2. Balance Sheet Details

Marketable Securities

The Company’s portfolio of available-for-sale securities by contractual maturity consists of the following (in thousands):


June 30, 2013	Maturity in Years		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-sale:
Government agency securities		1 or less	$	1,004	$	0	$	0		$	1,004
Municipal bonds		1 or less		10,576		4		0			10,580
Certificates of deposit		1 or less		4,520		0		0			4,520
Corporate debentures / bonds		1 or less		6,693		0		(11	)		6,682

Total short-term marketable securities				22,793		4		(11	)		22,786

Available-for-sale:
Municipal bonds		1 to 2		157		0		0			157
Certificates of deposit		1 to 2		3,220		0		0			3,220
Corporate debentures / bonds		1 to 2		8,238		0		(29	)		8,209

Total long-term marketable securities				11,615		0		(29	)		11,586

			$	34,408	$	4	$	(40	)	$	34,372


December 31, 2012	Maturity in Years		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale:
Government agency securities		1 or less	$	3,265	$	1	$	0	$	3,266
Municipal bonds		1 or less		11,246		14		0		11,260
Certificates of deposit		1 or less		6,200		5		0		6,205
Corporate debentures / bonds		1 or less		17,330		3		0		17,333

Total short-term marketable securities				38,041		23		0		38,064

Available-for-sale:
Certificates of deposit		1 to 2		1,200		1		0		1,201

Total long-term marketable securities				1,200		1		0		1,201

			$	39,241	$	24	$	0	$	39,265

The Company’s available-for-sale securities are carried on the condensed consolidated balance sheet at fair market value with the related unrealized gains and losses included in accumulated other comprehensive income (loss) on the condensed consolidated balance sheet, which is a separate component of stockholders’ equity. Realized gains and losses on the sale of available-for-sale marketable securities are determined using the specific-identification method.

The Company has a credit facility with a bank to allow margin borrowings based on the Company’s investments in cash equivalents and marketable securities held with the bank. This facility is collateralized by the Company’s cash equivalents and marketable securities held with the bank. At June 30, 2013, the Company had approximately $11.7 million in marketable securities held at this bank. Any monies borrowed and interest incurred are payable on demand, and there is no express expiration date to the credit facility. During the three and six months ended June 30, 2013, the Company borrowed approximately $3.0 million and $10.0 million, respectively, and had outstanding borrowings of $1.6 million under this facility at June 30, 2013. Under the terms of the credit facility, the bank may liquidate any of the Company’s cash equivalents or marketable securities held at any time in order to recoup the outstanding balance of the facility. Accordingly, a like amount of marketable equity securities have been classified by the Company as restricted marketable securities on the balance sheet at June 30, 2013. At June 30, 2013 the Company had no cash equivalents held at this bank. The restricted marketable securities of $1.6 million are included in the June 30, 2013 marketable securities presented in the table above.

As of June 30, 2013, the Company recorded a net unrealized loss of $36,000, or $24,000 net of tax. The Company’s net unrealized loss is the result of market conditions affecting its fixed-income, debt and equity securities, which are included in accumulated other comprehensive income (loss) in the condensed consolidated balance sheet for the period then ended. As of June 30, 2013 and December 31, 2012, we did not have any investments in marketable securities with a material unrealized loss position for twelve months or greater.

Inventories

Inventories consist of the following (in thousands):


	June 30, 2013		December 31, 2012
Finished goods	$	19,810	$	26,776
Raw materials and components		9,087		12,240

	$	28,897	$	39,016

Accrued Expenses

Accrued expenses consist of the following (in thousands):


	June 30, 2013		December 31, 2012
Royalties	$	5,574	$	4,349
Payroll and related expenses		6,112		7,788
Product warranty		2,451		2,329
Market development funds and price protection		2,075		2,147
Deferred rent		694		573
Professional fees		2,715		1,549
Deferred revenue		3,932		4,630
Other		4,040		4,435

	$	27,593	$	27,800

Accrued Warranty Obligations

Accrued warranty obligations consist of the following (in thousands):


	Three Months Ended June 30, 2013			Three Months Ended June 30, 2012			Six Months Ended June 30, 2013			Six Months Ended June 30, 2012
Warranty liability at beginning of period	$	2,664		$	1,738		$	2,329		$	1,525
Additions charged to operations		1,708			1,845			3,363			2,730
Deductions from liability		(1,921	)		(909	)		(3,241	)		(1,581	)

Warranty liability at end of period	$	2,451		$	2,674		$	2,451		$	2,674

The Company accrues warranty costs based on estimates of future warranty-related replacement, repairs or rework of products. The Company generally provides one to three years of coverage for products following the date of purchase and the Company accrues the estimated cost of warranty coverage as a component of cost of net revenues in the condensed consolidated statements of operations at the time revenue is recognized. In estimating our future warranty obligations, we consider various relevant factors, including the historical frequency and volume of claims, and the cost to replace or repair products under warranty.