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Balance Sheet Details

3 Months Ended

Mar. 31, 2013

2. Balance Sheet Details

Marketable Securities

The Company’s portfolio of available-for-sale securities by contractual maturity consists of the following (in thousands):


March 31, 2013	Maturity in Years		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-sale:
Government agency securities		1 or less	$	4,272	$	0	$	0		$	4,272
Municipal bonds		1 or less		11,377		10		0			11,387
Certificates of deposit		1 or less		4,999		0		0			4,999
Corporate debentures / bonds		1 or less		9,334		3		0			9,337

Total short-term marketable securities				29,982		13		0			29,995

Available-for-sale:
Municipal bonds		1 to 2		1,668		2		0			1,670
Certificates of deposit		1 to 2		1,920		0		0			1,920
Corporate debentures / bonds		1 to 2		6,279		0		(7	)		6,272

Total long-term marketable securities				9,867		2		(7	)		9,862

			$	39,849	$	15	$	(7	)	$	39,857


December 31, 2012	Maturity in Years		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-sale:
Government agency securities		1 or less	$	3,265	$	1	$	0		$	3,266
Municipal bonds		1 or less		11,246		14		0			11,260
Certificates of deposit		1 or less		6,200		5		0			6,205
Corporate debentures / bonds		1 or less		17,330		3		0			17,333

Total short-term marketable securities				38,041		23		0			38,064

Available-for-sale:
Certificates of deposit		1 to 2		1,200		1		0			1,201

Total long-term marketable securities				1,200		1		0			1,201

			$	39,241	$	24	$	0		$	39,265

The Company’s available-for-sale securities are carried on the condensed consolidated balance sheet at fair market value with the related unrealized gains and losses included in accumulated other comprehensive income (loss) on the condensed consolidated balance sheet, which is a separate component of stockholders’ equity. Realized gains and losses on the sale of available-for-sale marketable securities are determined using the specific-identification method.

The Company has a credit facility with a bank to allow margin borrowings based on the Company’s investments in cash equivalents and marketable securities held with the bank. This facility is collateralized by the Company’s cash equivalents and marketable securities held with the bank. At March 31, 2013, the Company had approximately $18.0 million in cash equivalents and marketable securities held at this bank. Any monies borrowed and interest incurred are payable on demand, and there is no express expiration date to the credit facility. During the three months ended March 31, 2013, the Company borrowed approximately $7.0 million, and had outstanding borrowings of $4.8 million under this facility at March 31, 2013. Under the terms of the credit facility, the bank may liquidate any of the Company’s cash equivalents or marketable securities held at any time in order to recoup the outstanding balance of the facility. Accordingly, a like amount of cash equivalents and marketable equity securities have been classified by the Company as restricted cash and restricted marketable securities on the balance sheet at March 31, 2013. At March 31, 2013 the Company had restricted cash of $661,000 and restricted marketable securities of $4.2 million related to the outstanding borrowings under the credit facility. The restricted marketable securities of $4.2 million are included in the March 31, 2013 marketable securities presented in the table above.

As of March 31, 2013, the Company recorded a net unrealized gain of $8,000. The Company’s net unrealized gain is the result of market conditions affecting its fixed-income, debt and equity securities, which are included in accumulated other comprehensive income (loss) in the condensed consolidated balance sheet for the period then ended.

Inventories

Inventories consist of the following (in thousands):


	March 31, 2013		December 31, 2012
Finished goods	$	21,516	$	26,776
Raw materials and components		8,674		12,240

	$	30,190	$	39,016

Accrued Expenses

Accrued expenses consist of the following (in thousands):


	March 31, 2013		December 31, 2012
Royalties	$	5,002	$	4,349
Payroll and related expenses		8,250		7,788
Product warranty		2,664		2,329
Market development funds and price protection		2,176		2,147
Deferred rent		667		573
Professional fees		1,738		1,549
Deferred revenue		4,025		4,630
Other		3,712		4,435

	$	28,234	$	27,800

Accrued Warranty Obligations

Accrued warranty obligations consist of the following (in thousands):


	Three Months Ended March 31, 2013			Three Months Ended March 31, 2012
Warranty liability at beginning of period	$	2,329		$	1,525
Additions charged to operations		2,256			1,267
Deductions from liability		(1,921	)		(1,054	)

Warranty liability at end of period	$	2,664		$	1,738

The Company accrues warranty costs based on estimates of future warranty-related replacement, repairs or rework of products. The Company generally provides one to three years of coverage for products following the date of purchase and the Company accrues the estimated cost of warranty coverage as a component of cost of net revenues in the condensed consolidated statements of operations at the time revenue is recognized. In estimating our future warranty obligations, we consider various relevant factors, including the historical frequency and volume of claims, and the cost to replace or repair products under warranty.

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

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