Inventories

Inventories consisted of the following (in thousands):



	December 31, 2014			December 31, 2013
Raw materials	$	9,219		$	21,127
Work-in-process	1,195			1,194
Finished goods	10,762			9,644
	21,176			31,965
Less: inventory valuation allowance	(2,701		)	(7,037		)
Inventories, net	$	18,475		$	24,928



	December 31, 2014			December 31, 2013
Inventory deposit ^(A)	$	370		$	1,289
Less: inventory deposit valuation allowance	(370		)	(808		)
Inventory deposit, net	$	—		$	481



(A)	During 2013 the Company modified the inventory deposit arrangement with its former contract manufacturing partner. Prior to the modification, the Company was obligated to place a deposit with its former contract manufacturer for the cost of excess inventory that had been purchased as a result of the Company's forecasted demand when there was no alternative use. Under the new arrangement, rather than place a deposit with the former contract manufacturer, the Company was obligated to purchase the inventory on consignment. The calculation of excess inventory and its impact on the Company’s cash and reported aggregate inventory levels is the same under the consignment arrangement as it was under the deposit arrangement. In the third quarter of 2014, the Company substantially completed the transition to a new contract manufacturing partner; however, as of December 31, 2014, there was a remaining $0.1 million balance of consigned inventory at the Company’s former contract manufacturing partner and a remaining deposit of $0.4 million relating to service inventory, which is fully reserved.

Consigned inventory is held at third-party locations, including the Company's contract manufacturing partner and customers. The Company retains title to the inventory until purchased by the third-party. Consigned inventory, consisting of raw materials and finished goods, was $2.6 million and $12.0 million at December 31, 2014 and 2013.

The Company recorded the following charges associated with the valuation of inventory, inventory deposit and the adverse purchase commitment liability for the years ended December 31 (in thousands):



	2014		2013		2012
Inventory, net	$	2,412	$	3,302	$	1,080
Inventory deposit, net	126		945		926
Adverse purchase commitments	323		327		31

The following is a summary of the change in the Company’s inventory valuation allowance for the years ended December 31 (in thousands):



	2014			2013
Inventory valuation allowance, beginning of the year	$	7,037		$	2,199
Usage:
Inventory scrapped	(5,768		)	(956		)
Inventory utilized	(1,005		)	(363		)
Subtotal—usage	(6,773		)	(1,319		)
Write-downs of inventory valuation	3,417			3,665
Transfer from other liabilities ^(A)	(1,013		)	35
Transfer from (to) inventory deposit valuation allowance	33			2,457
Inventory valuation allowance, end of the year	$	2,701		$	7,037


(A)	Transfer from other liabilities is related to obsolete inventory purchased from contract manufacturers during the year which was previously reserved for as an adverse purchase commitment. (Note 10—Other Accrued and Other Long-Term Liabilities and Note 14—Commitments and Contingencies.)