Exhibit 99.1
TABLE OF CONTENTS
INDEPENDENT AUDITORS` OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS PREPARED
IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN GERMANY OF OASIS
SILICONSYSTEMS HOLDING AKTIENGESELLSCHAFT FOR THE YEARS ENDED DECEMBER 31, 2004
AND DECEMBER 31, 2003
GERMAN STATUTORY CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2004 AND DECEMBER 31, 2003
o Consolidated balance sheet
o Consolidated profit and loss statement
o Consolidated cash flow statement
o Notes to the consolidated financial statements
INDEPENDENT AUDITORS` OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS PREPARED
IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN GERMANY OF OASIS
SILICONSYSTEMS HOLDING AKTIENGESELLSCHAFT FOR THE YEARS ENDED DECEMBER 31, 2004
AND DECEMBER 31, 2003
We have audited the accompanying consolidated balance sheet of OASIS
SiliconSystems Holding AG and subsidiaries as of 31 December 2004 and 2003, and
the related consolidated statements of income, stockholders` equity and
consolidated cash flows for each of the two years in the period ended December
31, 2004. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in Germany and auditing standards generally accepted in the United States of
America. 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 consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company`s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of OASIS SiliconSystems
Holding AG and its subsidiaries as of 31 December 2004 and 2003, and the
consolidated results of their operations and their consolidated cash flows for
each of the two years ended in conformity with accounting principles generally
accepted in Germany.
Application of accounting principles generally accepted in the United States of
America would have affected stockholders` equity as of December 31, 2004 and
2003 and net income for each of the two years in the period ended December 31,
2004 to the extent summarized by the Company in Note D. to the Consolidated
Financial Statements.
Stuttgart, 18 March 2005
Deloitte & Touche GmbH
Wirtschaftsprufungsgesellschaft
Signed: Dette Signed: ppa. Klingor
Wirtschaftsprufer Wirtschaftsprufer
[German Public Auditor] [German Public Auditor]
OASIS SiliconSystems Holding Aktiengesellschaft, Karlsruhe
Consolidated Balance Sheet as at 31 December 2004
A s s e t s
===============================================================================================
31 December 2004 Prior year
EUR '000 EUR '000 EUR'000
------------------------------- ------------
A. Fixed assets
I. Intangible assets
Concessions, industrial and similar
rights and assets 709 747
------------
II. Tangible assets
1. Buildings including buildings on
third-party land 99 30
2. Technical equipment and machines 384 422
3. Other equipment, factory and
office equipment 1,524 1,128
-------------- ------------
2,007 1,580
------------- ------------
2,716 2,327
------------- ------------
B. Current assets
I. Inventories
1. Work in process 3,723 4,561
2. Finished goods and merchandise 3,567 1,600
-------------- ------------
7,290 6,161
II. Receivables and other assets
1. Trade receivables 4,222 3,944
2. Other assets 249 275
-------------- ------------
4,471 4,219
III. Securities
Other short term investments 16,295 12,003
IV. Cash in hand, bank balances 2,391 4,806
------------- ------------
30,447 27,189
------------- ------------
C. Prepaid expenses 220 152
============= ============
33,383 29,668
------------- ------------
S h a r e h o l d e r s' E q u i t y a n d L i a b i l i t i e s
================================================================================
31 December 2004 Prior year
EUR '000 EUR '000 EUR'000
------------------------------ ------------
A. Equity
I. Subscribed capital 10,000 10,000
II. Consolidated capital
reserve 12,355 12,355
III. Consolidated retained
profits brought forward 1,316 1,056
IV. Consolidated net income
for the year 1,553 259
V. Difference due to foreign
currency translation -267 -203
-------------- ------------
24,957 23,467
------------
B. Accruals
1. Tax accrual 624 94
2. Other accruals 3,600 2,380
-------------- ------------
4,224 2,474
C. Liabilities
