Inventories, net

12 Months Ended

Dec. 31, 2017

Note 5. Inventories, net

The components of inventories are as follows:


	December 31,
	2017		2016
	(in thousands)
Raw materials	$	82,313	$	80,503
Work in process		31,651		14,117
Finished goods (completed systems)		6,580		19,233
Inventories, net	$	120,544	$	113,853

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establishes inventory reserves when conditions exist that indicate inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand for the Company’s products or market conditions.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. In 2017, the Company recorded a net increase of $5.3 million in inventory reserves, which includes $6.2 million of write-down of excess inventory related to Legacy products. As of December 31, 2017 and 2016, inventories are stated net of inventory reserves of $14.2 million and $8.8 million respectively.

During each of the years ended 2017, 2016 and 2015, the Company recorded charges to cost of sales of $8.1 million, $0.8 million and $0.5 million to reflect the lower of cost or net realizable value.

The Company has inventory on consignment at customer locations as of December 31, 2017 and 2016, of $3.6 million and $3.4 million, respectively.