Adaptec 2003 Annual Report Download - page 73

Download and view the complete annual report

Please find page 73 of the 2003 Adaptec annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 100

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100

entities. This charge is included in “Gain (loss) on investments” on the Consolidated Statement of Operations.
The following table summarizes the cumulative impairment charges that we have recorded with respect to investments in non−public
entities that the Company held at December 31, 2003:
(in thousands) Cost
Cumulative
unrealized
losses Carrying Value
Venture−based limited partnerships $ 36,775 $ 31,227 $ 5,548
Privately funded technology company 7,500 6,200 1,300
$ 44,275 $ 37,427 $ 6,848
These investments have been in an unrealized loss position for more than twelve months. There are no unrecorded temporary losses
relating to these investments as of December 31, 2003.
Subsequent to year−end, the Company sold its interest in a private technology company in exchange for total consideration of $10.6
million in cash. This investment had a carrying value of $1.3 million at December 31, 2003.
NOTE 6. Lines of credit
At December 31, 2003, the Company had available a revolving line of credit with a bank under which the Company may borrow up to
$5.3 million with interest at the bank’s alternate base rate (annual rate of 4.50% at December 31, 2003) as long as the Company
maintains eligible investments with the bank in an amount equal to its drawings. This agreement expires in December 2004. At
December 31, 2003, $2.5 million cash was deposited with the bank to offset the amount committed under letters of credit used as
security for a facility lease.
NOTE 7. Convertible subordinated notes
In August 2001, the Company issued $275 million of convertible subordinated notes maturing on August 15, 2006. These notes bear
interest at 3.75% payable semi−annually and are convertible into an aggregate of approximately 6.5 million shares of PMC’s common
stock at any time prior to maturity at a conversion price of approximately $42.43 per share. The Company may redeem the notes at
any time after August 19, 2004. In addition, a holder may require PMC to repurchase the notes if a change of control, as defined in
the indenture, occurs. These notes also become payable upon events of bankruptcy, insolvency or reorganization, or if the Company
fails to pay amounts due on the notes or any other indebtedness of at least $40 million, or the Company fails to perform various
procedural covenants detailed in the indenture. Under the terms of the indenture relating to our convertible subordinated notes, the
Company may not merge into another entity, permit another entity to merge into the Company, sell substantially all of its assets to
another entity, or purchase substantially all of the assets of another entity, unless the entity formed by the merger, sale or purchase is a
company,
67