Balance Sheet Components

9 Months Ended

Mar. 31, 2020

Balance Sheet Related Disclosures [Abstract]

The following tables provide details of the selected balance sheet items (in thousands):

Inventories:



	March 31, 2020		June 30, 2019
Finished goods	$	623,868	$	492,387
Work in process	82,108		43,598
Purchased parts and raw materials	160,250		134,203
Total inventories	$	866,226	$	670,188

The Company recorded a provision for excess and obsolete inventory to cost of sales totaling $4.7 million and $21.6 million in the three and nine months ended March 31, 2020, respectively, and $4.7 million and $17.3 million in the three and nine months ended March 31, 2019, respectively. These amounts exclude a (recovery) provision for adjusting the cost of certain inventories to net realizable value of $(0.8) million and $(3.5) million for the three and nine months ended March 31, 2020, respectively, and $5.7 million and $7.3 million for the three and nine months ended March 31, 2019, respectively.

Prepaid Expenses and Other Current Assets:



	March 31, 2020		June 30, 2019
Receivables from vendors (1)	$	90,006	$	83,050
Prepaid income tax	15,483		607
Restricted cash	16,804		11,673
Prepaid expenses	9,704		7,269
Deferred service costs	3,790		3,374
Others (2)	12,315		3,822
Total prepaid expenses and other current assets	$	148,102	$	109,795

__________________________

(1) Includes receivables from contract manufacturers based on certain buy-sell arrangements of $87.1 million and $82.0 million as of March 31, 2020 and June 30, 2019, respectively.

(2) Includes input value added tax (“VAT”) paid for inventories purchased in Taiwan of $8.4 million and $0 as of March 31, 2020 and June 30, 2019, respectively.

Cash, cash equivalents and restricted cash:



	March 31, 2020		June 30, 2019
Cash and cash equivalents	$	300,859	$	248,164
Restricted cash included in prepaid expenses and other current assets	16,804		11,673
Restricted cash included in other assets	1,601		2,303
Total cash, cash equivalents and restricted cash	$	319,264	$	262,140

Property, Plant, and Equipment:



	March 31, 2020			June 30, 2019
Buildings	$	86,930		$	86,136
Machinery and equipment	84,711			79,946
Land	75,240			74,926
Buildings construction in progress (1)	41,637			14,189
Building and leasehold improvements	24,390			22,307
Furniture and fixtures	21,038			20,193
Software	20,619			18,415
	354,565			316,112
Accumulated depreciation and amortization	(124,088		)	(108,775		)
Property, plant and equipment, net	$	230,477		$	207,337

__________________________

(1) Primarily relates to the development and construction costs associated with the Company’s Green Computing Park located in San Jose, California and new building construction in Taiwan.

Other Assets:



	March 31, 2020		June 30, 2019
Operating lease right-of-use asset	$	25,304	$	—
Deferred service costs, non-current	4,413		3,572
Prepaid expense, non-current	1,615		1,649
Restricted cash, non-current	1,601		2,303
Investment in auction rate security	1,571		1,571
Deposits	1,206		686
Non-marketable equity securities	128		878
Total other assets	$	35,838	$	10,659

Accrued Liabilities:



	March 31, 2020	June 30, 2019
Contract manufacturing liabilities	48,835	25,308
Accrued payroll and related expenses	28,716	25,552
Accrued legal liabilities (Note 11)	17,500	—
Customer deposits	15,958	11,133
Performance awards liability, current	10,257	—
Accrued warranty costs	9,386	8,661
Accrued cooperative marketing expenses	6,649	5,830
Operating lease liability	6,103	—
Accrued professional fees	2,804	11,756
Others (accrued liabilities)	30,940	26,438
Total accrued liabilities	177,148	114,678

Performance Awards Liability

In March 2020, the Board approved $25.3 million one-time performance bonuses to employees, which include $8.0 million payable in cash during the fourth quarter of fiscal year 2020 and $17.3 million payable in cash if the average closing price for the Company’s common stock equals or exceeds $21.39 for any period of 10 consecutive trading days following March 26, 2020. The target price criteria were achieved in April 2020. Therefore, the Company expects to pay the entire amount of the one-time performance bonuses to employees in the fourth fiscal quarter 2020.

