Other Financial Information

Inventories

The Company purchases and holds inventory to help ensure adequate component supplies over the life of the underlying products. The majority of the Company's inventory is production components to be used in the manufacturing process and finished goods inventory in transit. Inventories are reported both within prepaid expenses and other current assets and other long-term assets in the Condensed Consolidated Balance Sheets. Total inventories consisted of the following (in millions):



	As of
	March 31, 2015		December 31, 2014
Production materials	$	49.3	$	38.3
Finished goods	19.5		24.2
Inventories	$	68.8	$	62.5

In connection with the 2014 Restructuring Plan discussed in Note 8, Restructuring and Other Charges, the Company commenced a product rationalization initiative and accelerated the end-of-service life of certain products resulting in inventory charges of $8.4 million recorded within cost of revenues in the Condensed Consolidated Statement of Operations during the three months ended March 31, 2014.

Other Long-Term Assets

Other long-term assets consisted of the following (in millions):



	As of
	March 31, 2015		December 31, 2014
Privately-held investments	$	93.1	$	89.9
Licensed software	8.3		8.6
Federal income tax receivable	28.9		20.0
Customer financing receivable	4.5		16.9
Inventory	9.8		8.0
Prepaid costs, deposits, and other	63.7		35.5
Promissory note in connection with the sale of Junos Pulse⁽¹⁾	125.0		125.0
Other long-term assets	$	333.3	$	303.9

_______________________________


⁽¹⁾	On October 1, 2014, the Company completed the sale of its Junos Pulse product portfolio. The Company received total consideration of $230.7 million, of which $105.7 million was in cash, net of a $19.3 million working capital adjustment, and $125.0 million was in the form of an 18-month non-contingent interest bearing promissory note issued to the Company.

Warranties

The Company accrues for warranty costs based on associated material, labor for customer support, and overhead at the time revenue is recognized. This accrual is reported within other accrued liabilities in the Condensed Consolidated Balance Sheets. Changes in the Company’s warranty reserve during the three months ended March 31, 2015 were as follows (in millions):



Balance as of December 31, 2014	$	28.7
Provisions made during the period	7.3
Actual costs incurred during the period	(7.1		)
Balance as of March 31, 2015	$	28.9

Deferred Revenue

Details of the Company's deferred revenue, as reported in the Condensed Consolidated Balance Sheets, were as follows (in millions):



	As of
	March 31, 2015			December 31, 2014
Deferred product revenue:
Undelivered product commitments and other product deferrals	$	229.5		$	180.3
Distributor inventory and other sell-through items	90.0			103.7
Deferred gross product revenue	319.5			284.0
Deferred cost of product revenue	(66.1		)	(58.4		)
Deferred product revenue, net	253.4			225.6
Deferred service revenue	921.3			850.1
Total	$	1,174.7		$	1,075.7
Reported as:
Current	$	855.5		$	780.8
Long-term	319.2			294.9
Total	$	1,174.7		$	1,075.7

Deferred product revenue represents unrecognized revenue related to shipments to distributors that have not sold through to end-users, undelivered product commitments, and other shipments that have not met all revenue recognition criteria. In circumstances when costs are deferred, deferred product revenue is recorded net of the related costs of product revenue. Deferred service revenue represents billable amounts for service contracts, which include technical support, hardware and software maintenance, professional services, and training, for which services have not been rendered.

Other (Expense) Income, Net

Other (expense) income, net, consisted of the following (in millions):



	Three Months Ended March 31,
	2015			2014
Interest income	$	3.8		$	2.1
Interest expense	(18.5		)	(15.5		)
Gain on investments	0.6			166.2
Other	(1.7		)	1.4
Other (expense) income, net	$	(15.8	)	$	154.2

Interest income primarily includes interest earned on the Company’s cash, cash equivalents, investments, and on the promissory note issued to the Company in connection with the sale of Junos Pulse. Interest expense primarily includes interest, net of capitalized interest expense, from short-term debt, long-term debt, and customer financing arrangements. Other typically consists of investment and foreign exchange gains and losses and other non-operational income and expense items.

During the three months ended March 31, 2014, the Company recorded a gain of $163.0 million primarily related to the sale of investments which were converted from privately-held investments to publicly-traded equity upon initial public offering and subsequently sold.