4. Financial Statements Details

Cash, Cash Equivalents and Restricted Cash

The following table is a reconciliation of cash, cash equivalents and restricted cash reported within the accompanying condensed consolidated balance sheets that sum to the total of the same such amounts shown in the accompanying condensed consolidated statements of cash flows (in thousands):



	September 30, 2018		September 30, 2017
Cash and cash equivalents	$	524,687	$	854,479
Restricted cash included in other assets	4,210		5,502
Total cash, cash equivalents and restricted cash	$	528,897	$	859,981

Restricted cash included in other assets as of September 30, 2018 and September 30, 2017 primarily included $4.0 million pledged as collateral representing a security deposit required for a facility lease. In addition, September 30, 2017 included $1.1 million related to a letter of credit issued to a business partner.

Accounts Receivable, Net

Accounts receivable, net consists of the following (in thousands):



	September 30, 2018			December 31, 2017
Accounts receivable	$	333,304		$	254,881
Allowance for doubtful accounts	(498		)	(112		)
Product sales rebate and returns reserve	(10,753		)	(7,423		)
Accounts receivable, net	$	322,053		$	247,346

Inventories

Inventories consist of the following (in thousands):



	September 30, 2018		December 31, 2017
Raw materials	$	48,697	$	69,673
Finished goods	167,616		236,525
Total inventories	$	216,313	$	306,198

Prepaid Expenses and Other Current Assets

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



	September 30, 2018		December 31, 2017
Inventory deposit	$	19,290	$	34,141
Prepaid income taxes	83,598		38,134
Other current assets	118,262		96,215
Other prepaid expenses and deposits	14,731		8,840
Total prepaid expenses and other current assets	$	235,881	$	177,330

Property and Equipment, Net

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



	September 30, 2018			December 31, 2017
Equipment and machinery	$	54,169		$	47,711
Computer hardware and software	28,549			22,124
Furniture and fixtures	3,641			3,020
Leasehold improvements	36,350			30,548
Building	35,154			35,154
Construction-in-process	1,931			4,742
Property and equipment, gross	159,794			143,299
Less: accumulated depreciation	(84,397		)	(69,020		)
Property and equipment, net	$	75,397		$	74,279

Depreciation expense was $5.4 million and $5.2 million for the three months ended September 30, 2018 and 2017, respectively, and $16.0 million and $15.0 million for the nine months ended September 30, 2018 and 2017, respectively.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):



	September 30, 2018		December 31, 2017
Accrued payroll related costs	$	55,422	$	56,626
Accrued manufacturing costs	21,282		35,703
Accrued product development costs	7,552		21,201
Accrued warranty costs	10,115		7,415
Accrued professional fees	6,262		7,086
Accrued taxes	770		794
Other	1,705		5,002
Total accrued liabilities	$	103,108	$	133,827

Warranty Accrual

The following table summarizes the activity related to our accrued liability for estimated future warranty costs (in thousands):



	Nine Months Ended September 30,
	2018			2017
Warranty accrual, beginning of period	$	7,415		$	6,744
Liabilities accrued for warranties issued during the period	6,898			5,020
Warranty costs incurred during the period	(4,198		)	(3,478		)
Warranty accrual, end of period	$	10,115		$	8,286

Contract Balances

The following table summarizes the activity related to our contract assets (in thousands):



	Three Months Ended September 30, 2018			Nine Months Ended September 30, 2018
Contract assets, beginning balance	$	6,959		$	—
Less: Beginning balance reclassified to accounts receivable upon invoice	(1,505		)	—
Add: Contract assets recognized	3,963			9,417
Contract assets, ending balance	$	9,417		$	9,417

The following table summarizes the activity related to our contract liabilities (in thousands):



	Three Months Ended September 30, 2018			Nine Months Ended September 30, 2018
Contract liabilities, beginning balance	$	21,842		$	16,521
Less: Revenue recognized from beginning balance	(2,157		)	(6,107		)
Less: Beginning balance reclassified to deferred revenue	(970		)	(521		)
Add: Contract liabilities recognized	6,580			15,402
Contract liabilities, ending balance	$	25,295		$	25,295

As of September 30, 2018, $10.9 million of our contract liabilities was included in “Other current liabilities” with the remaining balance included in “Other long-term liabilities”.

Deferred Revenue and Performance Obligations

Deferred revenue is comprised mainly of unearned revenue related to multi-year PCS contracts, services and product deferrals related to acceptance clauses. The following table summarizes the activity related to our deferred revenue (in thousands):



	Three Months Ended September 30, 2018			Nine Months Ended September 30, 2018
Deferred revenue, beginning balance	$	448,644		$	498,740		⁽¹⁾
Less: Revenue recognized from beginning balance	(97,995		)	(306,350		)
Add: Deferral of revenue in current period, excluding amounts recognized during the period	179,206			337,465
Deferred revenue, ending balance	$	529,855		$	529,855
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(1) The beginning balance of the nine months ended September 30, 2018 excluded the $16.5 million that was reclassified to other current liabilities and other long-term liabilities at January 1, 2018 as a result of our adoption of ASC 606. See Note 1 for details.

Revenue from Remaining Performance Obligations

Revenue from remaining performance obligations represents contracted revenue that has not yet been recognized, which includes contract liabilities and deferred revenue that will be recognized as revenue in future periods. As of September 30, 2018, approximately $555.2 million of revenue is expected to be recognized from remaining performance obligations. We expect to recognize revenue on approximately 84% of these remaining performance obligations over the next 2 years and 16% during the 3rd to the 5th year.

Other Income (Expense), Net

Other income (expense), net consists of the following (in thousands):



	Three Months Ended September 30, 2018					Nine Months Ended September 30, 2018
	2018		2017			2018			2017
Interest income	$	8,585	$	2,332		$	21,933		$	4,889
Unrealized loss on investments in privately-held companies, net	—		—			(9,100		)	—
Other income (expense)	707		(196		)	(187		)	(609		)
Total	$	9,292	$	2,136		$	12,646		$	4,280