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Balance Sheet Accounts | 3 Months Ended
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Sep. 30, 2018
Organization Consolidation And Presentation Of Financial Statements [Abstract] |
Balance Sheet Accounts |
5. | Balance Sheet Accounts
Cash, Cash Equivalents and Marketable Securities The following is a summary of cash, cash equivalents and marketable securities (in thousands):
|  | September 30, 2018 |  |  | June 30, 2018 |
Cash |  | $ | 140,167 |  |  | $ | 121,139 |
Cash equivalents |  |  | — |  |  |  | — |
Total cash and cash equivalents |  |  | 140,167 |  |  |  | 121,139 |
Marketable securities (consisting of available-for-sale securities) |  |  | 887 |  |  |  | 1,459 |
Total cash, cash equivalents and marketable securities |  | $ | 141,054 |  |  | $ | 122,598 |
The Company considers highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Marketable equity securities are recorded in “Prepaid expense and other current assets” in the accompanying condensed consolidated balance sheets as these securities are publicly-traded with readily determinable values. Marketable equity securities are classified as available-for-sale and reported at fair value with unrealized gains and losses included in “Other (expense) income, net” in the accompanying condensed consolidated statements of operations. Inventories 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inventory allowances when conditions exist that suggest that inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand.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. Inventories consist of the following (in thousands):
|  | September 30, 2018 |  |  | June 30, 2018 |
Finished goods |  | $ | 42,150 |  |  | $ | 49,393 |
Raw materials |  |  | 13,430 |  |  |  | 14,474 |
Total Inventories |  | $ | 55,580 |  |  | $ | 63,867 |
Property and Equipment, Net Property and equipment consist of the following (in thousands):
|  | September 30, 2018 |  |  | June 30, 2018 |
Computers and equipment |  | $ | 63,456 |  |  | $ | 60,677 |
Purchased software |  |  | 21,558 |  |  |  | 21,389 |
Office equipment, furniture and fixtures |  |  | 15,034 |  |  |  | 14,980 |
Leasehold improvements |  |  | 50,959 |  |  |  | 50,070 |
Total property and equipment |  |  | 151,007 |  |  |  | 147,116 |
Less: accumulated depreciation and amortization |  |  | (74,783 | ) |  |  | (68,597 | )
Property and equipment, net |  | $ | 76,224 |  |  | $ | 78,519 |
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, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Developed technology |  | 3.1 years |  | $ | 117,000 |  |  | $ | 63,106 |  |  | $ | 53,894 |
Customer relationships |  | 2.8 years |  |  | 51,639 |  |  |  | 41,578 |  |  |  | 10,061 |
Maintenance contracts |  | 0.1 years |  |  | 17,000 |  |  |  | 16,717 |  |  |  | 283 |
Trade names |  | 3.2 years |  |  | 9,100 |  |  |  | 4,506 |  |  |  | 4,594 |
License agreements |  | 7.3 years |  |  | 2,232 |  |  |  | 1,244 |  |  |  | 988 |
Other intangibles |  | 1.3 years |  |  | 1,382 |  |  |  | 1,179 |  |  |  | 203 |
Total intangibles, net |  |  |  | $ | 198,353 |  |  | $ | 128,330 |  |  | $ | 70,023 |
|  | Weighted Average |  |  |  |  |  |  |  |  |  |  |  |
|  | Remaining Amortization |  | Gross Carrying |  |  | Accumulated |  |  | Net Carrying |
|  | Period |  | Amount |  |  | Amortization |  |  | Amount |
June 30, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Developed technology |  | 3.3 years |  | $ | 117,000 |  |  | $ | 58,299 |  |  | $ | 58,701 |
Customer relationships |  | 3.0 years |  |  | 51,639 |  |  |  | 40,634 |  |  |  | 11,005 |
Maintenance contracts |  | 0.3 years |  |  | 17,000 |  |  |  | 15,866 |  |  |  | 1,134 |
Trade names |  | 3.4 years |  |  | 9,100 |  |  |  | 4,141 |  |  |  | 4,959 |
Backlogs |  | — years |  |  | 1,800 |  |  |  | 1,800 |  |  |  | — |
License agreements |  | 5.8 years |  |  | 2,445 |  |  |  | 1,390 |  |  |  | 1,055 |
Other intangibles |  | 1.6 years |  |  | 1,382 |  |  |  | 1,144 |  |  |  | 238 |
Total intangibles, net |  |  |  | $ | 200,366 |  |  | $ | 123,274 |  |  | $ | 77,092 |
The amortization expense of intangibles for the periods presented is summarized below (in thousands):
|  | Three Months Ended |
|  | September 30, 2018 |  |  | September 30, 2017 |
Amortization in “Cost of revenues: Product” |  | $ | 4,932 |  |  | $ | 2,695 |
Amortization of intangibles |  |  | 2,141 |  |  |  | 1,614 |
Total amortization |  | $ | 7,073 |  |  | $ | 4,309 |
The amortization expense that is recognized in “Cost of revenues: Product” is comprised of amortization for developed technology, license agreements and other intangibles. Deferred Revenue The Company offers for sale to its customers, renewable support arrangements that range from one to five years as well as professional and training services, which results in deferred revenue. Debt The Company’s debt is comprised of the following (in thousands):
