Inventories, Net and Significant Suppliers

Inventories, net were as follows:



(In thousands)	June 30, 2013			December 31, 2012
Raw materials	$	23,683		$	17,438
Components	16,733			20,978
Work in process	3,250			1,050
Finished goods	58,306			46,939
Reserve for excess and obsolete inventory	(1,922		)	(2,024		)
Inventories, net	$	100,050		$	84,381

Reserve for Excess and Obsolete Inventory

Changes in the reserve for excess and obsolete inventory were as follows:



(In thousands) Description	Balance at Beginning of Period		Additions Charged to Costs and Expenses ⁽¹⁾		Sell Through⁽²⁾			Write-offs/FX Effects			Balance at End of Period
Reserve for excess and obsolete inventory:
Six months ended June 30, 2013	$	2,024	$	1,022	$	(219	)	$	(905	)	$	1,922
Six months ended June 30, 2012	$	3,447	$	1,386	$	(558	)	$	(1,238	)	$	3,037


⁽¹⁾	The additions charged to costs and expenses do not include inventory directly written-off that was scrapped during production totaling $0.1 million and $0.2 million for the six months ended June 30, 2013 and 2012, respectively. These amounts are production waste and are not included in management’s reserve for excess and obsolete inventory.


⁽²⁾	This column represents the reversal of reserves associated with inventory items that were sold during the period. Sell through is the result of differences between our judgment concerning the saleability of inventory items during the excess and obsolete inventory review process and our subsequent experience.

Significant Suppliers

We purchase integrated circuits, components and finished goods from multiple sources. We had purchases from the following significant suppliers that totaled more than 10% of our total inventory purchases as follows:



	Three Months Ended June 30,
	2013			2012
	$ (thousands)		% of Total Inventory Purchases	$ (thousands)		% of Total Inventory Purchases
Samsung	$	—	—	$	5,719	10.0	%



	Six Months Ended June 30,
	2013			2012
	$ (thousands)		% of Total Inventory Purchases	$ (thousands)		% of Total Inventory Purchases
Samsung	$	—	—	$	10,935	10.2	%
Samjin	$	—	—	$	11,193	10.4	%

We have identified alternative sources of supply for these integrated circuits, components, and finished goods; however, there can be no assurance that we will be able to continue to obtain these inventory purchases on a timely basis. We maintain inventories of our integrated circuits, which may be utilized to mitigate, but not eliminate, delays resulting from supply interruptions. An extended interruption, shortage or termination in the supply of any of the components used in our products, a reduction in their quality or reliability, or a significant increase in the prices of components, would have an adverse effect on our operating results, financial condition and cash flows.

Related Party Vendor

We purchase certain printed circuit board assemblies from a related party vendor. The vendor is considered a related party for financial reporting purposes because our Senior Vice President of Manufacturing owns 40% of this vendor. Inventory purchases from this vendor were as follows:



	Three Months Ended June 30,
	2013				2012
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Related party vendor	$	2,469	3.0	%	$	2,152	3.8	%



	Six Months Ended June 30,
	2013				2012
	$ (thousands)		% of Total Inventory Purchases		$ (thousands)		% of Total Inventory Purchases
Related party vendor	$	4,685	3.2	%	$	3,507	3.3	%

The total accounts payable to this vendor were the following:



	June 30, 2013				December 31, 2012
	$ (thousands)		% of Accounts Payable		$ (thousands)		% of Accounts Payable
Related party vendor	$	1,476	2.2	%	$	1,815	3.0	%

Our payable terms and pricing with this vendor are consistent with the terms offered by other vendors in the ordinary course of business. The accounting policies that we apply to our transactions with our related party vendor are consistent with those applied in transactions with independent third parties. Corporate management routinely monitors purchases from our related party vendor to ensure these purchases remain consistent with our business objectives.