3Ware 2005 Annual Report Download - page 37

On January 21, 2005, we entered into a Memorandum of Understanding in which we agreed to pay $60
million to settle a shareholder class action. In April 2005, we and our insurance carriers paid $60 million into a
settlement fund following the court’s preliminary approval. Of that amount, our insurers paid approximately $31
million and we paid approximately $29 million.
On August 12, 2004, our board of directors authorized a stock repurchase program for the repurchase of up
to $200.0 million of our common stock. During fiscal 2005, we repurchased on the open market 5.4 million
shares of our common stock for approximately $16.9 million. These shares were retired upon delivery to us. In
addition, during fiscal 2005, we entered into structured stock repurchase agreements totaling $59.5 million.
These agreements settle in cash or stock depending on the closing market price of our common stock on the
expiration date of the agreements. These agreements had various expiration dates through May 31, 2005. Upon
expiration of each agreement, if the closing market price of our common stock is at or above the pre-determined
price, we will have our investment returned with a premium. If the closing market price of our common stock is
below the pre-determined price, we will receive a predetermined number of our shares purchased on the open
market. During the year ended March 31, 2005, upon settlement of the underlying agreements, we received 2.5
million shares of our common stock at an effective purchase price of $3.03 per share from the settlements
resulting in the delivery of shares and received cash totaling $48.3 million from the settlements resulting in the
return of our investment with a premium. The cash returned, including the premium, is treated as an increase to
additional paid in capital on the balance sheet.
At March 31, 2005, we had four open structured stock repurchase agreements totaling $9.5 million that have
varying maturities through May 31, 2005. Under the remaining agreements, we could receive up to $10.3 million
of cash, or the delivery of up to 3.0 million shares of our common stock.
In April 2004, we completed the acquisition of 3ware, Inc., a provider of high-performance, high-capacity
SATA storage solutions. Under the terms of the agreement, we acquired all outstanding shares of 3ware, Inc. for
approximately $145.0 million in cash and assumed options to purchase approximately 4.3 million shares of
AMCC’s common stock.
In May 2004, we completed the acquisition of the assets and intellectual property associated with IBM’s 400
series of embedded PowerPC®standard products for approximately $227.9 million in cash. On December 6,
2004, we exercised an option to purchase additional related assets located in France for $4.1 million.
We believe that our available cash, cash equivalents and short-term investments will be sufficient to meet
our capital requirements and fund our operations for at least the next 12 months, although we could elect or could
be required to raise additional capital during such period. There can be no assurance that such additional debt or
equity financing will be available on commercially reasonable terms or at all.
The following table summarizes our contractual obligations as of March 31, 2005 (in thousands):
Operating
Leases
Capital
Leases
Other
Purchase
Commitments Total
(in thousands)
Fiscal Years Ending March 31,
2006 .............................................. $11,941 $ 34 $23,500 $35,475
2007 .............................................. 4,425 — — 4,425
2008 .............................................. 2,899 — — 2,899
2009 .............................................. 1,972 — — 1,972
2010 .............................................. 1,895 — — 1,895
Thereafter .......................................... 1,553 — — 1,553
Total minimum lease payments ..................... $24,685 $ 34 $23,500 $48,219
The table above does not include the $60 million liability related to the Memorandum of Understanding regarding
our shareholder litigation. The $60 million was paid to the settlement fund on April 1, 2005. Of that amount, our
insurers paid approximately $31 million and we paid approximately $29 million.
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