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Contractual Obligations and Commercial Contingencies
3 Months Ended
Jun. 29, 2012
Contractual Obligations and Commercial Contingencies [Abstract]  
Contractual Obligations and Commercial Contingencies
Note 8.  Contractual Obligations and Commercial Contingencies
 
3¾% Convertible Senior Notes: In December 2007, the Company issued $85.0 million of 3¾% convertible senior notes (the "2007 Notes") due December 15, 2014, in a private placement, of which $10.5 million remained outstanding at June 24, 2011. A 2007 Note may be converted by a holder, at its option, into shares of the Company's common stock initially at a conversion rate of 73.3689 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $13.63 per share of common stock (subject to adjustment in certain events), at any time on or prior to December 15, 2014, unless the 2007 Notes were previously repurchased. If a holder elects to convert its 2007 Notes in connection with certain fundamental changes, in certain circumstances the conversion rate will increase by a number of additional shares of common stock upon conversion. Upon conversion, a holder generally will not receive any cash payment representing accrued and unpaid interest, if any. The 2007 Notes are not redeemable by the Company prior to the stated maturity.
 
Upon the occurrence of certain fundamental changes including, without limitation, an acquisition of voting control of the Company, the liquidation or dissolution of the Company, or the Company's common stock ceasing to be traded on a U.S. national securities exchange, a holder may require the Company to purchase for cash all or any part of its 2007 Notes at a purchase price equal to 100% of the principal amount plus any accrued and unpaid interest (including additional interest, if any) up until, but not including, the fundamental change purchase date. The 2007 Notes are unsecured senior obligations, ranking equal in right of payment to all existing and future senior indebtedness, and senior in right of payment to any existing and future subordinated indebtedness. The 2007 Notes are effectively subordinated to existing and future secured indebtedness to the extent of the assets securing such indebtedness and structurally subordinated to the claims of all existing and future indebtedness and other liabilities of the Company's subsidiaries.
 
The consummation of the Merger will constitute a "fundamental change" under the 2007 Indenture. As required by the 2007 Indenture and as provided in the merger agreement, within 10 business days after the closing date of the Merger, Sonus will deliver, or cause to be delivered, a fundamental change notice to each holder of 2007 Notes indicating that each such holder has the right to have all or a portion of its 2007 Notes purchased at a price in cash equal to 100% of the principal amount of the 2007 Notes (or portion thereof), plus any accrued and unpaid interest. Any 2007 Notes tendered for purchase in response to the fundamental change notice will be purchased on a date to be selected by Sonus that shall be no later than 35 business days after the date of the fundamental change notice.
 
In accordance with the 2007 Indenture, on August 3, 2012 the Company notified the registered holders of the 2007 Notes of the proposed Merger, the supplemental indenture to be entered into in connection with the Merger, and the anticipated fundamental change notice to be delivered by Sonus.
 
7¼% Redeemable Convertible Subordinated Debentures: In May 1989, the Company issued $75.0 million of 7¼% redeemable convertible subordinated debentures due May 15, 2014 (the "1989 Debentures"), of which $23.7 million remained outstanding at June 24, 2011. Each 1989 Debenture is convertible at the option of the holder into common stock at $31.50 per share and is redeemable at the option of the Company. The 1989 Debenture holders are entitled to a sinking fund which began May 15, 2000, of 14 annual payments of 5% of the aggregate principal amount of 1989 Debentures issued ($3.8 million annually), reduced by any redemption or conversion of the 1989 Debentures. As a result of previous redemptions, the total remaining sinking fund requirement is $1.2 million, which, assuming no further redemptions, will be due as a final sinking fund payment on May 15, 2013.
 
In accordance with the 1989 Indenture, on August 3, 2012 the Company notified the registered holders of the 1989 Debentures of the proposed Merger and the supplemental indenture to be entered into in connection with the Merger.
 
License and Development Agreement: The Company is a party to a license and development agreement with a third-party technology supplier, under which the Company acquired a license to manufacture and distribute the supplier's high-speed networking platform. The Company agreed to pay an additional $5.0 million in four equal installments to the supplier for the advanced platform and an extended exclusive right to market. The first two installments were paid in fiscal 2008 and the remaining two will be due at separate future dates dependent upon the supplier's delivery of future enhancements of the advanced platform. The Company believes it is unlikely the remaining two installments will become due or be paid.
 
Unearned income: Deferred revenue, relating to both product and service revenues, was $3.9 million and $3.8 million, respectively at June 29, 2012 and March 30, 2012.
 
Contingencies: In the normal course of business, the Company enters into contractual commitments to purchase services, materials, components, and finished goods from suppliers, mainly its primary contract manufacturer, Plexus. Under the agreement with Plexus, the Company may incur certain liabilities, as described in Note 3.
 
Contractual obligations and contingencies decreased from $46.7 million at March 30, 2012 to $45.1 million at June 29, 2012. This decrease resulted principally as a result of ongoing interest and operating lease payments.