     US$ 4,636     N/A   US$ 4,636    
 

Credit Suisse Group Funding Guernsey Ltd

  —   ”     —     US$ 4,623     N/A   US$ 4,623    
 

BP Capital Markets PLC

  —   ”     —     US$ 4,596     N/A   US$ 4,596    
 

AEP Texas Inc

  —   ”     —     US$ 4,596     N/A   US$ 4,596    
 

Enterprise Products Operating LLC

  —   ”     —     US$ 4,510     N/A   US$ 4,510    
 

New York Life Global Funding

  —   ”     —     US$ 4,472     N/A   US$ 4,472    
 

Hyundai Capital America

  —   ”     —     US$ 4,381     N/A   US$ 4,381    
 

Bank of Nova Scotia/The

  —   ”     —     US$ 4,376     N/A   US$ 4,376    
 

Credit Agricole SA/London

  —   ”     —     US$ 4,202     N/A   US$ 4,202    
 

Banque Federative du Credit Mutuel SA

  —   ”     —     US$ 4,067     N/A   US$ 4,067    
 

Anthem Inc

  —   ”     —     US$ 4,028     N/A   US$ 4,028    
 

Exelon Generation Co LLC

  —   ”     —     US$ 4,000     N/A   US$ 4,000    
 

Duke Realty LP

  —   ”     —     US$ 3,960     N/A   US$ 3,960    
 

Keurig Dr Pepper Inc

  —   ”     —     US$ 3,956     N/A   US$ 3,956    
 

PNC Financial Services Group Inc/The

  —   ”     —     US$ 3,855     N/A   US$ 3,855    
 

Barclays PLC

  —   ”     —     US$ 3,817     N/A   US$ 3,817    
 

Amgen Inc

  —   ”     —     US$ 3,743     N/A   US$ 3,743    
 

Capital One Financial Corp

  —   ”     —     US$ 3,705     N/A   US$ 3,705    
 

Enel Finance International NV

  —   ”     —     US$ 3,693     N/A   US$ 3,693    
 

Barclays Bank PLC

  —   ”     —     US$ 3,681     N/A   US$ 3,681    
 

Asian Development Bank

  —   ”     —     US$ 3,611     N/A   US$ 3,611    
 

International Bank for Reconstruction & Development

  —   ”     —     US$ 3,593     N/A   US$ 3,593    

(Continued)

 

- 61 -

                March 31, 2019        

Held Company

Name

 

    Marketable Securities Type and Name    

  Relationship
with the
Company 		 

Financial Statement Account

  Shares/Units
(In Thousands) 		    Carrying Value
(Foreign
Currencies
in Thousands) 		    Percentage of
Ownership (%) 		  Fair Value
(Foreign
Currencies
in Thousands) 		    Note  

TSMC Global

 

Alimentation Couche-Tard Inc

  —  

Financial assets at fair value through other comprehensive income

    —     US$     3,529     N/A   US$ 3,529    
 

Branch Banking & Trust Co

  —   ”     —     US$     3,525     N/A   US$ 3,525    
 

BMW US Capital LLC

  —   ”     —     US$ 3,486     N/A   US$ 3,486    
 

Mondelez International Holdings Netherlands BV

  —   ”     —     US$ 3,412     N/A   US$ 3,412    
 

John Deere Capital Corp

  —   ”     —     US$ 3,408     N/A   US$ 3,408    
 

Southern Co/The

  —   ”     —     US$ 3,296     N/A   US$ 3,296    
 

Inter-American Development Bank

  —   ”     —     US$ 3,138     N/A   US$ 3,138    
 

State Street Corp

  —   ”     —     US$ 3,121     N/A   US$ 3,121    
 

Takeda Pharmaceutical Co Ltd

  —   ”     —     US$ 3,113     N/A   US$ 3,113    
 

Bank of Montreal

  —   ”     —     US$ 3,051     N/A   US$ 3,051    
 

Cigna Holding Co

  —   ”     —     US$ 3,016     N/A   US$ 3,016    
 

Eversource Energy

  —   ”     —     US$ 3,008     N/A   US$ 3,008    
 

Royal Bank of Canada

  —   ”     —     US$ 3,008     N/A   US$ 3,008    
 

Danske Bank A/S

  —   ”     —     US$ 2,999     N/A   US$ 2,999    
 

GlaxoSmithKline Capital PLC

  —   ”     —     US$ 2,964     N/A   US$ 2,964    
 

Anheuser-Busch InBev Finance Inc

  —   ”     —     US$ 2,922     N/A   US$ 2,922    
 

Charles Schwab Corp/The

  —   ”     —     US$ 2,887     N/A   US$ 2,887    
 

Thermo Fisher Scientific Inc

  —   ”     —     US$ 2,821     N/A   US$ 2,821    
 

Societe Generale SA

  —   ”     —     US$ 2,802     N/A   US$ 2,802    
 

RELX Capital Inc

  —   ”     —     US$ 2,800     N/A   US$ 2,800    
 

Express Scripts Holding Co

  —   ”     —     US$ 2,785     N/A   US$ 2,785    
 

Shell International Finance BV

  —   ”     —     US$ 2,762     N/A   US$ 2,762    
 

Santander UK PLC

  —   ”     —     US$ 2,761     N/A   US$ 2,761    
 

Ventas Realty LP / Ventas Capital Corp

  —   ”     —     US$ 2,752     N/A   US$ 2,752    
 

McCormick & Co Inc/MD

  —   ”     —     US$ 2,690     N/A   US$ 2,690    
 

US Bancorp

  —   ”     —     US$ 2,655     N/A   US$ 2,655    
 

Schlumberger Holdings Corp

  —   ”     —     US$ 2,650     N/A   US$ 2,650    
 

Ford Motor Credit Co LLC

  —   ”     —     US$ 2,649     N/A   US$ 2,649    
 

Sprint Spectrum Co LLC / Sprint Spectrum Co II LLC / Sprint Spectrum Co III LLC

  —   ”     —     US$ 2,615     N/A   US$ 2,615    
 

Kroger Co/The

  —   ”     —     US$ 2,605     N/A   US$ 2,605    
 

Berkshire Hathaway Energy Co

  —   ”     —     US$ 2,568     N/A   US$ 2,568    
 

PartnerRe Finance B LLC

  —   ”     —     US$ 2,567     N/A   US$ 2,567    
 

LyondellBasell Industries NV

  —   ”     —     US$ 2,566     N/A   US$ 2,566    
 

Husky Energy Inc

  —   ”     —     US$ 2,555     N/A   US$ 2,555    
 

Sempra Energy

  —   ”     —     US$ 2,496     N/A   US$ 2,496    
 

ING Groep NV

  —   ”     —     US$ 2,490     N/A   US$ 2,490    
 

WR Berkley Corp

  —   ”     —     US$ 2,481     N/A   US$ 2,481    
 

Shire Acquisitions Investments Ireland DAC

  —   ”     —     US$ 2,470     N/A   US$ 2,470    
 

NiSource Inc

  —   ”     —     US$ 2,449     N/A   US$ 2,449    
 

HCP Inc

  —   ”     —     US$ 2,442     N/A   US$ 2,442    
 

Delta Air Lines 2007-1 Class A Pass Through Trust

  —   ”     —     US$ 2,432     N/A   US$ 2,432    
 

DXC Technology Co

  —   ”     —     US$ 2,369     N/A   US$ 2,369    
 

JPMorgan Chase Bank NA

  —   ”     —     US$ 2,366     N/A   US$ 2,366    
 

Xylem Inc/NY

  —   ”     —     US$ 2,357     N/A   US$ 2,357    
 

EI du Pont de Nemours & Co

  —   ”     —     US$ 2,332     N/A   US$ 2,332    
 

NBCUniversal Media LLC

  —   ”     —     US$ 2,275     N/A   US$ 2,275    
 

Berkshire Hathaway Inc

  —   ”     —     US$ 2,273     N/A   US$ 2,273    
 

Lloyds Bank PLC

  —   ”     —     US$ 2,246     N/A   US$ 2,246    
 

Rockwell Collins Inc

  —   ”     —     US$ 2,237     N/A   US$ 2,237    

(Continued)

 

- 62 -

                March 31, 2019        

Held Company

Name

 

Marketable Securities Type and Name

  Relationship
with the
Company 		 

Financial Statement Account

  Shares/Units
(In Thousands) 		     Carrying Value
(Foreign
Currencies
in Thousands) 		    Percentage of
Ownership (%) 		    Fair Value
(Foreign
Currencies
in Thousands) 		    Note  

TSMC Global

 

