Adaptec 2008 Annual Report Download - page 19

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Our business is vulnerable to interruption by earthquake, fire, power loss, telecommunications failure,
terrorist activity and other events beyond our control.
We do not have sufficient business interruption insurance to compensate us for actual losses from
interruption of our business that may occur, and any losses or damages incurred by us could have a material
adverse effect on our business. We are vulnerable to a major earthquake and other calamities. We have
operations in seismically active regions in British Columbia, Canada and California, and we rely on third-party
wafer fabrication and testing facilities in seismically active regions in Asia. We have not undertaken a systematic
analysis of the potential consequences to our business and financial results from a major earthquake in either
region. We are unable to predict the effects of any such event, but the effects could be seriously harmful to our
business.
Our estimated restructuring accruals may not be adequate.
In 2005, 2006 and 2007, we implemented restructuring plans to streamline production and reduce and
reallocate operating costs. In 2001 and 2003, we implemented plans to restructure our operations in response to
the decline in demand for our networking products. We reduced the workforce and consolidated or shut down
excess facilities in an effort to bring our expenses into line with our revenue expectations.
While management uses all available information to estimate these restructuring costs, particularly facilities
costs, our estimated accruals may prove to be inadequate. If our actual sublease revenues or the results of our
exiting negotiations differ from our assumptions, we may have to record additional charges, which could
materially affect our results of operations, financial position and cash flow.
From time to time, we become defendants in legal proceedings about which we are unable to assess our
exposure and which could become significant liabilities upon judgment.
We become defendants in legal proceedings from time to time. Companies in our industry have been subject
to claims related to patent infringement and product liability, as well as contract and personal claims. We may
not be able to accurately assess the risk related to these suits, and we may be unable to accurately assess our level
of exposure. These proceedings may result in material charges to our operating results in the future if our
exposure is material and if our ability to assess our exposure becomes clearer.
If we cannot protect our proprietary technology, we may not be able to prevent competitors from copying
or misappropriating our technology and selling similar products, which would harm our revenues.
To compete effectively, we must protect our intellectual property. We rely on a combination of patents,
trademarks, copyrights, trade secret laws, confidentiality procedures and licensing arrangements to protect our
intellectual property rights. We hold numerous patents and have a number of pending patent applications.
However some of our patents are expiring in 2009, which could have a negative affect on our ability to prevent
competitors from duplicating certain of our products.
We might not succeed in obtaining patents from any of our pending applications. Even if we are awarded
patents, they may not provide any meaningful protection or commercial advantage to us, as they may not be of
sufficient scope or strength, or may not be issued in all countries where our products can be sold. In addition, our
competitors may be able to design around our patents.
To protect our product technology, documentation and other proprietary information, we enter into
confidentiality agreements with our employees, customers, consultants and strategic partners. We require our
employees to acknowledge their obligation to maintain confidentiality with respect to PMC’s products. Despite
these efforts, we cannot guarantee that these parties will maintain the confidentiality of our proprietary
information in the course of future employment or working with other business partners. We develop,
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