Adaptec 2005 Annual Report Download - page 44

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Table of Contents
Amortization of purchased intangible assets and in-process research and development
Amortization of intangible assets acquired from the Storage Semiconductor Business and Passave was $18.9 million and $20.4 million, respectively, for the year.
Passave
A portion of the purchase for Passave was allocated to in-process research and development projects and was expensed in the second quarter of 2006 because
technological feasibility had not been established and no future alternative uses existed. Projects acquired from Passave included Ethernet Passive Optical
Network (EPON) and Analog Front End (AFE) products, which are based on technology that provides a low-cost method of deploying optical access lines
between a carrier’s central office and a customer site and which provide further enhancements and functionality to the existing EPON series, and Gigabit Passive
Optical Network (GPON) products, which are more complex and support multiple protocols and provide further enhancements to the GPON series.
At the acquisition date of Passave, early revisions of the AFE products were in the final stage of testing and had been sent out to be manufactured or “taped out,”
with estimated costs to complete of approximately $0.4 million. At the end of the second quarter of 2007, production testing on AFE products was complete and
no further development efforts were required. The EPON products are also complete and released to production, with no additional costs required to complete.
By the end of the third quarter of 2007, the EPON products were shipping to customers.
GPON products were in the early design and prototype stages at acquisition, with estimated costs to complete of approximately $4.5 million at the acquisition
date. We are now shipping these products to customers. Another product is now being incorporated with other PMC technology and is part of a larger scope
project that is expected to be completed in 2008. Remaining efforts for completion include final stages of development, design testing, tape out, and final testing,
as well as customer acceptance.
Storage Semiconductor Business
A portion of the purchase for the Storage Semiconductor Business was allocated to in-process research and development projects and was expensed in the first
quarter of 2006 because technological feasibility had not been established and no future alternative uses existed. Projects acquired and expensed include three
next-generation Tachyon storage protocol products.
At the acquisition date, two of the next-generation Tachyon products had been taped out, with estimated costs to complete of approximately $0.8 million. These
products are now in production.
The third next-generation Tachyon product, a multi-protocol storage controller, was in the early design stage at acquisition, with estimated costs to complete of
approximately $10 million. By the end of the first quarter of 2006, the product was still in the design stage, and based on feedback from our customers, we
re-directed our design resources from this project to other Tachyon controller projects addressing other storage applications. Remaining efforts for completion of
the product would include further design, tape out, testing, and final customer acceptance procedures.
38
Source: PMC SIERRA INC, 10-K, February 22, 2008