Cintas Corp No 2

  —  

Financial assets at fair value through other comprehensive income

    —      US$ 2,211       N/A     US$ 2,211    
 

Siemens Financieringsmaatschappij NV

  —   ”     —      US$ 2,184       N/A     US$ 2,184    
 

NatWest Markets PLC

  —   ”     —      US$ 2,175       N/A     US$ 2,175    
 

ProAssurance Corp

  —   ”     —      US$ 2,131       N/A     US$ 2,131    
 

Gilead Sciences Inc

  —   ”     —      US$ 2,117       N/A     US$ 2,117    
 

Fifth Third Bank/Cincinnati OH

  —   ”     —      US$ 2,077       N/A     US$ 2,077    
 

Exelon Corp

  —   ”     —      US$ 2,076       N/A     US$ 2,076    
 

Aetna Inc

  —   ”     —      US$ 2,064       N/A     US$ 2,064    
 

Quest Diagnostics Inc

  —   ”     —      US$ 2,064       N/A     US$ 2,064    
 

Suncor Energy Inc

  —   ”     —      US$ 2,053       N/A     US$ 2,053    
 

Bank of New York Mellon Corp/The

  —   ”     —      US$ 2,052       N/A     US$ 2,052    
 

EOG Resources Inc

  —   ”     —      US$ 2,021       N/A     US$ 2,021    
 

Regions Financial Corp

  —   ”     —      US$ 2,013       N/A     US$ 2,013    
 

Realty Income Corp

  —   ”     —      US$ 2,008       N/A     US$ 2,008    
 

AstraZeneca PLC

  —   ”     —      US$ 1,992       N/A     US$ 1,992    
 

Deutsche Telekom International Finance BV

  —   ”     —      US$ 1,976       N/A     US$ 1,976    
 

Caterpillar Financial Services Corp

  —   ”     —      US$ 1,968       N/A     US$ 1,968    
 

Huntington Bancshares Inc/OH

  —   ”     —      US$ 1,948       N/A     US$ 1,948    
 

Simon Property Group LP

  —   ”     —      US$ 1,944       N/A     US$ 1,944    
 

Volkswagen Group of America Finance LLC

  —   ”     —      US$ 1,934       N/A     US$ 1,934    
 

Walgreens Boots Alliance Inc

  —   ”     —      US$ 1,923       N/A     US$ 1,923    
 

Northrop Grumman Corp

  —   ”     —      US$ 1,910       N/A     US$ 1,910    
 

Dow Chemical Co/The

  —   ”     —      US$ 1,895       N/A     US$ 1,895    
 

UBS AG/London

  —   ”     —      US$ 1,868       N/A     US$ 1,868    
 

WestRock RKT LLC

  —   ”     —      US$ 1,779       N/A     US$ 1,779    
 

National Australia Bank Ltd/New York

  —   ”     —      US$ 1,778       N/A     US$ 1,778    
 

UnitedHealth Group Inc

  —   ”     —      US$ 1,771       N/A     US$ 1,771    
 

PSEG Power LLC

  —   ”     —      US$ 1,767       N/A     US$ 1,767    
 

Dominion Energy Inc

  —   ”     —      US$ 1,759       N/A     US$ 1,759    
 

CenterPoint Energy Inc

  —   ”     —      US$ 1,757       N/A     US$ 1,757    
 

Dominion Energy Gas Holdings LLC

  —   ”     —      US$ 1,751       N/A     US$ 1,751    
 

Brambles USA Inc

  —   ”     —      US$ 1,739       N/A     US$ 1,739    
 

General Mills Inc

  —   ”     —      US$ 1,729       N/A     US$ 1,729    
 

McKesson Corp

  —   ”     —      US$ 1,723       N/A     US$ 1,723    
 

Standard Chartered PLC

  —   ”     —      US$ 1,719       N/A     US$ 1,719    
 

Wisconsin Public Service Corp

  —   ”     —      US$ 1,693       N/A     US$ 1,693    
 

Marathon Petroleum Corp

  —   ”     —      US$ 1,677       N/A     US$ 1,677    
 

Digital Realty Trust LP

  —   ”     —      US$ 1,618       N/A     US$ 1,618    
 

Amazon.com Inc

  —   ”     —      US$ 1,614       N/A     US$ 1,614    
 

General Electric Co

  —   ”     —      US$ 1,608       N/A     US$ 1,608    
 

Nutrien Ltd

  —   ”     —      US$ 1,598       N/A     US$ 1,598    
 

Principal Life Global Funding II

  —   ”     —      US$ 1,588       N/A     US$ 1,588    
 

American Electric Power Co Inc

  —   ”     —      US$ 1,567       N/A     US$ 1,567    
 

DTE Energy Co

  —   ”     —      US$ 1,559       N/A     US$ 1,559    
 

Lincoln National Corp

  —   ”     —      US$ 1,553       N/A     US$ 1,553    
 

Nestle Holdings Inc

  —   ”     —      US$ 1,543       N/A     US$ 1,543    
 

Marsh & McLennan Cos Inc

  —   ”     —      US$ 1,530       N/A     US$ 1,530    
 

Lam Research Corp

  —   ”     —      US$ 1,518       N/A     US$ 1,518    
 

Compass Bank

  —   ”     —      US$ 1,510       N/A     US$ 1,510    
 

AIG Global Funding

  —   ”     —      US$ 1,508       N/A     US$ 1,508    

(Continued)

 

- 63 -

                March 31, 2019        

Held Company

Name

 

Marketable Securities Type and Name

  Relationship
with the
Company 		 

Financial Statement Account

  Shares/Units
(In Thousands) 		    Carrying Value
(Foreign
Currencies
in Thousands) 		    Percentage of
Ownership (%) 		    Fair Value
(Foreign
Currencies
in Thousands) 		    Note  

TSMC Global

 

American Airlines 2013-2 Class A Pass Through Trust

  —  

Financial assets at fair value through other comprehensive income

    —     US$ 1,504       N/A     US$ 1,504    
 

Healthcare Trust of America Holdings LP

  —   ”     —     US$ 1,493       N/A     US$ 1,493    
 

Public Service Electric & Gas Co

  —   ”     —     US$ 1,492       N/A     US$ 1,492    
 

Nissan Motor Acceptance Corp

  —   ”     —     US$ 1,483       N/A     US$ 1,483    
 

Fiserv Inc

  —   ”     —     US$ 1,481       N/A     US$ 1,481    
 

Guardian Life Global Funding

  —   ”     —     US$ 1,478       N/A     US$ 1,478    
 

CBS Corp

  —   ”     —     US$ 1,463       N/A     US$ 1,463    
 

TransCanada PipeLines Ltd

  —   ”     —     US$ 1,461       N/A     US$ 1,461    
 

Eastman Chemical Co

  —   ”     —     US$ 1,458       N/A     US$ 1,458    
 

HSBC Bank PLC

  —   ”     —     US$ 1,444       N/A     US$ 1,444    
 

Sumitomo Mitsui Banking Corp

  —   ”     —     US$ 1,434       N/A     US$ 1,434    
 

WEC Energy Group Inc

  —   ”     —     US$ 1,431       N/A     US$ 1,431    
 

Monongahela Power Co

  —   ”     —     US$ 1,405       N/A     US$ 1,405    
 

Texas Eastern Transmission LP

  —   ”     —     US$ 1,393       N/A     US$ 1,393    
 

Metropolitan Life Global Funding I

  —   ”     —     US$ 1,381       N/A     US$ 1,381    
 

Cboe Global Markets Inc

  —   ”     —     US$ 1,372       N/A     US$ 1,372    
 

Georgia-Pacific LLC

  —   ”     —     US$ 1,352       N/A     US$ 1,352    
 

Canadian Natural Resources Ltd

  —   ”     —     US$ 1,301       N/A     US$ 1,301    
 

Entergy Arkansas LLC

  —   ”     —     US$ 1,283       N/A     US$ 1,283    
 

GATX Corp

  —   ”     —     US$ 1,275       N/A     US$ 1,275    
 

Visa Inc

  —   ”     —     US$ 1,270       N/A     US$ 1,270    
 

CNA Financial Corp

  —   ”     —     US$ 1,261       N/A     US$ 1,261    
 

Entergy Corp

  —   ”     —     US$ 1,255       N/A     US$ 1,255    
 

Consolidated Edison Inc

  —   ”     —     US$ 1,210       N/A     US$ 1,210    
 

Regions Bank/Birmingham AL

  —   ”     —     US$ 1,171       N/A     US$ 1,171    
 

CK Hutchison International 16 Ltd

  —   ”     —     US$ 1,166       N/A     US$ 1,166    
 

Magellan Midstream Partners LP

  —   ”     —     US$ 1,162       N/A     US$ 1,162    
 

MUFG Union Bank NA

  —   ”     —     US$ 1,155       N/A     US$ 1,155    
 

Woolworths Group Ltd

  —   ”     —     US$ 1,100       N/A     US$ 1,100    
 

Interpublic Group of Cos Inc/The

  —   ”     —     US$ 1,097       N/A     US$ 1,097    
 

Swedbank AB

  —   ”     —     US$ 1,065       N/A     US$ 1,065    
 

Reinsurance Group of America Inc

  —   ”     —     US$ 1,042       N/A     US$ 1,042    
 

Glencore Finance Canada Ltd

  —   ”     —     US$ 1,040       N/A     US$ 1,040    
 

Prudential Financial Inc

  —   ”     —     US$ 1,038       N/A     US$ 1,038    
 

Athene Global Funding

  —   ”     —     US$ 1,034       N/A     US$ 1,034    
 

Weyerhaeuser Co

  —   ”     —     US$ 1,030       N/A     US$ 1,030    
 

O’Reilly Automotive Inc

  —   ”     —     US$ 1,027       N/A     US$ 1,027    
 

DNB Bank ASA

  —   ”     —     US$ 1,026       N/A     US$ 1,026    
 

Commonwealth Bank of Australia

  —   ”     —     US$ 1,024       N/A     US$ 1,024    
 

ONE Gas Inc

  —   ”     —     US$ 1,024       N/A     US$ 1,024    
 

Scentre Group Trust 1 / Scentre Group Trust 2

  —   ”     —     US$ 1,023       N/A     US$ 1,023    
 

Mitsubishi UFJ Trust & Banking Corp

  —   ”     —     US$ 1,023       N/A     US$ 1,023    
 

Halliburton Co

  —   ”     —     US$ 1,022       N/A     US$ 1,022    
 

Union Pacific Corp

  —   ”     —     US$ 1,016       N/A     US$ 1,016    
 

Commonwealth Edison Co

  —   ”     —     US$ 1,016       N/A     US$ 1,016    
 

Equinor ASA

  —   ”     —     US$ 1,006       N/A     US$ 1,006    
 

Reynolds American Inc

  —   ”     —     US$ 1,005       N/A     US$ 1,005    
 

BOC Aviation Ltd

  —   ”     —     US$ 1,003       N/A     US$ 1,003    
 

Unum Group

  —   ”     —     US$ 1,001       N/A     US$ 1,001    
 

Sysco Corp

  —   ”     —     US$ 999       N/A     US$ 999    

(Continued)

 

- 64 -

Held Company

Name

 

Marketable Securities Type and Name

  Relationship
with the
Company 		 

Financial Statement Account

  March 31, 2019     Note  
  Shares/Units
(In Thousands) 		    Carrying Value
(Foreign
Currencies
in Thousands) 		    Percentage of
Ownership (%) 		  Fair Value
(Foreign
Currencies
in Thousands) 		 

TSMC Global

 

