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INVENTORIES

6 Months Ended

Jun. 30, 2012

4. INVENTORIES

Inventoried costs contain amounts relating to long-term contracts and programs with long production cycles, a portion of which will not be realized within one year. Inventories are valued at the lower of cost (principally average cost) or market. The composition of inventories is as follows:

			(In thousands)
		June 30,		December 31,
		2012		2011
Raw material		$	183,181	$	168,619
Work-in-process			106,471		97,420
Finished goods and component parts			80,015		81,544
Inventoried costs related to U.S. Government and other long-term contracts			47,312		35,347
Gross inventories			416,979		382,930
Less: Inventory reserves			(47,890)		(48,547)
	Progress payments applied, principally related to long-term contracts		(14,606)		(13,750)
Inventories, net		$	354,483	$	320,633

As of June 30, 2012 and December 31, 2011, inventory also includes capitalized contract development costs of $23.6 million and $17.5 million, respectively, related to certain aerospace and defense programs. These capitalized costs will be liquidated as production units are delivered to the customer. As of June 30, 2012 and December 31, 2011, $8.1 million and $9.4 million, respectively, are scheduled to be liquidated under existing firm orders.

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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