1. Liabilities to banks 1,326 112
2. Trade payables 1,910 3,130
3. Other liabilities 964 485
of which taxes:
EUR 459 thousand (prior
year: EUR 126 thousand)
of which relating to
social security and
similar obligations:
EUR 120 thousand (prior
year: EUR 88 thousand)
-------------- ------------
4,200 3,727
------------
D. Deferred income 2 0
-------------- ------------
33,383 29,668
-------------- ------------
OASIS SiliconSystems Holding Aktiengesellschaft, Karlsruhe
Consolidated Profit and Loss Account for the Business Year
from 1 January to 31 December 2004
from 1 Jan. to 31 Dec. 2004 Prior year
EUR '000 EUR'000
--------------------------- -----------
1. Sales 40,189 36,698
2. Decrease (prior year: increase)
in finished goods inventories
and work in process -838 1,667
3. Other operating income 1,114 1,170
--------- ---------
40,465 39,535
4. Cost of materials
a) Cost of raw materials,
consumables and supplies
and of purchased merchandise 16,694 20,039
b) Cost of purchased services 3,063 1,336
--------- ---------
19,757 21,375
5. Personnel expenses
a) Wages and salaries 9,773 9,022
b) Social security and pension
expenses 1,928 1,824
--------- ---------
11,701 10,846
6. Depreciation and amortization
on intangible fixed assets and
tangible assets 1,092 1,050
7. Other operating expenses 5,757 6,039
8. Other interest and similar income 333 248
9. Interest and similar expenses 16 16
--------- ---------
10. Result of ordinary activities 2,475 457
--------- ---------
11. Taxes on income 760 179
12. Other taxes 162 19
--------- ---------
13. Consolidated net income for the year 1,553 259
========= =========
Statement of cash flows under German GAAP
2004 2003
EUR'000 EUR'000
----------- -----------
Consolidated net income for the year 1,553 259
Depreciation on fixed assets 1,092 1,050
----------- -----------
2,645 1,309
Increase/decrease (-) in short and
medium-term accruals 1,750 992
Increase (-)/decrease in inventories,
trade receivables and other assets
including changes in fixed assets
due to disposals and effects caused
by foreign currency -1,311 3,866
Increase/decrease (-) in trade
payables and other liabilities
excluding liabilities to banks
payable on demand, and including
the difference between equity due to
foreign currency translation -914 -2,727
----------- -----------
Cash flow from operating activities 2,170 3,440
----------- -----------
Cash outflow (-) from capital
expenditure on property, plant
and equipment -1,287 -797
Cash outflow (-) from capital
investments in intangible
fixed assets -332 -378
----------- -----------
Cash flow from investing activities -1,619 -1,175
----------- -----------
Change in cash and cash equivalents 551 2,265
Opening balance of cash and cash
equivalents 16,809 14,544
----------- -----------
Closing balance of cash and cash
equivalents 17,360 16,809
=========== ===========
Analysis of cash and cash equivalents
December 31, December 31,
2004 2003
EUR'000 EUR'000
------------- -------------
Other short-term investments (shares
in investment funds) 16,295 12,003
Liquid funds 2,391 4,806
Liabilities to banks payable on demand (-) -1,326 0
------------- -------------
17,360 16,809
============= =============
OASIS SiliconSystems Holding Aktiengesellschaft, Karlsruhe
Notes to the Consolidated Financial Statements as at 31 December 2004
A. GENERAL PRINCIPLES
The consolidated financial statements are prepared in accordance with the
accounting provisions in the German Commercial Code.
The regulations under German Corporation Law are complied with, which are a
supplement to the mentioned provisions.
B. ACCOUNTING AND VALUATION METHODS
The prior year's accounting and valuation methods remained unchanged.
The type of expenditure format is applied to the income statement.
Assets and liabilities disclosed in the consolidated financial statements are
consistently accounted for and valued by taking into consideration applicable
provisions under commercial law. The financial statements of included
subsidiaries are based on Commercial Balance Sheets I prepared under German
national law, and are then adjusted to Commercial Balance Sheets II by means of
adjusting entries in the account books.
