0001193125-11-304675 | 10-Q | XBRL Viewer

Document And Entity Information - shares	9 Months Ended
Document And Entity Information - shares	Sep. 30, 2011	Nov. 07, 2011
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Entity Registrant Name	NOVATEL WIRELESS INC
Entity Central Index Key	0001022652
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		32,059,715

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2011	Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 21,927	$ 17,375
Marketable securities	33,391	59,775
Accounts receivable, net of allowance for doubtful accounts of $ 279 at September 30, 2011 and $228 at December 31, 2010	54,221	63,570
Inventories	49,149	43,094
Deferred tax assets, net	214	218
Prepaid expenses and other	3,682	6,961
Total current assets	162,584	190,993
Property and equipment, net of accumulated depreciation of $ 56,565 at September 30, 2011 and $48,223 at December 31, 2010	19,900	21,281
Marketable securities	9,101	20,676
Intangible assets, net of accumulated amortization of $9,552 at September 30, 2011 and $4,019 at December 31, 2010	37,251	44,265
Goodwill	19,535	22,258
Deferred tax assets, net	2,142	2,103
Other assets	713	532
Total assets	251,226	302,108
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	54,032	77,769
Accrued expenses	27,618	26,050
Total current liabilities	81,650	103,819
Capital lease obligations, long-term	0	55
Other long-term liabilities	2,275	12,831
Total liabilities	83,925	116,705
Stockholders' equity:
Preferred stock, par value $0.001; 2,000 shares authorized and none outstanding	0	0
Common stock, par value $0.001; 50,000 shares authorized, 32,060 and 31,852 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively	32	32
Additional paid-in capital	427,710	424,270
Accumulated other comprehensive (loss) income	(33)	21
Accumulated deficit	(235,408)	(213,920)
Total stockholders' equity before treasury stock	192,301	210,403
Treasury stock at cost; 2,436 common shares at September 30, 2011 and December 31, 2010	(25,000)	(25,000)
Total stockholders' equity	167,301	185,403
Total liabilities and stockholders' equity	$ 251,226	$ 302,108

Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2011	Dec. 31, 2010
Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 279	$ 228
Property and equipment, accumulated depreciation	56,565	48,223
Intangible assets, accumulated amortization	$ 9,552	$ 4,019
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	2,000	2,000
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	50,000	50,000
Common stock, shares issued	32,060	31,852
Common stock, shares outstanding	32,060	31,852
Treasury stock, shares	2,436	2,436

Consolidated Statements Of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Consolidated Statements Of Operations [Abstract]
Net revenues	$ 113,263	$ 75,602	$ 293,068	$ 219,664
Cost of net revenues	86,573	62,412	234,202	175,113
Gross profit	26,690	13,190	58,866	44,551
Operating costs and expenses:
Research and development	15,126	11,576	45,517	34,070
Sales and marketing	7,211	4,163	22,805	15,258
General and administrative	6,243	3,833	16,550	14,309
Goodwill impairment loss	3,514	0	3,514	0
Amortization of purchased intangible assets	644	0	1,699	0
Total operating costs and expenses	32,738	19,572	90,085	63,637
Operating loss	(6,048)	(6,382)	(31,219)	(19,086)
Other income (expense):
Interest income (expense), net	60	(2,292)	303	(2,698)
Other income (expense), net	(679)	420	(1,164)	1,671
Loss before income taxes	(6,667)	(8,254)	(32,080)	(20,113)
Income tax expense (benefit)	(11,165)	(1,149)	(10,592)	12,420
Net income (loss)	$ 4,498	$ (7,105)	$ (21,488)	$ (32,533)
Per share data:
Basic	$ 0.14	$ (0.22)	$ (0.67)	$ (1.04)
Diluted	$ 0.14	$ (0.22)	$ (0.67)	$ (1.04)
Weighted average shares used in computation of basic and diluted net income (loss) per share:
Basic	32,057	31,615	32,005	31,414
Diluted	32,370	31,615	32,005	31,414

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Cash flows from operating activities:
Net loss	$ (21,488)	$ (32,533)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of debt issuance costs	0	541
Loan fees recognized on extinguishment of debt	0	2,370
Depreciation and amortization	13,782	7,970
Goodwill impairment	3,514	0
Impairment loss on intangible assets and equipment	133	146
Provision for bad debts	59	141
Net impairment loss on marketable securities	346	0
Inventory provision	576	1,030
Share-based compensation expense	4,057	4,695
Excess tax benefits from equity based compensation	0	(89)
Non-cash income tax expense (benefit)	(11,287)	11,579
Changes in assets and liabilities:
Accounts receivable	9,046	3,739
Inventories	(6,634)	7,961
Prepaid expenses and other assets	3,484	(284)
Accounts payable	(23,941)	10,569
Accrued expenses, income taxes, and other	1,651	(3,887)
Net cash provided by (used in) operating activities	(26,702)	13,948
Cash flows from investing activities:
Purchases of property and equipment	(4,928)	(5,585)
Purchases of intangible assets	(219)	(110)
Purchases of securities	(21,366)	(155,009)
Securities maturities/sales	58,539	164,187
Net cash provided by investing activities	32,026	3,483
Cash flows from financing activities:
Proceeds from the issuance of short-term debt, net of issuance costs	12,000	27,415
Principal repayments of short-term debt	(12,000)	(30,000)
Principal payments under capital lease obligations	(81)	(105)
Proceeds from stock option exercises net of taxes paid on vested restricted stock units	(617)	580
Excess tax benefits from equity based compensation	0	89
Remittance from restricted funds	0	188,890
Deposit of restricted funds	0	(188,890)
Net cash used in financing activities	(698)	(2,021)
Effect of exchange rates on cash and cash equivalents	(74)	682
Net increase in cash and cash equivalents	4,552	16,092
Cash and cash equivalents, beginning of period	17,375	100,025
Cash and cash equivalents, end of period	21,927	116,117
Supplemental disclosures of cash flow information:
Interest	7	216
Income taxes	194	299
Supplemental disclosures of non-cash investing activities:
Building rent incentives to fund leasehold improvements	1,869	0
Supplemental disclosures of non-cash financing activities:
Marketable equity securities received in settlement of note receivable	384	0
Accrued debt issuance costs	$ 0	$ 326