Biogen Inc

  —  

Financial assets at fair value through other comprehensive income

    —     US$ 999     N/A   US$ 999    
 

Laboratory Corp of America Holdings

  —   ”     —     US$ 998     N/A   US$ 998    
 

Pricoa Global Funding I

  —   ”     —     US$ 997     N/A   US$ 997    
 

Southern California Edison Co

  —   ”     —     US$ 995     N/A   US$ 995    
 

Orange SA

  —   ”     —     US$ 994     N/A   US$ 994    
 

Protective Life Global Funding

  —   ”     —     US$ 994     N/A   US$ 994    
 

Loews Corp

  —   ”     —     US$ 993     N/A   US$ 993    
 

Entergy Texas Inc

  —   ”     —     US$ 988     N/A   US$ 988    
 

Ameriprise Financial Inc

  —   ”     —     US$ 988     N/A   US$ 988    
 

Bunge Ltd Finance Corp

  —   ”     —     US$ 987     N/A   US$ 987    
 

State Grid Overseas Investment 2016 Ltd

  —   ”     —     US$ 979     N/A   US$ 979    
 

Holcim US Finance Sarl & Cie SCS

  —   ”     —     US$ 969     N/A   US$ 969    
 

Citibank NA

  —   ”     —     US$ 967     N/A   US$ 967    
 

Lockheed Martin Corp

  —   ”     —     US$ 898     N/A   US$ 898    
 

Coca-Cola Femsa SAB de CV

  —   ”     —     US$ 890     N/A   US$ 890    
 

CA Inc

  —   ”     —     US$ 886     N/A   US$ 886    
 

CNOOC Finance 2011 Ltd

  —   ”     —     US$ 868     N/A   US$ 868    
 

Baker Hughes a GE Co LLC / Baker Hughes Co-Obligor Inc

  —   ”     —     US$ 857     N/A   US$ 857    
 

Viterra Inc

  —   ”     —     US$ 854     N/A   US$ 854    
 

Spectra Energy Partners LP

  —   ”     —     US$ 852     N/A   US$ 852    
 

Intesa Sanpaolo SpA

  —   ”     —     US$ 850     N/A   US$ 850    
 

Aon PLC

  —   ”     —     US$ 809     N/A   US$ 809    
 

ONEOK Partners LP

  —   ”     —     US$ 808     N/A   US$ 808    
 

Church & Dwight Co Inc

  —   ”     —     US$ 798     N/A   US$ 798    
 

Activision Blizzard Inc

  —   ”     —     US$ 796     N/A   US$ 796    
 

Suncorp-Metway Ltd

  —   ”     —     US$ 796     N/A   US$ 796    
 

Sinopec Capital 2013 Ltd

  —   ”     —     US$ 796     N/A   US$ 796    
 

Alterra Finance LLC

  —   ”     —     US$ 790     N/A   US$ 790    
 

AXIS Specialty Finance LLC

  —   ”     —     US$ 773     N/A   US$ 773    
 

Warner Media LLC

  —   ”     —     US$ 772     N/A   US$ 772    
 

Manulife Financial Corp

  —   ”     —     US$ 771     N/A   US$ 771    
 

AutoZone Inc

  —   ”     —     US$ 766     N/A   US$ 766    
 

Incitec Pivot Finance LLC

  —   ”     —     US$ 764     N/A   US$ 764    
 

Brookfield Finance Inc

  —   ”     —     US$ 757     N/A   US$ 757    
 

Baidu Inc

  —   ”     —     US$ 750     N/A   US$ 750    
 

Pinnacle West Capital Corp

  —   ”     —     US$ 743     N/A   US$ 743    
 

British Airways 2013-1 Class A Pass Through Trust

  —   ”     —     US$ 738     N/A   US$ 738    
 

APT Pipelines Ltd

  —   ”     —     US$ 713     N/A   US$ 713    
 

Baker Hughes a GE Co LLC

  —   ”     —     US$ 707     N/A   US$ 707    
 

Phillips 66

  —   ”     —     US$ 705     N/A   US$ 705    
 

Australia & New Zealand Banking Group Ltd/New York NY

  —   ”     —     US$ 698     N/A   US$ 698    
 

Merck & Co Inc

  —   ”     —     US$ 695     N/A   US$ 695    
 

National Oilwell Varco Inc

  —   ”     —     US$ 688     N/A   US$ 688    
 

Textron Inc

  —   ”     —     US$ 688     N/A   US$ 688    
 

Three Gorges Finance I Cayman Islands Ltd

  —   ”     —     US$ 687     N/A   US$ 687    
 

Vornado Realty LP

  —   ”     —     US$ 687     N/A   US$ 687    
 

Rochester Gas & Electric Corp

  —   ”     —     US$ 656     N/A   US$ 656    
 

Norfolk Southern Railway Co

  —   ”     —     US$ 651     N/A   US$ 651    
 

Ohio Power Co

  —   ”     —     US$ 640     N/A   US$ 640    
 

Alexandria Real Estate Equities Inc

  —   ”     —     US$ 627     N/A   US$ 627    

(Continued)

 

- 65 -

Held Company

Name

 

Marketable Securities Type and Name

  Relationship
with the
Company 		 

Financial Statement Account

  March 31, 2019     Note  
  Shares/Units
(In Thousands) 		    Carrying Value
(Foreign
Currencies
in Thousands) 		    Percentage of
Ownership (%) 		  Fair Value
(Foreign
Currencies
in Thousands) 		 

TSMC Global

 

Toledo Edison Co/The

  —  

Financial assets at fair value through other comprehensive income

    —     US$ 625     N/A   US$ 625    
 

ERP Operating LP

  —   ”     —     US$ 624     N/A   US$ 624    
 

Wm Wrigley Jr Co

  —   ”     —     US$ 624     N/A   US$ 624    
 

Citizens Financial Group Inc

  —   ”     —     US$ 622     N/A   US$ 622    
 

RBC USA Holdco Corp

  —   ”     —     US$ 620     N/A   US$ 620    
 

Liberty Property LP

  —   ”     —     US$ 613     N/A   US$ 613    
 

Grupo Bimbo SAB de CV

  —   ”     —     US$ 612     N/A   US$ 612    
 

OneBeacon US Holdings Inc

  —   ”     —     US$ 609     N/A   US$ 609    
 

Daiwa Securities Group Inc

  —   ”     —     US$ 608     N/A   US$ 608    
 

Kimco Realty Corp

  —   ”     —     US$ 606     N/A   US$ 606    
 

Continental Airlines 2007-1 Class A Pass Through Trust

  —   ”     —     US$ 604     N/A   US$ 604    
 

Ontario Teachers’ Cadillac Fairview Properties Trust

  —   ”     —     US$ 604     N/A   US$ 604    
 

Continental Airlines 2000-1 Class A-1 Pass Through Trust

  —   ”     —     US$ 601     N/A   US$ 601    
 

BAT International Finance PLC

  —   ”     —     US$ 598     N/A   US$ 598    
 

Life Technologies Corp

  —   ”     —     US$ 586     N/A   US$ 586    
 

AXIS Specialty Finance PLC

  —   ”     —     US$ 575     N/A   US$ 575    
 

Host Hotels & Resorts LP

  —   ”     —     US$ 572     N/A   US$ 572    
 

Nationwide Financial Services Inc

  —   ”     —     US$ 572     N/A   US$ 572    
 

ABC Inc

  —   ”     —     US$ 567     N/A   US$ 567    
 

AvalonBay Communities Inc

  —   ”     —     US$ 567     N/A   US$ 567    
 

Duke Energy Progress LLC

  —   ”     —     US$ 566     N/A   US$ 566    
 

Ingersoll-Rand Global Holding Co Ltd

  —   ”     —     US$ 526     N/A   US$ 526    
 

Nomura Holdings Inc

  —   ”     —     US$ 518     N/A   US$ 518    
 

Fulton Financial Corp

  —   ”     —     US$ 516     N/A   US$ 516    
 

ASB Bank Ltd

  —   ”     —     US$ 512     N/A   US$ 512    
 

Regency Centers Corp

  —   ”     —     US$ 510     N/A   US$ 510    
 

ORIX Corp

  —   ”     —     US$ 503     N/A   US$ 503    
 

Highwoods Realty LP

  —   ”     —     US$ 499     N/A   US$ 499    
 

Sumitomo Mitsui Trust Bank Ltd

  —   ”     —     US$ 498     N/A   US$ 498    
 

TD Ameritrade Holding Corp

  —   ”     —     US$ 496     N/A   US$ 496    
 

Eni SpA

  —   ”     —     US$ 491     N/A   US$ 491    
 

MassMutual Global Funding II

  —   ”     —     US$ 488     N/A   US$ 488    
 

International Paper Co

  —   ”     —     US$ 481     N/A   US$ 481    
 

Diageo Capital PLC

  —   ”     —     US$ 477     N/A   US$ 477    
 

Comerica Inc

  —   ”     —     US$ 475     N/A   US$ 475    
 

Duke Energy Carolinas LLC

  —   ”     —     US$ 464     N/A   US$ 464    
 

Spire Inc

  —   ”     —     US$ 461     N/A   US$ 461    
 

United Overseas Bank Ltd

  —   ”     —     US$ 459     N/A   US$ 459    
 

Narragansett Electric Co/The

  —   ”     —     US$ 457     N/A   US$ 457    
 

Total Capital International SA

  —   ”     —     US$ 452     N/A   US$ 452    
 

Public Service Enterprise Group Inc

  —   ”     —     US$ 452     N/A   US$ 452    
 

Moody’s Corp

  —   ”     —     US$ 450     N/A   US$ 450    
 

Burlington Northern Santa Fe LLC

  —   ”     —     US$ 433     N/A   US$ 433    
 

Columbia Pipeline Group Inc

  —   ”     —     US$ 427     N/A   US$ 427    
 

Canadian Pacific Railway Co

  —   ”     —     US$ 412     N/A   US$ 412    
 

Valero Energy Corp

  —   ”     —     US$ 411     N/A   US$ 411    
 

Eaton Electric Holdings LLC

  —   ”     —     US$ 407     N/A   US$ 407    
 

Markel Corp

  —   ”     —     US$ 402     N/A   US$ 402    
 

Texas-New Mexico Power Co

  —   ”     —     US$ 400     N/A   US$ 400    
 

Southern Power Co

  —   ”     —     US$ 396     N/A   US$ 396    

(Continued)

 

- 66 -

Held Company

Name

 

Marketable Securities Type and Name

  Relationship
with the
Company 		 

Financial Statement Account

  March 31, 2019     Note  
  Shares/Units
(In Thousands) 		    Carrying Value
(Foreign
Currencies
in Thousands) 		    Percentage of
Ownership (%) 		  Fair Value
(Foreign
Currencies
in Thousands) 		 

TSMC Global

 

Continental Airlines 2012-1 Class A Pass Through Trust

  —  

Financial assets at fair value through other comprehensive income

    —     US$ 395     N/A   US$ 395    
 

IBM Credit LLC

  —   ”     —     US$ 394     N/A   US$ 394    
 

StanCorp Financial Group Inc

  —   ”     —     US$ 385     N/A   US$ 385    
 

Aon Corp

  —   ”     —     US$ 376     N/A   US$ 376    
 

First Niagara Financial Group Inc

  —   ”     —     US$ 363     N/A   US$ 363    
 

CenterPoint Energy Resources Corp

  —   ”     —     US$ 357     N/A   US$ 357    
 

American Honda Finance Corp

  —   ”     —     US$ 356     N/A   US$ 356    
 

Principal Financial Group Inc

  —   ”     —     US$ 352     N/A   US$ 352    
 

Cooperatieve Rabobank UA

  —   ”     —     US$ 351     N/A   US$ 351    
 

Deutsche Bank AG

  —   ”     —     US$ 350     N/A   US$ 350    
 

Commonwealth Bank of Australia/New York NY

  —   ”     —     US$ 348     N/A   US$ 348    
 

Schlumberger Finance Canada Ltd

  —  

”

    —     US$ 298     N/A   US$ 298    
 

Eli Lilly & Co

  —  

”

    —     US$ 294     N/A   US$ 294    
 

Amphenol Corp

  —  

”

    —     US$ 288     N/A   US$ 288    
 

BAE Systems Holdings Inc

  —  

”

    —     US$ 284     N/A   US$ 284    
 

Home Depot Inc/The

  —  

”

    —     US$ 281     N/A   US$ 281    
 

EMD Finance LLC

  —  

”

    —     US$ 279     N/A   US$ 279    
 

Archer-Daniels-Midland Co

  —  

”

    —     US$ 256     N/A   US$ 256    
 

Bank of America NA

  —  

”

    —     US$ 253     N/A   US$ 253    
 

Hartford Financial Services Group Inc/The

  —  

”

    —     US$ 228     N/A   US$ 228    
 

Rolls-Royce PLC

  —  

”

    —     US$ 223     N/A   US$ 223    
 

Protective Life Corp

  —  

”

    —     US$ 215     N/A   US$ 215    
 

WestRock MWV LLC

  —  

”

    —     US$ 211     N/A   US$ 211    
 

ING Bank NV

  —   ”     —     US$ 209     N/A   US$ 209    
 

Fidelity National Information Services Inc

  —  

”

    —     US$ 206     N/A   US$ 206    
 

Glencore Funding LLC

  —  

”

    —     US$ 198     N/A   US$ 198    
 

GE Capital International Funding Co Unlimited Co

  —  

”

    —     US$ 198     N/A   US$ 198    
 

Equifax Inc

  —  

”

    —     US$ 177     N/A   US$ 177    
 

Schneider Electric SE

  —  

”

    —     US$ 161     N/A   US$ 161    
 

Packaging Corp of America

  —   ”     —     US$ 159     N/A   US$ 159    
 

Wells Fargo & Co

  —   Financial assets at amortized cost     —     US$ 160,126     N/A   US$ 161,567    
 

JPMorgan Chase & Co.

