Adaptec 2006 Annual Report Download - page 85

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Table of Contents
December 31,
(in thousands) 2006 2005
Pro forma revenues $ 461,429 $ 446,387
Pro forma net loss (66,454) (64,775)
Pro forma basic and diluted net loss per share $ (0.33) $ (0.32)
NOTE 4. Derivative Instruments
The Company generates revenues in U.S. dollars but incurs a portion of its operating expenses in various foreign currencies, primarily the Canadian dollar. To
minimize the short-term impact of foreign currency fluctuations on the Company’s operating expenses, the Company uses currency forward contracts.
Currency forward contracts that are used to hedge exposures to variability in forecasted foreign currency cash flows are designated as cash flow hedges. The
maturities of these instruments are less than twelve months. For these derivatives, the gain or loss from the effective portion of the hedge is initially reported as a
component of other comprehensive income in stockholders’ equity and subsequently reclassified to earnings in the same period in which the hedged transaction
affects earnings. The gain or loss from the ineffective portion of the hedge is recognized as interest income or expense immediately.
At December 31, 2006, the Company had six currency forward contracts outstanding that qualified and were designated as cash flow hedges. The U.S. dollar
notional amount of these contracts was $57.9 million and the contracts had a fair value of ($1.7) million. No portion of the hedging instrument’s gain or loss was
excluded from the assessment of effectiveness and the ineffective portions of hedges had no impact on earnings.
NOTE 5. Stock-Based Compensation
At December 31, 2006, the Company has two stock-based compensation programs, which are described below. None of the Company’s stock-based awards are
classified as liabilities. The Company did not capitalize any stock-based compensation cost, and recorded compensation expense for the year ended
December 31, 2006 as follows:
(in thousands)
Year ended
December 31, 2006
Cost of revenues $ 1,809
Research and development 16,210
Selling, general and administrative 19,889
Total $ 37,908
The Company received cash of $26.0 million from all stock-based awards during the year ended December 31, 2006. The total intrinsic value of stock awards
exercised during the year ended December 31, 2006, was $43.4 million.
83
Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research℠