Inventories, net

12 Months Ended

Dec. 31, 2016

Note 7. Inventories, net

The components of inventories are as follows:


	December 31,
	2016		2015
	(in thousands)
Raw materials	$	80,503	$	72,070
Work in process		14,117		29,219
Finished goods (completed systems)		19,233		8,119
Inventories, net	$	113,853	$	109,408

When recorded, inventory reserves are intended to reduce the carrying value of inventories to their market 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establishes inventory reserves when conditions exist that indicate inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand for the Company’s products or market conditions.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. In 2016, the Company recorded an overall decrease of $1.6 million in the inventory reserves, which consisted of disposals due to previously reserved for obsolescence and excess inventory of $2.6 million partially offset by a provision charge to the reserve of $1.0 million. As of December 31, 2016 and 2015, inventories are stated net of inventory reserves of $8.8 million and $10.5 million respectively.

During each of the years ended 2016, 2015 and 2014, the Company recorded charges to cost of sales of $0.8 million, $0.5 million and $0.8 million to reflect the lower of cost or market value. During 2014, the Company recorded a charge to cost of sales of $1.0 million due to production levels below normal capacity.