PROPERTY, PLANT AND EQUIPMENT

6 Months Ended

Jun. 30, 2016

Property, Plant and Equipment [Abstract]

Property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment charges. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the lease term or the useful life. The cost of major additions and improvements is capitalized, while maintenance and repair costs that do not improve or extend the lives of the respective assets are charged to operations as incurred. The cost of computer software obtained for internal use is accounted for in accordance with the Accounting Standards Codification 350-40, Internal-Use Software.

The cost of purchased spinal hardware instruments which the Company consigns to hospitals and independent sales agents to support surgeries is initially capitalized as construction in progress. The amount is then reclassified to spinal hardware instrument sets and depreciation is initiated when instruments are put together in a newly built set with spinal implants, or directly expensed for the instruments that are used to replace damaged instruments in an existing set. The depreciation expense and direct expense for replacement instruments are recorded in selling, general and administrative expense.

Property, plant and equipment balances and corresponding useful lives were as follows:



	June 30, 2016			December 31, 2015			Useful Lives
	(In thousands)
Leasehold improvement	$	6,020		$	4,830		Lease Term
Machinery and production equipment	6,530			6,404			3-10 years
Spinal hardware instrument sets	25,450			25,080			5 years
Information systems and hardware	6,972			6,872			3-7 years
Furniture and fixtures	1,194			944			3-5 years
Construction in progress	8,338			8,375
Total	54,504			52,505
Less accumulated depreciation and amortization	(32,646		)	(30,547		)
Property, plant and equipment, net	$	21,858		$	21,958

Depreciation and amortization expenses totaled $1.1 million and $0.9 million for the three months ended June 30, 2016 and 2015, respectively, and $2.3 million and $1.8 million for the six months ended June 30, 2016 and 2015, respectively. The cost of purchased instruments used to replace damaged instruments in existing sets and recorded directly to the instrument replacement expense totaled $0.2 million and $0.3 million for the three months ended June 30, 2016 and 2015, respectively, and $0.8 million and $0.5 million for the six months ended June 30, 2016 and 2015, respectively.