Adaptec 2008 Annual Report Download - page 78

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On July 15, 2008, Ian Beiser, a named plaintiff in the Beiser/Barone action, filed a complaint in the
Delaware Court of Chancery, and it was served on July 18, 2008, compelling the Company to permit plaintiff to
inspect and make copies of the Company’s books and records. On August 5, 2008, the plaintiffs moved to stay
the Federal Court action pending the books and records action. The Federal Court granted the motion to stay on
August 13, 2008, which removed from the calendar the hearing on defendants’ motions to dismiss, previously
scheduled for August 20, 2008.
On December 11, 2008, the Delaware Court of Chancery heard argument on the books and records demand
and the parties are awaiting the Court’s order.
As at December 28, 2008, the Company has not accrued costs for potential losses related to the amended
consolidated action.
Operating Leases:
The Company leases its facilities under operating lease agreements, which expire at various dates through
September 30, 2013.
Rent expense including operating costs for the years ended December 28, 2008, December 30, 2007, and
December 31, 2006 was $10.9 million, $10.8 million, and $10.5 million, respectively. Excluded from rent
expense for 2008 was additional rent and operating costs of $3.9 million (2007—$4.6 million; 2006—$4.2
million) related to excess facilities, which were accrued as part of the restructuring programs.
Minimum future rental payments under operating leases are as follows:
Year Ending December 28 (in thousands)
2009 ......................................................... $10,937
2010 ......................................................... 10,443
2011 ......................................................... 4,692
2012 ......................................................... 66
Total minimum future rental payments under operating leases ................ $26,138
Supply agreements. The Company has supply agreements with Chartered, TSMC, and UMC. Under these
agreements, the foundries must supply certain quantities of wafers per year. Neither of these agreements have
minimum unit volume requirements. The agreements may be terminated if either party does not comply with the
terms. The Company has a history of renewing contracts on an annual basis with its foundries for those
agreements that require renewals, and the Company does not anticipate any problems with renewing such
agreements beyond their expiring dates.
Contingencies. In the normal course of business, the Company receives and makes inquiries with regard to
possible patent infringements. Where deemed advisable, the Company may seek or extend licenses or negotiate
settlements. Outcomes of such negotiations may not be determinable at any point in time; however, management
does not believe that such licenses or settlements will, individually or in the aggregate, have a material adverse
effect on the Company's financial position, results of operations or cash flows.
NOTE 12. Special Shares
At December 28, 2008 and December 30, 2007, the Company maintained a reserve of 2,045,000 and
2,065,000, respectively, of PMC common stock to be issued to holders of PMC-Sierra, Ltd. (“LTD”) special
shares.
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