1999 Annual Report - Delta Electronics

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February 23, 2000 (00)R.D24P.4057 To Delta Electronics, Inc. We have examined the balance sheet of Delta Electronics, Inc. as of December 31, 1999 and 1998, and the related statements of income, of changes in stockholders' equity and of cash flows for the years 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 audits. As explained in Note 4(4), the financial statements of certain investee companies for the years ended December 31, 1999 and 1998, accounted for under the equity method, were examined by other auditors whose reports thereon have been furnished to us. The total amount of long-term investments in these investee companies at December 31, 1999 and 1998 was $12,372,337,000 and $7,441,594,000, respectively, and the related investment income for the years then ended were $3,040,313,000 and $2,375,107,000, respectively. Our opinion expressed herein, insofar as it relates to the amounts included in the financial statements relative to these long-term investments is based solely on the reports of the other auditors. Information of certain investee companies disclosed in Note 12 were based on the reports of the other auditors. We conducted our audits in accordance with the "Rules Governing Examinations of Financial Statements by Certified Public Accountants" and generally accepted auditing standards in the Republic of China. 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the other auditors audit report provide a reasonable basis for our opinion. In our opinion, based on our examinations and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Delta Electronics, Inc. as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended, in conformity with the "Rules Governing Preparation of the Financial Statements of Securities Issuers" and generally accepted accounting principles in the Republic of China. As indicated in Note 2, the accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices utilized in the Republic of China to audit such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. We have also audited the consolidated financial statements of Delta Electronics, Inc. and its subsidiaries for the years ended December 31, 1999 and 1998. Our report on those consolidated financial statements was unqualified. 56
DELTA ELECTRONICS, INC. BALANCE SHEET DECEMBER 31, 1999 AND 1998 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) 1999 1998 1999 1998 Amount % Amount % Amount % Amount % ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY Current Assets Current Liabilities Cash and cash equivalents (Note 4(1)) $ 2,312,296 8 $ 1,914,434 10 Short-term loans (Notes 4(7) and 6) $ 1,344 - $ 85,540 1 Notes receivable - net 248,121 1 184,260 1 Accounts payable 1,355,247 5 1,162,406 6 Accounts receivable - net (Note 4(2)) 3,890,480 13 1,755,451 9 Accounts payable - related parties (Note 5) 3,767,007 13 857,123 4 Accounts receivable - related parties (Note 5) 718,933 3 915,161 5 Income tax payable (Note 4(16)) 10,349 - - - Other receivables (Note 4(16)) 226,746 1 185,397 1 Accrued expenses 728,035 2 794,693 4 Other receivables - related parties (Note 5) 281,228 1 240,978 1 Other payables 203,096 1 145,682 1 Inventories (Note 4(3)) 1,599,569 5 1,090,350 5 Received in advance 65,274 - 19,029 - Prepaid expenses 4,812 - 11,611 - Current portion of long-term loans (Notes 4(9) and 6) 4,636 - 6,182 - Prepayments 11,450 - 12,755 - Other current liabilities 146,513 - 35,740 - Other current assets (Notes 4(16) and 6) 575,893 2 410,367 2 6,281,501 21 3,106,395 16 9,869,528 34 6,720,764 34 Long-Term Liabilities Funds and Long-term Investments Convertible bonds (Note 4(8)) 179,146 1 1,674,588 8 Long-term investments (Note 4(4)) 15,578,302 53 10,056,787 51 Long-term loans (Notes 4(9) and 6) - - 4,636 - Cash surrender value of life insurance 56,064 - 49,938 - 179,146 1 1,679,224 8 Prepayment for long-term investments - - 20,000 - Reserve Property, Plant and Equipment (Notes 4(5) and 6) 15,634,366 53 10,126,725 51 Reserve for land value incremental tax (Note 4(5)) 97,283 - 107,740 - Cost Other Liabilities Land 1,037,856 4 652,003 3 Reserve for retirement plan (Note 4(10)) 378,209 2 304,176 2 Buildings and equipment 1,250,154 4 658,372 3 Deposits - in 4,212 - 10,246 - Machinery and equipment 600,041 2 582,673 3 Deferred income tax liabilities (Note 4(16)) 2,129,143 7 1,389,625 7 Molds 327,880 1 218,174 1 Other liabilities - others 2,601 - 1,710 - Computer and communication equipment 283,461 1 168,460 1 2,514,165 9 1,705,757 9 Test equipment 622,935 2 577,132 3 Total Liabilities 9,072,095 31 6,599,116 33 Motor vehicles 18,432 - 22,038 - Furniture and fixtures 110,160 - 101,558 1 Stockholders' Equity Leasehold improvements 2,018 - 12,772 - Common stock (Notes 1 and 4(11)) 7,345,341 25 5,606,858 28 Land value appraisal increment 168,738 1 222,454 1 New share entitlement certificates (Note 4(12)) 132,230 - 12,227 - Cost and appraisal increment 4,421,675 15 3,215,636 16 Capital reserve (Note 4(13)) Less: Accumulated depreciation ( 1,122,996) ( 4) ( 1,060,071) ( 5) Premium 6,425,721 22 2,198,025 11 Prepayments for equipment and construction in progress 147,873 1 666,806 3 Others 255,603 1 245,718 2 3,446,552 12 2,822,371 14 Retained earnings Other Assets Legal reserve (Note 4(14)) 1,062,112 4 839,745 4 Leased assets (Notes 4(6) and 5) 87,209 - - - Undistributed earnings (Note 4(15)) 4,733,442 16 3,828,854 19 Deposits - out 23,195 - 20,938 - Cumulative translation adjustments 301,995 1 611,630 3 Deferred charges 267,689 1 251,375 1 Total Stockholders' Equity 20,256,444 69 13,343,057 67 378,093 1 272,313 1 Subsequent Events (Note 9) TOTAL ASSETS $ 29,328,539 100 $ 19,942,173 100 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 29,328,539 100 $19,942,173 100 Please refer to the accompanying notes and PricewaterhouseCoopers' audit report dated February 23, 2000. 57
Page 1 and 2: DELTA ELECTRONICS, INC. Annual Repo
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Page 5 and 6: 7 1999 Annual Report Major Products
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Page 12 and 13: DELTA ELECTRONICS, INC. CONSOLIDATE
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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 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
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1999 Annual Report - Delta Electronics

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