3Ware 2004 Annual Report Download - page 79

APPLIED MICRO CIRCUITS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
inventory is sold or disposed. From time to time, the Company has established general inventory reserves to
cover non-part specific inventory exposure, such as products built without a firm purchase order.
Warranty Reserves
The Company generally provides a one year warranty on production released semi-conductor products and
up to three years on board level products. Estimated expenses for warranty obligations are accrued as revenue is
recognized. Reserve estimates are adjusted periodically to reflect actual experience.
Property and Equipment
Property and equipment are stated at cost and depreciated over the estimated useful lives of the assets
ranging from 3 to 7 years using the straight line method. Leasehold improvements are stated at cost and
amortized over the shorter of the term of the related lease or its estimated useful life. Property and equipment
under capital leases are recorded at the net present value of the minimum lease payments and are amortized over
the useful lives of the assets.
Goodwill and Purchased Intangible Assets
Goodwill is recorded when the consideration paid for an acquisition exceeds the fair value of the identified
net tangible and intangible assets acquired. Other purchased intangible assets, including such items as developed
technology and trademarks, are amortized on a straight-line basis over the estimated remaining useful lives of the
respective assets, ranging from one to ten years.
Effective April 1, 2002, the Company completed the adoption of SFAS 142, “Goodwill and Other
Intangible Assets”(“SFAS 142”). SFAS 142 requires that the Company discontinue amortizing the remaining
balances of goodwill. All remaining and future acquired goodwill will be subject to impairment tests annually, or
earlier if indicators of potential impairment exist. All other intangible assets will continue to be amortized over
their estimated useful lives and assessed for impairment under SFAS 144, “Accounting for the Impairment or
Disposal of Long-Lived Asset”(“SFAS 144”).
The following table presents the impact of SFAS 142 on the net loss and the net loss per share as if
SFAS 142 had been in effect for all periods presented in the consolidated statements of operations (in thousands,
except per share data):
Fiscal Years Ended March 31,
2004 2003 2002
Net loss—as reported ......................................... $(104,877) $(745,541) $(3,605,690)
Adjustments:
Cumulative effect of accounting change ..................... — 102,229 —
Amortization of goodwill ................................ — — 230,250
Amortization of assembled workforce previously classified as
purchased intangible assets ............................. — — 4,193
Income tax effect ......................................... — — (1,698)
Total adjustments .................................... — 102,229 232,745
Net loss—as adjusted ......................................... $(104,877) $(643,312) $(3,372,945)
Basic and diluted net loss per share—as reported .................... $ (0.34) $ (2.47) $ (12.08)
Basic and diluted net loss per share—as adjusted .................... $ (0.34) $ (2.14) $ (11.30)
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