Balance Sheet Components

Inventories

Inventories consist of the following (in thousands):



	March 31, 2015		December 31, 2014
Raw materials	$	5,990	$	8,143
Work in process	4,487		2,970
Finished goods	4,095		4,815
Total Inventories	$	14,572	$	15,928

Work in process includes costs to produce our clear aligner and intra-oral products. Finished goods primarily represent our intra-oral scanners and ancillary products that support our clear aligner products.

Accrued liabilities

Accrued liabilities consist of the following (in thousands):



	March 31, 2015		December 31, 2014
Accrued payroll and benefits	$	38,022	$	44,610
Accrued sales rebates	10,423		11,110
Accrued sales and marketing expenses	5,452		5,979
Accrued sales tax and value added tax	5,015		5,456
Accrued professional fees	4,519		2,494
Accrued income taxes	4,290		2,027
Accrued accounts payable	3,578		5,736
Accrued warranty	3,005		3,148
Other accrued liabilities	7,407		7,320
Total Accrued Liabilities	$	81,711	$	87,880

Warranty

We regularly review the accrued warranty balances and update these balances based on historical warranty trends. Actual warranty costs incurred have not materially differed from those accrued; however, future actual warranty costs could differ from the estimated amounts.

Clear Aligner

We warrant our Invisalign products against material defects until the Invisalign case is complete. We accrue for warranty costs in cost of net revenues upon shipment of products. The amount of accrued estimated warranty costs is primarily based on historical experience as to product failures as well as current information on replacement costs.

Scanners

We warrant our scanners for a period of one year from the date of training and installation. We accrue for these warranty costs which includes materials and labor based on estimated historical repair costs. Extended service packages may be purchased for additional fees.

Warranty accrual as of March 31, 2015 and 2014 consists of the following activity (in thousands):



	Three Months Ended March 31,
	2015			2014
Balance at beginning of period	$	3,148		$	3,104
Charged to cost of net revenues	440			653
Actual warranty expenditures	(583		)	(709		)
Balance at end of period	$	3,005		$	3,048