5.	Balance Sheet Accounts

Cash and Cash Equivalents

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

	March 31, 2017		June 30, 2016
Cash	$	112,996	$	89,847
Cash equivalents		4,284		4,275

Total cash and cash equivalents	$	117,280	$	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

The Company values its inventory at lower of cost or market. 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by the age of inventory or when conditions exist that suggest that inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand.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.

Inventory consists of the following (in thousands):

	March 31, 2017		June 30, 2016
Finished goods	$	46,658	$	38,751
Raw materials		1,031		2,238
Total Inventory	$	47,689	$	40,989

Property and Equipment, Net

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

	March 31, 2017			June 30, 2016
Computer equipment	$	36,372		$	34,657
Purchased software		11,099			5,574
Office equipment, furniture and fixtures		11,099			10,385
Leasehold improvements		22,505			19,342
Total property and equipment		81,075			69,958
Less: accumulated depreciation and amortization		(50,666	)		(40,378	)
Property and equipment, net	$	30,409		$	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
March 31, 2017
Developed technology	5.52 years	$	55,600	$	42,056	$	13,544
Customer relationships	3.59 years		40,400		37,354		3,046
Maintenance contracts	1.59 years		17,000		11,617		5,383
Trademarks	4.59 years		5,100		2,717		2,383
License agreements	6.60 years		2,445		1,052		1,393
Other intangibles	2.90 years		1,382		965		417
Total intangibles, net with finite lives			121,927		95,761		26,166
In-process research and development, with indefinite life			1,600		-		1,600
Total intangibles, net		$	123,527	$	95,761	$	27,766

	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 amortization expense of intangibles for the periods presented is summarized below (in thousands):

	Three Months Ended				Nine Months Ended
	March 31, 2017		March 31, 2016		March 31, 2017		March 31, 2016
Amortization in "Cost of revenues: Product"	$	995	$	3,417	$	6,271	$	11,847
Amortization of intangibles		1,193		4,142		7,510		12,860
Total amortization	$	2,188	$	7,559	$	13,781	$	24,707

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):

	March 31, 2017
Balance as of June 30, 2016	$	70,877
Additions due to acquisition		11,803
Balance at end of period	$	82,680

During the nine months ended March 31, 2017, the Company completed the acquisition of certain assets and liabilities from Zebra resulting in an additional $11.8 million of goodwill. See Note 2 for additional information related to the acquisition.

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):

	March 31, 2017		June 30, 2016
Deferred maintenance	$	95,683	$	83,419
Deferred product and other revenue		7,091		11,441
Total deferred revenue, net		102,774		94,860
Less: current portion		78,918		72,934
Non-current deferred revenue, net	$	23,856	$	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):

	Three Months Ended						Nine Months Ended
	March 31, 2017			March 31, 2016			March 31, 2017			March 31, 2016
Balance beginning of period	$	98,128		$	84,706		$	83,419		$	87,441
Deferred maintenance assumed due to acquisition		626			—			14,159			—
New maintenance arrangements		28,181			27,683			90,690			84,502
Recognition of maintenance revenue		(31,252	)		(27,320	)		(92,585	)		(86,874	)
Balance end of period		95,683			85,069			95,683			85,069
Less: current portion		71,827			62,842			71,827			62,842
Non-current deferred revenue	$	23,856		$	22,227		$	23,856		$	22,227

Deferred Distributors Revenue, Net of Cost of Sales to Distributors

The Company records revenue from its stocking distributors on a sell-through basis, recording deferred revenue and deferred cost of sales associated with all sales transactions to these 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):

	March 31, 2017			June 30, 2016
Deferred distributors revenue	$	57,188		$	35,138
Deferred cost of sales to distributors		(12,930	)		(8,321	)
Deferred distributors revenue, net of cost of sales to distributors	$	44,258		$	26,817

Debt

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

	March 31, 2017		June 30, 2016
Current portion of long-term debt:
Term Loan	$	11,149	$	17,628
Current portion of long-term debt	$	11,149	$	17,628

Long-term debt, less current portion:
Term Loan	$	73,775	$	27,446
Revolving Facility		10,000		10,000
Total long-term debt, less current portion		83,775		37,446
Total debt	$	94,924	$	55,074

During the three months ended December 31, 2016, the Company entered into an Amended and Restated Credit Agreement which agreement was subsequently amended on March 2, 2017, by Amendment One to such agreement (collectively the agreement and Amendment One, the “Credit Facility, as amended”) with Silicon Valley Bank, JPMorgan Chase Bank, N.A., Bank of America, N.A., Cadence Bank, N.A., and Comerica Bank (collectively, the “Lenders”). The Credit Facility, as amended provides for a five-year $90.5 million term loan (“Term Loan”) and a five-year $50.0 million revolving credit facility (“Revolver”), which includes a $5.0 million swing line loan sub facility and a $10.0 million letter of credit sub facility. The Credit Facility, as amended among other things, amends and restates the Company’s existing credit facility. The Credit Facility, as amended is collateralized by substantially all of the assets of the Company.

Borrowings under the Term Loan bear interest, at our option, at a rate equal to either the LIBOR rate (subject to a 0.0% LIBOR floor), plus an applicable margin (currently 3.25% per annum based on a stated consolidated leverage ratio) or the adjusted base rate, plus an applicable margin (currently 1.25% per annum based on the Company’s consolidated leverage ratio). Borrowings under the Revolver bear interest, at the Company’s option, at a rate equal to either the LIBOR rate (subject to a 0.0% LIBOR floor), plus an applicable margin (currently 3.25% per annum based on a stated consolidated leverage ratio) or the adjusted base rate, plus an applicable margin (currently 1.25% per annum based on a stated consolidated leverage ratio). The Revolver has a commitment fee payable on the undrawn amount ranging from 0.375% to 0.50% per annum based upon a stated consolidated leverage ratio.

The Company had $23.2 million of availability under the Revolver as of March 31, 2017. The Company had $0.9 million of outstanding letters of credit under the Revolver as of March 31, 2017.

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 and nine months ended March 31, 2017 and 2016 (in thousands):

	Three Months Ended						Nine Months Ended
	March 31, 2017			March 31, 2016			March 31, 2017			March 31, 2016
Balance beginning of period	$	10,228		$	10,415		$	9,600		$	8,676
Warranties assumed due to acquisition		—			—			2,034			—
New warranties issued		1,893			1,638			3,997			7,158
Warranty expenditures		(2,091	)		(1,773	)		(5,601	)		(5,554	)
Balance end of period	$	10,030		$	10,280		$	10,030		$	10,280

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 and nine months ended March 31, 2017 and 2016, 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:

	Three Months Ended				Nine Months Ended
	March 31, 2017		March 31, 2016		March 31, 2017		March 31, 2016
Tech Data Corporation		13%		16%		15%		16%
Jenne		14%		17%		14%	13%
Westcon Group Inc.		10%		13%		12%		15%

The following customer accounts for more than 10% of our accounts receivable outstanding as of March 31, 2017, Westcon Group Inc. 18%.