Adaptec 2006 Annual Report Download - page 92

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Table of Contents
December 31,
(in thousands) 2006 2005
Investment in Ikanos Communications Inc. $ — $ 3,817
Investments in private entities 2,000 5,414
Deferred debt issue costs (Note 10) 5,645 6,612
Other assets 7,405 547
$ 15,050 $ 16,390
During 2006, the Company recorded a $3.2 million impairment loss on its investment in a private company, which was its carrying value. This was offset by a
$0.1 million gain on sale of another investment. In addition, the Company sold its investment in Ikanos Communications Inc. (Ikanos) in 2006 for proceeds of
$5.1 million and recorded a gain of $3.1 million, included in Gain on investments on the Statement of Operations.
During 2005, in connection with the IPO of Ikanos, the Company’s non-voting preferred shares of Ikanos were converted into 258,960 shares of common stock
of Ikanos. These shares are not tradeable until the end of the first quarter of 2006, and are subject to regulatory trading restrictions thereafter. The Company’s
investment in Ikanos was classified as available-for-sale and reported at fair value, with unrealized gains and losses recorded as Other Comprehensive (Loss)
Income.
In 2005, the Company received $2.2 million as final satisfaction of the mortgage owed to the Company for a property it sold in 2003. As part of the agreement
the Company 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, included in Gain on sale of investments on the Consolidated Statement of Operations. In addition, the Company received $0.7
million in 2005 that had been in escrow for one year pending final settlement of the sale of its investment in a private technology company. As a result the
Company recorded a gain for this amount, which has been included in Gain on sale of investments on the Consolidated Statement of Operations.
The Company monitors the value of its investments for impairment and records an impairment charge to reflect any decline in value below its cost basis, if that
decline is considered to be other than temporary. The assessment of impairment in carrying value is based on the market value trends of similar public
companies, the current business performance of the entities in which we have invested, and if available, the estimated future market potential of the companies
and venture funds.
During 2006 the Company made deposits of $7.4 million related to long-term design tool contracts. These costs are being amortized according to usage over the
contract term, which ends in 2010.
NOTE 9. Lines of credit
At December 31, 2006, the Company had available a revolving line of credit with a bank under which the Company may borrow up to $0.8 million with interest
at the bank’s alternate base rate (annual rate of 8.75% at December 31, 2006) as long as the Company maintains eligible
90
Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research℠