TSMC(US:TSM)2024-05-15 10:09Financial Review and Compliance - The consolidated financial statements for the three months ended March 31, 2024, and 2023 were reviewed, showing no significant discrepancies in financial presentation [6]. - The company reported a consolidated financial performance in accordance with International Accounting Standard 34, ensuring compliance with local regulations [6]. - The review was conducted under the Standards on Review Engagements of the Republic of China, focusing on financial and accounting inquiries [5]. - The engagement partners for the review were Shih Tsung Wu and Shang Chih Lin from Deloitte & Touche [7]. - The financial statements are presented in thousands of New Taiwan Dollars, adhering to local accounting principles [10]. - The review confirmed that the financial statements fairly represent the company's consolidated financial position as of March 31, 2024, and 2023 [6]. - The company’s cash flows for the three months ended March 31, 2024, were also reviewed and found to be in compliance with applicable standards [6]. - The independent auditors' review report was translated into English for reader convenience, maintaining the integrity of the original Chinese version [8]. - The financial statements are intended to reflect the company's financial performance and position in the Republic of China context [8]. - The review process is less comprehensive than an audit, which limits the assurance level regarding the identification of significant matters [5]. Financial Position and Performance - Total assets increased to $5,787,891,082, up 4.6% from $5,532,371,215 as of December 31, 2023 [11]. - Current assets rose to $2,452,767,394, representing 42% of total assets, compared to 40% in the previous quarter [11]. - Cash and cash equivalents increased by 15.9% to $1,698,195,704 from $1,465,427,753 [11]. - Total liabilities amounted to $2,122,174,828, remaining stable at 37% of total assets [11]. - Equity attributable to shareholders of the parent reached $3,635,731,930, accounting for 63% of total equity [11]. - Unappropriated earnings grew to $2,955,395,983, maintaining a 51% share of total equity [11]. - Noncurrent liabilities decreased slightly to $1,095,994,749, representing 19% of total liabilities [11]. - Inventories increased to $267,123,339, reflecting a 6.4% rise from $250,997,088 [11]. - Accounts payable rose to $56,424,812, a 1.3% increase from $55,726,757 [11]. - Total current liabilities increased to $1,026,180,079, up 12.3% from $913,583,316 [11]. Revenue and Income - Net revenue for the three months ended March 31, 2024, was $592.64 million, a 16.5% increase from $508.63 million in the same period of 2023 [14]. - Gross profit for the same period was $314.51 million, representing a gross margin of 53%, compared to 56% in the previous year [14]. - Operating expenses totaled $65.36 million, maintaining 11% of net revenue, consistent with the previous year [14]. - Income from operations was $249.02 million, accounting for 42% of net revenue, down from 45% in the prior year [14]. - Net income for the three months was $225.22 million, an 8.8% increase from $206.95 million in the same period last year [14]. - Total comprehensive income for the period was $266.50 million, reflecting a 30.8% increase from $203.65 million in the previous year [16]. - Basic and diluted earnings per share were both NT$8.70, up from NT$7.98 in the same period of 2023 [16]. - The company reported a foreign exchange gain of $3.20 million, compared to a loss of $44,363 in the previous year [14]. - Research and development expenses were $46.11 million, representing 8% of net revenue, consistent with the previous year [14]. Cash Flow and Investments - Cash generated from operations in Q1 2024 was NT$437,362,333, up from NT$385,931,234 in Q1 2023, reflecting a growth of 13.4% [22]. - Net cash generated by operating activities for Q1 2024 was NT$436,311,108, compared to NT$385,244,745 in Q1 2023, indicating an increase of 13.3% [22]. - Net cash used in investing activities for Q1 2024 was NT$159,806,991, a decrease from NT$272,231,795 in Q1 2023, showing a reduction of 41.2% [23]. - Net cash used in financing activities for Q1 2024 was NT$71,685,617, compared to NT$64,487,030 in Q1 2023, representing an increase of 11.0% [23]. - Cash and cash equivalents at the end of Q1 2024 totaled NT$1,698,195,704, up from NT$1,385,232,810 at the end of Q1 2023, marking an increase of 22.6% [26]. Shareholder Returns and Dividends - Cash dividends to shareholders amounted to $90,762,248, reflecting a commitment to return value to shareholders despite fluctuations in net income [18]. - TSMC's cash dividends per share for Q1 2024 are set at NT$4.00, an increase from NT$3.00 in Q1 2023 [87]. - The total cash dividends to shareholders for Q1 2024 amount to $103,734,517, compared to $77,796,213 in Q1 2023 [87]. Debt and Liabilities - Total liabilities as of March 31, 2024, were $1,009,462,421, up from $895,457,426 as of March 31, 2023, representing an increase of approximately 12.7% [128]. - The company's total financial liabilities as of March 31, 2024, were $1,774,692,676, slightly up from $1,768,812,131 as of December 31, 2023, indicating a marginal increase of about 0.3% [129]. - Bonds payable amounted to $1,186,624,225 as of March 31, 2024, with $28,846,265 due in less than 1 year [144]. - Long-term bank loans and lease liabilities combined total $12,830,932 and $34,483,988 respectively as of March 31, 2024 [144]. Investments and Marketable Securities - TSMC holds marketable securities valued at approximately NT$6,951,320,000 in commercial paper from Cathay Financial Holding Co., Ltd. [193]. - The fair value of TSMC's investment in ARM Holdings plc is approximately US$138,837,000 [193]. - TSMC's investment in commercial paper from various companies includes significant holdings in Bank of America Corporation and Morgan Stanley, with fair values of US$88,527,000 and US$82,268,000 respectively [193]. - The total carrying value of TSMC's marketable securities reflects a diverse investment strategy across multiple sectors [197]. Risk Management and Financial Instruments - The company manages liquidity risk by maintaining adequate cash and cash equivalents, ensuring sufficient funding to support operations over the next 12 months [143]. - Interest rate futures contracts with a contract amount of US$62,700 thousand were entered into to hedge against interest rate fluctuations, maturing in June 2024 [48]. - The effect of hedging instruments for the three months ended March 31, 2024 resulted in a change of $793,830 for net investments in foreign operations [55]. Employee Compensation and Benefits - The company recognized share-based payment expenses of $161.85 million during the period [90]. - TSMC's total liabilities under cash-settled share-based payment arrangements as of March 31, 2024, amounted to NT$82,942 thousand, compared to NT$23,379 thousand as of March 31, 2023 [119]. - The profit-sharing bonus to employees for the three months ended March 31, 2024, was $13,472,869, up from $12,363,840 in the same period of 2023, indicating an increase of approximately 9% [121].