Sunedison (SUNEQ) 10-K/A 2004 FY Annual report (amended)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

AMENDMENT NO. 1

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

Commission file number 001-13828

MEMC Electronic Materials, Inc.

(Exact name of registrant as specified in its charter)

Delaware	56-1505767
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

501 Pearl Drive (City of O’Fallon) St. Peters, Missouri	63376
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code

(636) 474-5000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered:
$.01 Par Value Common Stock	New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act:

None

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2)    Yes  x    No  ¨

The aggregate market value of the voting stock held by nonaffiliates of the registrant, based upon the closing price of such stock on June 30, 2004, as reported by the New York Stock Exchange, was approximately $815,357,601.

The number of shares outstanding of the registrant’s Common Stock as of April 29, 2005, was 209,122,223 shares.

DOCUMENTS INCORPORATED BY REFERENCE

1. Portions of the registrant’s 2004 Annual Report (Part II)

2. Portions of the registrant’s 2005 Proxy Statement (Part III)

EXPLANATORY NOTE

This Amendment No. 1 to Form 10-K/A for the fiscal year ended December 31, 2004 of MEMC Electronic Materials, Inc. (“MEMC”) is being filed to include the financial statements of Taisil Electronic Materials Corporation (“Taisil”) for the one month ended January 31, 2004, as required by Rule 3-09 of Regulation S-X. Until January 31, 2004, we owned 45% of Taisil. Effective as of February 1, 2004, we increased our ownership to 99.97% of the outstanding shares of Taisil and the financial results of Taisil were consolidated with MEMC. No other information contained in the Form 10-K for the fiscal year ended December 31, 2004 has been updated or amended by this Amendment No. 1.

PART IV

Item 15.Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) The following documents are filed as part of this report:

1.Financial Statements

The following consolidated financial statements of us and our subsidiaries, included on pages 25 through 54 of the 2004 Annual Report, and the Reports of the Independent Register Public Accounting Firm thereon of KPMG LLP appearing on page 55 and 56 of such report and Management’s Report on Internal Control Over Financial Reporting appearing on page 57 of such report, are incorporated herein by reference:

Consolidated Statements of Operations—Years Ended December 31, 2004, 2003 and 2002.

Consolidated Balance Sheets—December 31, 2004 and 2003.

Consolidated Statements of Cash Flows—Years Ended December 31, 2004, 2003 and 2002.

Consolidated Statements of Stockholders’ Equity (Deficiency)—Years Ended December 31, 2004, 2003 and 2002.

Notes to Consolidated Financial Statements.

Reports of the Independent Registered Public Accounting Firm.

Management’s Report on Internal Control over Financial Reporting.

The following financial statements of Taisil Electronic Materials Corporation, as required by Rule 3-09 of Regulation S-X, appearing herein:

Report of Independent Public Accounting Firm	T-1
Balance Sheets – January 31, 2004 and December 31, 2003 and 2002	T-2
Statements of Operations –One Month Ended January 31, 2004 and Years Ended December 31, 2003 and 2002	T-4
Statements of Changes in Stockholders’ Equity – One Month Ended January 31, 2004 and Years Ended December 31, 2003 and 2002	T-5
Statements of Cash Flows – One Month Ended January 31, 2004 and Years Ended December 31, 2003 and 2002	T-6
Notes to Financial Statements	T-7

1

2.Financial Statement Schedules
Report of Independent Registered Public Accounting Firm on Financial Statement Schedule	F-1
Valuation and Qualifying Accounts	F-2
3.Exhibits

Exhibit No.	Description
2-a	Restructuring Agreement between TPG Wafer Holdings LLC and the Company, dated as of November 13, 2001 (Incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K dated November 28, 2001)
2-b	Merger Agreement between TPG Wafer Holdings LLC and the Company, dated as of November 13, 2001 (Incorporated by reference to Exhibit 2.2 of the Company’s Current Report on Form 8-K dated November 28, 2001)
3-(i)	Restated Certificate of Incorporation of the Company (Incorporated by reference to Exhibit 3-a of the Company’s Form 10-Q for the Quarter ended June 30, 1995)
3-(i)(a)	Certificate of Amendment of Restated Certificate of Incorporation of the Company as filed with the Secretary of State of the State of Delaware on June 2, 2000 (Incorporated by reference to Exhibit 3-(i)(a) of the Company’s Form 10-Q for the Quarter ended June 30, 2000)
3-(i)(b)	Certificate of Amendment of Restated Certificate of Incorporation of the Company as filed with the Secretary of State of the State of Delaware on July 10, 2002 (Incorporated by reference to Exhibit 3-(i)(b) of the Company’s Form 10-Q for the Quarter ended September 30, 2002)
3-(ii)	Restated By-laws of the Company (Incorporated by reference to Exhibit 3(ii) of the Company’s Form 10-Q for the Quarter ended March 31, 2004)
4-b	Form of Warrant Certificate (Incorporated by reference to Exhibit 4.6 of the Company’s Current Report on Form 8-K dated November 28, 2001)
10-a	Share Sale and Purchase Agreement dated January 16, 2004 by and among the Company, China Steel Corporation, China Development Industrial Bank and Chiao Tung Bank (Incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K dated January 30, 2004)
10-b	Letter of Exercise of Call Option by Taisil Electronic Materials Corporation to Robina Finance & Leasing Corporation, Ltd. dated February 3, 2004 (Incorporated by reference to Exhibit 2.2 of the Company’s Current Report on Form 8-K dated January 30, 2004)
10-c	Joint Venture Agreement dated August 28, 1990 among the Company, Pohang Iron and Steel Company, Ltd. (“POSCO”) and Samsung Electronics Company, Ltd. (“Samsung”) (Incorporated by reference to Exhibit 10-c of Amendment No. 1 to the Company’s Form S-1 Registration Statement No. 33-92412)
10-c(1)	First Amendment to Joint Venture Agreement dated December 9, 1993 among the Company, POSCO and Samsung (Incorporated by reference to Exhibit 10-d of Amendment No. 1 to the Company’s Form S-1 Registration Statement No. 33-92412)
10-c(2)	Second Amendment to Joint Venture Agreement dated December 30, 1994 among the Company, POSCO and Samsung (Incorporated by reference to Exhibit 10-e of Amendment No. 1 to the Company’s Form S-1 Registration Statement No. 33-92412)

