Adaptec 2006 Annual Report Download - page 47

Table of Contents
Amortization of purchased intangible assets and in-process research and development
In 2006 we completed the acquisitions of the Storage Semiconductor Business from Avago, and of Passave, Inc. Amortization of intangible assets acquired from
the Storage Semiconductor Business and Passave was $19.0 million and $14.4 million, respectively, for the year.
In addition, a portion of the purchase for Passave was allocated to in-process research and development projects and was expensed in the second quarter of 2006
because technological feasibility had not been established and no future alternative uses exist. Projects acquired from Passave include Ethernet Passive Optical
Network (EPON) and Analog Front End (AFE) products, which are based on technology that provides a low-cost method of deploying optical access lines
between a carrier’s central office and a customer site and which provide further enhancements and functionality to the existing EPON series, and Gigabit Passive
Optical Network (GPON) products, which are more complex and support multiple protocols and provide further enhancements to the GPON series.
At the acquisition date, early revisions of the AFE products were in the final stage of design and had been sent out to be manufactured or “taped out”, with
estimated costs to complete of approximately $0.4 million. By the end of 2006, samples of the AFE products were being tested by customers, and are expected to
be in production in 2007. Remaining efforts for completion include final customer acceptance procedures. The EPON products were in the design testing stage,
with estimated costs to complete of approximately $1.9 million. By the end of 2006, the EPON products had been taped out and are expected to be in production
in 2007. Remaining efforts for completion include further qualification and testing, as well as customer acceptance procedures.
GPON products were in the early design and prototype stages at acquisition, with estimated costs to complete of approximately $4.5 million at the acquisition
date. By the end of 2006, some of the products were in the design testing stage, while others were at the coding stage. Remaining efforts for completion are
expected to continue through 2007-2008 and include final stages of development, design testing, tape out, and final testing, as well as customer acceptance.
A portion of the purchase for the Storage Semiconductor Business was allocated to in-process research and development projects and was expensed in the first
quarter of 2006 because technological feasibility had not been established and no future alternative uses exist. Projects acquired and expensed include three
next-generation Tachyon storage protocol products.
At the acquisition date, two of the next-generation Tachyon products had been taped out, with estimated costs to complete of approximately $0.8 million. By the
end of 2006, the products were in testing stages, and are expected to be in production by the first quarter of 2007. Remaining efforts for completion include final
customer acceptance procedures for the products.
The third next-generation Tachyon product, a multi-protocol storage controller, was in the early design stage at acquisition, with estimated costs to complete of
approximately $10 million. By the end of 2006, the product was still in the design stage, and based on feedback from our customers, we have re-directed our
design resources from this project to other Tachyon controller projects addressing the same application. Remaining efforts for completion of the product would
include further design, tape out, testing, and final customer acceptance procedures.
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Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research℠