  —   ”     —     US$ 84,967     N/A   US$ 86,186    
 

Westpac Banking Corp.

  —   ”     —     US$ 49,994     N/A   US$ 50,015    
 

Bank of Nova Scotia

  —   ”     —     US$ 49,980     N/A   US$ 50,028    
 

Industrial and Commercial Bank of China

  —   ”     —     US$ 9,996     N/A   US$ 10,026    
 

Government bond

             
 

United States Treasury Note/Bond

  —  

Financial assets at fair value through other comprehensive income

    —     US$ 417,315     N/A   US$ 417,315    
 

United States Treasury Floating Rate Note

  —   ”     —     US$ 26,004     N/A   US$ 26,004    
 

Abu Dhabi Government International Bond

  —   ”     —     US$ 3,456     N/A   US$ 3,456    
 

Qatar Government International Bond

  —   ”     —     US$ 1,336     N/A   US$ 1,336    
 

Agency mortgage-backed securities

             
 

Freddie Mac REMICS

  —  

Financial assets at fair value through Profit or Loss

    —     US$ 42,327     N/A   US$ 42,327    
 

Fannie Mae REMICS

  —   ”     —     US$ 29,100     N/A   US$ 29,100    
 

Government National Mortgage Association

  —   ”     —     US$ 20,470     N/A   US$ 20,470    
 

Freddie Mac Multifamily Structured Pass Through Certificates

  —   ”     —     US$ 1,631     N/A   US$ 1,631    
 

Fannie Mae Interest Strip

  —   ”     —     US$ 1,623     N/A   US$ 1,623    
 

Freddie Mac Strips

  —   ”     —     US$ 1,302     N/A   US$ 1,302    

(Continued)

 

- 67 -

                March 31, 2019        

Held Company
Name

 

Marketable Securities Type and Name

  Relationship
with the
Company 		 

Financial Statement Account

  Shares/Units
(In Thousands) 		     Carrying Value
(Foreign
Currencies
in Thousands) 		     Percentage of
Ownership (%) 		   Fair Value
(Foreign
Currencies
in Thousands) 		    Note  

TSMC Global

 

Fannie Mae Pool

  —  

Financial assets at fair value through other comprehensive income

    —      US$ 383,290      N/A    US$ 383,290    
 

Fannie Mae REMICS

  —   ”     —      US$ 156,933      N/A    US$ 156,933    
 

Government National Mortgage Association

  —   ”     —      US$ 132,853      N/A    US$ 132,853    
 

Freddie Mac REMICS

  —   ”     —      US$ 127,618      N/A    US$ 127,618    
 

Freddie Mac Gold Pool

  —   ”     —      US$ 104,290      N/A    US$ 104,290    
 

Ginnie Mae II Pool

  —   ”     —      US$ 77,728      N/A    US$ 77,728    
 

Fannie Mae

  —   ”     —      US$ 69,499      N/A    US$ 69,499    
 

Freddie Mac

  —   ”     —      US$ 22,049      N/A    US$ 22,049    
 

Fannie Mae-Aces

  —   ”     —      US$ 13,837      N/A    US$ 13,837    
 

Ginnie Mae

  —   ”     —      US$ 13,112      N/A    US$ 13,112    
 

Freddie Mac Multifamily Structured Pass Through Certificates

  —   ”     —      US$ 5,001      N/A    US$ 5,001    
 

Freddie Mac Non Gold Pool

  —   ”     —      US$ 2,602      N/A    US$ 2,602    
 

FHLMC-GNMA

  —   ”     —      US$ 1,352      N/A    US$ 1,352    
 

Province of Quebec Canada

  —   ”     —      US$ 999      N/A    US$ 999    
 

Federal Farm Credit Banks

  —   ”     —      US$ 899      N/A    US$ 899    
 

NCUA Guaranteed Notes Trust 2010-R2

  —   ”     —      US$ 800      N/A    US$ 800    
 

Ginnie Mae I Pool

  —   ”     —      US$ 605      N/A    US$ 605    
 

Kowloon-Canton Railway Corp

  —   ”     —      US$ 552      N/A    US$ 552    
 

FRESB 2019-SB60 Mortgage Trust

  —   ”     —      US$ 410      N/A    US$ 410    
 

NCUA Guaranteed Notes Trust 2010-R1

  —   ”     —      US$ 307      N/A    US$ 307    
 

Fannie Mae Benchmark REMIC

  —   ”     —      US$ 129      N/A    US$ 129    
 

Asset-backed securities

                
 

Citibank Credit Card Issuance Trust

  —  

Financial assets at fair value through other comprehensive income

    —      US$ 59,170      N/A    US$ 59,170    
 

American Express Credit Account Master Trust

  —   ”     —      US$ 47,244      N/A    US$ 47,244    
 

Chase Issuance Trust

  —   ”     —      US$ 41,726      N/A    US$ 41,726    
 

Discover Card Execution Note Trust

  —   ”     —      US$ 37,620      N/A    US$ 37,620    
 

Ford Credit Floorplan Master Owner Trust A

  —   ”     —      US$ 24,712      N/A    US$ 24,712    
 

Capital One Multi-Asset Execution Trust

  —   ”     —      US$ 8,797      N/A    US$ 8,797    
 

Hyundai Auto Receivables Trust 2018-B

  —   ”     —      US$ 8,149      N/A    US$ 8,149    
 

CGDBB Commercial Mortgage Trust 2017-BIOC

  —   ”     —      US$ 7,500      N/A    US$ 7,500    
 

BA Credit Card Trust

  —   ”     —      US$ 6,600      N/A    US$ 6,600    
 

UBS-Barclays Commercial Mortgage Trust 2012-C2

  —   ”     —      US$ 6,297      N/A    US$ 6,297    
 

Mercedes-Benz Master Owner Trust 2016-B

  —   ”     —      US$ 6,004      N/A    US$ 6,004    
 

Ford Credit Auto Owner Trust 2016-REV1

  —   ”     —      US$ 5,956      N/A    US$ 5,956    
 

BX Commercial Mortgage Trust 2018-IND

  —   ”     —      US$ 5,710      N/A    US$ 5,710    
 

BBCMS 2018-TALL Mortgage Trust

  —   ”     —      US$ 5,448      N/A    US$ 5,448    
 

Morgan Stanley Bank of America Merrill Lynch Trust 2013-C10

  —   ”     —      US$ 4,988      N/A    US$ 4,988    
 

Ford Credit Auto Owner Trust 2015-REV1

  —   ”     —      US$ 4,897      N/A    US$ 4,897    
 

Morgan Stanley Bank of America Merrill Lynch Trust 2013-C7

  —   ”     —      US$ 4,742      N/A    US$ 4,742    
 

Chesapeake Funding II LLC

  —   ”     —      US$ 4,605      N/A    US$ 4,605    
 

Volvo Financial Equipment Master Owner Trust

  —   ”     —      US$ 4,511      N/A    US$ 4,511    
 

UBS Commercial Mortgage Trust 2018-C10

  —   ”     —      US$ 4,098      N/A    US$ 4,098    
 

JPMCC Commercial Mortgage Securities Trust 2017-JP7

  —   ”     —      US$ 4,071      N/A    US$ 4,071    
 

BANK 2017-BNK4

  —   ”     —      US$ 4,028      N/A    US$ 4,028    
 

BANK 2017-BNK5

  —   ”     —      US$ 4,014      N/A    US$ 4,014    
 

BANK 2017-BNK6

  —   ”     —      US$ 4,007      N/A    US$ 4,007    
 

Morgan Stanley Bank of America Merrill Lynch Trust 2016-C29

  —   ”     —      US$ 4,005      N/A    US$ 4,005    

(Continued)

 

- 68 -

                March 31, 2019        

Held Company
Name

 

Marketable Securities Type and Name

  Relationship
with the
Company 		 

Financial Statement Account

  Shares/Units
(In Thousands) 		    Carrying Value
(Foreign
Currencies
in Thousands) 		    Percentage of
Ownership (%) 		  Fair Value
(Foreign
Currencies
in Thousands) 		    Note  

TSMC Global

 

J.P. Morgan Chase Commercial Mortgage Securities Trust 2016-WIKI

  —  

Financial assets at fair value through other comprehensive income

    —     US$ 3,986     N/A   US$ 3,986    
  Cold Storage Trust 2017-ICE3   —   ”     —     US$ 3,800     N/A   US$ 3,800    
 

