6-K 1 h02374e6vk.htm TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD
 
 
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 August 2008
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 þ           Form 40-F o
          (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 o                     No þ
(If “Yes” is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82: ___.)
 
 

 


 

Taiwan Semiconductor Manufacturing
Company Limited
Financial Statements for the
Six Months Ended June 30, 2008 and 2007 and
Independent Auditors’ Report

 


 

INDEPENDENT AUDITORS’ REPORT
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Limited
We have audited the accompanying balance sheets of Taiwan Semiconductor Manufacturing Company Limited as of June 30, 2008 and 2007, and the related statements of income, changes in shareholders’ equity and cash flows for the six months then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Taiwan Semiconductor Manufacturing Company Limited as of June 30, 2008 and 2007, and the results of its operations and its cash flows for the six months then ended in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, requirements of the Business Accounting Law and Guidelines Governing Business Accounting with respect to financial accounting standards, and accounting principles generally accepted in the Republic of China.
As discussed in Note 3 to the financial statements, effective January 1, 2008, Taiwan Semiconductor Manufacturing Company Limited adopted Interpretation 2007-052, “Accounting for Bonuses to Employees, Directors and Supervisors” issued by the Accounting Research and Development Foundation of the Republic of China and relevant requirements promulgated by the Financial Supervisory Commission of the Executive Yuan.

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We have also audited, in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China, the consolidated financial statements of Taiwan Semiconductor Manufacturing Company Limited and subsidiaries as of and for the six months ended June 30, 2008 and 2007, and expressed an unqualified opinion with an explanatory paragraph relating to the adoption of Interpretation 2007-052 and an unqualified opinion, respectively, on such consolidated financial statements.
July 10, 2008
Notice to Readers
The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.
For the convenience of readers, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

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Taiwan Semiconductor Manufacturing Company Limited
BALANCE SHEETS
JUNE 30, 2008 AND 2007
(In Thousands of New Taiwan Dollars, Except Par Value)
                                 
    2008     2007  
    Amount     %     Amount     %  
ASSETS                                
 
CURRENT ASSETS
                               
Cash and cash equivalents (Notes 2 and 4)
  $ 146,745,700       25     $ 143,256,382       23  
Financial assets at fair value through profit or loss (Notes 2 and 5)
    22,996             172,240        
Available-for-sale financial assets (Notes 2, 6 and 23)
    6,880,784       1       15,259,717       3  
Held-to-maturity financial assets (Notes 2 and 7)
    5,771,334       1       9,909,497       2  
Receivables from related parties (Note 24)
    24,139,822       4       20,675,167       3  
Notes and accounts receivable
    20,912,315       4       16,923,301       3  
Allowance for doubtful receivables (Notes 2 and 8)
    (687,619 )           (694,039 )      
Allowance for sales returns and others (Notes 2 and 8)
    (4,194,528 )     (1 )     (2,595,838 )      
Other receivables from related parties (Note 24)
    1,644,824             1,280,419        
Other financial assets
    417,822             545,717        
Inventories, net (Notes 2 and 9)
    20,816,966       4       21,677,958       3  
Deferred income tax assets (Notes 2 and 17)
    6,004,789       1       5,622,000       1  
Prepaid expenses and other current assets
    927,421             1,197,661        
 
                       
 
                               
Total current assets
    229,402,626       39       233,230,182       38  
 
                       
 
                               
LONG-TERM INVESTMENTS (Notes 2, 6, 7, 10, 11 and 23)
                               
Investments accounted for using equity method
    106,640,304       18       105,071,276       17  
Available-for-sale financial assets
                4,518,721       1  
Held-to-maturity financial assets
    7,240,785       1       20,788,140       3  
Financial assets carried at cost
    747,521             747,218        
 
                       
 
                               
Total long-term investments
    114,628,610       19       131,125,355       21  
 
                       
 
                               
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 12 and 24)
                               
Cost
                               
Buildings
    103,267,057       17       99,707,179       16  
Machinery and equipment
    618,319,896       104       550,470,017       89  
Office equipment
    9,477,430       2       8,908,044       1  
 
                       
 
    731,064,383       123       659,085,240       106  
Accumulated depreciation
    (520,741,784 )     (87 )     (452,483,898 )     (73 )
Advance payments and construction in progress
    26,550,147       4       31,434,579       5  
 
                       
 
                               
Net property, plant and equipment
    236,872,746       40       238,035,921       38  
 
                       
 
                               
INTANGIBLE ASSETS
                               
Goodwill (Note 2)
    1,567,756             1,567,756        
Deferred charges, net (Notes 2 and 13)
    7,068,055       1       5,179,415       1  
 
                       
 
                               
Total intangible assets
    8,635,811       1       6,747,171       1  
 
                       
 
                               
OTHER ASSETS
                               
Deferred income tax assets (Notes 2 and 17)
    4,724,630       1       8,489,812       1  
Refundable deposits
    2,722,875             2,552,561       1  
Others (Note 2)
    281,402             64,278        
 
                       
 
                               
Total other assets
    7,728,907       1       11,106,651       2  
 
                       
 
                               
TOTAL
  $ 597,268,700       100     $ 620,245,280       100  
 
                       
 
LIABILITIES AND SHAREHOLDERS’ EQUITY                                
 
CURRENT LIABILITIES
                               
Financial liabilities at fair value through profit or loss (Notes 2 and 5)
  $ 115,320           $ 3,460        
Accounts payable
    8,734,095       2       7,497,105       1  
Payables to related parties (Note 24)
    2,486,070             3,108,623       1  
Income tax payable (Notes 2 and 17)
    5,718,520       1       4,410,166       1  
Cash dividends payable (Note 19)
    76,881,311       13       77,489,064       12  
Bonuses payable to employees and directors (Notes 3 and 19)
    12,753,706       2       4,572,798       1  
Payables to contractors and equipment suppliers
    8,614,287       1       16,515,598       3  
Accrued expenses and other current liabilities (Note 15)
    19,154,139       4       9,835,302       1  
Current portion of bonds payable (Note 14)
    8,000,000       1       4,500,000       1  
 
                       
 
                               
Total current liabilities
    142,457,448       24       127,932,116       21  
 
                       
 
                               
LONG-TERM LIABILITIES
                               
Bonds payable (Note 14)
    4,500,000       1       12,500,000       2  
Other long-term payables (Note 15)
    1,005,988             1,343,935        
 
                       
 
                               
Total long-term liabilities
    5,505,988       1       13,843,935       2  
 
                       
 
                               
OTHER LIABILITIES
                               
Accrued pension cost (Notes 2 and 16)
    3,691,624       1       3,583,542       1  
Guarantee deposits (Note 26)
    1,704,666             3,001,515        
Deferred credits (Notes 2 and 24)
    668,408             997,610        
 
                       
 
                               
Total other liabilities
    6,064,698       1       7,582,667       1  
 
                       
 
                               
Total liabilities
    154,028,134       26       149,358,718       24  
 
                       
 
                               
CAPITAL STOCK — $10 PAR VALUE (Note 19)
                               
Authorized: 28,050,000 thousand shares in 2008
28,050,000 thousand shares in 2007
                               
Issued: 25,631,371 thousand shares in 2008
26,423,517 thousand shares in 2007
    256,313,709       43       264,235,168       43  
To be issued
    5,221,238       1              
 
                       
 
                               
 
    261,534,947       44       264,235,168       43  
 
                       
 
                               
CAPITAL SURPLUS (Notes 2 and 19)
    50,916,645       9       53,725,604       8  
 
                       
 
                               
RETAINED EARNINGS (Note 19)
                               
Appropriated as legal capital reserve
    67,324,393       11       56,406,684       9  
Appropriated as special capital reserve
    391,857             629,550        
Unappropriated earnings
    84,236,793       14       96,973,825       16  
 
                       
 
                               
 
    151,953,043       25       154,010,059       25  
 
                       
 
                               
OTHERS (Notes 2, 21 and 23)
                               
Cumulative translation adjustments
    (6,787,320 )     (1 )     (613,674 )      
Unrealized gain on financial instruments
    468,749             447,480        
Treasury stock: 250,770 thousand shares in 2008
34,096 thousand shares in 2007
    (14,845,498 )     (3 )     (918,075 )      
 
                       
 
                               
 
    (21,164,069 )     (4 )     (1,084,269 )      
 
                       
 
                               
Total shareholders’ equity
    443,240,566       74       470,886,562       76  
 
                       
 
                               
TOTAL
  $ 597,268,700       100     $ 620,245,280       100  
 
                       
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated July 10, 2008)

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Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
                                 
    2008     2007  
    Amount     %     Amount     %  
GROSS SALES (Notes 2 and 24)
  $ 173,877,093             $ 138,166,350          
 
                               
SALES RETURNS AND ALLOWANCES (Notes 2 and 8)
    3,052,847               1,967,831          
 
                           
 
                               
NET SALES
    170,824,246       100       136,198,519       100  
 
                               
COST OF SALES (Notes 18 and 24)
    94,108,599       55       81,342,396       60  
 
                       
 
                               
GROSS PROFIT
    76,715,647       45       54,856,123       40  
 
                               
UNREALIZED GROSS PROFIT FROM AFFILIATES (Note 2)
    130,977             178,259        
 
                       
 
                               
REALIZED GROSS PROFIT
    76,584,670       45       54,677,864       40  
 
                       
 
                               
OPERATING EXPENSES (Notes 18 and 24)
                               
Research and development
    9,874,836       6       7,279,536       5  
General and administrative
    5,171,447       3       3,436,220       2  
Marketing
    1,261,930       1       705,335       1  
 
                       
 
                               
Total operating expenses
    16,308,213       10       11,421,091       8  
 
                       
 
                               
INCOME FROM OPERATIONS
    60,276,457       35       43,256,773       32  
 
                       
 
                               
NON-OPERATING INCOME AND GAINS
                               
Valuation gain on financial instruments, net (Notes 2, 5 and 23)
    1,737,652       1              
Interest income
    1,441,583       1       1,447,702       1  
Equity in earnings of equity method investees, net (Notes 2 and 10)
    946,787       1       1,983,358       2  
Settlement income (Note 26)
    456,195             491,385       1  
Gain on settlement and disposal of financial assets, net (Notes 2, 5 and 23)
    391,888             233,970        
Technical service income (Notes 24 and 26)
    364,485             353,441        
Gain on disposal of property, plant and equipment and other assets (Notes 2 and 24)
    153,449             144,800        
Foreign exchange gain, net (Note 2)
                214,508        
Others (Note 24)
    314,240             488,028        
 
                       
 
                               
Total non-operating income and gains
    5,806,279       3       5,357,192       4  
 
                       
(Continued)

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Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
                                 
    2008     2007  
    Amount     %     Amount     %  
NON-OPERATING EXPENSES AND LOSSES
                               
Foreign exchange loss, net (Note 2)
  $ 1,790,609       1     $        
Provision for litigation loss (Note 26h)
    459,078                    
Interest expense
    177,500             300,973        
Valuation loss on financial instruments, net (Notes 2, 5 and 23)
                579,646       1  
Others
    47,052             29,957        
 
                       
 
                               
Total non-operating expenses and losses
    2,474,239       1       910,576       1  
 
                       
 
                               
INCOME BEFORE INCOME TAX
    63,608,497       37       47,703,389       35  
 
                               
INCOME TAX EXPENSE (Notes 2 and 17)
    6,694,609       4       3,380,808       2  
 
                       
 
                               
NET INCOME
  $ 56,913,888       33     $ 44,322,581       33  
 
                       
                                 
    2008     2007  
    Before     After     Before     After  
    Income     Income     Income     Income  
    Tax     Tax     Tax     Tax  
EARNINGS PER SHARE (NT$, Note 22)
                               
Basic earnings per share
  $ 2.49     $ 2.22     $ 1.81     $ 1.68  
 
                       
Diluted earnings per share
  $ 2.48     $ 2.22     $ 1.81     $ 1.68  
 
                       
Certain pro forma information (after income tax) is shown as follows, based on the assumption that the Company’s stock held by subsidiaries is treated as available-for-sale financial assets instead of treasury stock (Notes 2 and 21):
                 
    2008     2007  
NET INCOME
  $ 57,016,167     $ 44,424,343  
 
           
 
               
EARNINGS PER SHARE (NT$)
               
Basic earnings per share
  $ 2.23     $ 1.68  
 
           
Diluted earnings per share
  $ 2.22     $ 1.68  
 
           
The accompanying notes are an integral part of the financial statements.
     
(With Deloitte & Touche audit report dated July 10, 2008)   (Concluded)

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Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
                                                                                                         
                                                                            Others        
                                            Retained Earnings             Unrealized                
    Capital Stock - Common Stock     To Be Issued             Legal     Special                     Cumulative     Gain (Loss) on             Total  
    Shares (in             Shares (in             Capital     Capital     Capital     Unappropriated             Translation     Financial     Treasury     Shareholders’  
    Thousands)     Amount     Thousands)     Amount     Surplus     Reserve     Reserve     Earnings     Total     Adjustments     Instruments     Stock     Equity  
BALANCE, JANUARY 1, 2008
    26,427,104     $ 264,271,037           $     $ 53,732,682     $ 56,406,684     $ 629,550     $ 161,828,337     $ 218,864,571     $ (1,072,853 )   $ 680,997     $ (49,385,032 )   $ 487,091,402  
 
                                                                                                       
Appropriations of prior year’s earnings
                                                                                                       
Legal capital reserve
                                  10,917,709             (10,917,709 )                              
Reversal of special capital reserve
                                        (237,693 )     237,693                                
Bonus to employees — in cash
                                              (3,939,883 )     (3,939,883 )                       (3,939,883 )
Bonus to employees — in stock
                393,988       3,939,883                         (3,939,883 )     (3,939,883 )                        
Cash dividends to shareholders — NT$3.00 per share
                                              (76,881,311 )     (76,881,311 )                       (76,881,311 )
Stock dividends to shareholders — NT$0.02 per share
                51,254       512,542                         (512,542 )     (512,542 )                        
Bonus to directors
                                              (176,890 )     (176,890 )                       (176,890 )
Capital surplus transferred to capital stock
                76,881       768,813       (768,813 )                                                
Net income for the six months ended June 30, 2008
                                              56,913,888       56,913,888                         56,913,888  
Adjustment arising from changes in percentage of ownership in equity method investees
                            (186,344 )                                               (186,344 )
Translation adjustments
                                                          (5,714,467 )                 (5,714,467 )
Issuance of stock from exercising stock options
    4,267       42,672                   128,891                                                 171,563  
Cash dividends received by subsidiaries from the Company
                            102,279                                                 102,279  
Valuation loss on available-for-sale financial assets
                                                                (264,247 )           (264,247 )
Equity in the valuation gain on available-for-sale financial assets held by equity method investees
                                                                51,999             51,999  
Treasury stock retired
    (800,000 )     (8,000,000 )                 (2,092,050 )                 (38,374,907 )     (38,374,907 )                 48,466,957        
Treasury stock repurchased by the company
                                                                      (13,927,423 )     (13,927,423 )
 
