4.	Balance Sheet Accounts

Cash and Cash Equivalents

The following is a summary of cash and cash equivalents (in thousands):

	September 30, 2016		June 30, 2016
Cash	$	97,988	$	89,847
Cash equivalents		4,277		4,275

Total cash and cash equivalents	$	102,265	$	94,122

The Company considers highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Investments with original maturities of greater than three months, but less than one year at the balance sheet date are classified as short-term investments.

Inventory Valuation

The Company’s inventory balances as of September 30, 2016 and June 30, 2016 were $43.4 million and $41.0 million, respectively. The Company values its inventory at lower of cost or net realizable value. Cost is computed using standard cost, which approximates actual cost, on a first-in, first-out basis. The Company has established inventory allowances primarily determined by the age of inventory or when conditions exist that suggest that inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand. At the point of the loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Any written down or obsolete inventory subsequently sold has not had a material impact on gross margin for any of the periods disclosed.

The following is a summary of our inventory by category (in thousands):

	September 30, 2016		June 30, 2016
Finished goods	$	41,262	$	38,751
Raw materials		2,133		2,238
Total Inventory	$	43,395	$	40,989

Property and Equipment, Net

Property and equipment consist of the following (in thousands):

	September 30, 2016			June 30, 2016
Computer equipment	$	37,618		$	34,657
Purchased software		5,575			5,574
Office equipment, furniture and fixtures		10,374			10,385
Leasehold improvements		19,395			19,342
Total property and equipment		72,962			69,958
Less: accumulated depreciation and amortization		(42,904	)		(40,378	)
Property and equipment, net	$	30,058		$	29,580

Intangibles

The following tables summarize the components of gross and net intangible asset balances (dollars in thousands):

	Weighted Average
	Remaining Amortization	Gross Carrying		Accumulated		Net Carrying
	Period	Amount		Amortization		Amount
September 30, 2016
Developed technology	0.22 years	$	48,000	$	46,444	$	1,556
Customer relationships	0.10 years		37,000		35,972		1,028
Maintenance contracts	2.00 years		17,000		9,917		7,083
Trademarks	0.10 years		2,500		2,431		69
License agreements	7.00 years		2,445		963		1,482
Other intangibles	3.40 years		1,382		893		489
Total intangibles, net		$	108,327	$	96,620	$	11,707

	Weighted Average
	Remaining Amortization	Gross Carrying		Accumulated		Net Carrying
	Period	Amount		Amortization		Amount
June 30, 2016
Developed technology	0.30 years	$	48,000	$	43,028	$	4,972
Customer relationships	0.30 years		37,000		32,889		4,111
Maintenance contracts	2.30 years		17,000		9,067		7,933
Trademarks	0.30 years		2,500		2,222		278
License agreements	9.70 years		3,413		1,473		1,940
Other intangibles	3.70 years		1,428		900		528
Total intangibles, net		$	109,341	$	89,579	$	19,762

The following table summarizes the amortization expense of intangibles for the periods presented (in thousands):

	Three Months Ended
	September 30, 2016		September 30, 2015
Amortization in "Cost of revenues: Product"	$	3,498	$	4,424
Amortization of intangibles		4,142		4,467
Total amortization	$	7,640	$	8,891

The amortization expense that is recognized in “Cost of revenues: Product” is comprised of amortization for developed technology, license agreements and other intangibles.

Goodwill

The following table summarizes goodwill for the periods presented (in thousands):

	September 30, 2016		June 30, 2016
Balance at beginning of period	$	70,877	$	70,877
Changes during period		—		—
Balance at end of period	$	70,877	$	70,877

Other Accrued Liabilities

The following are the components of other accrued liabilities (in thousands):

	September 30, 2016		June 30, 2016
Accrued general and administrative costs	$	4,050	$	4,079
Restructuring		1,754		2,522
Other accrued liabilities		21,578		20,090
Total other accrued liabilities	$	27,382	$	26,691

Deferred Revenue, Net

Deferred revenue, net represents amounts for (i) deferred services revenue (support arrangements, professional services and training), and (ii) deferred product revenue net of the related cost of revenue when the revenue recognition criteria have not been met.

The following table summarizes deferred revenue, net (in thousands):

	September 30, 2016		June 30, 2016
Deferred maintenance	$	84,334	$	83,419
Deferred product and other revenue		7,903		11,441
Total deferred revenue, net		92,237		94,860
Less: current portion		70,697		72,934
Non-current deferred revenue, net	$	21,540	$	21,926

The Company offers for sale to its customers, renewable support arrangements that range from one to five years. Deferred support revenue is included within deferred revenue, net within the services category above. The change in the Company’s deferred support revenue balance in relation to these arrangements was as follows (in thousands):

	For the three months ended
	September 30, 2016			September 30, 2015
Balance beginning of period	$	83,419		$	87,441
New maintenance arrangements		28,745			27,046
Recognition of maintenance revenue		(27,830	)		(29,232	)
Balance end of period		84,334			85,255
Less: current portion		62,794			63,310
Non-current deferred revenue	$	21,540		$	21,945

Deferred Distributors Revenue, Net of Cost of Sales to Distributors

The Company records revenue from its distributors on a sell-through basis, recording deferred revenue and deferred cost of sales associated with all sales transactions to its distributors in “Deferred distributors revenue, net of cost of sales to distributors” in the liability section of its condensed consolidated balance sheets. The amount shown as “Deferred distributors revenue, net of cost of sales to distributors” represents the deferred gross profit on sales to distributors based on contractual pricing.

