XML 21 R13.htm IDEA: XBRL DOCUMENT

Balance Sheet Components

9 Months Ended

Oct. 02, 2011

9. Balance Sheet Components

Accounts receivable, net (in thousands):


	October 2, 2011			December 31, 2010
Gross accounts receivable	$	235,395		$	241,632

Less: Allowance for doubtful accounts		(1,480	)		(1,481	)
Allowance for sales returns		(11,484	)		(10,273	)
Allowance for price protection		(3,778	)		(3,147	)

Total allowances		(16,742	)		(14,901	)

Accounts receivable, net	$	218,653		$	226,731

Inventories (in thousands):


	October 2, 2011		December 31, 2010
Raw materials	$	2,225	$	1,591
Finished goods		133,738		125,803

Total	$	135,963	$	127,394

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 (in thousands):


	October 2, 2011			December 31, 2010
Computer equipment	$	7,036		$	6,057
Furniture, fixtures and leasehold improvements		9,663			9,450
Software		19,839			18,553
Machinery and equipment		20,028			17,465
Construction in progress		360			30

		56,926			51,555
Less: accumulated depreciation and amortization		(40,847	)		(34,052	)

Property and equipment, net	$	16,079		$	17,503

Goodwill (in thousands):


	Goodwill at December 31, 2010		Westell Acquisition		Goodwill at October 2, 2011
Goodwill	$	74,198		11,746	$	85,944

Goodwill increased $11.7 million during the nine months ended October 2, 2011 due to the acquisition of the Customer Networking Solutions division of Westell Technologies, Inc. ("Westell"). For additional discussion of the Westell acquisition, please refer to Note 3 of the Notes to Unaudited Condensed Consolidated Financial Statements.

In the fourth quarter of 2010, the Company completed its annual goodwill impairment test based on the Company operating in one segment. The Company determined that goodwill was not impaired at December 31, 2010 since the estimated fair value of the Company exceeded its carrying value.

In the three months ended July 3, 2011, the Company reorganized its reporting structure which resulted in changes to its segment reporting from one reporting segment, which comprised the development, marketing and sale of networking products for the commercial business and home markets, to three reporting segments: retail, commercial and service provider. Refer to Note 12 of the Notes to Unaudited Condensed Consolidated Financial Statements for additional information regarding the change in segment reporting.

On the first day of the second fiscal quarter of 2011, the Company performed a goodwill impairment assessment as a result of the change in reportable segments. The Company initially determined the fair value of the new business units and allocated goodwill to each segment based on their relative fair values. The Company compared the fair value of the new reporting units to the reporting unit's carrying value and determined that goodwill was not impaired at July 3, 2011 since the estimated fair values of each of the Company's reporting units exceeded the carrying values. As the Company has not been aware of any changed conditions or situations since the last impairment testing performed that might call into question whether the current balances are fairly recorded, no impairment testing was performed in the three months ended October 2, 2011. In the fourth quarter of 2011, the Company will perform its annual goodwill impairment test based on the Company operating in three segments.

The fair value of the new business units was determined using an income approach and a market approach, which were weighted equally. Under the income approach, the fair value of an asset is based on the value of the estimated cash flows that the asset can be expected to generate in the future. These estimated future cash flows were discounted at rates ranging from 13 to 15 percent to arrive at their respective fair values. Under the market approach, the fair value of the unit is based on an analysis of financial data for publicly traded companies engaged in the same or similar lines of business.

The following table presents the changes in carrying amount of goodwill in each of the Company's recast reportable segments at October 2, 2011 (in thousands):


				New Segments
	Old Segment			Retail		Commercial		Service Provider		Total
Goodwill at December 31, 2010	$	74,198		$	—	$	—	$	—	$	74,198
Relative fair value approach		(74,198	)		33,546		32,043		8,609		—

Goodwill at April 4, 2011		—			33,546		32,043		8,609		74,198
Westell acquisition goodwill		—			—		—		11,746		11,746

Goodwill at October 2, 2011	$	—		$	33,546	$	32,043	$	20,355	$	85,944

Other accrued liabilities (in thousands):


	October 2, 2011		December 31, 2010
Sales and marketing programs	$	36,232	$	37,020
Warranty obligation		40,576		40,513
Freight		6,683		7,174
Other		24,335		25,706

Other accrued liabilities	$	107,826	$	110,413