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Commitments and Contingencies (Tables) | 9 Months Ended
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Sep. 29, 2019
Commitments and Contingencies Disclosure [Abstract] |
Effect on Financial Statements | Supplemental cash flow information related to operating leases for the three and nine months ended September 29, 2019 was as follows:
|  | Three Months Ended September 29, 2019 |  | Nine Months Ended September 29, 2019
|  | (in thousands)
Cash paid for amounts included in the measurement of lease liabilities |  |  |  |
Operating cash flows from operating leases |  | $ | 1,470 |  |  | $ | 2,882 |
Right-of-use assets obtained in exchange for lease liabilities |  |  |  |
Operating leases |  | $ | 439 |  |  | $ | 22,172 |
Weighted average remaining lease term and weighted average discount rate related to operating leases as of September 29, 2019 were as follows:
Weighted average remaining lease term |  | 5.9 years |
Weighted average discount rate |  | 5.67 | %
The operating lease expense for the three and nine months ended September 29, 2019 was as follows:
|  | Statements of Operations Location |  | Three Months Ended September 29, 2019 |  | Nine Months Ended September 29, 2019
|  |  |  | (In thousands)
Operating lease cost (1) |  | General and administrative |  | $ | 1,726 |  |  | $ | 5,068 |
________________________ (1) Included short-term leases and variable lease costs which were immaterial.
Effect of Accounting Standard Adoption | The effect of accounting standards adoption of ASU 2016-02 on the unaudited condensed consolidated statement of balance sheets and supplemental balance sheet information related to operating leases as of September 29, 2019 were as follows:
Leases |  | Balance Sheet Location |  | September 29, 2019 |  | January 1, 2019 |  | December 31, 2018
|  |  |  | (In thousands)
Build-to-suit lease (1) |  | Property and equipment, net |  | $ | — |  |  | $ | (21,610 | ) |  | $ | 21,610 |
Build-to-suit lease (1) |  | Accrued liabilities |  | — |  |  | (281 | ) |  | 281 |
Build-to-suit lease (1) |  | Accrued liabilities |  | — |  |  | (1,632 | ) |  | 1,632 |
Build-to-suit lease (1) |  | Non-current financing lease obligation |  | — |  |  | (19,978 | ) |  | 19,978 |
Build-to-suit lease (1) |  | Retained earnings (Accumulated deficit) |  | 281 |  |  | 281 |  |  | — |
Operating leases (2) |  | Operating lease right-of-use assets, net |  | 32,008 |  |  | 14,400 |  |  | — |
Operating leases (2) |  | Accrued liabilities |  | — |  |  | (107 | ) |  | 107 |
Operating leases (2) |  | Accrued liabilities |  | 3,814 |  |  | 2,356 |  |  | — |
Operating leases (2) |  | Non-current deferred rent |  | — |  |  | (1,141 | ) |  | 1,141 |
Operating leases (2) |  | Non-current operating lease liabilities |  | 30,484 |  |  | 12,044 |  |  | — |
________________________
(1) | The Company was deemed to be the accounting owner of its build-to-suit lease arrangement for its San Jose corporate headquarters and the construction was in progress at adoption date. As such, the Company reevaluated its build-to-suit lease arrangement under ASU 2016-02 to ascertain whether it meets the criteria as the accounting owner of the build-to-suit lease arrangement through control of the underlying leased asset. The Company concluded that it did not have control over the underlying leased asset. As a result, the Company de-recognized the build to suit asset and liability as of adoption date of $21.6 million of Property and equipment and $21.9 million of financing lease obligations. The difference of $0.3 million between the de-recognized assets and the associated financing lease obligations was recorded as an adjustment to Accumulated deficit as of the adoption date.
(2) | The Company adopted ASU 2016-02 on January 1, 2019 which resulted in the recognition of ROU assets and lease liabilities for operating leases of $14.4 million on its unaudited condensed consolidated balance sheets. The ROU assets were reduced by $0.1 million current deferred rent and $1.1 million non-current deferred rent which were de-recognized along with the adoption. As of March 31, 2019, the construction of the Company’s leasehold improvements for its San Jose corporate headquarters was partially completed and partially occupied by the Company, resulting in lease commencement inception for the portion that was completed and occupied by the Company. Therefore, the Company proportionally recorded ROU assets and lease liabilities of $14.3 million, representing two thirds of the total value of the ROU assets and lease liabilities. As of June 30, 2019, upon the completion of the leasehold improvements and full occupation of the entire building, the Company recognized the remaining value of ROU assets and lease liabilities of $7.2 million. As of September 29, 2019, the Company received $3.1 million reimbursement for leasehold improvements that the Company de-recognized during the quarter.