GS Mortgage Securities Corp II

  —   ”     —     US$ 3,146     N/A   US$ 3,146    
 

COMM 2015-CCRE25 Mortgage Trust

  —   ”     —     US$ 3,009     N/A   US$ 3,009    
 

GS Mortgage Securities Corp Trust 2018-RIVR

  —   ”     —     US$ 2,996     N/A   US$ 2,996    
 

GM Financial Consumer Automobile Receivables Trust 2017-2

  —   ”     —     US$ 2,966     N/A   US$ 2,966    
 

Honda Auto Receivables 2017-2 Owner Trust

  —   ”     —     US$ 2,961     N/A   US$ 2,961    
 

WFRBS Commercial Mortgage Trust 2013-C13

  —   ”     —     US$ 2,827     N/A   US$ 2,827    
 

Honda Auto Receivables 2019-1 Owner Trust

  —   ”     —     US$ 2,808     N/A   US$ 2,808    
 

GM Financial Automobile Leasing Trust 2018-3

  —   ”     —     US$ 2,803     N/A   US$ 2,803    
 

BMW Floorplan Master Owner Trust

  —   ”     —     US$ 2,799     N/A   US$ 2,799    
 

GS Mortgage Securities Trust 2011-GC3

  —   ”     —     US$ 2,730     N/A   US$ 2,730    
 

GS Mortgage Securities Trust 2013-GCJ12

  —   ”     —     US$ 2,628     N/A   US$ 2,628    
 

Morgan Stanley Capital I Trust 2018-H3

  —   ”     —     US$ 2,619     N/A   US$ 2,619    
 

Toyota Auto Receivables 2018-C Owner Trust

  —   ”     —     US$ 2,578     N/A   US$ 2,578    
 

Hertz Fleet Lease Funding LP

  —   ”     —     US$ 2,329     N/A   US$ 2,329    
 

COMM 2014-CCRE17 Mortgage Trust

  —   ”     —     US$ 2,246     N/A   US$ 2,246    
 

JPMDB Commercial Mortgage Securities Trust 2016-C2

  —   ”     —     US$ 2,197     N/A   US$ 2,197    
 

UBS Commercial Mortgage Trust 2018-C11

  —   ”     —     US$ 2,129     N/A   US$ 2,129    
 

COMM 2013-CCRE12 Mortgage Trust

  —   ”     —     US$ 2,094     N/A   US$ 2,094    
 

BENCHMARK 2018-B4

  —   ”     —     US$ 2,066     N/A   US$ 2,066    
 

Nissan Auto Lease Trust 2017-A

  —   ”     —     US$ 2,041     N/A   US$ 2,041    
 

Wells Fargo Commercial Mortgage Trust 2015-C30

  —   ”     —     US$ 2,040     N/A   US$ 2,040    
 

Wells Fargo Commercial Mortgage Trust 2015-LC20

  —   ”     —     US$ 2,033     N/A   US$ 2,033    
 

JPMBB Commercial Mortgage Securities Trust 2014-C19

  —   ”     —     US$ 2,031     N/A   US$ 2,031    
 

COMM 2015-CCRE22 Mortgage Trust

  —   ”     —     US$ 2,028     N/A   US$ 2,028    
 

Citigroup Commercial Mortgage Trust 2017-P8

  —   ”     —     US$ 2,017     N/A   US$ 2,017    
 

UBS-Barclays Commercial Mortgage Trust 2013-C6

  —   ”     —     US$ 2,015     N/A   US$ 2,015    
 

JPMDB Commercial Mortgage Securities Trust 2017-C7

  —   ”     —     US$ 2,001     N/A   US$ 2,001    
 

Toyota Auto Receivables 2016-B Owner Trust

  —   ”     —     US$ 1,986     N/A   US$ 1,986    
 

Morgan Stanley Bank of America Merrill Lynch Trust 2016-C31

  —   ”     —     US$ 1,977     N/A   US$ 1,977    
 

Toyota Auto Receivables 2017-C Owner Trust

  —   ”     —     US$ 1,975     N/A   US$ 1,975    
 

Mercedes-Benz Auto Lease Trust 2018-B

  —   ”     —     US$ 1,960     N/A   US$ 1,960    
 

Morgan Stanley Bank of America Merrill Lynch Trust 2013-C8

  —   ”     —     US$ 1,809     N/A   US$ 1,809    
 

Ford Credit Auto Lease Trust

  —   ”     —     US$ 1,803     N/A   US$ 1,803    
 

Citigroup Commercial Mortgage Trust 2015-GC35

  —   ”     —     US$ 1,791     N/A   US$ 1,791    
 

Wheels SPV 2 LLC

  —   ”     —     US$ 1,771     N/A   US$ 1,771    
 

BENCHMARK 2018-B6 Mortgage Trust

  —   ”     —     US$ 1,766     N/A   US$ 1,766    
 

BANK 2018-BNK14

  —   ”     —     US$ 1,742     N/A   US$ 1,742    
 

UBS-Barclays Commercial Mortgage Trust 2013-C5

  —   ”     —     US$ 1,684     N/A   US$ 1,684    
 

Morgan Stanley Capital I Trust 2016-UB11

  —   ”     —     US$ 1,680     N/A   US$ 1,680    
 

Toyota Auto Receivables 2018-A Owner Trust

  —   ”     —     US$ 1,650     N/A   US$ 1,650    
 

Nelnet Student Loan Trust 2015-2

  —   ”     —     US$ 1,615     N/A   US$ 1,615    
 

SLM Student Loan Trust 2005-4

  —   ”     —     US$ 1,614     N/A   US$ 1,614    
 

Ford Credit Auto Lease Trust 2017-A

  —   ”     —     US$ 1,607     N/A   US$ 1,607    
 

Nelnet Student Loan Trust 2010-4

  —   ”     —     US$ 1,586     N/A   US$ 1,586    
 

Nelnet Student Loan Trust 2018-3

  —   ”     —     US$ 1,545     N/A   US$ 1,545    
 

Morgan Stanley Capital I Trust 2018-H4

  —   ”     —     US$ 1,520     N/A   US$ 1,520    
 

Morgan Stanley Capital I Trust 2017-H1

  —   ”     —     US$ 1,512     N/A   US$ 1,512    

(Continued)

 

- 69 -

                March 31, 2019        

Held Company
Name

 

Marketable Securities Type and Name

  Relationship
with the
Company 		 

Financial Statement Account

  Shares/Units
(In Thousands) 		    Carrying Value
(Foreign
Currencies
in Thousands) 		    Percentage of
Ownership (%) 		  Fair Value
(Foreign
Currencies
in Thousands) 		    Note  

TSMC Global

  Ford Credit Auto Owner Trust 2019-A   —  

Financial assets at fair value through other comprehensive income

    —     US$ 1,508     N/A   US$ 1,508    
  Ford Credit Auto Owner Trust 2015-A   —   ”     —     US$ 1,507     N/A   US$ 1,507    
 

COMM 2015-PC1 Mortgage Trust

  —   ”     —     US$ 1,504     N/A   US$ 1,504    
 

Ford Credit Auto Lease Trust 2018-A

  —   ”     —     US$ 1,502     N/A   US$ 1,502    
 

Edsouth Indenture No 10 LLC

  —   ”     —     US$ 1,476     N/A   US$ 1,476    
 

Morgan Stanley Bank of America Merrill Lynch Trust 2015-C24

  —   ”     —     US$ 1,457     N/A   US$ 1,457    
 

Toyota Auto Receivables 2018-B Owner Trust

  —   ”     —     US$ 1,444     N/A   US$ 1,444    
 

ECMC Group Student Loan Trust 2018-2

  —   ”     —     US$ 1,424     N/A   US$ 1,424    
 

Mercedes-Benz Master Owner Trust 2018-BA

  —   ”     —     US$ 1,400     N/A   US$ 1,400    
 

Ford Credit Auto Owner Trust 2014-REV2

  —   ”     —     US$ 1,396     N/A   US$ 1,396    
 

SLM Student Loan Trust 2013-6

  —   ”     —     US$ 1,393     N/A   US$ 1,393    
 

COMM 2013-CCRE6 Mortgage Trust

  —   ”     —     US$ 1,385     N/A   US$ 1,385    
 

Nelnet Student Loan Trust 2012-1

  —   ”     —     US$ 1,382     N/A   US$ 1,382    
 

JPMCC Commercial Mortgage Securities Trust 2017-JP5

  —   ”     —     US$ 1,353     N/A   US$ 1,353    
 

BMW Vehicle Lease Trust

  —   ”     —     US$ 1,351     N/A   US$ 1,351    
 

Navient Student Loan Trust 2017-1

  —   ”     —     US$ 1,314     N/A   US$ 1,314    
 

JPMBB Commercial Mortgage Securities Trust 2016-C1

  —   ”     —     US$ 1,275     N/A   US$ 1,275    
 

Pheaa Student Loan Trust 2018-1

  —   ”     —     US$ 1,270     N/A   US$ 1,270    
 

Hyundai Auto Lease Securitization Trust 2018-A

  —   ”     —     US$ 1,252     N/A   US$ 1,252    
 

COMM 2015-DC1 Mortgage Trust

  —   ”     —     US$ 1,233     N/A   US$ 1,233    
 

Navient Student Loan Trust 2019-1

  —   ”     —     US$ 1,214     N/A   US$ 1,214    
 

Ford Credit Auto Owner Trust 2017-C

  —   ”     —     US$ 1,213     N/A   US$ 1,213    
 

Morgan Stanley Bank of America Merrill Lynch Trust 2015-C20

  —   ”     —     US$ 1,197     N/A   US$ 1,197    
 

Ford Credit Auto Lease Trust 2017-B

  —   ”     —     US$ 1,163     N/A   US$ 1,163    
 

Enterprise Fleet Financing LLC

  —   ”     —     US$ 1,058     N/A   US$ 1,058    
 

COMM 2015-CCRE27 Mortgage Trust

  —   ”     —     US$ 1,057     N/A   US$ 1,057    
 

WFRBS Commercial Mortgage Trust 2011-C4

  —   ”     —     US$ 1,036     N/A   US$ 1,036    
 

GM Financial Consumer Automobile Receivables Trust 2018-4

  —   ”     —     US$ 1,033     N/A   US$ 1,033    
 

COMM 2014-LC17 Mortgage Trust

  —   ”     —     US$ 1,019     N/A   US$ 1,019    
 

JPMBB Commercial Mortgage Securities Trust 2014-C21

  —   ”     —     US$ 1,017     N/A   US$ 1,017    
 

Morgan Stanley Bank of America Merrill Lynch Trust 2014 C19

  —   ”     —     US$ 1,016     N/A   US$ 1,016    
 

COMM 2014-CCRE20 Mortgage Trust

  —   ”     —     US$ 1,016     N/A   US$ 1,016    
 

Nissan Auto Receivables 2017-B Owner Trust

  —   ”     —     US$ 1,014     N/A   US$ 1,014    
 

Nissan Auto Receivables 2018-B Owner Trust

  —   ”     —     US$ 1,010     N/A   US$ 1,010    
 

GS Mortgage Securities Corp Trust 2016-RENT

  —   ”     —     US$ 1,005     N/A   US$ 1,005    
 

Ford Credit Auto Owner Trust 2017-REV1

  —   ”     —     US$ 995     N/A   US$ 995    
 

GM Financial Consumer Automobile 2017-1

  —   ”     —     US$ 991     N/A   US$ 991    
 

Citigroup Commercial Mortgage Trust 2013-GC11

  —   ”     —     US$ 990     N/A   US$ 990    
 

Morgan Stanley Capital Barclays Bank Trust 2016-MART

  —   ”     —     US$ 988     N/A   US$ 988    
 

Nelnet Student Loan Trust 2006-2

  —   ”     —     US$ 983     N/A   US$ 983    
 

JP Morgan Chase Commercial Mortgage Securities Trust 2012-LC9

  —   ”     —     US$ 917     N/A   US$ 917    
 

Honda Auto Receivables 2018-2 Owner Trust

  —   ”     —     US$ 916     N/A   US$ 916    
 

GM Financial Automobile Leasing Trust 2017-1

  —   ”     —     US$ 900     N/A   US$ 900    
 

CarMax Auto Owner Trust 2018-1

  —   ”     —     US$ 879     N/A   US$ 879    
 

Morgan Stanley Bank of America Merrill Lynch Trust 2012-C6

  —   ”     —     US$ 861     N/A   US$ 861    
 

Mercedes-Benz Auto Receivables Trust 2018-1

  —   ”     —     US$ 847     N/A   US$ 847    
 

Nissan Auto Receivables 2019-A Owner Trust

  —   ”     —     US$ 847     N/A   US$ 847    
 

280 Park Avenue 2017-280P Mortgage Trust

  —   ”     —     US$ 829     N/A   US$ 829    
 

Hyundai Auto Lease Securitization Trust 2017-C

  —   ”     —     US$ 826     N/A   US$ 826    

(Continued)