The method of translating balance sheets and statements of profit and loss
denominated in foreign currency of group companies is to translate items of the
balance sheet at the rates in effect at the balance sheet date, and to translate
items of the statement of profit and loss on the basis of average market prices.
The conversion rates are as follows:
Rate in effect at the balance sheet date Average market prices
Currency 31 December 2004 2004
- -------- ---------------------------------------- -----------------------------------
USD USD 1.00000 EUR 0.73314 USD 1,00000 EUR 0.79790
SEK SEK 1.00000 EUR 0.11231 SEK 1,00000 EUR 0.10892
JPY EUR 1.00000 JPY 132.40000 EUR 1,00000 JPY 132.81512
Items are accounted for and valued by taking into consideration the
consolidation principles as defined in ss.ss. 300 et seq. of the Commercial
Code. Tangible assets and intangible assets are disclosed at acquisition cost
less scheduled straight-line depreciation over their anticipated useful lives.
Inventories are disclosed at acquisition and production cost, or recorded at
their latest value where this is lower.
Receivables are disclosed at their nominal value. Receivables denominated in
foreign currency are disclosed at the exchange rate in effect at the balance
sheet date, insofar as it results in lower valuations under ss. 253 (3) of the
Commercial Code (HGB).
Other short-term investments (shares in investment funds) are valued under ss.
253 (1) of the Commercial Code (HGB) at acquisition cost, and the Company sees
no reason to depreciate under ss. 253 (3) of the Commercial Code (HGB) as at the
balance sheet date. The mentioned shares including retained claims for gains are
disclosed under other short-term investments.
Other accruals were set aside for contingent liabilities. They cover all
identifiable risks and commitments, such as among others outstanding invoices,
warranties, overdue vacation commitments / year-end closing and audit expenses.
Liabilities are disclosed at the amounts at which they will be repaid.
Liabilities denominated in foreign currency are disclosed at the exchange rate
in effect at the balance sheet date, insofar as it results in higher amounts to
be repaid (ss. 253 (1) of the Commercial Code (HGB)).
Entities Included in the Consolidation
OASIS SiliconSystems Holding Aktiengesellschaft, Karlsruhe, is directly or
indirectly entitled to 100 % of voting rights with respect to the following
companies. These subsidiaries are included in the consolidated financial
statements by way of full consolidation:
Companies
Share in capital - %
--------------------------
Oasis SiliconSystems Aktiengesellschaft, Karlsruhe 54.88 directly
45.12 indirectly
--------------------------
100.0
SiliconSystems GmbH Multimedia Engineering,
Karlsruhe 100.0
OASIS SiliconSystems AB, Gothenburg, Sweden 100.0
OASIS SiliconSystems Inc., Austin/Texas, USA 100.0
OASIS SiliconSystems KK, Yokohama, Japan 100.0
Consolidated Balance Sheet
Capital consolidation is based on the book-value method according to ss. 301 of
the Commercial Code (HGB). Acquisition cost of subsidiaries was charged against
prorated equity at the time of each first consolidation.
The treatment of foreign-currency differences arising from the consolidation of
intra-group balances and other offsetting differences is such that the statement
of profit and loss is not affected.
Inventories and tangible assets accounted for by the consolidated companies as
at the balance sheet date of the consolidated financial statements, have been
written down to group acquisition or production cost to the extent that these
inventories and tangible assets resulted from goods and services provided by
other companies included in the group. The cost of acquisition or production
incurred by the company providing goods or services, is stated as group
acquisition or production cost. Inter-company profits to be eliminated, do not
exist in the year 2004.
The Movements in Fixed Assets are presented on the following page.
