0001104659-16-153742 | 10-Q | XBRL Viewer

Document and Entity Information - shares	3 Months Ended
Sep. 30, 2016	Oct. 21, 2016
Document and Entity Information
Entity Registrant Name	ACCURAY INC
Entity Central Index Key	0001138723
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		81,693,888
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Current assets:
Cash and cash equivalents	$ 83,616	$ 119,771
Short-term investments	40,806	47,239
Restricted cash	470	891
Accounts receivable, net of allowance for doubtful accounts of $800 and $826 as of September 30, 2016 and June 30, 2016, respectively	56,939	56,810
Inventories	117,358	115,987
Prepaid expenses and other current assets	14,655	16,098
Deferred cost of revenue	4,994	4,884
Total current assets	318,838	361,680
Property and equipment, net	26,579	27,878
Goodwill	57,844	57,848
Intangible assets, net	5,622	7,611
Deferred cost of revenue	1,833	1,996
Other assets	12,017	12,020
Total assets	422,733	469,033
Current liabilities:
Accounts payable	17,049	15,229
Accrued compensation	19,006	18,725
Other accrued liabilities	20,100	22,184
Short-term debt	3,500	39,900
Customer advances	21,298	22,123
Deferred revenue	91,265	92,051
Total current liabilities	172,218	210,212
Long-term liabilities:
Long-term other liabilities	9,454	10,984
Deferred revenue	16,167	17,665
Long-term debt	171,524	170,512
Total liabilities	369,363	409,373
Commitments and contingencies (Note 5)
Stockholders' Equity:
Preferred stock, $0.001 par value; authorized: 5,000,000 shares; no shares issued and outstanding
Common stock, $0.001 par value; authorized: 200,000,000 shares as of September 30, 2016 and June 30, 2016 respectively; issued and outstanding: 81,693,888 and 81,378,208 shares at September 30, 2016 and June 30, 2016, respectively	82	81
Additional paid-in capital	484,863	481,346
Accumulated other comprehensive loss	(842)	(960)
Accumulated deficit	(430,733)	(420,807)
Total stockholders' equity	53,370	59,660
Total liabilities and stockholders' equity	$ 422,733	$ 469,033

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Net revenue:
Products	$ 35,599	$ 39,995
Services	50,907	49,636
Total net revenue	86,506	89,631
Cost of revenue:
Cost of products	23,352	23,017
Cost of services	31,810	32,716
Total cost of revenue	55,162	55,733
Gross profit	31,344	33,898
Operating expenses:
Research and development	12,229	14,296
Selling and marketing	14,318	13,417
General and administrative	11,344	13,416
Total operating expenses	37,891	41,129
Loss from operations	(6,547)	(7,231)
Other expense, net	(4,005)	(5,091)
Loss before provision for income taxes	(10,552)	(12,322)
Provision for (benefit from) income taxes	(626)	704
Net loss	$ (9,926)	$ (13,026)
Loss per share attributable to stockholders
Net loss per share - basic and diluted	$ (0.12)	$ (0.16)
Weighted average common shares used in computing loss per share Basic and diluted	81,576	79,760
Net loss	$ (9,926)	$ (13,026)
Foreign currency translation adjustment	119	(258)
Unrealized gain (loss) on investments, net of tax	(2)	38
Comprehensive loss	$ (9,809)	$ (13,246)

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash Flows From Operating Activities
Net loss	$ (9,926)	$ (13,026)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	4,655	4,559
Share-based compensation	3,473	2,514
Amortization of debt issuance costs	403	403
Amortization and accretion of discount and premium on investments	41	270
Accretion of interest on debt	816	1,920
Recovery of (provision for) bad debt, net	(27)	36
Provision for write-down of inventories	303	424
Loss on disposal of property and equipment		8
Changes in assets and liabilities:
Restricted cash	421
Accounts receivable	166	20,902
Inventories	(1,517)	(7,193)
Prepaid expenses and other assets	1,547	(65)
Deferred cost of revenue	57	(704)
Accounts payable	1,768	710
Accrued liabilities	(4,985)	(13)
Customer advances	(926)	3,609
Deferred revenue	(2,619)	(2,098)
Net cash provided by (used in) operating activities	(6,350)	12,256
Cash Flows From Investing Activities
Purchases of property and equipment, net	(1,299)	(1,544)
Purchases of investments	(8,992)	(15,439)
Sales and maturities of investments	15,382	12,000
Net cash (used in) provided by investing activities	5,091	(4,983)
Cash Flows From Financing Activities
Proceeds from employee stock plans	1,227	1,034
Taxes paid related to net share settlement of equity awards	(99)	(1,060)
Payments made to note holders	(36,608)
Net cash used in financing activities	(35,480)	(26)
Effect of exchange rate changes on cash and cash equivalents	584	(1,214)
Net (decrease) increase in cash and cash equivalents	(36,155)	6,033
Cash and cash equivalents at beginning of period	119,771	79,551
Cash and cash equivalents at end of period	$ 83,616	$ 85,584

Summary of Significant Accounting Policies

3 Months Ended

Sep. 30, 2016

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

Description of Business

Accuray Incorporated (together with its subsidiaries, the “Company” or “Accuray”) is incorporated in Delaware and has its principal place of business in Sunnyvale, California. The Company designs, develops and sells advanced radiosurgery and radiation therapy systems for the treatment of tumors throughout the body. The Company has offices in the United States, Switzerland, China, Hong Kong and Japan and conducts its business worldwide.

Basis of Presentation and Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures have been condensed or omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair presentation of the periods presented. The results for the three months ended September 30, 2016 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2017, or for any other future interim period or fiscal year.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes for the fiscal year ended June 30, 2016 included in the Company’s Annual Report on Form 10-K filed with the SEC on August 24, 2016. The Company’s significant accounting policies are described in Note 2 to those audited consolidated financial statements and there have been no material changes to such policies.

We reclassified the debt issuance costs from other assets in the prior year’s condensed consolidated balance sheet to long-term debt to conform to the current quarter presentation upon the adoption of ASU No. 2015-03 as discussed below.

Recent Accounting Standard Update Not Yet Effective

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2016-13 (ASU 2016-13) Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets held. This guidance will become effective for the Company beginning in the third quarter of fiscal year 2020 and must be adopted using a modified retrospective approach, with certain exceptions. Early adoption is permitted beginning in the third quarter of fiscal year 2019. The Company is currently evaluating the impact of the adoption of this standard on its condensed consolidated financial statements and related disclosures.

In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09, Compensation-Stock Compensation (Topic 718). The new guidance simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this standard are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this standard on its condensed consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under the new guidance, a lessee will be required to recognize assets and liabilities for all leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. This ASU requires additional disclosures. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The ASU requires adoption based upon a modified retrospective transition approach. Early adoption is permitted. The Company has not yet selected a transition method, has not yet determined whether it will elect early adoption and is currently evaluating the impact of the adoption of this standard on its condensed consolidated financial statements and related disclosures.

In January 2016, the FASB issued ASU No. 2016-01 (ASU 2016-01) Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 changes accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, it clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The guidance will become effective for the Company beginning in the third quarter of fiscal year 2018 and must be adopted using a modified retrospective approach, with certain exceptions. Early adoption is permitted for certain provisions. The Company is currently evaluating the impact of the adoption of this standard on its condensed consolidated financial statements and related disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is required to be adopted, using either of two methods: (i) retrospective to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospective with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. On July 9, 2015, the FASB approved a one year deferral of the effective period of ASU 2014-09. The standard will be effective for the Company for fiscal year 2019, but entities will be permitted to early adopt the standard as of the original effective date. The FASB issued supplemental adoption guidance and clarification to ASU 2014-09 in March 2016, April 2016 and May 2016 within ASU 2016-08 Revenue From Contracts With Customers: Principal vs. Agent Considerations, ASU 2016-10 Revenue From Contracts with Customers: Identifying Performance Obligations and Licensing, and ASU 2016-12 Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients, respectively. The Company has not yet selected a transition method and is currently evaluating the impact of the adoption of these standards on its condensed consolidated financial statements and related disclosures.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures at the date of the financial statements. Key estimates and assumptions made by the Company relate to revenue recognition, assessment of recoverability of goodwill and intangible assets, valuation of inventories, share-based compensation expense, income taxes, allowance for doubtful accounts, loss contingencies and corporate bonus expenses. Actual results could differ materially from those estimates.

Concentration of Credit and Other Risks

The Company’s cash, cash equivalents and investments are deposited with several major financial institutions. At times, deposits in these institutions exceed the amount of insurance provided on such deposits. The Company has not experienced any losses in such accounts and does not believe that it is exposed to any significant risk of loss on these balances.

For the three months ended September 30, 2016, there were no customers that represented 10% or more of total net revenue. For the three months ended September 30, 2015, there was one customer that represented 15% of total net revenue. One customer accounted for 17% and 18% of the Company’s total accounts receivable as of September 30, 2016, and June 30, 2016, respectively.

Accounts receivable are typically not collateralized. The Company performs ongoing credit evaluations of its customers and maintains reserves for potential credit losses. Accounts receivable are deemed past due in accordance with the contractual terms of the agreement. Accounts receivable balances are charged against the allowance for doubtful accounts once collection efforts are unsuccessful.

Single source suppliers presently provide the Company with several components. In most cases, if a supplier was unable to deliver these components, the Company believes that it would be able to find other sources for these components subject to any regulatory qualifications, if required.

Revenue Recognition

The Company earns revenue from the sale of products and related services. The Company records revenues net of any value added or sales tax. For arrangements with multiple elements, the Company allocates arrangement fees to products and services based upon Vendor Specific Objective Evidence (“VSOE”) of fair value of the respective elements, Third-Party Evidence (“TPE”), or Best Estimate of Selling Price (“BESP”), using the relative selling price method.