The following table summarizes deferred distributors revenue, net of cost of sales to distributors (in thousands):

	September 30, 2016			June 30, 2016
Deferred distributors revenue	$	38,780		$	35,138
Deferred cost of sales to distributors		(8,551	)		(8,321	)
Deferred distributors revenue, net of cost of sales to distributors	$	30,229		$	26,817

Debt

The Company’s debt is comprised of the following (in thousands):

	September 30, 2016		June 30, 2016
Current portion of long-term debt:
Term Loan	$	19,269	$	17,628
Current portion of long-term debt	$	19,269	$	17,628

Long-term debt, less current portion:
Term Loan	$	22,621	$	27,446
Revolving Facility		10,000		10,000
Total long-term debt, less current portion		32,621		37,446
Total debt	$	51,890	$	55,074

During fiscal 2015, the Company amended its credit agreement which provides for a five-year revolving credit facility for up to $50.0 million (the “Revolving Facility”) and a $65.0 million five-year term loan (the “Term Loan”) and together with the Revolving Facility the (“Senior Secured Credit Facilities, as amended”).

The Senior Secured Credit Facilities, as amended contains, among others, certain financial covenants that require the Company to maintain defined minimum financial ratios which may limit the Company’s availability to borrowings under the Revolving Facility. As of September 30, 2016, the Company had $27.1 million of availability under the Revolving Facility.

The Company had $1.0 million of outstanding letters of credit as of September 30, 2016.

On October 28, 2016 the Company entered into an Amended and Restated Credit Agreement by and among the Company, as borrower, the several banks and other financial institutions or entities party thereto as lenders, and Silicon Valley Bank, as administrative agent and collateral agent. For information with respect to the terms of this agreement refer to Subsequent Events in Note 13 of Condensed Consolidated Financial Statements.

Guarantees and Product Warranties

Networking products may contain undetected hardware or software errors when new products or new versions or updates of existing products are released to the marketplace. The Company’s standard hardware warranty period is typically 12 months from the date of shipment to end-users and 90 days for software. For certain access products, the Company offers a limited lifetime hardware warranty commencing on the date of shipment from the Company and ending five (5) years following the Company’s announcement of the end of sale of such product. Upon shipment of products to its customers, the Company estimates expenses for the cost to repair or replace products that may be returned under warranty and accrue a liability in cost of product revenue for this amount. The determination of the Company’s warranty requirements is based on actual historical experience with the product or product family, estimates of repair and replacement costs and any product warranty problems that are identified after shipment. The Company estimates and adjusts these accruals at each balance sheet date in accordance with changes in these factors.

Upon issuance of a standard product warranty, the Company discloses and recognizes a liability for the obligations it assumes under the product warranty. The following table summarizes the activity related to the Company’s product warranty liability during the three months ended September 30, 2016 and 2015 (in thousands):

	Three Months Ended
	September 30, 2016			September 30, 2015
Balance beginning of period	$	9,600		$	8,676
New warranties issued		928			2,564
Warranty expenditures		(1,908	)		(1,996	)
Balance end of period	$	8,620		$	9,244

To facilitate sales of its products in the normal course of business, the Company indemnifies its resellers and end-user customers with respect to certain matters. The Company has agreed to hold the customer harmless against losses arising from a breach of intellectual property infringement or other. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. It is not possible to estimate the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements have not had a material impact on its operating results or financial position.

Advertising

Cooperative advertising expenses are recorded as marketing expenses to the extent that an advertising benefit separate from the revenue transaction can be identified and the cash paid does not exceed the fair value of that advertising benefit received. Cooperative advertising obligations with customers are accrued and the costs expensed at the time the related revenue is recognized. If the Company does not meet the criteria for recognizing such cooperative advertising obligations as marketing expense, the costs are recorded as a reduction of revenue. All other advertising costs are expensed as incurred. Advertising expenses for three months ended September 30, 2016 and 2015, were immaterial.

Concentrations

The Company may be subject to concentration of credit risk as a result of certain financial instruments consisting of accounts receivable and short-term investments. The Company does not invest an amount exceeding 10% of its combined cash or cash equivalents in the securities of any one obligor or maker, except for obligations of the United States government, obligations of United States government agencies and money market accounts.

The Company performs ongoing credit evaluations of its customers and generally does not require collateral in exchange for credit.

The following table sets forth major customers accounting for 10% or more of our net revenue:

	For the three months ended
	September 30, 2016		September 30, 2015
Tech Data Corporation		17%		12%
Jenne		16%		11%
Avnet		13%	*
Westcon Group Inc.		11%		16%
Scansource, Inc.	*			13%

*	Less than 10% of net revenue

The following customers account for more than 10% of our accounts receivable outstanding as of September 30, 2016, Westcon Group Inc. 17% and Tech Data Corporation 11%.