Inventories



Inventories (in millions)	Balance at year-end
	2016			2015
Raw materials and supplies	$	146.0		$	141.6
Work in process	147.8			149.4
Finished goods	43.0			45.8
	336.8			336.8
Progress payments	(9.1		)	(12.3		)
Reduction to LIFO cost basis	(13.5		)	(15.3		)
Total inventories, net	$	314.2		$	309.2

Inventories at cost determined on the LIFO method were $68.4 million at January 1, 2017, and $96.6 million at January 3, 2016. The remainder of the inventories using average cost or the FIFO methods, were $268.4 million at January 1, 2017, and $240.2 million at January 3, 2016. Certain inventory costs are also reflective of the estimates used in applying the percentage-of-completion revenue recognition method.

The Company recorded $0.7 million in LIFO income in 2016, $1.2 million in LIFO income in 2015 and less than $0.1 million of LIFO income in 2014.

Total inventories at current cost were net of reserves for excess, slow moving and obsolete inventory of $59.4 million and $58.8 million at January 1, 2017, and January 3, 2016, respectively. Judgment is required when establishing reserves to reduce the carrying amount of inventory to market or net realizable value. Inventory reserves are recorded when inventory is considered to be excess or obsolete based upon an analysis of actual on-hand quantities on a part-level basis to forecasted product demand and historical usage.

Inventories, before progress payments, related to long-term contracts were $87.2 million and $73.8 million at January 1, 2017, and January 3, 2016, respectively. Progress payments related to long-term contracts were $9.1 million and $12.3 million at January 1, 2017, and January 3, 2016, respectively. Under the contractual arrangements by which progress payments are received, the customer has an ownership right in the inventories associated with specific contracts.