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Summary of Significant Accounting Policies | 12 Months Ended
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Jun. 30, 2017
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Revenue Recognition The Company's revenue is primarily derived from sales of networking products, which are tangible products containing software and non-software components that function together to deliver the tangible product's essential functionality. In addition to tangible products, the Company's sales arrangements may include other deliverables such as standalone software licenses, or service offerings. For multiple deliverable arrangements, the Company recognizes revenue in accordance with the accounting standard for multiple deliverable revenue arrangements, which provides guidance on whether multiple deliverables exist, how deliverables in an arrangement should be separated, and how consideration should be allocated. Software revenue recognition guidance is applied to the sales of the Company's standalone software products, including software upgrades and software that is not essential to the functionality of the hardware with which it is sold. Pursuant to the guidance of the accounting standard for multiple deliverable revenue arrangements, when the Company's sales arrangements contain multiple elements, such as products, software licenses, maintenance agreements, or professional services, the Company determines the standalone selling price for each element based on a selling price hierarchy. The application of the multiple deliverable revenue accounting standard does not change the units of accounting for the Company's multiple element arrangements. Under the selling price hierarchy, the selling price for each deliverable is based on the Company's vendor-specific objective evidence (“VSOE”), which is determined by a substantial majority of the Company's historical standalone sales transactions for a product or service falling within a narrow range. If VSOE is not available due to a lack of standalone sales transactions or lack of pricing within a narrow range, then third party evidence (“TPE”), as determined by the standalone pricing of competitive vendor products in similar markets, is used, if available. TPE typically is difficult to establish due to the proprietary differences of competitive products and difficulty in obtaining reliable competitive standalone pricing information. When neither VSOE nor TPE is available, the Company determines its best estimate of standalone selling price (“ESP”) for a product or service and does so by considering several factors including, but not limited to, the 12-month historical median sales price, sales channel, geography, gross margin objective, competitive product pricing, and product life cycle. In consideration of all relevant pricing factors, the Company applies management judgment to determine the Company's best estimate of selling price through consultation with and formal approval by the Company's management for all products and services for which neither VSOE nor TPE is available. Generally, the standalone selling price of services is determined using VSOE and the standalone selling price of other deliverables is determined by using ESP. The Company regularly reviews VSOE, TPE and ESP for all of its products and services and maintains internal controls over the establishment and updates of these estimates. After allocation of the relative selling price to each element of the arrangement, the Company recognizes revenue in accordance with the Company's policies for product, software, and service revenue recognition Pursuant to the software revenue recognition accounting standard, the Company recognizes revenue for standalone software products (including optional software upgrades and other software that is not essential to the functionality of the hardware with which it is sold) using the residual method, as VSOE has been established for undelivered elements (typically post contract support). The Company derives the majority of its revenue from sales of its networking equipment, with the remaining revenue generated from service fees relating to maintenance contracts, professional services, and training for its products. The Company generally recognizes product revenue from its value-added resellers, non-stocking distributors and end-user customers at the time of shipment, provided that persuasive evidence of an arrangement exists, delivery has occurred, the price of the product is fixed or determinable, and collection of the sales proceeds is reasonably assured. In instances where the criteria for revenue recognition are not met, revenue is deferred until all criteria have been met. Sales taxes collected from customers are excluded from revenues. The Company sells its products and maintenance contracts to partners in two distribution channels, or tiers. The first tier consists of a limited number of independent distributors that stock its products and sell primarily to resellers. The Company defers recognition of revenue on all sales to its stocking distributors until the distributors sell the product, as evidenced by “sales-out” reports that the distributors provide. The Company grants these distributors the right to return a portion of unsold inventory for the purpose of stock rotation and certain price protection rights. The distributor-related deferred revenue and receivables are adjusted at the time of the stock rotation return or price reduction. The Company also provides distributors with credits for changes in selling prices based on competitive conditions, and allows distributors to participate in cooperative marketing programs (See Deferred Distributors Revenue, Net of Cost of Sales to Distributors, below in this footnote for additional information). The Company maintains estimated accruals and allowances for these exposures