OASIS SiliconSystems Holding Aktiengesellschaft, Karlsruhe
Movements in Consolidated Fixed Assets in the Business Year 2004
Gross book values
----------------------------------------------------------------------------
Differences due to
Balance on foreign currency Additions Disposals Balance on
1 Jan. 2004 translation 31 Dec. 2004
EUR '000 EUR '000 EUR '000 EUR '000 EUR '000
----------------------------------------------------------------------------
I. Intangible assets
Concessions, industrial and similar
rights and assets 1,984 -97 331 21 2,199
------- ------- --------- ------- -------
II. Tangible assets
1. Buildings including buildings
on third-party land 31 -1 69 0 99
2. Technical equipment and machines 1,051 -45 88 0 1,094
3. Other equipment, factory and office
equipment 2,167 -67 1,130 218 3,012
------- ------- --------- ------- -------
3,249 -112 1,287 218 4,205
------- ------- --------- -------
5,233 -209 1,619 238 6,404
======= ======= ========= ======= =======
Accumulated depreciation/amortization Net book values
----------------------------------------------------------------------------- ------------------------------
Differences due
Balance on to foreign currency Additions Disposals Balance on Balance on Prior year
1 Jan. 2004 translation 31 Dec. 2004 31 Dec. 2004
EUR '000 EUR '000 EUR '000 EUR '000 EUR '000 EUR '000 EUR '000
------------ ------------------- --------- --------- ------------ ------------ -------------
I. Intangible assets
Concessions,
industrial and
similar rights
and assets 1,237 -67 321 0 1,490 709 747
------- ------- ------- ------- ------- ------- -------
II. Tangible assets
1. Buildings including
buildings on
third-party land 1 0 3 3 0 99 30
2. Technical equipment
and machines 629 -38 125 6 710 384 422
3. Other equipment,
factory and
office
equipment 1,039 -30 644 165 1,488 1,524 1,128
------- ------- ------- ------- ------- ------- -------
1,669 -67 771 174 2,199 2,007 1,580
------- ------- ------- ------- ------- ------- -------
2,906 -135 1,092 175 3,689 2,716 2,327
======= ======= ======= ======= ======= ======= =======
As in the prior year, receivables do not exist whose residual terms exceed 1
year.
Liabilities which become due for payment in less than one year amount to EUR
4,200 thousand (prior year: EUR 3,727 thousand). Liabilities do not exist as in
the prior year whose residual terms exceed 5 years.
Items for the purpose of cutting off deferred taxes according to ss. 306 of the
Commercial Code (HGB) are not to be set aside.
Development of Consolidated Equity
As at Change in As at
January 1 fiscal year December 31
EUR'000 EUR'000 EUR'000
----------- ------------- -------------
Fiscal year 2003
Subscribed capital 10,000 10,000
Consolidated capital reserve 12,355 12,355
Consolidated retained profits
brought forward 1,056 1,056
Consolidated net income for
the year 259 259
Difference due to foreign
currency translation -109 -94 -203
----------- ------------- -------------
Total consolidated equity 23,302 165 23,467
Fiscal year 2004
Subscribed capital 10,000 10,000
Consolidated capital reserve 12,355 12,355
Consolidated retained profits
brought forward 1,315 1 1,316
Consolidated net income for
the year 1,553 1,553
Difference due to foreign
currency translation -203 -64 -267
----------- ------------- -------------
Total consolidated equity 23,467 1,490 24,957
=========== ============= =============
The nominal capital of OASIS SiliconSystems Holding Aktiengesellschaft,
Karlsruhe, is divided into 10,000,000 individual share certificates made out to
bearer.
Capital Reserve/Difference Arising from Capital Consolidation
The difference arising from capital consolidation and the capital reserve were
offset according to ss. 309 (1) Sentence 3 of the Commercial Code (HGB), and
developed as follows:
EUR'000
---------------
Goodwill on 31 December 2000 4,145
Goodwill charged against capital reserve according
to ss. 309 (1) Sentence 3 of the Commercial Code (HGB) -4,145
---------------
Goodwill on 31 December 2001/31 December 2002/
31 December 2003/ 31 December 2004 0
===============
Other Financial Commitments
Other financial commitments of EUR 2,792 thousand relate to agreements to rent
buildings, and extend to the year 2009.
