3Ware 2003 Annual Report Download - page 77

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APPLIED MICRO CIRCUITS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The Company has established a valuation allowance against its net deferred tax assets, due to uncertainty
regarding their future realization. In assessing the realizability of its deferred tax assets, management considers
the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies.
Based on the projections for future taxable income over the periods in which the deferred tax assets are
realizable, management believes it is more likely than not that the Company will realize its deferred tax assets,
net of the valuation allowance.
8. Commitments
The Company leases certain of its facilities under long-term operating leases, which expire at various dates
through 2010. The lease agreements frequently include renewal or other provisions, which require the Company
to pay taxes, insurance, maintenance costs or defined rent increases. The Company also leases certain
engineering design software tools under non-cancellable operating leases expiring through fiscal 2005.
The Company has various term notes payable to a bank, with monthly payments totaling approximately
$64,000 including interest, payable over 60 months, at interest rates between 6.5% and 7.35%. At March 31,
2003, approximately $502,000 was outstanding on the notes.
Annual future minimum payments as of March 31, 2003, are as follows (in thousands):
Fiscal Years Ending March 31,
Operating
Leases
Notes Payable
and Capital
Leases
2004 .............................................................. $16,335 $1,278
2005 .............................................................. 11,326 —
2006 .............................................................. 3,666 —
2007 .............................................................. 2,199 —
2008 .............................................................. 1,672 —
Thereafter .......................................................... 3,147 —
Total minimum lease payments ......................................... $38,345 1,278
Less amount representing interest ....................................... (13)
Present value of remaining minimum capital lease payments – current portion .... $1,265
Rent expense (including short-term leases and net of sublease income) for the years ended March 31, 2001,
2002, and 2003 was $3.7 million, $7.9 million and $7.8 million, respectively.
9. Employee Retirement Plan
Effective January 1, 1986, the Company established a 401(k) defined contribution retirement plan
(“Retirement Plan”) covering all full-time employees. The Retirement Plan provides for voluntary employee
contributions from 1% to 20% of annual compensation, subject to a maximum limit allowed by Internal Revenue
Service guidelines. The Company may contribute such amounts as determined by the board of directors.
Employer contributions vest to participants at a rate of 33% per year of service. The total contributions under the
plan charged to operations totaled $1.2 million, $2.3 million and $1.4 million for the years ended March 31,
2001, 2002 and 2003, respectively.
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