Balance Sheet Components

Accounts receivable, net



	As of
	July 1, 2018				December 31, 2017
	(In thousands)
Gross accounts receivable	$	111,320			$	164,157
Allowance for doubtful accounts	(207		)		(207		)
Allowance for sales returns	—			*	(5,868		)
Allowance for price protection	—			*	(402		)
Total allowances	(207		)		(6,477		)
Total accounts receivable, net	$	111,113			$	157,680

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* Upon adoption of ASC 606, allowances for sales returns and price protection were reclassified to current liabilities as these reserve balances are considered refund liabilities. Refer to Note 3. Revenue Recognition, for additional information on the adoption impact.

Property and equipment, net

The condensed combined balance sheets include the property and equipment specifically identifiable to Arlo’s business. The components of property and equipment are as follows:



	As of
	July 1, 2018			December 31, 2017
	(In thousands)
Machinery and equipment	$	8,290		$	6,067
Computer equipment	4,798			50
Software	2,791			180
Leasehold improvements	548			530
Furniture and fixtures	408			443
Total property and equipment, gross	16,835			7,270
Accumulated depreciation and amortization	(4,446		)	(3,387		)
Total property and equipment, net	$	12,389		$	3,883

Depreciation and amortization expense pertaining to property and equipment was $0.7 million and $1.2 million for the three and six months ended July 1, 2018 and $0.4 million and $0.8 million for the three and six months ended July 2, 2017. Allocated depreciation expense from NETGEAR was $0.5 million and $1.2 million for the three and six months ended July 1, 2018 and $0.5 million and $0.9 million for the three and six months ended July 2, 2017. The condensed combined statements of operations include both the depreciation expense directly identifiable as Arlo’s and allocated depreciation expense from NETGEAR. Refer to Note 1, The Company and Basis of Presentation, for detailed disclosures regarding the methodology used for corporate expense allocation.

Intangibles, net



	As of July 1, 2018							As of December 31, 2017
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
	(In thousands)
Technology	$	9,800	$	(6,477	)	$	3,323	$	9,800	$	(5,790	)	$	4,010
Customer contracts and relationships	1,400		(1,400		)	—		1,400		(1,400		)	—
Other	800		(538		)	262		800		(462		)	338
Total intangibles, net	$	12,000	$	(8,415	)	$	3,585	$	12,000	$	(7,652	)	$	4,348

As of July 1, 2018, the remaining weighted-average estimated useful life of intangibles was two years.

Amortization of intangibles was $0.4 million and $0.8 million for the three and six months ended July 1, 2018 and $0.6 million and $1.2 million for the three and six months ended July 2, 2017.

As of July 1, 2018, estimated amortization expense related to finite-lived intangibles for the remaining years was as follows (in thousands):



2018 (remaining six months)	$	762
2019	1,517
2020	1,306
Total estimated amortization expense	$	3,585

Goodwill

In the year ended December 31, 2016, the Company acquired Placemeter. Refer to Note 4, Business Acquisition, for detailed disclosures. There was no change in the carrying amount of goodwill during the six months ended July 1, 2018 and the goodwill as of December 31, 2017 and July 1, 2018 was as follows (in thousands):



As of December 31, 2017	$	15,638
As of July 1, 2018	$	15,638

Other non-current assets



	As of
	July 1, 2018		December 31, 2017
	(In thousands)
Non-current deferred income taxes	$	1,109	$	865
Other	2,331		1,328
Total other non-current assets	$	3,440	$	2,193

Accrued liabilities



	As of
	July 1, 2018			December 31, 2017
	(In thousands)
Sales and marketing	$	39,230		$	31,613
Warranty obligation	3,487		*	31,756
Sales returns	26,581		*	—
Freight	2,704			3,862
Accrued employee compensation	6,038			3,184
Other	18,446			5,682
Total accrued liabilities	$	96,486		$	76,097

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* Upon adoption of ASC 606 on January 1, 2018, warranty reserve balances totaling $28.7 million were reclassified to sales returns as these liabilities are payable to the Company’s customers and settled in cash or by credit on account. Under ASC 606, these amounts are to be accounted for as sales with right of return.