                                                                             
 
                                                                                                       
BALANCE, JUNE 30, 2008
    25,631,371     $ 256,313,709       522,123     $ 5,221,238     $ 50,916,645     $ 67,324,393     $ 391,857     $ 84,236,793     $ 151,953,043     $ (6,787,320 )   $ 468,749     $ (14,845,498 )   $ 443,240,566  
 
                                                                             
 
                                                                                                       
BALANCE, JANUARY 1, 2007
    25,829,688     $ 258,296,879           $     $ 54,107,498     $ 43,705,711     $ 640,742     $ 152,778,079     $ 197,124,532     $ (1,191,165 )   $ 561,615     $ (918,075 )   $ 507,981,284  
 
                                                                                                       
Appropriations of prior year’s earnings
                                                                                                       
Legal capital reserve
                                  12,700,973             (12,700,973 )                              
Reversal of special capital reserve
                                        (11,192 )     11,192                                
Bonus to employees — in cash
                                              (4,572,798 )     (4,572,798 )                       (4,572,798 )
Bonus to employees — in stock
    457,280       4,572,798                                     (4,572,798 )     (4,572,798 )                        
Cash dividends to shareholders — NT$3.00 per share
                                              (77,489,064 )     (77,489,064 )                       (77,489,064 )
Stock dividends to shareholders — NT$0.02 per share
    51,659       516,594                                     (516,594 )     (516,594 )                        
Bonus to directors and supervisors
                                              (285,800 )     (285,800 )                       (285,800 )
Capital surplus transferred to capital stock
    77,489       774,891                   (774,891 )                                                
Net income for the six months ended June 30, 2007
                                              44,322,581       44,322,581                         44,322,581  
Adjustment arising from changes in percentage of ownership in equity method investees
                            68,411                                                 68,411  
Translation adjustments
                                                          577,491                   577,491  
Issuance of stock from exercising stock options
    7,401       74,006                   222,824                                                 296,830  
Cash dividends received by subsidiaries from the Company
                            101,762                                                 101,762  
Valuation loss on available-for-sale financial assets
                                                                (83,408 )           (83,408 )
Equity in the valuation loss on available-for-sale financial assets held by equity method investees
                                                                (30,727 )           (30,727 )
 
                                                                             
 
                                                                                                       
BALANCE, JUNE 30, 2007
    26,423,517     $ 264,235,168           $     $ 53,725,604     $ 56,406,684     $ 629,550     $ 96,973,825     $ 154,010,059     $ (613,674 )   $ 447,480     $ (918,075 )   $ 470,886,562  
 
                                                                             
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated July 10, 2008)

- 6 -


 

Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(In Thousands of New Taiwan Dollars)
                 
    2008     2007  
CASH FLOWS FROM OPERATING ACTIVITIES
               
Net income
  $ 56,913,888     $ 44,322,581  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    36,227,938       36,293,514  
Unrealized gross profit from affiliates
    130,977       178,259  
Amortization of premium/ discount of financial assets
    (51,144 )     (64,051 )
Gain on disposal of available-for-sale financial assets, net
    (391,218 )     (233,970 )
Gain on disposal of financial assets carried at cost, net
    (670 )      
Equity in earnings of equity method investees, net
    (946,787 )     (1,983,358 )
Dividends received from equity method investees
    589,071        
Gain on disposal of property, plant and equipment and other assets, net
    (153,449 )     (142,673 )
Deferred income tax
    1,780,514       (518,685 )
Changes in operating assets and liabilities:
               
Decrease (increase) in:
               
Financial assets and liabilities at fair value through profit or loss
    (113,239 )     (134,930 )
Receivables from related parties
    2,561,826       (3,805,658 )
Notes and accounts receivable
    (3,000,987 )     (645,137 )
Allowance for doubtful receivables
    (1,353 )     3,108  
Allowance for sales returns and others
    337,843       (155,227 )
Other receivables from related parties
    222,924       (145,024 )
Other financial assets
    (86,124 )     107,743  
Inventories
    170,176       (2,525,744 )
Prepaid expenses and other current assets
    (65,956 )     23,538  
Increase (decrease) in:
               
Accounts payable
    (751,723 )     1,353,426  
Payables to related parties
    (513,560 )     (218,293 )
Income tax payable
    (5,259,443 )     (3,440,252 )
Bonuses payable to employees and directors
    8,636,933        
Accrued expenses and other current liabilities
    302,852       1,421,840  
Accrued pension cost
    33,945       53,426  
Deferred credits
    (47,873 )     (47,872 )
 
           
 
               
Net cash provided by operating activities
    96,525,361       69,696,561  
 
           
 
               
CASH FLOWS FROM INVESTING ACTIVITIES
               
Acquisitions of:
               
Available-for-sale financial assets
    (4,300,000 )     (2,151,252 )
Held-to-maturity financial assets
    (549,455 )      
Financial assets carried at cost
    (1,142 )     (34,375 )
Investments accounted for using equity method
    (301,607 )     (2,054,634 )
Property, plant and equipment
    (36,086,150 )     (38,511,341 )
Proceeds from disposal or redemption of:
               
Financial assets carried at cost
    2,451        
Available-for-sale financial assets
    21,235,748       15,163,560  
Held-to-maturity financial assets
    7,788,000       6,825,120  
Property, plant and equipment and other assets
    1,764,920       4,787  
(Continued)

- 7 -


 

Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(In Thousands of New Taiwan Dollars)
                 
    2008     2007  
Proceeds from return of capital by investees
  $ 114,255     $ 44,258  
Increase in deferred charges
    (1,854,102 )     (1,322,268 )
Decrease (increase) in refundable deposits
    18,663       (1,246,327 )
 
           
 
               
Net cash used in investing activities
    (12,168,419 )     (23,282,472 )
 
           
 
               
CASH FLOWS FROM FINANCING ACTIVITIES
               
Repayment of long-term bonds payable
          (2,500,000 )
Decrease in guarantee deposits
    (536,011 )     (808,446 )
Proceeds from exercise of employee stock options
    171,563       296,830  
Bonus to directors and supervisors
          (285,800 )
Repurchase of treasury stock
    (9,668,896 )      
 
           
 
               
Net cash used in financing activities
    (10,033,344 )     (3,297,416 )
 
           
 
               
NET INCREASE IN CASH AND CASH EQUIVALENTS
    74,323,598       43,116,673  
 
               
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    72,422,102       100,139,709  
 
           
 
               
CASH AND CASH EQUIVALENTS, END OF PERIOD
  $ 146,745,700     $ 143,256,382  
 
           
 
               
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
               
Interest paid
  $ 355,000     $ 420,000  
 
           
Income tax paid
  $ 10,105,861     $ 7,330,375  
 
           
 
               
INVESTING ACTIVITIES AFFECTING BOTH CASH AND NON-CASH ITEMS
               
Acquisition of property, plant and equipment
  $ 39,310,697     $ 44,357,416  
Increase in payables to contractors and equipment suppliers
    (3,224,547 )     (5,846,075 )
 
           
Cash paid
  $ 36,086,150     $ 38,511,341  
 
           
 
               
Disposal of property, plant and equipment and other assets
  $ 1,901,048     $ 7,313  
Increase in other payables to related parties
    (136,128 )     (2,526 )
 
           
Cash received
  $ 1,764,920     $ 4,787  
 
           
 
               
Repurchase of treasury stock
  $ 13,927,423     $  
Increase in accrued expenses and other current liabilities
    (4,258,527 )      
 
           
Cash paid
  $ 9,668,896     $  
 
           
 
               
NON-CASH FINANCING ACTIVITIES
               
Current portion of bonds payable
  $ 8,000,000     $ 4,500,000  
 
           
Current portion of other long-term payables (under accrued expenses and other current liabilities)
  $ 2,012,071     $ 2,433,227  
 
           
     The accompanying notes are an integral part of the financial statements.
     
(With Deloitte & Touche audit report dated July 10, 2008)   (Concluded)

- 8 -


 

Taiwan Semiconductor Manufacturing Company Limited
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
1.   GENERAL
 
    Taiwan Semiconductor Manufacturing Company Limited (the “Company” or “TSMC”), a Republic of China (R.O.C.) corporation, was incorporated on February 21, 1987 as a venture among the Government of the R.O.C., acting through the Development Fund of the Executive Yuan; Philips Electronics N.V. and certain of its affiliates (Philips); and certain other private investors. On September 5, 1994, its shares were listed on the Taiwan Stock Exchange (TSE). On October 8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form of American Depositary Shares (ADSs).
 
    The Company is a dedicated foundry in the semiconductor industry which engaged mainly in the manufacturing, selling, packaging, testing and computer-aided designing of integrated circuits and other semiconductor devices and the manufacturing of masks.
 
    As of June 30, 2008 and 2007, the Company had 20,835 and 20,572 employees, respectively.
 
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
    The financial statements are presented in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, Business Accounting Law, Guidelines Governing Business Accounting, and accounting principles generally accepted in the R.O.C.
 
    For the convenience of readers, the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the R.O.C. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language financial statements shall prevail.
 
    Significant accounting policies are summarized as follows:
 
    Use of Estimates
 
    The preparation of financial statements in conformity with the aforementioned guidelines, law and principles requires management to make reasonable assumptions and estimates of matters that are inherently uncertain. The actual results may differ from management’s estimates.
 
    Classification of Current and Noncurrent Assets and Liabilities
 
    Current assets are assets held for trading purposes and assets expected to be converted to cash, sold or consumed within one year from the balance sheet date. Current liabilities are obligations incurred for trading purposes and obligations expected to be settled within one year from the balance sheet date. Assets and liabilities that are not classified as current are noncurrent assets and liabilities, respectively.
 
    Cash Equivalents
 
    Repurchase agreements collateralized by government bonds, repurchase agreements collaterized by short-term notes and asset-backed commercial papers acquired with maturities of less than three months from the date of purchase are classified as cash equivalents. The carrying amount approximates fair value.

- 9 -


 

    Financial Assets/Liabilities at Fair Value Through Profit or Loss
 
    Derivatives that do not meet the criteria for hedge accounting are initially recognized at fair value, with transaction costs expensed as incurred. The derivatives are remeasured at fair value subsequently with changes in fair value recognized in earnings. A regular way purchase or sale of financial assets is accounted for using settlement date accounting.
 
    Fair value is estimated using valuation techniques incorporating estimates and assumptions that are consistent with prevailing market conditions. When the fair value is positive, the derivative is recognized as a financial asset; when the fair value is negative, the derivative is recognized as a financial liability.
 
    Available-for-sale Financial Assets
 
    Available-for-sale financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Changes in fair value from subsequent remeasurement are reported as a separate component of shareholders’ equity. The corresponding accumulated gains or losses are recognized in earnings when the financial asset is derecognized from the balance sheet. A regular way purchase or sale of financial assets is accounted for using settlement date accounting.
 
    The fair value of structured time deposits is estimated using valuation techniques. Fair value of open-end mutual funds is determined using the net assets value at the end of the period. For debt securities, fair value is determined using the average of bid and asked prices at the end of the period.
 
    Any difference between the initial carrying amount of a debt security and the amount due at maturity is amortized using the effective interest method, with the amortization recognized in earnings.
 
    If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in a subsequent period, the amount of the impairment loss decreases, for equity securities, the previously recognized impairment loss is reversed to the extent of the decrease and recorded as an adjustment to shareholders’ equity; for debt securities, the amount of the decrease is recognized in earnings, provided that the decrease is clearly attributable to an event which occurred after the impairment loss was recognized.
 
    Held-to-maturity Financial Assets
 
    Debt securities for which the Company has a positive intention and ability to hold to maturity are categorized as held-to-maturity financial assets and are carried at amortized cost under the effective interest method except for structured time deposits which are carried at acquisition cost. Those financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Gains or losses are recognized at the time of derecognition, impairment or amortization. A regular way purchase or sale of financial assets is accounted for using settlement date accounting.
 
    If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in a subsequent period, the amount of the impairment loss decreases and the decrease is clearly attributable to an event which occurred after the impairment loss was recognized, the previously recognized impairment loss is reversed to the extent of the decrease. The reversal may not result in a carrying amount that exceeds the amortized cost that would have been determined as if no impairment loss had been recognized.
 
    Allowance for Doubtful Receivables
 
    An allowance for doubtful receivables is provided based on a review of the collectibility of notes and accounts receivable. The Company determines the amount of the allowance for doubtful receivables by examining the aging analysis of outstanding notes and accounts receivable and current trends in the credit quality of its customers as well as its internal credit policies.

- 10 -


 

    Revenue Recognition and Allowance for Sales Returns and Others
 
    The Company recognizes revenue when evidence of an arrangement exists, the rewards of ownership and significant risk of the goods has been transferred to the buyer, price is fixed or determinable, and collectibility is reasonably assured. Provisions for estimated sales returns and others are recorded in the period the related revenue is recognized, based on historical experience, management’s judgment, and any known factors that would significantly affect the allowance.
 
    Sales prices are determined using fair value taking into account related sales discounts agreed to by the Company and its customers. Sales agreements typically provide that payment is due 30 days from invoice date for a majority of the customers and 30 to 45 days after the end of the month in which sales occur for some customers. Since the receivables from sales are collectible within one year and such transactions are frequent, fair value of the receivables is equivalent to the nominal amount of the cash to be received.
 
    Inventories
 
    Inventories are stated at the lower of cost or market value. Inventories are recorded at standard cost and adjusted to the approximate weighted-average cost at the balance sheet date. Market value represents replacement cost for raw materials, supplies and spare parts and net realizable value for work in process and finished goods. The Company assesses the impact of changing technology on its inventories on hand and writes off inventories that are considered obsolete. Period-end inventories are evaluated for estimated excess quantities and obsolescence based on a demand forecast within a specific time horizon, which is generally 180 days or less. Estimated losses on scrap and slow-moving items are recognized and included in the allowance for losses.
 
    Investments Accounted for Using Equity Method
 
    Investments in companies wherein the Company exercises significant influence over the operating and financial policy decisions are accounted for using the equity method. The Company’s share of the net income or net loss of an investee is recognized in the “equity in earnings/losses of equity method investees, net” account. Effective January 1, 2006, pursuant to the revised Statement of Financial Accounting Standards No. 5, “Long-term Investments Accounted for Using the Equity Method”, the cost of an investment shall be analyzed and the cost of investment in excess of the fair value of identifiable net assets acquired, representing goodwill, shall not be amortized. If the fair value of identifiable net assets acquired exceeds the cost of investment, the excess shall be proportionately allocated as reductions to fair values of non-current assets (except for financial assets other than investments accounted for using the equity method and deferred income tax assets). The accounting treatment for the investment premiums paid before January 1, 2006 is the same as that for goodwill which is no longer being amortized; while investment discounts continue to be amortized over the remaining periods. When an indication of impairment is identified, the carrying amount of the investment is reduced, with the related impairment loss recognized in earnings.
 
