3Ware 2004 Annual Report Download - page 84

APPLIED MICRO CIRCUITS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following is a summary of available-for-sale securities (in thousands):
Amortized
Cost
Gross Unrealized Estimated
Fair ValueGains Losses
At March 31, 2004:
U.S. Treasury securities and agency bonds .................. $ 68,984 $ 726 $ 73 $ 69,637
Corporate bonds ...................................... 150,715 2,529 209 153,035
Mortgage-backed and asset-backed securities ............... 238,646 1,663 847 239,462
Closed-end bond funds ................................. 68,224 1,949 428 69,745
$526,569 $ 6,867 $1,557 $531,879
At March 31, 2003:
U.S. Treasury securities and agency bonds .................. $253,418 $ 2,563 $ 44 $255,937
Corporate bonds ...................................... 296,591 6,122 2,457 300,256
Mortgage-backed and asset-backed securities ............... 263,278 3,085 928 265,435
Closed-end bond funds ................................. 63,559 797 400 63,956
$876,846 $12,567 $3,829 $885,584
Available-for-sale securities by contractual maturity are as follows (in thousands):
March 31,
2004
Due in one year or less ............................................................... $ 60,088
Due after one year through two years ................................................... 82,867
Greater than two years ............................................................... 388,924
$531,879
Strategic Equity Investments
The Company has entered into certain equity investments in privately held businesses for the promotion of
business and strategic objectives, and typically does not attempt to reduce or eliminate the inherent market risks
on these investments. The Company’s investments in equity securities of privately held businesses are accounted
for under the cost method. Under the cost method, strategic investments in which the Company holds less than a
20% voting interest and on which the Company does not have the ability to exercise significant influence are
carried at the lower of cost or fair value. These investments are included in other assets on the Company’s
balance sheet and are carried at fair value or cost, as appropriate. The Company periodically reviews these
investments for other-than-temporary declines in fair value based on the specific identification method and writes
down investments to their fair value when an other-than-temporary decline has occurred. During fiscal 2004, the
Company recognized a gain of $1.0 million when of one of the privately held companies in which the Company
had an equity investment was sold. During fiscal 2002 and 2003, as a result of macro economic factors and the
decreases in the financial viability of certain of these investments, the Company determined that certain
investments were impaired and recorded impairment charges of $15.0 million and $13.3 million, respectively.
The fiscal 2002 impairment charge related to an investment in a development stage semiconductor company
which was unable to raise additional funding and ceased its operations. Of the total fiscal 2003 impairment
charge, $10 million related to one investment in a company that due to its financial condition was forced to raise
additional funds at a valuation which represented a substantial decrease from the valuation at which the Company
made its investment. At March 31, 2004 and 2003 the balance of these investments included in other assets was
$600,000 and $1.2 million, respectively.
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