INVENTORIES

6 Months Ended

Jun. 30, 2020

Inventories are stated at the lower of cost or net realizable values. Cost is determined on a first in, first out basis. Finished goods and work-in-process inventories include material, labor and overhead costs. Factory overhead costs are primarily allocated to inventory manufactured in-house based upon labor hours.

Inventories consisted of the following:



(In thousands)	June 30, 2020			December 31, 2019
Raw materials	$	2,441		$	2,935
Work in process	1,504			1,209
Finished goods	1,997			1,316
Gross inventories	5,942			5,460
Less: provision for obsolescence	(685		)	(392		)
Inventories, net	$	5,257		$	5,068

During the second fiscal quarter, we reassessed our forecasted product mix due to COVID-19, increased availability of our newer handpiece designs and earlier than expected completion of product registrations in some of our foreign markets. As a result, certain products were reduced to a lower carrying value, and some components were also written off as it was determined to cease further production on these models. The total associated impairment was approximately $400,000 and is included in cost of sales in the accompanying consolidated statements of income for the three and six months ended June 30, 2020.