    When the Company subscribes for additional investee’s shares at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment in the investee differs from the amount of the Company’s share of the investee’s equity. The Company records such a difference as an adjustment to long-term investments with the corresponding amount charged or credited to capital surplus.
 
    Gains or losses on sales from the Company to equity method investees are deferred in proportion to the Company’s ownership percentages in the investees until such gains or losses are realized through transactions with third parties. The entire amount of the gains or losses on sales to investees over which the Company has a controlling interest is deferred until such gains or losses are realized through subsequent sales of the related products to third parties. Gains or losses on sales from equity method investees to the Company are deferred in proportion to the Company’s ownership percentages in the investees until they are realized through transactions with third parties. Gains or losses on sales between equity method investees over each of which the Company has control are deferred in proportion to the Company’s weighted-average ownership percentage in the investee which records gains or losses. In transactions between equity method

- 11 -


 

    investees over either or both of which the Company has no control, gains or losses on sales are deferred in proportion to the multiplication of the Company’s weighted-average ownership percentages in the investees. Such gains or losses are recorded until they are realized through transactions with third parties.
 
    If an investee’s functional currency is a foreign currency, differences will result from the translation of the investee’s financial statements into the reporting currency of the Company. Such differences are charged or credited to cumulative translation adjustments, a separate component of shareholders’ equity.
 
    Financial Assets Carried at Cost
 
    Investments for which the Company does not exercise significant influence and that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, such as non-publicly traded stocks and mutual funds, are carried at their original cost. The costs of non-publicly traded stocks and mutual funds are determined using the weighted-average method. If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. A subsequent reversal of such impairment loss is not allowed.
 
    Cash dividends are recognized as investment income upon resolution of shareholders of an investee but are accounted for as a reduction to the original cost of investment if such dividends are declared on the earnings of the investee attributable to the period prior to the purchase of the investment. Stock dividends are recorded as an increase in the number of shares held and do not affect investment income. The cost per share is recalculated based on the new total number of shares.
 
    Property, Plant and Equipment, Assets Leased to Others and Idle Assets
 
    Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation. When an indication of impairment is identified, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, net of depreciation, as if no impairment loss had been recognized. Significant additions, renewals and betterments incurred during the construction period are capitalized. Maintenance and repairs are expensed as incurred.
 
    Depreciation is computed using the straight-line method over the following estimated service lives: buildings — 10 to 20 years; machinery and equipment — 5 years; and office equipment — 3 to 5 years.
 
    Upon sale or disposal of property, plant and equipment and assets leased to others, the related cost and accumulated depreciation are deducted from the corresponding accounts, with any gain or loss recorded as non-operating gains or losses in the period of sale or disposal.
 
    When property, plant and equipment are determined to be idle or useless, they are transferred to idle assets at the lower of the net realizable value or carrying amount. Depreciation on the idle assets is provided continuously, and the idle assets are tested for impairment on a periodical basis.
 
    Intangible Assets
 
    Goodwill represents the excess of the consideration paid for acquisition over the fair value of identifiable net assets acquired. Prior to January 1, 2006, goodwill was amortized using the straight-line method over the estimated life of 10 years. Effective January 1, 2006, pursuant to the newly revised Statement of Financial Accounting Standards No. 25, “Business Combinations — Accounting Treatment under Purchase Method”, goodwill is no longer amortized and instead is tested for impairment annually. If an event occurs or circumstances change which indicated that the fair value of goodwill is more likely than not below its carrying amount, an impairment loss is recognized. A subsequent reversal of such impairment loss is not allowed.

- 12 -


 

    Deferred charges consist of technology license fees, software and system design costs and other charges. The amounts are amortized over the following periods: Technology license fees — the shorter of the estimated life of the technology or the term of the technology transfer contract; software and system design costs and other charges — 3 years. When an indication of impairment is identified, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the previously recognized impairment loss would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, net of amortization, as if no impairment loss had been recognized.
 
    Expenditures related to research activities and those related to development activities that do not meet the criteria for capitalization are charged to expenses when incurred.
 
    Pension Costs
 
    For employees who participate in defined contribution pension plans, pension costs are recorded based on the actual contributions made to employees’ individual pension accounts during their service periods. For employees who participate in defined benefit pension plans, pension costs are recorded based on actuarial calculations.
 
    Income Tax
 
    The Company applies an inter-period allocation for its income tax whereby deferred income tax assets and liabilities are recognized for the tax effects of temporary differences and unused tax credits. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified as current or noncurrent in accordance with the classification of its related asset or liability. However, if a deferred tax asset or liability does not relate to an asset or liability in the financial statements, then it is classified as either current or noncurrent based on the expected length of time before it is realized or settled.
 
    Any tax credits arising from purchases of machinery, equipment and technology, research and development expenditures, personnel training expenditures, and investments in important technology-based enterprises are recognized using the flow-through method.
 
    Adjustments of prior years’ tax liabilities are added to or deducted from the current period’s tax provision.
 
    Income tax on unappropriated earnings at a rate of 10% is expensed in the year of shareholder approval which is the year subsequent to the year the earnings are generated.
 
    Stock-based Compensation
 
    Employee stock options that were granted or modified in the period from January 1, 2004 to December 31, 2007 are accounted for by the interpretations issued by the Accounting Research and Development Foundation of the Republic of China. The Company adopted the intrinsic value method and any compensation cost determined using this method is recognized in earnings over the employee vesting period. Employee stock option plans that were granted or modified after December 31, 2007 are accounted for using fair value method in accordance with Statement of Financial Accounting Standards No. 39, “Accounting for Share-based Payment”. The Company did not grant or modify employee stock options since January 1, 2008.
 
    Treasury Stock
 
    Treasury stock is stated at cost and shown as a deduction in shareholders’ equity. When the Company retires treasury stock, the treasury stock account is reduced and the common stock as well as the capital surplus — additional paid-in capital are reversed on a pro rata basis. When the book value of the treasury stock exceeds the sum of the par value and additional paid-in capital, the difference is charged to capital surplus — treasury stock transactions and to retained earnings for any remaining amount.

- 13 -


 

    The Company’s stock held by its subsidiaries is treated as treasury stock and reclassified from investments accounted for using equity method to treasury stock. The gains resulted from disposal of the treasury stock held by subsidiaries and cash dividends received by subsidiaries from the Company are recorded under capital surplus — treasury stock transactions.
 
    Foreign-currency Transactions
 
    Foreign-currency transactions are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur. Exchange gains or losses derived from foreign-currency transactions or monetary assets and liabilities denominated in foreign currencies are recognized in earnings.
 
    At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are revalued at prevailing exchange rates with the resulting gains or losses recognized in earnings.
 
    Recent Accounting Pronouncements
 
    The Accounting Research and Development Foundation (ARDF) of the R.O.C. revised Statement of Financial Accounting Standards No. 10, “Accounting for Inventories” (SFAS No. 10) in November 2007, which requires inventories to be stated at the lower of cost or net realizable value item by item. Inventories are recorded by the specific identification method, first-in, first-out method or weighted average method. The last-in, first-out method is no longer permitted. The revised SFAS No. 10 should be applied to financial statements for the fiscal years beginning on or after January 1, 2009. Early adoption is permitted.
 
    Reclassification
 
    Certain accounts in the financial statements as of and for the six months ended June 30, 2007 have been reclassified to be consistent with the financial statements as of and for the six months ended June 30, 2008.
 
3.   ACCOUNTING CHANGES
 
    Effective January 1, 2008, the Company adopted Interpretation 2007-052, “Accounting for Bonuses to Employees, Directors and Supervisors” issued in March 2007 by the ARDF, which requires companies to record bonuses paid to employees, directors and supervisors as an expense rather than as an appropriation of earnings. The adoption of this interpretation resulted in a decrease in net income and earnings per share (after income tax) of NT$7,194,657 thousand and NT$0.28, respectively, for the six months ended June 30, 2008.
 
    Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 39, “Accounting for Share-based Payment”, which requires companies to record share-based payment transactions in the financial statements at fair value. Such a change in accounting principle did not have any effect on the Company’s financial statements as of and for the six months ended June 30, 2008.
 
4.   CASH AND CASH EQUIVALENTS
                 
    June 30  
    2008     2007  
Cash and deposits in banks
  $ 130,545,705     $ 84,229,386  
Repurchase agreements collaterized by government bonds
    12,229,689       58,429,635  
Repurchase agreements collaterized by short-term notes
    3,970,306        
Asset-backed commercial papers
          597,361  
 
           
 
               
 
  $ 146,745,700     $ 143,256,382  
 
           

- 14 -


 

5.   FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
                 
    June 30  
    2008     2007  
Derivatives — financial assets
               
 
               
Forward exchange contracts
  $     $ 15,335  
Cross currency swap contracts
    22,996       156,905  
 
           
 
               
 
  $ 22,996     $ 172,240  
 
           
 
               
Derivatives — financial liabilities
               
 
               
Forward exchange contracts
  $ 112,709     $ 3,460  
Cross currency swap contracts
    2,611        
 
           
 
               
 
  $ 115,320     $ 3,460  
 
           
    The Company entered into derivative contracts during the six months ended June 30, 2008 and 2007 to manage exposures due to fluctuations of foreign exchange rates. The derivative contracts entered into by the Company did not meet the criteria for hedge accounting. Therefore, the Company did not apply hedge accounting treatment for its derivative contracts.
 
    Outstanding forward exchange contracts as of June 30, 2008 and 2007:
         
        Contract Amount
    Maturity Date   (in Thousands)
June 30, 2008
       
 
Sell EUR/buy US$
                 July 2008   EUR 11,500/US$17,826
Sell EUR/buy NT$
                 July 2008   EUR 20,000/NT$858,620
Sell US$/buy NT$
                 July 2008   US$30,000/NT$909,600
 
       
June 30, 2007
       
 
Sell EUR/buy NT$
                 July 2007 to July 2008   EUR 50,700/NT$2,209,845
    Outstanding cross currency swap contracts as of June 30, 2008 and 2007:
             
        Range of   Range of
    Contract Amount   Interest Rates   Interest Rates
Maturity Date   (in Thousands)   Paid   Received
June 30, 2008
           
 
July 2008
  US$971,000/NT$29,509,297   2.49%-4.68%   0.43%-2.42%
 
           
June 30, 2007
           
 
July 2007 to August 2007
  US$765,000/NT$25,251,620   2.36%-5.43%   1.70%-4.21%
    For the six months ended June 30, 2008 and 2007, gains and losses arising from derivative financial instruments were net gains of NT$1,737,652 thousand and net losses of NT$579,646 thousand, respectively.

- 15 -


 

6.   AVAILABLE-FOR-SALE FINANCIAL ASSETS
                 
    June 30  
    2008     2007  
Open-end mutual funds
  $ 3,702,857     $ 10,971,467  
Corporate bonds
    3,177,927       4,176,057  
Government bonds
          4,133,533  
Structured time deposits
          497,381  
 
           
 
    6,880,784       19,778,438  
Current portion
    (6,880,784 )     (15,259,717 )
 
           
 
               
 
  $     $ 4,518,721  
 
           
    As of June 30, 2007, structured time deposits categorized as available-for-sale financial assets consisted of the following:
                                 
    Principal     Carrying              
    Amount     Amount     Interest Rate     Maturity Date  
Step-up callable deposits
                               
Domestic deposits
  $ 500,000     $ 497,381       1.76%     March 2008
 
                           
    The interest rate of the step-up callable deposits was pre-determined by the Company and the banks.
 
7.   HELD-TO-MATURITY FINANCIAL ASSETS
                 
    June 30  
    2008     2007  
Corporate bonds
  $ 9,516,207     $ 11,968,229  
Government bonds
    2,995,912       8,682,408  
Structured time deposits
    500,000       10,047,000  
 
           
 
    13,012,119       30,697,637  
Current portion
    (5,771,334 )     (9,909,497 )
 
           
 
               
 
  $ 7,240,785     $ 20,788,140  
 
           
    As of June 30, 2008 and 2007, structured time deposits categorized as held-to-maturity financial assets consisted of the following:
                             
    Principal     Interest     Range of      
    Amount     Receivable     Interest Rates     Maturity Date
June 30, 2008
                           
 
                           
Step-up callable deposits
                           
Domestic deposits
  $ 500,000     $ 2,031       1.83%     October 2008
 
                       
 
                           
June 30, 2007
                           
 
Step-up callable deposits
                           
Domestic deposits
  $ 3,500,000     $ 13,267       1.69%-1.83 %   October 2007 to October 2008
Callable range accrual deposits
                           
Domestic deposits
    3,928,200       4,556     (See below)   September 2009 to December 2009
Foreign deposits
    2,618,800       4,828     (See below)   October 2009 to December 2009
 
                       
 
                           
 
  $ 10,047,000     $ 22,651              
 
                       

- 16 -


 

    The amount of interest earned from the callable range accrual deposits is based on a pre-defined range as determined by the 3-month or 6-month LIBOR plus an agreed upon rate ranging between 2.10% and 3.45%. Based on the terms of the contracts, if the 3-month or 6-month LIBOR moves outside of the pre-defined range, the interest paid to the Company is at a fixed rate ranging between zero and 1.5%. Under the terms of the contracts, the bank has the right to cancel the contracts prior to the maturity date.
 
    As of June 30, 2008, no structured time deposit resided in banks located in foreign countries. As of June 30, 2007, the principal of the deposits that resided in banks located in Hong Kong and Singapore amounted to US$60,000 thousand and US$20,000 thousand, respectively.
 
