Adaptec 2003 Annual Report Download - page 66

Interest and other income, net. The components of interest and other income, net are as follows:
Year Ended December 31,
(in thousands) 2003 2002 2001
Interest income $ 10,833 $ 17,152 $ 18,998
Interest expense on long−term debt and capital leases (9,134) (10,540) (4,335)
Amortization of debt issue costs (1,413) (1,564) (652)
Other (84) (95) (117)
$ 202 $ 4,953 $ 13,894
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, whereby deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases, and operating loss and tax credit carry forwards. 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.
Segment reporting. Segmented information is reported in accordance with Statement of Financial Accounting Standards No. 131
(SFAS 131), “Disclosures about Segments of an Enterprise and Related Information”. SFAS 131 uses a management approach to
report financial and descriptive information about a company’s operating segments. Operating segments are revenue−producing
components of a company for which separate financial information is produced internally for the company’s management. Under this
definition, the Company operated, for all periods presented, in two segments: networking and non−networking products.
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. The
Company accounted for restructuring activities initiated after December 31, 2002 in accordance with SFAS 146, resulting in
restructuring charges being recorded as they were incurred over the course of fiscal 2003, rather than at the time management
committed to the restructuring plan.
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
disclosure requirements of FIN 45 were effective for financial statements for period ending after December 15, 2002. PMC
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