Contingent Liabilities
The following guarantee was given as at 31 December 2004:
Type: Credit by way of a guarantee given by a bank that rent
will be paid
Currency/amount: EUR 862 thousand (USD 1,175 thousand)
Expiry on: 30 November 2008
Securities classified into current assets are pledged as security for credit of
EUR 862 thousand (USD 1,175 thousand) by way of a guarantee given by a bank that
rent will be paid, and for a credit line of EUR 1,466 thousand (the Company had
availed itself of EUR 1,265 thousand thereof as at the balance sheet date).
Consolidated Statement of Profit and Loss
Sales are classified into geographical regions as follows:
2004 Prior year
EUR'000 EUR'000
----------------- -----------------
Domestic 25,798 26,512
Foreign 14,392 10,186
----------------- -----------------
40,190 36,698
================= =================
Sales revenues focus on the sale of complex integrated circuits in the
multimedia and network area, as well as development, analysis and demonstration
tools.
C. OTHER DISCLOSURES
The average number of staff employed by companies whose financial statements
were included in the consolidated financial statements, is 151 (prior year:
139).
Supervisory Board
The following individuals are members of the supervisory board of OASIS
SiliconSystems Holding Aktiengesellschaft as at 31 December 2004:
o Dr. Hans-Gerd Hoptner (Chairman), Dipl.-Ing., Oberwinter/Remagen
o Sabine Ahlers (Vice-Chairman), board of directors of Deutsche Effecten und
Wechsel-Beteiligungsgesellschaft AG, Jena
o Dr. Rudolf Simon, Dipl.-Ing., Korntal
The emoluments paid to the members of the supervisory board in the 2004 business
year amount to EUR 23 thousand (prior year: EUR 23 thousand).
Board of Directors
The following individuals were members of the board of directors in the 2004
business year of OASIS SiliconSystems Holding Aktiengesellschaft, Karlsruhe:
o Dipl.-Ing. (FH) Herbert Hetzel, Schweigen
o Dr. Manfred Muller, Golmsdorf
o Dave Knapp, Austin/Texas, USA
o Rolf Jurgen Brub, Grobenzell (since 1 February 2004)
The above individuals are members of the board of directors by profession.
Members of the board of directors of the parent company were paid in 2004 a
remuneration of EUR 687 thousand (prior year: EUR 509 thousand) for the work
they did for the parent company and its subsidiaries.
Conditional Capital
An extraordinary general meeting of shareholders of OASIS SiliconSystem Holding
Aktiengesellschaft, Karlsruhe, passed the following resolution on 26 June 2001:
The Company's nominal capital is conditionally increased by up to EUR 1,000
thousand by way of issuing up to 1,000,000 individual no-par-value share
certificates payable to bearer, whose calculated share in the nominal capital is
EUR 1.00 per share certificate. The purpose of the conditional capital increase
is to grant once or more than once according to ss. 192 (2) No. 3 of the German
Corporation Law (AktG) subscription rights to members of the Company's board of
directors, managing directors of enterprises affiliated with the Company within
the meaning of ss. 15 of the German Corporation Law (AktG), and authorized staff
of the Company and its affiliated enterprises. The board of directors is
authorized to grant subscription rights to subscribe for individual share
certificates with the approval of the supervisory board. Subscription rights are
supposed to be granted as follows:
o up to 800,000 subscription rights granted to employees of the Company and
its affiliated enterprises
o up to 100,000 subscription rights granted to managing directors of the
Company and its affiliated enterprises
o up to 100,000 subscription rights granted to members of the board of
directors of the Company.
As at the balance sheet date, 523,998 subscription rights had been granted to
employees of the Company and its affiliated enterprises.
Investment Holdings
Companies
Participation Nominal capital/ Results for the
quota Share capital Equity year 2004
(Name/registered office) per cent EUR EUR EUR
- ------------------------------------ --------------- ------------------- ------------- ----------------
1. Domestic
a. Oasis Silicon Systems
AG, Karlsruhe 54.88 56,653.70 4,605,929.44 1,019,826.98
Allocation under ss. 16 (4) of
German Corporation Law (AktG) 45.12
b. Silicon Systems GmbH Multimedia
Engineering, Karlsruhe 100.00 25,564.59 206,538.93 88,722.52
2. Foreign
a. OASIS SiliconSystems Inc.
