Inventories

Inventories consist of the following:



	June 30, 2014		December 31, 2013
Raw materials	$	16,802	$	17,099
Work in progress	23,346		21,605
Manufactured and purchased components	22,614		21,675
Finished goods	29,799		40,572
Product inventory	92,561		100,951
Capitalized contract costs (1)	16,281		12,227
Total inventories	$	108,842	$	113,178

(1) Net of a loss reserve on long-term production contracts of $3,434 and $2,057 as of June 30, 2014 and December 31, 2013 respectively

Inventories include capitalized contract costs relating to programs and contracts with long-term production cycles, substantially all of which are not expected to be realized within one year. The Company believes these amounts will be fully recovered over the life of the contracts. Anticipated losses on contracts are recognized, when required, and reported as a reduction of related contract costs recorded in inventory and as additional cost of sales. The Company is engaged in a contract accounted for using the units of delivery method where estimated costs exceed the total contract revenue. A provision for the remaining estimated loss on this contract of $4,602 and $5,222 is reported as a reduction to inventory of $3,434 and $2,057 and an increase in accrued expenses of $1,168 and $3,165 in the Condensed Consolidated Balance Sheet at June 30, 2014 and December 31, 2013, respectively. Estimated revenues at completion on long term contracts, accounted for under the units of delivery method, include unpriced change orders and claims of $4,775 that are subject to future negotiation. The final resolution of these unpriced items could result in a change in the future profitability and deferred costs on related contracts.