Adaptec 2011 Annual Report Download - page 38

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Table of Contents
December 26, 2010
(in thousands)
Amortized
Cost
Gross
Unrealized
Gains*
Gross
Unrealized
Losses* Fair Value
Foreign Government and Agency notes 15,065 158 — 15,223
US States and Municipal securities 1,720 — (2) 1,718
Total long-term investment securities 234,252 1,684 (567) 235,369
Total $ 579,293 $ 4,800 $ (568) $ 583,525
* Gross unrealized gains include accrued interest on investments of $2.7 million. The remainder of the gross unrealized gains and losses is included in the
Consolidated Balance Sheet as Other comprehensive income.
The investments in the Reserve Funds, classified as cash and cash equivalents on the Consolidated Balance Sheet were recorded at a value of $nil at
December 31, 2011 (2010—$22.4 million) and relate to shares of the International Fund and the Primary Fund. In 2011, we received $22.6 million from the
International Fund and its liquidation was completed. The Primary Fund continues to be in the process of liquidation. We continue to hold shares of the
Reserve Primary Fund with an original cost of $0.6 million, which are valued at $nil on the Consolidated Balance Sheet. See Critical Accounting Policies and
Estimates under the Investment in Cash Equivalents, Short-Term Investments and Long-Term Investment Securities.
OPERATING ACTIVITIES
Net revenues in 2011 grew by 3% compared to 2010 from $635.1 million to $654.3 million. Net income in 2011 of $84.7 million was slightly higher
than the $83.2 million in 2010. While the cash generation in both years was strong, $160.8 million and $183.3 million for 2011 and 2010, respectively, the net
decrease of $22.5 million in cash from operations results mainly from additional R&D investment for specific projects in 2011 and the full year effect of our
2010 acquisitions. In addition, the year-over-year net change in working capital items resulted in $27.3 million of cash used. The primary working capital
items driving this net change were:
1. $20 million net increase in use of cash related to accounts payable and accrued liabilities, including for the settlement of 2010 liabilities assumed on our
acquisition of Wintegra; and
2. $13.1 million net increase in use of cash related to income taxes;
Partially offset by:
3. other working capital changes, including $11.3 million greater net cash generated from accounts receivable with a slight decline in fourth quarter net
revenues on a year-over-year basis.
INVESTING ACTIVITIES
Cash used for investing activities was significantly higher in 2010 compared to 2011, with our acquisitions of Wintegra and the Channel Storage
business of Adaptec. In 2010, we used $200 million to acquire Wintegra and $34.3 million to acquire the Channel Storage Business from Adaptec.
Cash balances were lower due to repaying $180 million of our short term loan borrowed in connection with our acquisition of Wintegra.
FINANCING ACTIVITIES
During 2011 we used $40 million of cash to repurchase 6.1 million shares of our common stock. We also received $16.8 million from issuances of
common stock.
In connection with the acquisition of Wintegra, we borrowed $220 million in 2010, $40 million of which was repaid in 2010. The remainder was repaid
in January 2011.
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