Adaptec 2002 Annual Report Download - page 27

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See Note 12 to the Consolidated Financial Statements for additional information
regarding income taxes.
Recently issued accounting standards.
In June 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standard No. 146 (SFAS 146), "Accounting for Costs Associated with Exit or Disposal Activities". SFAS 146
requires that the liability for a cost associated with an exit or disposal activity be recognized at its
fair value when the liability is incurred. Under previous guidance, a liability for certain exit costs was
recognized at the date that management committed to an exit plan. As SFAS 146 is effective only for exit or
disposal activities initiated after December 31, 2002, the adoption of this statement will not impact our
financial statements for 2002, but will affect the accounting for any restructurings initiated after 2002.
In January 2003, we announced a third restructuring plan, the costs of which will be accounted for in
accordance with SFAS 146.
In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45), "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others". FIN 45
requires that upon issuance of a guarantee, a guarantor must recognize a liability for the fair value of an
obligation assumed under a guarantee. FIN 45 also requires additional disclosures by a guarantor in its
interim and annual financial statements about the obligations associated with guarantees issued. The
recognition provisions of FIN 45 will be effective for any guarantees that are issued or modified after
December 31, 2002. We adopted the disclosure requirements and are currently evaluating the effects of the
recognition provisions of FIN 45; however, we do not expect that the adoption will have a material impact on
our results of operations or financial position.
In December 2002, the FASB issued Statement of Financial Accounting Standard No. 148 (SFAS 148), "Accounting
for Stock−Based Compensation − Transition and Disclosure". SFAS 148 provides alternative methods of
transition for a voluntary change to the fair value based method of accounting for stock−based employee
compensation. SFAS 148 also requires prominent disclosure in the "Summary of Significant Accounting
Policies" of both annual and interim financial statements about the method of accounting for stock−based
employee compensation and the effect of the method used on reported results. We adopted SFAS 148 for our
2002 fiscal year end. Adoption of this statement has affected the location of this disclosure within our
Consolidated Financial Statements, but will not impact our results of operation or financial position unless
we change to the fair value method of accounting for stock−based employee compensation.
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