Inventoried Costs

6 Months Ended

Jun. 26, 2011

Inventoried Costs

Inventoried Costs

Note 4. Inventoried Costs

Inventoried costs are stated at the lower of cost or market. Cost is determined using the average cost or first-in, first-out method and is applied consistently within an operating entity. Inventoried costs primarily relate to work in process under fixed-price contracts using costs as the basis of the percentage-of-completion calculation under the units produced method of revenue recognition. These costs represent accumulated contract costs less the portion of such costs allocated to delivered items. Accumulated contract costs include direct production costs, factory and engineering overhead and production tooling costs. Pursuant to contract provisions of U.S. Government contracts, such customers may have title to, or a security interest in, inventories related to such contracts as a result of advances, performance-based payments, and progress payments. The Company reflects those advances and payments as an offset against the related inventory balances.

The Company regularly reviews inventory quantities on hand, future purchase commitments with its suppliers, and the estimated utility of its inventory. If the Company’s review indicates a reduction in utility below carrying value, it reduces its inventory to a new cost basis.

Inventoried costs consisted of the following components (in millions):

	December 26, 2010			June 26, 2011
Raw materials	$	16.5		$	33.7
Work in process	7.9			25.9
Finished goods	1.1			5.8
Supplies and other	5.8			5.5
Subtotal inventoried costs	31.3			70.9
Less customer advances and progress payments	(5.4		)	(6.9		)
Total inventoried costs	$	25.9		$	64.0