Note 4. Investments
In July 1995, the Company entered into an agreement with United
Microelectronics Corporation ("UMC") and S3 Incorporated ("S3") to form a
separate Taiwanese company, United Semiconductor Corporation ("USC"), for the
purpose of building and managing an 8-inch semiconductor manufacturing facility
in Taiwan. The Company paid approximately 1 billion New Taiwan Dollars ("NTD")
(approximately US$36.4 million) in September 1995, approximately NTD 450 million
(approximately US$16.4 million) in July 1996, and approximately NTD 492 million
(approximately US$17.6 million) in July 1997. After the last of these payments,
the Company owned approximately 190 million shares of USC, or approximately 19%
of the outstanding shares. In April 1998, the Company sold 35 million shares of
USC to an affiliate of UMC and received approximately US$31.7 million. In
connection with the sale of 35 million shares of USC, the Company additionally
has the right to receive up to another 665 million NTD (approximately US$20.4
million at the exchange rate prevailing on January 2, 1999, which rate is
subject to material change) upon the occurrence of certain potential future
events. After the April 1998 sale, the Company owned approximately 15.5% of the
outstanding shares of USC, and has the right to purchase up to approximately 25%
of the manufacturing capacity in this facility. In October 1998, USC issued 46
million shares to the Company by way of dividend distribution. As a result of
this distribution, the Company owns approximately 15.1% of the outstanding
shares. To the extent USC experiences operating income or losses, and the
Company maintains its current ownership percentage of outstanding shares, the
Company will recognize its proportionate share of such income or losses. During
the first nine months of fiscal 1999, the Company recorded $9.3 million of
equity in income of USC, as compared to $8.4 million recorded during the first
nine months of fiscal 1998.
In February 1995, the Company agreed to purchase shares of Chartered
Semiconductor ("Chartered") for approximately US$10 million and entered into a
manufacturing agreement under which Chartered will provide a minimum number of
wafers from its 8-inch wafer fabrication facility known as "Fab2." In April
1995, the Company agreed to purchase additional shares in Chartered, bringing
the total agreed investment in Chartered to approximately US$51.6 million and
Chartered agreed to provide an increased minimum number of wafers to be provided
by Chartered from Fab2. The Company has paid all installments to Chartered.
Chartered is a private company based in Singapore that is controlled by entities
affiliated with the Singapore government. The Company owns approximately 2.1% of
the equity of Chartered.
In October 1995, the Company entered into an agreement with UMC and other
parties to form a separate Taiwanese company, United Silicon, Inc. ("USI"), for
the purpose of building and managing an 8-inch semiconductor manufacturing
facility in Taiwan. The facility has commenced volume production utilizing
advanced sub-micron semiconductor manufacturing processes. The contributions of
the Company and other parties shall be in the form of equity investments,
representing an initial ownership interest of approximately 5% for each US$30
million invested. The Company had originally committed to an investment of
approximately US$60 million or 10% ownership interest but subsequently requested
that its level of participation be reduced by 50%. The first installment of
approximately 50% of the revised investment was made in January 1996, and the
Company had, but did not exercise, the option to pay a second installment of
approximately 25% of the revised investment payable in December 1997. The
Company made a third installment payment of approximately 106 million NTD (or
approximately US$3.1 million) in July 1998. After the third installment, the
Company owns approximately 2.96% of the
outstanding shares of USI and has the right to purchase approximately 3.70% of
the manufacturing capacity of the facility.
Note 5. Gain On Sale of USC Shares
In April 1998, the Company sold 35 million shares of USC (representing
approximately 18% of the Company's interest in USC) to an affiliate of UMC for
net proceeds of $31.7 million, plus the right to receive a contingent payment of
up to 665 million NTD (approximately US$20.4 million at the exchange rate
prevailing on January 2, 1999, which rate is subject to material change) upon
the occurrence of certain potential future events. The net gain on the sale,
after deducting the cost basis plus a share of the equity in income of those
shares disposed, was $15.8 million.
ALLIANCE SEMICONDUCTOR CORP /DE/ has filed a Form 10-Q with the United
States Securities and Exchange Commission.
Click on the following hyperlink to view this filing:
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