Basis Of Presentation	9 Months Ended
Basis Of Presentation	Sep. 30, 2011
Basis Of Presentation [Abstract]
Basis Of Presentation	1. Basis of Presentation The information contained herein has been prepared by Novatel Wireless, Inc. (the "Company") in accordance with the rules of the Securities and Exchange Commission. The information at September 30, 2011 and the results of the Company's operations for the three and nine months ended September 30, 2011 and 2010 are unaudited. The consolidated financial statements reflect all adjustments, consisting of only normal recurring accruals, which are, in the opinion of management, necessary for a fair statement of the results of the interim periods presented. These consolidated financial statements and notes hereto should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2010 ("2010 Form 10-K"). The accounting policies used in preparing these consolidated financial statements are the same as those described in the 2010 Form 10-K with the exception of new accounting pronouncements adopted in 2011. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for any other interim period or for the year as a whole. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues, expenses and disclosures of contingent assets and liabilities. Actual results could differ materially from these estimates. Significant estimates include allowance for doubtful accounts receivable, provision for excess and obsolete inventory, valuation of intangible and long-lived assets, valuation of goodwill, valuation of contingent consideration, royalty costs, provision for warranty costs, income taxes and share-based compensation expense. Difficult global economic conditions, tight credit markets, volatile equity, foreign currency and energy markets and declines in consumer spending have combined to increase the uncertainty inherent in these estimates and assumptions. As future events and their effects cannot be determined with precision, particularly those related to the condition of the economy, actual results could differ significantly from these estimates. New Accounting Pronouncements In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-08 "Intangibles-Goodwill and Other (Topic 350) — Testing Goodwill for Impairment." ASU 2011-08 amends the previous guidance under Topic 350 which required an entity to test goodwill for impairment, on at least an annual basis, by performing the two-step goodwill impairment test described in Topic 350. The amendments in ASU 2011-08 permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more likely than not threshold is defined as having likelihood of more than 50 percent. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity's financial statements for the most recent annual or interim period have not yet been issued. We are assessing the impact of ASU 2011-08 on our financial statement results. In June 2011, the FASB issued ASU No. 2011-05 "Comprehensive Income (Topic 220) — Presentation of Comprehensive Income." ASU 2011-05 requires that all nonowner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 is effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2011. We are assessing the impact of ASU 2011-05 on our comprehensive income presentation. Prior Period Adjustment In the third quarter of 2011, the Company identified errors in its consolidated financial statements for the year ended December 31, 2010 and for each of the quarterly periods ended March 31, 2011 and June 30, 2011. The errors were due to the amount of recorded goodwill in connection with the 2010 acquisition of Enfora, Inc. ("Enfora"). The errors were made in connection with the Company's initial allocation of the consideration transferred in the acquisition where the Company understated goodwill and overstated acquired intangibles at the time of the acquisition by $1.7 million (see Notes 4 and 5) of this report. The Company analyzed the potential impact of these items and concluded that while the accumulation of this error was significant to the three months ended September 30, 2011, the correction would not be material to any individual periods, taking in to account the requirements of the Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB 108). In accordance with the relevant guidance, management evaluated the materiality of the errors from a qualitative and quantitative perspective. Based on such evaluation, the Company concluded that correcting the cumulative error of $631,000 for the year ended December 31, 2010 is expected to be immaterial to the currently estimated full year results for 2011 and correcting the error did not have a material impact on any individual prior period financial statements or affect the trend of financial results. Accordingly, during the third quarter of 2011, the Company adjusted the carrying value of the Enfora intangibles by $1.7 million to reflect the proper allocation between goodwill and acquired intangibles and recorded cumulative adjustments of $439,000 in the statement of operations associated with the revised amortization of intangible assets and related income tax affects.

- Definition

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

+ References

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+ Details

Merger And Acquisition Activities

9 Months Ended

Sep. 30, 2011

Merger And Acquisition Activities [Abstract]

Merger And Acquisition Activities

2. Merger and Acquisition Activities

Acquisition of Enfora

On November 30, 2010, the Company completed the acquisition of Enfora, a provider of intelligent asset-management solutions utilizing wireless technology and machine-to-machine (M2M) communications. The acquisition of Enfora diversifies the Company's customer base and product lines into adjacent markets and advances the Company's strategy of providing intelligent devices to more end markets—enterprise, consumer and vertical applications.

Enfora's results of operations and estimated fair value of assets acquired and liabilities assumed are included in the Company's consolidated financial statements from the date of acquisition. During the three months ended September 30, 2011, the Company completed its purchase price allocation related to the 2010 acquisition as discussed in Note 1. Also, during the third quarter of 2011, the Company made a $297,000 adjustment to increase Enfora net deferred tax assets, with a corresponding dollar amount decrease to goodwill, based on completed studies of available tax benefits existing as of the date of acquisition.

The revenue and operating results contributed by Enfora during the three and nine months ended September 30, 2011 are disclosed in the Note 8 of this report.

