Certain Financial Statement Information

Accounts receivable:



	March 31,
	2013			2012
	(In thousands)
Accounts receivable	$	25,278		$	23,765
Less: allowance for bad debts	(703		)	(1,099		)
	$	24,575		$	22,666

Inventories:



	March 31,
	2013		2012
	(In thousands)
Finished goods	$	7,247	$	17,883
Work in process	4,098		3,818
Raw materials	1,555		1,543
	$	12,900	$	23,244

Other current assets:



	March 31,
	2013		2012
	(In thousands)
Prepaid expenses	$	13,762	$	20,353
Executive deferred compensation assets	693		1,344
Deposits	828		899
Proceeds receivable from sale of strategic investment	1,331		7,100
Other	1,384		1,409
	$	17,998	$	31,105

Property and equipment:



	Useful Life	March 31,
	Useful Life	2013			2012
	(In years)	(In thousands)
Machinery and equipment*	5-7	$	40,063		$	36,600
Leasehold improvements	1-15	14,202			14,228
Computers, office furniture and equipment	3-7	43,485			43,929
Buildings	31.5	2,756			2,756
Land	—	9,800			9,800
		110,306			107,313
Less: accumulated depreciation and amortization		(75,915		)	(69,213		)
		$	34,391		$	38,100

____________________


*	Includes capitalized mask set costs

Goodwill and purchased intangible assets:

Goodwill is as follows (in thousands):



	Fiscal Years Ended March 31,
	2013			2012
Beginning balance, gross	$	4,441,026		$	4,441,026
Accumulated amortization and impairments	(4,441,026		)	(4,441,026		)
Beginning balance, net	—			—
Goodwill related to TPack acquisition	13,183			13,183
Ending balance	$	13,183		$	13,183

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



	March 31, 2013								March 31, 2012
	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	$	(431,771	)	$	9,529	3.5	$	441,300	$	(429,054	)	$	12,246	4.6
Customer relationships	12,830		(10,507		)	2,323		2.1	12,830		(8,881		)	3,949		2.9
Patents/core technology rights/trade name	63,206		(63,067		)	139		0.3	63,206		(62,767		)	439		1.5
	$	517,336	$	(505,345	)	$	11,991		$	517,336	$	(500,702	)	$	16,634

The estimated future amortization expense of purchased intangible assets to be charged to cost of sales and operating expenses as of March 31, 2013, is as follows (in thousands):



	Cost of Sales		Operating Expenses		Total
Fiscal Years Ending March 31, 2014	$	2,717	$	1,189	$	3,906
2015	2,717		904		3,621
2016	2,717		369		3,086
2017	1,339		—		1,339
2018	39		—		39
Total	$	9,529	$	2,462	$	11,991

Other Assets:



	March 31,
	2013		2012
	(In thousands)
Non-current portion of prepaid expenses	$	7,866	$	4,193
Strategic investments*	3,000		4,750
Other	—		1,331
	$	10,866	$	10,274

*During the fiscal year ended March 31, 2013 and 2012, the Company recognized an impairment charge of its non-marketable strategic investment of $2.3 million and $1.0 million. Refer to Note 2 to the Consolidated Financial Statements for further details.

Other accrued liabilities:



	March 31,
	2013		2012
	(In thousands)
Customer deposits*	$	237	$	415
Employee related liabilities	2,236		2,051
Executive deferred compensation	1,284		1,878
Income taxes	903		1,401
Professional fees	3,840		961
Contingent consideration	—		618
Other	2,230		1,728
	$	10,730	$	9,052

____________________

* Includes credit balances in Accounts Receivable 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,
	2013			2012
Beginning balance	$	454		$	176
(Capitalized) charged to costs of revenues	(94		)	515
Costs incurred	(140		)	(237		)
Ending balance	$	220		$	454

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



	Fiscal Years Ended March 31,
	2013			2012		2011
	(In thousands)
Interest income	$	2,347		$	3,601	$	6,163
Net realized gain on short-term investments	1,391			646		3,727
Impairments of short-term investments and marketable securities	(1,143		)	—		—
	$	2,595		$	4,247	$	9,890

Other income, net:



	Fiscal Years Ended March 31,
	2013			2012			2011
	(In thousands)
Net (impairment) gain on strategic investments*	$	(2,250	)	$	7,147		$	—
Write-off of notes receivable and other assets**	(1,800		)	—			—
Net (loss) gain on disposals of property	(21		)	(10		)	323
Other, net	1,677			300			474
	$	(2,394	)	$	7,437		$	797

**During the fiscal year ended March 31, 2013, the Company wrote-off $1.5 million of notes receivable due from an investee and $0.3 million related to a prepaid intellectual property license from this investee. The Company also impaired the related equity investment of $2.3 million in this investee - see * above.

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 loss per share include the dilutive effect of common shares potentially issuable upon the exercise of stock options, vesting of 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,
	2013			2012			2011
Net loss	$	(134,115	)	$	(82,688	)	$	(1,006	)
Shares used in net loss per share computation:
Weighted average common shares outstanding, basic	65,258			62,245			65,160
Net effect of dilutive common share equivalents	—			—			—
Weighted average common shares outstanding, diluted	65,258			62,245			65,160
Basic and diluted net loss per share	$	(2.06	)	$	(1.33	)	$	(0.02	)

The effect of anti-dilutive securities (comprised of options and restricted stock units) totaling 7.2 million, 9.0 million and 3.7 million equivalent shares for the fiscal years ended March 31, 2013, 2012 and 2011, respectively, has been excluded from the net loss per share computation, as the 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 0.8 million, 0.5 million and 2.0 million equivalent shares for the fiscal years ended March 31, 2013, 2012 and 2011, respectively, has been excluded from the net loss per share computation, as the impact would be anti-dilutive because the Company has incurred losses in the periods presented.

Total equivalent shares excluded from the net loss per share computation is 8.0 million, 9.5 million and 5.7 million for the fiscal years ended March 31, 2013, 2012 and 2011, respectively.