Balance Sheet Components

Marketable Securities

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



	June 30, 2016
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Commercial paper	$	17,924	$	51	$	—		$	17,975
U.S. government notes	125,398		37		(11		)	125,424
Corporate bonds	149,231		235		(105		)	149,361
Total marketable securities	$	292,553	$	323	$	(116	)	$	292,760

As of June 30, 2016, there have been no other-than-temporary losses on our marketable securities. None of our marketable securities have been in continuous unrealized loss positions for greater than twelve months as of June 30, 2016. We had no marketable securities as of December 31, 2015.

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 these investments upon maturity or sale.

As of June 30, 2016, the contractual maturities of our investments did not exceed 24 months. The fair values of available-for-sale investments, by remaining contractual maturity, are as follows (in thousands):



	June 30, 2016
Due in 1 year or less	$	201,798
Due in 1 year through 2 years	90,962
Total marketable securities	$	292,760

The weighted average remaining duration of our current marketable securities is approximately 0.8 years as of June 30, 2016. As we view these securities as available to support current operations, we classify securities with maturities beyond 12 months as current assets under the caption marketable securities in the accompanying consolidated balance sheets.

Accounts Receivable, net

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



	June 30, 2016			December 31, 2015
Accounts receivable	$	148,007		$	145,792
Allowance for doubtful accounts	(306		)	(963		)
Sales return reserve	(1,042		)	(566		)
Accounts receivable, net	$	146,659		$	144,263

Inventories

Inventories consist of the following (in thousands):



	June 30, 2016		December 31, 2015
Raw materials	$	41,730	$	29,831
Finished goods	76,400		62,298
Total inventories	$	118,130	$	92,129

Prepaid Expenses and Other Current Assets

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



	June 30, 2016		December 31, 2015
Prepaid income taxes	$	16,131	$	14,150
Other current assets	27,513		29,270
Other prepaid expenses and deposits	9,803		7,190
Total prepaid expenses and other current assets	$	53,447	$	50,610

Property and Equipment, net

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



	June 30, 2016			December 31, 2015
Equipment and machinery	$	36,062		$	29,101
Computer hardware and software	15,600			12,630
Furniture and fixtures	2,853			2,380
Leasehold improvements	29,466			24,372
Building	35,154			35,154
Construction-in-process	343			6,408
Property and equipment, gross	119,478			110,045
Less: accumulated depreciation	(39,797		)	(30,339		)
Property and equipment, net	$	79,681		$	79,706

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 continue to maintain involvement in the property post construction completion, and lack transferability of the risks and rewards of ownership, due to our required maintenance of a $4.0 million letter of credit, in addition to our ability and option to sublease our portion of the leased building for fees substantially higher than our base rate. 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 completion, we account for the building as a financing obligation. See “Note 5 - Commitments and Contingencies". Accordingly, as of June 30, 2016 and December 31, 2015, we have recorded assets of $53.4 million, representing the total costs of the building and improvements incurred, including the costs paid by the Landlord. The building was completed in 2014.

Depreciation and amortization expense was $4.8 million, $3.3 million, $9.7 million, and $6.2 million for the three and six months ended June 30, 2016 and 2015, respectively.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):



	June 30, 2016		December 31, 2015
Accrued payroll related costs	$	30,878	$	39,479
Accrued warranty costs	4,841		4,718
Accrued manufacturing costs	6,920		6,397
Accrued professional fees	5,718		4,875
Accrued taxes	1,257		1,347
Other	5,496		4,155
Total accrued liabilities	$	55,110	$	60,971

Warranty Accrual

We offer a one-year warranty on all of our hardware products and a 90-day warranty against defects in the software embedded in the products. The accrued warranty liability is recorded in accrued liabilities in the accompanying consolidated balance sheets.

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



	Six Months Ended June 30,
	2016			2015
Warranty accrual, beginning of period	$	4,718		$	3,204
Liabilities accrued for warranties issued during the period	1,438			1,602
Warranty costs incurred during the period	(1,018		)	(834		)
Adjustments related to change in estimate	(297		)	—
Warranty accrual, end of period	$	4,841		$	3,972