Credit Losses

9 Months Ended

Sep. 30, 2021

Credit Loss [Abstract]

CREDIT LOSSES

CREDIT LOSSESThe Company is exposed to credit losses primarily through its accounts receivable, investments in available-for-sale debt securities, and contract assets. See Note 3 for additional information related to the Company's contract assets.

Accounts receivable, net

The Company's accounts receivable consist of the following (in thousands):

	September 30, 2021
Accounts receivable, gross	$	554,790
Less: allowance for returns	(10,851)
Less: allowance for credit losses	(11,937)
Accounts receivable, net	$	532,002

The allowance for credit losses on accounts receivable is determined using a combination of specific reserves for accounts that are deemed to exhibit credit loss indicators and general reserves that are judgmentally determined using loss rates based on historical write-offs by geography and customer accounts subject to credit check versus non-credit check status and consideration of recent forecasted information, including underlying economic expectations. The credit loss reserves are updated quarterly for most recent write-offs and collections information and underlying economic expectations. The Company will compare its current estimate of expected credit losses with the estimate of credit losses from the prior period and will report in net income the amount necessary to adjust the allowance for current expected credit losses. Credit loss expense is included within General and administrative expenses in the accompanying condensed consolidated statements of income.

The activity in the Company's allowance for credit losses for the nine months ended September 30, 2021 is summarized as follows (in thousands):

	Total
Balance of allowance for credit losses at January 1, 2021	$	15,419
Current period provision (reversal) for expected losses	(1,447)
Write-offs charged against allowance	(3,030)
Recoveries of any amounts previously written off	110
Other (1)	885
Balance of allowance for credit losses at September 30, 2021	$	11,937

(1) Includes amounts established in connection with acquisitions.

As of September 30, 2021, one distributor accounted for 14% of the Company's total gross accounts receivable.

Available-for-sale Investments

The Company did not have any credit loss expense recorded related to available-for-sale debt securities for the three and nine months ended September 30, 2021 and 2020, respectively.

The Company has available-for-sale debt securities that have fair values below amortized cost; however, the Company does not consider a credit allowance necessary as (i) the Company does not intend to sell the securities, (ii) it is not more-likely-than-not that the Company will be required to sell the investments before recovery of the amortized cost basis, and (iii) the unrealized losses are due to market factors rather than credit loss factors. See Note 7 for more information on available-for-sale debt securities.