Adaptec 2006 Annual Report Download - page 21

Table of Contents
on our historical financial statements relating to stock option grants. In addition, the SEC inquiry and shareholder litigation may require significant human and
financial resources that could otherwise be devoted to the operation of our business. If we are subject to an adverse finding resulting from the SEC investigation
or litigation, we could be required to pay damages or penalties or have other remedies imposed upon us. An SEC investigation or litigation may also impair our
ability to timely file reports with the Securities and Exchange Commission in the future, which could lead to our inability to continue to meet NASDAQ listing
requirements and comply with contractual commitments to do so, and impair our ability to grant employee equity incentives. In addition, we could become the
target of costly class-action securities litigation related to other matters in the future. Considerable legal and accounting expenses related to these matters have
been incurred to date and significant expenditures may continue to be incurred in the future. Any new investigation or litigation could adversely affect our
business, results of operations, financial position and cash flows.
Our 2006 acquisitions may adversely affect our results of operations and be dilutive to existing shareholders.
In addition to the risks the Company generally faces in connection with acquisitions, including difficulties in assimilating and integrating the operations,
personnel, technologies, products and information systems of acquired businesses, there are several risks that the Company faces in connection with the
acquisitions of Passave Inc., and the Avago Storage Semiconductor Business.
We purchased Passave in part based on projected growth in the Fiber To The Home market. This growth depends on many factors, including service provider
capital expenditures, consumer adoption of FTTH-based services and government policy. The timing of development of the North American FTTH market is less
certain than in Asian markets.
Whether and when the Passave acquisition becomes accretive to PMC depends on growth in both Passave’s and PMC’s business. Projected tax rates for
Passave’s business assume continued tax incentives from the state of Israel.
PMC must successfully integrate Passave’s personnel and operations with PMC’s personnel and operations to achieve the benefits of the acquisition.
The Storage Semiconductor Business acquisition may make the Company reliant on a limited number of customers for a major portion of its revenues. PMC may
also be unsuccessful at, either selling the existing products of the acquired business, or developing and selling new products of the combined company. PMC may
not achieve its goal of improving time-to-market for integrated circuits using its existing technology and the acquired business’ technology.
If PMC fails to successfully address integration challenges in a timely manner, or at all, it may not realize the anticipated benefits or synergies of the acquisition
to the extent, or in the time frame, anticipated. Even if the acquired businesses are successfully integrated, the Company may not receive the expected benefits of
the acquisitions, which are based on forecasts, which are subject to numerous assumptions which may prove to be inaccurate. Any one of these integration
challenges or any combination thereof could adversely affect PMC’s cash flow and results of operations, and as a result, the acquisition may prove to be dilutive
to existing shareholders.
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Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research℠