Inventories, net

9 Months Ended

Sep. 30, 2015

Note 6. Inventories, net

The components of inventories are as follows:

	September 30,		December 31,
	2015		2014
	(in thousands)
Raw materials	$	71,940	$	65,723
Work in process	30,792		22,358
Finished goods (completed systems)	17,335		15,982

	$	120,067	$	104,063

When recorded, inventory reserves are intended to reduce the carrying value of inventories to their net realizable value. The Company establishes inventory reserves when conditions exist that indicate inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand for the Company’s products or market conditions. The Company regularly evaluates the ability to realize the value of inventories based on a combination of factors including the following: forecasted sales or usage, estimated product end of life dates, estimated current and future market value and new product introductions. Purchasing and usage alternatives are also explored to mitigate inventory exposure. As of September 30, 2015 and December 31, 2014, inventories are stated net of inventory reserves of $17.3 million and $23.6 million, respectively.

During the three months and nine months ended September 30, 2014, the Company recorded a charge to cost of sales of $0.6 million and $1.0 million, respectively, due to production levels below normal capacity.