Note 9 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Text Block]

9.  Commitments and Contingencies

 The following table summarizes the Company’s commitments as of December 31, 2012 (in thousands):

	Payments by Period
	Total		2013		2014		2015		2016		Thereafter
Operating leases	$	1,165	$	912	$	206	$	45	$	2	$	-
Outstanding purchase commitments		15,542		15,542		-		-		-		-
	$	16,707	$	16,454	$	206	$	45	$	2	$	-

Lease Obligations

Until May, 2012, the Company leased its headquarters and sales offices in San Jose, California. The landlord of the San Jose facility exercised their right to terminate the lease, effective April 18, 2012. In May 2012, the Company moved to an owned facility also located in San Jose, California.

In September 2004, the Company entered into a five-year lease arrangement 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. Following the five-year lease term, the Company now has the option to acquire the facility for approximately $1.8 million which consists of total construction costs minus total rent paid by the Company during the lease term. This option became exercisable in March 2011 and does not expire. The Company will likely exercise its purchase option and enter into a purchase agreement for this facility in the future.

The Company also leases sales and research and development offices in the United States, Japan, China, Taiwan and Korea. Certain of the Company’s facility leases provide for periodic rent increases. Rent expense for the years ended December 31, 2012, 2011 and 2010 was $1.6 million, $2.1 million and $1.8 million, respectively.

Warranty and Indemnification Provisions

The Company generally 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. 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 2012, 2011 and 2010 are as follows (in thousands):

	Year Ended December 31,
	2012			2011			2010
Balance at beginning of year	$	561		$	764		$	294
Warranty provision for product sales		917			870			801
Settlements made during the period		(675	)		(626	)		(107	)
Unused warranty provision		(472	)		(447	)		(224	)
Balance at end of period	$	331		$	561		$	764

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. There were no indemnification costs in 2012, 2011 and 2010. These costs are charged to operations as incurred. The Company also provides for indemnification of its directors and officers.