Commitments and Contingencies

9 Months Ended

Oct. 01, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies

6. Commitments and Contingencies

     Lease Obligations

     Rental expense under operating leases for the three months ended October 1, 2011 and October 2, 2010 were $1.1 million and $1.0 million, respectively, and for the nine months ended October 1, 2011 and October 2, 2010 were $3.1 million and $2.8 million, respectively. Future minimum rental payments under operating leases were as follows as of October 1, 2011:

	Operating
	Leases
	(In thousands)
Remainder of 2011	$	783
2012		3,028
2013		2,611
2014		2,570
2015		2,564
Thereafter		10,692
Total minimum lease payments	$	22,248

     Sales Taxes

     The Company collects and remits sales tax in jurisdictions in which it has a physical presence or it believes nexus exists, which therefore obligates the Company to collect and remit sales tax. The Company continually evaluates whether it has established a nexus in new jurisdictions with respect to sales tax. The Company has recorded a liability for potential exposure in several states where there is uncertainty about the point in time at which the Company established a sufficient business connection to create nexus. The Company continues to analyze possible sales tax exposure, but does not currently believe that any individual claim or aggregate claims that might arise will ultimately have a material effect on its consolidated results of operations, financial position or cash flows.

     Guarantees and Indemnification Obligations

     The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company indemnifies and agrees to reimburse the indemnified party for losses incurred by the indemnified party, generally the Company’s customers, in connection with any patent, copyright, trade secret or other proprietary right infringement claim by any third party with respect to the Company’s products. The term of these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of October 1, 2011 and January 1, 2011, respectively.

     Warranty

     The Company provides warranties on most products and has established a reserve for warranty based on identified or estimated warranty costs. The reserve is included as part of accrued expenses (Note 5) in the accompanying balance sheets.

     Activity related to the warranty accrual was as follows:

	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2011			2010			2011			2010
	(In thousands)						(In thousands)
Balance at beginning of period	$	9,472		$	7,395		$	9,284		$	6,105
Provision		1,266			1,908			3,531			5,003
Warranty usage(1)		(479	)		(604	)		(2,556	)		(2,409	)
Balance at end of period	$	10,259		$	8,699		$	10,259		$	8,699

(1) Warranty usage includes the expiration of product warranties unutilized.