 

- 70 -

                March 31, 2019        

Held Company
Name

 

Marketable Securities Type and Name

  Relationship
with the
Company 		 

Financial Statement Account

  Shares/Units
(In Thousands) 		    Carrying Value
(Foreign
Currencies
in Thousands) 		    Percentage of
Ownership (%) 		  Fair Value
(Foreign
Currencies
in Thousands) 		    Note  

TSMC Global

  Ford Credit Auto Owner Trust 2015-REV2   —  

Financial assets at fair value through other comprehensive income

    —     US$ 807     N/A   US$ 807    
  Honda Auto Receivables 2018-3 Owner Trust   —   ”     —     US$ 800     N/A   US$ 800    
 

Ford Credit Auto Owner Trust/Ford Credit 2014-REV1

  —   ”     —     US$ 799     N/A   US$ 799    
 

Navient Student Loan Trust 2018-1

  —   ”     —     US$ 798     N/A   US$ 798    
 

JPMBB Commercial Mortgage Securities Trust 2015-C31

  —   ”     —     US$ 790     N/A   US$ 790    
 

SLM Student Loan Trust 2012-3

  —   ”     —     US$ 779     N/A   US$ 779    
 

Citigroup Commercial Mortgage Trust 2015-GC27

  —   ”     —     US$ 775     N/A   US$ 775    
 

Mercedes-Benz Auto Lease Trust 2018-A

  —   ”     —     US$ 772     N/A   US$ 772    
 

CFCRE Commercial Mortgage Trust 2011-C1

  —   ”     —     US$ 771     N/A   US$ 771    
 

Nissan Auto Receivables 2016-B Owner Trust

  —   ”     —     US$ 767     N/A   US$ 767    
 

GM Financial Automobile Leasing Trust 2018-1

  —   ”     —     US$ 756     N/A   US$ 756    
 

SLM Student Loan Trust 2013-1

  —   ”     —     US$ 747     N/A   US$ 747    
 

Navient Student Loan Trust 2017-3

  —   ”     —     US$ 726     N/A   US$ 726    
 

COMM 2015-LC19 Mortgage Trust

  —   ”     —     US$ 726     N/A   US$ 726    
 

Toyota Auto Receivables 2018-D Owner Trust

  —   ”     —     US$ 710     N/A   US$ 710    
 

Enterprise Fleet Financing 2019-1 LLC

  —   ”     —     US$ 700     N/A   US$ 700    
 

Wells Fargo Commercial Mortgage Trust 2015-C28

  —   ”     —     US$ 691     N/A   US$ 691    
 

Ally Auto Receivables Trust 2019-1

  —   ”     —     US$ 665     N/A   US$ 665    
 

SLM Student Loan Trust 2013-4

  —   ”     —     US$ 660     N/A   US$ 660    
 

Ford Credit Auto Owner Trust 2018-A

  —   ”     —     US$ 644     N/A   US$ 644    
 

Mercedes-Benz Auto Lease Trust 2019-A

  —   ”     —     US$ 615     N/A   US$ 615    
 

JP Morgan Chase Commercial Mortgage Securities Trust 2012-WLDN

  —   ”     —     US$ 611     N/A   US$ 611    
 

CarMax Auto Owner Trust

  —   ”     —     US$ 607     N/A   US$ 607    
 

JP Morgan Chase Commercial Mortgage Securities Trust 2012-C6

  —   ”     —     US$ 592     N/A   US$ 592    
 

DBGS 2018-BIOD Mortgage Trust

  —   ”     —     US$ 585     N/A   US$ 585    
 

Ally Auto Receivables Trust 2018-3

  —   ”     —     US$ 578     N/A   US$ 578    
 

DBUBS 2011-LC2 Mortgage Trust

  —   ”     —     US$ 515     N/A   US$ 515    
 

Hyundai Auto Lease Securitization Trust 2016-C

  —   ”     —     US$ 512     N/A   US$ 512    
 

CD 2016-CD2 Mortgage Trust

  —   ”     —     US$ 502     N/A   US$ 502    
 

COMM 2014-CCRE19 Mortgage Trust

  —   ”     —     US$ 500     N/A   US$ 500    
 

GS Mortgage Securities Trust 2014-GC18

  —   ”     —     US$ 492     N/A   US$ 492    
 

ARI Fleet Lease Trust 2018-A

  —   ”     —     US$ 450     N/A   US$ 450    
 

Hyundai Auto Lease Securitization Trust 2017-A

  —   ”     —     US$ 434     N/A   US$ 434    
 

Ford Credit Auto Owner Trust 2016-A

  —   ”     —     US$ 426     N/A   US$ 426    
 

WFRBS Commercial Mortgage Trust 2014-C25

  —   ”     —     US$ 406     N/A   US$ 406    
 

GM Financial Automobile Leasing Trust 2018-2

  —   ”     —     US$ 392     N/A   US$ 392    
 

Morgan Stanley Bank of America Merrill Lynch Trust 2014-C18

  —   ”     —     US$ 373     N/A   US$ 373    
 

Honda Auto Receivables 2017-4 Owner Trust

  —   ”     —     US$ 368     N/A   US$ 368    
 

ARI Fleet Lease Trust 2018-B

  —   ”     —     US$ 332     N/A   US$ 332    
 

BMW Vehicle Lease Trust 2018-1

  —   ”     —     US$ 319     N/A   US$ 319    
 

JPMBB Commercial Mortgage Securities Trust 2013-C14

  —   ”     —     US$ 276     N/A   US$ 276    
 

Toyota Auto Receivables 2019-A Owner Trust

  —   ”     —     US$ 273     N/A   US$ 273    
 

Wells Fargo Commercial Mortgage Trust 2016-LC24

  —   ”     —     US$ 266     N/A   US$ 266    
 

Wells Fargo Commercial Mortgage Trust 2015-NXS1

  —   ”     —     US$ 264     N/A   US$ 264    
 

GM Financial Automobile Leasing Trust 2016-3

  —   ”     —     US$ 249     N/A   US$ 249    
 

Morgan Stanley Bank of America Merrill Lynch Trust 2014-C16

  —   ”     —     US$ 219     N/A   US$ 219    
 

Wells Fargo Commercial Mortgage Trust 2015-SG1

  —   ”     —     US$ 215     N/A   US$ 215    
 

BMW Vehicle Lease Trust 2017-2

  —   ”     —     US$ 188     N/A   US$ 188    

(Continued)

 

- 71 -

Held Company
Name

 

Marketable Securities Type and Name

  Relationship
with the
Company 		 

Financial Statement Account

  March 31, 2019     Note  
  Shares/Units
(In Thousands) 		    Carrying Value
(Foreign
Currencies
in Thousands) 		    Percentage of
Ownership (%) 		  Fair Value
(Foreign
Currencies
in Thousands) 		 

TSMC Global

 

Morgan Stanley Bank of America Merrill Lynch Trust 2012-C5

  —  

Financial assets at fair value through other comprehensive income

    —     US$ 162     N/A   US$ 162    
 

Honda Auto Receivables 2016-2 Owner Trust

  —   ”     —     US$ 122     N/A   US$ 122    
 

WFRBS Commercial Mortgage Trust 2011-C5

  —   ”     —     US$ 113     N/A   US$ 113    
 

GS Mortgage Securities Trust 2010-C1

  —   ”     —     US$ 108     N/A   US$ 108    
 

Hyundai Auto Lease Securitization Trust 2017-B

  —   ”     —     US$ 86     N/A   US$ 86    
 

Citigroup Commercial Mortgage Trust 2014-GC23

  —   ”     —     US$ 70     N/A   US$ 70    
 

COMM 2014-CCRE15 Mortgage Trust

  —   ”     —     US$ 46     N/A   US$ 46    
 

GM Financial Automobile Leasing Trust 2017-2

  —   ”     —     US$ 46     N/A   US$ 46    
 

GS Mortgage Securities Trust 2014-GC24

  —   ”     —     US$ 40     N/A   US$ 40    
 

GS Mortgage Securities Trust 2010-C2

  —   ”     —     US$ 39     N/A   US$ 39    
 

Non-publicly traded equity investments

             
 

Primavera Capital Fund II L.P.

  —  

Financial assets at fair value through other comprehensive income

    —     US$ 66,254     4   US$ 66,254    

VTAF II

 

Non-publicly traded equity investments

             
 

Sentelic

  —  

Financial assets at fair value through other comprehensive income

    1,019     US$ 2,033     4   US$ 2,033    
 

Aether Systems, Inc.

  —   ”     1,085     US$ 352     20   US$ 352    
 

5V Technologies, Inc.

  —   ”     364     US$ 313     2   US$ 313    

VTAF III

 

Non-publicly traded equity investments

             
 

LiquidLeds Lighting Corp.

  —  

Financial assets at fair value through other comprehensive income

    1,952     US$ 800     14   US$ 800    
 

Neoconix, Inc.

  —   ”     4,147     US$ 174     —   US$ 174    

Growth Fund

 

Non-publicly traded equity investments

             
 

Innovium, Inc.

  —  

Financial assets at fair value through other comprehensive income

    451     US$ 2,393     —   US$ 2,393    
 

CNEX Labs, Inc.

  —   ”     237     US$ 775     —   US$ 775    

(Concluded)

 

- 72 -

TABLE 4

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL

FOR THE THREE MONTHS ENDED MARCH 31, 2019

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

 

 

    Marketable                   Beginning Balance     Acquisition     Disposal     Ending Balance (Note)  

Company Name

 

Securities
Type and Name

 

Financial Statement Account

  Counter-party     Nature of
Relationship 		    Shares/Units
(In Thousands) 		        Amount         Shares/Units
(In Thousands) 		        Amount         Shares/Units
(In Thousands) 		        Amount         Carrying
Value 		    Gain/Loss on
Disposal 		    Shares/Units
(In Thousands) 		        Amount      

TSMC

 

Commercial paper

                         
 

Taiwan Power Company

 

Financial assets at amortized cost

    —       —       180     $ 1,795,261       —     $ —       120     $ 1,200,000     $ 1,200,000     $ —       60     $ 598,357  

TSMC Global

 

Corporate bond

                         
 

Anheuser-Busch InBev Worldwide Inc.

