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For the years ended December 31,
1999 and 2000, the recogni-tion of gains and losses for forward foreign
currency exchange contracts and currency options that were considered
identifi-able hedges was deferred until settlement of the underlying
commitments. Realized gains and losses were recorded as other income or expense
when the underlying exposure materi-alized or the hedged transaction was no
longer expected to occur. The discount or premium on these forward contracts
designated as a hedge was recorded as an asset or liability and amortized to
interest expense over the term of the contract. For the forward contracts and
currency options that were not con-sidered identifiable hedges, gains and
losses were recorded at each reporting period as other income or expense based
on the fair market value of the forward contract.
During the first
quarter of 2001, the Company adopted Statement of Financial Accounting
Standards No. 133 (FAS 133), Account-ing for Derivative Instruments and Hedging
Activities and deter-mined that the statement did not have a material impact on
its consolidated results of operations, financial position or financial
disclosure. This statement establishes accounting and reporting standards for
derivative instruments and requires recognition of all derivatives as assets or
liabilities in the balance sheet, and the measurement of those instruments at
fair value. The Company’s only derivative instruments include forward
foreign currency exchange contracts and currency options that do not qualify as
hedging instruments under FAS 133. These instruments are marked-to-market based
on the forward rates and option prices provided by independent banking
institutions and the gains or losses are recorded as other income or
expense.
2.4
RECLASSIFICATIONS
Certain prior year amounts have been
reclassified to conform with the current year
presentation.
2.5 INCOME
RECOGNITION
Sales
Revenue on sales of semiconductor
products is recognized upon transfer of the ownership of the goods at shipment.
A portion of the Company’s sales are made to distributors who participate
in certain programs common in the semiconductor industry whereby the
distributors are allowed to return mer-chandise under certain circumstances and
may receive future price reductions. Provision is made at the time of sale for
esti-mated product returns and price protection which may occur under programs
the Company has with these customers.
Fundings
Government fundings are
recognized as the related costs are incurred, commencing when the
fundings’ contract is signed with the relevant government department or
agency. Government fundings for research and development are included in
“other income and expenses”. Government fundings for capital
expen-ditures are deducted from the cost of the related fixed assets and reduce
depreciation over the assets’ remaining estimated useful
lives. |
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Other
revenue
Other revenue consists of co-development contract
fees, certain contract indemnity payments and patent royalty income. Other
revenue is recognized rateably over the term of the agreement.
In
December 1999, the Securities and Exchange Commission released Staff Accounting
Bulletin No. 101, Revenue Recogni-tion in Financial Statements (SAB 101),
providing the staff’s view on applying generally accepted accounting
principles to selected revenue recognition issues. The Company adopted SAB 101
in the fourth quarter of 2000, as required. The adoption of SAB 101 did not
have a material effect on the Company’s financial position or overall
trends in results of operations.
2.6 ADVERTISING
COSTS
Advertising costs are expensed as incurred.
Advertising expenses for 1999, 2000 and 2001 were $21,102, $30,421 and $21,184,
respectively.
2.7 RESEARCH AND
DEVELOPMENT
Research and development costs are charged to
expense as incurred. Research and development costs include costs incurred by
the Company as well as the Company’s share of costs incurred by other
research and development interest groups.
2.8 START-UP COSTS Start-up
costs represent manufacturing costs incurred in the Company’s new
manufacturing facilities, before reaching a minimum level of production, are
included in “other income and expenses” in the accompanying
consolidated statement of income.
2.9 INCOME TAXES The provision for
current taxes represents the income taxes expected to be payable for the
current year. Deferred tax assets and liabilities are recorded for all
temporary differences arising between the tax and book bases of assets and
liabilities and for the benefits of tax credits and loss carryforwards. Those
deferred tax assets and liabilities are measured using the enacted tax rates at
which they are expected to be realized or paid. A valua-tion allowance is
provided where necessary to reduce deferred tax assets to the amount for which
management considers the possibility of recovery to be more likely than
not.
2.10 EARNINGS PER SHARE Basic earnings per share are computed by
dividing net income by the weighted average number of common shares outstanding
during the period. Diluted earnings per share are computed by dividing net
income (add-back interest expense, net of tax effects, related to convertible
debt) by the weighted average number of common shares and common share
equivalents outstanding during the period. The weighted average shares used to
compute diluted earnings per share include the incremental shares of common
stock relating to outstanding options and convertible debt to the extent such
incremental shares are dilutive. |
