Inventories

Inventories on the Consolidated Balance Sheets are summarized as follows:



	December 31,
(Thousands)	2014		2013
Principally average cost:
Raw materials and supplies	$	39,559	$	39,201
Work in process	155,377		152,645
Finished goods	37,473		40,954
Net inventories	$	232,409	$	232,800

Average cost approximates current cost. Gross inventories accounted for using the LIFO method totaled $183.9 million at December 31, 2014 and $175.6 million at December 31, 2013. Net inventory includes a LIFO reserve balance of $53.7 million as of December 31, 2014, and $58.2 million as of December 31, 2013. The use of the LIFO method results in a better matching of revenue and costs. The liquidation of LIFO inventory layers reduced cost of sales by $0.1 million in 2014 and $1.0 million in 2013.

The Company repaid a precious metal-denominated loan totaling $28.7 million as of December 31, 2013 in the third quarter of 2014. This debt reduction was completed by transferring 23,781 ounces of gold held in inventory to the lender as repayment for the outstanding short-term debt, and this transaction was treated as a non-cash item in the Consolidated Statement of Cash Flows.

The December 31, 2013 balance reflects a reclassification of $19.4 million from prepaid assets to inventory. The Company determined it was more appropriate to reflect the fair market value adjustment related to certain of its precious metal inventory as inventory. The reclassification did not impact previously reported total current assets or total assets in the accompanying Consolidated Balance Sheets, net income in the Consolidated Statements of Income, or net cash provided by operating activities in the Consolidated Statements of Cash Flows.