Balance Sheet Components

Deferred Revenue

Deferred revenue relates to performance obligations for which payments have been received by the customer prior to revenue recognition. Deferred revenue primarily consists of deferred software, or amounts allocated to mobile dashboard and on-line apps and unspecified upgrade rights. Deferred revenue also includes deferred subscription-based services. The deferred software and deferred subscription-based service performance obligations are anticipated to be recognized over the useful life or service periods of twelve to seventeen months.

Changes in the total short-term and long-term deferred revenue balances were as follows (in thousands):



	Three Months Ended
	March 30, 2019

Beginning balances	$	36,836
Deferral of revenue	7,659
Recognition of deferred revenue	(9,917		)
Ending balances	$	34,578

Revenue Returns Reserve

Revenue returns reserve activities were as follows (in thousands):



	Three Months Ended
	March 30, 2019			March 31, 2018

Beginning balances	$	104,001		$	109,872
Increases ⁽¹⁾	31,259			26,073
Returns taken	(59,262		)	(53,333		)
Ending balances	$	75,998		$	82,612


⁽¹⁾	Increases in the revenue returns reserve include provisions for open box returns and stock rotations.

Inventories

Inventories consisted of the following (in thousands):




	March 30, 2019		December 31, 2018

Components	$	19,010	$	8,866
Finished goods	155,468		116,005
Total inventories	$	174,478	$	124,871

Prepaid Expenses and Other Current Assets

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




	March 30, 2019		December 31, 2018

Point-of-purchase (“POP”) displays, net	$	4,262	$	5,143
Prepaid marketing	2,673		3,258
Derivative asset	464		623
Prepaid expenses	11,136		18,100
Other	7,946		15,201
Total prepaid expenses and other current assets	$	26,481	$	42,325

Property and Equipment, Net

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




	March 30, 2019			December 31, 2018

Tooling and manufacturing equipment	$	80,200		$	80,685
Furniture and office equipment	22,454			22,738
Purchased and internally-developed software	24,200			21,741
Leasehold improvements	64,591			67,715
Total property and equipment	191,445			192,879
Less: Accumulated depreciation and amortization	(96,170		)	(86,593		)
Property and equipment, net	$	95,275		$	106,286

Total depreciation and amortization expense related to property and equipment, net was $13.4 million and $10.5 million for the three months ended March 30, 2019 and March 31, 2018, respectively.

Goodwill and Intangible Assets

The carrying amount of goodwill was $61.0 million as of March 30, 2019 and December 31, 2018.

The carrying amounts of the intangible assets as of March 30, 2019 and December 31, 2018 were as follows (in thousands, except useful life):



	March 30, 2019							December 31, 2018
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net

Developed technology	$	35,988	$	(17,852	)	$	18,136	$	35,988	$	(15,983	)	$	20,005
Customer relationships	3,790		(586		)	3,204		3,790		(451		)	3,339
Trademarks and other	1,278		(1,059		)	219		1,278		(1,002		)	276
Total intangible assets, net	$	41,056	$	(19,497	)	$	21,559	$	41,056	$	(17,436	)	$	23,620

Total amortization expense related to intangible assets was $2.1 million and $1.7 million for the three months ended March 30, 2019 and March 31, 2018, respectively.

The estimated future amortization expense of acquired finite-lived intangible assets to be charged to cost of revenue and operating expenses after March 30, 2019 is as follows (in thousands):



	Cost of Revenue		Operating Expenses		Total

Remaining 2019	$	4,781	$	620	$	5,401
2020	5,854		643		6,497
2021	5,854		597		6,451
2022	1,180		597		1,777
2023	—		597		597
Thereafter	—		836		836
Total finite-lived intangible assets, net	$	17,669	$	3,890	$	21,559

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):



	March 30, 2019		December 31, 2018
	March 30, 2019		December 31, 2018
Accrued sales incentives	$	101,352	$	126,400
Accrued revenue reserve from returns	75,998		104,001
Product warranty	48,034		45,605
Finance lease liabilities	2,102		—
Sales taxes and VAT payable	12,873		20,121
Accrued manufacturing expense and freight	30,288		21,357
Accrued co-op advertising and marketing development funds	27,605		30,435
Employee-related liabilities	19,196		33,916
Accrued sales and marketing	15,573		18,171
Accrued research and development	12,655		8,783
Inventory received but not billed	4,091		6,373
Accrued legal settlements and fees	2,912		2,821
Derivative liabilities	28		549
Other	11,044		18,702
Accrued liabilities	$	363,751	$	437,234

Product warranty reserve activities were as follows (in thousands):



	Three Months Ended
	March 30, 2019			March 31, 2018

Beginning balances	$	45,605		$	87,882
Charged to cost of revenue	8,238			(2,481		)
Changes related to pre-existing warranties	4,747			(3,402		)
Settlement of claims	(10,556		)	(10,024		)
Ending balances	$	48,034		$	71,975

Accumulated Other Comprehensive Income (Loss)

The components and activity of accumulated other comprehensive income (“AOCI”), net of tax, were as follows (in thousands):



	Unrealized Gains (Losses) on Cash Flow Hedges		Currency Translation Adjustments		Unrealized Gains (Losses) on Available-for-Sale Investments			Total

Balance at December 31, 2018	$	66	$	—	$	(132	)	$	(66	)
Other comprehensive income (loss) before reclassifications	—		—		162			162
Amounts reclassified from AOCI	—		—		—			—
Other comprehensive income (loss)	—		—		162			162
Balance at March 30, 2019	$	66	$	—	$	30		$	96