Actual and Pro Forma Results of Enfora Acquisition

The following table presents the unaudited results for the three and nine months ended September 30, 2011 and pro forma financial information for the three and nine months ended September 30, 2010. The unaudited pro forma financial information for the three and nine months ended September 30, 2010 combines the results of operations of Novatel Wireless and Enfora as though the companies had been combined as of the beginning of fiscal 2009 as previously reported in the 2010 Form 10-K. The pro forma financial information is presented for informational purposes only. The pro forma financial information is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2009. The following unaudited results and pro forma financial information presented include amortization charges for acquired intangible assets, inventory fair value adjustments, eliminations of intercompany transactions, adjustments to interest expense, reduction in share-based compensation and related tax effects (in thousands):


	Three Months Ended September 30,					Nine Months Ended September 30,
	2011		2010⁽¹⁾			2011			2010⁽¹⁾
Net revenue	$	113,263	$	90,827		$	293,068		$	266,118
Net income (loss)		4,498		(9,225	)		(21,488	)		(23,847	)

(1)	Pro forma results

Enfora acquisition consideration

Under the terms of the acquisition agreement, the Company paid cash consideration of $64.5 million and additional cash consideration of $13.0 million in exchange for an agreed upon amount of Enfora working capital. The Company also agreed to pay additional cash consideration ("contingent consideration") of up to $6.0 million based on the operating results of Enfora for the 15 month period from October 1, 2010 to December 31, 2011. The estimated fair value of this contingent consideration at the acquisition date was $0.9 million, resulting in total estimated cash to be paid of $78.4 million. During the quarter ended March 31, 2011, the Company revised its estimate of contingent consideration to $0 and accordingly reflected this change as a benefit to general and administrative expenses for the quarter ended March 31, 2011. There were no changes in the fair value of the contingent consideration recorded in the three months ended September 30, 2011 as the Company continues to believe the operating results necessary to receive payment of the contingent consideration will not be achieved.

Cinterion

In June 2010, the Company submitted a bid to purchase certain assets of Cinterion Wireless Modules ("Cinterion"), a company in the cellular machine-to-machine communications industry. The Company was not the successful bidder at the conclusion of the process on June 28, 2010.

In June 2010, the Company borrowed $30.0 million, net of $2.2 million in lender fees, under a bridge loan facility in connection with its bid. In accordance with bidding procedures, during June 2010, the Company deposited into escrow an amount in Euros equal to its bid price using cash and cash equivalents, proceeds from the sale of marketable securities, and borrowings under the $30.0 million bridge loan facility. The escrowed funds are reflected as a deposit of restricted funds in the accompanying Consolidated Statement of Cash Flows for the nine months ended September 30, 2010. The escrowed funds were returned to the Company in July 2010.

While the Company's Euro funds were held in escrow, the Company engaged in hedging transactions to address foreign currency risk at a cost of $1.2 million, which amount was recorded in other income (expense), net, in the Consolidated Statement of Operations during the second quarter ended June 30, 2010.

During the second quarter ended June 30, 2010, the Company recorded a foreign currency gain of $2.9 million, which was recorded in other income (expense), net, in connection with the conversion of its Euro-denominated escrowed funds into U.S. dollars following completion of the auction on June 28, 2010.

Pursuant to authoritative accounting guidance, the $2.2 million in lender fees on the $30.0 million bridge loan facility were recorded as a discount to amounts outstanding under the facility and amortized over the stated term of the facility which was scheduled to mature on September 8, 2010. During June 2010, the Company also incurred $660,000 in professional fees attributable to the bridge facility, which were capitalized and amortized over the stated term of the facility. During the second quarter ended June 30, 2010, the Company recognized $687,000 in interest expense related to this facility, which primarily consisted of the amortization of lender and professional fees.

In connection with its bid, the Company estimated that during the second quarter of 2010, it had incurred $2.0 million in legal, advisory and professional fees unrelated to the bridge loan facility, which were recorded as accrued expenses on the Consolidated Balance Sheet and classified as general and administrative expenses in the Consolidated Statement of Operations. During the third quarter of 2010, the Company reduced its estimate of professional fees by approximately $700,000 based upon information we received during the third quarter of 2010 that indicated the reduction to the original estimated liability was appropriate.

In July 2010, the Company repaid all amounts outstanding under the bridge loan facility.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6972119&loc=d3e1497-128463

Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6972119&loc=d3e1486-128463

Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6972119&loc=d3e1383-128463

+ Details

Balance Sheet Details

9 Months Ended

Sep. 30, 2011

Balance Sheet Details [Abstract]

Balance Sheet Details

3. Balance Sheet Details

Marketable Securities

The Company's portfolio of available-for-sale securities by contractual maturity consists of the following (in thousands):

		$00,000		$00,000		$00,000			$00,000		$00,000
September 30, 2011	Maturity in Years		Amortized Cost		Gross Unrealized Losses			Gross Unrealized Gains		Estimated Fair Value
Available-for-sale:
Corporate debentures / bonds		1 or less	$	23,333	$	(17	)	$	0	$	23,316
Municipal bonds		1 or less		3,287		(2	)		0		3,285
Certificates of deposit		1 or less		2,640		0			7		2,647
Government agency securities		1 or less		4,106		(1	)		0		4,105
Marketable equity securities		N/A		38		0			0		38

Total short-term marketable securities				33,404		(20	)		7		33,391

Available-for-sale:
Government agency securities		1 to 2		7,932		(21	)		0		7,911
Muncipal bonds		1 to 2		1,189		0			1		1,190

Total long-term marketable securities				9,121		(21	)		1		9,101

			$	42,525	$	(41	)	$	8	$	42,492

		$00,000		$00,000		$00,000			$00,000		$00,000
December 31, 2010	Maturity in Years		Amortized Cost		Gross Unrealized Losses			Gross Unrealized Gains		Estimated Fair Value
Available-for-sale:
Corporate debenture/bonds		1 or less	$	33,356	$	(3	)	$	31	$	33,384
Municipal bonds		1 or less		5,259		(4	)		0		5,255
Certificates of deposit		1 or less		925		0			0		925
Government agency securities		1 or less		20,207		0			4		20,211

Total short-term marketable securities				59,747		(7	)		35		59,775

Available-for-sale:
Corporate debenture/bonds		1 to 2		8,808		(14	)		0		8,794
Certificates of deposit		1 to 2		2,397		0			6		2,403
Government agency securities		1 to 2		9,478		0			1		9,479

Total long-term marketable securities				20,683		(14	)		7		20,676

			$	80,430	$	(21	)	$	42	$	80,451

The Company's available-for-sale securities are carried on the Consolidated Balance Sheet at fair market value with the related unrealized gains and losses included in accumulated other comprehensive (loss) income on the Consolidated Balance Sheet, which is a separate component of stockholders' equity. Realized gains and losses on the sale of available-for-sale marketable securities are determined using the specific-identification method.

