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0000320193
20031219
10-K
1,452
This gain was deferred, recognized in long-term debt and is being amortized to other income and expense over the remaining life of the debt.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,453
Debt The Company currently has debt outstanding in the form of $300 million of aggregate principal amount 6.5% unsecured notes that were originally issued in 1994.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,454
The notes, which pay interest semiannually, were sold at 99.925% of par, for an effective yield to maturity of 6.51%.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,455
The notes, along with approximately $4 million of related unamortized deferred gains on closed interest rate swaps, are due in February of 2004 and therefore have been classified as current debt as of September 27, 2003.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,456
As of September 27, 2003 and September 28, 2002, the carrying amount of these notes, including unamortized deferred gains associated with closed debt interest rate swaps, was $304 million and $316 million, respectively, while the fair value was $302 million and $299 million, respectively.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,457
The fair value of the notes is based on their listed market values as of September 27, 2003 and September 28, 2002.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,458
Non-Current Debt and Equity Investments and Related Gains and Losses The Company has held investments in EarthLink, Inc. (EarthLink), Akamai Technologies, Inc. (Akamai), ARM Holdings plc (ARM), and Samsung Electronics Co., Ltd (Samsung).
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,459
These investments have been reflected in the consolidated balance sheets as long term assets within other assets and have been categorized as available-for-sale requiring that they be carried at fair value with unrealized gains and losses, net of taxes, reported in equity as a component of accumulated other comprehensi...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,460
All realized gains on the sale of these investments have been included in total other income and expense.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,461
The combined fair value of these investments held by the Company was $5 million and $39 million as of September 27, 2003 and September 28, 2002, respectively.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,462
EarthLink In January 2000, the Company invested $200 million in EarthLink, an Internet service provider (ISP).
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,463
The investment was in EarthLink's Series C Convertible Preferred Stock, which was convertible by the Company after January 4, 2001, into approximately 7.1 million shares of EarthLink common stock.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,464
Concurrent with this investment, EarthLink and the Company entered into a multi-year agreement to deliver ISP service to Macintosh users in the United States.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,465
Under the terms of the agreement, the Company profits from each new Mac customer that subscribes to EarthLink's ISP service for a specified period of time, and EarthLink is the default ISP in the Company's Internet Setup Software included with all Macintosh computers sold in the United States.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,466
During the first quarter of 2003, the Company sold 2,580,000 shares of EarthLink stock for net proceeds of approximately $13.7 million, an amount that approximated the Company's carrying value of the shares.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,467
During the third quarter of 2003, the Company sold all of its remaining holdings in EarthLink, consisting of 3,960,000 shares of stock for net proceeds of approximately $23 million, and a gain before taxes of $2 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,468
During the first quarter of 2002, the Company sold 117,000 shares of EarthLink stock for net proceeds of $2 million and a gain before taxes of $223,000.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,469
No sales of EarthLink were made in any of the subsequent quarters of fiscal 2002.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,470
However, during the fourth quarter of 2002, the Company determined that the then current decline in the fair value of its investment in EarthLink was other-than-temporary.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,471
As a result, the Company recognized a $44 million charge to earnings to write-down the basis of its investment in EarthLink to $35 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,472
This charge was included in gains (losses) on non-current investments, net.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,473
As of September 28, 2002, the Company held 6.5 million shares of EarthLink stock valued at $35 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,474
During the second quarter of 2001, the Company determined that the decline in the fair value of its investment in EarthLink was other-than-temporary requiring that its cost basis be written down to fair value as a new cost basis and the amount of the write-down be included in earnings.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,475
As a result, the Company recognized a $114 million charge to earnings to write-down the basis of its investment in EarthLink to $86 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,476
This charge was included in gains (losses) on non-current investments, net.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,477
During the fourth quarter of 2001, the Company sold a total of approximately 425,000 shares of EarthLink stock for net proceeds of approximately $6 million, recorded a gain before taxes of approximately $800,000, and recognized related income tax of approximately $200,000.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,478
Akamai In June 1999, the Company invested $12.5 million in Akamai, a global Internet content delivery service.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,479
The investment was in the form of convertible preferred stock that converted into 4.1 million shares of Akamai common stock (adjusted for subsequent stock splits) at the time of Akamai's initial public offering in October 1999.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,480
Beginning in the first quarter of 2000, the Company categorized its shares in Akamai as available-for-sale.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,481
During the fourth quarter of 2003, the Company sold 1,875,000 shares of Akamai stock for net proceeds of $9 million and a gain before taxes of $8 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,482
As of September 27, 2003, the Company's remaining investment in Akamai consists of 986,000 shares of Akamai stock valued at $5 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,483
During the first quarter of 2002, the Company sold 250,000 shares of Akamai stock for net proceeds of $2 million and a gain before taxes of $710,000.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,484
No sales of Akamai were made in any of the subsequent quarters of fiscal 2002.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,485
