ANNUAL REPORT 2004 - ELMOS Semiconductor AG

GROUP STATUS REPORT FINANCIAL STATEMENTS GROUP STRUCTURE GLOSSARY
Financial statements
ÿ Notes
Auditor’s certificate
The equity securities in the portfolio showed a constantly rising performance in the
past fiscal year up to March 2004. After that a repeated decrease in fair value occurred
until the balance-sheet date. Because securities are still balanced significantly below
purchase cost as of December 31, 2004 and this decline in value existed considerably
longer than a year as of balance-sheet date, SFAS No. 115 rules that the qualification
as temporary decline in value is only possible if other factors, mirrored in the issuer’s
sphere and his fundamental financial data, justify such a qualification.
The company has considered all available evidence in its assessment of whether the
decline in fair value of the balanced equity securities is temporary or other-than-tem-
porary, in particular
ÿ the financial situation and current prospects of the issuer, especially
the current cash flow data and the targeted earnings development,
ÿ the company’s intent and ability to retain its investment for a period
of time sufficient to allow a complete recovery of the fair value,
ÿ analysts’ and industry experts’ assessments and evaluations,
ÿ the equity securities’ performance after the balance-sheet date, and
ÿ the equity securities’ past performance in 2003 and 2004 and the
comparison with the performances of comparable securities and indices.
Based upon its valuation as of December 31, 2004, the company management has
assessed that the decline in fair value is essentially temporary. The write-down is
considered other-than-temporary to an amount of three million Euro and is accor-
dingly recorded as success-effective in the income statement at stated amount.
Fair value of financial instruments
The book value of financial instruments such as accounts receivable and notes and
accounts payable approximates their fair value based on the short-term maturity of
these instruments.
The book value of amounts payable to banks approximates the fair value based on
quoted market prices for the same or similar issues as well as the current interest
rates offered to the company. The company observes the value development of
liabilities at fixed and variable interest rates as well as of long-term and current
obligations. Within this context, an examination of business and other financial risks
is carried out.
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