Adaptec 2009 Annual Report Download - page 80

corporate governance reforms and to maintain these and other reforms put in place while the litigation was
pending for a period of three years. The Company has agreed, subject to court approval, to pay plaintiffs’ counsel
$1.6 million in attorneys’ fees, half of which will be paid by the Company and the other half by the Company’s
insurance carrier. In light of the stipulated settlement, the parties have agreed to suspend the briefing on
defendants’ renewed motions to dismiss the Beiser/Barone action. On January 26, 2010, the Federal Court issued
an order (the “Preliminary Order”) granting preliminary approval of the settlement. The stipulation of settlement
is subject to final approval by the Federal Court, which has scheduled for hearing on April 29, 2010.
The Company has accrued costs of $800,000 to reflect its share of the attorneys’ fees to be paid to plaintiffs’
counsel pursuant to the settlement. As with the rest of the settlement, the agreement to pay attorneys’ fees and the
amount of fees to be paid remain subject to final approval by the Federal Court.
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 27, 2009, December 28, 2008, and
December 30, 2007 was $11.3 million, $10.9 million, and $10.8 million, respectively. Excluded from rent
expense for 2009 was additional rent and operating costs of $2.5 million (2008—$3.9 million; 2007—$4.6
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 Ended December 27, 2009 (in thousands)
2010 ......................................................... $ 8,901
2011 ......................................................... 6,908
2012 ......................................................... 2,901
2013 ......................................................... 2,607
2014 ......................................................... 2,442
Thereafter ..................................................... 3,372
Total minimum future rental payments under operating leases ................ $27,131
Supply Agreements
The Company has supply agreements with 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
current expiry 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.
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