INVENTORIES

Inventories consist of:



	December 31, 2012			December 31, 2011
Leaf tobacco	$	59,130		$	65,411
Other raw materials	3,151			3,831
Work-in-process	210			688
Finished goods	64,396			64,594
Inventories at current cost	126,887			134,524
LIFO adjustments	(26,495		)	(25,296		)
	$	100,392		$	109,228

The Company has a leaf inventory management program whereby, among other things, it is committed to purchase certain quantities of leaf tobacco. The purchase commitments are for quantities not in excess of anticipated requirements and are at prices, including carrying costs, established at the commitment date. At December 31, 2012, Liggett had leaf tobacco purchase commitments of approximately $11,914. The Company has a single source supply agreement for fire safe cigarette paper through 2015.

The Company capitalizes the incremental prepaid cost of the MSA in ending inventory. Each year the Company capitalizes in inventory that portion of its MSA liability that has been shipped to the public warehouses but not sold. The amount of capitalized MSA cost in "Finished goods" inventory was $13,854 and $13,804 at December 31, 2012 and 2011, respectively.

All of the Company’s inventories at December 31, 2012 and 2011 have been reported under the LIFO method.