3Ware 2002 Annual Report Download - page 63

APPLIED MICRO CIRCUITS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
for determining whether a plan qualifies as a noncompensatory plan, the accounting consequence of various
modifications to the terms of a previously fixed stock option or award, and the accounting for the assumption of
stock compensation awards in a business combination. FIN 44 was effective July 1, 2000. The provisions of
FIN 44 change the accounting for the assumption of unvested employee stock options and restricted stock awards
in a purchase business combination. The new rules require that the intrinsic value of the unvested awards be
allocated to deferred compensation and recognized as stock-based compensation expense over the remaining
future vesting period. The Company adopted these new rules in its second quarter of fiscal 2001 for acquisitions
accounted for as purchase transactions.
Segments of a Business Enterprise
SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information” (“SFAS 131”)
establishes standards for the way that public business enterprises report information about operating segments in
annual consolidated financial statements and requires that those enterprises report selected information about
operating segments in interim financial reports. SFAS 131 also establishes standards for related disclosures about
products and services, geographic areas and major customers. The Company operates in one segment.
Recent Accounting Pronouncements
In October 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-
Lived Assets” (“SFAS 144”), which supersedes prior accounting standards concerning the financial accounting
and reporting for the impairment or the disposition of long-lived assets and for the disposition of a segment of a
business. SFAS 144 is effective for fiscal years beginning after December 15, 2001. The Company expects to
adopt SFAS 144 as of April 1, 2002 and has not yet determined the effect, if any, the adoption of SFAS 144 will
have on its results of operations and financial condition.
In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations”
(“SFAS 143”), which addresses financial accounting and reporting for obligations associated with the retirement
of tangible long-lived assets and the associated retirement costs. The standard applies to legal obligations
associated with the retirement of long-lived assets that result from the acquisition, construction, development
and/or normal use of the asset. SFAS 143 is effective for fiscal years beginning after June 15, 2002. The adoption
of this standard is not expected to have a material impact on the Company’s consolidated financial statements.
In June 2001, the FASB issued SFAS No. 141, “Business Combinations” (“SFAS 141”) and No. 142,
“Goodwill and Other Intangible Assets” (“SFAS 142”), effective for fiscal years beginning after December 15,
2001. Under these new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be
amortized but will be subject to annual impairment tests. Other intangible assets will continue to be amortized
over their estimated lives.
The Company will apply the new rules on accounting for goodwill and other intangible assets from prior
acquisitions beginning in the first quarter of fiscal 2003. In the fiscal year ended March 31, 2002, the Company
recorded a total of $297.9 million of amortization of goodwill and purchased intangibles. If the Company had
given effect to the provisions of SFAS 142, the resulting amortization for the fiscal year would have been
$63.5 million. The Company will perform the first of the required impairment tests of goodwill and indefinite-
lived intangible assets under the new rules during the first six months of fiscal 2003. The Company has not yet
determined the effect these tests will have on its results of operations and financial condition.
In June 1998, the FASB issued SFAS No. 133, “Accounting for Derivative Instruments and Hedging
Activities”, which establishes accounting and reporting standards for derivative instruments and hedging
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