Product and Service Revenue

The majority of product revenue is generated from sales of CyberKnife and TomoTherapy Systems. If the Company is responsible for installation, the Company recognizes revenue after installation and acceptance of the system. Otherwise, revenue is recognized upon delivery, assuming all other revenue recognition criteria are met.

The Company offers systems with post-contract customer support (“PCS”), installation services, training and professional services. PCS includes planned and corrective maintenance services, software updates, bug fixes, as well as call-center support. Service revenue is generated primarily from PCS (warranty period services and post warranty services), installation services, training, parts and upgrades that are sold under service contracts and professional services. PCS revenue is deferred and recognized over the service period. Installation service revenue is recognized concurrently with system revenue. Training and professional service revenues that are not deemed essential to the functionality of the systems are recognized as such services are performed.

Costs associated with service revenue are expensed when incurred, except when those costs are related to parts or system upgrades where revenue recognition has been deferred. In those cases, the costs are deferred and recognized over the period of revenue recognition.

Net Income (Loss) Per Common Share

Basic and diluted net income (loss) per share is computed by dividing net income (loss) attributable to stockholders by the weighted average number of common shares outstanding during the period.

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per share follows (in thousands):

	Three Months Ended September 30,
	2016			2015
Numerator:
Net loss used to compute basic and diluted loss per share	$	(9,926	)	$	(13,026	)

Denominator:
Weighted average shares used to compute basic and diluted loss per share	81,576			79,760

The potentially dilutive shares of the Company’s common stock resulting from the assumed exercise of outstanding stock options, the vesting of Restricted Stock Units (RSU), Market Stock Units (MSU) and Performance Stock Units (PSU), and the purchase of shares under the Employee Stock Purchase Program (ESPP), as determined under the treasury stock method, are excluded from the computation of diluted net loss per share because their effect would have been anti-dilutive. Additionally, the 3.50% Convertible Senior Notes due February 1, 2018 (the “3.50% Convertible Notes”) and the 3.50% Series A Convertible Notes (the “3.50% Series A Convertible Notes”) due February 1, 2018 (together, the “Convertible Notes”) are included in the calculation of diluted net income per share only if their inclusion is dilutive. The following table sets forth all potentially dilutive securities excluded from the computation in the table above because their effect would have been anti-dilutive (in thousands):

	As of September 30,
	2016	2015
Stock options	2,175	2,458
RSUs, PSUs and MSUs	4,858	4,095
3.50% Convertible Notes	8,378	8,378

	15,411	14,931

Outstanding Convertible Notes—Diluted Share Impact

The 3.50% Series A Convertible Notes have an optional physical (share), cash or combination settlement feature and contain certain conditional conversion features. Due to the optional cash settlement feature and management’s intent to settle the principal amount thereof in cash, the conversion shares underlying the outstanding principal amount of the 3.50% Series A Convertible Notes, totaling approximately 3.9 million shares were not included in the potentially diluted share count table above. The zero potentially dilutive shares of the 3.50% Series A Convertible Notes as of September 30, 2016 and 2015, respectively, included in the table above are the result of the lower average share price, which was below the conversion price and management’s intent to settle the principal amount thereof in cash. The number of premium shares included in the Company’s diluted share count will vary with fluctuations in the Company’s share price. Higher actual share prices result in a greater number of premium shares.

Segment Information

The Company has one operating and reporting segment (oncology systems group), which develops, manufactures and markets proprietary medical devices used in radiation therapy and radiosurgery for the treatment of cancer patients. The Company’s Chief Executive Officer, its Chief Operating Decision Maker reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. The Company does not assess the performance of its individual product lines on measures of profit or loss, or asset based metrics. Therefore, the information below is presented only for revenues and long-lived tangible assets by geographic areas. Revenue by geographic region is based on the shipping addresses of the Company’s customers. The following summarizes revenue by geographic region (in thousands):

	Three Months Ended
	September 30,
	2016		2015
Americas	$	40,642	$	45,290
Europe, India Middle East, and Africa	21,282		23,034
Asia-Pacific	13,225		16,982
Japan	11,357		4,325

Total	$	86,506	$	89,631

Information regarding geographic areas in which the Company has long lived tangible assets is as follows (in thousands):

	September 30,		June 30,
	2016		2016
Americas	$	22,374	$	23,842
Europe, India Middle East, and Africa	483		551
Asia-Pacific	1,733		1,342
Japan	1,989		2,143

Total	$	26,579	$	27,878

Balance Sheet Components

3 Months Ended

Sep. 30, 2016

Balance Sheet Components

Balance Sheet Components

2. Balance Sheet Components

Financing receivables

A financing receivable is a contractual right to receive money, on demand or on fixed or determinable dates, that is recognized as an asset in the Company’s balance sheet. The Company’s financing receivables, consisting of its accounts receivable with contractual maturities of more than one year and capital leases, totaled $7.0 million and $7.6 million at September 30, 2016 and June 30, 2016, respectively, and are included in Other Assets in the condensed consolidated balance sheets. Of the $7.0 million in financing receivables at September 30, 2016, $3.3 million are related to sales-type leases with customers while the remaining $3.7 million are related to contractual maturities of more than one year. Of the $7.6 million in financing receivables at June 30, 2016, $3.5 million are related to sales-type leases with customers while the remaining $4.1 million related to contractual maturities of more than one year. Due to the homogenous nature of the leasing transactions, the Company manages them on an aggregate basis when assessing and monitoring credit risk. The Company evaluates the credit quality of an obligor at lease inception and monitors credit quality over the term of the underlying transactions. The Company performs a credit analysis for all new customers and reviews payment history, current order backlog, financial performance of the customers and other variables that augment or mitigate the inherent credit risk of a particular transaction. Such variables include the underlying value and liquidity of the collateral, the essential use of the equipment, the term of the lease and the inclusion of credit enhancements, such as guarantees, letters of credit or security deposits. Accounts rated as low risk typically have the equivalent of a Moody’s rating of Baa3 or higher, while accounts rated as moderate risk generally have the equivalent of a Ba1 or lower. The Company classifies accounts as high risk when it considers the financing receivable to be impaired or when management believes there is a significant near-term risk of non-payments. As of September 30, 2016, the sales-type lease portion of the financing receivables was rated at a moderate risk. The Company performed an assessment of the allowance for credit losses related to its financing receivables as of September 30, 2016. Based upon such assessment, the Company did not record an allowance for credit losses related to such financing receivables as of September 30, 2016 and June 30, 2016, respectively.

A summary of the Company’s financing receivables is presented as follows:

September 30, 2016 (in thousands)	Lease Receivables			Financed Service Contracts and Other		Total
Gross	$	4,650		$	5,416	$	10,066
Residual value	—			—		—
Unearned income	(568		)	—		(568		)
Allowance for credit loss	—			—		—

Total, net	$	4,082		$	5,416	$	9,498

Reported as:
Current	$	733		$	1,758	$	2,491
Non-current	3,349			3,658		7,007

Total, net	$	4,082		$	5,416	$	9,498

June 30, 2016 (in thousands)	Lease Receivables			Financed Service Contracts and Other		Total
Gross	$	4,998		$	5,840	$	10,838
Residual value	—			—		—
Unearned income	(623		)	—		(623		)
Allowance for credit loss	—			—		—

Total, net	$	4,375		$	5,840	10,215

Reported as:
Current	$	840		$	1,778	$	2,618
Non-current	3,535			4,062		7,597

Total, net	$	4,375		$	5,840	$	10,215

Actual cash collections may differ from the contracted maturities due to early customer buyouts, refinancing, or defaults. Future minimum lease payments to be received as of September 30, 2016 are presented as follows:

Year Ending September 30, (in thousands)	Amount
2017	$	620
2018	930
2019	930
2020	930
2021	930
2022	310

Total	$	4,650

Inventories

Inventories consisted of the following (in thousands):

	September 30,		June 30,
	2016		2016
Raw materials	$	48,977	$	50,480
Work-in-process	16,445		20,190
Finished goods	51,936		45,317

Inventories	$	117,358	$	115,987

Property and equipment, net

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

	September 30,			June 30,
	2016			2016
Furniture and fixtures	$	4,464		$	4,527
Computer and office equipment	11,636			11,485
Software	11,319			11,104
Leasehold improvements	22,780			21,632
Machinery and equipment	49,579			47,171
Construction in progress	1,814			4,412

	101,592			100,331
Less: Accumulated depreciation	(75,013		)	(72,453		)

Property and equipment, net	$	26,579		$	27,878

Depreciation expense related to property and equipment for the three months ended September 30, 2016 and 2015 was $2.7 million and $2.6 million, respectively.

Goodwill and Intangible Assets

3 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets

Goodwill and Intangible Assets

3. Goodwill and Intangible Assets

Goodwill

Activity related to goodwill consisted of the following (in thousands):

	Three Months			Year
	Ended			Ended
	September 30,			June 30,
	2016			2016
Balance at the beginning of the period	$	57,848		$	58,054
Currency translation	(4		)	(206		)

Balance at the end of the period	$	57,844		$	57,848

In the second quarter of fiscal 2016, the Company performed its annual goodwill impairment test. Based on this analysis, the Company determined that there was no impairment to goodwill. The Company will continue to monitor its recorded goodwill for indicators of impairment. In the three months ended September 30, 2016, there were no indicators of impairment.

Intangible Assets

The Company’s unamortized intangible assets associated with completed acquisitions at September 30, 2016 and June 30, 2015 are as follows (in thousands):

		September 30, 2016							June 30, 2016
		Gross							Gross
		Carrying		Accumulated			Net		Carrying		Accumulated			Net
	Useful Lives	Amount		Amortization			Amount		Amount		Amortization			Amount
	(in years)
Developed technology	5 — 6	$	46,743	$	(41,121	)	$	5,622	$	46,743	$	(39,132	)	$	7,611

The Company did not identify any triggering events that would indicate potential impairment of its definite-lived intangible and long-lived assets as of September 30, 2016 and June 30, 2016.

