Inventories, net

12 Months Ended

Dec. 31, 2020

Inventories, net

Inventories, net

Note 6. Inventories, net

The components of inventories are as follows:

	December 31,
	2020		2019
	(in thousands)
Raw materials	$	100,254	$	95,867
Work in process		33,867		32,131
Finished goods (completed systems)		26,955		12,366
Inventories, net	$	161,076	$	140,364

When recorded, inventory reserves are intended to reduce the carrying value of inventories to their net realizable value. We establish inventory reserves when conditions exist that indicate inventory may be in excess of anticipated demand or is obsolete based upon assumptions about future demand for our products or market conditions. We regularly evaluate our ability to realize the value of inventories based on a combination of factors including the following: forecasted sales and the size and utilization of our installed base, 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 2020, we recorded a net slight increase of $0.1 million in inventory reserves. As of December 31, 2020 and 2019, inventories are stated net of inventory reserves of $8.3 million and $8.2 million, respectively.

During the years ended December 31, 2020, 2019 and 2018, we recorded charges to cost of sales of $3.7 million, $2.8 million and $2.2 million, respectively, to reflect the lower of cost or net realizable value.

We have inventory on consignment at customer locations as of December 31, 2020 and 2019, of $4.9 million and $5.0 million, respectively.