8.   ALLOWANCES FOR DOUBTFUL RECEIVABLES, SALES RETURNS AND OTHERS
 
    Movements of the allowance for doubtful receivables were as follows:
                 
    Six Months Ended  
    June 30  
    2008     2007  
Balance, beginning of period
  $ 688,972     $ 690,931  
Provision
          3,108  
Write-off
    (1,353 )      
 
           
 
               
Balance, end of period
  $ 687,619     $ 694,039  
 
           
    Movements of the allowance for sales returns and others were as follows:
                 
    Six Months Ended  
    June 30  
    2008     2007  
Balance, beginning of period
  $ 3,856,685     $ 2,751,065  
Provision
    3,052,847       1,967,831  
Write-off
    (2,715,004 )     (2,123,058 )
 
           
 
               
Balance, end of period
  $ 4,194,528     $ 2,595,838  
 
           
9.   INVENTORIES
                 
    June 30  
    2008     2007  
Finished goods
  $ 3,619,551     $ 4,545,835  
Work in process
    16,744,201       16,447,979  
Raw materials
    791,420       1,137,465  
Supplies and spare parts
    560,754       421,597  
 
           
 
    21,715,926       22,552,876  
Allowance for losses
    (898,960 )     (874,918 )
 
           
 
               
 
  $ 20,816,966     $ 21,677,958  
 
           

- 17 -


 

10.   INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
                                 
    June 30  
    2008     2007  
            % of             % of  
    Carrying        Owner-     Carrying        Owner-  
    Amount        ship     Amount        ship  
TSMC Global Ltd. (TSMC Global)
  $ 41,946,173       100     $ 43,613,633       100  
TSMC International Investment Ltd. (TSMC International)
    27,447,357       100       27,053,657       100  
Vanguard International Semiconductor Corporation (VIS)
    9,926,933       36       5,637,861       27  
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
    8,641,503       39       8,289,538       39  
TSMC (Shanghai) Company Limited (TSMC Shanghai)
    7,574,803       100       8,799,540       100  
TSMC Partners, Ltd. (TSMC Partners)
    3,534,832       100       4,567,193       100  
TSMC North America
    2,246,123       100       2,207,039       100  
Xintec Inc. (Xintec)
    1,396,316       43       1,366,816       43  
VentureTech Alliance Fund III, L.P. (VTAF III)
    1,106,412       98       756,146       98  
VentureTech Alliance Fund II, L.P. (VTAF II)
    963,211       98       858,453       98  
Global UniChip Corporation (GUC)
    798,498       37       694,111       38  
Emerging Alliance Fund, L.P. (Emerging Alliance)
    388,216       99       717,200       99  
Chi Cherng Investment Co., Ltd. (Chi Cherng)
    221,911       36       168,359       36  
Hsin Ruey Investment Co., Ltd. (Hsin Ruey)
    220,092       36       166,857       36  
Taiwan Semiconductor Manufacturing Company Europe B.V. (TSMC Europe)
    107,796       100       65,109       100  
TSMC Japan Limited (TSMC Japan)
    104,842       100       94,250       100  
TSMC Korea Limited (TSMC Korea)
    15,286       100       15,514       100  
 
                           
 
                               
 
  $ 106,640,304             $ 105,071,276          
 
                           
    In August 2007, the Company acquired additional 169,600 thousand shares in VIS for NT$4,927,865 thousand; after the acquisition, the Company’s percentage of ownership in VIS increased from 27% to 36%.
 
    For the six months ended June 30, 2008 and 2007, net equity in earnings of NT$946,787 thousand and NT$1,983,358 thousand was recognized, respectively. The related equity in earnings of equity method investees was determined based on the audited financial statements of the investees for the same periods as the Company.
 
    As of June 30, 2008 and 2007, fair value of publicly traded stocks in investments accounted for using equity method (VIS and GUC) was NT$23,162,413 thousand and NT$28,683,049 thousand, respectively.
 
    Movements of the difference between the cost of investments and the Company’s share in investees’ net assets allocated to depreciable assets for the six months ended June 30, 2008 and 2007 were as follows:
                 
    Six Months Ended  
    June 30  
    2008     2007  
Balance, beginning of period
  $ 2,677,388     $ 943,277  
Additions
          112,660  
Amortization
    (312,068 )     (106,565 )
 
           
 
               
Balance, end of period
  $ 2,365,320     $ 949,372  
 
           

- 18 -


 

    Balance of the aforementioned difference allocated to goodwill for the six months ended June 30, 2008 and 2007 was NT$987,349 thousand and NT$213,984 thousand, respectively. There are no any additions or impairment for the six months ended June 30, 2008 and 2007.
 
11.   FINANCIAL ASSETS CARRIED AT COST
                 
    June 30  
    2008     2007  
Non-publicly traded stocks
  $ 364,913     $ 364,913  
Funds
    382,608       382,305  
 
           
 
               
 
  $ 747,521     $ 747,218  
 
           
12.   PROPERTY, PLANT AND EQUIPMENT
                                         
    Six Months Ended June 30, 2008  
    Balance,                                
    Beginning of                             Balance,  
    Period     Additions     Disposals     Reclassification     End of Period  
Cost
                                       
Buildings
  $ 101,907,892     $ 1,361,363     $ (1,887 )   $ (311 )   $ 103,267,057  
Machinery and equipment
    589,131,625       32,074,642       (2,665,119 )     (221,252 )     618,319,896  
Office equipment
    9,167,107       407,498       (97,232 )     57       9,477,430  
 
                             
 
    700,206,624     $ 33,843,503     $ (2,764,238 )   $ (221,506 )     731,064,383  
 
                             
Accumulated depreciation
                                       
Buildings
    57,349,828     $ 3,848,827     $ (1,887 )   $ (4 )     61,196,764  
Machinery and equipment
    422,278,071       30,674,584       (667,487 )     (206,424 )     452,078,744  
Office equipment
    7,097,120       466,362       (97,232 )     26       7,466,276  
 
                             
 
    486,725,019     $ 34,989,773     $ (766,606 )   $ (206,402 )     520,741,784  
 
                             
Advance payments and construction in progress
    21,082,953     $ 5,467,194     $     $       26,550,147  
 
                             
 
                                       
Net
  $ 234,564,558                             $ 236,872,746  
 
                                   
                                         
    Six Months Ended June 30, 2007  
    Balance,                                
    Beginning of                             Balance,  
    Period     Additions     Disposals     Reclassification     End of Period  
Cost
                                       
Buildings
  $ 96,961,851     $ 2,777,163     $ (31,835 )   $     $ 99,707,179  
Machinery and equipment
    527,850,728       22,404,381       (299,721 )     514,629       550,470,017  
Office equipment
    8,659,225       404,055       (154,426 )     (810 )     8,908,044  
 
                             
 
    633,471,804     $ 25,585,599     $ (485,982 )   $ 513,819       659,085,240  
 
                             
Accumulated depreciation
                                       
Buildings
    49,595,917     $ 3,881,018     $ (30,957 )   $       53,445,978  
Machinery and equipment
    361,401,800       30,595,506       (298,619 )     519,139       392,217,826  
Office equipment
    6,469,533       504,843       (154,329 )     47       6,820,094  
 
                             
 
    417,467,250     $ 34,981,367     $ (483,905 )   $ 519,186       452,483,898  
 
                             
Advance payments and construction in progress
    12,230,805     $ 18,771,817     $     $ 431,957       31,434,579  
 
                             
 
                                       
Net
  $ 228,235,359                             $ 238,035,921  
 
                                   
    No interest was capitalized during the six months ended June 30, 2008 and 2007.

- 19 -


 

13.   DEFERRED CHARGES, NET
                                                 
    Six Months Ended June 30, 2008  
    Balance,                                        
    Beginning of                                     Balance,  
    Period     Additions     Amortization     Disposals     Reclassification     End of Period  
Technology license fees
  $ 5,349,937     $     $ (781,844 )   $     $     $ 4,568,093  
Software and system design costs
    1,309,272       666,273       (347,384 )     (14,279 )     59       1,613,941  
Others
    513,204       454,125       (81,308 )                 886,021  
 
                                   
 
                                               
 
  $ 7,172,413     $ 1,120,398     $ (1,210,536 )   $ (14,279 )   $ 59     $ 7,068,055  
 
                                   
                                                 
    Six Months Ended June 30, 2007  
    Balance,                                        
    Beginning of                                     Balance,  
    Period     Additions     Amortization     Disposals     Reclassification     End of Period  
Technology license fees
  $ 4,038,551     $ 825,550     $ (844,203 )   $     $ (296,451 )   $ 3,723,447  
Software and system design costs
    1,517,575       496,718       (432,489 )     (51 )     (426,590 )     1,155,163  
Others
    36,942             (32,588 )           296,451       300,805  
 
                                   
 
                                               
 
  $ 5,593,068     $ 1,322,268     $ (1,309,280 )   $ (51 )   $ (426,590 )   $ 5,179,415  
 
                                   
14.   BONDS PAYABLE
                 
    June 30  
    2008     2007  
Domestic unsecured bonds:
               
Issued in December 2000 and repayable in December 2007, 5.36% interest payable annually
  $     $ 4,500,000  
Issued in January 2002 and repayable in January 2009 and 2012 in three installments, 2.75% and 3.00% interest payable annually, respectively
    12,500,000       12,500,000  
 
           
 
    12,500,000       17,000,000  
Current portion
    (8,000,000 )     (4,500,000 )
 
           
 
               
 
  $ 4,500,000     $ 12,500,000  
 
           
    As of June 30, 2008, future principal repayments for the Company’s bonds were as follows:
         
Year of Repayment   Amount  
2009
  $ 8,000,000  
2012
    4,500,000  
 
     
 
       
 
  $ 12,500,000  
 
     

- 20 -


 

15.   OTHER LONG-TERM PAYABLES
 
    Most of the payables resulted from license agreements for certain semiconductor-related patents. As of June 30, 2008, future payments for other long-term payables were as follows:
         
Year of Payment   Amount  
2008 (3rd and 4th quarter)
  $ 1,613,276  
2009
    544,551  
2010
    465,630  
2011
    394,602  
 
     
 
    3,018,059  
Current portion (classified under accrued expenses and other current liabilities)
    (2,012,071 )
 
     
 
       
 
  $ 1,005,988  
 
     
16.   PENSION PLANS
 
    The pension mechanism under the Labor Pension Act is deemed a defined contribution plan. Pursuant to the Act, the Company has made monthly contributions equal to 6% of each employee’s monthly salary to employees’ pension accounts, and recognized pension costs of NT$326,409 thousand and NT$298,794 thousand for the six months ended June 30, 2008 and 2007, respectively.
 
    The Company has a defined benefit plan under the Labor Standards Law that provides benefits based on an employee’s length of service and average monthly salary for the six-month period prior to retirement. The Company contributes an amount equal to 2% of salaries paid each month to a pension fund (the Fund), which is administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the Committee’s name in the Bank of Taiwan (originally the Central Trust of China, which was merged into the Bank of Taiwan on July 1, 2007). The Company recognized pension costs of NT$134,494 thousand and NT$162,308 thousand for the six months ended June 30, 2008 and 2007, respectively.
 
    Changes in the Fund and accrued pension cost under the defined benefit plan are summarized as follows:
                 
    Six Months Ended June 30  
    2008     2007  
The Fund
               
Balance, beginning of period
  $ 2,145,010     $ 1,913,002  
Contributions
    109,289       111,502  
Interest
    71,236       46,279  
Payments
    (13,726 )      
 
           
 
               
Balance, end of period
  $ 2,311,809     $ 2,070,783  
 
           
 
               
Accrued pension cost
               
Balance, beginning of period
  $ 3,657,679     $ 3,530,116  
Accruals
    33,945       53,426  
 
           
 
Balance, end of period
  $ 3,691,624     $ 3,583,542  
 
           

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17.   INCOME TAX
  a.   A reconciliation of income tax expense based on “income before income tax” at statutory rate and income tax currently payable was as follows:
                 
    Six Months Ended June 30  
    2008     2007  
Income tax expense based on “income before income tax” at statutory rate (25%)
  $ 15,902,124     $ 11,925,847  
Tax effect of the following:
               
Tax-exempt income
    (5,071,328 )     (2,770,225 )
Temporary and permanent differences
    310,461       (320,582 )
Others
    41,235        
Additional tax at 10% on unappropriated earnings
          2,686,561  
Investment tax credits used
    (5,591,246 )     (7,260,151 )
 
           
 
               
Income tax currently payable
  $ 5,591,246     $ 4,261,450  
 
           
  b.   Income tax expense consisted of the following:
                 
Income tax currently payable
  $ 5,591,246     $ 4,261,450  
Other income tax adjustments
    (677,151 )     (361,957 )
Net change in deferred income tax assets
               
Investment tax credits
    1,318,658       3,082,172  
Temporary differences
    25,929       (760,228 )
Valuation allowance
    435,927       (2,840,629 )
 
           
 
               
Income tax expense
  $ 6,694,609     $ 3,380,808  
 
           
  c.   Net deferred income tax assets consisted of the following:
                 
    June 30  
    2008     2007  
Current deferred income tax assets
               
Investment tax credits
  $ 6,004,789     $ 5,622,000  
 
           
 
               
Noncurrent deferred income tax assets
               
Investment tax credits
  $ 7,513,308     $ 11,252,720  
Temporary differences
    1,117,382       1,600,692  
Valuation allowance
    (3,906,060 )     (4,363,600 )
 
           
 
               
 
  $ 4,724,630     $ 8,489,812  
 
           
  d.   Integrated income tax information:
 
      The balance of the imputation credit account as of June 30, 2008 and 2007 was NT$12,141,222 thousand and NT$2,759,715 thousand, respectively.
 
      The creditable ratios for distribution of earnings of 2007 and 2006 were 9.83% (expected) and 5.23%, respectively.
 
      The imputation credit allocated to shareholders is based on its balance as of the date of dividend distribution. The estimated creditable ratio may change when the actual distribution of imputation credit is made.

- 22 -


 

  e.   All earnings generated prior to December 31, 1997 have been appropriated.
 
  f.   As of June 30, 2008, investment tax credits consisted of the following:
                                 
            Total     Remaining        
            Creditable     Creditable     Expiry  
Law/Statute   Item     Amount     Amount     Year  
Statute for Upgrading Industries
  Purchase of machinery and equipment   $ 6,067,738     $ 2,625,338       2010  
      4,591,234       4,591,234       2011  
 
            1,533,855       1,533,855       2012  
 
                           
 
                               
 
          $ 12,192,827     $ 8,750,427          
 
                           
 
                               
Statute for Upgrading Industries
  Research and development expenditures   $ 1,000,000     $       2008  
      1,127,051             2009  
 
            1,781,376       1,781,376       2010  
 
            1,834,115       1,834,115       2011  
 
            1,074,087       1,074,087       2012  
 
                           
 
                               
 
          $ 6,816,629     $ 4,689,578          
 
                           
 
                               
Statute for Upgrading Industries
  Personnel training expenditures   $ 21,795     $       2009  
            46,119       46,119       2010  
 
            31,973       31,973       2011  
 
                           
 
                               
 
          $ 99,887     $ 78,092          
 
                           
  g.   The profits generated from the following projects are exempt from income tax for a five-year period:
     
    Tax-exemption Period
Construction of Fab 14 — Module A
  2006 to 2010
Construction of Fab 12 — Module B and expansion of Fab 14 — Module A
  2007 to 2011
  h.   The tax authorities have examined income tax returns of the Company through 2005.
18.   LABOR COST, DEPRECIATION AND AMORTIZATION
                         
    Six Months Ended June 30, 2008  
            Classified as        
    Classified as     Operating        
    Cost of Sales     Expenses     Total  
Labor cost
                       
Salary
  $ 9,092,200     $ 6,656,160     $ 15,748,360  
Labor and health insurance
    335,749       189,700       525,449  
Pension
    294,502       166,401       460,903  
Meal
    219,219       88,295       307,514  
Welfare
    92,539       54,046       146,585  
Others
    89,637       3,876       93,513  
 
                 
 
                       
 
  $ 10,123,846     $ 7,158,478     $ 17,282,324  
 
                 
 
                       
Depreciation
  $ 32,997,017     $ 1,984,163     $ 34,981,180  
 
                 
Amortization
  $ 894,932     $ 315,604     $ 1,210,536  
 
                 

- 23 -


 

                         
    Six Months Ended June 30, 2007  
            Classified as        
    Classified as     Operating        
    Cost of Sales     Expenses     Total  
Labor cost
                       
Salary
  $ 4,405,268     $ 2,160,377     $ 6,565,645  
Labor and health insurance
    277,788       150,831       428,619  
Pension
    298,525       162,577       461,102  
Meal
    213,703       80,294       293,997  
Welfare
    109,186       66,138       175,324  
Others
    62,796       3,017       65,813  
 
                 
 
                       
 
  $ 5,367,266     $ 2,623,234     $ 7,990,500  
 
                 
 
                       
Depreciation
  $ 33,044,630     $ 1,919,406     $ 34,964,036  
 
                 
Amortization
  $ 905,291     $ 403,390     $ 1,308,681  
 
                 
19.   SHAREHOLDERS’ EQUITY
 
    As of June 30, 2008, 1,086,575 thousand ADSs of the Company were traded on the NYSE. The number of common shares represented by the ADSs was 5,432,874 thousand (one ADS represents five common shares).
 