Amortization expense related to intangible assets for the three months ended September 30, 2016 and 2015 was $2.0 million and $2.0 million, respectively.

The estimated future amortization expense of purchased intangible assets as of September 30, 2016 is as follows (in thousands):

Year Ending June 30,	Amount
2017 (remaining 9 months)	$	5,622

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Financial Instruments

3 Months Ended

Sep. 30, 2016

Financial Instruments

Financial Instruments

5. Financial Instruments

The Company considers all highly liquid investments held at major banks, certificates of deposit and other securities with original maturities of three months or less to be cash equivalents.

The Company classifies all of its investments as available-for-sale at the time of purchase because management intends that these investments are available for current operations and includes these investments on its balance sheet as short-term investments. Investments with original maturities longer than three months include commercial paper, U.S. agency securities, non-U.S. government securities and investment-grade corporate debt securities. Investments classified as available-for-sale are recorded at fair market value with the related unrealized gains and losses included in accumulated other comprehensive income (loss), a component of stockholders’ equity. Realized gains and losses are recorded based on specific identification of each security’s cost basis.

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels of inputs that may be used to measure fair value, as follows:

Level 1— Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.

Level 2— Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets in non-active markets;

Inputs other than quoted prices that are observable for the asset or liability; and

Inputs that are derived principally from or corroborated by other observable market data.

Level 3— Unobservable inputs that cannot be corroborated by observable market data and require the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

The following tables summarize the amortized cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category for cash, cash equivalents and short-term investments (in thousands):

	September 30, 2016
								Estimated Market Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Cash and Cash Equivalents		Short-term Investments

Cash	$	80,266	$	—	$	—		$	80,266	$	—

Level 1
Money market funds	3,350		—		—			3,350		—

	3,350		—		—			3,350		—

Level 2
U.S. agency securities	34,993		5		(22		)	—		34,976
U.S. treasury bills	2,000		—		—			—		2,000
Corporate notes	3,830		1		(1		)	—		3,830

	40,823		6		(23		)	—		40,806

Total	$	124,439	$	6	$	(23	)	$	83,616	$	40,806

	June 30, 2016
								Estimated Market Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Cash and Cash Equivalents		Short-term Investments

Cash	$	95,906	$	—	$	—		$	95,906	$	—

Level 1
Money market funds	13,362		—		—			13,362		—

	13,362		—		—			13,362		—

Level 2
Commercial paper	14,704		—		—			8,938		5,766
U.S. government agency securities	28,000		7		(17		)	—		27,990
U.S. Treasury securities	3,997		1		—			—		3,998
Municipal debt securities	1,565		—		—			1,565		—
Corporate debt securities	9,491		—		(6		)	—		9,485

	57,757		8		(23		)	10,503		47,239

Total	$	167,025	$	8	$	(23	)	$	119,771	$	47,239

Certain investments in the table above are classified as having Level 2 inputs because quoted prices in an active market are not readily accessible for those specific financial assets, or the Company may have relied on alternative pricing methods that do not rely exclusively on quoted prices to determine the fair value of the investments.

The Company had investments that were in an unrealized loss position as of September 30, 2016. The Company determined that (i) it does not have the intent to sell any of these investments and (ii) it is not likely that it will be required to sell any of these investments before recovery of the entire amortized cost basis. The Company reviews its investments quarterly to identify and evaluate investments that have an indication of possible impairment. As of September 30, 2016, the Company anticipates that it will recover the entire carrying value of such investments and has determined that no other-than-temporary impairments associated with credit losses were required to be recognized during the three months ended September 30, 2016.

Contractual maturities of available-for-sale securities at September 30, 2016 were as follows (in thousands):

	September 30, 2016
	Amortized Cost		Fair Value
Due in 1 year or less	$	12,181	$	12,182
Due in 1-2 years	31,992		31,974

	$	44,173	$	44,156

The following table summarizes our available-for-sale debt securities that were in a continuous unrealized loss position, but were not deemed to be other-than-temporarily impaired:

	Less Than 12 Months					12 Months or Greater					Total
(in thousands)	Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value
September 30, 2016
Debt securities:
Corporate debt securities	$	(1	)	$	3,830	—			—		$	(1	)	$	3,830
U.S. government agencies securities	—			—		(22		)	31,974		(22		)	31,974

Total	$	(1	)	$	3,830	$	(22	)	$	31,974	$	(23	)	$	35,804

June 30, 2016
Debt securities:
Corporate debt securities	$	(3	)	$	6,325	$	(3	)	$	3,160	$	(6	)	$	9,485
U.S. government agencies securities	—			—		(17		)	19,988		(17		)	19,988

Total	$	(3	)	$	6,325	$	(20	)	$	23,148	$	(23	)	$	29,473

The Company held a total of 10 positions as of September 30, 2016 and 11 positions as of June 30, 2016 that were in an unrealized loss position. Based on the Company’s review of these securities, the Company believes it had no other-than-temporary impairments on these securities as of September 30, 2016 and June 30, 2016 because it does not intend to sell these securities and believes it is not more likely than not that it will be required to sell these securities before the recovery of their amortized cost basis. Gross realized gains and gross realized losses were insignificant for the three months ended September 30, 2016 and the year ended June 30, 2016.

Assets and Liabilities That Are Measured at Fair Value on a Nonrecurring Basis

The Company’s non-marketable equity investments and non-financial assets, such as goodwill, intangible assets, and property, plant, and equipment (measured at fair value if a write-down is recognized) are evaluated for impairment annually or when indicators of impairment exist. The fair value measurement of non-marketable equity investments is performed by a third-party analyst using Level 3 inputs. Non-financial assets such as identified intangible assets acquired in connection with an acquisition are measured at fair value using Level 3 inputs, which include discounted cash flow methodologies, or similar techniques, when there is limited market activity and the determination of fair value requires significant judgment and estimates. In addition, in evaluating the fair value of goodwill impairment, further corroboration is obtained using our market capitalization. The Company did not record any impairment charges for non-marketable equity investments and non-financial asset in the three months ended September 30, 2016.

The long-term debt is measured on a non-recurring basis using Level 2 inputs based upon observable inputs of the Company’s underlying stock price and the time value of the conversion option, since an observable quoted price of the Convertible Notes is not readily available.

The following table summarizes the carrying values and estimated fair values of our short-term and long-term debt (in thousands):

	September 30, 2016				June 30, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
3.75% Convertible Notes	$	—	$	—	$	36,400	$	36,487
3.50% Convertible Notes	43,417		58,397		43,195		51,450
3.50% Series A Convertible Notes	67,178		91,996		66,613		81,053
Secured Loan	64,429		64,429		64,204		64,204

Total	$	175,024	$	214,822	$	210,412	$	233,194

The short-term and long-term debt is measured on a non-recurring basis using Level 2 inputs based upon observable inputs of the Company’s underlying stock price and the time value of the conversion option, since an observable quoted price of the Convertible Notes is not readily available.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Debt

3 Months Ended

Sep. 30, 2016

Debt

Debt

8. Debt

First Lien Senior Secured Term Loan due January 2021 (Secured Loan)

On January 11, 2016, the Company closed a $70.0 million first lien senior secured debt financing agreement with Cerberus Business Finance, LLC, an affiliate of Cerberus Capital Management, L.P (the “Secured Loan”). As required by the terms of the financing, upon the closing of the financing in January 2016, the Company used a portion of the net proceeds from the financing to repurchase approximately $63.4 million in aggregate principal amount of the 3.75% Convertible Senior Notes for $66.6 million in cash. In August 2016, the Company settled the remaining approximately $36.6 million in aggregate principal amount of the 3.75% Convertible Senior Notes and accrued interest for $37.3 million in cash.. The Secured Loan bears interest at a variable rate per annum equal to, at the Company’s option, (i) the LIBOR Rate for one month plus an applicable margin of 7.00% (subject to a LIBOR Rate floor of 1.00% per annum), or (ii) a Reference Rate, which is the higher of 1) 3.25%, 2) Federal Funds Rate plus 0.5%, 3) the LIBOR rate for 1 month plus 1%, and 4) the US Prime Rate as published in the Wall Street Journal, plus an applicable margin of 4.75% per annum. The loan is repayable in consecutive quarterly installments of $875,000 with the final payment due on the Final Maturity Date. The Secured Loan matures on the earlier of: (i) January 11, 2021 and (ii) the date that is 120 days prior to the scheduled maturity date of the 3.5% Convertible Senior Notes maturing February 1, 2018 unless the Company has set aside specifically identifiable funds raised from new common equity or new debt equal to the then-outstanding principal amount of the 3.5% Convertible Senior Notes. The net proceeds from the offering, after deducting the initial purchaser’s discount and commission and the related offering costs, were approximately $65.5 million. The offering costs of $3.1 million and the initial purchaser’s discount and commission of $1.4 million (both of which are recorded in Long-term Debt) are being amortized to interest expense using the effective interest method over five years. The Secured Loan is secured by first-priority liens on substantially all the assets of the Company.

The covenants in the Secured Loan include:

Secured leverage —defines the maximum amount of secured leverage that can be on the Company’s books at a given point in time calculated by the total secured debt divided by the last twelve months’ adjusted EBITDA;

Total leverage —defines the maximum amount of total leverage that can be on the Company’s books at a given point in time calculated by the total debt divided by the last twelve months’ adjusted EBITDA;

Fixed Charge Coverage Ratio — designed to ensure that the Company’s cash fixed charges are met with adequate free cash flow based on a minimum coverage ratio to be set and maintained;

Minimum EBITDA — defines the minimum amount of adjusted EBITDA the Company must maintain and generate;

Maximum CapEx — defines how much cash the Company can use annually to pursue capital projects, purchase PP&E and other related activities during the life of the loan; and

Affirmative and negative covenants — defines reporting requirements, subsidiary asset restrictions, dividend distribution and repayment requirements among other general requirements.

