Adaptec 2006 Annual Report Download - page 72

Table of Contents
Estimated future amortization expense for intangible assets is as follows:
(in thousands) $
2007 43,059
2008 41,643
2009 40,436
2010 25,726
2011 18,918
thereafter 50,247
Impairment of long-lived assets. The Company reviews its long-lived assets, other than goodwill, for impairment whenever events or changes in circumstances
indicate that the carrying value of such assets may not be recoverable. To determine recoverability, the Company compares the carrying value of the assets to the
estimated future undiscounted cash flows. Measurement of an impairment loss for long-lived assets held for use is based on the fair value of the asset. Long-lived
assets classified as held for sale are reported at the lower of carrying value and fair value less estimated selling costs. For assets to be disposed of other than by
sale, an impairment loss is recognized when the carrying value is not recoverable and exceeds the fair value of the asset.
Accrued liabilities. The components of accrued liabilities are as follows:
December 31,
(in thousands) 2006 2005
Accrued compensation and benefits $ 21,977 $ 15,260
Other accrued liabilities 29,222 25,359
$ 51,199 $ 40,619
Foreign currency translation. For all foreign operations, the U.S. dollar is used as the functional currency. Monetary assets and liabilities in foreign currencies
are translated into U.S. dollars using the exchange rate as of the balance sheet date. Revenues and expenses are translated at average rates of exchange during the
year. Gains and losses from foreign currency transactions are reported separately as foreign exchange gain (loss) under Other income (expense) on the Statement
of Operations.
Derivatives and Hedging Activities. Fluctuating foreign exchange rates may significantly impact PMC’s net income and cash flows. The Company periodically
hedges forecasted foreign currency transactions related to certain operating expenses. All derivatives are recorded in the balance sheet at fair value. For a
derivative designated as a fair value hedge, changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in net
(loss) income. For a derivative designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in other
comprehensive income and are recognized in net (loss) income when the hedged item affects net (loss) income. Ineffective portions of changes in the fair value
of cash flow hedges are recognized in net (loss) income. If the derivative used in an economic hedging relationship is not designated in an accounting hedging
relationship or if it becomes ineffective, changes in the fair value of the derivative are recognized in net income. During the year ended December 31, 2006, all
hedges were designated as cash flow hedges.
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Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research℠