Inventory Disclosure

12 Months Ended

Dec. 31, 2011

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Inventory Disclosure Text Block

Note 13 – Inventories

Inventories at December 31, 2011 and 2010 were comprised of:

(in thousands)	December 31,	December 31,
	2011	2010
Finished products	$ 20,280	$ 18,718
In - process	8,354	8,110
Raw materials	17,304	16,389
Fine and fabricated precious metal in various stages of completion	8,658	12,151
	54,596	55,368
LIFO reserve	(4,211)	(6,693)
	$ 50,385	$ 48,675

In order to produce certain of its products, H&H purchases, maintains and utilizes precious metal inventory.  H&H records its precious metal inventory at last-in, first-out (“LIFO”) cost, subject to lower of cost or market with any adjustments recorded through cost of goods sold.  The market value of the precious metal inventory exceeded LIFO cost by $4.2 million and $6.7 million as of December 31, 2011 and 2010, respectively.  The Company recorded favorable non-cash LIFO liquidation gains of $1.9 million and $0.2 million in 2011 and 2010, respectively.

Certain customers and suppliers of H&H choose to do business on a “toll” basis, and furnish precious metal to H&H for return in fabricated form (“customer metal”) or for purchase from or return to the supplier. When the customer metal is returned in fabricated form, the customer is charged a fabrication charge. The value of this customer metal is not included in the Company’s balance sheet.  To the extent H&H is able to utilize customer precious metal in its production processes, such customer metal replaces the need for H&H to purchase its own inventory. As of December 31, 2011, H&H’s customer metal consisted of 240,568 ounces of silver, 609 ounces of gold, and 1,396 ounces of palladium.

Supplemental inventory information:	December 31,	December 31,
(in thousands, except per ounce)	2011	2010
Precious metals stated at LIFO cost	$ 4,447	$ 5,458
Market value per ounce:
Silver	$ 27.95	$ 30.92
Gold	$ 1,565.80	$ 1,421.07
Palladium	$ 655.40	$ 797.00