As of September 30, 2011, the Company had a net unrealized loss of $33,000 in accumulated other comprehensive (loss) income. The Company's net unrealized loss is the result of market conditions affecting its fixed-income, debt and equity securities, which are included in accumulated other comprehensive (loss) income on the Consolidated Balance Sheet for the period then ended.

As of September 30, 2011, the Company's investment portfolio included $385,000 of marketable equity securities at original cost, with a fair value of $38,000. These securities are currently traded on the Over the Counter Bulletin Board (OTCBB) and are not traded on major exchanges such as the New York Stock Exchange. During the three and nine months ended September 30, 2011, the Company recorded an other-than-temporary loss of $193,000 and $347,000, respectively, within other income (expense), net in the Consolidated Statement of Operations.

Inventories

Inventories consist of the following (in thousands):


	September 30, 2011		December 31, 2010
Finished goods	$	43,259	$	36,764
Raw materials and components		5,890		6,330

	$	49,149	$	43,094

Accrued Expenses

Accrued expenses consist of the following (in thousands):


	September 30, 2011		December 31, 2010
Royalties	$	6,201	$	6,461
Payroll and related expenses		6,985		5,704
Product warranty		1,729		2,279
Market development fund and price protection		1,646		1,452
Deferred rent		1,099		1,092
Professional fees		910		1,103
Other		9,048		7,959

	$	27,618	$	26,050

Accrued Warranty Obligations

Accrued warranty obligations consist of the following (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Warranty liability at beginning of period	$	1,709		$	2,467		$	2,279		$	3,039
Additions charged to operations		1,035			262			2,238			1,014
Deductions from liability		(1,015	)		(649	)		(2,788	)		(1,973	)

Warranty liability at end of period	$	1,729		$	2,080		$	1,729		$	2,080

The Company accrues warranty costs based on estimates of future warranty-related replacement, repairs or rework of products. The Company generally provides one to three years of coverage for products following the date of purchase and the Company accrues the estimated cost of warranty coverage as a component of cost of revenues in the Consolidated Statements of Operations at the time revenue is recognized. In estimating our future warranty obligations we consider various relevant factors, including the historical frequency and volume of qualifying claims, and the cost to replace or repair products under warranty.

Intangible Assets

9 Months Ended

Sep. 30, 2011

Intangible Assets [Abstract]

Intangible Assets

4. Intangible Assets

The Company's amortizable purchased intangible assets resulting from its acquisition of Enfora are composed of (in thousands):


	September 30, 2011												December 31, 2010
	Gross		Purchase Price Adjustment ⁽ⁱ⁾			Adjusted Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Developed technology	$	29,200	$	(3,200	)	$	26,000	$	(3,201	)	$	22,799	$	29,200	$	(371	)	$	28,829
Trade name		12,800		0			12,800		(1,067	)		11,733		12,800		(107	)		12,693
Other		2,220		1,500			3,720		(1,409	)		2,311		2,220		(356	)		1,864

Total amortizable purchased intangible assets	$	44,220	$	(1,700	)	$	42,520	$	(5,677	)	$	36,843	$	44,220	$	(834	)	$	43,386

(i)

During the three months ended September 30, 2011, the Company corrected its purchase price allocations related to the 2010 Enfora acquisition (see Note 1). The net impact of the correction was a $1.7 million decrease to the purchased intangible assets and a corresponding increase to goodwill (see Note 5). Amortization expense for the third quarter of 2011 was reduced by $173,000 to correct for the impact to accumulated amortization resulting from the corrections to the purchased intangible assets.

The following table presents details of the amortization of purchased intangible assets of Enfora included in the cost of net revenues and operating costs and expenses categories (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Cost of net revenues	$	705	$	0	$	3,144	$	0
General and administrative expenses		644		0		1,699		0

Total amortization expense	$	1,349	$	0	$	4,843	$	0

The following table presents details of the amortization of existing amortizable purchased intangible assets of Enfora that is currently estimated to be expensed in the remainder of 2011 and thereafter (in thousands):


Fiscal year:	Amount
2011 (remaining 3 months)	$	1,481
2012		5,571
2013		5,333
2014		5,333
2015		5,226
2016		4,053
Thereafter		9,846

Total	$	36,843

Additionally, at September 30, 2011 and December 31, 2010, the Company had $409,000 and $879,000, respectively, of acquired software licenses, net, representing rights to use certain software necessary for the development and commercial sale of the Company's products.

Goodwill

9 Months Ended

Sep. 30, 2011

Goodwill [Abstract]

Goodwill

5. Goodwill

The changes in the carrying amount of goodwill for the nine months ended September 30, 2011, are as follows (in thousands):

		$22,258			$22,258
	M2M Products and Solutions
	2011			2010
Balance at January 1,	$	22,258		$	0
Goodwill acquisition price correction (Note 1)		1,700			0
Net deferred tax asset related adjustment due to goodwill correction		(612	)		0
Completion of deferred tax asset valuation (Note 2)		(297	)		0
Goodwill impairment loss during the period		(3,514	)		0

Balance at September 30,	$	19,535		$	0

The Company tests goodwill for impairment annually during the fourth quarter of each fiscal year. If an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value, goodwill will be evaluated for impairment between annual tests. The impairment test involves a comparison of the fair value of its reporting unit as defined under ASC 350, Intangibles-Goodwill and Other, to carrying amounts. If the reporting unit's aggregated carrying amount exceeds its fair value, then an indication exists that the reporting unit's goodwill may be impaired. The impairment to be recognized is measured by the amount by which the carrying value of the reporting unit being measured exceeds its fair value, up to the total amount of its assets.

