Adaptec 2004 Annual Report Download - page 32

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Other Income and Expenses ($ millions)
2004 Change 2003 Change 2002
Interest income, net $ 4.9 188% $ 1.7 (74)% $ 6.5
Percentage of net revenues 2% 1% 3%
Foreign exchange loss $ (1.3) 30% $ (1.0) — —
Percentage of net revenues 0% 0% 0%
Gain (loss) on extinguishment of debt and
amortization of debt issue costs $ (2.2) (633)% $ 0.3 119% $ (1.6)
Percentage of net revenues (1)% 0% (1)%
Gain (loss) on investments $ 9.2 283% $ 2.4 121% $ (11.6)
Percentage of net revenues 3% 1% (5)%
Interest income, net
Net interest income increased by $3.2 million in 2004 compared to 2003 and decreased by $4.8 million in 2003 compared to 2002.
In 2004 our interest income increased due to interest expense savings of $6.5 million from the repurchase of a portion of our 3.75%
convertible subordinated notes. These savings were partially offset by a decline in interest revenue of $3.3 million due to a decline in
cash balances and average yields on our cash, short−term and long−term investments.
In 2003 our interest income declined by approximately $4.8 million compared to 2002 as a result of a decline in average yields on our
cash, short−term and long−term investments. $1.4 million of the decrease was due to an overall decline in our average cash balances.
Foreign exchange loss
Foreign exchange loss increased to $1.3 million in 2004 compared to $1.0 million in 2003 and nil in 2002.
We have a significant design presence outside the United States, especially in Canada. The majority of our operating expense
exposures to changes in the value of the Canadian Dollar relative to the United States Dollar have been hedged through
December 2005. The foreign exchange loss for all years presented relates primarily to the re−measurement of accrued income tax
amounts in our Canadian subsidiary. We do not hedge our accrual for Canadian income taxes in the ordinary course of business (see
Item 7a. Quantitative and Qualitative Disclosures About Market Risk).
Gain (loss) on extinguishment of debt and amortization of debt issue costs
We recognized amortization of debt issue costs of $0.4 million, $1.4 million, and $1.6 million in 2004, 2003 and 2002, respectively.
We recognized an additional loss of $1.8 million and gain of
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