D-Link 2004 Annual Report Download - page 64

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36
D-LINK CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Continued)
(7) 3Com Corporation (“3Com”) asserted that D-Link Systems, a D-Link’ s subsidiary, sold a chip
that was included in products that infringed certain 3Com patents relating to network interface
technology, and brought an assumpsit against D-Link and its subsidiary. D-Link is pursuing the
suit with the chip suppliers. D-Link believes that the abovementioned event will not have a
significant effect on operations.
(8) D-Link is discussing with certain companies regarding patent licensing. D-Link has made
reasonable accrual for these expenses and believes that the abovementioned event will not have a
significant effect on operations.
(9) D-Link disagreed with the assessments made by the tax authorities for its 1999 and 2002 income
tax returns regarding a tax exemption, a research and development tax credit, etc. As of
December 31, 2004, the tax authorities had not approved the appeals. D-Link’ s 1999 and 2002
income tax returns have been assessed by the tax authorities for additional income tax payable
amounting to $31,468 thousand and $161,179 thousand, respectively.
21. Other Information
(1) The information on labor, depreciation, and amortization expenses by function for the years
ended December 31, 2003 and 2004, is summarized as follows:
2003 2004
Account
Cost of
goods sold
Operating
expense
Total
Cost of
goods sold
Operating
expense
Total
Employee expenses
Salaries 384,048 1,712,712 2,096,760 395,176 2,279,755 2,674,931
Labor and health
insurance 26,014 91,959 117,973 28,072 106,251 134,323
Pension 14,949 54,047 68,996 14,550 73,569 88,119
Others 29,005 193,109 222,114 20,600 241,737 262,337
Depreciation 144,814 277,499 422,313 123,336 319,989 443,325
Amortization 10,926 127,334 138,260 5,685 136,998 142,683