The Company may, at its election, repay the Secured Loan at any time and if so, the Company will be required to pay a prepayment premium of 2% if the Secured Loan is repaid or accelerated within the first year on the amount repaid and 1% if the Secured Loan is repaid or accelerated within the second year on the amount repaid.

3.75% Convertible Senior Notes due August 2016

On August 1, 2011, the Company issued the 3.75% Convertible Senior Notes to certain qualified institutional buyers, or QIBs. The 3.75% Convertible Senior Notes were offered and sold to the QIBs pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), or Rule 144A. The net proceeds from the $100 million offering, after deducting the initial purchaser’s discount and commission and the related offering costs, were approximately $96.1 million. The offering costs and the initial purchaser’s discount and commission (which are recorded in Long-term Debt) were amortized to interest expense using the effective interest method over five years. The 3.75% Convertible Senior Notes bore interest at a rate of 3.75% per year, payable semi-annually in arrears in cash on February 1 and August 1 of each year, beginning on February 1, 2012. The 3.75% Convertible Senior Notes matured on August 1, 2016. A portion of these notes were redeemed in January 2016, and the remainder of these notes was redeemed on August 1, 2016, as discussed further below.

The 3.75% Convertible Senior Notes were issued under an Indenture between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee. Holders of the 3.75% Convertible Senior Notes may convert their 3.75% Convertible Senior Notes at any time on or after May 1, 2016 until the close of business on the business day immediately preceding the maturity date. Prior to May 1, 2016, holders of the 3.75% Convertible Senior Notes could convert their 3.75% Convertible Senior Notes only under the following circumstances: (1) during any calendar quarter after the calendar quarter ending September 30, 2011, and only during such calendar quarter, if the closing sale price of the Company’s common stock for each of 20 or more trading days in the 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the conversion price in effect on the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading-day period (such five consecutive trading-day period, the “Note Measurement Period”) in which the trading price per $1,000 principal amount of 3.75% Convertible Senior Notes for each trading day of that Note Measurement Period was equal to or less than 98% of the product of the closing sale price of shares of the Company’s common stock and the applicable conversion rate for such trading day; (3) if the Company calls any or all of the 3.75% Convertible Senior Notes for redemption, at any time prior to the close of business on the business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate transactions as described in the Indenture. Upon conversion by holders of the 3.75% Convertible Senior Notes, the Company will have the right to pay or deliver, as the case may be, cash, shares of common stock of the Company or a combination thereof, at the Company’s election. At any time on or prior to the 33rd business day immediately preceding the maturity date, the Company may irrevocably elect to (a) deliver solely shares of common stock of the Company in respect of the Company’s conversion obligation or (b) pay cash up to the aggregate principal amount of the 3.75% Convertible Senior Notes to be converted and pay or deliver, as the case may be, cash, shares of common stock of the Company or a combination thereof in respect of the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the 3.75% Convertible Senior Notes being converted. The initial conversion rate was 105.5548 shares of the Company’s common stock per $1,000 principal amount of 3.75% Convertible Senior Notes (which represents an initial conversion price of approximately $9.47 per share of the Company’s common stock).

In accordance with ASC 470-20, Debt with Conversion and Other Options, the Company separately accounts for the liability and equity conversion components of the 3.75% Convertible Senior Notes. The principal amount of the liability component of the 3.75% Convertible Senior Notes was $75.9 million as of the date of issuance based on the present value of its cash flows using a discount rate of 10%, our approximate borrowing rate at the date of the issuance for a similar debt instrument without the conversion feature. The carrying value of the equity conversion component was $24.1 million. A portion of the initial purchaser’s discount and commission and the offering costs totaling $0.9 million was allocated to the equity conversion component. The liability component is being accreted to the principal amount of the 3.75% Convertible Senior Notes using the effective interest method over five years.

In January 2016, the Company repurchased approximately $63.4 million in aggregate principal amount of the 3.75% Convertible Senior Notes for $66.6 million in cash. As $63.4 million of the 3.75% Convertible Senior Notes were settled in cash, a total of 6.7 million potentially dilutive shares are no longer potentially outstanding from an EPS perspective, these shares were already noted in Note 1 above as being excluded due to being anti-dilutive in the current fiscal quarter of 2016. Following such transactions, approximately $44.7 million aggregate principal amount of the 3.50% Convertible Senior Notes, approximately $36.6 million aggregate principal amount of the 3.75% Convertible Senior Notes and approximately $70.3 million of the 3.50% Series A Convertible Senior Notes remained outstanding. The Company recorded a charge in the third quarter of fiscal 2016 of approximately $1.0 million associated with the repurchase of the notes.

On August 1, 2016, the Company settled the remaining 3.75% Convertible Senior Notes for approximately $36.6 million aggregate principal amount and $0.7 million accrued interest for approximately $37.3 million in cash. In settling the notes for cash, during the January 2016 retirement as further described above and the August 2016 transaction, the Company avoided the issuance of approximately 10.6 million new common equity shares, representing a potential dilution of approximately 13 percent as of September 30, 2016.

3.50% Convertible Senior Notes due February 2018

In February 2013, the Company issued $115.0 million aggregate principal amount of its 3.50% Convertible Senior Notes to certain QIBs. The 3.50% Convertible Senior Notes were offered and sold to the QIBs pursuant to Rule 144A. The net proceeds from the offering, after deducting the initial purchaser’s discount and commission and the related offering costs, were approximately $110.5 million. The offering costs and the initial purchaser’s discount and commission (which are recorded in Long-term Debt) are both being amortized to interest expense using the effective interest method over five years. The 3.50% Convertible Senior Notes bear interest at a rate of 3.50% per year, payable semi-annually in arrears in cash on February 1 and August 1 of each year, which began on August 1, 2013. The 3.50% Convertible Senior Notes will mature on February 1, 2018, unless earlier repurchased, redeemed or converted.

In April 2014, through a series of transactions, the Company refinanced approximately $70.3 million aggregate principal amount of the 3.50% Convertible Senior Notes with approximately $70.3 million aggregate principal amount of the Company’s new 3.50% Series A Convertible Senior Notes due 2018 (the “3.50% Series A Convertible Notes”).

The 3.50% Convertible Notes were issued under an Indenture between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee. Holders of the 3.50% Convertible Notes may convert their 3.50% Convertible Notes at any time until the close of business on the business day immediately preceding the maturity date. The 3.50% Convertible Notes are convertible, as described below into common stock of the Company at an initial conversion rate equal to 187.6877 shares of common stock per $1,000 principal amount of the 3.50% Convertible Notes, which is equivalent to a conversion price of approximately $5.33 per share of common stock, subject to adjustment.

Holders of the 3.50% Convertible Notes who convert their 3.50% Convertible Notes in connection with a “make-whole fundamental change”, as defined in the Indenture, may be entitled to a make-whole premium in the form of an increase in the conversion rate. Additionally, in the event of a “fundamental change,” as defined in the Indenture, holders of the 3.50% Convertible Notes may require the Company to purchase all or a portion of their 3.50% Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of 3.50% Convertible Notes, plus accrued and unpaid interest, if any, to, but not including, the fundamental change repurchase date.

In accordance with guidance in ASC 470-20, Debt with Conversion and Other Options and ASC 815-15, Embedded Derivatives, the Company determined that the embedded conversion components of the 3.50% Convertible Note do not require bifurcation and separate accounting. The remaining $44.7 million principal amount of the 3.50% Convertible Note has been recorded in Long-term Debt on the condensed consolidated balance sheet as of September 30, 2016.

3.50% Series A Convertible Senior Notes due February 2018

On April 17, 2014, the Company entered into note exchange agreements with certain holders (the “Participating Holders”) of the 3.50% Convertible Notes to refinance approximately $70.3 million aggregate principal amount of the 3.50% Convertible Notes with approximately $70.3 million aggregate principal amount of the 3.50% Series A Convertible Notes. Pursuant to the note exchange agreements, the Company also paid the Participating Holders an aggregate of approximately $0.4 million in cash in connection with such transactions. The principal amount of 3.50% Convertible Notes refinanced for each $1,000 principal amount of the 3.50% Series A Convertible Notes was $1,000 and the amount in cash paid per $1,000 principal amount of such 3.50% Convertible Notes delivered was determined in individual negotiations between the Company and each Participating Holder. The Series A Convertible Notes have the same interest rate, maturity and other terms as the 3.50% Convertible Notes, except that the 3.50% Series A Convertible Notes are convertible into cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s option.

The 3.50% Series A Convertible Notes were issued under an Indenture between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee. Holders of the 3.50% Series A Convertible Notes may convert their Securities at any time on or after November 1, 2017 until the close of business on the business day immediately preceding the maturity date. Prior to November 1, 2017, holders of the 3.50% Series A Convertible Notes may convert their Securities only under the following circumstances: (1) during any calendar quarter after the calendar quarter ending September 30, 2014, and only during such calendar quarter, if the closing sale price of the Company’s common stock for each of 20 or more trading days in the 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the conversion price in effect on the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading-day period (such five consecutive trading-day period, the “Note Measurement Period”) in which the trading price per $1,000 principal amount of 3.50% Series A Convertible Notes for each trading day of that Securities Measurement Period was equal to or less than 98% of the product of the closing sale price of shares of the Company’s common stock and the applicable conversion rate for such trading day; or (3) upon the occurrence of specified corporate transactions as described in the Indenture. Upon conversion by holders of the 3.50% Series A Convertible Notes, the Company will have the right to pay or deliver, as the case may be, cash, shares of common stock of the Company or a combination thereof, at the Company’s election. At any time on or prior to the 17th business day immediately preceding the maturity date, the Company may irrevocably elect to (a) deliver solely shares of common stock of the Company in respect of the Company’s conversion obligation or (b) pay cash up to the aggregate principal amount of the 3.50% Series A Convertible Notes to be converted and pay or deliver, as the case may be, cash, shares of common stock of the Company or a combination thereof in respect of the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the 3.50% Series A Convertible Notes being converted. The initial conversion rate is 187.6877 shares of the Company’s common stock per $1,000 principal amount of 3.50% Series A Convertible Notes (which represents an initial conversion price of approximately $5.33 per share of the Company’s common stock). The conversion rate, and thus the conversion price, is subject to adjustment as further described below.

Holders of the 3.50% Series A Convertible Notes who convert their Notes in connection with a “make-whole fundamental change”, as defined in the Indenture, may be entitled to a make-whole premium in the form of an increase in the conversion rate. Additionally, in the event of a “fundamental change,” as defined in the Indenture, holders of the 3.50% Series A Convertible Notes may require the Company to purchase all or a portion of their 3.50% Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 3.50% Series A Convertible Notes, plus accrued and unpaid interest, if any, to, but not including, the fundamental change repurchase date.

In accordance with Accounting Standards Codification, or ASC 470-20, Debt with Conversion and Other Options, the Company separately accounts for the liability and equity conversion components of the 3.50% Series A Convertible Notes. The principal amount of the liability component of the 3.50% Series A Convertible Notes was $62.5 million as of the date of issuance based on the present value of its cash flows using a discount rate of 7%, our approximate borrowing rate at the date of the issuance for a similar debt instrument without the conversion feature. The carrying value of the equity conversion component was $7.9 million. In addition, the portion of the cash amount paid to the Participating Holders totaling $0.4 million was allocated to the debt discount with the remaining $47,000 to the equity component. The liability component is being accreted to the principal amount of the 3.50% Series A Convertible Notes using the effective interest method through the maturity in February 2018.

The following table presents the carrying values of all Convertible Notes and notes issued pursuant to the Secured Loan (collectively, “Notes”) as of September 30, 2016 (in thousands):

	Secured Loan			3.50% Convertible Notes			3.50% Series A Convertible Notes			Total
Carrying amount of the equity conversion component	$	—		$	—		$	7,844		$	7,844

Principal amount of the Notes	$	68,250		$	44,654		$	70,346		$	183,250
Unamortized debt costs	(2,631		)	(1,237		)	—			(3,868		)
Unamortized debt discount	(1,190		)	—			(3,168		)	(4,358		)

Net carrying amount	$	64,429		$	43,417		$	67,178		$	175,024

A summary of interest expense on the Notes is as follows (in thousands):

	Three months ended September 30,
	2016		2015
Interest expense related to contractual interest coupon	$	2,531	$	1,945
Interest expense related to amortization of debt discount	816		1,920
Interest expense related to amortization of debt issuance costs	403		403

	$	3,750	$	4,268

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Sep. 30, 2016

Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

Recent Accounting Standard Update Not Yet Effective

Use of Estimates

Concentration of Credit and Other Risks

Revenue Recognition

Product and Service Revenue

Net Income (Loss) Per Common Share

Basic and diluted net income (loss) per share is computed by dividing net income (loss) attributable to stockholders by the weighted average number of common shares outstanding during the period.

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per share follows (in thousands):

	Three Months Ended September 30,
	2016			2015
Numerator:
Net loss used to compute basic and diluted loss per share	$	(9,926	)	$	(13,026	)

Denominator:
Weighted average shares used to compute basic and diluted loss per share	81,576			79,760

	As of September 30,
	2016	2015
Stock options	2,175	2,458
RSUs, PSUs and MSUs	4,858	4,095
3.50% Convertible Notes	8,378	8,378

	15,411	14,931

Outstanding Convertible Notes - Diluted Share Impact

Outstanding Convertible Notes—Diluted Share Impact

Segment Information

	Three Months Ended
	September 30,
	2016		2015
Americas	$	40,642	$	45,290
Europe, India Middle East, and Africa	21,282		23,034
Asia-Pacific	13,225		16,982
Japan	11,357		4,325

Total	$	86,506	$	89,631

Information regarding geographic areas in which the Company has long lived tangible assets is as follows (in thousands):

	September 30,		June 30,
	2016		2016
Americas	$	22,374	$	23,842
Europe, India Middle East, and Africa	483		551
Asia-Pacific	1,733		1,342
Japan	1,989		2,143

Total	$	26,579	$	27,878

- Definition

Disclosure of accounting policy for revenue recognition. If the entity has different policies for different types of revenue transactions, the policy for each material type of transaction is generally disclosed. If a sales transaction has multiple element arrangements (for example, delivery of multiple products, services or the rights to use assets) the disclosure may indicate the accounting policy for each unit of accounting as well as how units of accounting are determined and valued. The disclosure may encompass important judgment as to appropriateness of principles related to recognition of revenue. The disclosure also may indicate the entity's treatment of any unearned or deferred revenue that arises from the transaction.

+ References + Details

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Sep. 30, 2016

Summary of Significant Accounting Policies

Schedule of reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per share

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income (loss) per share follows (in thousands):

	Three Months Ended September 30,
	2016			2015
Numerator:
Net loss used to compute basic and diluted loss per share	$	(9,926	)	$	(13,026	)

Denominator:
Weighted average shares used to compute basic and diluted loss per share	81,576			79,760

Schedule of all potentially dilutive securities excluded from the computation of basic and diluted net income (loss) per share

The following table sets forth all potentially dilutive securities excluded from the computation in the table above because their effect would have been anti-dilutive (in thousands):

	As of September 30,
	2016	2015
Stock options	2,175	2,458
RSUs, PSUs and MSUs	4,858	4,095
3.50% Convertible Notes	8,378	8,378

	15,411	14,931

Schedule of revenue by geographic region

The following summarizes revenue by geographic region (in thousands):

	Three Months Ended
	September 30,
	2016		2015
Americas	$	40,642	$	45,290
Europe, India Middle East, and Africa	21,282		23,034
Asia-Pacific	13,225		16,982
Japan	11,357		4,325

Total	$	86,506	$	89,631

Schedule of geographic areas in which the Company has long lived tangible assets

Information regarding geographic areas in which the Company has long lived tangible assets is as follows (in thousands):

	September 30,		June 30,
	2016		2016
Americas	$	22,374	$	23,842
Europe, India Middle East, and Africa	483		551
Asia-Pacific	1,733		1,342
Japan	1,989		2,143

Total	$	26,579	$	27,878

Balance Sheet Components (Tables)

3 Months Ended

Sep. 30, 2016

Balance Sheet Components

Schedule of financing receivables

September 30, 2016 (in thousands)	Lease Receivables			Financed Service Contracts and Other		Total
Gross	$	4,650		$	5,416	$	10,066
Residual value	—			—		—
Unearned income	(568		)	—		(568		)
Allowance for credit loss	—			—		—

Total, net	$	4,082		$	5,416	$	9,498

Reported as:
Current	$	733		$	1,758	$	2,491
Non-current	3,349			3,658		7,007

Total, net	$	4,082		$	5,416	$	9,498

June 30, 2016 (in thousands)	Lease Receivables			Financed Service Contracts and Other		Total
Gross	$	4,998		$	5,840	$	10,838
Residual value	—			—		—
Unearned income	(623		)	—		(623		)
Allowance for credit loss	—			—		—

Total, net	$	4,375		$	5,840	10,215

Reported as:
Current	$	840		$	1,778	$	2,618
Non-current	3,535			4,062		7,597

Total, net	$	4,375		$	5,840	$	10,215

Schedule of future minimum lease payments receivable

Year Ending September 30, (in thousands)	Amount
2017	$	620
2018	930
2019	930
2020	930
2021	930
2022	310

Total	$	4,650

Schedule of inventories

Inventories consisted of the following (in thousands):

	September 30,		June 30,
	2016		2016
Raw materials	$	48,977	$	50,480
Work-in-process	16,445		20,190
Finished goods	51,936		45,317

Inventories	$	117,358	$	115,987

Schedule of property and equipment, net

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

	September 30,			June 30,
	2016			2016
Furniture and fixtures	$	4,464		$	4,527
Computer and office equipment	11,636			11,485
Software	11,319			11,104
Leasehold improvements	22,780			21,632
Machinery and equipment	49,579			47,171
Construction in progress	1,814			4,412

	101,592			100,331
Less: Accumulated depreciation	(75,013		)	(72,453		)

Property and equipment, net	$	26,579		$	27,878

Goodwill and Intangible Assets (Tables)

3 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets

Schedule of goodwill

Activity related to goodwill consisted of the following (in thousands):

	Three Months			Year
	Ended			Ended
	September 30,			June 30,
	2016			2016
Balance at the beginning of the period	$	57,848		$	58,054
Currency translation	(4		)	(206		)

Balance at the end of the period	$	57,844		$	57,848

Schedule of intangible assets associated with completed acquisitions

The Company’s unamortized intangible assets associated with completed acquisitions at September 30, 2016 and June 30, 2015 are as follows (in thousands):

		September 30, 2016							June 30, 2016
		Gross							Gross
		Carrying		Accumulated			Net		Carrying		Accumulated			Net
	Useful Lives	Amount		Amortization			Amount		Amount		Amortization			Amount
	(in years)
Developed technology	5 — 6	$	46,743	$	(41,121	)	$	5,622	$	46,743	$	(39,132	)	$	7,611

Schedule of estimated future amortization expense of purchased intangible assets

The estimated future amortization expense of purchased intangible assets as of September 30, 2016 is as follows (in thousands):

