CREDIT LOSSES

6 Months Ended

Jun. 30, 2022

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):

	June 30, 2022
Accounts receivable, gross	$	739,570
Less: allowance for returns	(12,495)
Less: allowance for credit losses	(30,239)
Accounts receivable, net	$	696,836

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 six months ended June 30, 2022 is summarized as follows (in thousands):

	Total
Balance of allowance for credit losses at January 1, 2022	$	20,737
Current period provision (reversal) for expected losses	10,575
Write-offs charged against allowance	(1,073)
Balance of allowance for credit losses at June 30, 2022	$	30,239

As of June 30, 2022, one distributor accounted for 10% 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 six months ended June 30, 2022 and 2021, 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.