Other Financial Information

9 Months Ended

Sep. 30, 2020

Other Financial Information [Abstract]

Other Financial Information

Note 5. Other Financial Information

Inventory

Total inventory consisted of the following (in millions):

	As of
	September 30, 2020		December 31, 2019
Production and service materials	$	144.6	$	69.0
Finished goods	31.2		25.2
Inventory	$	175.8	$	94.2
Reported as:
Prepaid expenses and other current assets	$	166.4	$	90.6
Other long-term assets	9.4		3.6
Total	$	175.8	$	94.2

Deposit

The Company has a non-interest bearing deposit balance of $58.3 million, net of an unamortized discount balance of $3.0 million, to a contract manufacturer. The discount is calculated based on an imputed interest rate of 5.0% at September 30, 2020. The imputed interest will be amortized over the term of the deposit to interest income along with a corresponding charge to cost of revenues. The deposit is classified as other long-term assets on the Condensed Consolidated Balance Sheets.

Warranties

Changes during the nine months ended September 30, 2020 in the Company’s warranty reserve as reported within other accrued liabilities in the Condensed Consolidated Balance Sheets were as follows (in millions):

Balance as of December 31, 2019	$	31.4
Provisions made during the period	28.1
Actual costs incurred during the period	(28.9)
Balance as of September 30, 2020	$	30.6

Deferred Revenue

Details of the Company's deferred revenue, as reported in the Condensed Consolidated Balance Sheets, were as follows (in millions):

	As of
	September 30, 2020		December 31, 2019
Deferred product revenue:
Undelivered product commitments and other product deferrals	$	109.8	$	141.7
Deferred gross product revenue	109.8		141.7
Deferred cost of product revenue	(10.5)		(9.1)
Deferred product revenue, net	99.3		132.6
Deferred service revenue	1,034.7		1,090.8
Total	$	1,134.0	$	1,223.4
Reported as:
Current	$	750.2	$	812.9
Long-term	383.8		410.5
Total	$	1,134.0	$	1,223.4

Revenue

See Note 10, Segments, for disaggregated revenue by product and service, customer vertical, and geographic region.

Product revenue of $13.3 million and $61.7 million included in deferred revenue at January 1, 2020 was recognized during the three and nine months ended September 30, 2020, respectively. Service revenue of $149.6 million and $622.6 million included in deferred revenue at January 1, 2020 was recognized during the three and nine months ended September 30, 2020, respectively.

The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of September 30, 2020 and when the Company expects to recognize the amounts as revenue (in millions):

	Revenue Recognition Expected by Period
	Total		Less than 1 year		1-3 years		More than 3 years
Product	$	109.8	$	90.4	$	17.3	$	2.1
Service(*)	1,049.0		677.5		308.2		63.3
Total	$	1,158.8	$	767.9	$	325.5	$	65.4

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(*)     Represents unearned service revenue allocated to the performance obligations not delivered or partially delivered as of September 30, 2020. The unearned service revenue is comprised of deferred revenue and non-cancellable contract revenue for which we have not invoiced.

Deferred Commissions

Deferred commissions were $26.2 million as of September 30, 2020. For the three and nine months ended September 30, 2020, amortization expense for the deferred commissions was $35.1 million and $92.7 million, respectively, and there were no impairment charges recognized.

Other Expense, Net

Other expense, net, consisted of the following (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Interest income	$	6.1	$	19.7	$	30.4	$	63.0
Interest expense	(19.1)		(22.1)		(58.5)		(68.3)
Loss on extinguishment of debt	—		(15.3)		—		(15.3)
Gain (loss) on investments, net	2.0		(3.4)		2.7		(4.6)
Other	(2.5)		0.7		(3.6)		2.0
Other expense, net	$	(13.5)	$	(20.4)	$	(29.0)	$	(23.2)