Year Ending June 30,	Amount
2017 (remaining 9 months)	$	5,622

Financial Instruments (Tables)

3 Months Ended

Sep. 30, 2016

Financial Instruments

Summary of amortized cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category for cash, cash equivalents and short-term investments

	September 30, 2016
								Estimated Market Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Cash and Cash Equivalents		Short-term Investments

Cash	$	80,266	$	—	$	—		$	80,266	$	—

Level 1
Money market funds	3,350		—		—			3,350		—

	3,350		—		—			3,350		—

Level 2
U.S. agency securities	34,993		5		(22		)	—		34,976
U.S. treasury bills	2,000		—		—			—		2,000
Corporate notes	3,830		1		(1		)	—		3,830

	40,823		6		(23		)	—		40,806

Total	$	124,439	$	6	$	(23	)	$	83,616	$	40,806

	June 30, 2016
								Estimated Market Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Cash and Cash Equivalents		Short-term Investments

Cash	$	95,906	$	—	$	—		$	95,906	$	—

Level 1
Money market funds	13,362		—		—			13,362		—

	13,362		—		—			13,362		—

Level 2
Commercial paper	14,704		—		—			8,938		5,766
U.S. government agency securities	28,000		7		(17		)	—		27,990
U.S. Treasury securities	3,997		1		—			—		3,998
Municipal debt securities	1,565		—		—			1,565		—
Corporate debt securities	9,491		—		(6		)	—		9,485

	57,757		8		(23		)	10,503		47,239

Total	$	167,025	$	8	$	(23	)	$	119,771	$	47,239

Schedule of contractual maturities of available-for-sale securities

Contractual maturities of available-for-sale securities at September 30, 2016 were as follows (in thousands):

	September 30, 2016
	Amortized Cost		Fair Value
Due in 1 year or less	$	12,181	$	12,182
Due in 1-2 years	31,992		31,974

	$	44,173	$	44,156

Schedule of available-for-sale debt securities that were in a continuous unrealized loss position

	Less Than 12 Months					12 Months or Greater					Total
(in thousands)	Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value
September 30, 2016
Debt securities:
Corporate debt securities	$	(1	)	$	3,830	—			—		$	(1	)	$	3,830
U.S. government agencies securities	—			—		(22		)	31,974		(22		)	31,974

Total	$	(1	)	$	3,830	$	(22	)	$	31,974	$	(23	)	$	35,804

June 30, 2016
Debt securities:
Corporate debt securities	$	(3	)	$	6,325	$	(3	)	$	3,160	$	(6	)	$	9,485
U.S. government agencies securities	—			—		(17		)	19,988		(17		)	19,988

Total	$	(3	)	$	6,325	$	(20	)	$	23,148	$	(23	)	$	29,473

Summary of carrying values and estimated fair values of short-term and long-term debt

The following table summarizes the carrying values and estimated fair values of our short-term and long-term debt (in thousands):

	September 30, 2016				June 30, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
3.75% Convertible Notes	$	—	$	—	$	36,400	$	36,487
3.50% Convertible Notes	43,417		58,397		43,195		51,450
3.50% Series A Convertible Notes	67,178		91,996		66,613		81,053
Secured Loan	64,429		64,429		64,204		64,204

Total	$	175,024	$	214,822	$	210,412	$	233,194

Balance Sheet Components (Details) - USD ($) $ in Thousands	3 Months Ended
Balance Sheet Components (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Financing receivables
Sales-type leases	$ 3,300		$ 3,500
Accounts receivable with contractual maturities of more than one year	3,700		4,100
Allowance for doubtful accounts related to financing receivables	0		0
Gross	10,066		10,838
Unearned income	(568)		(623)
Total, net	9,498		10,215
Current	2,491		2,618
Non-current	7,007		7,597
Capital leases future minimum payments receivable
2017	620
2018	930
2019	930
2020	930
2021	930
2022	310
Total	4,650
Inventories
Raw materials	48,977		50,480
Work-in-process	16,445		20,190
Finished goods	51,936		45,317
Total inventories	117,358		115,987
Property and equipment, net
Property and equipment, gross	101,592		100,331
Less: Accumulated depreciation	(75,013)		(72,453)
Property and equipment, net	26,579		27,878
Depreciation expense	2,700	$ 2,600
Furniture and fixtures
Property and equipment, net
Property and equipment, gross	4,464		4,527
Computer and office equipment
Property and equipment, net
Property and equipment, gross	11,636		11,485
Software
Property and equipment, net
Property and equipment, gross	11,319		11,104
Leasehold improvements
Property and equipment, net
Property and equipment, gross	22,780		21,632
Machinery and equipment
Property and equipment, net
Property and equipment, gross	49,579		47,171
Construction in progress
Property and equipment, net
Property and equipment, gross	1,814		4,412
Lease Receivables
Financing receivables
Gross	4,650		4,998
Unearned income	(568)		(623)
Total, net	4,082		4,375
Current	733		840
Non-current	3,349		3,535
Financed Service Contracts and Other
Financing receivables
Gross	5,416		5,840
Total, net	5,416		5,840
Current	1,758		1,778
Non-current	$ 3,658		$ 4,062

Financial Instruments - Investment (Details) $ in Thousands	3 Months Ended	12 Months Ended
Financial Instruments - Investment (Details) $ in Thousands	Sep. 30, 2016 USD ($) position	Jun. 30, 2016 USD ($) position	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)
Cash, cash equivalents and short-term investments
Amortized Cost	$ 124,439	$ 167,025
Gross Unrealized Gains	6	8
Gross Unrealized Losses	(23)	(23)
Cash and Cash Equivalents	83,616	119,771	$ 85,584	$ 79,551
Short-term investments	40,806	47,239
Other-than-temporary impairments	0	0
Amortized Cost
Due in 1 year or less	12,181
Due in 1-2 years	31,992
Total Amortized Cost	44,173
Fair Value
Due in 1 year or less	12,182
Due in 1-2 years	31,974
Available-for-sale Securities	44,156
Gross Unrealized Losses
Less Than 12 Months	(1)	(3)
12 Months or Greater	(22)	(20)
Total	(23)	(23)
Estimated Fair Value
Less Than 12 Months	3,830	6,325
12 Months or Greater	31,974	23,148
Total	$ 35,804	$ 29,473
Number of positions held in an unrealized loss position \| position	10	11
U.S. government agencies securities
Gross Unrealized Losses
12 Months or Greater	$ (22)	$ (17)
Total	(22)	(17)
Estimated Fair Value
12 Months or Greater	31,974	19,988
Total	31,974	19,988
Corporate debt securities
Gross Unrealized Losses
Less Than 12 Months	(1)	(3)
12 Months or Greater		(3)
Total	(1)	(6)
Estimated Fair Value
Less Than 12 Months	3,830	6,325
12 Months or Greater		3,160
Total	3,830	9,485
Cash.
Cash, cash equivalents and short-term investments
Amortized Cost	80,266	95,906
Cash and Cash Equivalents	80,266	95,906
Level 1
Cash, cash equivalents and short-term investments
Amortized Cost	3,350	13,362
Cash and Cash Equivalents	3,350	13,362
Level 1 \| Money market funds
Cash, cash equivalents and short-term investments
Amortized Cost	3,350	13,362
Cash and Cash Equivalents	3,350	13,362
Level 2
Cash, cash equivalents and short-term investments
Amortized Cost	40,823	57,757
Gross Unrealized Gains	6	8
Gross Unrealized Losses	(23)	(23)
Cash and Cash Equivalents		10,503
Short-term investments	40,806	47,239
Level 2 \| Commercial paper
Cash, cash equivalents and short-term investments
Amortized Cost		14,704
Cash and Cash Equivalents		8,938
Short-term investments		5,766
Level 2 \| U.S. government agencies securities
Cash, cash equivalents and short-term investments
Amortized Cost	34,993	28,000
Gross Unrealized Gains	5	7
Gross Unrealized Losses	(22)	(17)
Short-term investments	34,976	27,990
Level 2 \| U.S. Treasury securities
Cash, cash equivalents and short-term investments
Amortized Cost	2,000	3,997
Gross Unrealized Gains		1
Short-term investments	2,000	3,998
Level 2 \| Municipal debt securities
Cash, cash equivalents and short-term investments
Amortized Cost		1,565
Cash and Cash Equivalents		1,565
Level 2 \| Corporate debt securities
Cash, cash equivalents and short-term investments
Amortized Cost	3,830	9,491
Gross Unrealized Gains	1
Gross Unrealized Losses	(1)	(6)
Short-term investments	$ 3,830	$ 9,485

