Adaptec 2003 Annual Report Download - page 71

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the amount by which the carrying value of the goodwill and intangibles exceeded the present value of estimated future cash flows
related to these assets, to impair the goodwill and intangibles acquired in the second acquisition. The remaining $1.5 million
impairment of goodwill resulted from the cancellation of research and development activities of the third acquired company during
2001.
Write−down of Inventory
The Company recorded a write−down of excess inventory of $4.0 million in 2002 and $20.7 million in 2001. The continued industry
wide reduction in capital spending and resulting decrease in demand for the Company’s products prompted the Company to assess its
current inventory levels compared to sales forecasts for the next twelve months. The excess inventory charge, which was included in
cost of revenues, was calculated in accordance with the Company’s policy, which is based on inventory levels in excess of estimated
12−month demand.
The inventory provision as of December 31, 2003 was $16.2 million (2002 − $30.1 million, 2001 − $28.4 million). In fiscal 2003, the
Company reduced inventory reserves by $14.5 million (2002 − $5.2 million) for inventory that was scrapped during the year.
NOTE 4. Debt Investments
The following tables summarize the Company’s investments in debt securities:
December 31,
(in thousands) 2003 2002
Held to maturity:
US Government Treasury and Agency notes $ — $ 92,039
Corporate bonds and notes — 303,169
— 395,208
Available−for−sale:
US Government Treasury and Agency notes 60,495 94,512
Corporate bonds and notes 100,191 —
$ 160,686 $ 489,720
Reported as:
Short−term investments $ 119,117 $ 340,826
Investments in bonds and notes 41,569 148,894
$ 160,686 $ 489,720
In 2003, the Company sold investments in bonds and notes previously classified as held−to− maturity with a total amortized cost of
$29.9 million. The securities were sold in the third quarter to partially fund the repurchase of $100 million face value of convertible
subordinated notes. As a result of this sale, all debt investments were reclassified as available−for−sale. The realized gain or loss on
these sales was immaterial. The total fair value of available−for−sale investments at December 31, 2003 was $160.7 million (2002 −
$94.5 million) with remaining maturities ranging from 1 to 24 months.
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