NOTE J – INVENTORIES

Inventories are stated at the lower of cost or net realizable value using the first-in first-out method (“FIFO”). Shipping and handling costs are classified as a component of cost of sales in the consolidated statements of operations. Sales demonstration inventory is comprised of measuring devices utilized by sales representatives to present the Company’s products to customers. These products remain in sales demonstration inventory for approximately 6 to 12 months and are subsequently sold at prices that produce slightly reduced gross margins. Service inventory is comprised of inventory that is not expected to be sold within twelve months, such as training and loaned equipment.

Inventories consist of the following:


	As of September 27, 2014			As of December 31, 2013
Raw materials	$	23,787		$	23,692
Finished goods		13,543			7,176
Sales demonstration inventory		21,845			19,545
Reserve for excess and obsolete		(2,693	)		(1,473	)

Inventories	$	56,482		$	48,940


Service inventory	$	21,589		$	19,033