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Revenue
Recognition
Revenue from product sales is recorded upon completion of
delivery provided that collection is deemed probable. Service
revenues are recognized ratably over applicable contract periods
or as the services are performed.
Cash
Equivalents
Cash equivalents include short-term investments with remaining
maturities of three months or less at date of purchase.
Marketable
Securities
Marketable securities are classified as “available for sale”
and are carried at fair market value.
Inventories
Inventories are valued at the lower of cost (first-in, first-out
method) or market.
Property
and Equipment
Property and equipment are recorded at cost. Depreciation
is based on the following estimated useful lives of the assets
using the straight-line method:
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Machinery
and equipment |
3
years |
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Computer
equipment |
3-5
years |
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Furniture
and fixtures |
5 years |
| |
Telecommunications
computer equipment |
5
years |
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Leasehold
improvements |
Shorter
of the lease term or economic life |
Expenditures
for additions, renewals and betterments of property and equipment
are capitalized. Expenditures for repairs and maintenance
are charged to expense as incurred. As assets are retired
or sold, the related cost and accumulated depreciation are
removed from the accounts and any resulting gain or loss is
included in the results of operations.
Goodwill
Goodwill is amortized on a straight-line basis over its estimated
useful life. Accumulated amortization was $1.2 million and
$2.2 million as of December 31, 1998 and 1999, respectively.
Impairment
of Long-Lived Assets
The Company reviews long-lived assets, including goodwill,
for impairment whenever events or changes in business circumstances
indicate that the carrying amount of the assets may not be
fully recoverable or that the useful lives of these assets
are no longer appropriate. Each impairment test is based on
a comparison of the undiscounted cash flows to the recorded
value of the asset. If an impairment is indicated, the asset
is written down to its estimated fair value on a discounted
cash flow basis.
License
Agreements
License agreements are stated at cost. Amortization of
licenses is computed on the shorter of a per unit sold basis
or over the estimated useful lives of these licenses.
Research
and Development
All research and development costs are expensed as incurred.
Capitalized
Software Development Costs
The Company capitalizes software development costs incurred
after a product’s technological feasibility has been established
and before it is available for general release to customers.
Amortization of capitalized software costs and acquired completed
technology is computed on an individual product basis and
is the greater of a) the ratio that current gross revenues
for a product bear to the total of current and anticipated
future gross revenues of that product or b) the straight-line
method over the estimated economic life of the product. Costs
qualifying for capitalization have been immaterial for all
periods presented and accordingly have not been capitalized.
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