 

Financial assets at fair value through other comprehensive income

    —       —       —       —       —     US$ 11,039       —     US$ 1,373     US$ 1,329     US$ 44       —     US$ 10,168  
 

Wells Fargo & Co

 

Financial assets at amortized cost

    —       —       —     US$ 149,941       —     US$ 10,187       —       —       —       —       —     US$ 160,126  
 

JPMorgan Chase & Co.

 

”

    —       —       —     US$ 124,948       —       —       —     US$ 40,000     US$ 40,000       —       —     US$ 84,967  
 

Westpac Banking Corp.

 

”

    —       —       —     US$ 99,987       —       —       —     US$ 50,000     US$ 50,000       —       —     US$ 49,994  
 

Commonwealth Bank of Australia

 

”

    —       —       —     US$ 49,994       —       —       —     US$ 50,000     US$ 50,000       —       —       —  
 

Goldman Sachs Group, Inc.

 

”

    —       —       —     US$ 99,900       —       —       —     US$ 100,000     US$ 100,000       —       —       —  
 

National Australia Bank

 

”

    —       —       —     US$ 49,994       —       —       —     US$ 50,000     US$ 50,000       —       —       —  
 

Government bond

                         
 

United States Treasury Note/Bond

 

Financial assets at fair value through other comprehensive income

    —       —       —     US$ 283,314       —     US$ 308,212       —     US$ 185,498     US$ 185,346     US$ 152       —     US$ 396,334  
 

United States Treasury Floating Rate Note

 

”

    —       —       —     US$ 68,164       —       —       —     US$ 42,161     US$ 42,195     US$ (34 )      —     US$ 26,004  
 

Agency bonds/Agency mortgage-backed securities

                         
 

FNMA TBA 30 Yr 3

 

Financial assets at fair value through other comprehensive income

    —       —       —       —       —     US$ 92,523       —     US$ 69,463     US$ 69,025     US$ 438       —     US$ 23,485  
 

FHLMC TBA 30 Yr 3

 

”

    —       —       —     US$ 15       —     US$ 43,753       —     US$ 22,137     US$ 21,706     US$ 431       —     US$ 22,049  
 

GNMA II TBA 30 Yr 5

 

”

    —       —       —     US$ 12,209       —     US$ 37,505       —     US$ 37,275     US$ 37,190     US$ 85       —     US$ 12,521  
 

FNMA TBA 30 Yr 3.5

 

”

    —       —       —       —       —     US$ 91,764       —     US$ 77,496     US$ 77,231     US$ 265       —     US$ 10,221  
 

FNMA TBA 30 Yr 4.5

 

”

    —       —       —       —       —     US$ 39,842       —     US$ 19,425     US$ 19,397     US$ 28       —     US$ 9,002  
 

FNMA Pool BM4493

 

”

    —       —       —     US$ 16,915       —     US$ 1,795       —     US$ 12,661     US$ 12,595     US$ 66       —     US$ 6,280  
 

FNMA Pool BM4681

 

”

    —       —       —     US$ 31,784       —       —       —     US$ 26,790     US$ 26,473     US$ 317       —     US$ 5,477  
 

FNMA TBA 30 Yr 5

 

”

    —       —       —     US$ 24,761       —     US$ 44,160       —     US$ 65,501     US$ 65,433     US$ 68       —     US$ 3,565  
 

FNMA TBA 15 Yr 3.5

 

”

    —       —       —     US$ 2,020       —     US$ 12,197       —     US$ 12,200     US$ 12,171     US$ 29       —     US$ 2,046  
 

FED HM LN PC Pool G61553

 

”

    —       —       —     US$ 15,045       —       —       —     US$ 15,177     US$ 15,109     US$ 68       —       —  
 

FED HM LN PC Pool G61592

 

”

    —       —       —     US$ 21,507       —       —       —     US$ 21,633     US$ 21,407     US$ 226       —       —  
 

FNMA Pool CA2352

 

”

    —       —       —     US$ 25,130       —       —       —     US$ 25,161     US$ 25,104     US$ 57       —       —  
 

GNMA II TBA 30 Yr 4

 

”

    —       —       —     US$ 2,129       —     US$ 10,752       —     US$ 12,901     US$ 12,873     US$ 28       —       —  

TSMC Global

 

Asset-backed securities

                         
 

Citibank Credit Card Issuance Trust

 

Financial assets at fair value through other comprehensive income

    —       —       —     US$ 68,487       —     US$ 995       —     US$ 10,539     US$ 10,542     US$ (3 )      —     US$ 59,170  

 

Note:

The ending balance includes the amortization of premium/discount on bonds investments, share of profits/losses of investees and other related adjustment.

 

- 73 -

TABLE 5

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

ACQUISITION OF INDIVIDUAL REAL ESTATE PROPERTIES AT COSTS OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL

FOR THE THREE MONTHS ENDED MARCH 31, 2019

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

 

 

Company Name

 

Types of

Property

 

Transaction Date

  Transaction
Amount
(Foreign
Currencies in
Thousands) 		   

Payment Term

 

Counter-party

  Nature of
Relationships 		 

 

Prior Transaction of Related Counter-party

 

Price
Reference

 

Purpose of
Acquisition

 

Other

Terms

  Owner   Relationships   Transfer Date   Amount

TSMC

  Fab  

March 25, 2019

  $ 888,800    

Monthly settlement by the construction progress and acceptance

 

PAN ASIA Corp.

  —   N/A   N/A   N/A   N/A  

Price comparison and price negotiation

 

Manufacturing purpose

  None

 

- 74 -

TABLE 6

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

FOR THE THREE MONTHS ENDED MARCH 31, 2019

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

 

 

                    Notes/Accounts
Payable or
Receivable 		     
           

Transaction Details

      Ending Balance            
               

Amount

(Foreign Currencies

    % to       Abnormal Transaction  

(Foreign

Currencies

    % to      

Company Name

 

Related Party

 

Nature of Relationships

 

Purchases/Sales

  in Thousands)     Total  

Payment Terms

  Unit Price   Payment Terms   in Thousands)     Total   Note  

TSMC

 

TSMC North America

  Subsidiary   Sales   $ 134,825,041     58  

Net 30 days from invoice date (Note)

  —   Note   $ 63,659,192     63  
 

GUC

  Associate   Sales     963,914     —  

Net 30 days from the end of the month of when invoice is issued

  —   —     165,739     —  
 

TSMC China

  Subsidiary   Purchases     3,337,467     17  

Net 30 days from the end of the month of when invoice is issued

  —   —     (931,502 )    3  
 

TSMC Nanjing

  Subsidiary   Purchases     2,734,150     14  

Net 30 days from the end of the month of when invoice is issued

  —   —     (922,190 )    3  
 

WaferTech

  Indirect subsidiary   Purchases     1,580,046     8  

Net 30 days from the end of the month of when invoice is issued

  —   —     (883,186 )    3  
 

VIS

  Associate   Purchases     1,127,639     6  

Net 30 days from the end of the month of when invoice is issued

  —   —     (273,032 )    1  
 

SSMC

  Associate   Purchases     422,763     2  

Net 30 days from the end of the month of when invoice is issued

  —   —     (164,403 )    1  

TSMC North America

 

GUC

  Associate of TSMC   Sales    

(US$

487,166

15,806

 

) 

  —  

Net 30 days from invoice date

  —   —    

(US$

137,817

4,470

 

) 

  —  

 

Note:

The tenor is 30 days from TSMC’s invoice date or determined by the payment terms granted to its clients by TSMC North America.

 

- 75 -

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

MARCH 31, 2019

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

 

 

Company Name

  

Related Party

  

Nature of Relationships

   Ending Balance
(Foreign Currencies
in Thousands) 		     Turnover Days
(Note 1) 		  

 

Overdue

   Amounts Received
in Subsequent
Period 		     Allowance for
Bad Debts 		 
   Amount      Action Taken

TSMC

  

TSMC North America

  

Subsidiary

   $ 64,417,163      51    $ 3,002,667      —    $ 28,508,965      $ —  
  

TSMC Nanjing

  

Subsidiary

     169,796      Note 2      —      —      —        —  
  

GUC

  

Associate

     165,739      26      —      —      —        —  

TSMC China

  

TSMC Nanjing

  

The same parent company

    

(RMB

31,685,280

6,906,572

 

) 

   Note 2      —      —      —        —  
  

TSMC

  

Parent company

    

(RMB

931,502

203,045

 

) 

   31      —      —      —        —  

TSMC Nanjing

  

TSMC

  

Parent company

    

(RMB

922,190

201,015

 

) 

   21      —      —      —        —  

WaferTech

  

TSMC

  

The ultimate parent of the Company

    

(USD

883,186

28,647

 

) 

   57     

(USD

469,207

15,229

 

) 

   —     

(USD

469,207

15,229

 

) 

     —  
  

TSMC Development

  

Parent company

    

(USD

181,608

5,891

 

) 

   Note 2      —      —      —        —  

TSMC Technology

  

TSMC

  

The ultimate parent of the Company

    

(USD

262,311

8,508

 

) 

   Note 2      —      —      —        —  

TSMC North America

  

GUC

  

Associate of TSMC

    

(USD

137,817

4,470

 

) 

   23      —      —      —        —  
  

TSMC

  

Parent company

    

(USD

107,865

3,499

 

) 

   Note 2     

(USD

577

19

 

) 

   —     

(USD

577

19

 

) 

     —  

TSMC Japan

  

TSMC

  

Parent company

    

(JPY

100,992

361,202

 

) 

   Note 2     

(JPY

18,908

67,242

 

) 

   —     

(JPY

18,908

67,242

 

) 

     —  

 

Note 1:

The calculation of turnover days excludes other receivables from related parties.

Note 2:

The ending balance is primarily consisted of other receivables, which is not applicable for the calculation of turnover days.

 

- 76 -

TABLE 8

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2019

(Amounts in Thousands of New Taiwan Dollars)

 

 

No.