based upon the Company's historical experience. In connection with cooperative advertising programs, if the Company does not meet the criteria for recognizing the expense as marketing expense the costs are recorded as a reduction to revenue in the same period that the related revenue is recorded. The second tier of the distribution channel consists of a non-stocking distributors and value-added resellers that sell directly to end-users. For product sales to non-stocking distributors and value-added resellers, the Company does not grant return privileges, except for defective products during the warranty period, nor does the Company grant pricing credits. Accordingly, the Company recognizes revenue upon transfer of title and risk of loss or damage, generally upon shipment. In connection with cooperative advertising programs and certain price protection rights that may occur under contractual arrangements with its resellers, if the Company does not meet the criteria for recognizing the expense as marketing expense, the costs are recorded as a reduction to revenue in the same period that the related revenue is recorded. Allowance for Product Returns The Company provides an allowance for product returns based on its historical returns, analysis of credit memo data and its return policies. The allowance includes the estimates for product allowances from end customers as well as stock rotations and other returns from the Company’s stocking distributors for which it has billed the customer for the product but has yet to recognize revenue. The allowance for product returns is a reduction of accounts receivable. If the historical data that the Company uses to calculate the estimated product returns and allowances does not properly reflect future levels of product returns, these estimates will be revised, thus resulting in an impact on future net revenue. The allowance for product returns estimate is also impacted by the timing of the actual product return from the customer. The Company estimates and adjusts this allowance at each balance sheet date. The following table is a summary of our allowance for product returns (in thousands).
Description |  | Balance at beginning of period |  |  | Additions |  |  | Deductions |  |  | Balance at end of period |
Year Ended June 30, 2017: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for product returns |  | $ | 1,609 |  |  | $ | 3,658 |  |  | $ | (4,725 | ) |  | $ | 542 |
Year Ended June 30, 2016: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for product returns |  | $ | 1,080 |  |  | $ | 3,478 |  |  | $ | (2,949 | ) |  | $ | 1,609 |
Year Ended June 30, 2015: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for product returns |  | $ | 2,700 |  |  | $ | 3,306 |  |  | $ | (4,926 | ) |  | $ | 1,080 |
Allowance for Doubtful Accounts The Company maintains an allowance for doubtful accounts which reflects its best estimate of potentially uncollectible trade receivables. The allowance is based on both specific and general reserves. The Company continually monitors and evaluates the collectability of its trade receivables based on a combination of factors. It records specific allowances for bad debts in general and administrative expense when it becomes aware of a specific customer’s inability to meet its financial obligation to the Company, such as in the case of bankruptcy filings or deterioration of financial position. Estimates are used in determining the allowances for all other customers based on factors such as current trends in the length of time the receivables are past due and historical collection experience. The Company mitigates some collection risk by requiring most of its customers in the Asia-Pacific region, excluding Japan and Australia, to pay cash in advance or secure letters of credit when placing an order with the Company. The following table is a summary of the allowance for doubtful accounts (in thousands).
Description |  | Balance at beginning of period |  |  | Charges to bad debt expenses |  |  | Deductions (1) |  |  | Balance at end of period |
Year Ended June 30, 2017: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for doubtful accounts |  | $ | 1,648 |  |  | $ | 323 |  |  | $ | (781 | ) |  | $ | 1,190 |
Year Ended June 30, 2016: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for doubtful accounts |  | $ | 1,316 |  |  | $ | 834 |  |  | $ | (502 | ) |  | $ | 1,648 |
Year Ended June 30, 2015: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for doubtful accounts |  | $ | 918 |  |  | $ | 940 |  |  | $ | (542 | ) |  | $ | 1,316 |
(1) | Uncollectible accounts written off, net of recoveries
Business Combinations The Company applies the acquisition method of accounting for business combinations. Under this method of accounting, all assets acquired and liabilities assumed are recorded at their respective fair values at the date of the completion of the transaction. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, intangibles and other asset lives, among other items. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Market participants are assumed to be buyers and sellers in the principal (most advantageous) market for the asset or liability. Additionally, fair value measurements for an asset assume the highest and best use of that asset by market participants. As a result, the Company may have been required to value the acquired assets at fair value measures that do not reflect its intended use of those assets. Use of different estimates and judgments could yield different results. Any excess of the purchase price over the fair value of the net assets acquired is recognized as goodwill. Although the Company believes the assumptions and estimates it has made are reasonable and appropriate, they are based in part on historical experience and information that may be obtained from the management of the acquired company and are inherently uncertain. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company's consolidated statements of operations. 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:
