Note 9 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies Disclosure [Text Block]

9.  Commitments and Contingencies

The following table summarizes the Company’s commitments as of December 31, 2011 (in thousands):

	Payments by Period
	Total		2012		2013		2014		2015		2016		Thereafter
Operating leases	$	2,138	$	1,222	$	784	$	132	$	-	$	-	$	-
Outstanding purchase commitments		18,574		18,574		-		-		-		-		-
	$	20,712	$	19,796	$	784	$	132	$	-	$	-	$	-

Lease Obligations

The Company leases it headquarters and sales offices in San Jose, California. The San Jose facility was sold and the new landlord has exercised their right to terminate the lease, effective April 18, 2012. In addition, the Company entered into a five-year lease arrangement in September 2004 for its manufacturing facility located in Chengdu, China. Pursuant to this agreement, the Company contributed capital in the form of cash, in-kind assets, and/or intellectual property, of at least $5.0 million to its wholly-owned Chinese subsidiary as the registered capital for the subsidiary and exercised the option to purchase land use rights for the facility of approximately $0.2 million. The Company also has the option which became exercisable in March 2011 to acquire the facility after a five-year lease term for the original construction cost less rents paid, which is currently estimated at $1.9 million. The Company will likely exercise its purchase option and enter into a purchase agreement for this facility in the future.  The Company also leases its sales offices in Japan, China, Taiwan and Korea and its research and development facilities in Finland. Certain of the Company’s facility leases provide for periodic rent increases. Rent expense for the years ended December 31, 2011, 2010 and 2009 was $2.1 million, $1.8 million and $1.3 million, respectively.

Warranty and Indemnification Provisions

The Company provides a standard one-year warranty against defects in materials and workmanship and will either repair the goods or provide replacements at no charge to the customer for defective units. On occasion the Company permits the return of defective products outside the normal warranty period. In such cases, the Company accrues for the related costs at the time the decision to permit the return is made. Reserve requirements are recorded in the period of sale and are based on an assessment of the products sold with warranty and historical warranty costs incurred.

The changes in warranty reserves during 2011, 2010 and 2009 are as follows (in thousands):

	2011			2010			2009
Balance at beginning of year	$	764		$	294		$	764
Warranty costs		(626	)		(107	)		(137	)
Reserve adjustments and unused warranty provision		(447	)		(224	)		(728	)
Warranty provision for product sales		870			801			395
Balance at end of year	$	561		$	764		$	294

The Company provides indemnification agreements to a supplier and certain direct or indirect customers. The Company agrees to reimburse these parties for any damages, costs and expenses incurred by them as a result of legal actions taken against them by third parties for infringing upon their intellectual property rights as a result of using the Company’s products and technologies. These indemnification provisions are varied in their scope and are subject to certain terms, conditions, limitations and exclusions.  Such costs were $1.0 million for the year ended December 31, 2009. There were no indemnification costs in 2010 and 2011. These costs are charged to operations as incurred. The Company also provides for indemnification of its directors and officers.