2

Exhibit No.	Description
10-g	Share Transfer Agreement dated as of August 1, 2004 by and among Texas Instruments Incorporated, the Company, and MEMC Southwest Inc. (Incorporated by reference to Exhibit 10-g of the Company Form 10-Q for the Quarter ended June 30, 2004)
10-i	Registration Rights Agreement by and among the Company, TPG Wafer Holdings LLC and the Guarantors specified therein, dated as of November 3, 2001 (Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K dated November 28, 2001)
10-i(1)	Amendment to Registration Rights Agreement dated July 15, 2002, among the Company, TPG Wafer Holdings LLC and Guarantors specified therein (Incorporated by reference to Exhibit 10-i(1) of the Company’s Form 10-Q for the quarter ended September 30, 2002)
10-i(2)	Amendment No. 2 to Registration Rights Agreement dated November 14, 2002, among the Company, TPG Wafer Holdings LLC and the Guarantors specified therein (Incorporated by reference to Exhibit 10-i(2) of the Company’s Form 10-K for the Year ended December 31, 2002)
10-i(3)	Amendment No. 3 to Registration Rights Agreement dated February 17, 2003, among the Company, TPG Wafer Holdings LLC and the Guarantors specified therein (Incorporated by reference to Exhibit 10-i(3) of the Company’s Form 10-Q for the quarter ended March 31, 2003)
10-i(4)	Amendment No. 4 to Registration Rights Agreement dated August 31, 2003, among the Company, TPG Wafer Holdings LLC and the Guarantors specified therein (Incorporated by reference to Exhibit 10-i(4) of the Company’s Form 10-Q for the quarter ended September 30, 2003)
10-j	Form of Master Reserve Volume Agreement (Incorporated by reference to Exhibit 10-m of the Company’s Form 10-K for the Year ended December 31, 1995)
10-k	Management Advisory Agreement between the Company and TPG GenPar III, L.P., dated as of November 13, 2001 (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated November 28, 2001)
10-m	MEMC Technology License Agreement dated as of July 31, 1995, between Albemarle Corporation and the Company (Incorporated by reference to Exhibit 10-tt of the Company’s Form 10-K for the Year ended December 31, 1995)
*10-n	Seller Technology License Agreement dated as of July 31, 1995, among Albemarle Corporation, the Company, and MEMC Pasadena, Inc. (Incorporated by reference to Exhibit 10-ll of the Company’s Form 10-K/A Amendment No. 2 for the Year ended December 31, 1997)
*10-o	Technology Purchase Agreement dated as of July 31, 1995, among Albemarle Corporation and the Company (Incorporated by reference to Exhibit 10-mm of the Company’s Form 10-K/A Amendment No. 2 for the Year ended December 31, 1997)
10-p	Ground Lease Agreement dated as of July 31, 1995, between Albemarle Corporation and MEMC Pasadena, Inc. (Incorporated by reference to Exhibit 10-nn of the Company’s Form 10-K/A Amendment No. 2 for the Year ended December 31, 1997)
10-p(1)	Amendment to Ground Lease Agreement dated as of May 31, 1997, between the Company, MEMC Pasadena, Inc., and Albemarle Corporation (Incorporated by reference to Exhibit 10-nn(1) of the Company’s Form 10-K/A Amendment No. 2 for the Year ended December 31, 1997)
†10-aa	Consulting Agreement dated December 15, 2003 between the Company and Thomas P. Stiffler (Incorporated by reference to Exhibit 10-aa of the Company’s Form 10-K for the Year ended December 31, 2003)
†10-bb	Separation Agreement and General Release by and between the Company and Chandramohan Subramaniam (Incorporated herein by reference to Exhibit 10 of the Company’s Form S-3 Registration Statement No. 333-122520)

3

Exhibit No.	Description
†10-cc	MEMC Electronic Materials, Inc. 1995 Equity Incentive Plan as Amended and Restated on January 26, 2004 (Incorporated by reference to Exhibit 10-cc of the Company’s Form 10-K for the Year ended December 31, 2003)
†10-cc(1)	Form of Restricted Stock Unit Award Agreement (Incorporated by reference to Exhibit 10-cc(1) of the Company Form 10-Q for the Quarter ended June 30, 2004)
†10-cc(2)	Form of Stock Option and Restricted Stock Agreement (Incorporated by reference to Exhibit 10-t(1) of the Company’s Form 10-K for the Year ended December 31, 1995)
†10-cc(3)	Form of Stock Option and Performance Restricted Stock Agreement (Incorporated by reference to Exhibit 10-yy of the Company’s Form 10-K for the Year ended December 31, 1995)
†10-cc(4)	Form of Stock Option Agreement (Incorporated by reference to Exhibit 10-zz of the Company’s Form 10-K for the Year ended December 31, 1995)
†10-cc(5)	Form of Stock Option and Performance Restricted Stock Agreement (Incorporated by reference to Exhibit 10-nnn of the Company’s Form 10-Q for the Quarter ended March 31, 1997)
†10-cc(6)	Form of Stock Option Agreement (Incorporated by reference to Exhibit 10-ooo of the Company’s Form 10-Q for the Quarter ended March 31, 1997)
†10-cc(7)	Form of Stock Option Agreement (Non-employee Directors) (Incorporated by reference to Exhibit 10-ppp of the Company’s Form 10-Q for the Quarter ended March 31, 1997)
†10-cc(8)	Form of Stock Option Agreement (Incorporated by reference to Exhibit 10-cc(7) of the Company’s Form 10-K for the Year ended December 31, 1999)
†10-cc(9)	Form of Stock Option Agreement (4-year cliff vesting) (Incorporated by reference to Exhibit 10-cc(9) of the Company’s Form 10-Q for the Quarter ended March 31, 2002)
†10-cc(10)	Form of Stock Option Agreement (2-year cliff vesting) (Incorporated by reference to Exhibit 10-cc(10) of the Company’s Form 10-Q for the Quarter ended March 31, 2002)
†10-cc(11)	Form of Stock Option Agreement (7-year cliff vesting) (Incorporated by reference to Exhibit 10-cc(11) of the Company’s Form 10-Q for the Quarter ended March 31, 2002)
†10-cc(12)	Form of Stock Option Agreement (Outside Directors) (Incorporated by reference to Exhibit 10-cc(12) of the Company’s Form 10-K for the Year ended December 31, 2003)
†10-dd	MEMC Electronic Materials, Inc. 2001 Equity Incentive Plan as Restated on March 2, 2004 (Incorporated by reference to Exhibit 10-dd of the Company’s Form 10-K for the Year ended December 31, 2003)
†10-dd(1)	Form of Stock Option Agreement (4 year vesting) (Incorporated by reference to Exhibit 10-dd(1) of the Company’s Form 10-Q for the Quarter ended March 31, 2002)
†10-dd(2)	Form of Stock Option Agreement (7 year cliff vesting) (Incorporated by reference to Exhibit 10-dd(2) of the Company’s Form 10-Q for the Quarter ended March 31, 2002)
†10-dd(3)	Form of Stock Option Agreement (end of contract vesting) (Incorporated by reference to Exhibit 10-dd(3) of the Company’s Form 10-K for the Year ended December 31, 2002)
†10-ee	Retirement Agreement dated December 29, 2003 between the Company and James M. Stolze (Incorporated by reference to Exhibit 10-dd of the Company’s Form 10-K for the Year ended December 31, 2003)
†10-ff	Stock Option Grant Agreement (Incorporated herein by reference to Exhibit 99.1 to the Company’s Form S-8 Registration Statement filed March 1, 2002)
†10-gg	Stock Option Grant Agreement (Incorporated herein by reference to Exhibit 99.2 to the Company’s Form S-8 Registration Statement filed March 1, 2002)

