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):



	March 31, 2019		March 31, 2018
Cash and cash equivalents	$	809,491	$	886,160
Restricted cash included in other assets	4,218		5,508
Total cash, cash equivalents and restricted cash	$	813,709	$	891,668

Restricted cash included in other assets as of March 31, 2019 and March 31, 2018 primarily included $4.0 million pledged as collateral representing a security deposit required for a facility lease. In addition, March 31, 2018 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):



	March 31, 2019			December 31, 2018
Accounts receivable	$	280,860		$	340,897
Allowance for doubtful accounts	(373		)	(507		)
Product sales rebate and returns reserve	(9,241		)	(8,613		)
Accounts receivable, net	$	271,246		$	331,777

Inventories

Inventories consist of the following (in thousands):



	March 31, 2019		December 31, 2018
Raw materials	$	102,836	$	76,795
Finished goods	244,317		187,762
Total inventories	$	347,153	$	264,557

Prepaid Expenses and Other Current Assets

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



	March 31, 2019		December 31, 2018
Inventory deposit	$	19,555	$	14,639
Prepaid income taxes	35,920		38,636
Other current assets	63,436		95,730
Other prepaid expenses and deposits	12,746		13,316
Total prepaid expenses and other current assets	$	131,657	$	162,321

Property and Equipment, Net

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



	March 31, 2019			December 31, 2018
Equipment and machinery	$	57,939		$	55,912
Computer hardware and software	31,371			30,566
Furniture and fixtures	3,711			3,697
Leasehold improvements	31,089			36,447
Building	—			35,154
Construction-in-process	633			3,591
Property and equipment, gross	124,743			165,367
Less: accumulated depreciation	(83,214		)	(90,012		)
Property and equipment, net	$	41,529		$	75,355

On January 1, 2019, upon the adoption of ASC 842, we derecognized the building and certain leasehold improvements that were capitalized for our corporate headquarters building under a build-to-suit arrangement. See Note 1 and Note 6 for further details.

Depreciation expense was $4.7 million and $5.3 million for the three months ended March 31, 2019 and 2018, respectively.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):



	March 31, 2019		December 31, 2018
Accrued payroll related costs	$	45,117	$	70,755
Accrued manufacturing costs	25,968		31,336
Accrued product development costs	15,292		6,988
Accrued warranty costs	5,126		5,362
Accrued professional fees	8,652		5,678
Accrued taxes	889		839
Other	3,184		2,296
Total accrued liabilities	$	104,228	$	123,254

Warranty Accrual

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



	Three Months Ended March 31,
	2019			2018
Warranty accrual, beginning of period	$	5,362		$	7,415
Liabilities accrued for warranties issued during the period	932			1,557
Warranty costs incurred during the period	(1,168		)	(1,538		)
Warranty accrual, end of period	$	5,126		$	7,434

Contract Balances

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



	Three Months Ended March 31,
	2019		2018
Contract assets, beginning balance	$	6,341	$	—
Contract assets, ending balance	5,699		—

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



	Three Months Ended March 31,
	2019			2018
Contract liabilities, beginning balance	$	32,595		$	16,521
Less: Revenue recognized from beginning balance	(2,826		)	(1,694		)
Less: Beginning balance reclassified to deferred revenue	(1,259		)	(806		)
Add: Contract liabilities recognized	8,804			4,817
Contract liabilities, ending balance	$	37,314		$	18,838

As of March 31, 2019, $15.5 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 March 31,
	2019			2018
Deferred revenue, beginning balance⁽¹⁾	$	587,227		$	498,740
Less: Revenue recognized from beginning balance	(190,597		)	(157,684		)
Add: Deferral of revenue in current period, excluding amounts recognized during the period	139,841			114,998
Deferred revenue, ending balance	$	536,471		$	456,054
______________________
(1) The beginning balance of the three months ended March 31, 2018 excludes $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.

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 March 31, 2019, approximately $575.2 million of revenue is expected to be recognized from remaining performance obligations. We expect to recognize revenue on approximately 88% of these remaining performance obligations over the next 2 years and 12% during the 3rd to the 5th year.

Other Income (Expense), Net

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



	Three Months Ended March 31,
	2019			2018
Interest income	$	11,898		$	5,385
Interest expense	—			(687		)
Gain on investment in privately-held companies	1,150			—
Other expense, net	(715		)	(542		)
Total	$	12,333		$	4,156

Upon the adoption of ASC 842 on January 1, 2019, we derecognized the lease financing obligation associated with a build-to-suit lease, and therefore did not incur interest expense in the quarter ended March 31, 2019. See Note 1 for further details.