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. Long term contract inventory includes an immaterial amount of claims or other similar items subject to uncertainty concerning their determination or realization. Inventories are valued at the lower of cost (principally average cost) or market. The composition of inventories is as follows:



	(In thousands)
	September 30, 2013			December 31, 2012
Raw materials	$	234,423		$	224,613
Work-in-process	114,203			92,761
Finished goods and component parts	118,082			107,173
Inventoried costs related to long-term contracts	55,695			38,000
Gross inventories	522,403			462,547
Less: Inventory reserves	(54,498		)	(50,333		)
Progress payments applied	(11,021		)	(14,743		)
Inventories, net	$	456,884		$	397,471

As of September 30, 2013 and December 31, 2012, inventory also includes capitalized contract development costs of $30.5 million and $23.8 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 September 30, 2013 and December 31, 2012, $5.2 million and $5.4 million, respectively, are scheduled to be liquidated under existing firm orders.