Debt (Details) - USD ($) $ / shares in Units, shares in Millions					1 Months Ended				3 Months Ended
	Aug. 01, 2016	Jan. 11, 2016	Apr. 17, 2014	Aug. 01, 2011	Aug. 31, 2016	Jan. 31, 2016	Apr. 30, 2014	Feb. 28, 2013	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Debt
Carrying amount of the equity conversion component									$ 7,844,000
Principal amount of the Notes									183,250,000
Unamortized debt costs									(3,868,000)
Unamortized debt discount									(4,358,000)
Net carrying amount									175,024,000
Interest expense related to contractual interest coupon									2,531,000	$ 1,945,000
Interest expense related to amortization of debt discount									816,000	1,920,000
Interest expense related to amortization of debt issuance costs									403,000	403,000
Total interest expense recognized									3,750,000	$ 4,268,000
Secured Loan
Debt
Aggregate principal amount of debt issued		$ 70,000,000
Quarterly installment payment		875,000
Proceeds from debt, net of costs		65,500,000
Offering costs		3,100,000
Initial purchaser's discount and commission		$ 1,400,000
Amortization period		5 years
EBITDA Monitoring Period		12 months
Prepayment premium if loan repaid or accelerated within the first year		2.00%
Prepayment premium if loan repaid or accelerated within the second year		1.00%
Principal amount of the Notes									68,250,000
Unamortized debt costs									(2,631,000)
Unamortized debt discount									(1,190,000)
Net carrying amount									64,429,000
Secured Loan \| Option (ii)
Debt
Interest rate (as a percent)		3.25%
Secured Loan \| Maximum \| 3.50% Convertible Notes
Debt
Debt instrument maturity before reference instrument maturity date		120 days
Secured Loan \| One month LIBOR \| Option (i)
Debt
Margin on interest rate		7.00%
Secured Loan \| One month LIBOR \| Option (ii)
Debt
Margin on interest rate		1.00%
Secured Loan \| LIBOR \| Minimum \| Option (i)
Debt
Interest rate (as a percent)		1.00%
Secured Loan \| Federal Funds Rate \| Option (ii)
Debt
Margin on interest rate		0.50%
Secured Loan \| US Prime Rate \| Option (ii)
Debt
Margin on interest rate		4.75%
3.75% Convertible Note and 3.50% Convertible Note
Debt
Charge associated with repurchase of notes									$ 1,000,000
3.75% Convertible Notes
Debt
Aggregate principal amount of debt issued	$ 36,600,000			$ 100,000,000	$ 36,600,000
Interest rate (as a percent)	3.75%			3.75%	3.75%	3.75%			3.75%		3.75%
Proceeds from debt, net of costs				$ 96,100,000
Amortization period				5 years
Debt issuance costs, amortization period				5 years
Number of consecutive trading days during which the closing price of the entity's common stock must exceed the conversion price for at least 20 days in order for the notes to be convertible into common stock									30 days
Number of consecutive business days immediately after any five consecutive trading day period during the note measurement period									5 days
Number of consecutive trading days before five consecutive business days during the note measurement period									5 days
Principal amount used for debt instrument conversion ratio									$ 1,000
Number of working days preceding maturity date for delivery of shares or payment of cash									33 days
Conversion rate, number of shares to be issued per $1000 of principal amount (in shares)									105.5548
Conversion price (in dollars per share)									$ 9.47
Discount rate on liability component (as a percent)				10.00%
Carrying amount of the equity conversion component				$ 24,100,000
Debt issuance costs and discount allocated to equity conversion component				900,000
Principal amount of the Notes retired						$ 63,400,000
Cash paid to Participating Holders in connection with debt refinancing	$ 37,300,000				$ 37,300,000	$ 66,600,000
Potentially dilutive shares outstanding						6.7
Principal amount of the Notes						$ 36,600,000
Net carrying amount				$ 75,900,000
Total interest expense recognized	$ 700,000
Number of new common equity shares avoided to issue	10.6
Potential dilution due to avoidance of common shares issuance (as a percent)	13.00%
3.75% Convertible Notes \| Minimum
Debt
Number of days within 30 consecutive trading days in which the closing price of the entity's common stock must exceed the conversion price for the notes to be convertible into common stock									20 days
Percentage of the closing sales price of the entity's common stock that the conversion price must exceed in order for the notes to be convertible									130.00%
3.75% Convertible Notes \| Maximum
Debt
Percentage of the trading price to the product of the sale price of the entity's common stock and the conversion rate									98.00%
3.50% Convertible Notes
Debt
Aggregate principal amount of debt issued								$ 115,000,000
Interest rate (as a percent)						3.50%		3.50%	3.50%		3.50%
Proceeds from debt, net of costs								$ 110,500,000
Debt issuance costs, amortization period								5 years
Principal amount used for debt instrument conversion ratio									$ 1,000
Conversion rate, number of shares to be issued per $1000 of principal amount (in shares)									187.6877
Conversion price (in dollars per share)									$ 5.33
Repurchase price, as percentage of principal amount, if company undergoes change of control									100.00%
Principal amount of the Notes						$ 44,700,000			$ 44,654,000
Aggregate principal amount of debt refinanced							$ 70,300,000
Conversion rate, amount of debt to be issued per $1000 of principal amount			$ 1,000
Unamortized debt costs									(1,237,000)
Net carrying amount									$ 43,417,000
3.50% Series A Convertible Notes
Debt
Aggregate principal amount of debt issued			$ 70,300,000
Interest rate (as a percent)			3.50%			3.50%			3.50%		3.50%
Number of consecutive trading days during which the closing price of the entity's common stock must exceed the conversion price for at least 20 days in order for the notes to be convertible into common stock									30 days
Percentage of the closing sales price of the entity's common stock that the conversion price must exceed in order for the notes to be convertible									130.00%
Number of consecutive business days immediately after any five consecutive trading day period during the note measurement period									5 days
Number of consecutive trading days before five consecutive business days during the note measurement period									5 days
Principal amount used for debt instrument conversion ratio									$ 1,000
Number of working days preceding maturity date for delivery of shares or payment of cash									17 days
Conversion rate, number of shares to be issued per $1000 of principal amount (in shares)									187.6877
Conversion price (in dollars per share)									$ 5.33
Discount rate on liability component (as a percent)									7.00%
Carrying amount of the equity conversion component									$ 7,844,000
Principal amount of the Notes						$ 70,300,000			$ 70,346,000
Payments made to convertible note holders			$ 400,000
Repurchase price, as a percentage of the principal amount, in the event of a fundamental change, as defined in Indenture									100.00%
Portion of cash amount paid allocated to debt discount									$ 400,000
Portion of cash amount paid allocated to equity component									47,000
Unamortized debt discount									(3,168,000)
Net carrying amount									$ 67,178,000
3.50% Series A Convertible Notes \| Minimum
Debt
Number of days within 30 consecutive trading days in which the closing price of the entity's common stock must exceed the conversion price for the notes to be convertible into common stock									20 days
3.50% Series A Convertible Notes \| Maximum
Debt
Percentage of the trading price to the product of the sale price of the entity's common stock and the conversion rate									98.00%

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Condensed Consolidated Balance Sheets
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 800	$ 826
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized shares	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized shares	200,000,000	200,000,000
Common stock, issued shares	81,693,888	81,378,208
Common stock, outstanding shares	81,693,888	81,378,208

Commitments and Contingencies	3 Months Ended
Commitments and Contingencies	Sep. 30, 2016
Commitments and Contingencies
Commitments and Contingencies	6. Commitments and Contingencies The Company’s contractual obligations were presented in the Annual Report on Form 10-K for the previous annual reporting period ended June 30, 2016. As discussed in Note 8, in August 2016, we settled the remaining approximately $36.6 million in aggregate principal amount of the 3.75% Convertible Senior Notes and accrued interest for $37.3 million in cash. In addition, we signed a lease extension in October 2016 on our Madison, Wisconsin facility through 2023, which would have expired in 2018. Except for the change in debt and lease obligations, there has been no material changes outside of the ordinary course of business in those obligations during the three months ended September 30, 2016. Litigation From time to time, the Company is involved in legal proceedings arising in the ordinary course of its business. The Company records a provision for a loss when it believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated. Currently, management believes the Company does not have any probable and reasonably estimable losses related to any current legal proceedings and claims. Although occasional adverse decisions or settlements may occur, management does not believe that an adverse determination with respect to any of these claims would individually or in the aggregate materially and adversely affect the Company’s financial condition or operating results. For certain legal proceedings, management believes that there is a reasonable possibility that material losses may be incurred; however, the Company is unable to reasonably estimate a range of reasonably possible losses with respect to these matters. Litigation is inherently unpredictable and is subject to significant uncertainties, some of which are beyond the Company’s control. Should any of these estimates and assumptions change or prove to have been incorrect, the Company could incur significant charges related to legal matters that could have a material impact on its results of operations, financial position and cash flows. Rotary Systems On April 28, 2011, a former supplier to TomoTherapy, Rotary Systems Incorporated (“Rotary Systems”), filed suit in Minnesota state court, Tenth Judicial District, Anoka County, against TomoTherapy alleging misappropriation of trade secrets, as well as several other counts alleging various theories of injury. Rotary Systems alleges TomoTherapy misappropriated Rotary Systems’ trade secrets pertaining to a component previously purchased from Rotary Systems, which TomoTherapy now purchases from a different supplier. The suit alleged TomoTherapy improperly supplied the alleged trade secrets to its present supplier, Dynamic Sealing Technologies Inc. (also a named defendant in the suit). Rotary Systems made an unspecified claim for damages of greater than $50,000. TomoTherapy moved to dismiss the case and, on August 29, 2011, the court granted the motion to dismiss with respect to all counts other than the count alleging misappropriation of trade secrets. On May 21, 2012, the court gave Rotary Systems sixty days to identify the alleged trade secrets with specificity or face dismissal of its claim with prejudice. The court held a hearing on September 20, 2012 to review Rotary Systems’ amended complaint. TomoTherapy filed a motion for summary judgment on the trade secret claim, the court ruled in favor of TomoTherapy on December 5, 2013, and Rotary Systems appealed. On December 22, 2014, the Minnesota Court of Appeals reversed the district court’s dismissal of Rotary Systems’ trade secrets claim and remanded it to the district court but affirmed the dismissal of Rotary Systems’ other claims. In late October 2015, a final scheduling order was confirmed for the remanded claims and the parties engaged in the process of conducting discovery. On April 19, 2016, the parties entered into a written settlement agreement resolving the lawsuit. A stipulation of dismissal dismissing all claims by all parties with prejudice was filed with the court and the court entered an order on July 12, 2016 dismissing the case with prejudice. Cowealth Medical On February 27, 2014, Cowealth Medical Holding Co., Ltd. (“Cowealth”), Accuray’s former distributor in China, submitted a request for binding arbitration with the International Chamber of Commerce International Court of Arbitration (“ICC”) alleging, among other matters, that Accuray breached its distributor agreement with Cowealth by wrongfully terminating Cowealth as its distributor and misappropriated certain of Cowealth’s confidential information. Cowealth was seeking damages of approximately $170.0 million and injunctive relief. Accuray filed counterclaims for damages of approximately $35.0 million. Accuray’s answer and counterclaim were submitted to the ICC on May 12, 2014, and Cowealth served its reply on June 27, 2014. A hearing was held in Hong Kong between January 26, 2015 and February 6, 2015. The parties filed closing submissions and reply closing submissions in March 2015. On October 29, 2015, the ICC ruled that Accuray was liable for certain damages and awarded Cowealth approximately $3.4 million. On November 27, 2015, Cowealth applied for a correction to the award to revise the amount of damages upwards to approximately $5.5 million. On January 21, 2016, the arbitrator granted Cowealth’s application for a correction on the grounds that the original award amount was a clerical error on the part of the arbitrator. Interest on the final award amount was determined to accrue at a rate of 5% per annum starting 30 days after the date the corrected award was issued until payment. Accordingly, management recorded a charge of $3.4 million for the first fiscal quarter ending September 30, 2015, and an additional $2.1 million for the second fiscal quarter ending December 30, 2015. The parties filed cost submissions and reply cost submissions in December 2015. The ICC released the final award on February 12, 2016, which dealt with the parties’ claims for costs of the arbitration. Under the final award, the arbitrator awarded costs to Cowealth at a net amount of $2.4 million and rejected all other claims and requests. Prior to the ruling of the ICC, no accrual was established in the Company’s consolidated financial statements because management did not believe the likelihood of an award of damages or costs of arbitration to Cowealth were probable or estimable. In addition, the Company won several of its counterclaims including the right to be assigned the existing service contracts between Cowealth and Accuray customers, transfer to Accuray any regulatory clearances, licenses or permits obtained and held for the purposes of selling the CyberKnife System in China and deliver any consigned parts in their possession. Software License Indemnity Under the terms of the Company’s software license agreements with its customers, the Company agrees that in the event the software sold infringes upon any patent, copyright, trademark, or any other proprietary right of a third-party, it will indemnify its customer licensees against any loss, expense, or liability from any damages that may be awarded against its customer. The Company includes this infringement indemnification in all of its software license agreements and selected managed services arrangements. In the event the customer cannot use the software or service due to infringement and the Company cannot obtain the right to use, replace or modify the license or service in a commercially feasible manner so that it no longer infringes, then the Company may terminate the license and provide the customer a refund of the fees paid by the customer for the infringing license or service. The Company has not recorded any liability associated with this indemnification, as it is not aware of any pending or threatened actions that represent probable losses as of September 30, 2016.

