Balance Sheet Account Detail

(a) Property and Equipment

Property and equipment consisted of the following:



	December 31,
	2013			2012
Production equipment, molds, and office furniture	$	8,033		$	7,256
Computer hardware and software	3,290			2,265
Leasehold improvements	3,058			2,819
Construction in progress (software and related implementation, production equipment, and leasehold improvements)	2,594			556
Property and equipment, at cost	16,975			12,896
Accumulated depreciation	(9,637		)	(7,912		)
Property and equipment, net	$	7,338		$	4,984

Depreciation expense for property and equipment for the years ended December 31, 2013, 2012, and 2011 was $2.1 million, $1.5 million, and $1.3 million, respectively.

(b) Inventories

Inventories consisted of the following:



	December 31,
	2013		2012
Raw materials	$	3,793	$	3,901
Work-in-process	4,539		5,102
Finished goods	11,226		9,084
Inventories	$	19,558	$	18,087

The following table presents goodwill, indefinite lived intangible assets, finite lived intangible assets, and related accumulated amortization:



	December 31,
	2013			2012
Goodwill (1) (3)	$	29,103		$	29,022

Intangible assets:
Indefinite lived intangibles
In-process research and development (2)	$	—		$	40,100
Trademarks and trade names	2,708			2,708
Total indefinite lived intangibles	$	2,708		$	42,808

Finite lived intangibles
Developed technology (2)	$	40,100		$	—
Accumulated amortization	(48		)	—
Developed technology, net	$	40,052		$	—

Patent	$	100		$	100
Accumulated amortization	(95		)	(75		)
Patent, net	$	5		$	25

License	$	100		$	100
Accumulated amortization	(41		)	(12		)
License, net	$	59		$	88

Customer relationships	$	544		$	522
Accumulated amortization	(272		)	(87		)
Customer relationships, net	$	272		$	435

Intangible assets (excluding goodwill), net	$	43,096		$	43,356

(1) Difference in goodwill value between these dates is solely due to a foreign currency translation adjustment.

(2) Was reclassified in the first quarter of 2013 to finite lived intangibles, which coincided with the European commercial launch of the product (Nellix System) associated with this intangible asset. A significant portion of this intangible asset will not begin amortization until the U.S. launch of this product, currently scheduled for 2016.

(3) $2.0 million of goodwill is related to a 2012 acquisition.

Amortization expense for intangible assets for the years ended December 31, 2013, 2012, and 2011 was $0.3 million, $0.7 million, and $1.4 million, respectively.

Estimated amortization expense for the five succeeding years and thereafter (which includes amortization of intangible assets which commenced in February 2013 with the commercial launch of the Nellix System in Europe) is as follows:



	Amortization Expense
2014	$	436
2015	641
2016	953
2017	2,251
2018	3,867
2019 and thereafter	32,240
Total	40,388

(d) Marketable securities

Investments in held-to-maturity marketable securities, which all mature during 2014, consist of the following at December 31, 2013:



	December 31, 2013
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Corporate and other debt securities	$	31,313	$	3	$	(3	)	$	31,313

At December 31, 2013, the Company’s investments included 7 held-to-maturity debt securities in unrealized loss positions with a total unrealized loss of approximately $3 thousand and a total fair market value of approximately $15.2 million. All investments with gross unrealized losses have been in unrealized loss positions for less than 1 month. The unrealized losses were caused by interest rate fluctuations. There was no change in the credit risk of the securities. The Company does not intend to sell the securities and it is not more likely than not that the Company will be required to sell the securities before the expected recovery of their amortized cost bases. There were no realized gains or losses on the investments for year ended December 31, 2013.

(e) Fair Value Measurements

The following fair value hierarchy table presents information about each major category of the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2013:



	Fair value measurement at reporting date using:
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
At December 31, 2012
Cash and cash equivalents	$	45,118	$	—	$	—	$	45,118
Contingently issuable common stock					52,400		52,400
At December 31, 2013
Cash and cash equivalents	$	95,152	$	—	$	—	$	95,152
Contingently issuable common stock	—		—		60,900		60,900

There were no remeasurements to fair value during the years ended December 31, 2013 and 2012 of financial assets and liabilities that are not measured at fair value on a recurring basis. There were no transfers between Level 1, Level 2, or Level 3 securities during the years ended December 31, 2013 and 2012.

(f) Instruments Not Recorded at Fair Value on a Recurring Basis

We measure the fair value of our Senior Notes carried at amortized cost quarterly for disclosure purposes. The estimated fair value of the Senior Notes is determined by Level 2 inputs and is based primarily on quoted market prices for the same or similar issues. Based on the market prices, the fair value of our long-term debt was $84.9 million as of December 31, 2013.

We measure the fair value of our held-to-maturity marketable securities carried at amortized cost quarterly for disclosure purposes. The fair value of certain marketable securities is determined by Level 2 inputs and is based primarily on quoted market prices for the same or similar instruments.