2016 Q4 Form 10-Q Financial Statement

#000085565816000309 Filed on November 10, 2016

View on sec.gov

Income Statement

Concept 2016 Q4 2016 Q1 2015 Q4
Revenue $113.2M $101.2M $109.7M
YoY Change 3.2% 21.05%
Cost Of Revenue $45.70M $47.10M $49.42M
YoY Change -7.53% 26.27%
Gross Profit $63.48M $54.10M $59.85M
YoY Change 6.07% 16.85%
Gross Profit Margin 56.07% 53.46% 54.55%
Selling, General & Admin $29.24M $24.30M $23.82M
YoY Change 22.78% 32.79%
% of Gross Profit 46.07% 44.92% 39.8%
Research & Development $27.75M $31.80M $37.62M
YoY Change -26.24% 41.33%
% of Gross Profit 43.71% 58.78% 62.86%
Depreciation & Amortization $15.50M $17.90M $17.50M
YoY Change -11.43% 237.74%
% of Gross Profit 24.42% 33.09% 29.24%
Operating Expenses $56.99M $65.00M $61.44M
YoY Change -7.24% 58.92%
Operating Profit -$6.010M -$10.90M -$17.96M
YoY Change -66.53% -301.81%
Interest Expense $5.235M -$5.500M $5.754M
YoY Change -9.02%
% of Operating Profit
Other Income/Expense, Net $209.0K $500.0K -$841.0K
YoY Change -124.85% 400.0%
Pretax Income -$11.04M -$41.50M -$24.55M
YoY Change -55.05% -964.58%
Income Tax $1.000M $3.500M $309.0K
% Of Pretax Income
Net Earnings -$8.164M -$45.45M -$24.86M
YoY Change -67.16% -395.16%
Net Earnings / Revenue -7.21% -44.92% -22.66%
Basic Earnings Per Share -$0.38 -$0.21
Diluted Earnings Per Share -$102.8K -$0.38 -$0.21
COMMON SHARES
Basic Shares Outstanding 121.2M shares 119.0M shares 117.7M shares
Diluted Shares Outstanding 120.6M shares 117.7M shares

Balance Sheet

Concept 2016 Q4 2016 Q1 2015 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $98.90M $102.6M $118.4M
YoY Change -16.47% -59.73%
Cash & Equivalents $106.6M $84.61M $112.4M
Short-Term Investments $11.80M $18.00M $6.100M
Other Short-Term Assets $18.60M $18.90M $18.40M
YoY Change 1.09% 15.95%
Inventory $79.17M $75.90M $79.03M
Prepaid Expenses
Receivables $99.64M $88.47M $85.34M
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $314.7M $285.9M $301.2M
YoY Change 4.49% -28.25%
LONG-TERM ASSETS
Property, Plant & Equipment $49.48M $51.85M $50.46M
YoY Change -1.94% 86.54%
Goodwill $269.8M $267.5M $280.2M
YoY Change -3.73% 497.1%
Intangibles $118.9M $162.6M $180.3M
YoY Change -34.07% 1604.76%
Long-Term Investments $4.049M $4.508M
YoY Change
Other Assets $13.71M $17.50M $15.65M
YoY Change -12.39% 77.4%
Total Long-Term Assets $452.2M $500.1M $530.4M
YoY Change -14.74% 346.05%
TOTAL ASSETS
Total Short-Term Assets $314.7M $285.9M $301.2M
Total Long-Term Assets $452.2M $500.1M $530.4M
Total Assets $766.9M $785.9M $831.5M
YoY Change -7.78% 53.94%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $77.00M $74.30M $79.40M
YoY Change -3.02% 130.75%
Accrued Expenses $9.000M $9.500M $9.400M
YoY Change -4.26% -30.15%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due $33.77M $7.557M $407.0K
YoY Change 8196.56%
Total Short-Term Liabilities $157.6M $111.2M $110.8M
YoY Change 42.21% 83.02%
LONG-TERM LIABILITIES
Long-Term Debt $300.9M $330.9M $338.1M
YoY Change -11.02%
Other Long-Term Liabilities $38.05M $38.35M $36.60M
YoY Change 3.96% 335.38%
Total Long-Term Liabilities $338.9M $369.2M $374.7M
YoY Change -9.55% 4091.43%
TOTAL LIABILITIES
Total Short-Term Liabilities $157.6M $111.2M $110.8M
Total Long-Term Liabilities $338.9M $369.2M $374.7M
Total Liabilities $496.5M $480.4M $485.5M
YoY Change 2.26% 590.68%
SHAREHOLDERS EQUITY
Retained Earnings -$406.9M -$352.8M -$307.4M
YoY Change 32.39% 82.24%
Common Stock $680.3M $660.1M $647.2M
YoY Change 5.11% 3.9%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $270.4M $305.5M $338.5M
YoY Change
Total Liabilities & Shareholders Equity $766.9M $785.9M $831.5M
YoY Change -7.78% 53.94%

