Adaptec 2003 Annual Report Download - page 27

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Marketing, General and Administrative Expenses
Our marketing, general and administrative, or MG&A, expenses decreased $17.4 million, or 27%, in 2003 compared to 2002.
Reductions in headcount due to our first quarter restructuring program and attrition resulted in a decrease of personnel−related costs of
$5.7 million. Other MG&A expenses decreased $11.7 million primarily due to reduced sales commissions of $1.8 million, reduced
spending on marketing and corporate communications of $3.0 million, and decreased professional fees of $3.6 million. The reduction
in professional fees included the elimination of a provision for potential litigation costs of $1.8 million. Other MG&A expenses also
decreased $1.7 million due to a reduction in facilities−related costs, resulting from our restructuring programs and ongoing cost
control measures.
In 2002, our MG&A expenses decreased by $26.9 million, or 30%, compared to 2001. Of this decrease, $4.2 million was attributable
to lower variable sales commissions as a result of lower revenues. The remainder was attributable to the restructuring and cost
reduction programs implemented in 2001, which reduced our MG&A personnel and related costs by $9.7 million and other MG&A
expenses by $13.0 million compared to 2001, including reduced facilities costs of $2.9 million. Other factors contributing to the
decrease in other MG&A expenses were reduced spending on marketing, advertising and professional fees of $5.0 million and the
write−off of property and equipment related to restructuring, which reduced depreciation expense by $2.4 million.
Amortization of Deferred Stock Compensation
We recorded a non−cash charge of $1.0 million for amortization of deferred stock compensation in 2003 compared to $2.8 million in
2002 and $41.2 million in 2001.
Deferred stock compensation charges decreased $1.8 million from 2002 to 2003 due to the termination of certain employees as part of
our January 2003 restructuring and to the deferred stock compensation for certain employees becoming fully amortized in 2003.
Deferred stock compensation charges decreased by $38.4 million in 2002 compared to 2001 because we accelerated vesting for certain
employees terminated as part of our 2001 restructurings.
Impairment of Property and Equipment
In 2002, we recorded an impairment charge of $1.8 million reflecting a reduction in the estimated fair value of a product tester. This
equipment was removed from service because lower manufacturing and product development volumes resulted in excess product
testing capacity.
There were no impairments of property and equipment in 2003 or 2001, other than those assets impaired as a result of our 2001
restructurings as described below.
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