The Board also approved performance bonuses for the Chief Executive Officer, a senior executive and two members of the Board, which payments will be earned when specified market and performance conditions are achieved.

The Chief Executive Officer’s aggregate cash bonuses of up to $8.1 million are earned in two tranches. The first 50% is payable if the average closing price for the Company’s common stock equals or exceeds $31.61 for any period of 20 consecutive trading days following the date of the agreement and ending prior to September 30, 2021 and the Chief Executive Officer remains employed with the Company through the date that such common stock price goal is determined to have been achieved and the date that the payment is made. This payment can be reduced at the discretion of the Board to the extent the Company has not made adequate progress in remediating its material weaknesses in its internal control over financial reporting as determined by the Board. The second 50% is payable if the average closing price for the Company’s common stock equals or exceeds $32.99 for any period of 20 consecutive trading days following the date of the agreement and ending prior to June 30, 2022 and the Chief Executive Officer remains employed with the Company through the date that such common stock price goal is achieved and the date that the payment is made.

Performance bonuses for a senior executive and two members of the Board are earned based on achieving a specified target average closing price for the Company’s common stock over the specified period as determined by the Board at the grant dates and continuous services through the payment dates. A senior executive can earn an aggregate cash payment up to $0.1 million and the two members of the Board can earn aggregate cash payments of $0.3 million. The target average closing price ranges from $25.80 to $32.99 per share. These awards expire in two equal amounts at September 30, 2021 and June 30, 2022 for the two Board members' awards, and in September 30, 2022 for the senior executive’s award.

Except for cash bonuses of $8.0 million to employees, the Company accounts for these performance bonuses as liabilities and estimates fair value of payable amounts using a Monte-Carlo simulation model. The awards are re-measured at each period end with changes in fair value recorded in the Company’s condensed consolidated statement of operations in cost of sales and operating expenses. The cumulative recorded expense at each period end is trued-up to the expected payable amount vested through the period end. The requisite service periods over which expenses are recognized are derived from the Monte-Carlo model for all performance awards, except for the first 50% of the Chief Executive Officer’s award that includes a performance condition. The Company estimates if it is probable that the performance condition will be met through the expiration date of this award. If at the measurement date it is determined to be probable, the Company estimates the requisite period as the longer of the service period derived by the Monte-Carlo model and the implicit service period when the Company expects to make adequate progress in remediating its material weaknesses in its internal control over financial reporting, as reported by the Company's Audit Committee. If it is determined to not be probable, then the Company will reverse any previously recognized expense for this award in the period when it is no longer probable that the performance condition will be achieved.

As of March 31, 2020, the Company recorded a $10.3 million compensation expense related to performance bonuses, which amount includes the $8.0 million in cash payable in the fourth quarter of fiscal year 2020. An unrecognized compensation expense of $15.6 million will be recorded over the remaining service periods from one month for employees’ awards to 1.43 years for the first 50% of the Chief Executive Officer’s award. The unrecognized expense and remaining service periods will be remeasured each reporting period. As of March 31, 2020, the Company recorded $10.3 million in accrued liabilities and $0.1 million in other long-term liabilities in its condensed consolidated balance sheet.

Other Long-term Liabilities:



	March 31, 2020		June 30, 2019
Operating lease liability, non-current	$	19,488	$	—
Accrued unrecognized tax benefits including related interest and penalties	17,804		20,102
Accrued warranty costs, non-current	2,348		2,373
Others	1,626		3,708
Total other long-term liabilities	$	41,266	$	26,183

Product Warranties:



	Three Months Ended March 31,						Nine Months Ended March 31,
	2020			2019			2020			2019
Balance, beginning of the period	$	11,441		$	10,434		$	11,034		$	9,884
Provision for warranty	8,521			5,510			25,627			17,163
Costs utilized	(8,130		)	(6,346		)	(24,907		)	(18,083		)
Change in estimated liability for pre-existing warranties	(98		)	918			(20		)	1,552
Balance, end of the period	11,734			10,516			11,734			10,516
Current portion	9,386			8,200			9,386			8,200
Non-current portion	$	2,348		$	2,316		$	2,348		$	2,316