Adaptec 2002 Annual Report Download - page 77

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Included in the above net operating loss carryforwards are $23.8 million and $8.6 million of federal and
state net operating losses related to acquisitions accounted for under the purchase method of accounting.
The benefit of such losses, if and when realized, will be credited first to reduce to zero any goodwill
related to the respective acquisition, second to reduce to zero other non−current intangible assets related
to the respective acquisition, and third to reduce income tax expense.
Included in the deferred tax assets before valuation allowance are approximately $147.1 million of
cumulative tax benefits related to equity transactions, which will be credited to stockholder's equity if
and when realized.
The pretax income (loss) from foreign operations was ($32.6 million), ($154.1 million) and $254.5 million in
2002, 2001, and 2000, respectively. Undistributed earnings of the Company's foreign subsidiaries are
considered to be indefinitely reinvested and accordingly, no provision for federal and state income taxes
has been provided thereon. Upon distribution of those earnings in the form of a dividend or otherwise, the
Company would be subject to both US income taxes (subject to an adjustment for foreign tax credits) and
withholding taxes payable to the various foreign countries. It is not practical to estimate the income tax
liability that might be incurred on the remittance of such earnings.
NOTE 13. Segment Information
The Company has two operating segments: networking and non−networking products. The networking segment
consists of internetworking semiconductor devices and related technical service and support to equipment
manufacturers for use in their communications and networking equipment. The non−networking segment consists
of custom user interface products. The Company is supporting the non−networking products for existing
customers, but has decided not to develop any further products of this type.
The accounting policies of the segments are the same as those described in the summary of significant
accounting policies. The Company evaluates performance based on gross profits from operations of the two
segments.
Summarized financial information by segment is as follows:
Year Ended December 31,
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
(in thousands) 2002 2001 2000
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
Net revenues
Networking $ 212,651 $ 300,173 $ 665,700
Non−networking 5,442 22,565 28,984
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
Total $ 218,093 $ 322,738 $ 694,684
========================================
Gross profit
Networking $ 126,222 $ 176,068 $ 515,712
Non−networking 2,329 9,408 12,811
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
−
Total $ 128,551 $ 185,476 $ 528,523
========================================
Enterprise−wide information is provided in accordance with SFAS 131. Geographic revenue information is based
on the location of the customer invoiced. Long−lived assets include investments and other assets, property
and equipment, and goodwill and other intangible assets. Geographic information about long−lived assets is
based on the physical location of the assets.
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