Balance Sheet Components (in thousands)

Short-Term Investments



	As of
	September 30, 2012									December 31, 2011
	Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value		Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
U.S. Treasuries	$	225,019	$	17	$	(1	)	$	225,035	$	144,673	$	34	$	(4	)	$	144,703
Certificates of Deposits	2,784		—		—			2,784		94		—		—			94
Total	$	227,803	$	17	$	(1	)	$	227,819	$	144,767	$	34	$	(4	)	$	144,797

All of the Company’s marketable securities are classified as available-for-sale and consist of government securities with an original maturity or remaining maturity at the time of purchase of greater than three months and no more than 12 months. Accordingly, none of the short-term investments have unrealized losses greater than 12 months.

Cost Method Investments

As of September 30, 2012 and December 31, 2011, the carrying value of the Company's cost method investments was $1.3 million and $3.0 million respectively. These investments are included in other non-current assets in the consolidated balance sheets and are carried at cost, adjusted for any impairment, because the Company does not have a controlling interest and does not have the ability to exercise significant influence over these companies. The Company monitors these investments for impairment on a quarterly basis, and adjusts carrying value for any impairment charges recognized. There were no impairments recognized in the three and nine months ended September 30, 2012 and October 2, 2011. Realized gains and losses on these investments are reported in other income (expense), net in the consolidated statements of operations. In the third fiscal quarter of 2012 the Company recognized a gain of $3.1 million on the partial sale of one of its cost method investments.

Accounts receivable, net



	As of
	September 30, 2012			December 31, 2011
Gross accounts receivable	$	268,819		$	279,932
Allowance for doubtful accounts	(1,256		)	(1,335		)
Allowance for sales returns	(15,465		)	(13,360		)
Allowance for price protection	(3,236		)	(3,930		)
Total allowances	(19,957		)	(18,625		)
Total accounts receivable, net	$	248,862		$	261,307

Inventories



	As of
	September 30, 2012		December 31, 2011
Raw materials	$	4,352	$	4,676
Finished goods	174,564		159,048
Total inventories	$	178,916	$	163,724

The Company records provisions for excess and obsolete inventory based on forecasts of future demand. While management believes the estimates and assumptions underlying its current forecasts are reasonable, there is risk that additional charges may be necessary if current forecasts are greater than actual demand.

Property and equipment, net



	As of
	September 30, 2012			December 31, 2011
Computer equipment	$	7,154		$	7,109
Furniture, fixtures and leasehold improvements	12,415			9,757
Software	21,326			19,974
Machinery and equipment	28,533			21,797
Construction in progress	952			662
Total property and equipment, gross	70,380			59,299
Accumulated depreciation and amortization	(51,453		)	(43,415		)
Total property and equipment, net	$	18,927		$	15,884

Depreciation expense was $3.2 million and $8.7 million for the three and nine months ended September 30, 2012, respectively, and $2.5 million and $7.4 million for the three and nine months ended October 2, 2011, respectively.

Intangibles, net

The following tables present details of the Company’s purchased intangible assets:



	Gross		Accumulated Amortization			Net
September 30, 2012
Technology	$	32,059	$	(21,340	)	$	10,719
Customer contracts and relationships	16,000		(2,795		)	13,205
Other	5,470		(2,893		)	2,577
Finite-lived intangibles, net	53,529		(27,028		)	26,501
Indefinite-lived intangible assets	1,200		—			1,200
Total purchased intangible assets, net	54,729		(27,028		)	27,701



	Gross		Accumulated Amortization			Net
December 31, 2011
Technology	$	24,800	$	(19,905	)	$	4,895
Customer contracts and relationships	15,700		(1,308		)	14,392
Other	4,070		(2,401		)	1,669
Total purchased intangible assets, net	$	44,570	$	(23,614	)	$	20,956

In the third quarter of 2012, the Company purchased finite-lived intangible assets of $4.0 million and indefinite-lived assets of $2.0 million, as a result of its acquisition of AVAAK. For further discussion regarding the AVAAK acquisition, see Note 3, Business Acquisitions.

As of September 30, 2012, the Company had $1.2 million in unamortized intangible assets related to IPR&D. All of the IPR&D assets were acquired in connection with the Company's acquisition of AVAAK. IPR&D assets represent IPR&D projects that have not reached technical feasibility and are required to be classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts. Accordingly, during the development period after the date of acquisition, these assets will not be amortized. When the asset reaches technical feasibility, the Company will determine the useful life of the asset, reclassify the asset out of IPR&D, and begin amortization. Development costs incurred after acquisition on acquired IPR&D projects are expensed as incurred. Estimated future cost to complete these IPR&D projects is $0.4 million. As of September 30, 2012, $0.8 million of the IPR&D had reached technical feasibility and as a result, was reclassified from IPR&D to technology.

Amortization of purchased intangible assets was $1.4 million and $3.4 million for the three and nine months ended September 30, 2012, respectively, and $1.2 million, and $3.7 million for the three and nine months ended October 2, 2011, respectively. No impairment charges were recorded in the three and nine months ended September 30, 2012, and October 2, 2011.

Estimated amortization expense related to intangibles for each of the next five years and thereafter is as follows:



Year Ending December 31	Amount
2012 (remaining three months)	$	1,437
2013	5,458
2014	5,133
2015	4,517
2016	4,158
Thereafter	5,798
Total expected amortization expense	$	26,501

Goodwill

The changes in the carrying amount of goodwill during the nine months ended September 30, 2012 are as follows:



	Retail		Commercial		Service Provider		Total
Goodwill at December 31, 2011	$	33,546	$	32,043	$	20,355	$	85,944
Goodwill acquired during the period	11,895		3,041		—		14,936
Goodwill at September 30, 2012	$	45,441	$	35,084	$	20,355	$	100,880

During the nine months ended September 30, 2012, the Company recorded goodwill of $11.9 million and $3.0 million, related to its acquisition of AVAAK, and certain intellectual property of Firetide, respectively. For further discussion, see Note 3, Business Acquisitions. There were no impairments to goodwill during the three and nine months ended September 30, 2012 and October 2, 2011.

Other accrued liabilities



	As of
	September 30, 2012		December 31, 2011
Sales and marketing programs	$	39,973	$	44,394
Warranty obligation	44,393		44,846
Freight	5,733		7,940
Other	30,730		23,300
Total other accrued liabilities	$	120,829	$	120,480