1999 Annual Report - Delta Electronics

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13) Legal reserve The R.O.C Company Law requires that the Company shall set aside 10% of its net income as the legal reserve after covering prior years' losses until the legal reserve equals the capital stock balance. The legal reserve can be used only to cover an accumulated deficit or increase capital. The legal reserve can be used to increase capital only when the reserve exceeds 50% of capital stock, and should be limited to 50% of the excess portion of the reserve. 14) Undistributed earnings A. Based on the Company's Articles of Incorporation, as revised in the shareholders' meeting on May 15, 1998, the current year's earnings, if any, shall be distributed in the following order: a) Payment of all taxes and dues. b) Cover prior years' operating losses, if any. c) After deducting (a) and (b), set aside 10% of the remaining amount as legal reserve. d) After deducting items (a), (b) and (c), allocate up to 1% of the remaining amount as directors' and supervisors' remuneration. e) After deducting items (a), (b) and (c), allocate at least 3% of the remaining amount as employees' bonus. f) After deducting items (a), (b), (c), (d) and (e), distribute the remaining amount as dividends and shareholders' bonus or keep as retained earnings according to the resolution of the meeting of stockholders. B. The new Taiwan imputation tax system requires that any undistributed current earnings, on tax basis, of a company derived on or after January 1, 1998 be subject to an additional 10% corporate income tax if the earnings are not distributed before a specific time. This 10% additional tax on undistributed earnings paid by the company can be used as tax credit by the shareholders, including foreign shareholders, against the withholding tax on dividends. In addition, the domestic shareholders can claim a proportionate share in the company's corporate income tax as tax credit against its individual income tax liability effective 1998. As of December 31, 1999, the undistributed current earnings in 1998 of the subsidiary, DNI is subject to an additional 10% corporate tax amounting to $43. C. The information on these undistributed earnings and tax credit of the Company are as follows: Before December 31, 1998 1999 15) Income tax Imputation Estimated Undistributed tax credit creditable earnings account balance ratio A. Deferred income tax assets and liabilities as of December 31, 1999 and 1998 were as follows: A) Total deferred income tax assets B) Allowance for deferred income tax assets C) Total deferred income tax liabilities D) The components of deferred income tax assets and liabilities were as follows: December 31, 1999 1998 36
37 Undeposited pension Unrealized foreign exchange loss, net Royalty payable Reserve for decline in market value and inventory obsolescence Others, net Investment tax credits Investment income accounted for under the equity method B. Net deferred income tax assets - current Deferred income tax assets - current Deferred income tax liabilities - current Net deferred income tax assets - current (shown as other current assets in the balance sheet) C. Net deferred income tax liabilities - noncurrent Deferred income tax assets - noncurrent Allowance for deferred income tax assets - noncurrent Net deferred income tax assets - noncurrent Deferred income tax liabilities - noncurrent Net deferred income tax liabilities - noncurrent December 31, 1999 December 31, 1998 Original Original amount Tax effects amount Tax effects D. Income taxes payable (refundable) for the years ended December 31, 1999 and 1998 were arrived at as follows: Deferred tax assets - non-current Additional 10% corporate income tax on undistributed earnings Current year's income tax expense Effect of deferred income tax Over provision of income tax in prior years Less: Income subject to separate tax Prepaid income tax and tax withheld Others Income tax payable (refundable) December 31, 1999 1998 December 31, 1999 1998 1999 1998 E. As of December 31, 1999, the unused investment tax credits for the procurement of machinery and equipment, R & D and training expenditures of the Company and subsidiary, DNI amounted to $502,643. The tax credits will expire in 2003. F. The Company's income tax returns have been assessed and approved by the Tax Authority up to 1997. In 1994, additional income tax payable amounting to $7,421 was assessed. As the Company applied for a reassessment in April, 1997, no accrual was made for this tax liability. However, in accordance with the instructions from the Tax Authority, the Company provided the certificates of time deposit amounting to $7,900 in June 1997 to guarantee
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 20 and 21: transition is amortized equally ove
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 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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