Balance Sheet Information | 2. Balance Sheet Information Cash, Cash Equivalents and Marketable Securities The following table summarizes our cash and cash equivalents by category (in thousands): As of As of Cash $ 121,402 $ 97,187 Money market funds 52,281 54,186 $ 173,683 $ 151,373 The following tables summarize our marketable securities by category (in thousands): As of August 31, 2015 Amortized Gross Gross Fair Value Asset-backed securities $ 4,951 $ 9 $ (1 ) $ 4,959 Corporate debt securities 21,621 3 (17 ) 21,607 Equity securities 3,095 1,152 — 4,247 Foreign government bonds 207 — (1 ) 206 Mortgage-backed securities 2,657 2 (14 ) 2,645 U.S. government agency securities 7,542 7 (33 ) 7,516 U.S. government notes 2,886 — — 2,886 $ 42,959 $ 1,173 $ (66 ) $ 44,066 As of February 28, 2015 Amortized Gross Gross 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 We use the specific-identification method to determine any realized gains or losses from the sale of our marketable securities classified as available-for-sale. Such realized gains and losses were insignificant for each of the three and six months ended August 31, 2015 and 2014. We reflect these gains and losses as a component of other income (expense), net in the condensed consolidated statements of operations. The following tables present 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 August 31, 2015 Less Than 12 Months 12 Months or Greater Total Fair Unrealized Fair Value Unrealized Fair Value Unrealized Asset-backed securities $ 1,018 $ (1 ) $ — $ — $ 1,018 $ (1 ) Corporate debt securities 13,846 (17 ) — — 13,846 (17 ) Foreign government bonds 207 (1 ) — — 207 (1 ) Mortgage-backed securities 2,219 (14 ) — — 2,219 (14 ) U.S. government agency securities 4,421 (33 ) — — 4,421 (33 ) $ 21,711 $ (66 ) $ — $ — $ 21,711 $ (66 ) As of February 28, 2015 Less Than 12 Months 12 Months or Greater Total Fair Unrealized Fair Value Unrealized Fair Value Unrealized 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 ) We periodically review our marketable securities for other-than-temporary impairment. We consider factors such as the duration, severity and the reason for the decline in value, the potential recovery period and whether we intend to sell. For marketable debt securities, we also consider whether (i) it is more likely than not that we will be required to sell the debt securities before recovery of their amortized cost basis, and (ii) the amortized cost basis cannot be recovered as a result of credit losses. 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 August 31, 2015, we have recognized no other-than-temporary impairment loss. The following table summarizes the estimated fair value of our investments in marketable debt securities by contractual maturities (in thousands): As of Due in 1 year $ 13,738 Due in 1 year through 5 years 21,259 Due in 5 years through 10 years 580 Due after 10 years 4,242 $ 39,819 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. 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 147 Settlements (25 ) Balance as of August 31, 2015 $ 3,484 For the three and six months ended August 31, 2015, the contingent consideration remeasurement was recognized within research and development and sales and marketing expenses in our condensed consolidated statement of operations. Financial assets measured at fair value on a recurring basis are summarized below (in thousands): As of August 31, 2015 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 52,281 $ — $ — $ 52,281 Marketable securities: Asset-backed securities $ — $ 4,959 $ — $ 4,959 Corporate debt securities $ — $ 21,607 $ — $ 21,607 Equity securities $ 4,247 $ — $ — $ 4,247 Foreign government bonds $ — $ 206 $ — $ 206 Mortgage-backed securities $ — $ 2,645 $ — $ 2,645 U.S. government agency securities $ — $ 7,516 $ — $ 7,516 U.S. government notes $ — $ 2,886 $ — $ 2,886 Other accrued liabilities (current): Contingent consideration $ — $ — $ 1,293 $ 1,293 Other long-term liabilities: Contingent consideration $ — $ — $ 2,191 $ 2,191 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 $ — $ — $ 1,150 $ 1,150 Other long-term liabilities: Contingent consideration $ — $ — $ 1,878 $ 1,878 Inventories, Net Inventories, net consisted of the following (in thousands): As of As of Raw materials $ 2,802 $ 2,455 Finished goods 3,448 2,729 Reserves (671 ) (730 ) $ 5,579 $ 4,454 Deferred Costs Deferred costs consisted of the following (in thousands): As of As of Appliance $ 42,777 $ 41,052 Commissions 17,437 16,884 $ 60,214 $ 57,936 Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): As of As of Land $ 9,418 $ 9,354 Building 6,549 6,549 Computer hardware and software 20,023 17,860 Vehicles, machinery and equipment 4,089 3,546 Leasehold improvements 3,307 2,965 43,386 40,274 Accumulated depreciation and amortization (15,599 ) (12,435 ) $ 27,787 $ 27,839 Depreciation and amortization expense related to property and equipment was $1.7 million and $3.3 million for the three and six months ended August 31, 2015, respectively, and $1.2 million and $2.3 million for the three and six months ended August 31, 2014, respectively. Investment in Non-marketable Equity Security As of February 28, 2015, we have invested approximately $1.3 million in stock of a private company, which was accounted for under the equity method. We recognize our proportional share of earnings and losses of the investee in our financial statements and adjust the carrying amount of our investment accordingly. In August 2015, we acquired additional shares of stock in the privately held company for approximately $0.4 million to maintain our approximately 24% ownership interest. For the three and six months ended August 31, 2015, our proportionate share of the investee’s losses was $0.1 million and $0.2 million, respectively. For the three and six months ended August 31, 2014, our proportionate share was not material. The investment is classified in other non-current assets in our condensed consolidated balance sheets. Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss) (“AOCI”), net of tax, were as follows (in thousands): Foreign Unrealized Gains Total Balance as of February 28, 2015 $ (4,225 ) $ (8 ) $ (4,233 ) Other comprehensive income (loss) before reclassifications 324 1,122 1,446 Amounts reclassified from AOCI — (2 ) (2 ) Other comprehensive income (loss) 324 1,120 1,444 Balance as of August 31, 2015 $ (3,901 ) $ 1,112 $ (2,789 ) |