Adaptec 2001 Annual Report Download - page 74

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74
recorded at fair value. The total unrealized holding gain related to these shares on December
31, 2001, w as $41.6 million (2000 - $55.2 million).
The Company also has investments in non-public entities, w hich include venture funds that
invest in early-stage private technology companies of strategic interest to the Company. The
Company has commitments to invest additional capital into these funds (see Note 8). In 2001,
the Company made additional cash investments of $5.7 million (2000 – $24.8 million; 1999 - $8.5
million) in these non-public entities.
During the year ended December 31, 2001, the Company sold some of its investments in public
and non-public companies for cash proceeds of $3.3 million (2000 - $59.7 million; 1999 - $28.6
million) and non-cash proceeds of $1.7 million (2000 and 1999 – nil) and recorded gross realized
gains of $2.9 million (2000 - $58.5 million; 1999 - $26.8 million). Of these amounts, cash
proceeds of $2.1 million (2000 - $59.7 million; 1999 - $28.6 million) and gross realized gains of
$1.9 million (2000 - $58.5 million; 1999 - $26.8 million) related to the disposition of investments
classified as available for sale.
The Company monitors the value of its investments for impairment and writes them down to
reflect any decline in value below its cost basis, if that decline is considered to be other than
temporary. In 2001, the Company recorded an impairment charge of $17.5 million related to its
investments in non-public entities. This charge is included in Gain (loss) on investments on the
Consolidated Statement of Operations.
NOTE 6. Li nes of credit
At December 31, 2001, the Company had available a revolving line of credit with a bank under
which the Company may borrow up to $25 million with interest at the bank’s alternate base
rate (annual rate of 5.25% at December 31, 2001). The Company cannot pay cash dividends, or
make material divestments without the prior written consent of the bank. The agreement
expires in M ay 2003. At December 31, 2001, $5.3 million of the available line of credit was
committed under letters of credit.
NOTE 7. Convertible subordinated notes
In A ugust 2001, the Company issued $275 million of convertible subordinated notes maturing
on August 15, 2006. In connection with the issuance of these convertible subordinated notes,
the Company incurred approximately $7.8 million of issuance costs, which consisted primarily
of investment banker fees, legal and other professional fees, w hich have been deferred and are
being amortized over the term of the notes. The five-year term notes bear interest at a rate of
3.75% per annum and are convertible into an aggregate of approximately 6,480,650 shares of
PMC's common stock at any time prior to maturity, at a conversion price of approximately
$42.43 per share.
The Company may redeem the notes, in whole or in part, at any time after August 19, 2004 at a
redemption price ranging from 100.75% to 101.5% of the principal amount of notes outstanding
depending on the redemption date. Under certain conditions prior to August 19, 2004, the