Cashflow Statement

Concept 2016 Q4 2016 Q1 2015 Q4
OPERATING ACTIVITIES
Net Income -$8.164M -$45.45M -$24.86M
YoY Change -67.16% -395.16%
Depreciation, Depletion And Amortization $15.50M $17.90M $17.50M
YoY Change -11.43% 237.74%
Cash From Operating Activities -$13.40M -$2.300M -$5.200M
YoY Change 157.69% -387.5%
INVESTING ACTIVITIES
Capital Expenditures -$3.900M -$6.600M -$4.600M
YoY Change -15.22% 94.12%
Acquisitions
YoY Change
Other Investing Activities -$5.700M -$18.10M $22.50M
YoY Change -125.33% -351.39%
Cash From Investing Activities -$9.600M -$24.70M $18.00M
YoY Change -153.33% -733.33%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -300.0K -300.0K -1.300M
YoY Change -76.92% -97.3%
NET CHANGE
Cash From Operating Activities -13.40M -2.300M -5.200M
Cash From Investing Activities -9.600M -24.70M 18.00M
Cash From Financing Activities -300.0K -300.0K -1.300M
Net Change In Cash -23.30M -27.30M 11.50M
YoY Change -302.61% 326.56%
FREE CASH FLOW
Cash From Operating Activities -$13.40M -$2.300M -$5.200M
Capital Expenditures -$3.900M -$6.600M -$4.600M
Free Cash Flow -$9.500M $4.300M -$600.0K
YoY Change 1483.33% 2.38%