|  | Year Ended |
|  | June 30, 2017 |  |  | June 30, 2016 |  |  | June 30, 2015 |
Tech Data Corporation |  |  | 15% |  |  |  | 17% |  |  |  | 15% |
Jenne Corporation |  |  | 15% |  |  |  | 14% |  |  | * |
Westcon Group Inc. |  |  | 11% |  |  |  | 14% |  |  |  | 15% |
* | Less than 10% of net revenue
The following table sets forth major customers accounting for 10% or more of our accounts receivable balance:
|  | Year Ended |
|  | June 30, 2017 |  |  | June 30, 2016 |  |  | June 30, 2015 |
Tech Data Corporation |  |  | 18% |  |  |  | 11% |  |  | * |
Jenne Corporation |  |  | 12% |  |  | * |  |  | * |
Westcon Group Inc. |  |  | 11% |  |  |  | 19% |  |  |  | 27% |
* | Less than 10% of accounts receivable
Cash and Cash Equivalents The following is a summary of Cash and cash equivalents (in thousands):
|  | June 30, 2017 |  |  | June 30, 2016 |
Cash |  | $ | 126,159 |  |  | $ | 89,847 |
Cash equivalents (consisting of available-sale-securities) |  |  | 4,291 |  |  |  | 4,275 |
Total cash and cash equivalents |  | $ | 130,450 |  |  | $ | 94,122 |
Available-for-Sale Securities The following is a summary of available-for-sale securities (in thousands):
|  |  |  |  |  |  |  |  |  | Unrealized |  |  | Unrealized |
|  | Amortized |  |  |  |  |  |  | Holding |  |  | Holding |
|  | Cost |  |  | Fair Value |  |  | Gains |  |  | Losses |
June 30, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | 4,291 |  |  | $ | 4,291 |  |  | $ | — |  |  | $ | — |
|  | $ | 4,291 |  |  | $ | 4,291 |  |  | $ | — |  |  | $ | — |
Classified as: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 4,291 |  |  | $ | 4,291 |  |  | $ | — |  |  | $ | — |
|  | $ | 4,291 |  |  | $ | 4,291 |  |  | $ | — |  |  | $ | — |
June 30, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | 4,275 |  |  | $ | 4,275 |  |  | $ | — |  |  | $ | — |
|  | $ | 4,275 |  |  | $ | 4,275 |  |  | $ | — |  |  | $ | — |
Classified as: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 4,275 |  |  | $ | 4,275 |  |  | $ | — |  |  | $ | — |
|  | $ | 4,275 |  |  | $ | 4,275 |  |  | $ | — |  |  | $ | — |
The Company did not have any available-for sale investments in debt securities at June 30, 2017 or 2016. The Company considers highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Investments with maturities of greater than three months, but less than one year at the balance sheet date are classified as Short-term Investments. Investments with maturities of greater than one year at balance sheet date are classified as Marketable Securities. The Company diversifies its investments by limiting its holdings with any individual issuer except for direct obligations of the United States government, securities issued by agencies of the United States government and money market funds. Investments include available-for-sale investment-grade debt securities that the Company carries at fair value. The Company accumulates unrealized gains and losses on the Company's available-for-sale debt securities, net of tax, in accumulated other comprehensive income in the stockholders' equity section of its balance sheets. Such an unrealized gain or loss does not reduce net income for the applicable accounting period. If the fair value of an available-for-sale debt instrument is less than its amortized cost basis, an other-than-temporary impairment is triggered in circumstances where (1) the Company intends to sell the instrument, (2) it is more likely than not that the Company will be required to sell the instrument before recovery of its amortized cost basis, or (3) the Company does not expect to recover the entire amortized cost basis of the instrument (that is, a credit loss exists). If the Company intends to sell or it is more likely than not that the Company will be required to sell the available-for-sale debt instrument before recovery of its amortized cost basis, the Company recognizes an other-than-temporary impairment in earnings equal to the entire difference between the debt instruments' amortized cost basis and its fair value. For available-for-sale debt instruments that are considered other-than-temporarily impaired due to the existence of a credit loss, if the Company does not intend to sell and it is not more likely than not that the Company will be required to sell the instrument before recovery of its remaining amortized cost basis (amortized cost basis less any current-period credit loss), the Company separates the amount of the impairment into the amount that is credit related and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the debt instrument's amortized cost basis and the present value of its expected future cash flows. The remaining difference between the debt instrument's fair value and the present value of future expected cash flows is due to factors that are not credit related and is recognized in other comprehensive income. The Company determines the basis of the cost of a security sold or the amount reclassified out of accumulated other comprehensive income into earnings using the specific identification method. Realized gains or losses recognized on the sale of investments were not significant for fiscal 2015. As of June 30, 2017 and 2016, the Company did not hold any investment securities. Fair Value of Financial Instruments A three-tier fair value hierarchy is utilized to prioritize the inputs used in measuring fair value. The hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels are defined as follows:
| • | Level 1 Inputs - unadjusted quoted prices in active markets for identical assets or liabilities;
| • | Level 2 Inputs - quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and
| • | Level 3 Inputs - unobservable inputs reflecting the Company's own assumptions in measuring the asset or liability at fair value.
