INVENTORIES

Inventories consist of the following:



	December 31,
	2013		2012
Raw materials	$	17,099	$	14,946
Work in progress	21,605		20,012
Manufactured and purchased components	21,675		18,898
Finished goods	40,572		30,792
Product inventory	100,951		84,648
Capitalized contract costs (1)	12,227		5,391
Total inventories	$	113,178	$	90,039

(1) 2013 includes a reduction to inventory of $2,057 related to a loss reserve on a long-term production contract.

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.

Inventoried costs include capitalized contract costs relating to programs and contracts with long-term production cycles, substantially all of which is not expected to be realized within one year. The Company believes these amounts will be fully recovered over the life of the contracts.

For December 31, 2012, the Company has revised the classification of $5,505 in inventory between raw materials and manufactured and purchased components for a misclassification as previously reported at December 31, 2012.