Facts In Submission

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us-gaap Income Tax Expense Benefit
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us-gaap Income Tax Expense Benefit
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us-gaap Income Tax Expense Benefit
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us-gaap Increase Decrease In Deferred Income Taxes
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us-gaap Increase Decrease In Prepaid Deferred Expense And Other Assets
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us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Net Of Tax
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us-gaap Net Income Loss Attributable To Noncontrolling Interest
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us-gaap Other Comprehensive Income Loss Pension And Other Postretirement Benefit Plans Adjustment Net Of Tax
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CY2016Q4 us-gaap Other Comprehensive Income Loss Pension And Other Postretirement Benefit Plans Adjustment Net Of Tax
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us-gaap Other Comprehensive Income Loss Pension And Other Postretirement Benefit Plans Adjustment Net Of Tax
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us-gaap Other Comprehensive Income Loss Reclassification Adjustment From Aoci For Sale Of Securities Net Of Tax
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us-gaap Other Comprehensive Income Loss Reclassification Adjustment From Aoci For Sale Of Securities Net Of Tax
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us-gaap Other Comprehensive Income Unrealized Holding Gain Loss On Securities Arising During Period Net Of Tax
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us-gaap Other Comprehensive Income Unrealized Holding Gain Loss On Securities Arising During Period Net Of Tax
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us-gaap Other Nonoperating Income Expense
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us-gaap Payments For Restructuring
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us-gaap Payments Of Debt Issuance Costs
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us-gaap Payments To Acquire Available For Sale Securities
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us-gaap Payments To Acquire Businesses Net Of Cash Acquired
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us-gaap Payments To Acquire Equity Method Investments
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us-gaap Payments To Acquire Equity Method Investments
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us-gaap Payments To Acquire Property Plant And Equipment
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us-gaap Sales Revenue Goods Net
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us-gaap Sales Revenue Net
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us-gaap Selling General And Administrative Expense
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us-gaap Selling General And Administrative Expense
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us-gaap Weighted Average Number Of Diluted Shares Outstanding
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us-gaap Weighted Average Number Of Diluted Shares Outstanding
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us-gaap Weighted Average Number Of Share Outstanding Basic And Diluted
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CY2016Q4 us-gaap Weighted Average Number Of Share Outstanding Basic And Diluted
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us-gaap Weighted Average Number Of Share Outstanding Basic And Diluted
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:12pt;"><font style="font-family:Arial;font-size:12pt;font-weight:bold;">Concentration Risk</font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;">Potential exposure to concentration risk may impact revenue, trade receivables, marketable securities, and supply of wafers for our products. </font></div><div style="line-height:120%;text-indent:30px;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;">Customer concentration risk may impact revenue. Our top five end customers constituted approximately </font><font style="font-family:Arial;font-size:9pt;">32%</font><font style="font-family:Arial;font-size:9pt;"> of our revenue for the </font><font style="font-family:Arial;font-size:9pt;">third</font><font style="font-family:Arial;font-size:9pt;"> quarter of fiscal </font><font style="font-family:Arial;font-size:9pt;">2016</font><font style="font-family:Arial;font-size:9pt;">, compared to approximately </font><font style="font-family:Arial;font-size:9pt;">31%</font><font style="font-family:Arial;font-size:9pt;"> for the </font><font style="font-family:Arial;font-size:9pt;">third</font><font style="font-family:Arial;font-size:9pt;"> quarter of fiscal </font><font style="font-family:Arial;font-size:9pt;">2015</font><font style="font-family:Arial;font-size:9pt;">. Our top five end customers constituted approximately </font><font style="font-family:Arial;font-size:9pt;">25%</font><font style="font-family:Arial;font-size:9pt;"> of our revenue for the first </font><font style="font-family:Arial;font-size:9pt;">nine</font><font style="font-family:Arial;font-size:9pt;"> months of fiscal </font><font style="font-family:Arial;font-size:9pt;">2016</font><font style="font-family:Arial;font-size:9pt;">, compared to approximately </font><font style="font-family:Arial;font-size:9pt;">33%</font><font style="font-family:Arial;font-size:9pt;"> for the first </font><font style="font-family:Arial;font-size:9pt;">nine</font><font style="font-family:Arial;font-size:9pt;"> months of fiscal </font><font style="font-family:Arial;font-size:9pt;">2015</font><font style="font-family:Arial;font-size:9pt;">.