Adaptec 2006 Annual Report Download - page 6

Table of Contents
• sales, marketing and distribution;
• wafer fabrication capacity;
• competition and pricing;
• critical accounting policies and estimates;
• customer product inventory levels, needs and order levels;
• demand for networking, storage and consumer equipment;
• net revenues;
• gross profit;
• research and development expenses;
• selling, general and administrative expenditures;
• interest and other income;
• foreign exchange rates;
• capital resources sufficiency;
• restructuring activities, expenses and associated annualized savings; and
• our business outlook.
We undertake no obligation to update the forward-looking statements in this Annual Report on Form 10-K. Accordingly, this Form 10-K should be read in
conjunction with our periodic filings made with the SEC subsequent to the date of the original filing, including any amendments to those filings, as well as any
Current Reports filed on Form 8-K subsequent to the date of the original filing.
The 2006 Stock Option Review
In 2006, our Audit Committee completed a review of our stock option-award practices. Based on the results of the review we concluded that the accounting
measurement dates for certain stock option grants awarded primarily during the years 1998-2001, differ from the measurement dates previously used to
determine any stock-based compensation expense for the years 1998-2002. We determined that for certain option grants the allocations to individual recipients
and/or the proper documentation of formal corporate approvals had not been completed as of the original accounting measurement dates. As a result, new
accounting measurement dates were applied to the affected option grants. As the majority of the stock options in question were cancelled in an option exchange
program in 2002 or were otherwise fully vested, the new measurement dates do not affect operating results for 2003 and subsequent years. The Audit Committee
concluded that, while the Company used incorrect accounting measurement dates for certain stock option grants awarded primarily during the years 1998-2001,
those errors were not the product of any deliberate misconduct by the Company’s executives, staff, or members of its board of directors.
As a result of the review we adjusted our opening stockholders’ equity on the consolidated balance sheet as at December 31, 2002 and on the consolidated
balance sheets for all subsequent periods. The effect of the adjustments was to increase capital stock and additional paid-in capital and increase accumulated
deficit on all consolidated balance sheets commencing in 2003. These are offsetting reclassification entries within stockholders’ equity on the consolidated
balance sheet and the total opening amount of stockholders’ equity in 2003 and subsequent consolidated balance sheets did not change. The incremental expenses
resulting from the re-measurement, by year, were as follows:
Fiscal year (in thousands)
1999 $ 4,919
2000 17,810
2001 28,242
2002 38,659
$ 89,630
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Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research℠