3Ware 2005 Annual Report Download - page 75

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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, 2005:
U.S. Treasury securities and agency bonds ................... $ 50,532 $ 3 $1,200 $ 49,335
Corporate bonds ....................................... 41,682 24 1,067 40,639
Mortgage-backed and asset-backed securities ................ 160,031 47 2,499 157,579
Closed-end bond funds .................................. 77,723 874 3,597 75,000
Preferred stock and options ............................... 25,532 73 162 25,443
$355,500 $1,021 $8,525 $347,996
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
Available-for-sale securities by contractual maturity are as follows (in thousands):
March 31,
2005
Due in one year or less ............................................................... $124,003
Due after one year through two years ................................................... 44,486
Greater than two years ............................................................... 179,507
$347,996
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 current 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 one of the privately held companies in which the Company had
an equity investment was sold. During fiscal 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 $13.3 million. 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, 2005 and 2004 the balance of these investments included in other current assets was
$600,000.
F-13