</font></div><div style="line-height:120%;text-indent:30px;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;">Our largest end customer accounted for approximately </font><font style="font-family:Arial;font-size:9pt;">14%</font><font style="font-family:Arial;font-size:9pt;"> of total revenue in the </font><font style="font-family:Arial;font-size:9pt;">third</font><font style="font-family:Arial;font-size:9pt;"> quarter of fiscal </font><font style="font-family:Arial;font-size:9pt;">2016</font><font style="font-family:Arial;font-size:9pt;"> and </font><font style="font-family:Arial;font-size:9pt;">7%</font><font style="font-family:Arial;font-size:9pt;"> of total revenue in the first </font><font style="font-family:Arial;font-size:9pt;">nine</font><font style="font-family:Arial;font-size:9pt;"> months of fiscal </font><font style="font-family:Arial;font-size:9pt;">2016</font><font style="font-family:Arial;font-size:9pt;">. In the </font><font style="font-family:Arial;font-size:9pt;">third</font><font style="font-family:Arial;font-size:9pt;"> quarter and first </font><font style="font-family:Arial;font-size:9pt;">nine</font><font style="font-family:Arial;font-size:9pt;"> months of fiscal 2015, our largest end customer accounted for approximately </font><font style="font-family:Arial;font-size:9pt;">9%</font><font style="font-family:Arial;font-size:9pt;"> and </font><font style="font-family:Arial;font-size:9pt;">11%</font><font style="font-family:Arial;font-size:9pt;">, respectively, of total revenue. No other customers accounted for more than 10% of total revenue during these periods.</font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;">Sales through distributors have historically accounted for a significant portion of our total revenue. Revenue attributable to resale of products by our sell-through distributors for the </font><font style="font-family:Arial;font-size:9pt;">third</font><font style="font-family:Arial;font-size:9pt;"> quarter of fiscal </font><font style="font-family:Arial;font-size:9pt;">2016</font><font style="font-family:Arial;font-size:9pt;"> and fiscal </font><font style="font-family:Arial;font-size:9pt;">2015</font><font style="font-family:Arial;font-size:9pt;"> was </font><font style="font-family:Arial;font-size:9pt;">62%</font><font style="font-family:Arial;font-size:9pt;"> and </font><font style="font-family:Arial;font-size:9pt;">46%</font><font style="font-family:Arial;font-size:9pt;">, respectively. Revenue attributable to resale of products by our sell-through distributors for the first </font><font style="font-family:Arial;font-size:9pt;">nine</font><font style="font-family:Arial;font-size:9pt;"> months of fiscal </font><font style="font-family:Arial;font-size:9pt;">2016</font><font style="font-family:Arial;font-size:9pt;"> and fiscal </font><font style="font-family:Arial;font-size:9pt;">2015</font><font style="font-family:Arial;font-size:9pt;"> was </font><font style="font-family:Arial;font-size:9pt;">58%</font><font style="font-family:Arial;font-size:9pt;"> and </font><font style="font-family:Arial;font-size:9pt;">45%</font><font style="font-family:Arial;font-size:9pt;">, respectively. Our two largest distributor groups also account for a substantial portion of our trade receivables. At </font><font style="font-family:Arial;font-size:9pt;">October 1, 2016</font><font style="font-family:Arial;font-size:9pt;"> and </font><font style="font-family:Arial;font-size:9pt;">January 2, 2016</font><font style="font-family:Arial;font-size:9pt;">, one distributor group accounted for </font><font style="font-family:Arial;font-size:9pt;">35%</font><font style="font-family:Arial;font-size:9pt;"> and </font><font style="font-family:Arial;font-size:9pt;">29%</font><font style="font-family:Arial;font-size:9pt;">, respectively, and the other accounted for </font><font style="font-family:Arial;font-size:9pt;">31%</font><font style="font-family:Arial;font-size:9pt;"> and </font><font style="font-family:Arial;font-size:9pt;">15%</font><font style="font-family:Arial;font-size:9pt;">, respectively, of gross trade receivables. No other distributor groups or end customers accounted for more than 10% of gross trade receivables at these dates.</font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;">Concentration of credit risk with respect to trade receivables is mitigated by our credit and collection process, including active management of collections, credit limits, routine credit evaluations for essentially all customers, and secure transactions with letters of credit or advance payments where appropriate. We regularly review our allowance for doubtful accounts and the aging of our accounts receivable.