Note 3—Supplemental Financial Information

Inventories

Inventories consist of the following (in thousands):


	December 31, 2011		January 1, 2011
Raw materials	$	4,312	$	2,631
Work in process		237		171
Finished goods		1,508		1,707

	$	6,057	$	4,509

Property and Equipment

Property and equipment consist of the following (dollars in thousands):


	Estimated Useful Lives	December 31, 2011			January 1, 2011
Machinery and equipment	3-7 yrs.	$	8,130		$	7,595
Leasehold improvements	*		1,817			1,795
Furniture and fixtures	5 yrs.		457			457
Computer equipment and software	3-7 yrs.		3,365			3,099

			13,769			12,946
Less accumulated depreciation and amortization			(10,998	)		(8,869	)

		$	2,771		$	4,077

Estimated useful life is generally 7 years, or the remaining lease term, whichever is shorter.

Included in property and equipment are assets under capital leases with a cost of approximately $0.5 million and $0.6 million and accumulated amortization of approximately $0.1 million and $0.1 million at December 31, 2011 and January 1, 2011, respectively. Amortization of assets recorded under capital leases is included as a component of depreciation and amortization expense.

Warranty Liability

The following table summarizes the activity related to the warranty liability (in thousands):


	Year Ended
	December 31, 2011			January 1, 2011
Beginning balance	$	194		$	240
Estimated cost of warranty claims charged to cost of sales		342			271
Cost of actual warranty claims		(347	)		(317	)

Ending balance	$	189		$	194
Less current portion		(94	)		(109	)

Long-term warranty obligations	$	95		$	85

The allowance for warranty liabilities expected to be incurred within one year is included as a component of accrued expenses and other current liabilities in the accompanying consolidated balance sheets. The allowance for warranty liabilities expected to be incurred after one year is included as a component of other liabilities in the accompanying consolidated balance sheets.

Facility Relocation Costs

In accordance with ASC Topic 420, the Company recorded accruals related to the 2007 sublet of its former domestic headquarters facility and the 2009 sublet of a portion of its current headquarters facility. The master lease on the former facility and both subleases reached the conclusion of their terms in 2010. The Company determined that its estimates regarding the net payments due under the subleases exceeded its actual liability. As a result, the Company reversed approximately $61,000 of its accrual for facility relocation costs. The reversal of the accrual is included as a component of selling, general and administrative expense in the accompanying consolidated statement of operations for 2010.

The following table summarizes the activity and liability balance related to the facility relocation costs (in thousands):


Liability balance, January 2, 2010	$	84
Charged to costs and expenses		(61	)
Net payments		(23	)

Liability balance, January 1, 2011	$	—

Comprehensive Loss

The components of comprehensive loss, net of taxes, consist of the following (in thousands):


	Year Ended
	December 31, 2011			January 1, 2011
Net loss	$	(5,599	)	$	(15,115	)
Other comprehensive loss:
Change in net unrealized loss on investments
Unrealized loss transferred from other comprehensive loss to earnings		59			—
Net unrealized loss on investments, net of tax		(4	)		(54	)

Total comprehensive loss	$	(5,544	)	$	(15,169	)

Accumulated other comprehensive loss reflected on the consolidated balance sheets at December 31, 2011 and January 1, 2011 represents accumulated net unrealized losses on investments in marketable securities.

Computation of Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share, including the reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share (in thousands, except per share data):


	Year Ended
	December 31, 2011			January 1, 2011
Basic and diluted net loss per share:
Numerator: Net loss	$	(5,599	)	$	(15,115	)

Denominator: Weighted-average common shares outstanding, basic and diluted		25,086			23,779

Basic and diluted net loss per share	$	(0.22	)	$	(0.64	)

The following table sets forth potentially dilutive common share equivalents, consisting of shares issuable upon the exercise or vesting of outstanding stock options and restricted stock awards, respectively, and the exercise of warrants, computed using the treasury stock method. These potential common shares have been excluded from the diluted net loss per share calculations above as their effect would be anti-dilutive for the years then ended (in thousands):


	Year Ended
	December 31, 2011		January 2, 2011
Common share equivalents		1,455		1,948

The above common share equivalents would have been included in the calculation of diluted earnings per share had the Company reported net income for the years then ended.

Cash Flow Information

The following table sets forth supplemental disclosures of cash flow information and non-cash investing and financing activities (in thousands):


	Year Ended
	December 31, 2011		January 1, 2011
Supplemental disclosure of cash flow information:
Cash paid (received) during the year for:
Interest	$	227	$	96

Income taxes	$	4	$	(715	)

Supplemental disclosure of non-cash investing and financing acitivies:
Purchase of equipment through capitalized lease obligations	$	117	$	351

Debt financed acquisition of assets	$	169	$	199

Purchase of equipment not paid for at the end of the year	$	2	$	292

Unrealized losses from investments in marketable securities	$	4	$	54