The Company did not hold any financial liabilities that required measurement at fair value on a recurring basis. The following table presents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis (in thousands):
June 30, 2017 |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | 4,291 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,291 |
Investment in non-marketable equity |  |  | — |  |  |  | — |  |  |  | 3,000 |  |  |  | 3,000 |
Total |  | $ | 4,291 |  |  | $ | — |  |  | $ | 3,000 |  |  | $ | 7,291 |
June 30, 2016 |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | 4,275 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,275 |
Investment in non-marketable equity |  |  | — |  |  |  | — |  |  |  | 3,000 |  |  |  | 3,000 |
Total |  | $ | 4,275 |  |  | $ | — |  |  | $ | 3,000 |  |  | $ | 7,275 |
Level 2 investments: The Company includes U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, and state, municipal and provincial obligations for which quoted prices are available as Level 2. There were no transfers of assets or liabilities between Level 1 and Level 2 during the fiscal years 2017 or 2016 The fair value of the derivative instruments under our foreign currency contracts is estimated based on valuations provided by alternative pricing sources supported by observable inputs which is considered Level 2. Due to the short duration until maturity of the derivative instruments, the fair value approximates the carrying amount of the Company’s contacts of $27 thousand. The fair value of the borrowings under the Credit Facility is estimated based on valuations provided by alternative pricing sources supported by observable inputs which are considered Level 2. The carrying amount and estimated fair value of the Company’s total long-term indebtedness, including current portion was $93.7 million and $55.5 million as of June 30, 2017 and 2016, respectively. Level 3 investments: Certain of the Company's assets, including intangible assets and goodwill are measured at fair value on a non-recurring basis if impairment is indicated. The Company reflects a non-marketable equity investment as Level 3 in the fair value hierarchy as it is based on unobservable inputs that market participants would use in pricing this asset due to the absence of recent comparable market transactions and inherent lack of liquidity. During fiscal 2015, the Company purchased a $3.0 million equity interest in a company that operates in the enterprise software platform industry. The Company did not entered into any other transactions with the entity during fiscal 2017. Subsequent to the year end, this entity was sold to a third party. The Company will recognized a gain on the investment of approximately $3.7 million in the first quarter of fiscal year 2018. There were no transfers of assets or liabilities between Level 2 and Level 3 during the fiscal years 2017 or 2016. There were no impairments recorded for the fiscal years 2017 or 2016. Inventory Valuation The Company's inventory balance as of June 30, 2017 and 2016 was $45.9 million and $41.0 million, respectively. 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 when conditions exist that suggest that inventory may be in excess of anticipated demand based upon assumptions about future demand or is obsolete. 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).