  

Company Name

  

Counter Party

   Nature of
Relationship
(Note 1) 		  

Intercompany Transactions

 
  

Financial Statements Item

   Amount      Terms
(Note 2) 		   Percentage of
Consolidated Net Revenue
or Total Assets 		 

0

   TSMC    TSMC North America    1   

Net revenue from sale of goods

   $ 134,825,041      —      62%  
           

Receivables from related parties

     63,659,192      —      3%  
           

Other receivables from related parties

     757,971      —      —  
           

Payables to related parties

     107,865      —      —  
      TSMC Japan    1   

Payables to related parties

     100,992      —      —  
      TSMC Europe    1   

Marketing expenses - commission

     113,864      —      —  
      TSMC China    1   

Purchases

     3,337,467      —      2%  
           

Payables to related parties

     931,502      —      —  
      TSMC Nanjing    1   

Purchases

     2,734,150      —      1%  
           

Proceeds from disposal of property, plant and equipment

     366,863      —      —  
           

Other receivables from related parties

     169,796      —      —  
           

Payables to related parties

     922,190      —      —  
      TSMC Technology    1   

Research and development expenses

     593,317      —      —  
           

Payables to related parties

     262,311      —      —  
      WaferTech    1   

Purchases

     1,580,046      —      1%  
           

Payables to related parties

     883,186      —      —  

1

   TSMC China    TSMC Nanjing    3   

Other receivables from related parties

     31,685,280      —      1%  

2

   TSMC Development   

WaferTech

   3   

Other payables from related parties

     181,608      —      —  

 

Note 1:

No. 1 represents the transactions from parent company to subsidiary.

 

No. 3 represents the transactions between subsidiaries.

Note 2:

The sales prices and payment terms of intercompany sales are not significantly different from those to third parties. For other intercompany transactions, prices and terms are determined in accordance with mutual agreements.

 

- 77 -

TABLE 9

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA)

FOR THE THREE MONTHS ENDED MARCH 31, 2019

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

 

 

                Original Investment Amount     Balance as of March 31, 2019     Net Income    

Share of

Profits/Losses

     

Investor
Company

 

Investee

Company

 

Location

 

Main Businesses

and Products

  March 31,
2019
(Foreign
Currencies in
Thousands) 		    December 31,
2018
(Foreign
Currencies in
Thousands) 		    Shares (In
Thousands) 		    Percentage of
Ownership 		  Carrying
Value
(Foreign
Currencies in
Thousands) 		    (Losses) of the
Investee
(Foreign
Currencies in
Thousands) 		    of Investee
(Note 1)
(Foreign
Currencies in
Thousands) 		   

Note

TSMC

  TSMC Global   Tortola, British Virgin Islands   Investment activities   $

 

355,162,309

(Note 3

 

) 

  $ 355,162,309       11     100   $ 398,937,616     $ 2,887,393     $ 2,887,393     Subsidiary
  TSMC Partners   Tortola, British Virgin Islands  

Investing in companies involved in the design, manufacture, and other related business in the semiconductor industry and other investment activities

    31,456,130       31,456,130       988,268     100     53,079,089       471,097       471,097     Subsidiary
  VIS   Hsin-Chu, Taiwan  

Manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing and design service of masks

    10,180,677       10,180,677       464,223     28     9,402,933       1,387,527       391,724     Associate
  SSMC   Singapore  

Manufacturing and selling of integrated circuits and other semiconductor devices

    5,120,028       5,120,028       314     39     5,912,533       314,777       122,102     Associate
  VisEra Tech   Hsin-Chu, Taiwan  

Engaged in manufacturing electronic spare parts and in researching, developing, designing, manufacturing, selling, packaging and testing of color filter

    5,005,171       5,005,171       253,120     87     4,488,640       (49,791 )      (43,289 )    Subsidiary
  TSMC North America   San Jose, California, U.S.A  

Selling and marketing of integrated circuits and other semiconductor devices

    333,718       333,718       11,000     100     4,429,486       147,551       147,551     Subsidiary
  Xintec   Taoyuan, Taiwan  

Wafer level chip size packaging and wafer level post passivation interconnection service

    1,988,317       1,988,317       111,282     41     1,633,475       (326,144 )      (133,707 )    Associate
  GUC   Hsin-Chu, Taiwan  

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

    386,568       386,568       46,688     35     1,359,341       152,677       53,193     Associate
  TSMC Europe   Amsterdam, the Netherlands  

Customer service and supporting activities

    15,749       15,749       —     100     449,213       10,353       10,353     Subsidiary
  VTAF III  

Cayman Islands

 

Investing in new start-up technology companies

    1,309,772       1,308,244       —     98     200,844       (823 )      (806 )    Subsidiary
  TSMC Japan  

Yokohama, Japan

 

Customer service and supporting activities

    83,760       83,760       6     100     143,197       1,409       1,409     Subsidiary
  VTAF II  

Cayman Islands

 

Investing in new start-up technology companies

    260,300       278,800       —     98     110,381       (1,079 )      (1,057 )    Subsidiary
  TSMC Korea  

Seoul, Korea

 

Customer service and supporting activities

    13,656       13,656       80     100     40,817       449       449     Subsidiary
  TSMC Solar Europe GmbH  

Hamburg, Germany

 

Selling of solar related products and providing customer service

    —       25,266       —     —     —       —       —     Subsidiary

TSMC Partners

  TSMC Development  

Delaware, U.S.A

 

Investing in companies involved in the manufacturing related business in the semiconductor industry

   

(US$

18,095,323

586,939

 

) 

   

(US$

18,095,323

586,939

 

) 

    —     100    

(US$

29,579,313

959,433

 

) 

   

(US$

252,861

8,204

 

) 

    Note 2     Subsidiary
  TSMC Technology  

Delaware, U.S.A

 

Engineering support activities

   

(US$

440,315

14,282

 

) 

   

(US$

440,315

14,282

 

) 

    —     100    

(US$

621,626

20,163

 

) 

   

(US$

32,890

1,067

 

) 

    Note 2     Subsidiary
  TSMC Canada  

Ontario, Canada

 

Engineering support activities

   

(US$

70,909

2,300

 

) 

   

(US$

70,909

2,300

 

) 

    2,300     100    

(US$

215,264

6,982

 

) 

   

(US$

6,532

212

 

) 

    Note 2     Subsidiary
  ISDF  

Cayman Islands

 

Investing in new start-up technology companies

   

(US$

14,650

475

 

) 

   

(US$

14,650

475

 

) 

    583     97    

(US$

512

17

 

) 

    —       Note 2     Subsidiary
  ISDF II  

Cayman Islands

 

Investing in new start-up technology companies

    —       —       9,299     97     —       —       Note 2     Subsidiary

VTAF III

  Growth Fund  

Cayman Islands

 

Investing in new start-up technology companies

   

(US$

67,942

2,204

 

) 

   

(US$

66,401

2,154

 

) 

    —     100    

(US$

99,301

3,221

 

) 

   

(US$

(308

(10

) 

)) 

    Note 2     Subsidiary
  Mutual-Pak  

New Taipei, Taiwan

 

Manufacturing of electronic parts, wholesaling and retailing of electronic materials, and researching, developing and testing of RFID

   

(US$

49,123

1,593

 

) 

   

(US$

49,123

1,593

 

) 

    4,693     30    

(US$

28,176

914

 

) 

   

(US$

601

20

 

) 

    Note 2     Associate

(Continued)

 

- 78 -

                Original Investment Amount     Balance as of March 31, 2019     Net Income    

Share of

Profits/Losses

   

Investor
Company

 

Investee

Company

 

Location

 

Main Businesses

and Products

  March 31,
2019
(Foreign
Currencies in
Thousands) 		    December 31,
2018
(Foreign
Currencies in
Thousands) 		    Shares (In
Thousands) 		    Percentage of
Ownership 		  Carrying
Value
(Foreign
Currencies in
Thousands) 		    (Losses) of the
Investee
(Foreign
Currencies in
Thousands) 		    of Investee
(Note 1)
(Foreign
Currencies in
Thousands) 		 

Note

TSMC Development

  WaferTech   Washington, U.S.A  

Manufacturing, selling and testing of integrated circuits and other semiconductor devices

  $ —     $ —       293,637     100   $

(US$

4,731,190

153,461

 

) 

  $

(US$

122,437

3,973

 

) 

  Note 2   Subsidiary

 

Note 1:

The share of profits/losses of investee includes the effect of unrealized gross profit on intercompany transactions.

Note 2:

The share of profits/losses of the investee company is not reflected herein as such amount is already included in the share of profits/losses of the investor company.

Note 3:

To lower the hedging cost, in August 2018, the Board of Directors of TSMC approved to inject US$2,000,000 thousand of capital into TSMC Global. This project was approved by the Investment Commission, Ministry of Economic Affairs, R.O.C. (MOEA). The prepayment for investment was US$100,000 thousand as of March 31, 2019.

(Concluded)

 

- 79 -

TABLE 10

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

INFORMATION ON INVESTMENT IN MAINLAND CHINA

FOR THREE MONTHS ENDED MARCH 31, 2019

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

 

 

Investee Company

 

Main Businesses and

Products

  Total Amount of
Paid-in Capital
(RMB in
Thousands) 		    Method of
Investment 		  Accumulated
Outflow of
Investment from
Taiwan as of
January 1, 2019
(US$ in
Thousands) 		   

 

Investment

Flows

    Accumulated
Outflow of
Investment from
Taiwan as of
March 31,
2019 (US$ in
Thousands) 		    Net Income
(Losses) of the
Investee
Company 		    Percentage of
Ownership 		  Share of
Profits/Losses 		    Carrying
Amount
as of
March 31,
2019 		    Accumulated
Inward
Remittance of
Earnings as
of
March 31,
2019 		 
  Outflow
(US$ in
Thousands) 		    Inflow  

TSMC China

 

Manufacturing, selling, testing and computer-aided design of integrated circuits and other semiconductor devices

  $

(RMB

18,939,667

4,502,080

 

) 

  Note 1   $

(US$

18,939,667

596,000

 

) 

  $ —     $ —     $

(US$

18,939,667

596,000

 

) 

  $ 461,590     100%   $

 

493,415

(Note 2

 

) 

  $ 57,342,326     $ —  

TSMC Nanjing

 

Manufacturing, selling, testing and computer-aided design of integrated circuits and other semiconductor devices

   

(RMB

30,521,412

6,650,119

 

) 

  Note 1    

(US$

30,521,412

1,000,000

 

) 

    —       —      

(US$

30,521,412

1,000,000

 

) 

    (1,540,493 )    100%    

(1,330,016

(Note 2

) 

) 

    19,875,461       —  

 

Accumulated Investment in Mainland China
as of March 31, 2019
(US$ in Thousands) 		     Investment Amounts Authorized by
Investment Commission, MOEA
(US$ in Thousands) 		     Upper Limit on Investment
$

(US$

49,461,079

1,596,000

 

) 

   $

(US$

119,412,667

3,596,000

 

) 

   Note 3

 

Note 1:

TSMC directly invested US$596,000 thousand in TSMC China and US$1,000,000 thousands in TSMC Nanjing.

Note 2:

Amount was recognized based on the reviewed financial statements.

Note 3:

As the Company has obtained the certificate of being qualified for operating headquarters issued by Industrial Development Bureau, MOEA on August 2016, the upper limit on investment in mainland China pursuant to “Principle of investment or Technical Cooperation in Mainland China” is not applicable.

 

- 80 -

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