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Financial Review Unconsolidated
93
(21) Merger
In order to integrate resources, reduce operating costs,
enlarge business scales, and improve its financial structure,
profitability and global competitiveness, based on the resolution
of the board of directors’ meeting on February 26,
2004, the Company merged with SiSMC, the dissolved company,
on July 1, 2004. The merger was approved by the relevant
government authorities. All the assets, liabilities, rights,
and obligations of SiSMC have been fully incorporated into
the Company since July 1, 2004. The accounting treatment
regarding the merger is in compliance with the ROC SFAS No.
25 “Enterprise Mergers - Accounting of Purchase Method.”
Relevant information required by ROC SFAS No. 25 is disclosed
as follows:
a. Information of the dissolved company:
SiSMC was split from Silicon Integrated Systems Corp. on
December 15, 2003. It was mainly engaged in manufacturing
of integrated circuits and components of semiconductors.
b. Effective date, percentage of acquisition and accounting
treatment:
Based on the agreement and the resolution of the board
of directors’ meeting, the effective date of the merger
was July 1, 2004. All the stocks of the dissolved company
were exchanged by the surviving company’s newly issued
shares, and the merger was accounted for under the purchase
method.
c. The period of combining the dissolved company’s operating
result:
The operating result for the period from July 1, 2004 to
December 31, 2004 of the dissolved company was integrated
into the operating result of the Company.
d. Acquisition cost and the types, quantities, and amount of
securities issued for the merger:
According to the agreement, 357,143 thousand common
shares, amounting to NTD 3,571 million, were newly issued
by the Company for the merger. The newly issued shares
were allocated to the dissolved company’s shareholders in
proportion to their ownership. 2.24 common shares were
to be exchanged for 1 new share. Since SiSMC was not a
public company, there is no market value. Thus, the acquisition
cost was determined based on the appraisal made by
China Property Appraising Center Co., Ltd.
e. Amortization method and useful lives for goodwill or deferred
credit:
The difference between the acquisition cost and the fair
value of identifiable net assets was recognized as goodwill,
which was to be amortized under the straight-line
method for 15 years according to the Article 35 of Enterprise
Mergers and Acquisitions Law of the ROC.
f. Contingent price, warrants, or commitments and accounting
treatments in the merger contracts:
None.
g. Decisions of disposal of significant assets from the merger:
None.
h. Pro forma information on operating results:
The operating result for the period from July 1, 2004 to
December 31, 2004 of the dissolved company was consolidated
into the financial statements of the Company.
Since SiSMC was split from Silicon Integrated Systems
Corp. on December 15, 2003, the pro forma operating results
from January 1, 2003 to December 14, 2003 of SiSMC
are included in the following pro forma information. The
pro forma information on the operating results stated below
is based on the assumption that the Company merged
with SiSMC on January 1, 2004 and 2003.
For the year ended
December 31,
2004 2003
Net operating revenues $119,567,347 $91,666,999
Net income $30,669,982 $12,968,078
Weighted average of shares
outstanding
Shares expressed in thousands
17,021,234 17,032,221
Earnings per share-basic (NTD) $1.80 $0.76
Note 4