Balance Sheet Components

3 Months Ended

Apr. 04, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Deferred Revenue

Deferred revenue relates to performance obligations for which payments have been received by the customer prior to revenue recognition. Deferred revenue primarily consists of deferred software, or amounts allocated to mobile dashboard and on-line apps and unspecified upgrade rights. Deferred revenue also includes deferred subscription-based services. The deferred software and deferred subscription-based service performance obligations are anticipated to be recognized over the useful life or service periods of twelve to seventeen months.

Changes in the total short-term and long-term deferred revenue balances were as follows (in thousands):


	Three Months Ended
	April 4, 2020

Beginning balances	$	40,842
Deferral of revenue	12,098
Recognition of deferred revenue	(14,298)
Ending balances	$	38,642

Revenue Returns Reserve

Revenue returns reserve activities were as follows (in thousands):


	Three Months Ended
	April 4, 2020		March 30, 2019

Beginning balances	$	101,326	$	104,001
Increases ⁽¹⁾	33,104		31,259
Returns taken	(57,189)		(59,262)
Ending balances	$	77,241	$	75,998

⁽¹⁾Increases in the revenue returns reserve include provisions for open box returns and stock rotations.

Inventories

Inventories consisted of the following (in thousands)


	April 4, 2020		December 31, 2019

Components	$	1,461	$	5,397
Finished goods	104,284		131,355
Total inventories	$	105,745	$	136,752

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	April 4, 2020		December 31, 2019

Tariff receivable	$	28,854	$	—
Prepaid expenses	10,616		11,219
Prepaid marketing	2,796		3,347
Derivative asset	36		—

Other	14,392		14,090
Total prepaid expenses and other current assets	$	56,694	$	28,656

Property and Equipment, Net

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



	April 4, 2020		December 31, 2019

Tooling and manufacturing equipment	$	105,753	$	103,177
Furniture and office equipment	20,249		19,922
Purchased and internally-developed software	28,401		27,424
Leasehold improvements	60,087		59,926
Total property and equipment	214,490		210,449
Less: Accumulated depreciation and amortization	(138,272)		(127,693)
Property and equipment, net	$	76,218	$	82,756

Total depreciation expense related to property and equipment, net was $10.6 million and $13.4 million for the three months ended April 4, 2020 and March 30, 2019, respectively.

Goodwill and Intangible Assets, Net

The carrying amount of goodwill was $64.8 million as of April 4, 2020 and December 31, 2019.

The carrying amounts of the intangible assets as of April 4, 2020 and December 31, 2019 were as follows (in thousands):


	April 4, 2020										December 31, 2019
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net

Developed technology	$	37,813	$	(26,450)	$	11,363	$	37,813	$	(23,910)	$	13,903
Customer relationships	3,918		(2,564)		1,354		3,790		(991)		2,799
Trademarks and other	1,150		(1,150)		—		1,278		(1,234)		44
Total intangible assets, net	$	42,881	$	(30,164)	$	12,717	$	42,881	$	(26,135)	$	16,746

Total amortization expense related to intangible assets was $4.0 million and $2.1 million for the three months ended April 4, 2020 and March 30, 2019, respectively.

The estimated future amortization expense of acquired finite-lived intangible assets to be charged to cost of revenue and operating expenses after April 4, 2020 is as follows (in thousands):


	Cost of Revenue		Operating Expenses		Total

Remaining 2020	$	4,199	$	1,620	$	5,819
2021	5,037		56		5,093
2022	1,488		56		1,544
2023	—		56		56
2024	—		56		56
Thereafter	—		149		149
Total finite-lived intangible assets, net	$	10,724	$	1,993	$	12,717

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):


	April 4, 2020		December 31, 2019

Accrued sales incentives	$	117,428	$	156,839
Sales returns reserve	77,241		101,326
Product warranty	48,851		52,403
Employee-related liabilities	23,282		37,355
Accrued manufacturing expense and freight	18,972		35,112
Accrued research and development	18,470		19,232
Accrued co-op advertising and marketing development funds	17,880		40,689
Accrued legal settlements and fees	14,041		8,854
Accrued sales and marketing	11,640		26,781
Sales taxes and VAT payable	10,218		19,603
Inventory received but not billed	5,493		1,669
Finance lease liabilities	1,384		1,384
Derivative liabilities	10		748
Other	11,620		11,535
Accrued liabilities	$	376,530	$	513,530

Product warranty reserve activities were as follows (in thousands):


	Three Months Ended
	April 4, 2020		March 30, 2019

Beginning balances	$	52,403	$	45,605
Charged to cost of revenue	6,974		8,238
Changes related to pre-existing warranties	1,027		4,747
Settlement of claims	(11,553)		(10,556)
Ending balances	$	48,851	$	48,034