However, during the fourth quarter of 2002, the Company determined that the decline in the fair value of its investment in Akamai was other-than-temporary.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,486
As a result, the Company recognized a $6 million charge to earnings to write-down the basis of its investment in Akamai to $3 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,487
This charge was included in gains (losses) on non-current investments, net.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,488
As of September 28, 2002, the Company held 2.9 million shares of Akamai stock valued at $3 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,489
During 2001, the Company sold a total of approximately 1 million shares of Akamai stock for net proceeds of approximately $39 million and recorded a gain before taxes of approximately $36 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,490
ARM ARM is a publicly held company in the United Kingdom involved in the design and licensing of high performance microprocessors and related technology.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,491
During the third quarter of 2003, the Company sold all of its remaining holdings in ARM stock, consisting of 278,000 shares for net proceeds of approximately $295,000, and a gain before taxes of $270,000.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,492
During the first quarter of 2002, the Company sold 4.7 million shares of ARM stock for both net proceeds and a gain before taxes of $21 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,493
No sales of ARM were made in any of the subsequent quarters of fiscal 2002.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,494
As of September 28, 2002, the Company held 278,000 shares of ARM stock valued at $578,000.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,495
During 2001, the Company sold a total of approximately 29.8 million shares of ARM stock for net proceeds of approximately $176 million, recorded a gain before taxes of approximately $174 million, and recognized related income tax expense of approximately $52 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,496
Samsung During the fourth quarter of 1999, the Company invested $100 million in Samsung to assist in the further expansion of Samsung's TFT-LCD flat-panel display production capacity.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,497
The investment was in the form of three year unsecured bonds, which were convertible into approximately 550,000 shares of Samsung common stock beginning in July 2000.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,498
The bonds carried an annual coupon rate of 2% and paid a total yield to maturity of 5% if redeemed at maturity.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,499
Prior to its sale, the Company had categorized its investment in Samsung as available-for-sale requiring that it be carried at fair value with unrealized gains and losses, net of taxes, reported in equity as a component of accumulated other comprehensive income.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,500
The fair value of the Company's investment in Samsung was approximately $123 million as of September 30, 2000.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,501
With the adoption of SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,502
133 on October 1, 2000, the Company was required to account for the conversion option embedded in the Samsung bonds separately from the related debt.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,503
The conversion feature was carried at fair value with any changes in fair value recognized in earnings in the period in which they occur.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,504
Included in the $17 million gross SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,505
133 transition adjustment recorded in earnings during the first quarter of fiscal 2001 was a $23 million favorable adjustment for the restatement to fair value as of October 1, 2000, of the derivative component of the Company's investment in Samsung.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,506
To adjust the carrying value of the derivative component of its investment in Samsung to fair value as of December 30, 2000, the Company recognized an unrealized loss of approximately $13 million during the first quarter of 2001.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,507
During the second quarter of 2001, the Company sold this investment for book value, including accrued interest, and received net proceeds of approximately $117 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,508
Other Strategic Investments The Company has made additional minority debt and equity investments in several privately held technology companies, which were reflected in the consolidated balance sheets in other assets.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,509
These investments were inherently risky because the products and/or markets of these companies were typically not fully developed.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,510
During 2002 and 2001, the Company determined that the decline in fair value of certain of these investments was other-than-temporary and, accordingly, recognized a charge to earnings of $15 million and $8 million, respectively.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,511
These charges were included in gains (losses) on non-current investments, net.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,512
As of September 27, 2003 and September 28, 2002, the Company had no private debt or equity investments reflected in its consolidated balance sheets.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,513
Note 3-Consolidated Financial Statement Details (in millions) Inventories Other Current Assets Property, Plant, and Equipment Other Assets Accrued Expenses Interest and Other Income, Net Note 4-Acquisitions Goodwill and Other Intangible Assets The Company is currently amortizing its acquired intangible assets with defi...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,514
The Company ceased amortization of goodwill at the beginning of fiscal 2002 when it adopted SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,515
142.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,516
The following table summarizes the components of gross and net intangible asset balances (in millions): (a)Accumulated amortization related to goodwill of $55 million arising prior to the adoption of SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,517
142 has been reflected in the gross carrying amount of goodwill as of September 27, 2003 and September 28, 2002.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,518
Expected annual amortization expense related to acquired technology is as follows (in millions): Amortization expense related to acquired intangible assets is as follows (in millions): Net loss and net loss per share adjusted to exclude amortization of goodwill in fiscal periods prior to the adoption of SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,519
142 in fiscal 2002 follows (in millions, except per share amounts): Acquisition of Emagic GmbH During the fourth quarter of 2002, the Company acquired Emagic GmbH (Emagic), a provider of professional software solutions for computer based music production, for approximately $30 million in cash; $26 million of which was ...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,520
