Balance Sheet Components

Marketable Securities

The following table summarizes the unrealized gains and losses and fair value of our available-for-sale marketable securities (in thousands):



	December 31, 2014
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. government notes	$	209,671	$	—	$	(245	)	$	209,426

We did not realized any other-than-temporary losses on our marketable securities for the year ended December 31, 2014. None of our marketable securities have been in continuous unrealized loss positions for greater than twelve months as of December 31, 2014.

We did not hold any marketable securities as of December 31, 2013.

We invest in marketable securities that have maximum maturities of up to two years and are generally deemed to be low risk based on their credit ratings from the major rating agencies. The longer the duration of these marketable securities, the more susceptible they are to changes in market interest rates and bond yields. As interest rates increase, those marketable securities purchased at a lower yield show a mark-to-market unrealized loss. The unrealized losses are due primarily to changes in credit spreads and interest rates. We expect to realize the full value of all these investments upon maturity or sale. The weighted average remaining duration of our current marketable securities is approximately 0.8 years as of December 31, 2014.

The following table summarizes the amortized cost and fair value of our marketable securities as of December 31, 2014, by contractual years-to-maturity (in thousands):



	Amortized Cost		Fair Value
Due within one year	$	209,671	$	209,426

Accounts Receivable, net

Accounts receivable, net consists of the following (in thousands):



	December 31,
	2014			2013
Accounts receivable	$	100,076		$	80,338
Allowance for doubtful accounts	(1,063		)	(810		)
Product sales return reserve	(2,031		)	(1,529		)
Accounts receivable, net	$	96,982		$	77,999

Allowance for Doubtful Accounts

Activity in the allowance for doubtful accounts consists of the following (in thousands):



	Year Ended December 31,
	2014			2013			2012
Balance at the beginning of year	$	810		$	1,284		$	1,169
Charged to expenses	860			191			326
Deductions (write-offs)	(607		)	(665		)	(211		)
Balance at the end of year	$	1,063		$	810		$	1,284

Sales Return Reserve

Activity in the sales return reserve consists of the following (in thousands):



	Year Ended December 31,
	2014			2013
Balance at the beginning of year	$	1,529		$	—
Charged against revenue	4,063			1,627
Sales returns	(3,561		)	(98		)
Balance at the end of year	$	2,031		$	1,529

Inventories

Inventories consist of the following (in thousands):



	December 31,
	2014		2013
Raw materials	$	17,094	$	18,286
Finished goods	63,425		48,808
Total inventories	$	80,519	$	67,094

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consists of the following (in thousands):



	December 31,
	2014		2013
Prepaid income taxes	$	25,212	$	134
Other current assets	9,820		5,137
Other prepaid and deposits	5,237		2,382
Total prepaid expenses and other current assets	$	40,269	$	7,653

Property and Equipment, net

Property and equipment, net consists of the following (in thousands):



	December 31,
	2014			2013
Equipment and machinery	$	18,265		$	13,733
Computer hardware and software	7,772			3,688
Furniture and fixtures	1,373			1,352
Leasehold improvements	19,420			19,407
Building	35,154			35,154
Construction-in-process	6,532			1,056
Property and equipment, gross	88,516			74,390
Less: accumulated depreciation	(16,958		)	(7,186		)
Property and equipment, net	$	71,558		$	67,204

Building consists of capitalized construction costs of our leased building in Santa Clara, California. Based on the terms of the lease agreement and due to our involvement in certain aspects of the construction, such as our financial involvement in structural elements of asset construction, making decisions related to tenant improvement costs and purchasing insurance not reimbursable by the buyer-lessor (the Landlord), we were deemed the owner of the building (for accounting purposes only) during the construction period. We maintain continued involvement in the property after construction was completed and lack transferability of the risks and rewards of ownership, primarily due to our required maintenance of a $4.0 million letter of credit. Due to our continuing involvement in the property post construction and lack of transferability of related risks and rewards of ownership to the Landlord after construction is complete, we account for the building as a financing obligation. See “Note 6-Commitments and Contingencies”. Accordingly, as of December 31, 2014 and December 31, 2013, we have recorded assets of $53.4 million and $53.3 million, respectively, representing the total costs of the building and improvements incurred, including the costs paid by the Landlord. The building was completed in 2013.

Depreciation expense was $10.0 million, $5.0 million and $1.8 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):



	December 31,
	2014		2013
Accrued payroll related costs	$	30,749	$	9,103
Accrued warranty costs	3,204		5,075
Accrued manufacturing costs	1,089		3,835
Accrued professional fees	2,354		1,220
Accrued taxes	1,577		927
Other	1,396		1,379
Total accrued liabilities	$	40,369	$	21,539

Warranty Accrual

The following table summarizes the activity related to our accrued liability for estimated future warranty costs (in thousands):



	Year Ended December 31,
	2014			2013
Warranty accrual, beginning of period	$	5,075		$	5,314
Liabilities accrued for warranties issued during the period	2,611			4,290
Warranty costs incurred during the period	(2,163		)	(4,529		)
Adjustments related to change in estimate	(2,319		)	—
Warranty accrual, end of period	$	3,204		$	5,075

During the year ended December 31, 2013, we identified specific products that were failing in the field prematurely at higher than expected rates due to various component issues. There were no significant specific product warranty reserves recorded in 2014.

Other Current Liabilities

Other current liabilities consist of the following (in thousands):



	December 31,
	2014		2013
Liability for early exercised shares subject to repurchase	$	4,616	$	7,520
Sales tax payable	3,101		1,359
Lease financing obligations, current portion	1,087		818
Other	2,445		447
Total other current liabilities	$	11,249	$	10,144