DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS

3 Months Ended

Jun. 30, 2019

Balance Sheet Related Disclosures [Abstract]

DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS

Accounts receivable, net:



	June 30,			March 31,
(in thousands)	2019			2019
Accounts receivable	$	383,337		$	393,415
Provisions for promotions, rebates, and other	(61,857		)	(50,789		)
Provisions for doubtful accounts and sales allowances	(3,245		)	(4,956		)
Accounts receivable, net	$	318,235		$	337,671

As a result of 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 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 30, 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 asset. 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 30, 2019 was approximately $42.7 million due from the financing company, of which $22.3 million was related to accounts receivable transferred. Total fees incurred pursuant to the Financing Agreement were immaterial for the quarter ended June 30, 2019. These fees are recorded as a reduction to revenue on the Company's condensed consolidated statement of operations.

Inventory, net:



	June 30,		March 31,
(in thousands)	2019		2019
Raw materials	$	82,575	$	34,054
Work in process	18,077		274
Finished goods	116,772		142,818
Inventory, net	$	217,424	$	177,146

Accrued Liabilities:



	June 30,		March 31,
(in thousands)	2019		2019
Short term deferred revenue	$	140,186	$	133,200
Employee compensation and benefits	61,795		68,882
Operating lease liabilities, current	22,101		—
Income tax payable	11,145		5,692
Provision for returns	28,238		24,632
Marketing incentives liabilities	23,093		25,369
Discounts reserve	36,712		46,894
Accrued interest	3,531		10,425
Warranty obligation	14,044		15,736
VAT/Sales tax payable	7,483		11,804
Derivative liabilities	7,152		3,275
Accrued other	52,826		52,806
Accrued liabilities	$	408,306	$	398,715

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 30, 2019 and 2018 were as follows:



	Three Months Ended June 30,
(in thousands)	2019			2018
Warranty obligation at beginning of period	$	17,984		$	9,604
Warranty provision related to products shipped	4,837			2,562
Deductions for warranty claims processed	(5,001		)	(2,634		)
Adjustments related to preexisting warranties	(1,036		)	200
Warranty obligation at end of period⁽¹⁾	$	16,784		$	9,732

(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.

Operating Leases:



	Balance Sheet	June 30,		March 31,
(in thousands)	Classification	2019		2019
ASSETS
Operating right-of-use assets⁽¹⁾	Other assets	$	51,447	$	—
LIABILITIES
Operating lease liabilities, current⁽²⁾	Accrued liabilities	22,101		$	—
Operating lease liabilities, long-term	Other liabilities	$	41,609	$	—

⁽¹⁾ During the three months ended June 30, 2019, the Company made $5.9 million in payments for operating leases included within cash provided by operating activities in its condensed consolidated statements of cash flows.

⁽²⁾ During the three months ended June 30, 2019, the Company recognized $5.7 million in operating lease expense, net of $1.4 million in sublease income, within its condensed consolidated statement of operations.