Adaptec 2004 Annual Report Download - page 15

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portfolio of more than 230 products, we do not consider any individual new product or group of products released in a year to be
material, beyond our continuing development of a portfolio of products that meet our customers’ future needs.
At the end of fiscal 2004, we had design centers in the United States (California, Oregon, and Pennsylvania) and Canada (British
Columbia, Saskatchewan, Manitoba, Ontario and Quebec). In 2003, we closed design centers in Maryland, Ireland and India as a
result of corporate restructuring activities.
We spent $120.5 million in 2004, $119.5 million in 2003 and $137.7 million in 2002 on research and development.
BACKLOG
Our sales originate from customer purchase orders. However, our customers frequently revise order quantities and shipment
schedules to reflect changes in their needs. We believe that orders placed with delivery dates in excess of six months are not firm
orders. As of December 31, 2004, our backlog of products scheduled for shipment within six months totaled approximately $50.0
million. Unless our customers cancel or defer to a subsequent year a portion of this backlog, we expect this entire backlog to be filled
in 2005. Our backlog of products as of December 31, 2003 for shipment within six months totaled $67.0 million.
Our backlog includes our backlog of shipments to direct customers, minor distributors and a portion of shipments by our major
distributor to end customers. Our customers may cancel or defer backlog orders at their discretion without penalty. Accordingly, we
believe that our backlog at any given time is not a meaningful indicator of future long−term revenues.
COMPETITION
We typically face competition at the customer design stage when our customers are determining which semiconductor components to
use in their new and next generation equipment designs.
Most of our customers choose a particular semiconductor component primarily based on whether the component:
•meets the functional requirements;
•interfaces easily with other components in a design;
•meets power usage requirements;
•is priced competitively; and
•is commercially available on a timely basis.
OEMs are becoming more price conscious as semiconductors sourced from third party suppliers start to comprise a larger portion of
the total materials cost in OEM equipment. This price pressure from our customers can lead to aggressive price competition by
competing suppliers that may force us to decrease our prices significantly to win a design and therefore decrease our gross profit.
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