    Capital surplus can only be used to offset a deficit under the Company Law. However, the capital surplus generated from donations and the excess of the issuance price over the par value of capital stock (including the stock issued for new capital, mergers, convertible bonds and the surplus from treasury stock transactions) may be appropriated as stock dividends, which are limited to a certain percentage of the Company’s paid-in capital. Also, the capital surplus from long-term investments may not be used for any purpose.
 
    Capital surplus consisted of the following:
                 
    June 30  
    2008     2007  
From merger
  $ 23,276,911     $ 24,003,546  
Additional paid-in capital
    18,295,464       19,422,365  
From convertible bonds
    9,077,065       9,360,424  
From long-term investments
    164,871       448,264  
From treasury stock transactions
    102,279       490,950  
Donations
    55       55  
 
           
 
               
 
  $ 50,916,645     $ 53,725,604  
 
           
    The Company’s Articles of Incorporation provide that, when allocating the net profits for each fiscal year, the Company shall first offset its losses in previous years and then set aside the following items accordingly:
  a.   Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve equals the Company’s paid-in capital;
 
  b.   Special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge;

- 24 -


 

  c.   Bonus to directors and bonus to employees of the Company of not more than 0.3% and not less than 1% of the remainder, respectively. Directors who also serve as executive officers of the Company are not entitled to receive the bonus to directors. The Company may issue stock bonuses to employees of an affiliated company meeting the conditions set by the Board of Directors or, by the person duly authorized by the Board of Directors;
 
  d.   Any balance left over shall be allocated according to the resolution of the shareholders’ meeting.
    The Company’s Articles of Incorporation also provide that profits of the Company may be distributed by way of cash dividend and/or stock dividend. However, distribution of profits shall be made preferably by way of cash dividend. Distribution of profits may also be made by way of stock dividend; provided that the ratio for stock dividend shall not exceed 50% of the total distribution.
 
    Any appropriations of the profits are subject to shareholders’ approval in the following year.
 
    For the six months ended June 30, 2008, the Company has recorded bonuses to employees and directors with a charge to earnings of approximately 15% of net income. Material differences between such estimated amounts and the amounts proposed by the Board of Directors subsequent to the end of the fiscal year are adjusted for in the earnings of the current year. If the actual amounts subsequently resolved by the shareholders differ from the proposed amounts by the Board of Directors, the differences are recorded in the year of shareholders’ resolution as a change in accounting estimate. If stock bonuses are resolved to be distributed to employees, the number of shares is determined by dividing the amount of bonuses by the closing price (after considering the effect of cash and stock dividends) of the shares on the day preceding the shareholders’ meeting.
 
    The Company no longer has supervisors since January 1, 2007. The required duties of supervisors are being fulfilled by the Audit Committee.
 
    The appropriation for legal capital reserve shall be made until the reserve equals the Company’s paid-in capital. The reserve may be used to offset a deficit, or be distributed as dividends and bonuses for the portion in excess of 50% of the paid-in capital if the Company has no unappropriated earnings and the reserve balance has exceeded 50% of the Company’s paid-in capital. The Company Law also prescribes that, when the reserve has reached 50% of the Company’s paid-in capital, up to 50% of the reserve may be transferred to capital.
 
    A special capital reserve equivalent to the net debit balance of the other components of shareholders’ equity (for example, cumulative translation adjustments and unrealized loss on financial instruments, but excluding treasury stock) shall be made from unappropriated earnings pursuant to existing regulations promulgated by the Securities and Futures Bureau (SFB). Any special reserve appropriated may be reversed to the extent that the net debit balance reverses.

- 25 -


 

    The appropriations of earnings for 2007 and 2006 had been approved in the shareholders’ meetings held on June 13, 2008 and May 7, 2007, respectively. The appropriations and dividends per share were as follows:
                                 
                    Dividends Per Share  
    Appropriation of Earnings     (NT$)  
    For Fiscal     For Fiscal     For Fiscal     For Fiscal  
    Year 2007     Year 2006     Year 2007     Year 2006  
Legal capital reserve
  $ 10,917,709     $ 12,700,973                  
Special capital reserve
    (237,693 )     (11,192 )                
Bonus to employees — in cash
    3,939,883       4,572,798                  
Bonus to employees — in stock
    3,939,883       4,572,798                  
Cash dividends to shareholders
    76,881,311       77,489,064     $ 3.00     $ 3.00  
Stock dividends to shareholders
    512,542       516,594       0.02       0.02  
Bonus to directors and supervisors
    176,890       285,800                  
 
                           
 
                               
 
  $ 96,130,525     $ 100,126,835                  
 
                           
    The shareholders’ meeting held on June 13, 2008 and May 7, 2007 also resolved to distribute stock dividends out of capital surplus in the amount of NT$768,813 thousand and NT$774,891 thousand, respectively.
 
    The amounts of the appropriations of earnings for 2007 and 2006 are consistent with the resolutions of the meetings of the Board of Directors held on February 19, 2008 and February 6, 2007. If the above bonus to employees, directors and supervisors had been paid entirely in cash and charged to earnings of 2007 and 2006, the basic earnings per share (after income tax) for the years ended December 31, 2007 and 2006 shown in the respective financial statements would have decreased from NT$4.14 to NT$3.84 and NT$4.93 to NT$4.56, respectively. The shares distributed as a bonus to employees represented 1.49% and 1.77% of the Company’s total outstanding common shares as of December 31, 2007 and 2006, respectively.
 
    The information about the appropriations of bonuses to employees, directors and supervisors is available at the Market Observation Post System website.
 
    Under the Integrated Income Tax System that became effective on January 1, 1998, the R.O.C. resident shareholders are allowed a tax credit for their proportionate share of the income tax paid by the Company on earnings generated since January 1, 1998.
 
20.   STOCK-BASED COMPENSATION PLANS
 
    The Company’s Employee Stock Option Plans under the 2004 Plan, 2003 Plan and 2002 Plan were approved by the SFB on January 6, 2005, October 29, 2003 and June 25, 2002, respectively. The maximum number of options authorized to be granted under the 2004 Plan, 2003 Plan and 2002 Plan was 11,000 thousand, 120,000 thousand and 100,000 thousand, respectively, with each option eligible to subscribe for one common share when exercisable. The options may be granted to qualified employees of the Company or any of its domestic or foreign subsidiaries, in which the Company’s shareholding with voting rights, directly or indirectly, is more than fifty percent (50%). The options of all the plans are valid for ten years and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the terms of the plans, the options are granted at an exercise price equals to the closing price of the Company’s common shares listed on the TSE on the grant date.
 
    Options of the plans that had never been granted or had been granted but subsequently cancelled had expired as of June 30, 2008.

- 26 -


 

    Information about outstanding options for the six months ended June 30, 2008 and 2007 was as follows:
                 
            Weighted-  
            average  
    Number of     Exercise  
    Options     Price  
    (in Thousands)     (NT$)  
Six months ended June 30, 2008
               
 
               
Balance, beginning of period
    41,875     $ 37.4  
Options exercised
    (4,267 )     40.2  
Options cancelled
    (260 )     46.8  
 
             
 
               
Balance, end of period
    37,348       37.0  
 
             
 
               
Six months ended June 30, 2007
               
 
               
Balance, beginning of period
    52,814     $ 37.9  
Options granted
    1,094       37.9  
Options exercised
    (7,401 )     40.1  
Options cancelled
    (598 )     45.2  
 
             
 
               
Balance, end of period
    45,909       37.6  
 
             
    The number of outstanding options and exercise prices have been adjusted to reflect the distribution of dividends in accordance with the plans.
 
    As of June 30, 2008, information about outstanding and exercisable options was as follows:
                                         
    Options Outstanding   Options Exercisable
            Weighted-   Weighted-           Weighted-
            average   average           average
    Number of   Remaining   Exercise   Number of   Exercise
     Range of Exercise   Options (in   Contractual   Price   Options (in   Price
          Price (NT$)   Thousands)   Life (Years)   (NT$)   Thousands)   (NT$)
$25.9-$36.4
    26,488       4.66     $ 33.0       26,488     $ 33.0  
38.9 - 51.3
    10,860       6.40       46.6       8,816       46.3  
 
                                       
 
                                       
 
    37,348               37.0       35,304       36.3  
 
                                       
    No compensation cost was recognized under the intrinsic value method for the six months ended June 30, 2008 and 2007. Had the Company used the fair value based method to evaluate the options using the Black-Scholes model, the assumptions and pro forma results of the Company for the six months ended June 30, 2008 and 2007 would have been as follows:
                 
    Six Months Ended June 30
    2008   2007
Assumptions:
               
Expected dividend yield
    1.00%-3.44 %     1.00%-3.44 %
Expected volatility
    43.77%-46.15 %     43.77%-46.15 %
Risk free interest rate
    3.07%-3.85 %     3.07%-3.85 %
Expected life
  5 years   5 years
(Continued)

- 27 -


 

                 
    Six Months Ended June 30
    2008   2007
Net income:
               
Net income as reported
  $ 56,913,888     $ 44,322,581  
Pro forma net income
    56,802,663       44,112,157  
Earnings per share (EPS) — after income tax (NT$):
               
Basic EPS as reported
  $ 2.22     $ 1.68  
Pro forma basic EPS
    2.22       1.67  
Diluted EPS as reported
    2.22       1.68  
Pro forma diluted EPS
    2.21       1.67  
(Concluded)
21.   TREASURY STOCK
                                 
    (Shares in Thousands)  
    Beginning                     Ending  
    Shares     Addition     Retirement     Shares  
Six months ended June 30, 2008
                               
 
Parent company stock held by subsidiaries
    34,096                   34,096  
Repurchase under share buyback plan
    800,000       216,674       800,000       216,674  
 
                       
 
                               
 
    834,096       216,674       800,000       250,770  
 
                       
 
                               
Six months ended June 30, 2007
                               
 
                               
Parent company stock held by subsidiaries
    33,926       170             34,096  
 
                       
    As of June 30, 2008 and 2007, the book value of the treasury stock was NT$14,845,498 thousand and NT$918,075 thousand each; the market value was NT$16,300,044 thousand and NT$2,417,400 thousand, respectively. The Company’s common shares held by subsidiaries were treated as treasury stock and the holders are entitled to the rights of shareholders, with the exception of voting rights.
 
    The Company held a meeting of the Board of Directors on November 13, 2007 and approved a share buyback plan to repurchase the Company’s common shares up to 800,000 thousand shares listed on the TSE during the period from November 14, 2007 to January 13, 2008 for the buyback price in the range from NT$43.2 to NT$94.2. The Company had repurchased 800,000 thousand common shares. All the treasury stock repurchased under this share buyback plan was retired on February 27, 2008.
 
    The Company held a meeting of the Board of Directors on May 13, 2008 and approved a share buyback plan to repurchase the Company’s common shares up to 500,000 thousand shares listed on the TSE during the period from May 14, 2008 to July 13, 2008 for the buyback price in the range from NT$48.25 to NT$100.50. As of June 30, 2008, the Company had repurchased 216,674 thousand common shares for a total cost of NT$13,927,423 thousand. All of these treasury stock will be retired in the second half year of 2008.

- 28 -


 

22.   EARNINGS PER SHARE
                                 
    Six Months Ended June 30  
    2008     2007  
    Before     After     Before     After  
    Income     Income     Income     Income  
    Tax     Tax     Tax     Tax  
Basic EPS (NT$)
                               
Income for the period
  $ 2.49     $ 2.22     $ 1.81     $ 1.68  
 
                       
The pro-forma adjusted EPS for stock dividends with ex-dividend date after the issuance of the financial statements
  $ 2.44     $ 2.18     $ 1.77     $ 1.65  
 
                       
 
                               
Diluted EPS (NT$)
                               
Income for the period
  $ 2.48     $ 2.22     $ 1.81     $ 1.68  
 
                       
The pro-forma adjusted EPS for stock dividends with ex-dividend date after the issuance of the financial statements
  $ 2.43     $ 2.17     $ 1.77     $ 1.65  
 
                       
    EPS is computed as follows:
                                         
                    Number of     EPS (NT$)  
    Amounts (Numerator)     Shares     Before     After  
    Before     After     (Denominator)     Income     Income  
    Income Tax     Income Tax     (in Thousands)     Tax     Tax  
Six months ended June 30, 2008
                                       
Basic EPS
                                       
Income available to common shareholders
  $ 63,608,497     $ 56,913,888       25,587,867     $ 2.49     $ 2.22  
 
                                   
Effect of dilutive potential common stock -
                                       
Bonus to employees
                70,282                  
Stock options
                17,817                  
 
                                 
 
                                       
Diluted EPS
                                       
Income available to common shareholders (including effect of dilutive potential common stock)
  $ 63,608,497     $ 56,913,888       25,675,966     $ 2.48     $ 2.22  
 
                             
 
                                       
Six months ended June 30, 2007
                                       
 
                                       
Basic EPS
                                       
Income available to common shareholders
  $ 47,703,389     $ 44,322,581       26,385,050     $ 1.81     $ 1.68  
 
                                   
Effect of dilutive potential common stock — stock options
                23,482                  
 
                                 
 
                                       
Diluted EPS
                                       
Income available to common shareholders (including effect of dilutive potential common stock)
  $ 47,703,389     $ 44,322,581       26,408,532     $ 1.81     $ 1.68  
 
                             
    Potential shares from bonus to employees which will be settled in shares will be included in the weighted average number of shares outstanding in calculation of diluted EPS, if the shares have a dilutive effect. The number of shares is estimated by dividing the amount of bonus to employees by the closing price of the common shares on the balance sheet date. The dilutive effect of the potential shares needs to be considered until the shares of employee bonus are resolved in the shareholders’ meeting in the following year.