|  | June 30, 2017 |  |  | June 30, 2016 |
Finished goods |  | $ | 45,090 |  |  | $ | 38,751 |
Raw materials |  |  | 790 |  |  |  | 2,238 |
Total Inventory |  | $ | 45,880 |  |  | $ | 40,989 |
Long-Lived Assets Long-lived assets include (a) property and equipment, (b) goodwill and intangible assets, and (c) other assets. Property and equipment and definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets or asset groups may not be recoverable. If such facts and circumstances exist, the Company assesses the recoverability of these assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairments, if any, are based on the excess of the carrying amount over the fair value of those assets. Goodwill and indefinite-lived intangible assets are generated as a result of business combinations. The Company’s indefinite-lived intangible assets are comprised of acquired in-process research and development (“IPR&D”), which is treated as indefinite until the completion or abandonment of the associated research and development effort. During the development period, the Company conducts an IPR&D impairment test annually and whenever events or changes in facts and circumstances indicate that it is more likely than not that the IPR&D is impaired. Events which might indicate impairment include, but are not limited to, adverse cost factors, deteriorating financial performance, strategic decisions made in response to economic, market, and competitive conditions, the impact of the economic environment on us and our customer base, and/or other relevant events such as changes in management, key personnel, litigations, or customers. Management did not identify any triggering events for any periods presented. The Company evaluates goodwill for impairment on an annual basis (on the first day of its fourth fiscal quarter) or whenever events occur or facts and circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. An impairment loss is recognized to the extent that the carrying amount of goodwill exceeds the asset’s implied fair value. Based on the results of the goodwill impairment analyses, the Company determined that no impairment charge needed to be recorded for any periods presented. Other assets consist primarily of service parts and long term deposits. The Company reduces the carrying value of service parts to net realizable value based on expected quantities needed to satisfy contractual service requirements of customers. (a) Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets. Estimated useful lives of one to four years are used for computer equipment and software. Estimated useful lives of three to seven years are used for office equipment, furniture and fixtures. Depreciation and amortization of leasehold improvements is computed using the lesser of the useful life or lease terms (ranging from two to ten years). Property and equipment consist of the following (in thousands):
|  | June 30, 2017 |  |  | June 30, 2016 |
Computer equipment |  | $ | 34,716 |  |  | $ | 34,657 |
Purchased software |  |  | 11,785 |  |  |  | 5,574 |
Office equipment, furniture and fixtures |  |  | 10,852 |  |  |  | 10,385 |
Leasehold improvements |  |  | 23,046 |  |  |  | 19,342 |
Total property and equipment |  |  | 80,399 |  |  |  | 69,958 |
Less: accumulated depreciation and amortization |  |  | (50,159 | ) |  |  | (40,378 | )
Property and equipment, net |  | $ | 30,240 |  |  | $ | 29,580 |
We recognized depreciation expense of $10.6 million, $10.8 million, and $12.8 million related to property and equipment during the years ended June 30, 2017, 2016, and 2015, respectively. (b) Goodwill and Intangibles As part of the acquisition of WLAN Business, the Company acquired $9.3 million in goodwill which has been allocated to the Company's only reportable segment, the development and marketing of network infrastructure equipment. The following table reflects the changes in the carrying amount of goodwill (in thousands):
|  | June 30, 2017 |
Balance as of June 30, 2016 |  | $ | 70,877 |
Additions due to acquisition |  |  | 9,339 |
Balance at end of period |  | $ | 80,216 |
The following tables summarize the components of gross and net intangible asset balances (in thousands, except years):
|  | Weighted Average |  |  |  |  |  |  |  |  |  |  |  |
|  | Remaining Amortization |  | Gross Carrying |  |  | Accumulated |  |  | Net Carrying |
|  | Period |  | Amount |  |  | Amortization |  |  | Amount |
June 30, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Developed technology |  | 5.3 years |  | $ | 55,400 |  |  | $ | 42,689 |  |  | $ | 12,711 |
Customer relationships |  | 3.3 years |  |  | 40,300 |  |  |  | 37,567 |  |  |  | 2,733 |
Maintenance contracts |  | 1.3 years |  |  | 17,000 |  |  |  | 12,467 |  |  |  | 4,533 |
