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Guarantees

9 Months Ended

Sep. 30, 2011

Guarantees [Abstract]

GUARANTEES

NOTE 15: GUARANTEES

Warranties. The Company accrues for estimated warranty costs at the time of product shipment. Management periodically reviews the estimated fair value of its warranty liability and records adjustments based on the terms of warranties provided to customers, historical and anticipated warranty claims experience, and estimates of the timing and cost of specified warranty claims. Activity for the Company’s warranty accrual, which is included in accrued liabilities, is summarized below:

		Three months ended								Nine months ended
		September 30, 2011				October 1, 2010				September 30, 2011				October 1, 2010
		(In thousands)
Balance at beginning of period		$	5,578			$	3,194			$	4,811			$	4,186
Accrual for current period warranties			1,990				1,096				6,423				2,567
Warranty costs incurred			(1,963	)			(1,267	)			(5,629	)			(3,730	)
Omneon acquisition			—				959				—				959
Balance at end of period		$	5,605			$	3,982			$	5,605			$	3,982

Standby Letters of Credit. As of September 30, 2011, the Company’s financial guarantees consisted of standby letters of credit outstanding, which principally related to performance bonds and state requirements imposed on employers. The maximum amount of potential future payments under these arrangements was $0.8 million.

Indemnification. Harmonic is obligated to indemnify its officers and the members of its Board of Directors pursuant to its bylaws and contractual indemnity agreements. Harmonic also indemnifies some of its suppliers and most of its customers for specified intellectual property matters pursuant to certain contractual arrangements, subject to certain limitations. The scope of these indemnities varies but, in many instances, includes indemnification for damages and expenses (including reasonable attorneys’ fees). There have been no amounts accrued in respect of the indemnification provisions through September 30, 2011.

Guarantees. As of September 30, 2011, Harmonic had no other guarantees outstanding.

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The entire disclosure for each guarantee obligation, or each group of similar guarantee obligations, including (a) the nature of the guarantee, including its term, how it arose, and the events or circumstances that would require the guarantor to perform under the guarantee; (b) the maximum potential amount of future payments (undiscounted) the guarantor could be required to make under the guarantee; (c) the current carrying amount of the liability, if any, for the guarantor's obligations under the guarantee; and (d) the nature of any recourse provisions under the guarantee, and any assets held either as collateral or by third parties, and any relevant related party disclosure. Excludes disclosures about product warranties.

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