Inventories

Inventories consist of the following:



	March 31, 2015		December 31, 2014
Raw materials	$	16,777	$	16,712
Work in progress	24,254		22,960
Manufactured and purchased components	21,241		21,296
Finished goods	31,848		32,403
Product inventory	94,120		93,371
Capitalized contract costs	27,626		20,908
Total inventories	$	121,746	$	114,279

Inventories include capitalized contract costs relating to programs and contracts with long-term production cycles. 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. At March 31, 2015 and December 31, 2014, the Company was not engaged in any contracts that would require it to record a loss reserve.

In January 2015, the Company signed an agreement with a key customer to form a strategically aligned partnership. This agreement extended the performance period of the statements of work for certain contracts with the customer and gives the Company preferred supplier status on certain future contracts. In accordance with the contract terms, the Company made a $4,800 cash payment of consideration in January 2015. The payment was recorded as an increase to inventory and is being amortized as a reduction to revenue over the life of the associated contracts.