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23.   DISCLOSURES FOR FINANCIAL INSTRUMENTS
  a.   Fair values of financial instruments were as follows:
                                 
    June 30
    2008   2007
    Carrying           Carrying    
    Amount   Fair Value   Amount   Fair Value
Assets
                               
 
Financial assets at fair value through profit or loss
  $ 22,996     $ 22,996     $ 172,240     $ 172,240  
Available-for-sale financial assets
    6,880,784       6,880,784       19,778,438       19,778,438  
Held-to-maturity financial assets
    13,012,119       13,004,523       30,697,637       30,616,918  
 
                               
Liabilities
                               
 
                               
Financial liabilities at fair value through profit or loss
    115,320       115,320       3,460       3,460  
Bonds payable (including current portion)
    12,500,000       12,642,479       17,000,000       17,241,349  
Other long-term payable (including current portion)
    3,018,059       3,018,059       3,777,162       3,777,162  
  b.   Methods and assumptions used in the estimation of fair values of financial instruments
  1)   The aforementioned financial instruments do not include cash and cash equivalents, receivables, other financial assets, refundable deposits, payables, payables to contractors and equipment suppliers and guarantee deposits. The carrying amounts of these financial instruments approximate their fair values due to their short maturities.
 
  2)   Fair values of financial assets/liabilities at fair value through profit or loss were estimated using valuation techniques incorporating estimates and assumptions that were consistent with prevailing market conditions.
 
  3)   Fair values of available-for-sale and held-to-maturity financial assets were based on their quoted market prices; except for structured time deposits of which fair values were estimated using valuation techniques.
 
  4)   Fair value of bonds payable was based on their quoted market price.
 
  5)   Fair value of other long-term payables was based on the present value of expected cash flows, which approximates their carrying amount.
  c.   The changes in fair value during the six months ended June 30, 2008 and 2007 of derivatives estimated using valuation techniques were recognized as valuation losses of NT$92,324 thousand and valuation gains of NT$168,780 thousand, respectively.
 
  d.   As of June 30, 2008 and 2007, financial assets exposed to fair value interest rate risk were NT$19,915,899 thousand and NT$50,648,315 thousand, respectively, financial liabilities exposed to fair value interest rate risk were NT$12,615,320 thousand and NT$17,003,460 thousand, respectively, and financial assets exposed to cash flow interest rate risk were nil and NT$6,547,000 thousand, respectively.

- 30 -


 

  e.   Movements of unrealized gains or losses on financial instruments for the six months ended June 30, 2008 and 2007 were as follows:
                         
    Six Months Ended June 30, 2008  
            Equity in        
    Valuation     Valuation        
    Gain (Loss)     Gain on        
    on Available-     Available-for-        
    for-sale     sale Financial        
    Financial     Assets Held by        
    Assets     Investees     Total  
Balance, beginning of period
  $ 266,573     $ 414,424     $ 680,997  
Recognized directly in shareholders’ equity
    126,971       51,999       178,970  
Removed from shareholders’ equity and recognized in earnings
    (391,218 )           (391,218 )
 
                 
 
                       
Balance, end of period
  $ 2,326     $ 466,423     $ 468,749  
 
                 
                         
    Six Months Ended June 30, 2007  
            Equity in        
    Valuation     Valuation        
    Gain (Loss)     Gain on        
    on Available-     Available-for-        
    for-sale     sale Financial        
    Financial     Assets Held by        
    Assets     Investees     Total  
Balance, beginning of period
  $ 242,248     $ 319,367     $ 561,615  
Recognized directly in shareholders’ equity
    150,562       (30,727 )     119,835  
Removed from shareholders’ equity and recognized in earnings
    (233,970 )           (233,970 )
 
                 
 
                       
Balance, end of period
  $ 158,840     $ 288,640     $ 447,480  
 
                 
  f.   Information about financial risks
  1)   Market risk. The derivative financial instruments categorized as financial assets/liabilities at fair value through profit or loss are mainly used to hedge the exchange rate fluctuations of foreign-currency assets and liabilities; therefore, the market risk of derivatives will be offset by the foreign exchange risk of these hedged items. Available-for-sale financial assets held by the Company are mainly fixed-interest-rate debt securities; therefore, the fluctuations in market interest rates will result in changes in fair values of these debt securities.
 
  2)   Credit risk. Credit risk represents the potential loss that would be incurred by the Company if the counter-parties or third-parties breached contracts. Financial instruments with positive fair values at the balance sheet date are evaluated for credit risk. The counter-parties or third-parties to the foregoing financial instruments are reputable financial institutions, business organizations and government agencies. Management believes that the Company’s exposure to default by those parties is low.
 
  3)   Liquidity risk. The Company has sufficient operating capital to meet cash needs upon settlement of derivative financial instruments and bonds payable. Therefore, the liquidity risk is low.

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  4)   Cash flow interest rate risk. The Company mainly invests in fixed-interest-rate debt securities. Therefore, cash flows are not expected to fluctuate significantly due to changes in market interest rates.
24.   RELATED PARTY TRANSACTIONS
 
    The Company engages in business transactions with the following related parties:
  a.   Subsidiaries
 
      TSMC North America
 
      TSMC Shanghai
 
      TSMC Europe
 
      TSMC Japan
 
      TSMC Korea
 
  b.   Investees
 
      GUC (with a controlling financial interest)
 
      VIS (accounted for using equity method)
 
      SSMC (accounted for using equity method)
 
  c.   Indirect subsidiaries
 
      WaferTech, LLC (WaferTech)
 
      TSMC Technology, Inc. (TSMC Technology)
 
      TSMC Design Technology Canada Inc. (TSMC Canada) (established in May 2007)
 
  d.   Indirect investee
 
      VisEra Technology Company, Ltd. (VisEra), an indirect investee accounted for using equity method.
 
  e.   Others
 
      Related parties over which the Company has control or exercises significant influence but with which the Company had no material transactions.
    Transactions with the aforementioned parties, other than those disclosed in other notes, are summarized as follows:
                                 
    2008     2007  
    Amount     %     Amount     %  
For the six months ended June 30
                               
Sales
                               
TSMC North America
  $ 103,800,578       60     $ 83,546,469       60  
Others
    769,027             465,685       1  
 
                       
 
 
  $ 104,569,605       60     $ 84,012,154       61  
 
                       

- 32 -


 

                                 
    2008     2007  
    Amount     %     Amount     %  
Purchases
                               
WaferTech
  $ 4,410,290       20     $ 4,804,106       21  
TSMC Shanghai
    2,650,161       12       2,485,579       11  
SSMC
    2,300,893       10       2,765,116       12  
VIS
    1,718,897       8       1,681,324       8  
Others
                732        
 
                       
 
                               
 
  $ 11,080,241       50     $ 11,736,857       52  
 
                       
 
                               
Manufacturing expenses — outsourcing
                               
VisEra
  $ 45,313           $ 20,500        
 
                       
 
                               
Marketing expenses — commission
                               
TSMC Europe
  $ 184,005       15     $ 146,354       21  
TSMC Japan
    116,844       9       115,663       16  
Others
    9,837       1       11,146       2  
 
                       
 
                               
 
  $ 310,686       25     $ 273,163       39  
 
                       
 
                               
General and administrative expenses — rental
                               
GUC
  $ 525           $ 3,473        
 
                       
 
                               
Research and development expenses
                               
TSMC Technology (primarily consulting fee)
  $ 167,355       2     $ 145,596       2  
TSMC Canada (primarily consulting fee)
    95,549       1              
Others
    12,156             59,381       1  
 
                       
 
                               
 
  $ 275,060       3     $ 204,977       3  
 
                       
 
                               
Sales of property, plant and equipment and other assets
                               
TSMC Shanghai
  $ 1,871,252       99     $ 2,378       33  
Others
    10,665                    
 
                       
 
                               
 
  $ 1,881,917       99     $ 2,378       33  
 
                       
 
                               
Non-operating income and gains
                               
VIS (primarily technical service income, see Note 26f)
  $ 181,670       3     $ 173,765       3  
TSMC Shanghai
    161,523       3       168,625       3  
SSMC (primarily technical service income, see Note 26e)
    131,194       2       116,257       2  
VisEra
    69,597       1       177,414       4  
 
                       
 
                               
 
  $ 543,984       9     $ 636,061       12  
 
                       
 
                               
As of June 30
                               
 
                               
Receivables
                               
TSMC North America
  $ 23,871,291       99     $ 20,642,259       100  
Others
    268,531       1       32,908        
 
                       
 
                               
 
  $ 24,139,822       100     $ 20,675,167       100  
 
                       

- 33 -


 

                                 
    2008     2007  
    Amount     %     Amount     %  
Other receivables
                               
VIS
  $ 1,132,499       69     $ 809,153       63  
TSMC Shanghai
    191,032       12       60,263       5  
GUC
    140,489       9       52,817       4  
SSMC
    108,319       7       97,977       8  
TSMC North America
    28,677       1       88,131       7  
VisEra
                147,186       11  
Others
    43,808       2       24,892       2  
 
                       
 
                               
 
  $ 1,644,824       100     $ 1,280,419       100  
 
                       
 
                               
Payables
                               
VIS
  $ 685,168       28     $ 780,221       25  
WaferTech
    666,082       27       804,285       26  
SSMC
    501,436       20       728,808       23  
TSMC Shanghai
    476,025       19       611,054       20  
Others
    157,359       6       184,255       6  
 
                       
 
                               
 
  $ 2,486,070       100     $ 3,108,623       100  
 
                       
 
                               
Deferred credits
                               
TSMC Shanghai
  $ 277,340       41     $ 617,113       62  
VisEra
    31,087       5       93,262       9  
 
                       
 
                               
 
  $ 308,427       46     $ 710,375       71  
 
                       
    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, prices were determined in accordance with mutual agreements.
 
    The Company deferred the gains (classified under the deferred credits) derived from sales of property, plant, and equipment to TSMC Shanghai and VisEra, and then recognized such gains (classified under non-operating income and gains) over the depreciable lives of the disposed assets.
 
    The Company leased part of its office space from GUC and also leased certain buildings and facilities to VisEra. The related rental expense and rental income were classified under non-operating expenses and income, respectively. The lease terms and prices were determined in accordance with mutual agreements. The lease agreement between the Company and VisEra expired in April 2008.

- 34 -


 

25.   SIGNIFICANT LONG-TERM LEASES
 
    The Company leases several parcels of land from the Science Park Administration. These operating leases expire on various dates from December 2008 to December 2028 and can be renewed upon expiration.
 
    As of June 30, 2008, future lease payments were as follows:
         
Year
  Amount  
2008 (3rd and 4th quarter)
  $ 173,470  
2009
    340,443  
2010
    291,245  
2011
    289,664  
2012
    289,664  
2013 and thereafter
    2,315,796  
 
     
 
       
 
  $ 3,700,282  
 
     
26.   SIGNIFICANT COMMITMENTS AND CONTINGENCIES
 
    The significant commitments and contingencies of the Company as of June 30, 2008, except as disclosed in other notes, were as follows:
  a.   On June 20, 2004, the Company and Philips (Philips parted with its semiconductor company which was renamed as NXP B.V. in September 2006) amended the Technical Cooperation Agreement, which was originally signed on May 12, 1997. The amended Technical Cooperation Agreement is for five years beginning from January 1, 2004. Upon expiration, this amended Technical Cooperation Agreement will be terminated and will not be automatically renewed; however, the patent cross license arrangement between the Company and Philips (now NXP B.V.) will survive the expiration of the amended Technical Cooperation Agreement. Under this amended Technical Cooperation Agreement, the Company will pay Philips (now NXP B.V.) royalties based on a fixed amount mutually agreed-on, rather than under a certain percentage of the Company’s annual net sales. The Company and Philips (now NXP B.V.) agreed to cross license the patents owned by each party. The Company also obtained through Philips (now NXP B.V.) a number of cross patent licenses
 
  b.   Under a technical cooperation agreement with ITRI, the R.O.C. Government or its designee approved by the Company can use up to 35% of the Company’s capacity if the Company’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.
 
  c.   Under several foundry agreements, the Company shall reserve a portion of its production capacity for certain major customers that have guarantee deposits with the Company. As of June 30, 2008, the Company had a total of US$54,538 thousand of guarantee deposits.

- 35 -


 

  d.   Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30, 1999, the parties formed a joint venture company, SSMC, which is an integrated circuit foundry in Singapore. The Company’s equity interest in SSMC was 32%. Nevertheless, Philips parted with its semiconductor company which was renamed as NXP B.V. in September 2006. The Company 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, the Company and NXP B.V. currently own approximately 39% and 61% of the SSMC shares respectively. The Company and Philips (now NXP) committed to buy specific percentages of the production capacity of SSMC. The Company and Philips (now NXP B.V.) are required, in the aggregate, to purchase up to 70% of SSMC’s capacity, but the Company alone is not required to purchase more than 28% of the capacity. If any party defaults on the commitment and the capacity utilization of SSMC fall below a specific percentage of its capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs.
 
  e.   The Company provides technical services to SSMC under a Technical Cooperation Agreement (the Agreement) effective March 30, 1999. The Company receives compensation for such services computed at a specific percentage of net selling price of all products sold by SSMC. The Agreement shall remain in force for ten years and may be automatically renewed for successive periods of five years each unless pre-terminated by either party under certain conditions.
 
  f.   The Company provides a technology transfer to VIS under a Manufacturing License and Technology Transfer Agreement entered into on April 1, 2004. The Company receives compensation for such technology transfer in the form of royalty payments from VIS computed at specific percentages of net selling price of certain products sold by VIS. VIS agreed to reserve its certain capacity to manufacture for the Company certain products at prices as agreed by the parties.
 
  g.   TSMC, TSMC North America and WaferTech filed a series of lawsuits in late 2003 and 2004 against Semiconductor Manufacturing International Corporation, SMIC (Shanghai) and SMIC Americas (aggregately referring to as “SMIC”). The lawsuits alleged that SMIC infringed multiple TSMC, TSMC North America and WaferTech patents and misappropriated TSMC, TSMC North America and WaferTech’s trade secrets. These suits were settled out of court on January 30, 2005. As part of the settlement, Semiconductor Manufacturing International Corporation shall pay US$175 million over six years to resolve TSMC, TSMC North America and WaferTech’s claims. As of June 30, 2008, SMIC had paid US$105 million in accordance with the terms of this settlement agreement. In August 2006, TSMC, TSMC North America and WaferTech filed a lawsuit against SMIC in Alameda County Superior Court in California for breach of aforementioned settlement agreement, breach of promissory notes and trade secret misappropriation, seeking injunctive relief and monetary damages. In September 2006, SMIC filed a cross-complaint against TSMC, TSMC North America and WaferTech in the same court, alleging TSMC, TSMC North America and WaferTech of breach of the settlement agreement and implied covenant of good faith and fair dealing, in response to TSMC, TSMC North America and WaferTech’s August complaint. In November 2006, SMIC filed a complaint with Beijing People’s High Court against TSMC, TSMC North America and WaferTech alleging defamation and breach of good faith. The California State Superior Court of Alameda County issued an Order on TSMC, TSMC North America and WaferTech’s pre-trial motion for a preliminary injunction against SMIC on September 7, 2007. In the Order, the Court found “TSMC has demonstrated a significant likelihood that it will ultimately prevail on the merits of its claim for breach of certain paragraphs of the (2005) Settlement Agreement” with SMIC. The Court also found “TSMC has demonstrated a significant probability of establishing that SMIC retains and is using TSMC Information in SMIC’s 0.13um and smaller technologies, and there is significant threat of serious irreparable harm to TSMC if SMIC were to disclose or transfer that information before final resolution of the case.” Therefore, the Court ordered that, effective immediately, SMIC must provide advance notice and an opportunity for TSMC, TSMC North America and WaferTech to object before disclosing items enumerated in the Court Order to SMIC’s third party partners. The Court, however, did not grant a preliminary injunction as requested by TSMC, TSMC North America and WaferTech. The result of the above-mentioned litigation cannot be determined at this time.