|  | September 30, 2018 |  |  | June 30, 2018 |
Current portion of long-term debt: |  |  |  |  |  |  |  |
Term Loan |  | $ | 9,500 |  |  | $ | 9,500 |
Less: unamortized debt issuance costs |  |  | (492 | ) |  |  | (493 | )
Current portion of long-term debt |  | $ | 9,008 |  |  | $ | 9,007 |
Long-term debt, less current portion: |  |  |  |  |  |  |  |
Term Loan |  | $ | 178,125 |  |  | $ | 180,500 |
Revolving Facility |  |  | — |  |  |  | 10,000 |
Less: unamortized debt issuance costs |  |  | (1,627 | ) |  |  | (1,751 | )
Total long-term debt, less current portion |  |  | 176,498 |  |  |  | 188,749 |
Total debt |  | $ | 185,506 |  |  | $ | 197,756 |
On May 1, 2018, the Company entered into a Credit Agreement (the “Credit Agreement”), by and among the Company, as borrower, BMO Harris Bank N.A., as an issuing lender and swingline lender, Bank of Montreal, as administrative and collateral agent, and the financial institutions or entities that are a party thereto as lenders. The Credit Agreement provides for i) $40 million five-year revolving credit facility (the “New Revolving Facility”) ii) a $190 million five-year term loan (the “New Term Loan”) and iii) an uncommitted additional incremental loan facility in the principal amount of up to $100 million (“New Incremental Facility”). On May 1, 2018, the Company borrowed $200 million under the Credit Agreement to pay off existing debt and for general corporate purposes. Borrowings under the Credit Agreement will bear interest, at the Company’s election, as of May 1, 2018, at a rate per annum equal to LIBOR plus 1.50% to 2.75%, or the adjusted base rate plus 0.50% to 1.75%, based on the Company’s Consolidated Leverage Ratio. In addition, the Company is required to pay a commitment fee of between 0.25% and 0.40% quarterly (currently 0.35%) on the unused portion of the New Revolving Facility, also based on the Company’s consolidated leverage ratio. Principal installments are payable on the New Term Loan in varying percentages quarterly starting June 30, 2018 and to the extent not previously paid, all outstanding balances are to be paid at maturity. The Credit Agreement is secured by substantially all of the Company’s assets. The Credit Agreement requires the Company to maintain certain minimum financial ratios at the end of each fiscal quarter. The Credit Agreement also includes covenants and restrictions that limit, among other things, 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. The Credit Agreement also includes customary events of default which may result in acceleration of the outstanding balance. Financing costs incurred in connection with obtaining long-term financing are deferred and amortized over the term of the Credit Agreement. Amortization of deferred financing costs included in “Interest expense” in the accompanying condensed consolidated statements of operations totaled $0.2 million for each of the three month periods ended September 30, 2018 and 2017. The Company had $38.7 million of availability under the New Revolving Facility as of September 30, 2018. The Company had $1.3 million of outstanding letters of credit as of September 30, 2018. 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, 2018 and 2017 (in thousands):
|  | Three Months Ended |
|  | September 30, 2018 |  |  | September 30, 2017 |
Balance beginning of period |  | $ | 12,807 |  |  | $ | 10,584 |
Warranties assumed due to acquisitions |  |  | — |  |  |  | 3,156 |
New warranties issued |  |  | 3,722 |  |  |  | 2,272 |
Warranty expenditures |  |  | (3,928 | ) |  |  | (2,513 | )
Balance end of period |  | $ | 12,601 |  |  | $ | 13,499 |
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. Other long-term liabilities The following is a summary of long-term liabilities (in thousands):
|  | September 30, 2018 |  |  | June 30, 2018 |
Acquisition related deferred payments, less current portion |  | $ | 12,350 |  |  | $ | 13,251 |
Contingent consideration obligations, less current portion |  |  | 4,711 |  |  |  | 4,898 |
Other contractual obligations, less current portion |  |  | 31,402 |  |  |  | 31,200 |
Other |  |  | 15,644 |  |  |  | 9,751 |
Total other long-term liabilities |  | $ | 64,107 |  |  | $ | 59,100 |
Advertising All advertising costs are expensed as incurred. Advertising expenses for three months ended September 30, 2018 and 2017, 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 marketable securities. 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.

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- Definition The entire disclosure for supplemental balance sheet disclosures, including descriptions and amounts for assets, liabilities, and equity. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -URI http://asc.fasb.org/topic&trid=2122208 + Details
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