CERTAIN FINANCIAL STATEMENT INFORMATION

Accounts receivable, net:



	September 30, 2016			March 31, 2016
	(In thousands)
Accounts receivable	$	13,843		$	9,527
Less: allowance for bad debts	(291		)	(262		)
	$	13,552		$	9,265

Inventories:



	September 30, 2016		March 31, 2016
	(In thousands)
Finished goods	$	4,605	$	8,206
Work in process	7,455		5,854
Raw materials	1,121		2,088
	$	13,181	$	16,148

Other current assets:



	September 30, 2016		March 31, 2016
	(In thousands)
Prepaid expenses	$	7,787	$	8,887
Executive deferred compensation assets	873		817
Other	1,269		1,071
	$	9,929	$	10,775

Property and equipment:



	Useful Life	September 30, 2016			March 31, 2016
	(In years)	(In thousands)
Machinery and equipment	3-5	$	39,946		$	36,723
Leasehold improvements	1-5	7,528			7,529
Computers, office furniture and equipment	3-5	33,391			34,016
		80,865			78,268
Less: accumulated depreciation		(68,136		)	(64,975		)
		$	12,729		$	13,293

Other accrued liabilities:



	September 30, 2016		March 31, 2016
	(In thousands)
Employee related liabilities	$	1,629	$	1,362
Executive deferred compensation	912		848
Accrued bonus	5,752		3,269
Other	4,732		4,314
	$	13,025	$	9,793

Short-term investments:

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



	September 30, 2016									March 31, 2016
	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	$	21,449	$	—	$	—		$	21,449	$	23,510	$	—	$	—		$	23,510
Cash equivalents (Money market funds)	1,040		—		—			1,040		1,555		—		—			1,555
U.S. Treasury and agency securities	16,218		39		(2		)	16,255		14,863		38		(3		)	14,898
Corporate bonds	25,254		287		(2		)	25,539		28,047		221		(5		)	28,263
Asset-backed and mortgage-backed securities	16,573		74		(13		)	16,634		13,565		13		(27		)	13,551
Municipal bonds	806		5		—			811		2,052		16		—			2,068
	$	81,340	$	405	$	(17	)	$	81,728	$	83,592	$	288	$	(35	)	$	83,845
Reported as:
Cash and cash equivalents								$	22,489								$	25,065
Short-term investments available-for-sale								59,239									58,780
								$	81,728								$	83,845

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):



	September 30, 2016								March 31, 2016
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash	$	21,449	$	—	$	—	$	21,449	$	23,510	$	—	$	—	$	23,510
Cash equivalents (Money market funds)	1,040		—		—		1,040		1,555		—		—		1,555
U.S. Treasury and agency securities	16,255		—		—		16,255		14,898		—		—		14,898
Corporate bonds	—		25,539		—		25,539		—		28,263		—		28,263
Asset-backed and mortgage-backed securities	—		16,634		—		16,634		—		13,551		—		13,551
Municipal bonds	—		811		—		811		—		2,068		—		2,068
	$	38,744	$	42,984	$	—	$	81,728	$	39,963	$	43,882	$	—	$	83,845

There were no significant transfers in and out of Level 1 and Level 2 fair value measurement categories during the six months ended September 30, 2016 and 2015. The fair value of the Company’s receivables and payables approximates their carrying value at amortized cost, due to their short duration.

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 and agency securities, corporate bonds, asset-backed and mortgage-backed securities and municipal bonds, by contractual maturity (in thousands):



	September 30, 2016
	Cost		Estimated Fair Value
Less than 1 year	$	13,174	$	13,182
Mature in 1 – 2 years	40,007		40,241
Mature in 3 – 5 years	5,670		5,816
	$	58,851	$	59,239

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



As of September 30, 2016	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 and agency securities	$	2,149	$	(2	)	$	—	$	—	$	2,149	$	(2	)
Corporate bonds	1,906		(2		)	—		—		1,906		(2		)
Asset-backed and mortgage-backed securities	3,673		(13		)	—		—		3,673		(13		)
	$	7,728	$	(17	)	$	—	$	—	$	7,728	$	(17	)



As of March 31, 2016	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 and agency securities	$	9,396	$	(3	)	$	—	$	—	$	9,396	$	(3	)
Corporate bonds	4,601		(5		)	—		—		4,601		(5		)
Asset-backed and mortgage-backed securities	8,394		(27		)	—		—		8,394		(27		)
	$	22,391	$	(35	)	$	—	$	—	$	22,391	$	(35	)

Accumulated other comprehensive loss (in thousands):



	Foreign currency translation adjustments			Unrealized gain (loss) on short-term investments			Total
Balance as of March 31, 2016	$	(2,486	)	$	(7,067	)	$	(9,553	)
Other comprehensive income (loss) before reclassifications	(119		)	167			48
Amounts reclassified from accumulated other comprehensive income	—			(50		)	(50		)
Net current-period other comprehensive income (loss), net of tax	(119		)	117			(2		)
Balance as of September 30, 2016	$	(2,605	)	$	(6,950	)	$	(9,555	)

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



	Three Months Ended September 30,				Six Months Ended September 30,
	2016		2015		2016		2015
Net realized gain on short-term investments	$	34	$	127	$	66	$	1,557
Interest income, net	208		130		406		319
	$	242	$	257	$	472	$	1,876

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, purchase of Employee Stock Purchase Plan ("ESPP") rights and vesting of restricted stock units ("RSUs"). For the three months and the six months ended September 30, 2016 and 2015, the Company recorded a net loss. As such, all outstanding potential common shares were anti-dilutive and were excluded from the diluted earnings per share computation. For each of the periods presented, the dilutive shares equals the weighted average basic shares.

The following potentially dilutive common shares were excluded from the computation of diluted net loss per share:



	September 30, 2016	September 30, 2015
	(In thousands)
Outstanding stock options	693	1,670
Outstanding RSUs	4,711	3,998
ESPP shares	385	376
	5,789	6,044