During fiscal 2003, contingent consideration totaling $1.3 million was paid.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,521
The acquisition has been accounted for as a purchase.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,522
The portion of the purchase price allocated to purchased in-process research and development (IPR&D) was expensed immediately, and the portion of the purchase price allocated to acquired technology and to tradename will be amortized over their estimated useful lives of 3 years.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,523
Goodwill associated with the acquisition of Emagic is not subject to amortization pursuant to the provisions of SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,524
142.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,525
Total consideration was allocated as follows (in millions): The amount of the purchase price allocated to IPR&D was expensed upon acquisition, because the technological feasibility of products under development had not been established and no alternative future uses existed.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,526
The IPR&D relates primarily to Emagic's Logic series technology and extensions.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,527
At the date of the acquisition, the products under development were between 43%-83% complete, and it was expected that the remaining work would be completed during the Company's fiscal 2003 at a cost of approximately $415,000.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,528
The remaining efforts, which were completed in 2003, included finalizing user interface design and development, and testing.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,529
The fair value of the IPR&D was determined using an income approach, which reflects the projected free cash flows that will be generated by the IPR&D projects and that are attributable to the acquired technology, and discounting the projected net cash flows back to their present value using a discount rate of 25%.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,530
Acquisition of certain assets of Zayante, Inc., Prismo Graphics, and Silicon Grail During fiscal 2002 the Company acquired certain technology and patent rights of Zayante, Inc., Prismo Graphics, and Silicon Grail Corporation for a total of $20 million in cash.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,531
These transactions have been accounted for as asset acquisitions.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,532
The purchase price for these asset acquisitions, except for $1 million identified as contingent consideration which will be allocated to compensation expense over the next 3 years, has been allocated to acquired technology and will be amortized on a straight-line basis over 3 years, except for certain assets acquired f...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,533
Acquisition of Nothing Real, LLC During the second quarter of 2002, the Company acquired certain assets of Nothing Real, LLC (Nothing Real), a privately-held company that develops and markets high performance tools designed for the digital image creation market.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,534
Of the $15 million purchase price, the Company has allocated $7 million to acquired technology, which will be amortized over its estimated life of 5 years.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,535
The remaining $8 million, which has been identified as contingent consideration, rather than recorded as an additional component of the cost of the acquired assets, will be allocated to future compensation expense in the appropriate periods over the next 3 years.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,536
Acquisition of Spruce Technologies, Inc.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,537
In July 2001, the Company acquired Spruce Technologies, Inc. (Spruce), a privately-held company that develops and markets DVD authoring products, for $14.9 million in cash.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,538
Goodwill associated with the acquisition of Spruce is not subject to amortization pursuant to the transition provisions of SFAS No.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,539
142.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,540
The consolidated financial statements include the operating results of Spruce from the date of acquisition.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,541
Total consideration was allocated as follows (in millions): Acquisition of PowerSchool, Inc.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,542
In May 2001, the Company acquired PowerSchool, Inc. (PowerSchool), a provider of web-based student information systems for K-12 schools and districts that enable schools to record, access, report, and manage their student data and performance in real-time, and gives parents real-time web access to track their children'...
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,543
The consolidated financial statements include the operating results of PowerSchool from the date of acquisition.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,544
The purchase price of approximately $66.1 million consisted of the issuance of approximately 2.4 million shares of the Company's common stock with a fair value of $61.2 million, the issuance of stock options with a fair value of $4.5 million, and $300,000 of direct transaction costs.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,545
The fair value of the common stock options issued was determined using a Black-Scholes option pricing model with the following assumptions: volatility of 67%, expected life of 4 years, dividend rate of 0%, and risk-free rate of 4.73%.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,546
Total consideration was allocated as follows (in millions): The amount of the purchase price allocated to IPR&D was expensed upon acquisition, because the technological feasibility of products under development had not been established and no alternative future uses existed.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,547
The IPR&D relates to technologies representing processes and expertise employed to design, develop, and deploy a functioning, scalable web-based student information system for use by K-12 schools.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,548
At the date of the acquisition, the product under development was approximately 50% complete, and it was expected that the remaining 50% would be completed during the Company's fiscal 2002 at a cost of approximately $9.25 million.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,549
The remaining efforts, which were completed in 2002, included completion of coding, finalizing user interface design and development, and testing.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,550
The fair value of the IPR&D was determined using an income approach, which reflects the projected free cash flows that will be generated by the IPR&D projects and that are attributable to the acquired technology, and discounting the projected net cash flows back to their present value using a discount rate of 25%.
0001047469-03-041604/full-submission.txt
0000320193
20031219
10-K
1,551
The acquired intangibles are being amortized over their estimated useful lives of 3 years.
0001047469-03-041604/full-submission.txt