Adaptec 2001 Annual Report Download - page 61

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61
Company’s sales. The Company generally does not require collateral security for outstanding
amounts.
The Company relies on a limited number of suppliers for wafer fabrication capacity.
Revenue recognition. Revenues from product sales direct to customers and minor distributors are
recognized at the time of shipment. The Company accrues for warranty costs, sales returns and
other allowances at the time of shipment based on its experience. Certain of the Company’s
product sales are made to major distributors under agreements allowing for price protection
and/ or right of return on products unsold. Accordingly, the Company defers recognition of
revenue on such sales until the products are sold by the distributors.
Advertising costs. The Company expenses all advertising costs as incurred.
Interest and other income, net. The components of interest and other income, net are as follows:
Income taxes. Income taxes are reported under Statement of Financial Accounting Standards
No. 109 and, accordingly, deferred income taxes are recognized using the asset and liability
method, w hereby deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences betw een the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases, and operating loss and tax credit
carry forw ards. Valuation allowances are provided if, after considering available evidence, it is
more likely than not that some or all of the deferred tax assets will not be realized.
Net income (loss) per common share. Basic net income (loss) per share is computed using the
weighted average number of common shares outstanding during the period. The PMC-Sierra
Ltd. Special Shares have been included in the calculation of basic net income (loss) per share.
Diluted net income (loss) per share is computed using the weighted average number of
common and dilutive common equivalent shares outstanding during the period. Dilutive
common equivalent shares consist of stock options and warrants.
Share and per common share data presented reflect the two-for-one stock splits in the form of
100% stock dividends effective February 2000 and May 1999.
Segment reporting. Segmented information is reported under Statement of Financial A ccounting
Standards No. 131 (SFA S 131), "Disclosures about Segments of an Enterprise and Related
Information". SFA S 131 uses a management approach to report financial and descriptive
Year Ended December 31,
(in thousands) 2001 2000 1999
Interest income 18,998$ 19,243$ 8,511$
Interest expense on convertible subordinated notes (4,124) - -
Other interest expense** (211) (808) (1,549)
Amortization of debt issue costs (652) - -
Equity in income of investee - 574 792
Other (117) (83) 168
13,894$ 18,926$ 7,922$
**Consists primarily of interest on long-term debt and obligations under capital leases.