BALANCE SHEET DETAIL



In thousands	December 31, 2016			December 31, 2015
Inventories, net:
Raw materials	$	17,273		$	24,898
Work-in-process	15,510			18,284
Finished products	17,692			22,216
Total (net of reserves)	$	50,475		$	65,398
Property, plant, and equipment, net
Machinery and equipment	$	46,581		$	46,369
Leasehold improvements	15,695			15,603
Office equipment and furniture	14,755			14,619
	77,031			76,591
Accumulated depreciation and amortization	(63,162		)	(59,311		)
Total	$	13,869		$	17,280
Other assets:
Deferred compensation plan assets	5,062			4,341
Demonstration and laboratory equipment	4,540			5,022
Other	1,196			996
Total	$	10,798		$	10,359
Accrued expenses:
Accrued payroll-related liabilities	$	11,494		$	6,417
Warranty accrual	1,884			1,586
Capital lease, current portion	504			831
Advanced billings	583			543
Other	3,563			2,769
Total	$	18,028		$	12,146
Other Liabilities:
Deferred compensation plan liabilities	$	6,100		$	5,247
Income tax payable - long term	26			2,523
Asset retirement obligations	2,706			2,540
Postretirement benefits obligation	1,869			2,231
Capital lease - long term	—			575
Deferred service income - long term	1,145			49
Other	610			309
Total	$	12,456		$	13,474

Warranty Accrual

We generally warrant our products for a period of 12 months for new products, or three months for refurbished products, from the date of system acceptance for material and labor to repair the product; accordingly, an accrual for the estimated cost of the warranty is recorded at the time the product is shipped. Extended warranty terms, if granted, result in deferral of revenue equating to our standard pricing for similar service contracts. Recognition of the related warranty cost is deferred until product revenue is recognized. Factors that affect our warranty liability include the number of installed units, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our recorded warranty liabilities and adjust the amounts as necessary.

Changes in our product liability are as follows:



In thousands	December 31, 2016			December 31, 2015
Balance, beginning of year	$	1,586		$	1,501
Liabilities accrued for warranties issued	2,529			1,896
Warranty claims paid and utilized	(2,137		)	(2,155		)
Changes in accrued warranty liabilities	(94		)	344
Balance, end of year	$	1,884		$	1,586

Deferred Service Income

We sell service contracts for which revenue is deferred and recognized ratably over the contract period (for time based service contracts) or as service hours are delivered (for contracts based on a purchased quantity of hours). Changes in our deferred service revenue are as follows:



In thousands	December 31, 2016			December 31, 2015
Balance, beginning of year	$	4,011		$	5,233
Service contracts billed during year	3,891			3,244
Service contract revenue recognized during year	(4,060		)	(4,466		)
Balance, end of year	$	3,842		$	4,011

Balance sheet classification
Service contracts classified as short-term	$	2,697		$	3,962
Service contracts classified as long-term	1,145			49
Balance, end of year	$	3,842		$	4,011

Asset Retirement Obligations

In accordance with ASC 410, Asset Retirement and Environmental Obligations, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation (“ARO”) if the fair value of the liability can be reasonably estimated, even if conditional on a future event. The ARO liability is principally for estimable retirement obligations related to remediation costs, which we estimate will be incurred upon the expiration of certain operating leases.

The following table sets forth an analysis of the ARO activity for the years ended December 31, 2016 and 2015:



In thousands	2016		2015
Balance as of January 1	$	2,540	$	2,397
Accretion expense	166		143
Liabilities incurred	—		—
Balance as of December 31	$	2,706	$	2,540

Advanced Billings

On occasion, we require, or our customers pay, a deposit in advance of order shipment. These amounts are classified as advanced billings until the related order ships. At December 31, 2016, we have received $0.6 million in advanced billings from our customers and $0.5 million at December 31, 2015.