Balance Sheet Information and Fair Value

Cash, Cash Equivalents and Marketable Securities

The following table summarizes our cash and cash equivalents by category (in thousands):



	As of February 28/29,
	2016		2015
Cash and cash equivalents:
Cash	$	60,252	$	97,187
Money market funds	58,402		54,186
	$	118,654	$	151,373

The following table summarizes our marketable securities by category (in thousands):



	As of February 29, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Asset-backed securities	$	4,717	$	9	$	(3	)	$	4,723
Corporate debt securities	19,135		11		(22		)	19,124
Equity securities	3,095		380		—			3,475
Foreign government bonds	205		—		—			205
Mortgage-backed securities	2,341		—		(13		)	2,328
U.S. government agency securities	2,242		6		(14		)	2,234
U.S. government notes	4,279		26		—			4,305
	$	36,014	$	432	$	(52	)	$	36,394



	As of February 28, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Asset-backed securities	$	4,846	$	3	$	(4	)	$	4,845
Corporate debt securities	21,241		17		(13		)	21,245
Equity securities	1,211		37		(32		)	1,216
Foreign government bonds	201		—		—			201
Mortgage-backed securities	2,716		4		(10		)	2,710
U.S. government agency securities	7,310		8		(24		)	7,294
U.S. government notes	3,242		1		—			3,243
	$	40,767	$	70	$	(83	)	$	40,754

The gross realized gains and losses from the sale of our marketable securities classified as available-for-sale were insignificant in all periods presented. We reflect these gains and losses as a component of other income (expense), net in the consolidated statements of operations.

The following table presents gross unrealized losses and fair values for those marketable securities that were in an unrealized loss position aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in thousands):



	As of February 29, 2016
	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Asset-backed securities	$	1,788	$	(3	)	$	—	$	—		$	1,788	$	(3	)
Corporate debt securities	12,088		(22		)	—		—			12,088		(22		)
Mortgage-backed securities	1,746		(8		)	385		(5		)	2,131		(13		)
U.S. government agency securities	887		(10		)	622		(4		)	1,509		(14		)
	$	16,509	$	(43	)	$	1,007	$	(9	)	$	17,516	$	(52	)



	As of February 28, 2015
	Less Than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Asset-backed securities	$	2,385	$	(4	)	$	—	$	—	$	2,385	$	(4	)
Corporate debt securities	11,346		(13		)	—		—		11,346		(13		)
Equity securities	978		(32		)	—		—		978		(32		)
Mortgage-backed securities	1,923		(10		)	—		—		1,923		(10		)
U.S. government agency securities	4,331		(24		)	—		—		4,331		(24		)
	$	20,963	$	(83	)	$	—	$	—	$	20,963	$	(83	)

Unrealized losses related to these investments are due to interest rate fluctuations as opposed to changes in credit quality. We do not intend to sell and it is not more likely than not that we would be required to sell these investments before recovery of their amortized cost basis, which may be at maturity. As of February 29, 2016, we have recognized no other-than-temporary impairment loss. The following table classifies our marketable debt securities by contractual maturities (in thousands):



	As of
	February 29, 2016
Due in 1 year	$	12,409
Due in 1 year through 5 years	16,018
Due in 5 years through 10 years	559
Due after 10 years	3,933
	$	32,919

Fair Value Measurements

We determine fair value based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. 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. The fair value assumes that the transaction to sell the asset or transfer the liability occurs in the principal or most advantageous market for the asset or liability and establishes that the fair value of an asset or liability shall be determined based on the assumptions that market participants would use in pricing the asset or liability. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:



Level 1:	Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2:	Inputs are 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.

Level 3:	Inputs are unobservable inputs based on our assumptions.

Cash equivalents and marketable equity securities are classified within Level 1 because they are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Marketable debt securities and derivative assets are classified within Level 2 if the investments are valued using model driven valuations which use observable inputs such as quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Our marketable securities are held by custodians who obtain investment prices from a third-party pricing provider that incorporates standard inputs in various asset price models.

We estimated the fair value of our Level 3 contingent consideration liabilities based on a weighted probability assessment of achieving the milestones related to certain of our acquisitions. Significant increases (decreases) in the probability assumptions in isolation would result in a significantly higher (lower) fair value measurement. In developing these estimates, we considered unobservable inputs that are supported by little or no market activity and reflect our own assumptions.

