Adaptec 2009 Annual Report Download - page 58

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Inventories (net of reserves of $6.8 million and $9.3 million at December 27, 2009 and December 28, 2008,
respectively) were as follows:
(in thousands)
December 27,
2009
December 28,
2008
Work-in-progress .................................... $14,452 $11,391
Finished goods ...................................... 17,079 22,612
$31,531 $34,003
In 2009, the Company decreased inventory reserves by $2.6 million (2008—$3.1 million, 2007—$1.5
million) for inventory that was scrapped during the year.
Investments in private entities. The Company has investments in privately traded companies in which it has
less than 20% of the voting rights and in which it does not exercise significant influence. The Company monitors
these investments for impairment and makes appropriate reductions in carrying values when necessary. These
investments are included in Investments and other assets on the Company’s consolidated balance sheet and are
carried at cost, net of write-downs for impairment.
Deposits for wafer fabrication capacity. The Company has wafer supply agreements with two independent
foundries. Under these agreements, the Company has deposits of $5.1 million (2008—$5.1 million) to secure
access to wafer fabrication capacity. These are classified as long-term assets in the consolidated balance sheets.
Also, see related comments under Concentrations.
Property and equipment, net. Property and equipment is stated at cost, net of write-downs for impairment,
and accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful
lives of the assets, ranging from two to five years. Leasehold improvements are capitalized and amortized over
the shorter of their estimated useful lives or the lease term.
The components of property and equipment, net are as follows:
December 27, 2009 (in thousands) Gross
Accumulated
Amortization Net
Software ........................................... $ 57,525 $ (54,040) $ 3,485
Machinery and equipment .............................. 132,203 (123,858) 8,345
Leasehold improvements .............................. 15,442 (13,363) 2,079
Furniture and fixtures ................................. 13,657 (13,657) —
Total .......................................... $218,827 $(204,918) $13,909
December 28, 2008 (in thousands) Gross
Accumulated
Amortization Net
Software ........................................... $ 57,273 $ (52,706) $ 4,567
Machinery and equipment .............................. 127,492 (119,048) 8,444
Leasehold improvements .............................. 14,895 (12,804) 2,091
Furniture and fixtures ................................. 13,742 (12,986) 756
Total .......................................... $213,402 $(197,544) $15,858
Goodwill. Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair
value of the net identified tangible and intangible assets acquired. The Company performs a two-step process on
an annual basis, or more frequently if necessary, to determine 1) whether the fair value of the relevant reporting
unit exceeds the carrying value and 2) the amount of an impairment loss, if any. The Company completed this
process in December 2009, 2008 and 2007, and determined that there was no impairment to goodwill.
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