During the third quarter of 2011, the Company experienced a sustained, significant decline in its stock price and based on actual and forecasted operating results of the M2M products and solutions reporting unit, the Company determined there were sufficient indicators of impairment present to require an interim impairment analysis.

Based upon fair value tests performed during the third quarter, the Company recorded a pre-tax non-cash impairment charge of $3.5 million in connection with the goodwill related to the M2M reporting unit. The fair value of the M2M reporting unit was estimated with the assistance of an independent third-party appraisal. As of November 9, 2011, the Company has not finalized its review of this impairment analysis due to the limited time period from the first indication of potential impairment to the date of this filing and the complexities involved in estimating the fair value of certain assets and liabilities. Any adjustment to that estimated charge resulting from the completion of the measurement of the impairment loss will be recognized in the fourth quarter of 2011.

Fair Value Measurement Of Assets And Liabilities

9 Months Ended

Sep. 30, 2011

Fair Value Measurement Of Assets And Liabilities [Abstract]

Fair Value Measurement Of Assets And Liabilities

6. Fair Value Measurement of Assets and Liabilities

The Company's fair value measurements relate to its cash equivalents, marketable debt securities, and marketable equity securities, which are classified pursuant to authoritative guidance for fair value measurements. The Company places its cash equivalents and marketable debt securities in instruments that meet credit quality standards, as specified in its investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issue, issuer or type of instrument.

Our financial instruments consist principally of cash and cash equivalents, short-term and long-term marketable securities, and short-term and long-term debt. The Company's cash and cash equivalents consist of its investment in money market securities and treasury bills. The Company's marketable securities consist primarily of government agency securities, municipal bonds, time deposits and investment-grade corporate bonds. From time to time, the Company may utilize foreign exchange forward contracts. These contracts are valued using pricing models that take into account the currency rates as of the balance sheet date (Level 2 of the fair value hierarchy).

Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows:

Level 1: Pricing inputs are based on quoted market prices for identical assets or liabilities in active markets (e.g., NYSE). Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Pricing inputs include benchmark yields, trade data, reported trades and broker dealer quotes, two-sided markets and industry & economic events, yield to maturity, Municipal Securities Rule Making Board reported trades and vendor trading platform data. Level 2 includes those financial instruments that are valued using various pricing services and broker pricing information including Electronic Communication Networks and broker feeds.

Level 3: Pricing inputs include significant inputs that are generally less observable from objective sources, including the Company's own assumptions.

The fair value of the majority of our cash and cash equivalents and marketable equity securities were determined based on Level 1 inputs. The fair value of our marketable debt securities was determined based on Level 2 inputs. We do not have any securities in the Level 3 category. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

The following table summarizes the Company's financial instruments measured at fair value on a recurring basis in accordance with the authoritative guidance for fair value measurements as of September 30, 2011 (in thousands):


Description	September 30, 2011		Level 1		Level 2		Level 3
Assets:
Cash equivalents
Money market funds	$	137	$	137	$	0	$	0
US Treasury notes		4,871		0		4,871		0

Total cash equivalents		5,008		137		4,871		0

Short-term marketable securities:
Available-for-sale:
Corporate debentures / bonds		23,316		0		23,316		0
Muncipal bonds		3,285		0		3,285		0
Certificates of deposit		2,647		0		2,647		0
Government agency securities		4,105		0		4,105		0
Marketable equity securities		38		38		0		0

Total short-term marketable securities		33,391		38		33,353		0

Long-term marketable securities:
Available-for-sale:
Muncipal bonds		7,911		0		7,911		0
Government agency securities		1,190		0		1,190		0

Total long-term marketable securities		9,101		0		9,101		0


Total financial assets	$	47,500	$	175	$	47,325	$	0

There were no transfers between Level 1 and Level 2 securities during the nine months ended September 30, 2011. All of our long-term marketable debt securities had maturities of between one and two years in duration at September 30, 2011.

The table below presents Level 3 activity for our contingent consideration liability for the nine months ended September 30, 2011 (in thousands):


Contingent consideration liability	Level 3
Beginning balance at January 1, 2011	$	(880	)
Adjustments		880

Ending balance at September 30, 2011	$	—

As of September 30, 2011, the Company had no outstanding foreign currency exchange forward contracts. On December 31, 2010, the Company recorded an unrealized loss of $8,000 on its outstanding foreign currency exchange forward contracts. These contracts were utilized to hedge the Company's Euro-denominated cash and accounts receivable balances.

During the three and nine months ended September 30, 2011, the Company recorded foreign currency losses on Euro-denominated foreign currency exchange forward contracts of approximately $0 and $19,000, respectively. During the same periods in 2010, the Company recorded losses on its foreign currency exchange forward contracts of approximately $857,000 and $498,000, respectively. All recorded gains and losses on foreign currency exchange transactions are recorded in other (income) expense.

