Adaptec 2002 Annual Report Download - page 70

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The existing line of credit replaces the $25 million revolving line of credit that was available to the
Company at the end of 2001. At December 31, 2001, $5.3 million of the available $25 million line of credit
was committed under letters of credit.
NOTE 7. Convertible subordinated notes
In August 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, which 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 Company may redeem any portion of
the notes at a price of 100% of the principal amount of notes, plus a "make whole" amount for accrued and
unpaid interest to the redemption date. The fair value of this make whole provision was determined to be
immaterial at the time the debt was issued and at December 31, 2002.
These notes are subject to restrictive covenants including those concerning payments on the notes and other
indebtedness. In the event of a change in control of the Company, the noteholders may require the Company to
repurchase their notes.
NOTE 8. Commitments and Contingencies
Operating leases. The Company leases its facilities under operating lease
agreements, which expire at various dates through December 31, 2011.
Rent expense including operating costs for the years ended December 31, 2002, 2001 and 2000 was $12.4
million, $15.9 million and $8.3 million, respectively. Excluded from rent expense for 2002 was additional
rent and operating costs of $27.5 million (2001 − $3.4 million) related to excess facilities, which were
accrued as part of the restructuring charges in 2001.
In connection with the restructuring charges recorded in 2001, the Company recorded a charge of $128.3
million for exiting and terminating certain lease facilities that are included in the table below.
Minimum future rental payments under operating leases are as follows:
Year Ending December 31 (in thousands)
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
2003 $ 31,839
2004 31,470
2005 30,628
2006 31,964
2007 29,166
Thereafter 118,262
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
Total minimum future rental payments under operating leases $ 273,329
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