GROSS PRODUCT MARGIN

Gross product margin was 69.3 percent for the fourth quarter of 2011 compared to 69.0 percent for the fourth quarter of 2010. The increase in gross product margin in the fourth quarter of 2011 was due to lower inventory obsolescence charges partially offset by a higher mix of contract manufactured product sales.

Gross product margin for the full year of 2011 was 69.5 percent compared to 67.3 percent in 2010. Inventory obsolescence charges were $5.3 million lower in 2011 when compared to 2010. In 2011, $0.4 million of costs were incurred relating to accelerated depreciation and other costs associated with the relocation of our Sunnyvale, California activities that did not qualify to be separately reported as exit costs.

INCOME / LOSS FROM OPERATIONS

Loss from operations for the fourth quarter of 2011 was $51.4 million compared to income from operations of $14.8 million for the same period in 2010. The loss from operations for the fourth quarter of 2011 includes a charge of $74.0 million for the proposed settlement of securities class actions, partially offset by net proceeds of $7.8 million received in the fourth quarter to settle the derivative actions. These items are reported as part of investigation and restatement-related costs in operating expenses.

In the fourth quarter of 2011, the Company also incurred exit costs of approximately $3.0 million related to the closure and relocation of its Sunnyvale, California facilities and operations.

For the full year of 2011, loss from operations was $15.5 million compared to income from operations of $54.3 million for 2010. The 2011 loss from operations includes $80.8 million for investigation and restatement expenses, of which $74.0 million was a charge for the proposed settlement of the private securities class actions against the Company offset by the net proceeds of $7.8 million from the settlement of the derivative actions.

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