Note 3. Balance Sheet Details

Inventories

Inventories as of the periods presented below, are as follows (in thousands):


	March 31, 2018		December 31, 2017
Raw materials	$	56,381	$	57,061
Work in process		13,641		9,792
Finished goods		53,802		58,960

Total	$	123,824	$	125,813

Deferred Contract Acquisition Costs

ASC 340-40, Other Assets and Deferred Costs – Contracts with Customers, requires the deferral of incremental costs of obtaining a contract with a customer.

Certain of our sales incentive programs that meet the definition of an incremental cost of obtaining a customer contract are required to be capitalized. We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year.

Sales commissions for renewal of a contract may not be commensurate with the commissions paid for the acquisition of the initial contract because commissions are generally not paid on the renewal of the specifically anticipated contract. Sales commissions for initial contracts are deferred and then amortized generally on a straight-line basis over a period of benefit that we have determined to be three to four years. We determined the period of benefit by taking into consideration our customer contracts, our technology, and other factors.

Upon adoption of ASC 340-40 on January 1, 2018, we capitalized $8.1 million in contract acquisition costs related to contracts that were not completed. For contracts that have durations of less than one year, we follow the practical expedient and expense these costs when incurred.

During the three months ended March 31, 2018, we amortized $1.1 million of deferred contract acquisition costs. There was no impairment loss in relation to costs capitalized. During the three months ended March 31, 2018, an additional $1.0 million of contract acquisition costs were capitalized. Deferred contract acquisition costs are included within other noncurrent assets in our Condensed Consolidated Balance Sheets.

Deferred Cost of Revenue

Deferred cost of revenue related to unrecognized revenue on shipments to customers was $1.4 and $3.5 million as of March 31, 2018 and December 31, 2017, respectively, and is included in other current assets in our Condensed Consolidated Balance Sheets.

Product Warranty Reserves

Product warranty reserves are included in accrued and other liabilities on our Condensed Consolidated Balance Sheets. The changes in product warranty reserves during the periods presented below are as follows (in thousands):


	March 31,
	2018			2017
Beginning balance	$	16,335		$	10,319
Liability assumed upon acquiring FFPS		—			9,368
Provisions, net of releases		2,972			3,564
Settlements		(4,501	)		(4,144	)

Ending balance	$	14,806		$	19,107

Equipment Subject to Operating Leases, Net

Equipment subject to operating leases for the periods presented below was as follows (in thousands):


	March 31, 2018			December 31, 2017
Equipment subject to operating leases	$	7,849		$	5,432
Accumulated depreciation		(2,207	)		(1,927	)

Equipment subject to operating leases, net	$	5,642		$	3,505

Scheduled minimum future rental revenues on operating leases as of March 31, 2018 (in thousands):


Remainder of 2018	$	1,483
2019		2,189
2020		2,678
2021		384
2022		432

	$	7,166

The aggregate minimum future rental revenues on noncancelable leases was $4.1 million as of December 31, 2017.

Accumulated Other Comprehensive Income (“AOCI”)

AOCI classified within stockholders’ equity in our Condensed Consolidated Balance Sheets as of the periods presented below is as follows (in thousands):


	March 31, 2018			December 31, 2017
Net unrealized investment losses	$	(1,243	)	$	(697	)
Currency translation gains		14,454			8,794
Net unrealized gains on cash flow hedges		—			41

Total	$	13,211		$	8,138

Amounts reclassified out of AOCI, net of tax, were less than $0.1 million for the three months ended March 31, 2018 and 2017, respectively, and consisted of unrealized gains and losses from investments in debt securities that are reported within interest income and other income, net of expenses, in our Condensed Consolidated Statements of Operations.