Adaptec 2011 Annual Report Download - page 36

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Table of Contents
Recovery of (provision for) Income Taxes
See Item 8. Financial Statements and Supplementary Data, the Notes to the Consolidated Financial Statements, Note 15. Income Taxes.
BUSINESS OUTLOOK
We expect our revenues for the first quarter of 2012 to be approximately $130 million to $136 million. A number of factors such as volatile
macroeconomic conditions could impact the achievement of our revenue outlook.
We anticipate our first quarter 2012 gross margin percentage to be in the range of 67.4%-68.4%, which includes approximately $0.2 million stock-
based compensation expense. 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 2012 research and development and selling, general and administrative expenses to be approximately $95.2 million and
$97.2 million, respectively, including, stock-based compensation expense of approximately $6 million to $7 million, and amortization of purchased intangible
assets related to our past acquisitions of $11.2 million.
We anticipate that net interest expense will be approximately $0.4 million in the first quarter of 2012 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.
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity are cash from operations, our short-term investments and long-term investment securities. 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 loans and notes, and finance working capital. The combination of cash, cash equivalents, short-term investments and long-term investment
securities at December 31, 2011, December 26, 2010 and December 27, 2009 totaled $513.6 million, $583.5 million and $453.4 million, respectively.
In November 2010, we obtained a short-term loan to facilitate the acquisition of Wintegra, the balance of which was $181.0 million as of December 26,
2010. We fully repaid this loan in January 2011.
At both December 31, 2011 and December 26, 2010, we had senior convertible notes with a total face value of $68.3 million outstanding. The
Company may redeem all or a portion of the notes at par on and after October 20, 2012. The noteholders may require that the Company repurchase all or a
portion of the notes on October 15, 2012. The Company believes it has adequate liquidity to discharge this liability should it be required in 2012.
In the future, we expect our cash on hand and cash generated from operations, together with our short-term investments, and long-term investment
securities, to be our primary sources of liquidity.
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