Adaptec 2003 Annual Report Download - page 36

and 2006 respectively. Following the repurchase of the notes, we are committed to semi−annual interest payments of approximately
$1.3 million to holders of our convertible notes. These interest payments are due on February 15 and August 15 of each year, with the
last payment of interest and $68.1 million in principal being due on August 15, 2006.
Purchase obligations are comprised of commitments to purchase design tools and software for use in product development. We have
not included open purchase orders for inventory or other expenses issued in the normal course of business in the purchase obligations
shown above. Subsequent to December 31, 2003, we entered into additional purchase obligations related to development tools for
$7.4 million, $1.0 million and $0.3 million for the years 2004, 2005 and 2006, respectively.
In 1999 and 2000, we were passive investors, like many of our peers, in four professionally managed venture funds. These
investments help us monitor technological and market developments in the rapidly evolving market in which we participate. From
time to time these funds request additional capital. In 2003, one of our venture funds reduced our commitment by $14.0 million as the
general partnership was resized to reflect the new venture market environment. We have committed to invest an additional $19.2
million into these funds, which may be requested by the fund managers at any time over the next six years.
We have a line of credit with a bank that allows us to borrow up to $5.3 million provided we maintain eligible investments with the
bank equal to the amount drawn on the line of credit. At December 31, 2003 we had committed $2.5 million under letters of credit as
security for office leases.
We have completed most of our financial and operating restructuring expenditures, including the settlement of our long−term Mission
Towers Two lease obligation and the repurchase of all but $68.1 million of our convertible subordinated notes. We expect to use
approximately $15.7 million of cash in 2004 for capital expenditures. We generated $10.6 million in cash in the first quarter of 2004
by selling our interest in a private company, and cannot estimate what our direct investments in venture−backed startups will be in
2004. Based on our current operating prospects, we believe that existing sources of liquidity will satisfy our projected operating,
working capital, venture investing, debt interest, capital expenditure, wafer deposit and remaining restructuring requirements through
the end of 2005. Our expectation as to the sufficiency of our capital resources is based on the assumption that our market has
stabilized.
While we believe our current liquidity will be sufficient to meet our long−term needs for capital, we operate in an industry that is
subject to rapid technological and economic changes. In addition, we may contemplate mergers and acquisitions of other companies or
assets as part of our business strategy. Consequently in the future we may determine that our sources of liquidity are insufficient and
we may proceed with financing or other activities, which may dilute your investment or impact our liquidity and operating results.
FACTORS THAT YOU SHOULD CONSIDER BEFORE INVESTING IN PMC−SIERRA
Our company is subject to a number of risks – some are normal to the fabless networking semiconductor industry, some are the same
or similar to those disclosed in previous SEC
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