Business Combination

6 Months Ended

Dec. 31, 2011

Business Combination [Abstract]

BUSINESS COMBINATION

NOTE 4. BUSINESS COMBINATIONS

Asset Sale

In December 2011, we entered into an asset sale agreement to sell certain assets related to a legacy product, including inventory, equipment and intangibles, in exchange for $3.9 million in initial consideration plus potential earnout consideration, based on the purchaser’s revenues from the legacy product over a 15 month period following the closing date. As of December 31, 2011, we have received $1.5 million in cash proceeds and are scheduled to receive the remaining $2.4 million of initial consideration in the third quarter of fiscal year 2012.

The transfer of assets under the agreement is expected to be completed in February 2012. As of December 31, 2011, we have deferred a $1.3 million net gain on the sale of these assets and classified this amount in accrued expenses and other liabilities in our condensed consolidated balance sheet. We expect to recognize this deferred gain when the asset transfer is complete. Earnout consideration, if any, will be recognized in the period it is reported to us as due, provided we believe cash collections are reasonably assured.

Acquisition of Mintera

In July 2010, we acquired Mintera. For accounting purposes, the total fair value of consideration given in connection with the acquisition of Mintera was $25.6 million. This acquisition is more fully discussed in Note 3, Business Combinations, to our consolidated financial statements included in our 2011 Form 10-K.

Under the terms of this acquisition, we agreed to pay certain revenue-based consideration, whereby former security holders of Mintera are entitled to receive up to $20.0 million, determined based on a set of sliding scale formulas, to the extent revenue from Mintera products was more than $29.0 million in the 12 months following the acquisition and/or is more than $40.0 million in the 18 months following the acquisition. The earnout consideration is payable in cash or, at our option, newly issued shares of our common stock, or a combination of cash and stock.

During the three months ended October 1, 2011, we reviewed the fair value of the 12 month and 18 month earnout obligations and determined that the fair value of the obligations decreased by $3.8 million, to $12.4 million, based on revised estimates of revenues from Mintera products. The $3.8 million decrease in fair value was recorded as a decrease in restructuring, acquisition and related expenses in the condensed consolidated statement of operations.

During the three months ended December 31, 2011, we settled the 12 month earnout obligation with the former security holders by paying them $0.5 million in cash and issuing 0.8 million shares of our common stock valued at $2.8 million. We also reassessed the fair value of the 18 month earnout obligation, determining that the fair value of the obligations increased by $0.9 million, to $10.0 million, during the three months ended December 31, 2011. We estimated the fair value of the 18 month obligation using management estimates of the total amounts expected to be paid based on estimated future operating results, discounted to present value using our incremental borrowing cost. The $10.0 million has been recorded in accrued expenses and other liabilities in our condensed consolidated balance sheet at December 31, 2011. The 18 month obligation is payable in April 2012.

During the three and six months ended December 31, 2011, we recorded minimal amounts in interest expense related to the earnout obligations. During the three and six months ended January 1, 2011, we recorded $0.3 million and $0.5 million, respectively, in interest expense related to the earnout obligations.