4

Exhibit No.	Description
†10-hh	Written Description of MEMC Electronic Materials, Inc. Cash Incentive Plan Covering Executive Officers (Incorporated by reference to Exhibit 10-hh of the Company’s Form 10-Q for the Quarter ended September 30, 2004)
†10-ii	Employment Agreement effective as of March 26, 2002 between the Company and Nabeel Gareeb (Incorporated by reference to Exhibit 10-ii of the Company’s Form 10-Q for the Quarter ended June 30, 2002)
†10-ii(1)	Stock Option Grant Agreement (2002 Service Option) (Incorporated by reference to Exhibit 10-ii(1) of the Company’s Form 10-Q for the Quarter ended June 30, 2002)
†10-ii(2)	Stock Option Grant Agreement (Four Year Vesting) (Incorporated by reference to Exhibit 10-ii(2) of the Company’s Form 10-Q for the Quarter ended June 30, 2002)
†10-ii(3)	Stock Option Grant Agreement (Seven Year Vesting) (Incorporated by reference to Exhibit 10-ii(3) of the Company’s Form 10-Q for the Quarter ended June 30, 2002)
†10-ii(4)	Amendment to Stock Option Grant Agreement (2002 Service Option) (Incorporated by reference to Exhibit 10-ii(4) of the Company Form 10-Q for the Quarter ended June 30, 2004)
†10-jj	Form of Indemnification Agreement (Incorporated by reference to Exhibit 10-jj of the Company’s Form 10-Q for the Quarter ended September 30, 2002)
†10-jj(1)	Form of Indemnification Agreement (Incorporated by reference to Exhibit 10-jj(1) of the Company’s Form 10-Q for the Quarter ended March 31, 2003)
†10-kk	Summary of Compensation Arrangements for Certain Named Executive Officers (filed previously)
†10-ll	Summary of Director Compensation (filed previously)
†10-mm	Agreement dated as of July 7, 2003 between the Company and Jonathon P. Jansky (Incorporated by reference to Exhibit 10-nn of the Company’s Form 10-Q for the Quarter ended September 30, 2003)
10-aaa	Revolving Credit Agreement, dated as of December 5, 2002, among the Company, the lenders party thereto and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10-aaa of the Company’s Form 10-K for the Year ended December 31, 2002)
10-bbb	Revolving Credit Agreement, dated as of December 21, 2001, among the Company, the lenders party thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K dated January 14, 2002)
10-bbb(1)	Security Agreement, dated as of December 21, 2001, among the Company, each subsidiary listed on Schedule I thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10.8 of the Company’s Current Report on Form 8-K dated January 14, 2002)
10-bbb(2)	Pledge Agreement, dated as of December 21, 2001, among the Company, each subsidiary listed on Schedule I thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10.9 of the Company’s Current Report on Form 8-K dated January 14, 2002)
10-bbb(3)	Indemnity, Subrogation and Contribution Agreement, dated as of December 21, 2001, among the Company, each subsidiary listed on Schedule I thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10.10 of the Company’s Current Report on Form 8-K dated January 14, 2002)
10-bbb(4)	Guarantee Agreement, dated as of December 21, 2001, among the Company, each subsidiary listed on Schedule I thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10.11 of the Company’s Current Report on Form 8-K dated January 14, 2002)
10-bbb(5)	Amendment No. 1, dated as of March 21, 2002, to the Revolving Credit Agreement, dated as of December 21, 2002, among the Company, the lenders party thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10-www(5) of the Company’s Form 10-Q for the Quarter ended March 31, 2002)

5

Exhibit No.	Description
10-bbb(6)	Omnibus Amendment Agreement dated January 25, 2002, among the Company, Citicorp USA, Inc., and the other signatories thereto (Incorporated by reference to Exhibit 10-www(6) of the Company’s Form 10-Q for the Quarter ended March 31, 2002)
10-bbb(7)	Omnibus Amendment Agreement No. 2 dated March 27, 2002, among the Company, Citicorp USA, Inc., and the other signatories thereto (Incorporated by reference to Exhibit 10-www(7) of the Company’s Form 10-Q for the Quarter ended March 31, 2002)
10-bbb(8)	Amendment No. 2, dated June 21, 2002, to the Revolving Credit Agreement, dated December 21, 2001, among the Company, the lenders party thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10-www(8) of the Company’s Form 10-Q for the Quarter ended June 30, 2002)
10-bbb(9)	Amendment No. 1, dated as of March 3, 2003, to the Security Agreement, dated as of December 21, 2001, among the Company, each subsidiary of the Company listed on Schedule I thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10-www(9) of the Company’s Form 10-K for the Year ended December 31, 2002)
10-bbb(10)	Amendment No. 1, dated as of March 3, 2003, to the Pledge Agreement, dated as of December 21, 2001, among the Company, each subsidiary of the Company listed on Schedule I thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10-www(10) of the Company’s Form 10-K for the Year ended December 31, 2002)
10-bbb(11)	Italian Supplement, dated as of March 3, 2003, to the Pledge Agreement, dated as of December 21, 2001, among the Company, each subsidiary of the Company listed on Schedule I thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10-www(11) of the Company’s Form 10-K for the Year ended December 31, 2002)
10-bbb(12)	Amendment No. 3 dated as of March 11, 2003, to the Revolving Credit Agreement, dated as of December 21, 2001, among the Company, the lenders party thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10-www(12) of the Company’s Form 10-K for the Year ended December 31, 2002)
10-bbb(13)	Amendment No. 4 dated as of June 13, 2003, to the Revolving Credit Agreement, dated as of December 21, 2001, among the Company, the lenders party thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10-www(13) of the Company’s Form 10-Q for the Quarter ended June 30, 2003)
10-ccc	Reimbursement Agreement, dated as of December 21, 2001 by and among the Company, TPG Partners III, L.P., TCW/Crescent Mezzanine Partners III, L.P, TCW/Crescent Mezzanine Trust III, Green Equity Investors III, L.P. and Green Equity Investors Side III, L.P, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated January 14, 2002)
10-ccc(1)	Amended and Restated Security Agreement, dated as of December 21, 2001, among the Company, each subsidiary listed on Schedule I thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K dated January 14, 2002)
10-ccc(2)	Amended and Restated Pledge Agreement, dated as of December 21, 2001, among the Company, each subsidiary listed on Schedule I thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K dated January 14, 2002)
10-ccc(3)	Amended and Restated Indemnity, Subrogation and Contribution Agreement, dated as of December 21, 2001, among the Company, each subsidiary listed on Schedule I thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K dated January 14, 2002)`

6

Exhibit No.	Description
10-ccc(4)	Amended and Restated Guarantee Agreement, dated as of December 21, 2001, among the Company, each subsidiary listed on Schedule I thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K dated January 14, 2002)
10-ccc(5)	Amendment No. 1, dated as of March 3, 2003, to the Amended and Restated Security Agreement, dated as of December 21, 2001, among the Company, each subsidiary of the Company listed on Schedule I thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10-xxx(5) of the Company’s Form 10-K for the Year ended December 31, 2002)
10-ccc(6)	Amendment No. 1, dated as of March 3, 2003, to the Amended and Restated Pledge Agreement, dated as of December 21, 2001, among the Company, each subsidiary of the Company listed on Schedule I thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10-xxx(6) of the Company’s Form 10-K for the Year ended December 31, 2002)
10-ccc(7)	Italian Supplement, dated as of March 3, 2003, to the Amended and Restated Pledge Agreement, dated as of December 21, 2001, among the Company, each subsidiary of the Company listed on Schedule I thereto, and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10-xxx(7) of the Company’s Form 10-K for the Year ended December 31, 2002)
10-ddd	Termination and Funding Agreement, dated as of December 21, 2001, by and among the Company, TPG Wafer Credit Partners LLC, T(3) Partners II, L.P., T(3) Parallel II, L.P., TCW/Crescent Mezzanine Partners III, L.P., TCW/Crescent Mezzanine Trust III, Green Equity Investors III, L.P., Green Equity Investors Side III, L.P., and Citicorp USA, Inc. (Incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K dated January 14, 2002)
13	Pages 10 through 57 and page 59 of the Company’s 2004 Annual Report (filed previously)
18	Preferability Letter of KPMG LLP (Incorporated by reference to Exhibit 18 of the Company’s Form 10-Q for the Quarter ended March 31, 2003)
21	Subsidiaries of the Company (filed previously)
**23.1	Consent of KPMG LLP
**23.2	Consent of KPMG LLP Certified Public Accountants
**31.1	Certification by the Chief Executive Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
**31.2	Certification by the Chief Financial Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
**32	Certification by the Chief Executive Officer and Chief Financial Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Confidential treatment of certain portions of these documents has been granted.