Austin/Texas (USA) 100.00 793.02 769,377.66 418,292.02
b. OASIS SiliconSystems AB,
Gothenburg, Sweden 100.00 109,958.99 111,739.87 2,865.50
c. OASIS SiliconSystems KK,
Yokohama, Japan 100.00 74,100.00 94,743.75 14,337.71
Shares in capital denominated in foreign currency were translated at the rates
in effect at respective balance sheet dates.
Disclosures under ss. 158 of German Corporation Law (AktG)
EUR '000
-------------
Consolidated net income for the year according to
consolidated statement of profit and loss 1,553
Prior year's consolidated retained profits brought forward 1,315
-------------
Consolidated retained profits brought forward by the end of
the business year 2,868
=============
Karlsruhe, 17 March 2005
OASIS SiliconSystems Holding Aktiengesellschaft
The Board of Directors
- ----------------- -------------------- -------------- ----------------------
(Herbert Hetzel) (Dr. Manfred Muller) (Dave Knapp) (Rolf Jurgen Brub)
D. ADDITIONAL NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS WITH
RESPECT TO U.S. GAAP REQUIREMENTS
1. Accounting principles used to prepare the financial statements
The consolidated financial statements of OASIS SiliconSystems Holding AG
included above were prepared in accordance with the accounting and valuation
principles of the German Commercial Code (Handelsgesetzbuch) and the German
Stock Corporation Act (Aktiengesetz) - hereafter also referred to as German
GAAP. Reconciliation to net income and shareholder's equity of the differences
to U.S. GAAP is described in the following paragraphs.
2. Material deviations in the principles, practices and methods used under
German GAAP and methods generally accepted in the United States of America
with respect to the consolidated balance sheets of OASIS SiliconSystems
Holding AG as of December 31, 2004 and 2003
The balance sheet line "Other short-term investments" (shares in investment
funds) amounting to EUR 16,295 thousand as at December 31, 2004 and EUR 12,003
thousand as at December 31, 2003 under German GAAP represents cash equivalents
under U.S. GAAP because of its short maturity date. Thereof EUR 862 thousand as
at December 31, 2004 and EUR 1,150 thousand as at December 31, 2003 are pledged
funds and represent restricted cash under U.S. GAAP.
The presentation of the other balance sheet line items is not materially
different in comparison to balance sheet line items presented under U.S. GAAP.
The amounts from reconciling items between German GAAP and U.S. GAAP with regard
to balance sheet line items presented in the German GAAP balance sheets in
comparison to balance sheet line items presented under U.S. GAAP are shown in
the reconciliation of Stockholders` Equity to U.S. GAAP.
The following is a summary of the significant adjustments to net income and
stockholders` equity that would be required if U.S. GAAP had been applied rather
than German GAAP.
