8x8 2005 Annual Report Download - page 51

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CASH, CASH EQUIVALENTS AND INVESTMENTS
The Company considers all highly liquid investments with an original maturity of three months or less to be cash
equivalents. Management determines the appropriate categorization of debt and equity securities at the time of
purchase and reevaluates the classification at each reporting date. The cost of the Company's investments is
determined based upon specific identification.
The Company’s investments are comprised of U.S. obligations, U.S. government debt agencies, corporate debt,
auction rate securities and bank issues. At March 31, 2005, all investments were classified as available-for-sale and
reported at fair value, based upon quoted market prices, with unrealized gains and losses, net of related tax, if any,
included in other comprehensive loss and disclosed as a separate component of stockholders’ equity. Realized gains
and losses on sales of all such investments are reported within the caption of other income, net in the statements of
operations and computed using the specific identification method. The Company’s investments in marketable
securities are monitored on a periodic basis for impairment. In the event that the carrying value of an investment
exceeds its fair value and the decline in value is determined to be other-than-temporary, an impairment charge is
recorded and a new cost basis for the investment is established.
Available-for-sale investments at March 31, 2005 were (in thousands):
Gros s
Adjusted Unrealized Estimated
Cos ts Los s Fair Value
Commercial paper........................................................... $ 10,565 $ (2) $ 10,563
Federal agency securities.............................................
.
5,976 (6) 5,970
Auction rate securities.................................................. 5,500 -- 5,500
Corporate bonds............................................................
.
2,563 (12) 2,551
Total available-for-sale investments........................... $ 24,604 $ (20) $ 24,584
Reported as (in thousands):
Cash and cash equivalents...................................................................................................
.
$ 15,549
Short-term investments.........................................................................................................
.
9,035
Total ......................................................................................................................................
.
$ 24,584
Contractual maturities of available-for-sale debt securities as of March 31, 2005 are set forth below (in thousands):
Due within one year.................................................................................................................
.
$18,585
Due after one year....................................................................................................................
.
499
Due after five years..................................................................................................................
.
5,500
Total ......................................................................................................................................
.
$24,584
RESTRICTED CASH
Restricted cash represents amounts held in certificates of deposit to support stand-by letters of credit used as security
for third party vendors.
INVENTORY
Inventory is stated at the lower of standard cost, which approximates actual cost using the first-in, first-out method,
or market. Inventory reserves are established when conditions indicate that the current replacement cost or market is
below the carrying value due to physical deterioration, obsolescence, changes in price levels, or other causes.
Reserves are established for excess inventory generally based on inventory levels in excess of demand, as
determined by management, for each specific product. Inventory at March 31, 2005 and 2004 was comprised of the
following: