NOTE 5—INVENTORIES

Inventories consist of the following (in millions):

	March 31, 2013		December 30, 2012

Raw materials	$	94.3	$	107.6
Subassemblies-in-process		6.0		3.6
Finished goods		49.1		49.0

	$	149.4	$	160.2

Inventories are stated at the lower of cost (first-in, first-out method) or market. 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 writes down the carrying value of its inventory in excess of this demand. In addition, the Company evaluates the reliability of its assessment of projected usage by comparing such projected usage amounts to actual subsequent usage.

During the quarters ended March 31, 2013 and April 1, 2012 the Company wrote off approximately $2.6 million and $1.5 million, respectively, related to excess and obsolete inventory and recorded the charges as costs of goods sold in the accompanying consolidated condensed statements of operations.