- Definition

Tabular disclosure of the fair value measurement of assets and liabilities which includes [financial] instruments measured at fair value that are classified in stockholders' equity. Such assets and liabilities may be measured on a recurring or nonrecurring basis. The disclosures which may be required or desired include: (1) for assets and liabilities measured on a recurring basis, disclosure may include: (a) the fair value measurements at the reporting date; (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); (c) for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (ii) purchases, sales, issuances, and settlements (net); (iii) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs); (d) the amount of the total gains or losses for the period in subparagraph (c) (i) above included in earnings (or changes in net assets) that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of income (or activities); (e) the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period and (2) for assets and liabilities that are measured at fair value on a nonrecurring basis (for example, impaired assets) disclosure may include, in addition to (a) above: (a) the reasons for the fair value measurements recorded; (b) the same as (b) above; (c) for fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs; and (d) the valuation technique(s) used to measure fair value and a discussion of changes, if any, in the valuation technique(s) used to measure similar assets and/or liabilities in prior periods. Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 10
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 32
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 33
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 6
-Footnote 4
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19207-110258

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19190-110258

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19279-110258

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258

+ Details

Share-Based Compensation

9 Months Ended

Sep. 30, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation

7. Share-Based Compensation

The Company included the following amounts for share-based compensation awards in the accompanying unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2011 and 2010 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Cost of revenues	$	149	$	156	$	383	$	473
Research and development		529		545		1,337		1,687
Sales and marketing		327		266		890		838
General and administrative		566		585		1,447		1,697

Totals	$	1,571	$	1,552	$	4,057	$	4,695

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 50
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
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-Section 50
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-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 40
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929

+ Details

Segment Information And Concentrations Of Risk

9 Months Ended

Sep. 30, 2011

Segment Information And Concentrations Of Risk [Abstract]

Segment Information And Concentrations Of Risk

8. Segment Information and Concentrations of Risk

Segment Information

The Company reports segment information based on the "management" approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company's reportable segments.

The Company operates in the wireless broadband technology industry and senior management makes decisions about allocating resources based on the following reportable segments:

•

Mobile Computing Products segment—includes our MiFi products, USB and PC-card modems and Embedded Modules that enable data transmission and services via cellular wireless networks. All products within the segment represent a single product family.

•

M2M Products and Solutions segment—includes our intelligent asset-management solutions utilizing wireless technology and M2M communications acquired with our acquisition of Enfora.

Segment revenues and segment operating income (loss) represent the primary financial measures used by senior management to assess performance and include the net revenues, cost of net revenues, sales and operating costs and expenses for which management is held accountable. Segment expenses include sales and marketing, research and development, general and administrative, and amortization expenses that are directly related to individual segments. Segment operating income (loss) also includes acquisition-related costs, purchased intangible asset amortization, restructuring and integration costs.

The table below presents net revenues, operating income (loss) and identifiable assets for our reportable segments (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Net revenues:
Mobile Computing Products	$	102,691		$	75,602		$	258,268		$	219,664
M2M Products and Solutions		10,572			0			34,800			0

Total	$	113,263		$	75,602		$	293,068		$	219,664


Operating income (loss):
Mobile Computing Products	$	1,311		$	(6,382	)	$	(14,359	)	$	(19,086	)
M2M Products and Solutions		(7,359	)		0			(16,860	)		0

Total	$	(6,048	)	$	(6,382	)	$	(31,219	)	$	(19,086	)


	September 30, 2011		December 31, 2010
Identifiable assets:
Mobile Computing Products	$	177,590	$	217,445
M2M Products and Solutions		73,636		84,663

Total	$	251,226	$	302,108

The Company has operations in the United States, Canada, Europe and Asia. The following table details the geographic concentration of the Company's assets in the United States, Canada, Europe and Asia (in thousands):


	September 30, 2011		December 31, 2010
United States	$	244,297	$	293,227
Canada		5,929		8,059
Europe		202		318
Asia		798		504

	$	251,226	$	302,108

The following table details the concentration of the Company's net revenues by geographic region based on the ship to location:


	Three Months ended September 30,						Nine Months ended September 30,
	2011			2010			2011			2010
North America		95.2	%		96.0	%		95.5	%		94.5	%
Europe / Middle East / Africa		4.5			4.0			4.3			5.1
Asia / Australia		0.3			0			0.2			0.4

		100.0	%		100.0	%		100.0	%		100.0	%

Concentrations of Risk

Substantially all of the Company's net revenues are derived from sales of wireless access products. Any significant decline in market acceptance of the Company's products or in the financial condition of the Company's existing customers would have an adverse effect on the Company's results of operations and financial condition.

A significant portion of the Company's net revenues are derived from a small number of customers. For the three months ended September 30, 2011, sales to our two largest customers accounted for 49% and 11% of net revenues. In the same period in 2010, sales to our two largest customers accounted for 59% and 13% of net revenues. No other customers accounted for more than ten percent of total net revenues in the three months ended September 30, 2011 and 2010. For the nine months ended September 30, 2011, sales to our three largest customers accounted for 45%, 13%, and 10% of net revenues. In the same period in 2010, sales to our two largest customers accounted for 59% and 13% of net revenues. No other customers accounted for more than ten percent of total net revenues in the nine months ended September 30, 2011 and 2010.

The Company currently outsources its manufacturing to four third-party contract manufacturers. If one or more of these manufacturers were to experience delays, disruptions, capacity constraints or quality control problems in manufacturing operations, product shipments to the Company's customers could be delayed or its customers could consequently elect to cancel the underlying product purchase order, which would negatively impact the Company's revenues and results of operations.

The Company contracts with a number of suppliers with operations in Thailand. Some of these suppliers have been unable to deliver sufficient quantities of components as a result of the effects of the major catastrophic flooding that began in July 2011 and still persist as of the date of this report. The Company's M2M products are being impacted significantly by these component shortages. The shortages have limited the Company's ability to deliver against sales opportunities, negatively impacting our results of operations.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 131
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+ Details

Earnings Per Share

9 Months Ended

Sep. 30, 2011

Earnings Per Share [Abstract]

Earnings Per Share

9. Earnings Per Share

Basic earnings per share ("EPS") excludes dilution and is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock using the treasury stock method. Potentially dilutive securities (consisting of options and restricted stock units ("RSUs") and employee stock purchase plan ("ESPP") withholdings using the treasury stock method) are excluded from the diluted EPS computation in loss periods and when the applicable exercise price is greater than the market price on the period end date as their effect would be anti-dilutive.

