DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS

3 Months Ended

Jun. 27, 2020

Balance Sheet Related Disclosures [Abstract]

DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS

Accounts receivable, net:



(in thousands)	June 27, 2020			March 28, 2020
Accounts receivable	$	297,260		$	350,642
Provisions for promotions, rebates, and other	(86,308		)	(101,666		)
Provisions for doubtful accounts and sales allowances	(2,264		)	(2,141		)
Accounts receivable, net	$	208,688		$	246,835

The Company maintains a provision for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company regularly performs credit evaluations of its customers’ financial conditions and considers factors such as historical experience, credit quality, age of the accounts receivable balances, geographic or country-specific risks, and economic conditions that may affect a customer’s ability to pay, including any reasonable and supportable forecasts of the future.

For the three months ended June 27, 2020, our assessment considered business and market disruptions caused by COVID-19 and estimates of credit and collectability trends. The continued volatility in market conditions and evolving shifts in credit trends are difficult to predict, causing variability and volatility that may impact our allowance for credit losses in future periods.

As a result of the Polycom Acquisition (the "Acquisition"), the Company assumed a financing agreement with an unrelated third-party financing company (the "Financing Agreement") whereby the Company offers distributors and resellers direct or indirect financing on their purchases of Polycom's products and services. In return, the Company agrees to pay the financing company a fee based on a pre-defined percentage of the transaction amount financed. In certain instances, these financing arrangements result in a transfer of the Company's receivables, without recourse, to the financing company. If the transaction meets the applicable criteria under Topic 860 and is accounted for as a sale of financial assets, the related accounts receivable is excluded from the balance sheet upon receipt of the third-party financing company's payment remittance. In certain legal jurisdictions, the arrangements that involve maintenance services or products bundled with maintenance at one price do not qualify as a sale of financial assets in accordance with the authoritative guidance. Accordingly, accounts receivable related to these arrangements are accounted for as a secured borrowing in accordance with Topic 860, and the Company records a liability for any cash received, while maintaining the associated accounts receivable balance until the distributor or reseller remits payment to the third-party financing company.

During the quarter ended June 27, 2020, total transactions entered pursuant to the terms of the Financing Agreement were approximately $31.4 million, of which $23.6 million was related to the transfer of the financial asset. During the quarter ended June 29, 2019, total transactions entered pursuant to the terms of the Financing Agreement were approximately $59.1 million, of which $27.3 million was related to the transfer of the financial assets. The financing of these receivables accelerated the collection of cash and reduced the Company's credit exposure. Included in "Accounts receivables, net" in the Company's condensed consolidated balance sheet as of June 27, 2020 and March 28, 2020 was approximately $13.6 million and $22.5 million, respectively due from the financing company, of which $11.1 million and $16.5 million, respectively was related to accounts receivable transferred. Total fees incurred pursuant to the Financing Agreement were immaterial for the quarters ended June 27, 2020 and June 29, 2019. These fees are recorded as a reduction to revenue on the Company's condensed consolidated statement of operations.

Inventory, net:



(in thousands)	June 27, 2020		March 28, 2020
Raw materials	$	92,764	$	97,371
Work in process	265		459
Finished goods	84,604		66,697
Inventory, net	$	177,633	$	164,527

Accrued Liabilities:



(in thousands)	June 27, 2020		March 28, 2020
Short term deferred revenue	$	141,722	$	144,040
Employee compensation and benefits	53,933		48,153
Estimated losses - legal and other	26,310		9,290
Operating lease liabilities, current	22,666		22,517
Provision for returns	20,749		20,146
Income tax payable	20,748		20,725
Warranty obligation	17,394		12,772
Derivative liabilities	12,834		12,840
VAT/Sales tax payable	10,442		9,673
Accrued interest	8,062		14,617
Marketing incentives liabilities	6,309		9,708
Accrued other	55,576		49,185
Accrued liabilities	$	396,745	$	373,666

The Company's warranty obligation is included as a component of accrued liabilities on the condensed consolidated balance sheets. Changes in the warranty obligation during the three months ended June 27, 2020 and June 29, 2019 were as follows:



	Three Months Ended
(in thousands)	June 27, 2020			June 29, 2019
Warranty obligation at beginning of period	$	15,261		$	17,984
Warranty provision related to products shipped	9,428			4,837
Deductions for warranty claims processed	(4,269		)	(5,001		)
Adjustments related to preexisting warranties	(533		)	(1,036		)
Warranty obligation at end of period⁽¹⁾	$	19,887		$	16,784

(1) Includes both short-term and long-term portion of warranty obligation; the prior table shows only the short-term portion included in accrued liabilities on the Company's condensed consolidated balance sheet. The long-term portion is included in other long-term liabilities.