Contingencies

9 Months Ended

Oct. 02, 2011

Contingencies [Abstract]

Contingencies

NOTE 13. Contingencies

Contingent consideration

The terms of our November 2010 acquisition of Wintegra, provide for potential additional earn-out based purchase consideration ranging from nil to $60 million, calculated on the basis of Wintegra's 2011 revenue as described in the Agreement and Plan of Merger dated as of October 21, 2010. At acquisition, the Company recorded a liability for contingent purchase consideration of $28.2 million as part of the acquisition of Wintegra, which reflected the estimated fair value of the potential earn-out payment, calculated by applying the income approach. Subsequent to acquisition, the Company continued to recognize mark-to-market adjustments to the liability. During the three months ended October 2, 2011, the Company determined that Wintegra's 2011 revenues are expected to be below earn-out levels. Accordingly, the Company recognized a fair value adjustment and a corresponding $29.4 million gain on liability for contingent consideration was recognized in the interim Condensed Consolidated Statements of Operations.