CERTAIN FINANCIAL STATEMENT INFORMATION

Accounts receivable, net:



	December 31, 2015			March 31, 2015
	(In thousands)
Accounts receivable	$	12,732		$	12,709
Less: allowance for bad debts	(280		)	(302		)
	$	12,452		$	12,407

Inventories:



	December 31, 2015		March 31, 2015
	(In thousands)
Finished goods	$	10,405	$	15,310
Work in process	6,508		5,377
Raw materials	2,779		2,827
	$	19,692	$	23,514

Other current assets:



	December 31, 2015		March 31, 2015
	(In thousands)
Prepaid expenses	$	12,284	$	14,847
Executive deferred compensation assets	985		1,004
Other	1,309		989
	$	14,578	$	16,840

Property and equipment:



	Useful Life	December 31, 2015			March 31, 2015
	(In years)	(In thousands)
Machinery and equipment	3-5	$	38,244		$	37,286
Leasehold improvements	1-5	7,528			9,909
Computers, office furniture and equipment	3-5	34,444			32,902
		80,216			80,097
Less: accumulated depreciation		(66,868		)	(63,348		)
		$	13,348		$	16,749

Other accrued liabilities:



	December 31, 2015		March 31, 2015
	(In thousands)
Employee related liabilities	$	1,377	$	1,454
Executive deferred compensation	1,017		1,025
Accrued bonus	1,768		39
Income taxes	330		1,311
Other	4,491		3,815
	$	8,983	$	7,644

Short-term investments:

The following is a summary of cash, cash equivalents and available-for-sale investments by type of instrument (in thousands):



	December 31, 2015									March 31, 2015
	Amortized Cost		Gross Unrealized					Estimated Fair Value		Amortized Cost		Gross Unrealized					Estimated Fair Value
	Amortized Cost		Gains		Losses			Estimated Fair Value		Amortized Cost		Gains		Losses			Estimated Fair Value
Cash	$	16,299	$	—	$	—		$	16,299	$	33,936	$	—	$	—		$	33,936
Cash equivalents	2,471		—		—			2,471		2,559		—		—			2,559
U.S. Treasury securities and agency bonds	17,855		—		(54		)	17,801		1,230		—		—			1,230
Corporate bonds	25,957		18		(63		)	25,912		10,772		28		(6		)	10,794
Asset-backed and mortgage-backed securities	11,948		1		(50		)	11,899		—		15		—			15
Municipal bonds	2,071		—		(10		)	2,061		—		—		—			—
Mutual funds	—		—		—			—		24,895		1,955		(59		)	26,791
Preferred stock	—		—		—			—		11		22		—			33
	$	76,601	$	19	$	(177	)	$	76,443	$	73,403	$	2,020	$	(65	)	$	75,358
Reported as:
Cash and cash equivalents								$	18,770								$	36,495
Short-term investments available-for-sale								57,673									38,863
								$	76,443								$	75,358

The established guidelines for measuring fair value and expanded disclosures regarding fair value measurements are defined as a three-level valuation hierarchy for disclosure of fair value measurements as follows:

Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 — Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Valuation of instruments includes unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities.

The following is a summary of cash, cash equivalents and available-for-sale investments by type of instrument measured at fair value on a recurring basis (in thousands):



	December 31, 2015								March 31, 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash	$	16,299	$	—	$	—	$	16,299	$	33,936	$	—	$	—	$	33,936
Cash equivalents	2,071		400		—		2,471		2,559		—		—		2,559
U.S. Treasury securities and agency bonds	17,801		—		—		17,801		1,230		—		—		1,230
Corporate bonds	—		25,912		—		25,912		—		10,794		—		10,794
Asset-backed and mortgage-backed securities	—		11,899		—		11,899		—		15		—		15
Municipal bonds	—		2,061		—		2,061		—		—		—		—
Mutual funds	—		—		—		—		26,791		—		—		26,791
Preferred stock	—		—		—		—		—		33		—		33
	$	36,171	$	40,272	$	—	$	76,443	$	64,516	$	10,842	$	—	$	75,358

There were no significant transfers in and out of Level 1 and Level 2 fair value measurement categories during the three and nine months ended December 31, 2015 and 2014.

The following is a summary of the cost and estimated fair values of available-for-sale securities with stated maturities, which include U.S. Treasury securities and agency bonds, corporate bonds, asset-backed and mortgage-backed securities and municipal bonds, by contractual maturity (in thousands):



	December 31, 2015
	Cost		Estimated Fair Value
Less than 1 year	$	15,500	$	15,485
Mature in 1 – 2 years	31,021		30,908
Mature in 3 – 5 years	11,310		11,280
Mature after 5 years	—		—
	$	57,831	$	57,673

The following is a summary of gross unrealized losses (in thousands):



As of December 31, 2015	Less Than 12 Months of Unrealized Losses					12 Months or More of Unrealized Losses				Total
	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
U.S. Treasury securities and agency bonds	$	17,260	$	(54	)	$	—	$	—	$	17,260	$	(54	)
Corporate bonds	18,243		(63		)	—		—		18,243		(63		)
Asset-backed and mortgage-backed securities	10,793		(50		)	—		—		10,793		(50		)
Municipal bonds	1,898		(10		)	—		—		1,898		(10		)
	$	48,194	$	(177	)	$	—	$	—	$	48,194	$	(177	)



As of March 31, 2015	Less Than 12 Months of Unrealized Losses					12 Months or More of Unrealized Losses					Total
	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
Corporate bonds	$	878	$	(6	)	$	—	$	—		$	878	$	(6	)
Mutual funds	14,592		(17		)	475		(42		)	15,067		(59		)
	$	15,470	$	(23	)	$	475	$	(42	)	$	15,945	$	(65	)

Realized gain on short-term investments and interest income, net (in thousands):



	Three Months Ended December 31,					Nine Months Ended December 31,
	2015			2014		2015		2014
Net realized gain (loss) on short-term investments	$	(2	)	$	123	$	1,557	$	123
Interest income, net	150			362		467		1,091
	$	148		$	485	$	2,024	$	1,214

Net loss per share:

Shares used in basic net loss per share are computed using the weighted average number of common shares outstanding during each period. Shares used in diluted net loss per share include the dilutive effect of common shares potentially issuable upon the exercise of stock options and vesting of restricted stock units ("RSUs"). For the three and nine months ended December 31, 2015 and 2014, the Company recorded a net loss. As such, all outstanding potential common shares were excluded from the diluted earnings per share computation.

The following potentially dilutive common shares are excluded from the computation of net loss per share (in thousands):



	December 31, 2015	December 31, 2014
Outstanding stock options	1,650	1,882
Outstanding RSUs	4,752	4,642
ESPP shares	365	350
	6,767	6,874