ANNUAL REPORT 2004 - ELMOS Semiconductor AG

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MANAGEMENT BOARD ELMOS – THE COMPANY THE ELMOS SHARE CORPORATE GOVERNANCE 82 For protection against interest rate fluctuations from short-term revolving obliga- tions at variable interest rates, the company has concluded an interest rate swap agreement over a basic amount of 20,000,000 Euro. This agreement has a term of five years, expiring in 2008. The interest swap has not been treated as a hedging instrument according to SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, in the consolidated financial statements. The fair value changes of the interest swap transaction, insignificant in 2004, are immediately recorded as success-effective and stated under liabilities. The fair value of the interest swap, de- termined on the basis of official price offers, comes to 186,051 Euro as of December 31, 2004. Credit risks The company performs ongoing credit evaluations of its customers and generally requires no collateral. Reserves are maintained for potential credit losses. Such losses remained within the Management Board’s expectations and customary limits. Reclassifications Certain prior period amounts were reclassified to conform with the current fiscal year’s presentation and for the purpose of certain corrections. Inventories Inventories are stated at average purchase or construction costs considering the lower of cost or market principle. Property, plant and equipment Property, plant and equipment are stated at respective purchase or construction costs. Tangible assets are written off over their respective estimated useful lives using the straight-line method:
GROUP STATUS REPORT FINANCIAL STATEMENTS GROUP STRUCTURE GLOSSARY Financial statements ÿ Notes Auditor’s certificate Buildings 25 years Improvements 10 years Plant and office equipment 5 to 12 years Software 3 years As of January 1, 2004 the company revised its estimate of the economic useful lives of certain machines (essentially testers). In previous years these machines were written off over eight to ten years. The useful lives were then extended to twelve years in view of the fact that testers have been used considerably longer than ten years in the past. The changes were carried out in order to present the terms of use of these assets more accurately. It has the effect that the write-off expense was decreased and the earnings after taxes were increased by roughly 605,828 Euro (0.03 Euro per share). Foreign currency translation and transactions Assets and liabilities of the company’s subsidiaries abroad are translated into Euro at period-end exchange rates. Net exchange gains or losses resulting from this translation are not included in net income and are stated success-ineffective as a separate item under shareholders’ equity. Income and expense accounts are translated at weighted average exchange rates for the recorded period. The company enters from time to time into forward exchange contracts to hedge foreign currency transactions on a continuing basis for periods consistent with its committed exposures. These hedging activities minimize the impact of foreign exchange rate movements on the company’s profit situation. The company does not engage in speculation. The company’s foreign exchange contracts do not subject the company’s profit situation to risk because gains and losses on these contracts generally offset losses and gains on the assets and liabilities being hedged. As of December 31, 2004 there were no outstanding forward exchange contracts. elmos annual report 2004 83
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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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ELMOS CONNECTS ELECTRONICS WITH MEC
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Page 129: FINANCIAL CALENDAR Press conference
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ANNUAL REPORT 2004 - ELMOS Semiconductor AG

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