- 36 -


 

  h.   In April 2004, UniRAM Technology, Inc. (“UniRAM”) filed an action against MoSys Inc., TSMC and TSMC North America in the U.S. District Court for the Northern District of California, alleging patent infringement and trade secret misappropriation and seeking injunctive relief and damages. In 2007, the trade secret misappropriation portion of the case went to trial, and in September 2007, a jury-rendered a verdict awarding US$30.5 million to UniRAM Technology, Inc. The court rendered a final order on May 1, 2008 regarding injunctive and other relief sought by UniRAM. Other than ordering TSMC to pay the aforementioned jury award and other fees totaling US$36.49 million, the court also granted in part an injunction sought by UniRAM. Under the injunction, TSMC may not within 5 years disclose to third parties certain technologies items that were asserted by UniRAM as trade secrets. TSMC may continue to offer eDRAM related design and manufacturing services, so long as such services do not disclose the asserted UniRAM trade secret technology items. In the next 5 years, TSMC must also pay a design fee and an one percent royalty based upon TSMC’s eDRAM wafer sales price. Based upon the order, TSMC has already accrued US$36.49 million as part of accrued expenses and other current liabilities. TSMC intends to continue to pursue remedies against this verdict.
27.   ADDITIONAL DISCLOSURES
 
    Following are the additional disclosures required by the SFB for the Company and its investees:
  a.   Financing provided: None;
 
  b.   Endorsement/guarantee provided: None;
 
  c.   Marketable securities held: Please see Table 1 attached;
 
  d.   Marketable securities acquired or disposed of at costs or prices of at least NT$100 million or 20% of the paid-in capital: Please see Table 2 attached;
 
  e.   Acquisition of individual real estate properties at costs of at least NT$100 million or 20% of the paid-in capital: Please see Table 3 attached;
 
  f.   Disposal of individual real estate properties at prices of at least NT$100 million or 20% of the paid-in capital: None;
 
  g.   Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: Please see Table 4 attached;
 
  h.   Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 5 attached;
 
  i.   Names, locations, and related information of investees over which the Company exercises significant influence: Please see Table 6 attached;

- 37 -


 

  j.   Information about derivatives of investees in which the Company has a controlling interest:
 
      TSMC Shanghai entered into forward exchange contracts during the six months ended June 30, 2008 to manage exposures due to foreign exchange rate fluctuations. Outstanding forward exchange contracts as of June 30, 2008:
         
        Contract
        Amount
    Maturity Date   (in Thousands)
Sell RMB/buy US$
  July 2008 to September 2008   RMB199,445/US$29,000
Sell US$/buy JPY
  July 2008 to August 2008   US$365/JPY 39,000
      For the six months ended June 30, 2008, net losses arising from forward exchange contracts of TSMC Shanghai were NT$4,194 thousand.
 
      XinTec entered into forward exchange contracts during the six months ended June 30, 2008 to manage exposures due to foreign exchange rate fluctuations. Outstanding forward exchange contracts as of June 30, 2008:
         
        Contract Amount
    Maturity Date   (in Thousands)
Sell US$/buy NT$
  August 2008   US$7,000/NT$212,281
      For the six months ended June 30, 2008, net gains arising from forward exchange contracts of XinTec were NT$13,460 thousand.
  k.   Information on investment in Mainland China
  1)   The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, equity in the net gain or net loss, ending balance, amount received as dividends from the investee, and the limitation on investee: Please see Table 7 attached.
 
  2)   Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: Please see Note 24.

- 38 -


 

     
TABLE 1
Taiwan Semiconductor Manufacturing Company Limited and Investees
MARKETABLE SECURITIES HELD
JUNE 30, 2008
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
                                                     
                June 30, 2008    
                                        Market Value or Net    
                Shares/Units   Carrying Value   Percentage of   Asset Value    
Held Company Name   Marketable Securities Type and Name   Relationship with the Company   Financial Statement Account   (in Thousands)   (US$ in Thousands)   Ownership (%)   (US$ in Thousands)   Note
The Company  
Open-end mutual funds
                                               
   
Capital Income Fund
    Available-for-sale financial assets     131,256     $ 2,001,916       N/A     $ 2,001,916          
   
PCA Well Pool Fund
        132,553       1,700,941       N/A       1,700,941          
   
 
                                               
   
Corporate bond
                                               
   
Hua Nan Bank
    Available-for-sale financial assets           1,587,105       N/A       1,587,105          
   
Cathay Bank
              1,190,901       N/A       1,190,901          
   
 
                                               
   
Formosa Petrochemical Corporation
              399,921       N/A       399,921          
   
 
                                               
   
Formosa Petrochemical Corporation
    Held-to maturity financial assets           3,589,118       N/A       3,568,319          
   
Taiwan Power Company
              1,731,903       N/A       1,731,831          
   
 
                                               
   
Nan Ya Plastics Corporation
              1,303,820       N/A       1,302,377          
   
 
                                               
   
CPC Corporation, Taiwan
              1,200,219       N/A       1,199,569          
   
 
                                               
   
China Steel Corporation
              1,000,000       N/A       989,215          
   
 
                                               
   
Formosa Plastic Corporation
              395,277       N/A       395,161          
   
 
                                               
   
Shanghai Commercial & Saving Bank
              295,870       N/A       295,790          
   
 
                                               
   
Government bond
                                               
   
2003 Asian Development Bank Govt. Bond
    Held-to maturity financial assets           864,201       N/A       875,103          
   
2003 Government Bond Series F
              799,930       N/A       799,724          
   
 
                                               
   
2003 Government Bond Series H
              700,162       N/A       700,434          
   
 
                                               
   
European Investment Bank Bonds
              381,952       N/A       400,000          
   
 
                                               
   
2004 Government Bond Series B
              249,667       N/A       250,243          
   
 
                                               
   
Stocks
                                               
   
TSMC Global
  Subsidiary   Investment accounted for using equity method     1       41,946,173       100       41,946,173          
   
TSMC International
  Subsidiary       987,968       27,447,357       100       27,447,357          
   
 
                                               
   
VIS
  Investee accounted for using equity method       616,240       9,926,933       36       13,711,350          
 
   
SSMC
  Investee accounted for using equity method       463       8,641,503       39       7,770,858          
 
   
TSMC Partners
  Subsidiary       300       3,534,832       100       3,534,832          
   
TSMC North America
  Subsidiary       11,000       2,246,123       100       2,246,123          
 
   
XinTec
  Investee with a controlling financial interest       91,703       1,396,316       43       1,353,773          
 
   
GUC
  Investee with a controlling financial interest       42,572       798,498       37       9,451,063          
 
   
TSMC Europe
  Subsidiary             107,796       100       107,796          
   
 
                                               
   
TSMC Japan
  Subsidiary       6       104,842       100       104,842          
   
 
                                               
   
TSMC Korea
  Subsidiary       80       15,286       100       15,286          
   
 
                                               
   
United Industrial Gases Co., Ltd.
    Financial assets carried at cost     16,783       193,584       10       272,594          
   
Shin-Etsu Handotai Taiwan Co., Ltd.
        10,500       105,000       7       348,439          
   
W.K. Technology Fund IV
        4,000       40,000       2       45,875          
   
 
                                               
   
Hontung Venture Capital Co., Ltd.
        2,633       26,329       10       20,306          
(Continued)

- 39 -


 

     
                                                     
                June 30, 2008    
                                        Market Value or Net    
                Shares/Units   Carrying Value   Percentage of   Asset Value    
Held Company Name   Marketable Securities Type and Name   Relationship with the Company   Financial Statement Account   (in Thousands)   (US$ in Thousands)   Ownership (%)   (US$ in Thousands)   Note
   
Fund
                                               
   
Horizon Ventures Fund
    Financial assets carried at cost         $     312,949       12     $     312,949          
   
Crimson Asia Capital
              69,659       1       69,659          
   
 
                                               
   
Capital
                                               
   
TSMC Shanghai
  Subsidiary   Investment accounted for using equity method           7,574,803       100       7,568,345          
   
 
                                               
   
VTAF III
  Subsidiary             1,106,412       98       1,093,659          
   
 
                                               
   
VTAF II
  Subsidiary             963,211       98       958,755          
   
 
                                               
   
Emerging Alliance
  Subsidiary             388,216       99       388,216          
   
 
                                               
   
Chi Cheng
  Subsidiary             221,911       36       680,475    
Treasury stock of NT$458,564 thousand is deducted from the carrying value
   
Hsin Ruey
  Subsidiary             220,092       36       679,603    
Treasury stock of NT$459,511 thousand is deducted from the carrying value
   
 
                                               
Chi Cherng  
Stocks
                                               
   
TSMC
  Parent Company   Available-for-sale financial assets     17,032       1,107,080             1,107,080          
   
VIS
  Investee accounted for using equity method   Investments accounted for using equity method     5,082       103,235             113,073          
   
 
                                               
   
Capital
                                               
   
Hsin Ruey
  Same parent company   Investments accounted for using equity method           964,748       64       1,424,259          
   
 
                                               
Hsin Ruey  
Stocks
                                               
   
TSMC
  Parent Company   Available-for-sale financial assets     17,064       1,109,155             1,109,155          
   
VIS
  Investee accounted for using equity method   Investments accounted for using equity method     3,748       80,865             83,384          
   
 
                                               
   
Capital
                                               
   
Chi Cherng
  Same parent company   Investments accounted for using equity method           967,488       64       1,426,052          
   
 
                                               
TSMC North America  
Preferred stock
                                               
   
NeXen, Inc.
    Financial assets carried at cost     328     US$ 656       1     US$ 1,912          
   
 
                                               
TSMC International  
Stocks
                                               
   
InveStar Semiconductor Development Fund, Inc. (ISDF)
  Subsidiary   Investments accounted for using equity method     7,680     US$ 9,841       97     US$ 9,841          
   
InveStar Semiconductor Development Fund, Inc.(II) LDC. (ISDF II)
  Subsidiary       41,027     US$ 43,875       97     US$ 43,875          
   
TSMC Development, Inc. (TSMC Development)
  Subsidiary           US$ 675,749       100     US$ 675,749          
   
TSMC Technology
  Subsidiary           US$ 8,129       100     US$ 8,129          
   
 
                                               
TSMC Development  
Stocks
                                               
   
WaferTech
  Subsidiary   Investments accounted for using equity method         US$ 193,376       100     US$ 193,376          
   
 
                                               
TSMC Partners  
Common stock
                                               
   
VisEra Holding Company
  Investee accounted for using equity method   Investments accounted for using equity method     43,000     US$ 72,590       49     US$ 72,590          
   
TSMC Canada
  Subsidiary       2,300     US$ 2,876       100     US$ 2,876          
(Continued)

- 40 -


 

     
                                                     
                June 30, 2008    
                                        Market Value or Net    
                Shares/Units   Carrying Value   Percentage of   Asset Value    
Held Company Name   Marketable Securities Type and Name   Relationship with the Company   Financial Statement Account   (in Thousands)   (US$ in Thousands)   Ownership (%)   (US$ in Thousands)   Note
Emerging Alliance  
Common stock
                                               
   
Pixim, Inc.
    Financial assets carried at cost     1,036     US$ 275           US$ 275          
   
RichWave Technology Corp.
        4,247     US$ 1,648       10     US$ 1,648          
   
 
                                               
   
Global Investment Holding Inc.
        10,800     $     100,000       6     $     100,000          
   
 
                                               
   
Preferred stock
                                               
   
Audience, Inc.
    Financial assets carried at cost     1,654     US$ 250       1     US$ 250          
   
Axiom Microdevices, Inc.
        1,000     US$ 1,000       1     US$ 1,000          
   
 
                                               
   
Miradia, Inc.
        3,040     US$ 1,000       3     US$ 1,000          
   
 
                                               
   
Mobilygen
        1,415     US$ 750       1     US$ 750          
   
 
                                               
   
Mosaic Systems, Inc.
        2,481     US$ 12       6     US$ 12          
   
 
                                               
   
Next IO, Inc.
        800     US$ 500       4     US$ 500          
   
 
                                               
   
Optichron, Inc.
        714     US$ 1,000       2     US$ 1,000          
   
 
                                               
   
Optimal Corporation
            US$ 229           US$ 229          
   
 
                                               
   
Pixim, Inc.
        3,606     US$ 862       2     US$ 862          
   
 
                                               
   
QST Holding, LLC
            US$ 131       4     US$ 131          
   
 
                                               
   
Teknovus, Inc.
        6,977     US$ 1,327       2     US$ 1,327          
   
 
                                               
   
Capital
                                               
   
VentureTech Alliance Holdings, L.L.C. (VTA Holdings)
  Subsidiary   Investments accounted for using equity method         US$       8     US$          
   
 
                                               
VTAF II  
Common stock
                                               
   
Yobon
    Financial assets carried at cost     1,875     US$ 919       13     US$ 919          
   
Sentelic
        1,200     US$ 2,040       15     US$ 2,040          
   
 
                                               
   
Leadtrend
        1,265     US$ 660       5     US$ 660          
   
 
                                               
   
RichWave Technology Corp.
        1,043     US$ 730       1     US$ 730          
   
 
                                               
   
Preferred stock
                                               
   
5V Technologies, Inc.
    Financial assets carried cost     2,357     US$ 1,768       11     US$ 1,768          
   
 
                                               
   
Aquantia Corporation
        2,108     US$ 2,573       5     US$ 2,573          
   
 
                                               
   
Audience, Inc.
        5,335     US$ 1,390       2     US$ 1,390          
   
 
                                               
   
Axiom Microdevices, Inc.
        6,326     US$ 2,481       5     US$ 2,481          
   
 
                                               
   
Beceem Communications
        650     US$ 1,600       1     US$ 1,600          
   
 
                                               
   
GemFire Corporation
        600     US$ 68       1     US$ 68          
   
 
                                               
   
Impinj, Inc.
        475     US$ 1,000           US$ 1,000          
   
 
                                               