Trademarks |  | 4.3 years |  |  | 5,100 |  |  |  | 2,846 |  |  |  | 2,254 |
License agreements |  | 6.4 years |  |  | 2,445 |  |  |  | 1,120 |  |  |  | 1,325 |
Other intangibles |  | 2.7 years |  |  | 1,382 |  |  |  | 1,001 |  |  |  | 381 |
Total intangibles, net with finite lives |  |  |  |  | 121,627 |  |  |  | 97,690 |  |  |  | 23,937 |
In-process research and development, with indefinite life |  |  |  |  | 1,400 |  |  |  | — |  |  |  | 1,400 |
Total intangibles, net |  |  |  | $ | 123,027 |  |  | $ | 97,690 |  |  | $ | 25,337 |
|  | Weighted Average |  |  |  |  |  |  |  |  |  |  |  |
|  | Remaining Amortization |  | Gross Carrying |  |  | Accumulated |  |  | Net Carrying |
|  | Period |  | Amount |  |  | Amortization |  |  | Amount |
June 30, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Developed technology |  | 0.2 years |  | $ | 48,000 |  |  | $ | 43,028 |  |  | $ | 4,972 |
Customer relationships |  | 0.3 years |  |  | 37,000 |  |  |  | 32,889 |  |  |  | 4,111 |
Maintenance contracts |  | 2.3 years |  |  | 17,000 |  |  |  | 9,067 |  |  |  | 7,933 |
Trademarks |  | 0.3 years |  |  | 2,500 |  |  |  | 2,222 |  |  |  | 278 |
License agreements |  | 9.7 years |  |  | 3,413 |  |  |  | 1,473 |  |  |  | 1,940 |
Other intangibles |  | 3.7 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):
|  | Year Ended |
|  | June 30, 2017 |  |  | June 30, 2016 |  |  | June 30, 2015 |
Amortization in "Cost of revenues: Product" |  | $ | 7,020 |  |  | $ | 15,369 |  |  | $ | 18,082 |
Amortization of intangibles |  |  | 8,702 |  |  |  | 17,001 |  |  |  | 17,869 |
Total amortization |  | $ | 15,722 |  |  | $ | 32,370 |  |  | $ | 35,951 |
The amortization expense that is recognized in "Cost of revenues: Product" is comprised of amortization for developed technology, license agreements and other intangibles. The estimated future amortization expense to be recorded for each of the respective future fiscal years is as follows (in thousands):
For the fiscal year ending: |  |  |  |
2018 |  | $ | 7,620 |
2019 |  |  | 5,292 |
2020 |  |  | 4,061 |
2021 |  |  | 3,266 |
2022 |  |  | 2,594 |
Thereafter, |  |  | 1,104 |
Total |  | $ | 23,937 |
(c) Other Assets Other assets primarily consist of service parts and long term deposits. The Company holds service parts to support customers who have purchased service contracts with a hardware replacement element, as well as to support our warranty program. The Company held service parts of $10.1 million and $16.0 million as of June 30, 2017 and 2016, respectively. Deferred Revenue, Net Deferred revenue, net represents amounts for (i) deferred maintenance revenue and (ii) deferred product revenue net of the related cost of revenue and other (professional services and training) when the revenue recognition criteria have not been met. The following table summarizes deferred revenue (in thousands):
|  | June 30, 2017 |  |  | June 30, 2016 |
Deferred maintenance |  | $ | 97,310 |  |  | $ | 83,419 |
Deferred product and other revenue |  |  | 7,031 |  |  |  | 11,441 |
Total deferred revenue, net |  |  | 104,341 |  |  |  | 94,860 |
Less: current portion |  |  | 79,048 |  |  |  | 72,934 |
Non-current deferred revenue, net |  | $ | 25,293 |  |  | $ | 21,926 |
The Company offers for sale to its customers, renewable support arrangements, including extended warranty contracts that range generally from one to five years. Deferred support revenue is included within deferred revenue, net within the maintenance revenue category above. The change in the Company’s deferred maintenance revenue balance in relation to these arrangements was as follows (in thousands):
|  | Year Ended |
|  | June 30, 2017 |  |  | June 30, 2016 |
Balance beginning of period |  | $ | 83,419 |  |  | $ | 87,441 |
Deferred maintenance assumed due to acquisition |  |  | 14,159 |  |  |  | — |
New maintenance arrangements |  |  | 125,542 |  |  |  | 110,192 |
Recognition of maintenance revenue |  |  | (125,810 | ) |  |  | (114,214 | )
Balance end of period |  |  | 97,310 |  |  |  | 83,419 |
Less: current portion |  |  | 72,017 |  |  |  | 61,493 |
Non-current deferred revenue |  | $ | 25,293 |  |  | $ | 21,926 |
