Adaptec 2005 Annual Report Download - page 92

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Table of Contents
November 21, 2006, the Beiser and Barone actions were consolidated into one case. On January 18, 2007, the Santa Clara County Superior Court in California
ordered that the Meissner action be stayed pending the outcome of the consolidated, federal Beiser/Baron action. A consolidated complaint in the Beiser/Baron
action was filed on January 29, 2007 (the “Consolidated Complaint”).
The Consolidated Complaint generally alleged that various current and former Company directors and/or officers breached their duty of loyalty and/or duty of
care to the Company and its shareholders, that these purported breaches of fiduciary duties caused harm to the Company and the plaintiffs seek to recover
damages on behalf of the Company. The Consolidated Complaint also alleged violations of federal securities laws. The Company is a nominal defendant in the
cases, but any recovery in the litigation would be paid to the Company, rather than to its shareholders. The defendants have entered into joint defense
arrangements.
On March 15, 2007, the Company filed three separate motions aimed at having the federal lawsuit dismissed on various legal grounds. One of these motions was
on the basis that plaintiffs failed to plead with particularity facts establishing that a litigation demand on the board of directors of the Company would have been
futile at the time they commenced the derivative lawsuit. On June 20, 2007, the Court heard the motion to dismiss plaintiffs’ complaint for failure to plead
demand futility with particularity. The Court ruled on the motion to dismiss on August 22, 2007 finding that the plaintiffs’ Consolidated Complaint had not met
the pleading burden and gave plaintiffs leave to amend. The plaintiffs filed their Amended Consolidated Complaint on October 2, 2007. While the plaintiffs’
claims are substantially similar, they have reduced the scope of their allegations. The Company filed motions to dismiss the Amended Consolidated Complaint
consistent with its previous motions which were argued before the Court on January 30, 2008. The Court also took argument on a motion to compel the
production of certain documents filed by the plaintiffs December 26, 2007. The Court has not yet ruled on the motions.
At December 30, 2007, the Company has not accrued costs for potential losses related to the Amended Consolidated Complaint.
Operating leases:
The Company leases its facilities under operating lease agreements, which expire at various dates through September 30, 2013.
Rent expense including operating costs for the years ended December 30, 2007, December 31, 2006, and 2005 was $10.8 million, $10.5 million, and $9.1
million, respectively. Excluded from rent expense for 2007 was additional rent and operating costs of $4.6 million (2006—$4.2 million; 2005—$4.2 million)
related to excess facilities, which were accrued as part of the restructuring programs.
86
Source: PMC SIERRA INC, 10-K, February 22, 2008