Adaptec 2006 Annual Report Download - page 51

Table of Contents
million in accrued interest and a $1.0 million call premium, resulting in a reduction in interest expense of $2.5 million for 2005 compared to 2004. In the fourth
quarter of 2005, we issued $225.0 million 2.25% senior convertible notes, resulting in higher net interest income of approximately $0.7 million as the yield on
the short-term deposits exceeded the interest rate on the notes. We earned an additional $4.0 million due to higher average yields on our cash, short-term and
long-term investments.
Foreign exchange loss
Foreign exchange loss decreased to $0.1 million in 2006 compared to $3.3 million in 2005 and $1.3 million in 2004.
We have a significant design presence outside the United States, especially in Canada. The majority of our operating expense exposures to changes in the value
of the Canadian Dollar relative to the United States Dollar have been hedged through September 2007. The foreign exchange loss for all years presented relates
primarily to the re-measurement each period of accrued income tax amounts in our Canadian subsidiary. We do not hedge our accrual for Canadian income taxes
in the ordinary course of business (see Item 7A. Quantitative and Qualitative Disclosures About Market Risk).
Loss on extinguishment of debt and amortization of debt issue costs
In the fourth quarter of 2005, we issued $225.0 million 2.25% senior convertible notes and recognized amortization of debt issue costs of $1.0 million during
2006 and $0.2 million in 2005.
On January 18, 2005, we redeemed our remaining outstanding 3.75% convertible subordinated notes. We expensed the $1.0 million call premium and the
remaining unamortized debt issue costs of $0.6 million, resulting in an aggregate net loss on redemption of $1.6 million. We recognized a loss of $1.8 million in
2004 as a result of repurchasing a portion of these notes. Amortization of debt issue costs related to these notes was $0.4 million in 2004.
(Loss) gain on investments
During 2006, we sold our investment in Ikanos Communications Inc. for proceeds of $5.1 million and recorded a gain of $3.1 million, which has been included
in (Loss) gain on sale of investments on the Statement of Operations. Also included in (Loss) gain on sale of investments were a gain on sale of another
investment, as well as an impairment loss of $3.2 million on our investment in a private company, and a $1.3 million loss on sales of other short-term
investments that were redeemed prior to maturity to fund the acquisition of the Storage Semiconductor Business.
In 2005, we received $2.2 million as final satisfaction of the mortgage owed to us for a property we sold in 2003. As part of the agreement we surrendered an
option to purchase the property. The difference between the proceeds and the carrying value of the mortgage receivable was recorded as a gain of $0.6 million on
the Statement of Operations. In addition, we received $0.7 million that had been in escrow for one year pending final settlement of the sale of our investment in a
private technology company. As a result we recorded a gain for this amount, which has been included in (Loss) gain on investments on the Statement of
Operations.
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Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research℠