   
Miradia, Inc.
        3,416     US$ 3,106       3     US$ 3,106          
   
 
                                               
   
Mobilygen
        569     US$ 149           US$ 149          
   
 
                                               
   
Next IO, Inc.
        2,510     US$ 756       2     US$ 756          
   
 
                                               
   
Optichron, Inc.
        1,050     US$ 1,844       4     US$ 1,844          
   
 
                                               
   
Pixim, Inc.
        6,348     US$ 1,141       2     US$ 1,141          
   
 
                                               
   
Power Analog Microelectronics
        3,324     US$ 2,409       14     US$ 2,409          
   
 
                                               
   
QST Holding, LLC
            US$ 415       13     US$ 415          
   
 
                                               
   
Teknovus, Inc.
        1,599     US$ 454           US$ 454          
   
 
                                               
   
Tzero Technologies, Inc.
        1,167     US$ 2,008       2     US$ 2,008          
   
 
                                               
   
Xceive
        870     US$ 1,177       2     US$ 1,177          
   
 
                                               
   
Capital
                                               
   
VTA Holdings
  Subsidiary   Investments accounted for using equity method         US$       24     US$          
   
 
                                               
VTAF III  
Common stock
                                               
   
Mutual-pak Technology Co., Ltd.
  Subsidiary   Investments accounted for using equity method     4,590     US$ 1,649       51     US$ 1,649          
(Continued)

- 41 -


 

     
                                                 
                June 30, 2008    
                                        Market Value or Net    
                Shares/Units   Carrying Value   Percentage of   Asset Value    
Held Company Name   Marketable Securities Type and Name   Relationship with the Company   Financial Statement Account   (in Thousands)   (US$ in Thousands)   Ownership (%)   (US$ in Thousands)   Note
 
  Preferred stock                                            
 
  Advasense Sensors, Inc.     Financial assets carried at cost     1,929     US$ 1,834       6     US$ 1,834      
 
  Auramicro, Inc.         2,500     US$ 750       17     US$ 750      
 
  BridgeLux, Inc.         3,333     US$ 5,000       3     US$ 5,000      
 
  Exclara, Inc. (Formerly SynDitec, Inc.)         14,513     US$ 2,412       19     US$ 2,412      
 
  GTBF, Inc.         1,154     US$ 1,500       N/A     US$ 1,500      
 
  InvenSense         816     US$ 1,000       1     US$ 1,000      
 
  M2000, Inc.     Financial assets carried at cost     3,000     US$ 3,000       5     US$ 3,000      
 
  Neoconix, Inc.         2,458     US$ 4,000       6     US$ 4,000      
 
  Powervation, Ltd.         191     US$ 2,930       19     US$ 2,930      
 
  Quellan, Inc.         3,106     US$ 3,500       6     US$ 3,500      
 
  Silicon Technical Services, LLC         1,055     US$ 1,208       2     US$ 1,208      
 
  Tilera, Inc.         1,698     US$ 2,360       3     US$ 2,360      
 
  Validity Sensors, Inc.         6,424     US$ 2,545       3     US$ 2,545      
 
  Capital                                            
 
  VTA Holdings   Subsidiary   Investments accounted for using equity method         US$       68     US$      
 
  Growth Fund Limited (Growth Fund)   Subsidiary           US$ 600       100     US$ 600      
 
                                               
Growth Fund
  Common stock                                            
 
  Staccato     Financial assets carried at cost     425     US$ 495       1     US$ 495      
 
                                               
ISDF
  Common stock                                            
 
  Memsic, Inc.     Available-for-sale financial assets     1,364     US$ 4,050       6     US$ 4,050      
 
  Capella Microsystems (Taiwan), Inc.     Financial assets carried at cost     530     US$ 154       2     US$ 154      
 
                                               
 
  Preferred stock                                            
 
  Integrated Memory Logic, Inc.     Financial assets carried at cost     2,872     US$ 1,221       9     US$ 1,221      
 
  IP Unity, Inc.         1,008     US$ 494       1     US$ 494      
 
  NanoAmp Solutions, Inc.         541     US$ 853       2     US$ 853      
 
  Sonics, Inc.         1,843     US$ 3,530       2     US$ 3,530      
 
                                               
ISDF II
  Common stock                                            
 
  Rich Tek Technology Corp.     Financial assets at fair value through profit or loss     92     US$ 714           US$ 714      
 
  Memsic, Inc.     Available-for-sale financial assets     1,145     US$ 3,399       5     US$ 3,399      
 
  Rich Tek Technology Corp.         261     US$ 2,033           US$ 2,033      
 
  Ralink Technology (Taiwan), Inc.         1,440     US$ 9,828       1     US$ 9,828      
 
  eLCOS Microdisplay Technology, Ltd.     Financial assets carried at cost     270     US$ 27       1     US$ 27      
 
  EoNEX Technologies, Inc.         55     US$ 1,524       5     US$ 1,524      
 
  Sonics, Inc.         2,220     US$ 32       3     US$ 32      
 
  Epic Communication, Inc.         191     US$ 37       1     US$ 37      
 
  EON Technology, Corp.         2,494     US$ 691       3     US$ 691      
 
  Goyatek Technology, Corp.         2,088     US$ 545       7     US$ 545      
 
  Trendchip Technologies Corp.         1,000     US$ 574       3     US$ 574      
 
  Capella Microsystems (Taiwan), Inc.         534     US$ 210       2     US$ 210      
 
  Auden Technology MFG. Co., Ltd.         1,049     US$ 223       3     US$ 223      
 
  Preferred stock                                            
 
  Alchip Technologies Limited     Financial assets carried at cost     6,979     US$ 3,664       20     US$ 3,664      
 
  eLCOS Microdisplay Technology, Ltd.         3,500     US$ 1,055       8     US$ 1,055      
 
  FangTek, Inc.         6,806     US$ 3,250       16     US$ 3,250      
 
  Kilopass Technology, Inc.         3,887     US$ 2,000       5     US$ 2,000      
 
  NanoAmp Solutions, Inc.         375     US$ 1,500       1     US$ 1,500      
 
  Sonics, Inc.         2,115     US$ 3,082       3     US$ 3,082      
(Continued)

- 42 -


 

     
                                                 
                June 30, 2008    
                                        Market Value or Net    
                Shares/Units   Carrying Value   Percentage of   Asset Value    
Held Company Name   Marketable Securities Type and Name   Relationship with the Company   Financial Statement Account   (in Thousands)   (US$ in Thousands)   Ownership (%)   (US$ in Thousands)   Note
GUC
  Common stock                                            
 
  GUC-NA   Subsidiary   Investments accounted for using equity method     100     $ 21,170       100     $ 21,170      
 
                                               
 
  GUC-Japan   Subsidiary       1       9,495       100       9,495      
 
  GUC-Europe   Subsidiary             2,420       100       2,420      
 
                                               
XinTec
  Capital                                            
 
  Compositech Ltd.     Financial assets carried at cost     587             3            
 
                                               
TSMC Global
  Agency bonds                                            
 
  Fed Hm Ln Pc Pool 1b1225     Available-for-sale financial assets         US$ 111       N/A     US$ 111      
 
  Fed Hm Ln Pc Pool 1b2566             US$ 138       N/A     US$ 138      
 
  Fed Hm Ln Pc Pool 1b2632             US$ 158       N/A     US$ 158      
 
  Fed Hm Ln Pc Pool 1b2642             US$ 216       N/A     US$ 216      
 
  Fed Hm Ln Pc Pool 1b2776             US$ 309       N/A     US$ 309      
 
  Fed Hm Ln Pc Pool 1b2792             US$ 206       N/A     US$ 206      
 
  Fed Hm Ln Pc Pool 1b2810             US$ 269       N/A     US$ 269      
 
  Fed Hm Ln Pc Pool 1b7453             US$ 2,452       N/A     US$ 2,452      
 
  Fed Hm Ln Pc Pool 1g0038             US$ 273       N/A     US$ 273      
 
  Fed Hm Ln Pc Pool 1g0053             US$ 341       N/A     US$ 341      
 
  Fed Hm Ln Pc Pool 1g0104             US$ 132       N/A     US$ 132      
 
  Fed Hm Ln Pc Pool 1g1282             US$ 3,552       N/A     US$ 3,552      
 
  Fed Hm Ln Pc Pool 1g1411             US$ 3,077       N/A     US$ 3,077      
 
  Fed Hm Ln Pc Pool 1h2520             US$ 2,409       N/A     US$ 2,409      
 
  Fed Hm Ln Pc Pool 1h2524             US$ 1,815       N/A     US$ 1,815      
 
  Fed Hm Ln Pc Pool 780870             US$ 595       N/A     US$ 595      
 
  Fed Hm Ln Pc Pool 781959             US$ 3,176       N/A     US$ 3,176      
 
  Fed Hm Ln Pc Pool 782785             US$ 228       N/A     US$ 228      
 
  Fed Hm Ln Pc Pool 782837             US$ 436       N/A     US$ 436      
 
  Fed Hm Ln Pc Pool 783022             US$ 488       N/A     US$ 488      
 
  Fed Hm Ln Pc Pool 783026             US$ 276       N/A     US$ 276      
 
  Fed Hm Ln Pc Pool B19205             US$ 6,068       N/A     US$ 6,068      
 
  Fed Hm Ln Pc Pool E01492             US$ 1,667       N/A     US$ 1,667      
 
  Fed Hm Ln Pc Pool E89857             US$ 1,217       N/A     US$ 1,217      
 
  Fed Hm Ln Pc Pool G11295             US$ 1,002       N/A     US$ 1,002      
 
  Fed Hm Ln Pc Pool M80855             US$ 2,688       N/A     US$ 2,688      
 
  Federal Home Ln Mtg Corp.             US$ 888       N/A     US$ 888      
 
  Federal Home Ln Mtg Corp.             US$ 998       N/A     US$ 998      
 
  Federal Home Ln Mtg Corp.             US$ 1,966       N/A     US$ 1,966      
 
  Federal Home Ln Mtg Corp.             US$ 2,212       N/A     US$ 2,212      
 
  Federal Home Ln Mtg Corp.             US$ 1,627       N/A     US$ 1,627      
 
  Federal Home Ln Mtg Corp.             US$ 3,034       N/A     US$ 3,034      
 
  Federal Home Ln Mtg Corp.             US$ 1,729       N/A     US$ 1,729      
 
  Federal Home Ln Mtg Corp.             US$ 2,792       N/A     US$ 2,792      
 
  Federal Home Ln Mtg Corp.             US$ 2,579       N/A     US$ 2,579      
 
  Federal National Mort Assoc             US$ 2,413       N/A     US$ 2,413      
 
  Federal Natl Mtg Assn             US$ 1,673       N/A     US$ 1,673      
 
  Federal Natl Mtg Assn             US$ 1,708       N/A     US$ 1,708      
 
  Federal Natl Mtg Assn             US$ 2,010       N/A     US$ 2,010      
 
  Federal Natl Mtg Assn             US$ 3,158       N/A     US$ 3,158      
 
  Federal Natl Mtg Assn Gtd             US$ 1,466       N/A     US$ 1,466      
 
  Fnma Pool 255883             US$ 2,965       N/A     US$ 2,965      
(Continued)

- 43 -


 

     
                                                 
                June 30, 2008    
                                        Market Value or Net    
                Shares/Units   Carrying Value   Percentage of   Asset Value    
Held Company Name   Marketable Securities Type and Name   Relationship with the Company   Financial Statement Account   (in Thousands)   (US$ in Thousands)   Ownership (%)   (US$ in Thousands)   Note
 
  Fnma Pool 257245     Available-for-sale financial assets         US$ 3,692       N/A     US$ 3,692      
 
  Fnma Pool 555549             US$ 1,255       N/A     US$ 1,255      
 
  Fnma Pool 555715             US$ 155       N/A     US$ 155      
 
  Fnma Pool 632399             US$ 354       N/A     US$ 354      
 
  Fnma Pool 662401             US$ 492       N/A     US$ 492      
 
  Fnma Pool 667766             US$ 1,205       N/A     US$ 1,205      
 
  Fnma Pool 680932             US$ 995       N/A     US$ 995      
 
  Fnma Pool 681393             US$ 2,192       N/A     US$ 2,192      
 
  Fnma Pool 685116             US$ 531       N/A     US$ 531      
 
  Fnma Pool 691283             US$ 3,225       N/A     US$ 3,225      
 
  Fnma Pool 694287             US$ 19       N/A     US$ 19      
 
  Fnma Pool 703711             US$ 425       N/A     US$ 425      
 
  Fnma Pool 725095             US$ 953       N/A     US$ 953      
 
  Fnma Pool 730033             US$ 147       N/A     US$ 147      
 
  Fnma Pool 740934             US$ 982       N/A     US$ 982      
 
  Fnma Pool 742232             US$ 17       N/A     US$ 17      
 
  Fnma Pool 750798             US$ 22       N/A     US$ 22      
 
  Fnma Pool 773246             US$ 204       N/A     US$ 204      
 
  Fnma Pool 790828             US$ 1,783       N/A     US$ 1,783      
 
  Fnma Pool 793932             US$ 393       N/A     US$ 393      
 
  Fnma Pool 794040             US$ 588       N/A     US$ 588      
 
  Fnma Pool 795548             US$ 169       N/A     US$ 169      
 
  Fnma Pool 799664             US$ 86       N/A     US$ 86      
 
  Fnma Pool 799868             US$ 30       N/A     US$ 30      
 
  Fnma Pool 804764             US$ 353       N/A     US$ 353      
 
  Fnma Pool 804852             US$ 292       N/A     US$ 292      
 
  Fnma Pool 804962             US$ 349       N/A     US$ 349      
 
  Fnma Pool 805163             US$ 377       N/A     US$ 377      
 
  Fnma Pool 806642             US$ 517       N/A     US$ 517      
 
  Fnma Pool 806721             US$ 594       N/A     US$ 594      
 
  Fnma Pool 814418             US$ 317       N/A     US$ 317      
 
  Fnma Pool 815626             US$ 2,023       N/A     US$ 2,023      
 
  Fnma Pool 819423             US$ 486       N/A     US$ 486      
 
  Fnma Pool 821129             US$ 451       N/A     US$ 451      
 
  Fnma Pool 888499             US$ 1,847       N/A     US$ 1,847      
 
  Fnma Pool 888502             US$ 220       N/A     US$ 220      
 
  Fnma Pool 888507             US$ 841       N/A     US$ 841      
 
  Fnma Pool 888515             US$ 1,027       N/A     US$ 1,027      
 
  Fnma Pool 888519             US$ 108       N/A     US$ 108      
 
  Fnma Pool 888527             US$ 62       N/A     US$ 62      
 
  Fnma Pool 888738             US$ 4,302       N/A     US$ 4,302      
 
  Fnma Pool 888793             US$ 4,964       N/A     US$ 4,964      
 
  Fnma Pool 900296             US$ 2,913       N/A     US$ 2,913      
 
  Gnma Ii Pool 081150       &n