3. Certain Financial Statement Information

Accounts receivable:


	March 31,
	2012			2011
	(In thousands)
Accounts receivable	$	23,765		$	21,321
Less: allowance for bad debts		(1,099	)		(1,324	)

	$	22,666		$	19,997

Inventories:


	March 31,
	2012		2011
	(In thousands)
Finished goods	$	17,883	$	21,255
Work in process		3,818		4,334
Raw materials		1,543		972

	$	23,244	$	26,561

Other current assets:


	March 31,
	2012		2011
	(In thousands)
Prepaid expenses*	$	20,353	$	14,543
Executive deferred compensation assets		1,344		2,003
Deposits		899		749
Gain receivable on strategic investment		7,100		—
Other		1,409		1,060

	$	31,105	$	18,355

*	The increase in Prepaid expenses relates primarily to IP license fees

Property and equipment:


	Useful Life		March 31,
	Useful Life		2012			2011
	(In years)		(In thousands)
Machinery and equipment*		5-7	$	36,600		$	29,837
Leasehold improvements		1-15		14,228			12,783
Computers, office furniture and equipment		3-7		43,929			37,664
Buildings		31.5		2,756			2,756
Land		—		9,800			9,800

				107,313			92,840
Less: accumulated depreciation and amortization				(69,213	)		(60,817	)

			$	38,100		$	32,023

*	Includes capitalized mask set costs

Goodwill and purchased intangible assets:

Goodwill is as follows (in thousands):


	Fiscal Years Ended March 31,
	2012			2011			2010
Beginning balance, gross	$	4,441,026		$	4,441,026		$	4,441,026
Accumulated amortization and impairments		(4,441,026	)		(4,441,026	)		(4,441,026	)
Beginning balance, net		—			—			—
Goodwill related to TPack acquisition (see note 12)		13,183			13,183			—

Ending balance	$	13,183		$	13,183		$	—

Purchase-related intangibles were as follows (in thousands):


	March 31, 2012									March 31, 2011
	Gross		Accumulated Amortization and Impairments			Net		Weighted average remaining useful life		Gross		Accumulated Amortization and Impairments			Net		Weighted average remaining useful life
Developed technology/in-process research and development	$	441,300	$	(429,054	)	$	12,246		4.6	$	441,300	$	(425,502	)	$	15,798		5.2
Customer relationships		12,830		(8,881	)		3,949		2.9		12,830		(6,581	)		6,249		3.5
Patents/core technology rights/trade name		63,206		(62,767	)		439		1.5		63,206		(61,865	)		1,341		1.5

	$	517,336	$	(500,702	)	$	16,634			$	517,336	$	(493,948	)	$	23,388

The estimated future amortization expense of purchased intangible assets to be charged to cost of sales and operating expenses as of March 31, 2012, is as follows (in thousands):


	Cost of Sales		Operating Expenses		Total
Fiscal Years Ending March 31, 2013	$	2,717	$	1,926	$	4,643
2014		2,717		1,189		3,906
2015		2,717		904		3,621
2016		2,717		369		3,086
2017 and thereafter		1,378		—		1,378

Total	$	12,246	$	4,388	$	16,634

Other Assets:


	March 31,
	2012		2011
	(In thousands)
Non-current portion of prepaid expenses	$	4,193	$	5,769
Strategic investments		4,750		1,330
Other		1,331		—

	$	10,274	$	7,099

Other accrued liabilities:


	March 31,
	2012		2011
	(In thousands)
Customer deposits*	$	415	$	953
Employee related liabilities		2,051		2,306
Executive deferred compensation		1,344		2,003
Income taxes		1,401		1,157
Professional fees		961		735
Contingent consideration		618		3,150
Other		2,262		2,444

	$	9,052	$	12,748

*	Includes credit balances in Accounts Receivables that have been reclassified as Other Accrued Liabilities

Warranty Reserves:

The Company's products typically carry a one year warranty. The Company establishes reserves for estimated product warranty costs at the time revenue is recognized. Although the Company engages in extensive product quality programs and processes, its warranty obligation is affected by product failure rates, use of materials and service delivery costs incurred in correcting any product failure. Should actual product failure rates, use of materials or service delivery costs differ from the Company's estimates, additional warranty reserves could be required, which could reduce its gross margin.

The following table summarizes warranty reserve activity (in thousands):


	Year Ended March 31,
	2012			2011
Beginning balance	$	176		$	169
Charged to (reductions in) costs of revenues		515			222
Charges incurred		(237	)		(215	)

Ending balance	$	454		$	176

Interest income (expense), net and other-than-temporary impairment:


	Fiscal Years Ended March 31,
	2012		2011		2010
	(In thousands)
Interest income	$	3,601	$	6,163	$	6,207
Net realized gain on short-term investments		646		3,727		1,380
Impairments of short-term investments and marketable securities		—		—		(4,147	)

	$	4,247	$	9,890	$	3,440

Other income, net:


	Fiscal Years Ended March 31,
	2012			2011		2010
	(In thousands)
Net gain/(impairment) of strategic investments	$	7,147		$	—	$	(2,000	)
Net gain (loss) on disposals of property		(10	)		323		(103	)
Other, net		300			474		552

	$	7,437		$	797	$	(1,551	)

Net loss per share:

Shares used in basic net loss per share are computed using the weighted average number of common shares outstanding during each period. Shares used in diluted net income per share include the dilutive effect of common shares potentially issuable upon the exercise of stock options, vesting of restricted stock units ("RSUs") and outstanding warrants. However, potentially issuable common shares are not used in computing diluted net loss per share as their effect would be anti-dilutive due to the loss recorded during the periods presented. The reconciliation of shares used to calculate basic and diluted net loss per share consists of the following (in thousands, except per share data):


	Fiscal Years Ended March 31,
	2012			2011			2010
Net income (loss):
From continuing operations	$	(82,688	)	$	(1,006	)	$	(13,597	)
From discontinued operations, net of taxes		—			—			6,112

Net loss	$	(82,688	)	$	(1,006	)	$	(7,485	)

Shares used in net income (loss) per share computation:
Weighted average common shares outstanding		62,245			65,160			66,006

Basic and diluted net income (loss) per share:
From continuing operations	$	(1.33	)	$	(0.02	)	$	(0.21	)
From discontinued operations, net of taxes		—			—			0.10

Net loss per share	$	(1.33	)	$	(0.02	)	$	(0.11	)

The effect of anti-dilutive securities (comprised of options and restricted stock units) totaling 9.0 million, 3.7 million and 6.8 million equivalent shares for the fiscal years ended March 31, 2012, 2011 and 2010, respectively, have been excluded from the net loss per share computation, as their impact would be anti-dilutive because the Company has incurred losses in the periods presented.

The effect of dilutive securities (comprised of options and restricted stock units) totaling 0.5 million, 2.0 million and 1.7 million equivalent shares for the fiscal years ended March 31, 2012, 2011 and 2010, respectively, have been excluded from the net loss per share computation, as their impact would be anti-dilutive because the Company has incurred losses in the periods presented.

Total equivalent shares excluded from the net (loss) income per share computation is 9.5 million, 5.7 million and 8.5 million for the fiscal years ended March 31, 2012, 2011 and 2010, respectively.