** Filed herewith.

† These exhibits constitute management contracts, compensatory plans and arrangements required to be filed as an exhibit to this form pursuant to Item 14(c) of this report.

7

Report of Independent Public Accounting Firm

The Board of Directors

Taisil Electronic Materials Corporation:

We have audited the accompanying balance sheet of Taisil Electronic Materials Corporation as of December 31, 2002, and the related statements of operations, changes in stockholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the accompanying financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Taisil Electronic Materials Corporation as of December 31, 2002, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles in the Republic of China.

Accounting principles generally accepted in the Republic of China vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such difference is presented in note 16 to the financial statements.

/s/ KPMG Certified Public Accountants

Taipei, Taiwan (the Republic of China)

January 17, 2003

T-1

TAISIL ELECTRONIC MATERIALS CORPORATION

BALANCE SHEETS

January 31, 2004, and December 31, 2003 and 2002

(expressed in thousands of US dollars)

	January 31, 2004			December 31,
				2003		2002
	(unaudited)			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents (note 4)	$	8,737		9,595		12,279
Short-term investments (note 5)		1,327		4,183		2,208
Notes and accounts receivable, net (note 6)		7,344		6,799		9,756
Receivables from related parties (note 3)		4,150		3,982		398
Other current financial assets (note 14)		148		145		142
Inventories, net (note 7)		11,373		13,545		12,534
Prepayments and other current assets (note 3)		4,824		2,396		866
Deferred income tax, net (note 13)		2,238		2,238		971
Total current assets		40,141		42,883		39,154
Property, plant and equipment (notes 3, 8 and 14):
Buildings		51,901		51,902		51,885
Machinery and equipment		239,701		239,711		237,024
Furniture and fixtures		5,487		5,487		7,088
		297,089		297,100		295,997
Less: accumulated depreciation		(199,477	)	(198,267	)	(184,785	)
Prepayments for equipment		3,980		3,972		5,397
Net property, plant, and equipment		101,592		102,805		116,609
Other assets:
Deferred technology fees (note 3)		306		319		820
Deferred income tax, net (note 13)		1,066		1,066		1,990
Other assets (note 14)		6,891		6,891		6,712
Total other assets		8,263		8,276		9,522
	$	149,996		153,964		165,285

See accompanying notes to financial statements

T-2

TAISIL ELECTRONIC MATERIALS CORPORATION

BALANCE SHEETS (Continued)

January 31, and 2004, December 31, 2003 and 2002

(expressed in thousands of US dollars, except par value)

	January 31, 2004			December 31,
				2003		2002
	(unaudited)			(unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term loans (note 9)	$	11,293		11,879		21,366
Short-term bills payable (note 9)		2,992		881		12,057
Current portion of long-term loans (notes 3, 10 and 14)		667		656		6,404
Notes and accounts payable (note 3)		5,191		5,958		2,605
Payables for construction in progress and prepayments for equipment		200		464		1,264
Accrued expenses and other current liabilities (note 3)		6,064		6,184		5,449
Total current liabilities		26,407		26,022		49,145
Long-term loans (notes 3, 10 and 14)		6,975		7,018		5,425
Accrued pension liabilities (note 11)		1,990		2,187		1,743
Total liabilities		35,372		35,227		56,313
Commitments and contingent liabilities (note 15)
Stockholders’ equity (note 12):
Common stock - par value NT$10		130,913		130,913		130,913
Accumulated deficit		(16,289	)	(12,176	)	(21,941	)
Total stockholders’ equity		114,624		118,737		108,972
	$	149,996		153,964		165,285

See accompanying notes to financial statements

T-3

TAISIL ELECTRONIC MATERIALS CORPORATION

STATEMENTS OF OPERATIONS

One month ended January 31, 2004, and the years ended December 31, 2003 and 2002

(expressed in thousands of US dollars, except for per share data)

	One month ended January 31, 2004			Year ended December 31,
				2003		2002
	(unaudited)			(unaudited)
Net sales (note 3)	$	3,649		81,614		78,345
Cost of goods sold (note 3)		(5,817	)	66,360		67,164
Gross margin (loss)		(2,168	)	15,254		11,181
Operating expenses:
Selling, general and administrative		329		3,998		7,417
Research and development		113		1,291		1,413
		442		5,289		8,830
Operating income (loss)		(2,610	)	9,965		2,351
Nonoperating income (expense):
Interest income		7		95		175
Interest expense (note 3)		(42	)	(827	)	(2,096	)
Loss on foreign exchange, net		(220	)	(280	)	(611	)
Other income (loss), net		(1,248	)	1,273		1,089
		(1,503	)	261		(1,443	)
Income (loss) before income tax		(4,113	)	10,226		908
Income tax expense (benefit) (note 13)		—		(273	)	3,842
		(4,113	)	10,499		(2,934	)
Casualty loss - net (note 8)		—		(734	)	—
Net income (loss)	$	(4,113	)	9,765		(2,934	)
Earnings (loss) per common share	$	(0.01	)	0.02		(0.01	)
Weighted-average number of shares outstanding		400,000,000		400,000,000		400,000,000

See accompanying notes to financial statements

T-4

TAISIL ELECTRONIC MATERIALS CORPORATION

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

One month ended January 31, 2004, and the years ended December 31, 2003 and 2002

(expressed in thousands of US dollars)

	Common stock		Capital surplus		Accumulated deficit		Total
Balance as of January 1, 2001 (unaudited)	$	130,913	8		(19,015	)	111,906
Transfer of capital surplus from gain on disposal of property, plant and equipment to accumulated deficit		—	(8	)	8		—
Net loss		—	—		(2,934	)	(2,934	)
Balance as of December 31, 2002		130,913	—		(21,941	)	108,972
Net income		—	—		9,765		9,765
Balance as of December 31, 2003 (unaudited)		130,913	—		(12,176	)	118,737
Net loss for one month ended January 31, 2004		—	—		(4,113	)	(4,113	)
Balance as of January 31, 2004 (unaudited)	$	130,913	—		(16,289	)	114,624

See accompanying notes to financial statements

T-5

TAISIL ELECTRONIC MATERIALS CORPORATION

STATEMENTS OF CASH FLOWS

One month ended January 31, 2004, and the years ended December 31, 2003 and 2002

(expressed in thousands of US dollars)

