ANNUAL REPORT 2004 - ELMOS Semiconductor AG

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MANAGEMENT BOARD ELMOS – THE COMPANY THE ELMOS SHARE CORPORATE GOVERNANCE 78 The approach of the revised Statement 123 (R) corresponds in principle with the approach described in the replaced Statement 123. But from now on the recording of all share-based payments including share options at fair value is mandatory. The company is expecting a significant influence on both the financial and profit situ- ation of the fiscal year 2005 from the implementation. Regarding the amount of this effect please compare the pro forma earnings under note 9. Consolidation The consolidated financial statements include all companies ELMOS holds a majority interest in. All significant accounts and transactions between the consolidated companies have been eliminated upon consolidation. Interests in companies of more than 20 percent but not in excess of 50 percent are recorded, if substantial, using the equity method. In January 2003 the U.S. Financial Accounting Standards Board published Interpre- tation No. 46, “Consolidation of Variable Interest Entities. An Interpretation of ARB No. 51” (FIN 46). FIN 46 clarifies the application of Accounting Research Bulletin (ARB) No. 51, “Consolidated Financial Statements”, with regard to those companies to be included whose equity capital investor does not exercise control according to the control concept. It provides for the consolidation of those companies whose expected losses and gains are taken over for the most part by the reporting group on the basis of partnership or other contractual terms, or financial interests. The application of this interpretation leads to the mandatory consolidation of the following companies operating in the field of research and development: DMOS GmbH, Dresden The company concluded an agreement with DMOS GmbH, Dresden (DMOS) on research and development services for particular projects effective November 1, 2002. In addition to pre-financing in the form of underwritten loans for the acquisition of property, plant and equipment this agreement provides for regular monthly install- ments over the term of 36 months for the financing of business activity and the compensation for the DMOS development services. The agreement also includes specifications concerning services and procedures for the company’s acceptance of development results. Since 2003 DMOS has predominantly provided services to the company as so-called “primary beneficiary”.
GROUP STATUS REPORT FINANCIAL STATEMENTS GROUP STRUCTURE GLOSSARY Financial statements ÿ Notes Auditor’s certificate Economically and legally, the company is the proprietor of the results stemming from the joint project activities. Furthermore, the company is granted an unlimited pur- chase option on a majority interest in DMOS which can be exercised from October 2005 at the soonest. The company regards the means provided by the shareholders as sufficient in order to realize the object of the business, i.e. research and development activities. In excess of the means promised in the agreement of a maximum 370,000 Euro per quarter, the company does not assume any risks of DMOS losses. The voting rights distribution at DMOS corresponds with the interest quota, as does the allocation of gains and losses. Other financing agreements between DMOS and the shareholders or banking institutes do not exist. Because of substance considerations DMOS was not included in the consolidation. The monthly payments are disclosed in the consolidated income statements under research and development expenses. MECHALESS Systems GmbH, Karlsruhe The company acquired a 49 percent interest in MECHALESS Systems GmbH, Karls- ruhe (MECHALESS) as so-called “primary beneficiary” effective September 30, 2003. In addition to that, two percent of the share in MECHALESS have been attributable to ELMOS as economic owner since 2004. MECHALESS concerns itself with the application development for sensors. Apart from the investment the company concluded a development and distribution agreement with MECHALESS by which MECHALESS receives a fixed amount per quarter for its development activities. The amount of this quarterly installment will be reduced to zero until 2007 and substituted with a sales commission for products transferred to serial production. Economically, the company is the proprietor of the basis technology put to use as well as the results of the development and application activities financed by ELMOS. The company regards the means provided by the shareholders as sufficient in order to realize the object of the business, i.e. development and application activities. There are no promises of means by the other shareholders. They have also no re- course against the company. In excess of the means promised in the agreement of a maximum 400,000 Euro per quarter, the company does not assume any risks of MECHALESS losses. elmos annual report 2004 79
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ANNUAL REPORT 2004
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Five-year overview ELMOS Group acco
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ÿ Chronicle 2004 1 ST QUARTER 2 ND
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ÿ Table of contents MANAGEMENT BOA
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MANAGEMENT BOARD ELMOS - THE COMPAN
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ELMOS IS A PART OF YOUR CAR’S FUT
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ELMOS NETWORKS YOUR CAR EFFECTIVELY
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GROUP STATUS REPORT FINANCIAL STATE
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ELMOS ASSISTS YOUR DRIVING At night
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ELMOS ASSISTS YOUR DRIVING Innovati
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ANNUAL REPORT 2004 - ELMOS Semiconductor AG

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