Summary of Operating Lease Maturity | The maturity of lease liabilities related to operating leases for each of the next five years and thereafter as of September 29, 2019 was as follows (in thousands):
2019 (Remaining three months) | $ | 1,170 |
2020 | 5,950 |
2021 | 5,789 |
2022 | 5,645 |
2023 | 4,968 |
Thereafter | 19,488 |
Total lease payments | 43,010 |
Less: interest (1) | (8,712 | )
Total | $ | 34,298 |
Accrued liabilities | $ | 3,814 |
Non-current operating lease liabilities | 30,484 |
Total | $ | 34,298 |
________________________ (1) Calculated using the Company’s incremental borrowing rate on a collateralized basis plus LIBOR rate that closely matches contractual term of most leases.
Summary of Future Minimum Lease Payments Before 842 | As of December 31, 2018, future minimum lease payments under non-cancelable operating leases and build-to-suit lease arrangements, for each of the next five years and thereafter were as follows (in thousands):
| Leases (1)
2019 | $ | 4,634 |
2020 | 5,813 |
2021 | 5,678 |
2022 | 5,580 |
2023 | 4,903 |
Thereafter | 19,252 |
Total | $ | 45,860 |
________________________ (1) Amounts are based on ASC 840, Leases that was superseded upon the adoption of ASC 842, Leases on January 1, 2019.
Schedule of Changes in Warranty Obligation | Changes in the Company’s warranty liability, which is included in Accrued liabilities in the unaudited condensed consolidated balance sheets, were as follows:
| Three Months Ended |  | Nine Months Ended
| September 29, 2019 |  | September 30, 2018 |  | September 29, 2019 |  | September 30, 2018
| (In thousands)
Balance at the beginning of the period | $ | 3,232 |  |  | $ | 3,487 |  |  | $ | 3,712 |  |  | $ | 31,756 |
Reclassified to sales returns upon adoption of ASC 606 (1) | — |  |  | — |  |  | — |  |  | (28,713 | )
Provision for warranty obligation made during the period | 364 |  |  | 344 |  |  | 292 |  |  | 1,166 |
Settlements made during the period | (193 | ) |  | (213 | ) |  | (601 | ) |  | (591 | )
Balance at the end of the period | $ | 3,403 |  |  | $ | 3,618 |  |  | $ | 3,403 |  |  | $ | 3,618 |
________________________ (1) 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.

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- Definition Tabular disclosure of lessee's lease cost. Includes, but is not limited to, interest expense for finance lease, amortization of right-of-use asset for finance lease, operating lease cost, short-term lease cost, variable lease cost and sublease income. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=77888426&loc=SL77918686-209980 + Details
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- Definition Tabular disclosure of undiscounted cash flows of lessee's operating lease liability. Includes, but is not limited to, reconciliation of undiscounted cash flows to operating lease liability recognized in statement of financial position. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=77888426&loc=SL77918701-209980 + Details
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- Definition Tabular disclosure of future minimum payments required in the aggregate and for each of the five succeeding fiscal years for operating leases having initial or remaining noncancelable lease terms in excess of one year and the total minimum rentals to be received in the future under noncancelable subleases as of the balance sheet date. + References Reference 1: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=77902758&loc=d3e41502-112717 + Details
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- Definition Tabular disclosure of the changes in the guarantor's aggregate product warranty liability, including the beginning balance of the aggregate product warranty liability, the aggregate reductions in that liability for payments made (in cash or in kind) under the warranty, the aggregate changes in the liability for accruals related to product warranties issued during the reporting period, the aggregate changes in the liability for accruals related to preexisting warranties (including adjustments related to changes in estimates), and the ending balance of the aggregate product warranty liability. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 460 -SubTopic 10 -Section 50 -Paragraph 8 -URI http://asc.fasb.org/extlink&oid=68068213&loc=d3e12565-110249 + Details
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