|
|
 | | | |
- close
- close
- close
- close
This excerpt taken from the FWLT 10-K filed Mar 3, 2006. 2. Summary of Significant Accounting Policies Fiscal Year — The Company’s fiscal year ends December 31. Liquidity — The Company has transactions and relationships with Foster Wheeler Ltd. and its affiliates. The financial position, results of operations, and the cash flows of the Company have been impacted by these transactions and relationships as discussed in Notes 2 and 3. The relationship between the Company and Foster Wheeler Ltd. and its affiliates will also impact the Company’s continuing operations. Foster Wheeler Ltd. closely monitors its domestic and global liquidity and updates its liquidity forecasts weekly. These forecasts cover, among other analyses, existing cash balances, cash flows from operations, cash repatriations from non-U.S. subsidiaries, proceeds from asset sales, working capital needs, unused credit line availability and claims recoveries, if any. Foster Wheeler Ltd.’s liquidity forecasts extend over a twelve-month period and continue to indicate that sufficient liquidity will be available to fund its working capital needs through such period. The Company forecasts it will meet its obligations over the next twelve months. Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. Actual results could differ from those estimates. Changes in estimates are reflected in the periods in which they become known. The most significant estimates relate to the collectibility of royalty income from affiliates and income taxes. Reclassifications — Certain prior period financial statement amounts have been reclassified to conform to the current year presentation. Revenue Recognition — Revenue is recognized on the accrual basis. The Company’s primary source of revenue is royalty income from related parties. Cash and Cash Equivalents — Cash and cash equivalents include highly liquid short-term investments purchased with original maturities of three months or less. Accounts Receivable from Affiliates — Accounts receivable consist solely of amounts due from related parties. See Note 3. Income Taxes — The Company files a tax return in Hungary. Provision is made for foreign income taxes payable in Hungary at the statutory rate of 4% for the twelve months ended December 31, 2005 and 2004 and 3% for the twelve months ended December 31, 2003. Hungarian legislation increased the statutory rate to 16% with certain exemptions which will bring the effective tax rate for the Company to approximately 8% effective January 1, 2006. In addition, the Company’s royalty income from foreign sources is subject to 373 FW HUNGARY LICENSING LIMITED LIABILITY COMPANY 2. Summary of Significant Accounting Policies — (Continued) foreign tax withholding. Income tax expense in the Company’s statement of operations has been calculated on a separate company basis. Deferred income taxes are provided on a liability method whereby deferred tax assets/liabilities are established for the difference between the financial reporting and income tax basis of assets and liabilities, as well as operating loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets were adjusted to reflect the increase in the Hungarian tax rates described above. This excerpt taken from the FWLT 10-Q filed Aug 10, 2005. 2. Summary of Significant Accounting Policies
The
condensed consolidated balance sheet as of July 1, 2005 and December 31,
2004 and the related condensed
consolidated statement of operations and comprehensive income for the three
and six months ended July 1, 2005 and June 25, 2004 and the condensed consolidated
statement of cash flows for the six months ended July 1, 2005 and June 25,
2004,
are unaudited. In the opinion of management, all adjustments necessary for
a fair presentation of such financial statements have been included. Such
adjustments
only consisted of normal recurring items. Interim results are not necessarily
indicative of results for a full year.
The financial statements and notes are presented in accordance with the requirements of Form 10-Q and do not contain certain information included in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004 (“2004 Form 10-K/A”)
filed with the Securities and Exchange Commission on May 20, 2005. The
condensed consolidated balance sheet as of December 31, 2004 has been derived
from the audited consolidated balance sheet included in the 2004 Form 10-K/A.
A summary of our significant accounting policies is presented below. There
has been no material change in our accounting policies during the first
six months of 2005.
Restatement — Subsequent to the original filing of our 2004 Form 10-K, we concluded that our consolidated financial statements for the year ended December 31, 2004 should be restated to correct an error in our December 31, 2004 pension valuation used in the preparation of our December 31, 2004 consolidated financial statements. As more fully discussed in our 2004 Form 10-K/A filed on May 20, 2005, the error related to our domestic pension plan and resulted in an understatement of the pension benefit obligation, funding liability and pension contributions for plan year 2004, and understated pension liabilities and comprehensive loss reported in the original 2004 Form 10-K.
This excerpt taken from the FWLT 10-K filed May 20, 2005. 3. Summary of Significant Accounting Policies Fiscal Year — The Company’s fiscal year ends December 31. Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. Actual results could differ from those estimates. Changes in estimates are reflected in the periods in which they become known. The most significant estimates relate to the collectibility of royalty income from affiliates and income taxes. Revenue Recognition — Revenue is recognized on the accrual basis. The Company’s primary source of revenue is royalty income from related parties. Cash and Cash Equivalents — Cash and cash equivalents include highly liquid short-term investments purchased with original maturities of three months or less. Accounts Receivable from Affiliates — Accounts receivable consist solely of amounts due from related parties. See Note 4. Income Taxes — The Company files a tax return in Hungary. Provision is made for foreign income taxes payable in Hungary at the statutory rate of 4% for the twelve months ended December 31, 2004 and 3% for the twelve months ended December 31, 2003. New Hungarian legislation increased the statutory rate to 408 FW HUNGARY LICENSING LIMITED LIABILITY COMPANY 3. Summary of Significant Accounting Policies — (Continued) 4% from 3% effective January 1, 2004 and will increase the statutory rate to 16% with certain exemptions which will bring the effective tax rate for the Company to 8% effective January 1, 2006. In addition, the Company’s royalty income from foreign sources is subject to foreign tax withholding. Income tax expense in the Company’s condensed statement of operations has been calculated on a separate company basis. Deferred income taxes are provided on a liability method whereby deferred tax assets/liabilities are established for the difference between the financial reporting and income tax basis of assets and liabilities, as well as operating loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets were adjusted to reflect the increase in the Hungarian tax rates described above. This excerpt taken from the FWLT 10-K filed Mar 31, 2005. 3. Summary of Significant Accounting Policies Fiscal Year — The Company’s fiscal year ends December 31. Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. Actual results could differ from those estimates. Changes in estimates are reflected in the periods in which they become known. The most significant estimates relate to the collectibility of royalty income from affiliates and income taxes. Revenue Recognition — Revenue is recognized on the accrual basis. The Company’s primary source of revenue is royalty income from related parties. Cash and Cash Equivalents — Cash and cash equivalents include highly liquid short-term investments purchased with original maturities of three months or less. Accounts Receivable from Affiliates — Accounts receivable consist solely of amounts due from related parties. See Note 4. Income Taxes — The Company files a tax return in Hungary. Provision is made for foreign income taxes payable in Hungary at the statutory rate of 4% for the twelve months ended December 31, 2004 and 3% for the twelve months ended December 31, 2003. New Hungarian legislation increased the statutory rate to 406 FW HUNGARY LICENSING LIMITED LIABILITY COMPANY 3. Summary of Significant Accounting Policies — (Continued) 4% from 3% effective January 1, 2004 and will increase the statutory rate to 16% with certain exemptions which will bring the effective tax rate for the Company to 8% effective January 1, 2006. In addition, the Company’s royalty income from foreign sources is subject to foreign tax withholding. Income tax expense in the Company’s condensed statement of operations has been calculated on a separate company basis. Deferred income taxes are provided on a liability method whereby deferred tax assets/liabilities are established for the difference between the financial reporting and income tax basis of assets and liabilities, as well as operating loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets were adjusted to reflect the increase in the Hungarian tax rates described above. | EXCERPTS ON THIS PAGE:
|
| |||||||