Deferred Distributors Revenue, Net of Cost of Sales to Distributors At the time of shipment to distributors, the Company records a trade receivable at the contractual discount to list selling price since there is a legally enforceable obligation from the distributor to pay on a current basis for product delivered. The Company relieves inventory for the carrying value of goods shipped since legal title has passed to the distributor, and the Company records deferred revenue and deferred cost of sales in “Deferred distributors revenue, net of cost of sales to distributors” in the liability section of its consolidated balance sheets. Deferred distributors revenue, net of cost of sales to distributors effectively represents the gross margin on the sale to the distributor; however, the amount of gross margin the Company recognizes in future periods will frequently be less than the originally recorded deferred distributors revenue, net of cost of sales to distributors as a result of price concessions negotiated at time of sell-through to end customers. The Company sells each item in its product catalog to all of its distributors worldwide at contractually discounted prices. However, distributors resell the Company’s products to end customers at a very broad range of individually negotiated price points based on customer, product, quantity, geography, and other competitive conditions which results in the Company remitting back to the distributors a portion of their original purchase price after the resale transaction is completed. Thus, a portion of the deferred revenue balance represents a portion of distributors’ original purchase price that will be remitted back to the distributors in the future. The wide range and variability of negotiated price credits granted to distributors does not allow the Company to accurately estimate the portion of the balance in the deferred revenue that will be remitted to the distributors. Therefore, the Company does not reduce deferred revenue by anticipated future price credits; instead, price credits are recorded against revenue when incurred, which is generally at the time the distributor sells the product. The following table summarizes deferred distributors revenue, net of cost of sales to distributors (in thousands):
|  | June 30, 2017 |  |  | June 30, 2016 |
Deferred distributors revenue |  | $ | 55,335 |  |  | $ | 35,138 |
Deferred cost of sales to distributors |  |  | (11,810 | ) |  |  | (8,321 | )
Deferred distributors revenue, net of cost of sales to distributors |  | $ | 43,525 |  |  | $ | 26,817 |
Debt The Company's debt is comprised of the following (in thousands):
|  | June 30, 2017 |  |  | June 30, 2016 |
Current portion of long-term debt: |  |  |  |  |  |  |  |
Term Loan |  | $ | 12,444 |  |  | $ | 17,875 |
Less: unamortized debt issuance costs |  |  | (164 | ) |  |  | (247 | )
Current portion of long-term debt |  | $ | 12,280 |  |  | $ | 17,628 |
Long-term debt, less current portion: |  |  |  |  |  |  |  |
Term Loan |  | $ | 71,268 |  |  | $ | 27,625 |
Revolving Facility |  |  | 10,000 |  |  |  | 10,000 |
Less: unamortized debt issuance costs |  |  | (846 | ) |  |  | (179 | )
Total long-term debt, less current portion |  |  | 80,422 |  |  |  | 37,446 |
Total debt |  | $ | 92,702 |  |  | $ | 55,074 |
The Company's debt repayment schedule by period is as follows, excluding unamortized debt issuance costs (in thousands):
For the fiscal year ending: |  |  |  |
2018 |  | $ | 12,444 |
2019 |  |  | 16,969 |
2020 |  |  | 21,494 |
2021 |  |  | 26,019 |
2022 |  |  | 16,786 |
Total |  | $ | 93,712 |
During the second quarter of fiscal 2017, the Company entered into an Amended and Restated Credit Agreement (the “Credit Facility”) with Silicon Valley Bank, as administrative agent and collateral agent, and the financial institutions that are a party thereto as lenders (“Lenders”). The Credit Facility provided for a five-year $90.5 million term loan (“Term Loan”) and a five-year $50.0 million revolving loan facility (“Revolver”), which included a $5.0 million swing line loan sub facility and a $10.0 million letter of credit sub facility. The Credit Facility among other things, amended and restated the Company’s previous credit facility. The borrowings under the Credit Facility during fiscal 2017 were used to acquire the WLAN Business as more fully described in Note 2. The Credit Facility was amended on March 2, 2017, by Amendment One to such agreement, in anticipation of the acquisition of specified assets and liabilities of Avaya, Inc. (“Avaya”) as more fully described in the Form 8-K filed on that date. On July 14, 2017, the Company entered into the Second Amendment to the Amended and Restated Credit Agreement (“Second Amendment”), which amended the Amended and Restated Credit Agreement, dated as of October 28, 2016 (the “Credit Facility, as amended”), by and among the Company, as borrower, Silicon Valley Bank, as administrative agent and collateral agent, and Lenders. Among other things, the Second Amendment (i) increased the amount of the available borrowing under the Credit Facility from $140.5 million to $243.7 million, composed of (a) the Term Loan in a principal amount of up to $183.7 million and (b) the Revolver in a principal amount of up to $60.0 million, (ii) extends the maturity date under the existing Term Loan and the termination date under the existing Revolver, (iii) provides for an uncommitted additional incremental loan facility in the principal amount of up to $50.0 million (“Incremental Facility”), and (iv) joins certain additional banks, financial institutions and institutional lenders as Lenders pursuant to the terms of the Credit Facility, as amended. On July 14, 2017, the Company borrowed an additional $80.0 million under the Term Loan which was used to fund the purchase of the Avaya Networking business (see Note 14). 