Quarterly report pursuant to Section 13 or 15(d)

Commitments And Contingencies

Commitments And Contingencies
9 Months Ended
Dec. 31, 2011
Commitments And Contingencies [Abstract]  
Commitments And Contingencies

Note 11. Commitments and Contingencies


Future obligations and commitments decreased $35.3 million in the nine months ended December 31, 2011 to $18.2 million, down from $53.5 million at March 31, 2011. The March 31, 2011 total included $11.2 million of purchase obligations related to the ConferencePlus segment which was sold in the third quarter of fiscal year 2012. As a result of the CNS asset sale, $12.3 million of purchase obligations were assigned to NETGEAR on April 15, 2011. The remaining $11.8 million decrease was primarily due to a decrease in inventory purchase obligations in the CNS equipment segment as the Company continued to fulfill remaining non-cancellable customer orders which are not being replaced with additional orders.


The Company and its subsidiaries are involved in various assertions, claims, proceedings and requests for indemnification concerning intellectual property, including patent infringement suits involving technologies that are incorporated in the Company's products, which are being handled and defended in the ordinary course of business. These matters are in various stages of investigation and litigation, and are being vigorously defended. Although the Company does not expect the outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial condition or results of operations, litigation is inherently unpredictable. Therefore, judgments could be rendered or settlements entered, that could adversely affect the Company's operating results or cash flows in a particular period. The Company routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability, and it records its best estimate of the ultimate loss in situations for which it assesses the likelihood of a loss is probable. The Company has not recorded any contingent liability attributable to existing litigation.

Contingency Reserves

As a result of a vendor dispute in the ConferencePlus segment, a $700,000 loss contingency reserve was recorded in cost of services in the fourth quarter of fiscal year 2010. The Company applies ASC 450 in assessing the need for a reserve and concluded that this loss was both probable and estimable. A settlement agreement was reached with the vendor and the Company paid the entire $700,000 as part of the settlement in the first quarter of fiscal year 2011. As of December 31, 2011, the Company has a contingent liability accrual of $838,000 related to certain intellectual property and indemnification claims. This accrual is classified as Accrued expenses on the Condensed Consolidated Balance Sheet as of December 31, 2011.