Adaptec 2006 Annual Report Download - page 94

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Table of Contents
3.75% Convertible subordinated notes
In August 2001, the Company issued $275 million of convertible subordinated notes maturing on August 15, 2006.
During the third fiscal quarter of 2003, the Company repurchased $100 million principal amount of these notes for $96.7 million and expensed $1.6 million of
related unamortized debt issue costs, resulting in a net gain of $1.7 million. On January 6, 2004, the Company repurchased $106.9 million of these notes pursuant
to a tender offer, at par value. The Company expensed approximately $1.6 million of debt issue costs related to the repurchased notes. The remaining $68.1
million of these notes were redeemed by the Company on January 18, 2005 for a total of $70.2 million in cash, which included $1.1 million in accrued interest
and a $1.0 million call premium.
These notes bore interest at 3.75% payable semi-annually and were convertible into an aggregate of approximately 6.5 million shares of PMC’s common stock at
any time prior to maturity at a conversion price of approximately $42.43 per share.
NOTE 11. Commitments and Contingencies
Legal Matters:
SEC Informal Inquiry
On August 18, 2006, PMC received an informal confidential request from the SEC advising that the SEC has commenced an informal inquiry into the
Company’s historical stock option-granting practices. The Company has produced documents in response to the SEC request and is continuing to cooperate with
the SEC. The Company has engaged outside counsel to represent it in the inquiry. On December 6, 2006, a meeting took place at the SEC in San Francisco
during which the Audit Committee and its special counsel summarized the results of its investigation into the Company’s historical option-granting practices.
Stockholder Derivative Lawsuits
Three derivative actions have been filed against the Company, as a nominal defendant, and various current and former officers and/or directors: (1) Meissner v.
Bailey, et al., Santa Clara Superior Court Case No. 1-06-CV-071329 (filed September 18, 2006); (2) Beiser v. Bailey, et al., United States District Court for the
Northern District of California Case No. 5:06-CV-05330-RS (filed August 29, 2006); and (3) Barone v. Bailey, et al., United States District Court for the
Northern District of California Case No. 4:06-CV-06473-SBA (filed October 16, 2006) . On November 21, 2006 the Beiser and Barone actions were
consolidated into one case. On January 18, 2007, the Santa Clara County Superior Court in California ordered that the Meissner action be stayed pending the
outcome of the consolidated, federal Beiser/Barone action. A consolidated complaint in the Beiser/Barone action was filed on January 29, 2007 (the
“Consolidated Complaint”).
The Consolidated Complaint generally alleges that various current and former Company directors and/or officers breached their duty of loyalty and/or duty of
care to the Company and its shareholders, that these purported breaches of fiduciary duties caused harm to the Company, and the plaintiffs seek to recover
damages on behalf of the Company. The
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Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research℠