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SUMMARY OF ACCOUNTING POLICIES

6 Months Ended

Sep. 28, 2012

2. SUMMARY OF ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”) for interim financial information and in accordance with the requirements of Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements, and should be read in conjunction with the Company’s audited consolidated financial statements as of and for the fiscal year ended March 31, 2012 contained in the Company’s Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three-month and six-month periods ended September 28, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2013.

The first quarter for fiscal 2013 and fiscal 2012 ended on June 29, 2012 and July 1, 2011, respectively. The second quarter for fiscal 2013 and fiscal 2012 ended on September 28, 2012 and September 30, 2011, respectively. The Company’s third fiscal quarter ends on December 31, and the fourth fiscal quarter and year ends on March 31 of each year.

The Company recognized a $23.0 million gain as a component of interest and other expense (income), net in the three-month period ended September 28, 2012 for the cumulative fair value adjustment of the Company’s warrants to purchase common shares of a supplier. These fully-vested warrants, which are derivative instruments, are to be fair valued at each reporting date with gains or losses from changes in fair value recognized in the statements of operations. The gain from changes in fair value recognized in the three-month period ended September 28, 2012 includes an out-of-period adjustment of $12.8 million and the six-month period ended September 28, 2012 includes an out-of-period adjustment of $5.7 million. Management believes the impact of the error is not material to current or prior fiscal periods.

During the second quarter of fiscal 2013, the Company finalized a plan to sell a non-core business. An agreement was entered into on October 15, 2012, and the sale is expected to close in fiscal 2013.

During the first quarter of fiscal 2013, the Company finalized the sale of certain assets of its Vista Point Technologies camera modules business, including intellectual property and the China-based manufacturing operations to Tessera Technologies, Inc. (“Tessera Technologies”), and DigitalOptics Corporation, a wholly-owned subsidiary of Tessera Technologies.

In accordance with the accounting guidance, these non-core businesses represent separate asset groups and the divestitures qualify as discontinued operations, and accordingly, the Company has reported the results of operations and financial position of these businesses in discontinued operations within the condensed consolidated statements of operations and the condensed consolidated balance sheets for all periods presented as applicable.

For the six-month period ended September 30, 2011, approximately $902.2 million of proceeds from bank borrowings and repayment of bank borrowings, related to certain short-term facilities, were previously reflected on a gross basis in the condensed consolidated statements of cash flows. These amounts should have been reflected on a net basis in “repayment of bank borrowings, long-term debt and capital lease obligations” and have been corrected in the accompanying condensed consolidated statements of cash flows. The correction had no net impact on total cash used in financing activities. This error had no impact on current year cash flows.

Cash and Cash Equivalents

Cash and cash equivalents consisted of the following:

	As of		As of
	September 28, 2012		March 31, 2012
	(In thousands)
Cash and bank balances	$	1,245,634	$	1,174,423
Money market funds and time deposits	315,935		343,906
	$	1,561,569	$	1,518,329

Inventories

The components of inventories, net of applicable lower of cost or market write-downs, were as follows:

	As of		As of
	September 28, 2012		March 31, 2012
	(In thousands)
Raw materials	$	1,955,335	$	1,952,358
Work-in-progress	498,034		537,753
Finished goods	668,165		810,680
	$	3,121,534	$	3,300,791

Other Current Assets / Other Assets

Other current assets includes approximately $458.1 million and $514.9 million as of September 28, 2012 and March 31, 2012, respectively, for the deferred purchase price receivable from our Global and North American Asset-Backed Securitization programs (see note 8). Additionally, as of September 28, 2012, $224.3 million was included in other current assets related to customer specific manufacturing assets financed by a third party banking institution on behalf of one of our customers as discussed further in note 10 to the condensed consolidated financial statements.

As discussed further under the basis of presentation and principles of consolidation, the Company recognized a $23.0 million gain for the fair value adjustment of the Company’s warrants to purchase common shares of a supplier. The fair value of the warrants is included in other assets on the condensed consolidated balance sheet as of September 28, 2012.

Property and Equipment

Depreciation expense associated with property and equipment was approximately $98.3 million and $198.2 million for the three-month and six-month periods ended September 28, 2012, respectively, and $101.7 million and $201.0 million for the three-month and six-month periods ended September 30, 2011, respectively.

Goodwill and Other Intangibles

The following table summarizes the activity in the Company’s goodwill account during the six-month period ended September 28, 2012:

	Amount
	(In thousands)
Balance, beginning of the year	$	101,670
Acquisitions (1)	68,319
Foreign currency translation adjustments	(379		)
Balance, end of the quarter	$	169,610

(1) The amount is attributable to certain acquisitions that were not individually, nor in the aggregate, significant to the Company. See note 10 to the condensed consolidated financial statements for additional information.

The components of acquired intangible assets are as follows:

	As of September 28, 2012							As of March 31, 2012
	Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	Amount		Amortization			Amount		Amount		Amortization			Amount
	(In thousands)
Intangible assets:
Customer-related intangibles	$	243,581	$	(212,307	)	$	31,274	$	243,681	$	(199,238	)	$	44,443
Licenses and other intangibles	110,737		(11,687		)	99,050		22,740		(8,929		)	13,811
Total	$	354,318	$	(223,994	)	$	130,324	$	266,421	$	(208,167	)	$	58,254

The gross carrying amounts of intangible assets are removed when the recorded amounts have been fully amortized. During the three-month period ended September 28, 2012, the Company recognized a charge for impairment of customer-related intangible assets with a net carrying amount of $10.0 million, which is included in the results from discontinued operations, in connection with the non-core business expected to be divested during fiscal 2013 based on the carrying value of net assets and the expected sale proceeds. During the first fiscal quarter of 2013, the value of intangible assets increased by $88.0 million relating to a license agreement for exclusive manufacturing rights and certain manufacturing technologies and processes in connection with an acquisition as more fully described in note 10 to the condensed consolidated financial statements. Total intangible amortization expense was $8.1 million and $15.9 million during the three-month and six-month periods ended September 28, 2012, respectively, of which $0.8 million was recorded in cost of sales during the quarter ended September 28, 2012 in connection with the aforementioned acquisition. Total intangible amortization expense was $11.5 million and $23.6 million during the three-month and six-month periods ended September 30, 2011, respectively. The estimated future annual amortization expense for acquired intangible assets is as follows:

Fiscal Year Ending March 31,	Total
	(In thousands)
2013 (1)	$	25,793
2014	45,030
2015	48,394
2016	7,809
2017	1,959
Thereafter	1,339
Total amortization expense	$	130,324

(1) Represents estimated amortization for the six-month period ending March 31, 2013.

Other Current Liabilities

Other current liabilities include customer working capital advances amounting to $210.8 million and $326.6 million and deferred revenue amounting to $231.1 million and $329.6 million as of September 28, 2012 and March 31, 2012, respectively. Additionally, as of September 28, 2012, $197.5 million was included in other current liabilities related to customer specific assets financed by a third party banking institution on behalf of one of our customers as discussed further in note 10 to the condensed consolidated financial statements.