The following table sets forth the computation of diluted weighted-average common and potential common shares outstanding for the three and nine months ended September 30, 2011 and 2010 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Basic weighted-average common shares outstanding		32,057		31,615		32,005		31,414
Effect of dilutive securities:
Options		33		0		0		0
Employee Stock Purchase Plan		258		0		0		0
Restricted Stock Units		22		0		0		0

Diluted weighted-average common and potential common shares outstanding		32,370		31,615		32,005		31,414

During the three and nine months ended September 30, 2011, weighted-average options, RSUs and unissued ESPP shares to acquire a total of 5,718,527 and 4,657,850 shares of common stock, respectively, were outstanding but not included in the computation of diluted earnings per share as their effect was anti-dilutive.

During three and nine months ended September 30, 2010, weighted-average options, RSUs, and unissued ESPP shares to acquire a total of 4,554,343 and 4,445,049 shares of common stock, respectively, were outstanding but not included in the computation of diluted earnings per share as their effect was anti-dilutive.

Commitments And Contingencies	9 Months Ended
Commitments And Contingencies	Sep. 30, 2011
Commitments And Contingencies [Abstract]
Commitments And Contingencies	10. Commitments and Contingencies Legal Matters The Company is, from time to time, party to various legal proceedings arising in the ordinary course of business. For example, the Company is currently named as a defendant or co-defendant in a number of patent infringement lawsuits in the U.S. and is indirectly participating in other U.S. patent infringement actions pursuant to its contractual indemnification obligations to certain customers. Based on evaluation of these matters and discussions with Company's counsel, the Company believes that liabilities arising from or sums paid in settlement of these existing matters would not have a material adverse effect on its consolidated results of operations or financial condition. On September 15, 2008 and September 18, 2008, two putative securities class action lawsuits were filed in the United States District Court for the Southern District of California on behalf of persons who allegedly purchased our stock between February 5, 2007 and August 19, 2008. On December 11, 2008, these lawsuits were consolidated into a single action entitled Backe v. Novatel Wireless, Inc., et al., Case No. 08-CV-01689-H (RBB) (Consolidated with Case No. 08-CV-01714-H (RBB)) (U.S.D.C., S.D. Cal.). In May 2010, the district court re-captioned the case In re Novatel Wireless Securities Litigation. The plaintiffs filed the consolidated complaint on behalf of persons who allegedly purchased our stock between February 27, 2007 and November 10, 2008. The consolidated complaint names the Company and certain of our current and former officers as defendants. The consolidated complaint alleges generally that we issued materially false and misleading statements during the relevant time period regarding the strength of our products and market share, our financial results and our internal controls. The plaintiffs are seeking an unspecified amount of damages and costs. The court has denied defendants' motions to dismiss. In May 2010, the court entered an order granting the plaintiffs' motion for class certification and certified a class of purchasers of Company common stock between February 27, 2007 and September 15, 2008. On February 14, 2011, following extensive discovery, the Company filed a motion for summary judgment on all of plaintiffs' claims. A trial date had been set for May 10, 2011. On March 15, 2011, the case was reassigned to a new district judge, the Honorable Anthony J. Battaglia. Following the reassignment, the court vacated the trial date pending the court's consideration of dispositive motions. Oral argument on the motion for summary judgment was heard by the court on June 17, 2011, after which the court took the matter under submission. The court has not yet issued a ruling on the motion. The Company intends to defend this litigation vigorously. We are unable at this time to estimate the effects of this lawsuit on our financial position, results of operations or cash flows. On October 8, 2008, a purported shareholder, Jerry Rosenbaum, filed a derivative action in the Superior Court for the State of California, County of San Diego, against the Company, as nominal defendant, and certain of our current and former officers and directors, as defendants. Two other purported shareholders, Mark Campos and Chris Arnsdorf, separately filed substantially similar lawsuits in the same court on October 20, 2008 and November 5, 2008, respectively. On October 16, 2009, the plaintiffs filed a consolidated complaint. The consolidated complaint, Case No. 37-2008-00093576-CU-NP-CTL, alleges claims for breaches of fiduciary duties, violations of certain provisions of the California Corporations Code, unjust enrichment, and gross mismanagement. In February 2010, the court granted the defendants' motion to stay the action pending the resolution of the federal securities class action described above. In July 2010, the parties executed a memorandum of understanding setting forth the terms to be included in a contemplated settlement. Any settlement would be subject to court approval. The memorandum of understanding does not contemplate any restitution from the defendants. Following execution of the memorandum of understanding, plaintiffs conducted certain confirmatory discovery and sought to negotiate an award of legal fees as part of the terms to be included in a stipulation of settlement. Plaintiffs have since purported to terminate the memorandum of understanding. On January 28, 2011, the court held an informal status conference, at which plaintiffs requested that the court lift the stay of the action. The court declined plaintiffs' request. Following certain additional confirmatory discovery, the Company anticipates seeking to enforce the terms of the parties' memorandum of understanding. At this time the Company is unable to estimate the amount of attorney's fees that may be approved by the court. Indemnification In the normal course of business, the Company periodically enters into agreements that require the Company to indemnify and defend its customers for, among other things, claims alleging that the Company's products infringe third-party patents or other intellectual property rights. The Company's maximum exposure under these indemnification provisions cannot be estimated but the Company does not believe that there are any matters individually or collectively that would have a material adverse effect on its financial condition. Credit Facility During July 2011, the Company entered into a credit facility with a bank to allow margin borrowings based on the Company's investments in cash equivalents and marketable securities held with the bank. This facility is collateralized by the Company's cash equivalents and marketable securities held with the bank. Borrowings under the facility incur interest rate at the bank's base rate plus 1%. This margin account facility provides us with the flexibility to access cash for short periods of time and avoids the need to sell marketable securities for these short-term requirements. At September 30, 2011, the Company had approximately $24.9 million in cash equivalents and marketable securities held at this bank. Any monies borrowed and interest incurred are payable on demand, and there is no express expiration date to the credit facility. During the three months ended September 30, 2011, the Company borrowed $12.0 million and repaid the entire amount during the same period. As of September 30, 2011, the Company has no outstanding borrowings under the credit facility.

