INVENTORIES

Inventories consist of the following:



	December 31,
	2016		2015
Raw materials	$	12,822	$	12,513
Work in progress	23,795		22,681
Manufactured and purchased components	20,922		19,224
Finished goods	28,346		28,169
Product inventory	85,885		82,587
Capitalized contract costs	36,876		32,188
Total inventories	$	122,761	$	114,775

Capitalized contract costs include $5,373 and $5,970 at December 31, 2016 and 2015, respectively, related to an agreement the Company signed with Spirit Aerostructures ("Spirit"). This agreement extended the performance period of the statements of work for certain contracts with Spirit and gave the Company preferred supplier status on certain future contracts. In accordance with the contract terms, the Company made $6,500 in cash payments of consideration to Spirit in 2015 which was recorded as an increase to capitalized contract costs in inventory in the Consolidated Balance Sheet. This consideration is being amortized as a reduction to revenue over the life of the related contracts.

The increase in capitalized contract costs in 2016 relates primarily to four early-stage long-term contracts. The Company expects these costs will not be realized within one year but believes these amounts will be fully recovered over the life of the related contracts.

The following table illustrates the market to which capitalized contract cost at December 31, 2016 and December 31, 2015 related:



	December 31,
	2016		2015
Large commercial aircraft	$	10,852	$	11,528
Corporate and regional aircraft	21,081		16,721
Military	4,943		3,939
Total capitalized contract cost	$	36,876	$	32,188

In accordance with ASC 605-35-45-1&2, the provisions for anticipated losses on contracts are accounted for as additional contract cost and recognized as part of cost of sales. Provisions for losses are recorded as a reduction of related contract costs recorded in inventory. At December 31, 2016 and 2015, the Company had no contracts with loss reserves accounted for as a reduction of inventory.