	One month ended January 31, 2004			Year ended December 31,
				2003		2002
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net income (loss)	$	(4,113	)	9,765		(2,934	)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization		1,250		16,641		21,040
Provision for (reversal of) allowance for sales discounts		205		(430	)	1,369
Provision for (reversal of) inventory loss		(299	)	414		761
Loss from disposal of property and equipment		1		—		—
Decrease (increase) in notes and accounts receivable		(918	)	(194	)	599
Decrease (increase) in inventories		2,471		(1,425	)	3,080
Increase in prepayments and other current assets		(2,428	)	(1,533	)	(30	)
Decrease (increase) in deferred income taxes		—		(343	)	3,773
Increase (decrease) in notes and accounts payable		(767	)	3,353		(2,150	)
Increase (decrease) in accrued expenses and other current liabilities		(122	)	732		(70	)
Increase (decrease) in accrued pension liabilities		(197	)	444		331
Net cash provided by (used in) operating activities		(4,917	)	27,424		25,769
Cash flows from investing activities:
Decrease (increase) in short-term investments		2,856		(1,975	)	(1,142	)
Additions to property, plant and equipment		(290	)	(3,131	)	(1,997	)
Decrease (increase) in refundable deposits		—		(184	)	3,391
Increase in restricted bank deposits		—		—		(1	)
Net cash provided by (used in) investing activities		2,566		(5,290	)	251
Cash flows from financing activities
Increase (decrease) in short-term loans and bills payable		1,525		(20,663	)	1,206
Increase in long-term loans		—		2,140		—
Repayment of long-term loans		(32	)	(6,295	)	(27,224	)
Net cash provided by (used in) financing activities		1,493		(24,818	)	(26,018	)
Net increase (decrease) in cash and cash equivalents		(858	)	(2,684	)	2
Cash and cash equivalents at beginning of the period		9,595		12,279		12,277
Cash and cash equivalents at end of the period	$	8,737		9,595		12,279
Supplemental disclosures of cash flow information:
Cash paid for interest	$	39		889		2,157
Cash paid for income taxes (including refundable income taxes)	$	—		55		17
Cash paid for property, plant and equipment:
Increase in property, plant and equipment	$	26		2,331		3,110
Less: increase (decrease) in other payables		(264	)	(800	)	1,113
Cash paid	$	290		3,131		1,997
Supplemental disclosures of noncash financing activities:
Current amounts of long-term liabilities	$	667		656		6,404

See accompanying notes to financial statements

T-6

TAISIL ELECTRONIC MATERIALS CORPORATION

NOTES TO FINANCIAL STATEMENTS

(amounts expressed in thousands of US dollars or

New Taiwan dollars, except per share data, unless otherwise stated)

(amounts and information with respect to 2004 and 2003 are unaudited)

(1) Organization and business environment

Taisil Electronic Materials Corporation (the “Company”) was founded in the Hsinchu Science Park of the Republic of China (“ROC”) on September 26, 1994. The Company is engaged in the research, development, production and sale of the latest generation silicon wafers.

(2) Significant accounting policies

The financial statements are prepared in accordance with accounting principles generally accepted in the ROC. The significant accounting policies and measurement basis adopted in preparing the accompanying financial statements are summarized as follows:

(a) Revenue recognition

Revenue is recognized when title to the products and risk of ownership are transferred to the customers, which occurs principally at the time the product is consumed by the customer and, to a lesser degree, at the time of shipment.

Allowance for sales discounts is provided based on the amount of discount granted to individual customers.

(b) Use of estimates

The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Economic conditions and events could cause actual results to differ significantly from such management estimates.

(c) Functional and reporting currency

The Company reports its financial position and results of operations using the United States dollar as the functional currency.

(d) Foreign currency transactions

Foreign currency transactions in currencies other than the functional currency are recorded at rates in effect at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at year-end are translated at the exchange rate then prevailing. Gains or losses resulting from settlement of such transactions or translations are included in nonoperating income (expense).

(e) Short-term investments

Investments are carried at the lower of cost or market value. The market value of open-ended investment funds is determined on the basis of the fund’s net worth at the balance sheet date. Costs of shares sold are determined on a weighted-average basis.

T-7

(f) Allowance for doubtful accounts

Allowance for doubtful accounts is based on the age, credit quality and results of the Company’s evaluation of the collectibility of outstanding balances of notes and accounts receivable.

(g) Inventories

Inventories are stated at the lower of cost or fair value. Cost is determined using the weighted-average method. The fair value of raw materials is determined on the basis of replacement cost. Fair values of work in process and finished goods are determined on the basis of net realizable value. A provision for inventory obsolescence and devaluation is recorded when management determines that the fair values of inventories are less than their cost basis.

(h) Property, plant and equipment

Property, plant and equipment are stated at acquisition cost. Depreciation of property, plant and equipment is provided over the estimated useful lives of the respective assets using the straight-line method less any salvage value. The ranges of the estimated useful lives are as follows: buildings - 40 or 55 years, machinery and equipment—3 to 15 years, and other equipment - 3 to 5 years. Interest costs related to the construction of property, plant and equipment are capitalized and included in the cost of the related asset. Gains or losses on the disposal of property, plant and equipment are recorded as nonoperating income (expenses) in the accompanying statements of operations. Before December 27, 2001, any gain, net of related income taxes, was required to be transferred from unappropriated earnings to capital surplus in the year of disposal in accordance with the Company Law of the ROC.

Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of property, plant and equipment, the estimated future undiscounted net cash flow of each asset is compared to the carrying amount of the asset. If the carrying amount exceeds the undiscounted cash flow, the impairment is measured based on the fair values of the assets. At January 31, 2004, and December 31, 2003 and 2002, the estimated future undiscounted net cash flows of property, plant and equipment exceeded their carrying amount.

(i) Technology fees

The Company has entered into a technical assistance service agreement with MEMC Electronic Materials, Inc. involving information and processes embodying technology, equipment design, assets and property rights for the manufacture of silicon wafers. Payments for such technology are capitalized and amortized over five years on a straight-line basis from the commencement of commercial production.

(j) Deferred charges

The costs of electrical facility installation charges are accounted for as deferred charges and are amortized over their estimated useful lives of five years on a straight-line basis.

(k) Employee retirement plan

The Company adopted a retirement plan covering substantially all employees in December 1995. Benefits are based on the employees’ years of service. Beginning in August 1996, in accordance with the ROC Labor Standards Law, the Company made monthly contributions to a pension fund with the Central Trust of China. As approved by the authorities, the funding rate was set at 2% of salaries and wages. Retirement benefits to employees will be paid from the retirement fund first, and if the fund is insufficient, the balance will be paid by the Company.

T-8

Pension costs charged to earnings are actuarially computed. The measurement date is the balance sheet date. Accrued pension liabilities are recognized for the excess of accumulated benefit obligation over the fair value of plan assets. Net periodic pension costs including current service cost and net obligations at transition are amortized over a 27-year period using the straight-line method, beginning in 1998.

(l) Income taxes

Income taxes are accounted for under the asset and liability method. Deferred income taxes are determined based on differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect during the years in which the differences are expected to reverse. The income tax effects resulting from taxable temporary differences are recognized as deferred income tax liabilities. The income tax effects resulting from deductible temporary differences, net operating loss carryforwards and income tax credits are recognized as deferred income tax assets. The realization of the deferred income tax assets is evaluated, and if it is considered more likely than not that the deferred tax assets will not be realized, a valuation allowance is recognized accordingly.

Classification of the deferred income tax assets or liabilities as current or noncurrent is based on the classification of the related asset or liability. If a deferred income tax asset or liability is not directly related to a specific asset or liability, then the classification is based on the expected realization date of such deferred income tax asset or liability.

Income tax expense is reduced by investment tax credits in the year in which the credits arise.

According to the ROC Income Tax Law, the Company’s undistributed income, if any, earned after December 31, 1997, is subject to an additional 10% retained earnings tax. The surtax is charged to income tax expense after the appropriation of earnings is approved by the stockholders in the following year.

(m) Casualty loss

Casualty loss consists of accrued loss caused by a fire on December 10, 2003, less the estimated insurance compensation.

(n) Earnings (loss) per common share

Earnings (loss) per share of common stock are computed based on the weighted-average number of common shares outstanding during the period.

