6. Balance Sheet Information

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at invoiced amount with standard net terms that range between 30 and 90 days. The Company extends credit to its customers based on an evaluation of a customer’s financial condition and collateral is generally not required. The Company maintains an allowance for doubtful accounts for estimated uncollectible accounts receivable. The allowance is based on the Company’s assessment of known delinquent accounts, historical experience, and other currently available evidence of the collectability and the aging of accounts receivable. The Company’s allowance for doubtful accounts was $0.1 million at September 30, 2014 and at December 31, 2013. The provision for doubtful accounts is included in sales and marketing expense in the condensed consolidated statements of operations.

Inventories

Inventories are stated at the lower of cost or market and include material, labor and overhead costs using the first-in, first-out (“FIFO”) method of costing. Inventories as of September 30, 2014 and December 31, 2013 were composed of raw materials, sub-assemblies, finished goods and work-in-process. The Company had consigned inventory with customers of $1.1 million at September 30, 2014 and December 31, 2013, respectively. The Company records allowances to reduce the value of inventory to the lower of cost or market, including allowances for excess and obsolete inventory. The allowance for inventory losses was $2.0 million at September 30, 2014 and $1.9 million at December 31, 2013, respectively.

Inventories consisted of the following at September 30, 2014 and December 31, 2013:


	September 30,		December 31,
	2014		2013
Raw materials	$	10,788	$	9,241
Work in process		774		716
Finished goods		4,805		4,578

Inventories, net	$	16,367	$	14,535

Prepaid and Other Current Assets

Prepaid assets are stated at cost and are amortized over the useful lives (up to one year) of the assets.

Property and Equipment

Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the assets. The Company depreciates computer equipment over three to five years, office equipment, manufacturing and test equipment, and motor vehicles over five years, furniture and fixtures over seven years, and buildings over 30 years. Leasehold improvements are amortized over the shorter of the corresponding lease term or useful life. Depreciation expense and gains and losses on the disposal of property and equipment are included in cost of sales and operating expenses in the condensed consolidated statements of operations. Maintenance and repairs are expensed as incurred.

Property and equipment consists of the following at September 30, 2014 and December 31, 2013:


	September 30,			December 31,
	2014			2013
Building	$	6,229		$	6,207
Computers and office equipment		10,524			9,818
Manufacturing and test equipment		11,493			10,415
Furniture and fixtures		1,207			1,204
Leasehold improvements		906			837
Motor vehicles		117			117

Total property and equipment		30,476			28,598
Less: Accumulated depreciation and amortization		(17,348	)		(15,397	)
Land		1,770			1,770

Property and equipment, net	$	14,898		$	14,971

Depreciation and amortization expense was approximately $0.7 million for the three months ended September 30, 2014 and 2013 and $2.1 million for the nine months ended September 30, 2014 and 2013, respectively. Amortization for capital leases is included in depreciation and amortization expense. See Note 11 for information related to capital leases.

Liabilities

Accrued liabilities consist of the following at September 30, 2014 and December 31, 2013:


	September 30,		December 31,
	2014		2013
Executive deferred compensation	$	1,971	$	0
Inventory receipts		1,930		1,489
Payroll, bonuses, and other employee benefits		1,339		3,267
Paid time off		1,259		1,154
Professional fees and contractors		765		584
Warranties		307		305
Deferred rent and revenues		161		199
Real estate taxes		135		160
Employee stock purchase plan		125		292
Income and sales taxes		146		159
Other		357		194

Total	$	8,495	$	7,803

Long-term liabilities consist of the following:


	September 30,		December 31,
	2014		2013

Deferred rent	$	270	$	278
Long-term obligations under capital leases		123		0
Reserve for uncertain tax positions		97		865
Deferred revenues		61		86
Executive deferred compensation		0		1,908

	$	551	$	3,137