Adaptec 2010 Annual Report Download - page 38

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We anticipate our first quarter 2011 gross margin percentage to be in the range of 61.4% 62.8%, which includes approximately
$0.2 million stock-based compensation expense and $9.0 million acquisition inventory adjustments. As in past quarters this could
vary depending on the volumes of products sold, since many of our costs are fixed. Margins will also vary depending on the mix of
products sold.
We expect our first quarter 2011 research and development and selling, general and administrative expenses to be approximately
$90.5 million to $93.5 million, respectively including, stock-based compensation expense of approximately $5.5 million to $6.5
million, and amortization of purchased intangible assets related to our past acquisitions of $11 million.
We anticipate that net interest expense will be approximately $0.6 million in the first quarter of 2011 as interest income earned
from our cash position will be offset by interest expense incurred on our outstanding senior convertible notes.
The GAAP provision for income taxes is not available on a forward looking basis without unreasonable effort.
L
IQUIDITY
AND
C
APITAL
R
ESOURCES
Our principal sources of liquidity are cash from operations, our short-term investments and long-term investment securities and
our short-term loan. We employ these sources of liquidity to support ongoing business activities, acquire or invest in critical or
complementary technologies, purchase capital equipment, repurchase and repay our senior convertible notes and finance working
capital. The combination of cash, cash equivalents, short-term investments and long-term investment securities at December 26, 2010
and December 27, 2009 totaled $583.5 million and $453.4 million, respectively.
In November 2010, we obtained a short-term loan to facilitate the acquisition of Wintegra, Inc., the balance of which was $181.0
million as of December 26, 2010. We fully repaid this loan subsequent to year end. At both December 26, 2010 and December 27,
2009, we had $68.3 million of senior convertible notes outstanding. In the future, we expect our cash on hand, from operations, our
short-term investments, and long-term investment securities to be our primary source of liquidity.
37