Balance Sheet Components

Available-for-sale short-term investments



	As of
	October 1, 2017									December 31, 2016
	Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value		Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
	(In thousands)
U.S. treasuries	$	124,159	$	—	$	(72	)	$	124,087	$	123,869	$	9	$	(40	)	$	123,838
Certificates of deposit	162		—		—			162		148		—		—			148
Total	$	124,321	$	—	$	(72	)	$	124,249	$	124,017	$	9	$	(40	)	$	123,986

The Company’s short-term investments are primarily comprised of marketable securities that are classified as available-for-sale and consist of government securities with an original maturity or remaining maturity at the time of purchase of greater than three months and no more than twelve months. Accordingly, none of the available-for-sale securities have unrealized losses greater than twelve months.

Cost method investments

The carrying value of the Company's cost method investments was $3.0 million and $0.1 million as of October 1, 2017 and December 31, 2016. These investments are accounted under the cost method because the Company does not have a controlling interest or the ability to exercise significant influence over these companies and these investments do not have readily determinable fair values. These investments are included in other non-current assets in the unaudited condensed consolidated balance sheets and are carried at cost, adjusted for any impairment. The Company monitors these investments for impairment on a quarterly basis, and adjusts carrying value for any impairment charges recognized. There were no impairments recognized during the nine months ended October 1, 2017 and October 2, 2016, respectively. Realized gains and losses on these investments are reported in other income (expense), net in the unaudited condensed consolidated statements of operations. The Company did not recognize any material realized gains or losses during the nine months ended October 1, 2017 and October 2, 2016.

Accounts receivable, net



	As of
	October 1, 2017			December 31, 2016
	(In thousands)
Gross accounts receivable	$	317,206		$	333,080
Allowance for doubtful accounts	(1,257		)	(1,255		)
Allowance for sales returns	(17,025		)	(13,506		)
Allowance for price protection	(3,333		)	(4,480		)
Total allowances	(21,615		)	(19,241		)
Total accounts receivable, net	$	295,591		$	313,839

Inventories



	As of
	October 1, 2017		December 31, 2016
	(In thousands)
Raw materials	$	5,171	$	4,596
Finished goods	243,907		243,266
Total inventories	$	249,078	$	247,862

The Company records provisions for excess and obsolete inventory based on assumptions about future demand and market conditions. While management believes the estimates and assumptions underlying its current forecasts are reasonable, there is risk that additional charges may be necessary if current forecasts are greater than actual demand.

Property and equipment, net



	As of
	October 1, 2017			December 31, 2016
	(In thousands)
Computer equipment	$	10,725		$	10,557
Furniture, fixtures and leasehold improvements	22,599			20,827
Software	28,973			28,663
Machinery and equipment	59,047			63,446
Total property and equipment, gross	121,344			123,493
Accumulated depreciation and amortization	(101,116		)	(104,020		)
Total property and equipment, net	$	20,228		$	19,473

Depreciation and amortization expense pertaining to property and equipment was $3.3 million and $9.8 million for the three and nine months ended October 1, 2017, respectively, and $3.4 million and $11.5 million for the three and nine months ended October 2, 2016, respectively.

Intangibles, net



	As of October 1, 2017
	Gross		Accumulated Amortization			Net
	(In thousands)
Technology	$	66,599	$	(61,620	)	$	4,979
Customer contracts and relationships	56,500		(35,674		)	20,826
Other	11,045		(9,323		)	1,722
Total intangibles, net	$	134,144	$	(106,617	)	$	27,527



	As of December 31, 2016
	Gross		Accumulated Amortization			Net
	(In thousands)
Technology	$	66,599	$	(57,381	)	$	9,218
Customer contracts and relationships	56,500		(30,375		)	26,125
Other	11,045		(8,489		)	2,556
Total intangibles, net	$	134,144	$	(96,245	)	$	37,899

Amortization of intangibles was $2.7 million and $10.4 million for the three and nine months ended October 1, 2017, respectively, and $4.2 million and $12.7 million for the three and nine months ended October 2, 2016, respectively.

Estimated amortization expense related to intangibles for each of the next five years and thereafter is as follows:



	As of October 1, 2017
	(In thousands)
2017 (remaining three months)	$	2,539
2018	9,396
2019	7,544
2020	6,622
2021	1,413
Thereafter	13
Total estimated amortization expense	$	27,527

Goodwill

As discussed in Note 11, Segment Information, during the first quarter of fiscal 2017, the Company's Chief Operating Decision Maker requested changes in the information that he regularly reviews for purposes of allocating resources and assessing performance. With these changes, the Company revised its reportable segments. Beginning fiscal 2017, the Company operates and reports in three segments: Arlo, Connected Home, and Small and Medium Business ("SMB"). Goodwill was reallocated to the reportable segments using a relative fair value approach. As a result, the Company completed assessments of any potential goodwill impairment for all reportable segments immediately prior to and after the reallocation and determined that no impairment existed.

The carrying amount of goodwill under these segments during the nine months ended October 1, 2017 are as follows:



	Arlo		Connected Home		SMB		Total
	(In thousands)
Goodwill as of January 1, 2017	$	21,149	$	28,035	$	36,279	$	85,463
Goodwill as of October 1, 2017	$	21,149	$	28,035	$	36,279	$	85,463

Other non-current assets



	As of
	October 1, 2017		December 31, 2016
	(In thousands)
Non-current deferred income taxes	$	72,022	$	70,859
Other	10,751		7,977
Total other non-current assets	$	82,773	$	78,836

Other accrued liabilities



	As of
	October 1, 2017		December 31, 2016
	(In thousands)
Sales and marketing	$	73,975	$	74,330
Warranty obligation	67,550		58,520
Freight	6,232		8,980
Other	39,776		28,844
Total other accrued liabilities	$	187,533	$	170,674