Adaptec 2002 Annual Report Download - page 69

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December 31,
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
(in thousands) 2002 2001
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
Investment in Sierra Wireless Inc. $ 8,707 $ 44,317
Other investments in public companies 264 2,744
Investments in non−public entities 7,098 12,392
Deferred debt issue costs (Note 7) 5,603 7,167
Other assets (Note 16) 306 2,243
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
$ 21,978 $ 68,863
=================================
At December 31, 2002, the Company held 2.0 million shares (2001 − 2.3 million shares) of Sierra Wireless,
Inc., of which 1.2 million were previously subject to resale restrictions and could not be sold until May
2002. The Company has classified these shares as available−for−sale and has recorded a related unrealized
holding gain at December 31, 2002 of $6.3 million (2001 − $41.6 million).
The Company also has investments in non−public entities, either directly or through venture funds, which
include investments in early−stage private technology companies of strategic interest to the Company. The
Company has commitments to invest additional capital into venture funds (see Note 8). In 2002, the Company
made additional cash investments of $10.1 million (2001 − $5.7 million; 2000 − $24.8 million) in non−public
entity investments.
During the year ended December 31, 2002, the Company sold some of its investments in public and non−public
companies for cash proceeds of $5.8 million (2001 − $3.3 million; 2000 − $59.7 million) and recorded gross
realized gains of $3.7 million (2001 − $2.9 million; 2000 − $58.5 million). There were no non−cash proceeds
from sales of investments in 2002 (2001 − $1.7 million; 2000 − nil). Of these amounts, cash proceeds of $5.3
million (2001 − $2.1 million; 2000 − $59.7 million) and gross realized gains of $3.3 million (2001 − $1.9
million; 2000 − $58.5 million) related to the disposition of investments classified as available for sale.
The Company monitors the value of its investments for impairment and records an impairment charge to reflect
any decline in value below its cost basis, if that decline is considered to be other than temporary. The
assessment of impairment in carrying value is based on the market value trends of similar public companies,
the current business performance of the entities in which we have invested, and if available, the estimated
future market potential of the companies and venture funds. In 2002, the Company recorded an impairment
charge of $15.3 million (2001 − $17.5 million) related to its investments in non−public entities. This
charge is included in "Gain (loss) on investments" on the Consolidated Statement of Operations.
NOTE 6. Lines of credit
At December 31, 2002, the Company had available a revolving line of credit with a bank under which the
Company may borrow up to $5.3 million with interest at the bank's alternate base rate (annual rate of 4.75%
at December 31, 2002) as long as the Company maintains eligible investments with the bank in an amount equal
to its drawings. This agreement expires in December 2004. At December 31, 2002, $5.3 million cash was
deposited with the bank to offset the amount committed under letters of credit.
67