Adaptec 2003 Annual Report Download - page 26

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Other Costs and Expenses ($000,000)
2003 Change 2002 Change 2001
Research and development $ 119.5 (13)% $ 137.7 (32)% $ 201.1
Percentage of net revenues 48% 63% 62%
Marketing, general and administrative $ 46.0 (27)% $ 63.4 (30)% $ 90.3
Percentage of net revenues 18% 29% 28%
Amortization of deferred stock compensation:
Research and development $ 0.3 (88)% $ 2.6 (92)% $ 32.5
Marketing, general and administrative 0.7 246% 0.2 (98)% 8.7
$ 1.0 (64)% $ 2.8 (93)% $ 41.2
Percentage of net revenues 0% 1% 13%
Impairment of property and equipment — $ 1.8 —
Percentage of net revenues — 1% —
Restructuring costs and other special charges $ 15.3 — $ 195.2
Percentage of net revenues 6% — 60%
Impairment of goodwill and purchased
intangible assets — — $ 269.8
Percentage of net revenues — — 84%
Amortization of goodwill — — $ 44.0
Percentage of net revenues — — 14%
Research and Development Expenses
Our research and development, or R&D, expenses were $18.2 million, or 13%, lower in 2003 compared to 2002 due to the
restructuring program implemented in the first quarter of 2003 and ongoing cost reduction initiatives. Headcount reductions resulting
from the first quarter restructuring program and attrition have decreased our R&D personnel and related costs by $5.3 million. Of the
remaining $12.9 million decrease in other R&D expenses since 2002, $7.6 million related to reduced depreciation expense as more
property and equipment became fully depreciated and was not replaced. The other main reason for the decrease in other R&D
expenses was that costs incurred for product development tools were $4.4 million lower in 2003 than in 2002 as less software and
related maintenance was required to support current development activity levels. Contributing to this reduction in tooling costs was
the closure of our development sites in Ireland, India and Maryland as there were fewer licenses required to support the reduced R&D
headcount.
In 2002, our R&D expenses decreased to $137.7 million, or 32%, from 2001 due to the Company’s restructuring and cost reduction
programs implemented in the first and fourth quarters of 2001. As a result of these programs, we reduced our R&D personnel and
related costs by $34.0 million and other R&D expenses by $29.4 million compared to 2001. $19.4 million of this decrease in other
R&D expenses was attributable to reduced product development materials and development−related services and software tools as we
downsized the number of development projects we were pursuing at that time. Further, there was a $6.8 million decrease in
depreciation expense due to the write−down of property and software assets during our 2001 restructuring program.
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