(3) Transactions with related parties

(a) Name and relationship

Name of related party	Relationship with the Company
MEMC Electronic Materials Inc. and Subsidiaries (“MEMC and subsidiaries”)	Includes MEMC Electronic Materials, Inc. and all of its majority-owned consolidated affiliates, including the investor using the equity method to account for its investment in the Company
Chiao Tung Bank Taiwan, ROC (“CTB”)	Investor represented on the Company’s board of directors

T-9

(b) Significant transactions with related parties

(i) Net sales to and corresponding amounts receivable from related parties were as follows:

	Sales
	One month ended January 31, 2004		Year ended December 31,
			2003		2002
	(unaudited)		(unaudited)
MEMC and subsidiaries	$	588	6,840		4,370
	Account receivable
	January 31, 2004		December 31,
			2003		2002
	(unaudited)		(unaudited)
MEMC and subsidiaries	$	4,150	4,059		398
Less: allowance for sales returns and discounts		—	(77	)	—
	$	4,150	3,982		398

(ii) Purchases from and corresponding amounts payable to related parties were as follows:

	Purchases
	One month ended January 31, 2004		Year ended December 31,
			2003	2002
	(unaudited)		(unaudited)
MEMC and subsidiaries	$	14	3,153	2,191
	Account payable
	January 31, 2004		December 31,
			2003	2002
	(unaudited)		(unaudited)
MEMC and subsidiaries	$	1,127	1,078	23

T-10

(iii) Financing

The Company’s long-term loans from CTB are summarized as follows:

Period	Maximum balance		Interest rate		Ending balance	Interest expense	Interest payable	Collateral
One month ended January 31, 2004 (unaudited)	$	1,787	3.19	%	1,756	4	4	Machinery and equipment of $21,727
Year ended December 31, 2003 (unaudited)	$	8,353	3.19 5.915	%- %	1,787	234	5	Machinery and equipment of $21,955
Year ended December 31, 2002	$	15,735	5.49 6.0786	%- %	8,167	770	43	Machinery and equipment of $26,285

(iv) Technology fees and royalties

According to the technical assistance service agreement between the Company and MEMC and subsidiaries, the Company is obligated to pay a royalty license fee. For the one month ended January 31, 2004, and the years ended December 31, 2003 and 2002, such royalty totalled $105, $4,056, and $3,196, respectively. As of January 31, 2004, and December 31, 2003 and 2002, unpaid balances amounted to $2,275, $2,170 and $1,593, respectively, which were included in accrued expenses and other current liabilities.

(v) Commission and service income

The Company earned $116, $1,201 and $418 of commission and service income for the one month ended January 31, 2004, and the years ended December 31, 2003 and 2002, respectively, for agency and service support provided to related parties. As of January 31, 2004, and December 31, 2003 and 2002, the related receivables of $1,115, $999 and $311, respectively, were included in prepayment and other current assets.

(vi) Toll fees and testing fees

The Company engaged MEMC and subsidiaries to process silicon wafers. Toll fees paid for the one month ended January 31, 2004, and the years ended December 31, 2003 and 2002, were as follows:

	One month ended January 31, 2004		Year ended December 31,
			2003	2002
	(unaudited)		(unaudited)
MEMC and subsidiaries	$	—	174	56

T-11

As of January 31, 2004, and December 31, 2003 and 2002, amounts due that resulted from the above transactions were as follows:

	January 31, 2004		December 31,
			2003	2002
	(unaudited)		(unaudited)
MEMC and subsidiaries	$	—	—	4

(vii) Acquisition of property, plant and equipment

The value of property, plant and equipment acquired from MEMC and subsidiaries for the year ended December 31, 2002, amounted to $88, and the amount had been paid in January 2003.

(viii) As of January 31, 2004, and December 31, 2003 and 2002, temporary disbursements due to related parties amounted to $0, $4 and $126, respectively, and were included in accrued expenses and other current liabilities.

(4) Cash and cash equivalents

Cash and cash equivalents consisted of the following:

	January 31, 2004		December 31,
			2003	2002
	(unaudited)		(unaudited)
Cash on hand and in banks	$	490	811	798
Time deposits		8,247	8,784	11,481
	$	8,737	9,595	12,279

(5) Short-term investments

Short-term investments consisted of open-ended investment funds at January 31, 2004, and December 31, 2003 and 2002. The fair value of such investments at January 31, 2004, and December 31, 2003 and 2002, was approximately $1,350, $4,200 and $2,224, respectively.

(6) Notes and accounts receivable

Notes and accounts receivable consisted of the following:

	January 31, 2004			December 31,
				2003		2002
	(unaudited)			(unaudited)
Notes receivable	$	9		17		10
Accounts receivable		6,407		4,071		10,255
Pledged accounts receivable		6,059		11,264		—
Less: short-term borrowing secured by accounts receivable		(4,847	)	(8,474	)	—
Amount reserved for pledged accounts receivable		1,212		2,790		—
Notes and accounts receivable		7,628		6,878		10,265
Less: allowance for sales returns and discounts		(284	)	(79	)	(509	)
	$	7,344		6,799		9,756

T-12

(7) Inventories

The components of inventories are summarized below:

	January 31, 2004			December 31,
				2003		2002
	(unaudited)			(unaudited)
Finished goods	$	1,816		3,006		4,165
Work in process		3,085		3,099		1,404
Raw materials and spare parts		10,653		11,920		11,016
		15,554		18,025		16,585
Less: provision for inventory devaluation		(4,181	)	(4,480	)	(4,051	)
	$	11,373		13,545		12,534
Insurance coverage on inventories		14,328		14,127		14,387

(8) Property, plant and equipment

Insurance coverage on property, plant and equipment as of January 31, 2004, and December 31, 2003 and 2002, amounted to $202,985, $200,129 and $189,912, respectively.

Due to a fire that occurred on December 10, 2003, the Company shut down some of its production lines. The damaged machinery and equipment had been recovered and back to normal production in the first quarter of 2004.

(9) Short-term loans and short-term bills payable

	January 31, 2004 (unaudited)				December 31,
					2003 (unaudited)			2002
	Amount			Interest rate	Amount		Interest rate	Amount		Interest rate
Unsecured loans	$	5,990		1.327%~1.4%	6,475		1.35%~1.395%	12,949		1.9%~2.3%
Credit loans and import loans under letters of credit		5,303		1.6%~1.7192%	5,404		1.2 %~1.8%	8,417		1.87%~2.47%
		11,293			11,879			21,366
Commercial paper payable		2,995			883			12,085		1.22%~1.95%
Unamortized discount		(3	)		(2	)		(28	)
		2,992			881			12,057
	$	14,285			12,760			33,423

T-13

(10) Long-term loans

Bank	Credit line and purpose	Period	Repayment term	January 31, 2004			December 31,
							2003		2002
				(unaudited)			(unaudited)
Chiao Tung Bank	NT$240 million for purchase of machinery	February 1998 to February 2005	Repayable in 17 quarterly instalments starting in February 2001	$	—		—		3,185
Chiao Tung Bank	NT$100 million for purchase of machinery	November 1995 to November 2005	Repayable in 29 quarterly instalments starting in January 1999		894		914		1,291
Chiao Tung Bank	NT$200 million for purchase of machinery	December 1996 to November 2003	Repayable in 17 quarterly instalments starting in December 1999		—		—		901
Chiao Tung Bank	NT$200 million for purchase of machinery	December 1996 to November 2003	Repayable in 17 quarterly instalments starting in March 2000		—		—		1,692
Chiao Tung Bank	NT$80 million for purchase of machinery	December 1996 to November 2006	Repayable in 29 quarterly instalments starting in January 2000		862		874		1,098
Industrial Bank of Taiwan	NT$200 million for purchase of machinery	September 2000 to September 2004	Repayable in 11 quarterly instalments starting in March 2002		—		—		3,662
Industrial Bank of Taiwan	NT$200 million for purchase of machinery	May 2003 to May 2006	Payable on the due date		5,886		5,886		—
					7,642		7,674		11,829
Less: current portion					(667	)	(656	)	(6,404	)
				$	6,975		7,018		5,425

As of January 31, 2004, the following amounts of long-term loans were to come due during the next five years:

Year	Amount
2004	$	667
2005		667
2006		6,174
After 2007		134
	$	7,642

The ranges of interest rates for all long-term borrowings for the one month ended January 31, 2004, and for the years ended December 31, 2003 and 2002, were 1.327%-3.19%, 2.57%-3.19% and 5.49%-6.24%, respectively. As of January 31, 2004, and December 31, 2003 and 2002, total unused lines of credit for both short-term and long-term loans combined amounted to $689, $1,923 and $62,241, respectively.

