INVENTORIES

9 Months Ended

Sep. 30, 2012

INVENTORIES

INVENTORIES

NOTE 5—INVENTORIES

        Inventories consist of the following, in millions:

	September 30, 2012		January 1, 2012
Raw materials	$	111.4	$	107.9
Subassemblies-in-process		7.5		6.7
Finished goods		68.7		45.9
	$	187.6	$	160.5

        The Company reviews the historical and projected usage for inventory in determining excess and obsolete inventory. The Company estimates the projected usage of each inventory item by performing a quarterly analysis of expected future usage of raw materials, subassemblies-in-process and finished goods on an item-by-item basis. Such analysis includes the consideration of current sales backlog supported by customer purchase orders as well as forecasted sales of each inventory item for the next four quarters. Forecasted sales of each inventory item takes into consideration historical usage during the last 12 months, expected demand in the next 12 months, known or anticipated technological changes, the commonality of components and sub-assemblies used in multiple products, the maturity of the product in its life cycle, and any other macroeconomic factors. The methodology for forecasting demand may be modified depending on specific product lifecycles and local circumstances. The Company reserves inventory in excess of this demand.

        During the nine months ended September 30, 2012 and October 2, 2011 the Company reserved approximately $3.9 million and $4.3 million, respectively, related to excess and obsolete inventory and recorded the charges as costs of goods sold. During the three months ended September 30, 2012 and October 2, 2011 the Company reserved approximately $0.8 million and $2.4 million, respectively, related to excess and obsolete inventory and recorded the charges as costs of goods sold.