Subsequent Event	3 Months Ended
Subsequent Event	Sep. 30, 2016
Subsequent Event
Subsequent Event	10. Subsequent Event On October 19, 2016, the Company signed a lease extension for its Madison, Wisconsin facility from 2018 through 2023. The Company’s lease payments will decrease slightly under terms of the lease extension, which is effective immediately through the original expiry date of 2018 and beyond.

Summary of Significant Accounting Policies - Concentration Risk (Details) - customer	3 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Total accounts receivable \| Credit concentration risk
Concentration of Credit and Other Risks
Number of significant customers	1		1
Percentage of concentration risk	17.00%		18.00%
Total net revenue \| Customer concentration risk
Concentration of Credit and Other Risks
Number of significant customers	0	1
Percentage of concentration risk		15.00%
Total net revenue \| Customer concentration risk \| Minimum
Concentration of Credit and Other Risks
Percentage of concentration risk	10.00%

Foreign Exchange Instruments (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2016
Foreign currency forward contracts	$ 0		$ 0
Other expense, net
Foreign currency transactions gain (loss)	132	$ 474
Other expense, net \| Foreign contracts
Foreign currency transactions gain (loss)	$ (563)	$ (1,413)
Maximum
Length of forward contracts	3 months

Summary of Significant Accounting Policies - Segments (Details) $ in Thousands	3 Months Ended
	Sep. 30, 2016 USD ($) segment	Sep. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)
Segment Information
Number of operating segments \| segment	1
Revenue	$ 86,506	$ 89,631
Long lived tangible assets	26,579		$ 27,878
Americas
Segment Information
Revenue	40,642	45,290
Long lived tangible assets	22,374		23,842
Europe, India Middle East, and Africa
Segment Information
Revenue	21,282	23,034
Long lived tangible assets	483		551
Asia-Pacific
Segment Information
Revenue	13,225	16,982
Long lived tangible assets	1,733		1,342
Japan
Segment Information
Revenue	11,357	$ 4,325
Long lived tangible assets	$ 1,989		$ 2,143

Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended			12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2016
Changes in the carrying amount of goodwill
Balance at the beginning of the period	$ 57,848		$ 58,054	$ 58,054
Currency translation	(4)			(206)
Balance at the end of the period	57,844			57,848
Impairment of goodwill		$ 0
Amortization expense	2,000		$ 2,000
Estimated future amortization expense of purchased intangible assets
2017 (remaining 9 months)	5,622
Developed technology
Changes in the carrying amount of goodwill
Gross Carrying Amount	46,743			46,743
Accumulated Amortization	(41,121)			(39,132)
Net Amount	5,622			7,611
Estimated future amortization expense of purchased intangible assets
Net Amount	$ 5,622			$ 7,611
Developed technology \| Minimum
Changes in the carrying amount of goodwill
Useful Lives	5 years			5 years
Developed technology \| Maximum
Changes in the carrying amount of goodwill
Useful Lives	6 years			6 years

Financial Instruments - Convertible Notes (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Aug. 31, 2016	Aug. 01, 2016	Jun. 30, 2016	Jan. 31, 2016	Apr. 17, 2014	Feb. 28, 2013	Aug. 01, 2011
3.75% Convertible Notes
Fair value measurement
Interest rate (as a percent)	3.75%	3.75%	3.75%	3.75%	3.75%			3.75%
3.50% Convertible Notes
Fair value measurement
Interest rate (as a percent)	3.50%			3.50%	3.50%		3.50%
3.50% Series A Convertible Notes
Fair value measurement
Interest rate (as a percent)	3.50%			3.50%	3.50%	3.50%
Non-recurring basis \| Carrying Value
Fair value measurement
Long term debt	$ 175,024			$ 210,412
Non-recurring basis \| Carrying Value \| 3.75% Convertible Notes
Fair value measurement
Long term debt				36,400
Non-recurring basis \| Carrying Value \| 3.50% Convertible Notes
Fair value measurement
Long term debt	43,417			43,195
Non-recurring basis \| Carrying Value \| 3.50% Series A Convertible Notes
Fair value measurement
Long term debt	67,178			66,613
Non-recurring basis \| Carrying Value \| Secured Loan
Fair value measurement
Long term debt	64,429			64,204
Non-recurring basis \| Fair Value
Fair value measurement
Long term debt	214,822			233,194
Non-recurring basis \| Fair Value \| 3.75% Convertible Notes
Fair value measurement
Long term debt				36,487
Non-recurring basis \| Fair Value \| 3.50% Convertible Notes
Fair value measurement
Long term debt	58,397			51,450
Non-recurring basis \| Fair Value \| 3.50% Series A Convertible Notes
Fair value measurement
Long term debt	91,996			81,053
Non-recurring basis \| Fair Value \| Secured Loan
Fair value measurement
Long term debt	$ 64,429			$ 64,204

Commitments and Contingencies (Details) - USD ($)									1 Months Ended		3 Months Ended
Commitments and Contingencies (Details) - USD ($)	Aug. 01, 2016	Feb. 12, 2016	Jan. 21, 2016	Nov. 27, 2015	Oct. 29, 2015	Feb. 27, 2014	May 21, 2012	Apr. 28, 2011	Aug. 31, 2016	Jan. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Sep. 30, 2016	Jun. 30, 2016	Feb. 11, 2016	Aug. 01, 2011
Rotary Systems
Contingencies
Period to identify alleged trade secrets with specificity or face dismissal of claim with prejudice							60 days
Rotary Systems \| Minimum
Contingencies
Claim for damages								$ 50,000
Cowealth Medical
Contingencies
Claim for damages						$ 170,000,000
Awarded value for the damages		$ 2,400,000			$ 3,400,000
Additional amount recorded				$ 5,500,000
Percentage of interest on awarded amount			5.00%
Period for interest not accrued after date of award			30 days
Recorded charge for awarded amount											$ 2,100,000	$ 3,400,000
Accrual amount of litigation															$ 0
Cowealth Medical \| Parent Company
Contingencies
Counterclaim for damages filed by the company						$ 35,000,000
3.75% Convertible Notes
Contingencies
Aggregate principal amount of debt issued	$ 36,600,000								$ 36,600,000							$ 100,000,000
Interest rate (as a percent)	3.75%								3.75%	3.75%			3.75%	3.75%		3.75%
Cash paid to Participating Holders in connection with debt refinancing	$ 37,300,000								$ 37,300,000	$ 66,600,000

Share-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
Share-Based Compensation (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Sep. 30, 2015
Share-based compensation charges
Share-based compensation expense	$ 3,473	$ 2,514
Cost of revenue
Share-based compensation charges
Share-based compensation expense	524	389
Research and development
Share-based compensation charges
Share-based compensation expense	663	549
Selling and marketing
Share-based compensation charges
Share-based compensation expense	622	644
General and administrative
Share-based compensation charges
Share-based compensation expense	$ 1,664	$ 932

Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Accumulated Other Comprehensive Loss
Net unrealized gain (loss) on short-term investments	$ (17)	$ (15)
Cumulative foreign currency translation adjustment	1,241	1,121
Defined benefit pension obligation	(2,066)	(2,066)
Accumulated other comprehensive loss	$ (842)	$ (960)