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) or the adjusted base rate, plus an applicable margin (currently 1.25% per annum). Borrowings under the Revolver bear interest, at the Company’s option, at a rate equal to either the LIBOR rate, plus an applicable margin (currently 3.25% per annum) or the adjusted base rate, plus an applicable margin (currently 1.25% per annum based). The Revolver has a commitment fee payable on the undrawn amount ranging from 0.375% to 0.50% per annum. If not repaid earlier, the borrowings on the Revolver shall be repaid on the termination date. The Credit Facility, as amended is secured by substantially all of the Company’s assets and is jointly and severally guaranteed by the Company and certain of its subsidiaries. The Credit Facility contains financial covenants that require the Company to maintain a minimum Consolidated Fixed Charge Coverage Ratio and a Consolidated Quick Ratio and a maximum Consolidated Leverage Ratio as well as several other financial and non-financial covenants and restrictions that limit the Company’s ability to incur additional indebtedness, create liens upon any of its property, merge, consolidate or sell all or substantially all of its assets, etc. These covenants, are subject to certain exceptions. The Credit Facility also includes customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, if any representation or warranty made by the Company is false or misleading in any material respect, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, the occurrence of certain ERISA events, the invalidity of the loan documents or a change in control of the Company. The amounts outstanding under the Credit Facility may be accelerated upon certain events of default. Financing costs incurred in connection with obtaining long-term financing are deferred and amortized over the term of the related indebtedness or credit agreement. During the year ended June 30, 2017, in conjunction with the amending of the Credit Facility, as noted above, the Company incurred $1.3 million of deferred financing costs. Amortization of deferred financing costs is included in "Interest expense" in the consolidated statements of operations, totaled $0.5 million, $0.5 million and $0.4 million in fiscal years 2017, 2016 and 2015, respectively. The Company had $39.1 million of availability under the Revolver as of June 30, 2017. The Company had $0.9 million of outstanding letters of credit as of June 30, 2017 and 2016. 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. In the past, we had experienced such errors in connection with products and product updates. 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 following periods (in thousands):
|  | Year Ended |
|  | June 30, 2017 |  |  | June 30, 2016 |
Balance beginning of period |  | $ | 9,600 |  |  | $ | 8,676 |
Warranties assumed due to acquisition |  |  | 2,034 |  |  |  | — |
New warranties issued |  |  | 6,015 |  |  |  | 8,176 |
Warranty expenditures |  |  | (7,642 | ) |  |  | (7,252 | )
Balance end of period |  | $ | 10,007 |  |  | $ | 9,600 |
In the normal course of business to facilitate sales of its products, 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 claims made against certain parties. 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 were $0.4 million, $0.3 million and $0.5 million in fiscal years 2017, 2016 and 2015, respectively. Income Taxes We account for income taxes utilizing the liability method. Deferred income taxes are recorded to reflect consequences on future years of differences between financial reporting and the tax basis of assets and liabilities measured using the enacted statutory tax rates and tax laws applicable to the periods in which differences are expected to affect taxable earnings. A valuation allowance is recognized to the extent that it is more likely than not that the tax benefits will not be realized. The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the provision for income taxes. For additional discussion, see Note 9. Income Taxes.

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