As of January 31, 2004, and December 31, 2003 and 2002, certain plant and equipment were pledged as security for long-term loans (refer to note 14).

T-14

(11) Pension

The following table sets forth the benefit obligation and accrued pension liabilities of the Company’s pension plan:

	December 31,
	2003			2002
	(unaudited)
Benefit obligation:
Vested benefit obligation	$	—		—
Nonvested benefit obligation		(2,058	)	(1,844	)
Accumulated benefit obligation		(2,058	)	(1,844	)
Effects of future salary increase		(1,232	)	(1,180	)
Projected benefit obligation		(3,290	)	(3,024	)
Fair value of plan assets		1,479		1,303
Benefit obligation in excess of plan assets		(1,811	)	(1,721	)
Unrecognized net obligation at transition		448		459
Unrecognized pension gain		(824	)	(481	)
Accrued pension liabilities	$	(2,187	)	(1,743	)

The net pension costs consisted of the following components:

	2003			2002
	(unaudited)
Service cost	$	485		480
Interest expense		115		114
Expected return on pension plan assets		(53	)	(52	)
Amortization and deferral		14		13
Net pension costs	$	561		555

Significant actuarial assumptions were as follows:

	2003		2002
	(unaudited)
Discount rate	3.50	%	3.75	%
Rate of salary progression	2.50	%	2.50	%
Projected return on plan assets	2.75	%	3.75	%

(12) Stockholders’ equity

(a) Capital stock

As of January 31, 2004, and December 31, 2003 and 2002, the Company’s authorized common stock, with par value of NT$10 per share, totalled NT$4,800,000; the issued capital was $130,913 (NT$4,000,000).

(b) Capital surplus

Capital surplus can only be used to offset a deficit or to increase issued share capital.

Pursuant to a shareholders’ resolution on May 23, 2003, the Company decided to transfer capital surplus from the gain on disposal of fixed assets amounting to $8 to accumulated deficit.

T-15

(c) Distribution of earnings

In accordance with the ROC Company Law, the Company’s articles of incorporation stipulate that 10% of annual earnings (net of losses of prior years, if any) are to be retained as a statutory reserve until such retention equals the amount of issued share capital. The distribution of remaining earnings should be proposed by the board of directors and decided in a stockholders’ meeting. At least 0.01% of the distribution should be appropriated as employees’ bonuses when the stockholders approve an earnings distribution.

(13) Income taxes

The Company is authorized to be a “science-based industry” and “important technology-based industry” as defined by the ROC Statute for the Establishment and Administration of Science-Based Industrial Park (the Statute). The Company’s earnings are subject to an income tax rate of 25 percent. Before January 20, 2001, the statutory tax rate of the Company was 20 percent. For the one month ended January 31, 2004, and the years ended December 31, 2003 and 2002, income tax expense was as follows:

	One month ended January 31, 2004		Year ended December 31,
			2003		2002
	(unaudited)		(unaudited)
Current income tax expense	$	—	—		—
Deferred income tax expense (benefit)		—	(273	)	3,842
	$	—	(273	)	3,842

The differences between income tax expense (benefit) based on the statutory income tax rate and the income tax expense (benefit) as reported in the accompanying statements of operations are summarized as follows:

	One month ended January 31, 2004			Year ended December 31,
				2003		2002
	(unaudited)			(unaudited)
Expected income tax expense (benefit)	$	(1,028	)	3,154		1,410
Tax effect of permanent differences		—		(747	)	—
Investment tax credit decrease (earned), net		—		(78	)	895
Tax exemption		—		(1,161	)	(430	)
Expired loss carryforward		—		8,636		5,991
Additional 10% income surtax on undistributed earnings		—		431		—
Others		221		8		159
Valuation allowance increase (decrease)		807		(10,516	)	(4,183	)
Income tax expense (benefit)	$	—		(273	)	3,842

T-16

The temporary differences, tax credits, loss carryforwards and their effects on deferred income tax were as follows:

						December 31,
	January 31, 2004 (unaudited)					2003 (unaudited)				2002
	Amount		Income tax effect			Amount		Income tax effect		Amount	Income tax effect
Current assets:
Unrealized loss from inventory devaluation	$	4,181		1,045		4,032		1,008		3,537	884
Unrealized foreign exchange loss (gain)		69		17		(117	)	(29	)	164	41
Unrealized loss		—		—		736		184		—	—
Loss carryforward		17,924		4,481		17,924		4,481		184	46
Investment tax credits earned		392		392		392		392		—	—
				5,935				6,036			971
Less: valuation allowance				(3,697	)			(3,798	)		—
			$	2,238				2,238			971
Noncurrent assets:
Investment tax credits earned	$	659		659		659		659		1,375	1,375
Difference in technology fees		2,020		505		2,092		523		2,432	608
Accrued pension liabilities		1,972		493		2,172		543		1,758	440
Loss carryforward		3,904		976		—		—		57,113	14,278
				2,633				1,725			16,701
Less: valuation allowance				(1,567	)			(659	)		(14,711	)
			$	1,066				1,066			1,990

The ROC tax regulations stipulate that investment tax credits used by the Company each year shall not exceed 50% of the current income tax payable, and any unused balance can be carried forward to the following four years, subject to the same percentage limitation for each year except in the year of expiration, when any remainder can be used for offset of income tax payable in that year. As of January 31, 2004, the estimated unused income tax credits, resulting from investment in machinery and equipment and research and development available to reduce future tax liabilities and the years of expiration were as follows:

Year of investment	Tax credits		Year of expiration
2000	$	392	2004
2001		552	2005
2002		29	2006
2003		78	2007
	$	1,051

According to the Statute, a science-based company may, within two years from the date on which it begins to sell its products or to render services, select any fiscal year in the four-year period from such date for exemption from profit-seeking enterprise income tax for a period of five consecutive years from the starting date of such fiscal year. The Company’s initial NT$2,000,000 capital expenditure project (phase I project) is entitled to enjoy the tax holiday incentive scheme. The Company has chosen January 1, 2000, as the tax holiday starting date.

T-17

Pursuant to the ROC Income Tax Law, the Company’s tax losses may be carried forward for up to five years to reduce future taxable income. As of January 31, 2004, the estimated tax loss carryforwards were as follows:

Year of loss	Amount		Year of expiration
1999	$	17,924	2004
2004		3,904	2009
	$	21,828

The tax authorities have examined and assessed the Company’s income tax returns through 2001.