3. Reconciliation of net income to U.S. GAAP
2004 in 2003 in
Reconciliation of net income to U.S. GAAP Footnote EUR'000 EUR'000
- --------------------------------------------------------------------------------
Net income as reported in the consolidated
financial statements according to German GAAP 1,553 259
---------------------
Items having the effect of increasing reported
income according to US GAAP
- reduced cost of materials (cost of goods
sold) due to overhead cost allocation in
inventory valuation a) 72 32
- reduction in trade liabilities due to foreign
currency valuation b) 34 3
- increase in trade receivables due to reversal
of general reserve c) 39 0
Items having the effect of decreasing reported
income according to US GAAP
- deferred income taxes on items discussed above d) -55 -13
----------------------------
Net income in consolidated financial statements
according to U.S. GAAP 1,643 281
----------------------------
4. Reconciliation of Stockholders` Equity to U.S. GAAP as of December 31, 2003
and 2004
Reconciliation of Stockholders` Equity to U.S. GAAP for 2003 Footnote EUR'000
- --------------------------------------------------------------------------------
Stockholders` Equity as reported in the consolidated balance
sheet under German GAAP as at January 1, 2003 23,302
Consolidated net income under German GAAP for the year 2003 259
Change in difference arising from 2003 currency translation
(German GAAP) -94
-------
Stockholders` Equity as reported in the consolidated balance
sheet under German GAAP as at December 31, 2003 23,467
-------
Overhead cost allocation in inventory valuation a) 299
Reduction in trade liabilities due to foreign currency b) 3
valuation
Deferred income taxes -115
-------
Stockholders` Equity in accordance with U.S. GAAP as at
December 31, 2003 23,654
-------
Reconciliation of Stockholders` Equity to U.S. GAAP for 2004 Footnote EUR'000
- --------------------------------------------------------------------------------
Stockholders` Equity as reported in the consolidated balance
sheet under German GAAP as at January 1, 2004 23,467
Consolidated net income under German GAAP for the year 2004 1,553
Change in difference arising from 2004 currency translation
(German GAAP) -63
-------
Stockholders` Equity as reported in the consolidated balance
sheet under German GAAP as at December 31, 2004 24,957
-------
Overhead cost allocation in inventory valuation a) 371
General reserve on trade receivables c) 39
Reduction in trade liabilities due to foreign currency
valuation b) 37
Deferred income taxes d) -170
-------
Stockholders` Equity in accordance with U.S. GAAP as at
December 31, 2004 25,234
-------
5. Footnotes to net income and stockholders` equity reconciliation
a) Inventory valuation: Under German GAAP overhead costs are directly recorded
as expenses. For U.S. GAAP purposes overhead costs are capitalized to
inventories. As a result a U.S. GAAP adjustment is recorded which leads to
a higher value of inventories.
b) Valuation of trade liabilities: Under German GAAP trade liabilities are
valuated with the exchange rate effective at transaction date in case that
rate leads to a higher valuation of the liabilities. For U.S. GAAP purposes
trade liabilities not denominated in EUR are valuated with the exchange
rate effective at balance sheet closing date. As a result a U.S. GAAP
adjustment is recorded which leads to a higher valuation of trade
liabilities.
c) Valuation of trade receivables: Under German GAAP a general reserve on
trade receivables is recorded. For U.S. GAAP purposes a general reserve is
generally disallowed. As a result a U.S. GAAP adjustment is recorded which
leads to a higher valuation of trade receivables.
d) Deferred income taxes: On the reconciling items for U.S. GAAP described
under footnotes a) to c) deferred income taxes need to be applied for due
to reversal effects in future periods.
6. Statement of cash flows prepared in accordance with International
Accounting Standard No. 7 as amended in October 1992
2004 2003
EUR'000 EUR'000
---------- ----------
Consolidated net income for the year 1,553 259
Depreciation on fixed assets 1,092 1,050
---------- ----------
2,645 1,309
Increase/decrease (-) in short and medium-term
accruals 1,750 992
Increase (-)/decrease in inventories, trade
receivables and other assets including changes
in fixed assets due to disposals and effects
caused by foreign currency -1,311 3,866
Increase/decrease (-) in trade payables and other
liabilities excluding liabilities to banks
payable on demand, and including the difference
between equity due to foreign currency translation -914 -2,727
---------- ----------
Cash flow from operating activities 2,170 3,440
---------- ----------
Cash outflow (-) from capital expenditure on
property, plant and equipment -1,287 -797
Cash outflow (-) from capital investments
in intangible fixed assets -332 -378
---------- ----------
Cash flow from investing activities -1,619 -1,175
---------- ----------
Change in cash and cash equivalents 551 2,265
Opening balance of cash and cash equivalents 16,809 14,544
---------- ----------
Closing balance of cash and cash equivalents 17,360 16,809
========== ==========
Analysis of cash and cash equivalents
December December
31, 2004 31, 2003
EUR'000 EUR'000
---------- ----------
Other short-term investments (shares in
investment funds) 16,295 12,003
Liquid funds 2,391 4,806
Liabilities to banks payable on demand (-) -1,326 0
---------- ----------
17,360 16,809
========== ==========