1999 Annual Report - Delta Electronics

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transition is amortized equally over 15 years. The pension fund is managed by an independently administered pension fund association. Convertible bonds 1) The excess of estimated redemption price over the par value is recognized as interest expense at the effective interest rate and a liability is recorded as "Interest Payable on Redemption". If there are two or more redemption prices, the highest redemption price is used. Variance between book value as of redemption day and actual redemption price is recognized as current year's interest expense. 2) When a bondholder exercises his/her conversion rights, the book value of bonds is credited to common stock at an amount equal to the par value of the stock and the excess is credited to capital reserve; no gain or loss is recognized on bond conversion. 3) The related issuance costs for convertible bonds are recorded as deferred charges, and are amortized over the life of the bonds. The unamortized bonds issuance costs related to the bonds converted or redeemed before the maturity date are transferred to expense upon conversion or redemption. 4) For convertible bonds with redemption rights, the right of redemption lapses if the investor fails to exercise his/her redemption right, and the balance of Interest Payable on Redemption is amortized over the period from the date following the redemption period to maturity date using the effective interest rate. Income tax 1) The provision for income tax includes deferred tax resulting from items reported in different periods for tax and financial reporting purposes. Deferred income tax assets or liabilities are further classified into current and noncurrent items based on the classifications of the related assets or liabilities or on the expected reversal date of the temporary differences and are presented on the financial statements as net balance. Valuation allowance for deferred income tax assets is recognized if it is more likely than not that the tax benefits will not be realized. 2) According to the new Taiwan imputation tax system, any undistributed current earnings, on tax basis, of the Company derived on or after January 1, 1998 is subject to an additional 10% corporate tax if the earnings are not distributed before a specific time and is recorded as current income tax expense in the period the stockholders approved a resolution to retain the earnings. 3) The income tax of the foreign subsidiary and its subsidiaries are calculated based on the local policies. 4) Over or under provision of prior years' income tax liabilities is included in the current year's income tax expense. Revenue, costs and expenses recognition Revenue is recognized when the earning process is completed and realized or realizable. Costs and expenses are recorded as incurred. Research and development costs are expensed as incurred, except for costs of machinery used inR&Dwhich are capitalized. 3. CHANGES IN ACCOUNTING PRINCIPLES As described in Note 2, the subsidiary, DNI did not meet the criteria for consolidation in 1998 and, therefore, the long-term investment in DNI was accounted for under the equity method. In 1999, DNI met the criteria for consolidation and its 1999 financial statements were then included in the consolidation. Due to the change in the reporting entities in 1999, the 1998 consolidated financial statements have been restated to include the 1998 financial statements of DNI. DNI was in pre-operating stage in 1998 because it had not commenced its main operating activities and, therefore, the effect of the change in reporting entities change was immaterial. 28
29 4. DESCRIPTION OF SIGNIFICANT ACCOUNTS 1) Cash and cash equivalents Cash on hand Checking and demand deposits Time deposits Cash equivalents commercial paper 2) Accounts receivable Accounts receivable Less: Allowance for doubtful accounts 3) Inventories Raw materials Work in process Finished goods Inventory in transit Less: Reserve for decline in market value and inventory obsolescence 4) Long-term investments December 31, 1999 1998 December 31, 1999 1998 December 31, 1999 1998 A. List of long-term investments: December 31, 1999 December 31, 1998 Investee Company Equity method by the Company Amount % Amount % Cyntec Co., Ltd. $ 758,542 53.55 $ 687,653 54.33 Yuasa Delta Technology Inc. 266,414 33.59 308,732 33.59 Grand Advance Technology Ltd. 146,647 36.00 135,277 36.00 Delta Optoelectronics, Inc. 95,863 99.93 - - Analog and Power Electronics Corp. 59,681 22.15 43,558 24.00 Vivitek Co., Ltd. 48,211 75.36 84,826 75.36 Delta Electronics (Japan) Inc. 37,131 60.00 10,893 40.00 Delta Electronics Europe Ltd. 5,180 40.00 10,007 40.00 Luke Network Consulting Co., Ltd. - - 4,650 100.00 1,417,669 1,285,596
Page 1 and 2: DELTA ELECTRONICS, INC. Annual Repo
Page 3 and 4: 3 1999 Annual Report Message from t
Page 5 and 6: 7 1999 Annual Report Major Products
Page 7 and 8: 11 1999 Annual Report Manufacturing
Page 10 and 11: 17 1999 Annual Report Financial Sta
Page 12 and 13: DELTA ELECTRONICS, INC. CONSOLIDATE
Page 14 and 15: DELTA ELECTRONICS, INC. CONSOLIDATE
Page 16 and 17: DELTA ELECTRONICS, INC. NOTES TO CO
Page 18 and 19: Inventories Inventories are stated
Page 22 and 23: December 31, 1999 December 31, 1998
Page 24 and 25: 32 5) Property, plant and equipment
Page 26 and 27: The initial conversion price, which
Page 28 and 29: 13) Legal reserve The R.O.C Company
Page 30 and 31: payment of the final tax assessment
Page 32 and 33: G. Accounts payable DET DEJ Others
Page 34 and 35: short-term loan, accounts payable,
Page 36 and 37: When the contracts mature, there wi
Page 38 and 39: 46 11. DISCLOSURE OF INFORMATION ON
Page 40 and 41: 48 12. Disclosure information of in
Page 42 and 43: 50 D. Marketable securities acquire
Page 44 and 45: 52 H. Receivable from related parti
Page 46 and 47: 13. SEGMENTAL FINANCIAL INFORMATION
Page 48 and 49: February 23, 2000 (00)R.D24P.4057 T
Page 50 and 51: DELTA ELECTRONICS, INC. STATEMENT O
Page 52 and 53: DELTA ELECTRONICS, INC. STATEMENT O

1999 Annual Report - Delta Electronics

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