D-Link 2004 Annual Report Download - page 41

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13
D-LINK CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Continued)
Starting 2003, YCI was able to obtain Quie Tek Corp.’ s 2003 financial statements in a timely fashion.
As a result, the 2002 and 2003 investment gains or losses from Quie Tek Corp. were all recorded in
2003. This change in accounting principle increased D-Link and subsidiaries’ 2003 investment
income by $14,828 thousand, and the effect on income from continuing operations before income tax
was not significant.
In 2003, BEI was unable to forward its audited financial statements in a timely fashion, and D-Link
and subsidiaries recognized their share of investment gains or losses in 2004. Starting 2004, D-Link,
YCI, YMI and DTVCI were able to obtain BEI’ s 2004 financial statements in a timely fashion. As a
result, the 2003 and 2004 investment gains or losses from BEI were all recorded in 2004. This
change in accounting principle increased D-Link and subsidiaries’ 2004 investment income by
$12,106 thousand, and the effect on income from continuing operations before income tax was not
significant.
D-Link and its subsidiary YCI made additional investments in W-Link System Inc. (“W-Link”) in
August 2001 through contribution of accounts receivable amounting to $95,000 thousand and cash
amounting to $25,000 thousand, respectively. D-Link had previously provided allowance of doubtful
account amounting to $120,000 thousand for its receivables due from W-Link, and the provision was
reversed when the capital increase of W-Link was concluded. The reversal was then offset with D-
Link’ s and YCI’ s equity in loss of W-Link in 2003.
In 2004, D-Link sold a portion of its investment in Alpha to other companies; the selling price was
$2,003,849 thousand and the disposal gain was $927,946 thousand.
In 2003, D-Link found there was a permanent impairment in the value of its investment in Azure
Venture Partners I, L.P. and Ewave System. An investment loss equal to their carrying amount of
$69,022 thousand was recognized to reflect such decline. In 2003, YCI, YMI and DTVCI found
there was a permanent impairment in the value of their equity investments in IC Plus Corporation,
MaxEdge Electronics Corporation, PowerCom Technology Co., Ltd., etc. An investment loss of
$105,777 thousand was recognized to reflect such decline.
In 2004, D-Link found there was a permanent impairment in the value of its investment in Triumph
Technology Inc. An investment loss equal to its carrying amount of $3,783 thousand was recognized
to reflect such decline. In 2004, YCI, YMI, DTVCI and DHL found there was a permanent
impairment in the value of their equity investment in Z COM Inc., IC Plus Corporation, Max Edge
Electronics., etc. An investment loss of $128,712 thousand was recognized to reflect such decline.
In 2004, ACS was valued using the lower-of-cost–or-market method and recognized unrealized
valuation losses on long-term investment of $86,840 thousand under stockholders’ equity.