Beginning in 1998, an integrated income tax system was implemented in the ROC. Under the new tax system, the income tax paid at the corporate level can be used to offset the ROC resident stockholders’ individual income tax. The Company is required to establish an imputation credit account (“ICA”) to maintain a record of the corporate income taxes paid and imputation credit that can be allocated to each stockholder. The credit available to the ROC resident stockholders is calculated by multiplying the dividend by the creditable ratio. The creditable ratio is calculated as the balance of the ICA divided by earnings retained since January 1, 1998.

Information relating to the ICA is summarized as follows:

	January 31, 2004			December 31,
				2003		2002
	(unaudited)			(unaudited)
Accumulated deficit:
Earned after December 31, 1998	$	(16,289	)	(12,176	)	(21,941	)
Imputation credit account balance		1		1		1
	2004			2003		2002
	(unaudited)			(unaudited)
Creditable ratio for earnings distribution to resident stockholders		—		—		—

(14) Pledged assets

Pledged assets were as follows:

	Related secured liabilities/assets	January 31, 2004		December 31,
				2003	2002
		(unaudited)		(unaudited)
Time deposits – recorded in other current financial assets	Deposit with customs for export	$	60	59	58
Machinery and equipment	Long-term loans		21,727	21,955	35,001
Prepayment for equipment	Long-term loans		—	—	2,335
Buildings	Long-term loans		—	—	34,961
Refundable deposits	Deposit for stock repurchase agreement (other assets)		6,819	6,819	6,667
		$	28,606	28,833	79,022

T-18

(15) Commitments (contingencies)

(a) Operating lease

The Company is leasing a plant site from the Science Park Administration Bureau for a period of 20 years, expiring December 31, 2014. In accordance with the lease agreement, rental payments are subject to adjustment when the government reappraises the land value. The current rent is $975 (NT$33,554) per year.

Future minimum lease payments as of January 31, 2004, under the existing noncancellable agreement are

Years	Minimum lease payments
2004 through 2008		$4,793 ($989 annually)
2009 through 2013		4,945
2014		989
	$	10,727

(b) Technical service agreement

In accordance with a technical assistance agreement between the Company and MEMC, the Company is required to pay MEMC an annual royalty based on a certain percentage of net sales and operating income for 10 years after beginning the sales of products.

(c) Purchase of equipment

As of January 31, 2004, and December 31, 2003 and 2002, the Company had outstanding letters of credit amounting to approximately $1,214, $1,190 and $3,402, respectively, and was committed to purchase equipment with a total estimated cost of $1,523, $1,614 and $1,906, respectively.

(d) An unrelated third party acquired 19,718,000 shares of the Company’s NT$10 par value common stock from the Company’s employees at NT$11.75 per share in 2002. On September 6, 2002, the Company entered into a two-year agreement with this unrelated third party to purchase 19,718,000 shares of the Company’s common stock at a fixed price of NT$11.75 per share. The terms of the contract require the Company to pay an annual fee to the counter-party until the expiration of the agreement, as well as a one-time security deposit payment of NT$231,687 (US$6,667) to secure the Company’s performance of its obligations under the agreement. The Company’s security deposit payment is included in other assets on the balance sheet. In February 2004, MEMC and subsidiaries purchased 19,718,000 shares of the Company’s common stock and the agreement had been terminated. The Company’s security deposit payment has been refunded.

(16) Accounting principles generally accepted in the United States of America

The Company’s financial statements have been prepared in accordance with ROC GAAP. ROC GAAP varies in certain significant respects from accounting principles generally accepted in the United States of America (“US GAAP”). A brief description of certain significant differences between ROC GAAP and US GAAP are set out below. The organizations that promulgate ROC GAAP and US GAAP have projects ongoing that could have a significant impact on future comparisons such as this. This brief description is not intended to provide a comprehensive listing of all existing or future differences between ROC GAAP and US GAAP, including those specifically related to the Company or to the industry in which the Company operates. No attempt has been made in this summary to identify disclosure, presentation or classification differences that would affect the manner in which transactions and events are reflected in the Company’s financial statements or the notes thereto.

T-19

Certain differences which would have a significant effect on the Company’s results of operations and stockholders’ equity are as follows:

(a) Technology fee

Under ROC GAAP, the Company capitalizes and amortizes certain costs in connection with a technical assistance agreement entered into with a shareholder, MEMC. Under US GAAP, such payments would be expensed as incurred or treated as a return of capital investment, depending on the nature of the payment.

(b) Income tax

Under ROC GAAP, a valuation allowance is provided on deferred tax assets when they are not certain to be realized based on the projection of future taxable income. However, the criteria by which the need for a valuation allowance is determined are less stringent as compared to US GAAP. Under US GAAP, cumulative losses in recent years are a significant piece of negative evidence which is difficult to overcome with projections of future taxable income for the purpose of determining the valuation allowance.

Under a revised ROC tax rule effective on January 1, 1998, an additional 10% corporate income tax is assessed on taxable income but only to the extent such taxable income is not distributed before the end of the following year. As a result, from January 1, 1998, to January 20, 2002, the undistributed income of the Company would be subject to a corporate tax rate of 28% and distributed income would be taxed at 20%. Commencing from January 20, 2002, the undistributed and distributed income is subject to a corporate tax rate of 32.5% and 25%, respectively. Under ROC GAAP, the 10% tax on undistributed earnings is recognized as an expense at the date that stockholders resolve the amount of the earnings distribution. Under US GAAP, the Company would measure its tax expense, including the tax effects of temporary differences, using the undistributed rate.

(c) Provision for inventory obsolescence and devaluation

A provision for inventory obsolescence and devaluation is recorded when management determines that the market values of inventories are less than their cost basis. Under ROC GAAP, such provisions can be reversed in whole or in part if management further determines that the market values of inventories are greater that their cost basis.

Under US GAAP, provisions for inventory obsolescence and devaluation become a permanent adjustment to the carrying amount of the specific inventory whose market values are less than their cost basis, as deemed by management. Obsolescence and devaluation provision adjustments are included as part of cost of goods sold under US GAAP, and cannot be reversed once they are recorded.

(d) Computer software

Under ROC GAAP, there are no specific accounting guidelines related to costs of computer software developed or obtained for internal use.

US GAAP provides detailed guidance regarding the accounting treatment for internal-use software costs. American Institute of Certified Public Accountants Statement of Position 98-1 “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use” specifies the requirements for the capitalization of the costs of computer software obtained or developed for internal use.

T-20

(e) Repurchase of Company stock pursuant to the agreement described in Note 15(d)

Under ROC GAAP, the security deposit payment required by the agreement described in Note 15(d) is recorded as an asset until such time as the Company legally acquires ownership of the shares of stock, at which time the cost of the shares would be recorded as treasury stock, a contra-equity account.

Under US GAAP, payments made by the Company under a completed and enforceable contractual agreement to repurchase Company stock would be recorded as treasury stock, a contra-equity account.

In addition under US GAAP, payments made by a third party at the direction of the Company to acquire Company stock from its employees would result in a charge recorded to compensation expense to the extent that the repurchase cost per share exceeds the fair value of the shares on the purchase date. No such compensation expense is recognized under ROC GAAP under these circumstances.

T-21

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MEMC ELECTRONIC MATERIALS, INC.
By:	/S/ THOMAS E. LINNEN
	Thomas E. Linnen Senior Vice President and Chief Financial Officer

Date: June 24, 2005

EXHIBIT INDEX

The following exhibits are filed as part of this report.

Exhibit No.	Description
23.1	Consent of KPMG LLP
23.2	Consent of KPMG LLP Certified Public Accountants
31.1	Certification by the Chief Executive Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by the Chief Financial Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification by the Chief Executive Officer and Chief Financial Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.