- Definition

The entire disclosure for commitments and contingencies.

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+ Details

Comprehensive Loss

9 Months Ended

Sep. 30, 2011

Comprehensive Loss [Abstract]

Comprehensive Loss

11. Comprehensive Loss

Comprehensive income (loss) consists of the following (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Net income (loss)	$	4,498		$	(7,105	)	$	(21,488	)	$	(32,533	)
Unrealized gain (loss) on cash equivalents and marketable securities, net of tax		(60	)		30			(54	)		15

Comprehensive income (loss)	$	4,438		$	(7,075	)	$	(21,542	)	$	(32,518	)

- Definition

The entire disclosure for comprehensive income. Includes, but is not limited to, the following: 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income. Components of comprehensive income include: (1) foreign currency translation adjustments; (2) gains (losses) on foreign currency transactions that are designated as, and are effective as, economic hedges of a net investment in a foreign entity; (3) gains (losses) on intercompany foreign currency transactions that are of a long-term-investment nature, when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements; (4) change in the market value of a futures contract that qualifies as a hedge of an asset reported at fair value; (5) unrealized holding gains (losses) on available-for-sale securities and that resulting from transfers of debt securities from the held-to-maturity category to the available-for-sale category; (6) a net loss recognized as an additional pension liability not yet recognized as net periodic pension cost; and (7) the net gain (loss) and net prior service cost or credit for pension plans and other postretirement benefit plans.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 14-26
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+ Details

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2011
Income Taxes [Abstract]
Income Taxes	12. Income Taxes For the three and nine months ended September 30, 2011, the Company recorded income tax benefit, including discrete items, of $11.2 million and $10.6 million, respectively. These amounts vary from the income tax benefit that would be computed at the U.S. statutory rate resulting from its operating losses during the same period primarily due to an offsetting increase in the Company's U.S.-based deferred tax valuation allowance, the release of accruals related to uncertain tax positions, and expenses attributable to foreign operations. The Company recognizes federal, state and foreign current tax liabilities or assets based on its estimate of taxes payable to or refundable by tax authorities in the current fiscal year. The Company also recognizes federal, state and foreign deferred tax liabilities or assets based on the Company's estimate of future tax effects attributable to temporary differences and carry forwards. The Company records a valuation allowance to reduce any deferred tax assets by the amount of any tax benefits that, based on available evidence and judgment, are not expected to be realized. The Company assesses whether a valuation allowance should be recorded against its deferred tax assets based on the consideration of all available evidence, using a "more likely than not" realization standard. The four sources of taxable income that must be considered in determining whether deferred tax assets will be realized are: (1) future reversals of existing taxable temporary differences (i.e., offset of gross deferred tax assets against gross deferred tax liabilities); (2) taxable income in prior carryback years, if carryback is permitted under the applicable tax law; (3) tax planning strategies; and (4) future taxable income exclusive of reversing temporary differences and carryforwards. In assessing whether a valuation allowance is required, significant weight is to be given to evidence that can be objectively verified. A significant factor in the Company's assessment is that the Company is in a three-year historical cumulative loss position. This fact, combined with uncertain near-term market and economic conditions, reduced the Company's ability to rely on projections of future taxable income in assessing the realizability of its deferred tax assets. After a review of the four sources of taxable income as of September 30, 2011 (as described above), the Company recognized an increase in the valuation allowance primarily related to its U.S.-based deferred tax amounts resulting from carryforward net operating losses generated during the three and nine months ended September 30, 2011. These deferred tax benefits, combined with the increased valuation allowance, resulted in income tax expense of $46,000 and $372,000 for the three and nine months period ended September 30, 2011, respectively. The Company's valuation allowance was $34.7 million on gross deferred tax assets of $37.0 million at September 30, 2011. The net unreserved portion of the Company's remaining deferred tax assets at September 30, 2011 primarily related to research and development tax credits associated with the Company's Canadian subsidiary. The Company follows the accounting guidance related to financial statement recognition, measurement and disclosure of uncertain tax positions. The Company recognizes the impact of an uncertain income tax position at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. During the three months ended September 30, 2011, the Company released $11.8 million of reserves related to uncertain tax positions due to expiration of the applicable statutes of limitations for certain tax years. As of September 30, 2011 and December 31, 2010, the total liability for unrecognized tax benefits was $411,000 and $12.0 million, respectively, and is included in other long-term liabilities on the Company's consolidated balance sheets. For the three and nine months ended September 30, 2011, the Company included $3,000 and $31,000, respectively, of interest expense related to uncertain tax positions in its Consolidated Statements of Operations. As a result of a $1.7 million correction to the November 30, 2010 acquisition value of Enfora's intangible assets (Note 1), the Company recorded a corresponding correction of $612,000 to its net deferred tax assets during the three months ended September 30, 2011, with a corresponding charge to income tax expense. Also during the three months ended September 30, 2011, the Company completed its assessment of deferred tax benefits resulting from related to its acquisition of Enfora in 2010. As a result, the Company decreased its estimate of deferred tax assets acquired by $297,000, with a corresponding charge to income tax expense. The Company and its subsidiaries file U.S., state, and foreign income tax returns in jurisdictions with various statutes of limitations. The California Franchise Tax Board is currently conducting an examination of the Company's California income tax returns for 2006 and 2007. The Internal Revenue Service is currently conducting an examination of the Company's U.S. income tax return for 2009. The Company is also subject to various income federal tax examinations for the 2001 through 2010 calendar years due to the availability of net operating loss carryforwards. The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years. However, because audit outcomes and the timing of audit settlements are subject to significant uncertainty, the Company's current estimate of the total amounts of unrecognized tax benefits could increase or decrease for all open years. Currently, the Company does not anticipate that there will be any material change in the recognized tax benefits within next twelve months.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

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+ Details