Adaptec 2003 Annual Report Download - page 47

find appropriate licenses on reasonable terms.
Patent disputes in the semiconductor industry are often settled through cross−licensing arrangements. Because we currently do not
have a substantial portfolio of patents compared to our larger competitors, we may not be able to settle an alleged patent infringement
claim through a cross−licensing arrangement. We are therefore more exposed to third party claims than some of our larger
competitors and customers.
Our customers are required to obtain licenses from and pay royalties to third parties for the sale of systems incorporating our
semiconductor devices. Customers may also make claims against us with respect to infringement.
Furthermore, we may initiate claims or litigation against third parties for infringing our proprietary rights or to establish the validity of
our proprietary rights. This could consume significant resources and divert the efforts of our technical and management personnel,
regardless of the litigation’s outcome.
We have a significant debt load as a result of the sale of convertible subordinated notes.
As at December 28, 2003 we owed $175 million in convertible subordinated notes. On January 6, 2004 we repurchased
approximately $107 million of our convertible subordinated notes pursuant to a cash tender offer, leaving approximately $68 million
owing after the repurchase. Our debt could materially and adversely affect our ability to obtain financing for working capital,
acquisitions or other purposes and could make us more vulnerable to industry downturns and competitive pressures. Our ability to
meet our debt service obligations will be dependent upon our future performance, which will be subject to financial, business and
other factors affecting our operations, many of which are beyond our control. On August 15, 2006, we are obliged to repay the full
remaining principal amount of the notes that have not been converted into our common stock.
Securities we issue to fund our operations could dilute your ownership.
We may decide to raise additional funds through public or private debt or equity financing to fund our operations. If we raise funds by
issuing equity securities, the percentage ownership of current stockholders will be reduced and the new equity securities may have
priority rights to your investment. We may not obtain sufficient financing on terms that are favorable to you or us. We may delay,
limit or eliminate some or all of our proposed operations if adequate funds are not available.
Our stock price has been and may continue to be volatile.
In the past, our common stock price has fluctuated significantly. In particular, our stock price declined significantly following
announcements made by us and other semiconductor suppliers of reduced revenue expectations and of a general slowdown in the
markets we serve. Given these general economic conditions and the reduced demand for our products that we have experienced, we
expect that our stock price will continue to be volatile.
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