Adaptec 2009 Annual Report Download - page 37

Annual Report
Other Income and Expenses
(in millions) 2009 Change 2008 Change 2007
Gain on repurchase of senior convertible notes, net and
amortization of debt issue costs ......................... $(0.2) (101)% $ 14.6 2,186% $ (0.7)
Percentage of net revenues ............................... — % 3% — %
Foreign exchange (loss) gain ............................. $(2.4) (129)% $ 8.1 144% $(18.5)
Percentage of net revenues ............................... — % 2% (4)%
Loss on subleased facilities ............................... $(0.5) (100)% $ — — % $ —
Percentage of net revenues ............................... — % — % — %
Asset impairment ...................................... $— 100% $ (4.3) (100)% $ —
Percentage of net revenues ............................... — % (1)% — %
Interest (expense) income, net ............................. $(2.5) (213)% $ (0.8) (153)% $ 1.5
Percentage of net revenues ............................... (1)% — % — %
Recovery on investments ................................ $— (100)% $ 0.4 100% $ —
Percentage of net revenues ............................... — % — % — %
Gain (loss) on investment securities ........................ $0.2 (102)% $(11.8) (100)% $ —
Percentage of net revenues ............................... — % (2)% — %
(Provision for) recovery of income taxes .................... $(4.2) (106)% $ 70.0 516% $(16.8)
Percentage of net revenues ............................... (1)% 13% (4)%
Gain on Repurchase of Senior Convertible Notes and Amortization of Debt Issue Costs
In 2005, we issued $225.0 million of 2.25% senior convertible notes. In 2008, we repurchased $156.7
million principal amount of our senior convertible notes for $138.3 million and expensed $3.2 million of related
unamortized debt issue costs and transactions costs resulting in a net gain of $15.0 million. We also recognized
amortization of debt issue costs of $0.2 million, $0.4 million and $0.7 million for 2009, 2008 and 2007
respectively. The amounts have been adjusted for the adoption of ASC Topic 470, the Debt Topic, see Recent
Accounting Pronouncements.
Foreign Exchange Gain (Loss)
Foreign exchange loss was $2.4 million in 2009 compared to a gain of $8.1 million in 2008 and a loss of
$18.5 million in 2007. The foreign exchange gain (loss) for all years presented relates primarily to the
re-measurement each period of accrued income tax amounts.
We have significant design presence outside the United States, especially in Canada. The majority of our
operating expense exposures to changes in the value of the Canadian Dollar relative to the United States Dollar
have been hedged in accordance with our general practice of hedging approximately three quarters in advance.
Our net foreign exchange gain (loss) was $2.4 million foreign exchange loss, $8.1 million foreign exchange
gain and $18.5 million foreign exchange loss, in 2009, 2008 and 2007, respectively, which was primarily due to
foreign exchange gain (loss) on the revaluation of our net foreign tax liability. We do not hedge our income tax
accruals against fluctuations in foreign currency exchange rates (see Item 3. Quantitative and Qualitative
Disclosures About Market Risk). The revaluation of this foreign tax liability was required because of the foreign
exchange rate fluctuations of other currencies against the United States Dollar. The foreign exchange rate
between the United States Dollar and the currencies of countries where we have significant tax liabilities
depreciated 4% during the fourth quarter of 2009 and depreciated 14% for the year in 2009.
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