Financial assets measured at fair value on a recurring basis are summarized below (in thousands):



	As of February 29, 2016
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	58,402	$	—	$	—	$	58,402
Marketable securities:
Asset-backed securities	$	—	$	4,723	$	—	$	4,723
Corporate debt securities	$	—	$	19,124	$	—	$	19,124
Equity securities	$	3,475	$	—	$	—	$	3,475
Foreign government bonds	$	—	$	205	$	—	$	205
Mortgage-backed securities	$	—	$	2,328	$	—	$	2,328
U.S. government agency securities	$	—	$	2,234	$	—	$	2,234
U.S. government notes	$	—	$	4,305	$	—	$	4,305
Other accrued liabilities (current):
Contingent consideration liability	$	—	$	—	$	1,160	$	1,160
Other long-term liabilities:
Contingent consideration liability	$	—	$	—	$	161	$	161



	As of February 28, 2015
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	54,186	$	—	$	—	$	54,186
Marketable securities:
Asset-backed securities	$	—	$	4,845	$	—	$	4,845
Corporate debt securities	$	—	$	21,245	$	—	$	21,245
Equity securities	$	1,216	$	—	$	—	$	1,216
Foreign government bonds	$	—	$	201	$	—	$	201
Mortgage-backed securities	$	—	$	2,710	$	—	$	2,710
U.S. government agency securities	$	—	$	7,294	$	—	$	7,294
U.S. government notes	$	—	$	3,243	$	—	$	3,243
Derivative assets not designated (current):
Foreign exchange contracts	$	—	$	31	$	—	$	31
Other accrued liabilities (current):
Contingent consideration liability	$	—	$	—	$	1,150	$	1,150
Other long-term liabilities:
Contingent consideration liability	$	—	$	—	$	1,878	$	1,878

The following table summarizes the change in fair value of our Level 3 contingent consideration amounts (in thousands):



Balance as of February 28, 2015	$	3,028
Acquisition addition	334
Total remeasurement recognized in earnings	(1,867		)
Settlements	(174		)
Balance as of February 29, 2016	$	1,321

The contingent consideration remeasurement was recognized within research and development and sales and marketing expenses in the consolidated statements of operations. Refer to Note 3 to the Consolidated Financial Statements for additional information.

Assets Measured at Fair Value on a Non-Recurring Basis

We periodically review our intangible and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted cash flows resulting from use of the asset and its eventual disposition. If not recoverable, an impairment loss would be calculated based on the excess of the carrying amount over the fair value.

We utilized an income approach to estimate the fair value and the inputs used are classified as Level 3 within the fair value hierarchy due to the significance of unobservable inputs using company-specific information. During the fourth quarter of fiscal 2016, we determined there was an impairment due to a decrease in the projected cash flows related to certain developed technologies and customer relationships. We recorded an impairment charge of $1.2 million associated with these assets, included as amortization expense within cost of revenue and sales and marketing expense in the consolidated statements of operations. No impairment charges were recorded in fiscal 2015 and 2014.

Inventories, Net

Inventories, net consisted of the following (in thousands):



	As of February 28/29,
	2016			2015
Raw materials	$	2,459		$	2,455
Finished goods	3,659			2,729
Reserves	(470		)	(730		)
	$	5,648		$	4,454

Deferred Costs

Deferred costs consisted of the following (in thousands):



	As of February 28/29,
	2016		2015
Appliance	$	41,548	$	41,052
Commissions	17,414		16,884
	$	58,962	$	57,936

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):



	As of February 28/29,
	2016			2015
Land	$	9,578		$	9,354
Building	6,549			6,549
Computer hardware and software	26,450			17,860
Vehicles, machinery and equipment	4,711			3,546
Leasehold improvements	4,401			2,965
	51,689			40,274
Accumulated depreciation and amortization	(19,779		)	(12,435		)
	$	31,910		$	27,839

Depreciation and amortization expense related to property and equipment was $7.7 million, $5.2 million and $3.8 million for fiscal 2016, 2015 and 2014, respectively.

Other Investments

As of February 29, 2016 and February 28, 2015, we held approximately $1.6 million and $1.3 million, respectively, or approximately 24% ownership interest, in stock of a privately-held company that was accounted for under the equity method. We recognize our proportional share of earnings and losses of the investee in other income (expense), net in the statements of operations and adjust the carrying amount of our investment accordingly. For fiscal 2016, our proportionate share of the investee’s losses was $0.4 million. For fiscal 2015 and 2014, our proportionate share of the investee’s earnings and losses was not material.

As of February 29, 2016 and February 28, 2015, we held approximately $1.6 million and $0.6 million, respectively, in stock of a privately-held company, which was accounted for under the cost method.

Other investments are classified in other non-current assets in the consolidated balance sheets and are reviewed periodically for impairment.

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), net of tax, were as follows (in thousands):



	Foreign Currency Translation Adjustments			Unrealized Gain (Loss) on Available-for- Sale Investments			Total
Balance as of February 28, 2015	$	(4,225	)	$	(8	)	$	(4,233	)
Other comprehensive income (loss) before reclassifications	(669		)	403			(266		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			(10		)	(10		)
Other comprehensive income (loss)	(669		)	393			(276		)
Balance as of February 29, 2016	$	(4,894	)	$	385		$	(4,509	)