</font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;">Accounts receivable do not bear interest and are shown net of allowances for doubtful accounts of </font><font style="font-family:Arial;font-size:9pt;">$7.2 million</font><font style="font-family:Arial;font-size:9pt;"> at </font><font style="font-family:Arial;font-size:9pt;">October 1, 2016</font><font style="font-family:Arial;font-size:9pt;"> and </font><font style="font-family:Arial;font-size:9pt;">$0.6 million</font><font style="font-family:Arial;font-size:9pt;"> at </font><font style="font-family:Arial;font-size:9pt;">January 2, 2016</font><font style="font-family:Arial;font-size:9pt;">. Towards the end of our fiscal quarter, we received notice from one of our distributor groups that indicated a high likelihood of their bankruptcy. As a result, we wrote off our accounts receivable, net of deferred revenue, from the distributor group resulting in an increase in allowance for doubtful accounts of </font><font style="font-family:Arial;font-size:9pt;">$6.6 million</font><font style="font-family:Arial;font-size:9pt;"> and bad debt expense of </font><font style="font-family:Arial;font-size:9pt;">$7.5 million</font><font style="font-family:Arial;font-size:9pt;"> for both the </font><font style="font-family:Arial;font-size:9pt;">third</font><font style="font-family:Arial;font-size:9pt;"> quarter and first </font><font style="font-family:Arial;font-size:9pt;">nine</font><font style="font-family:Arial;font-size:9pt;"> months of fiscal </font><font style="font-family:Arial;font-size:9pt;">2016</font><font style="font-family:Arial;font-size:9pt;">. Bad debt expense was negligible for the </font><font style="font-family:Arial;font-size:9pt;">third</font><font style="font-family:Arial;font-size:9pt;"> quarter and first </font><font style="font-family:Arial;font-size:9pt;">nine</font><font style="font-family:Arial;font-size:9pt;"> months of fiscal </font><font style="font-family:Arial;font-size:9pt;">2015</font><font style="font-family:Arial;font-size:9pt;">.</font></div><div style="line-height:120%;text-indent:30px;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;">We place our investments primarily through one financial institution and mitigate the concentration of credit risk by limiting the maximum portion of the investment portfolio which may be invested in any one instrument. Our investment policy defines approved credit ratings for investment securities. Investments on-hand in marketable securities consisted primarily of money market instruments, &#8220;AA&#8221; or better corporate notes and bonds and commercial paper, and U.S. government agency obligations. See Note 3 for a discussion of the liquidity attributes of our marketable securities.</font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;">We rely on a limited number of foundries for our wafer purchases, including Fujitsu Limited, Seiko Epson Corporation, Taiwan Semiconductor Manufacturing Company, Ltd, and United Microelectronics Corporation. We seek to mitigate the concentration of supply risk by establishing, maintaining and managing multiple foundry relationships, but certain of our products are sourced from a single foundry.</font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;"><br clear="none"/></font></div></div>
us-gaap Property Plant And Equipment Impairment
PropertyPlantAndEquipmentImpairment
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:12pt;"><font style="font-family:Arial;font-size:12pt;font-weight:bold;">Property and Equipment</font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;">Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method for financial reporting purposes over the estimated useful lives of the related assets, generally </font><font style="font-family:Arial;font-size:9pt;">three</font><font style="font-family:Arial;font-size:9pt;"> to </font><font style="font-family:Arial;font-size:9pt;">five</font><font style="font-family:Arial;font-size:9pt;"> years for equipment and software, </font><font style="font-family:Arial;font-size:9pt;">one</font><font style="font-family:Arial;font-size:9pt;"> to </font><font style="font-family:Arial;font-size:9pt;">three</font><font style="font-family:Arial;font-size:9pt;"> years for tooling, and </font><font style="font-family:Arial;font-size:9pt;">thirty</font><font style="font-family:Arial;font-size:9pt;"> years for buildings. Upon disposal of property and equipment, the accounts are relieved of the costs and related accumulated depreciation and amortization, and resulting gains or losses are reflected in the Consolidated Statements of Operations for recognized gains and losses or in the Consolidated Balance Sheets for deferred gains and losses. Repair and maintenance costs are expensed as incurred.</font></div></div>
us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:12pt;"><font style="font-family:Arial;font-size:12pt;font-weight:bold;">Use of Estimates</font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;">The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and classification of assets, such as marketable securities, accounts receivable, inventory, goodwill (including the assessment of reporting units), intangible assets, current and deferred income taxes, accrued liabilities (including restructuring charges and bonus arrangements), deferred income and allowances on sales to sell-through distributors, disclosure of contingent assets and liabilities at the date of the financial statements, amounts used in acquisition valuations and purchase accounting, and the reported amounts of product revenue, licensing and services revenue, and expenses during the fiscal periods presented. Actual results could differ from those estimates.</font></div><div style="line-height:120%;font-size:9pt;"><font style="font-family:Arial;font-size:9pt;"><br clear="none"/></font></div></div>

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